Massachusetts Court Affirms Interest Formula in Workers’ Comp Claims

By Elizabeth Blosfield | May 11, 2017

The Massachusetts Appeals Court has affirmed the Department of Industrial Accidents (DIA) reviewing board’s decision in a case involving how interest should be assessed on unpaid workers’ compensation claims.

The DIA is responsible for overseeing the workers’ compensation system in Massachusetts. This particular case served to define the meaning of the word “claim” as it appears in Massachusetts workers’ compensation law, which requires that interest be calculated on unpaid workers’ compensation claims from “the date of the receipt of the notice of the claim by the department.”

The DIA reviewing board concluded that in the circumstances of this case, interest was to be accrued from the date the department received notice of the claim ultimately resulting in the order awarding benefits, the Appeals Court decision document stated. The board rejected the injured employee’s argument that interest should instead run from the filing date of an earlier, similar claim that had been terminated by agreement prior to an award of benefits, the decision document added.

This case comes after an employee was injured in 1993 while working. Liberty Mutual Insurance Company (Liberty) – the successor to Wausau Insurance Company, the insurer on the date of the injury – accepted liability and paid the employee’s benefits for total incapacity until he returned to work.

Liberty then paid partial incapacity benefits to the employee until March 10, 1995, and the employee continued to work until October 2, 1995, when he suffered a second injury. The insurer for the second injury is now the Massachusetts Insurance Insolvency Fund (MIIF), which assumed the risk when Eastern Casualty Insurance Company – the insurer at the time of the second injury – became insolvent, the Appeals Court document said.

With the advice of his treating orthopedic physician, the employee stopped work on December 26, 1995, and has not returned to work since. The employee then filed a claim for the second injury on April 1, 1996, and MIIF filed a denial of that claim. In May 1996, Liberty also filed a complaint for recoupment of almost $35,000 it had paid for the first injury, alleging the employee earned more than his average weekly wage while receiving the benefits.

The employee moved to join two claims against Liberty for the first injury. Liberty in turn moved to join MIIF as the insurer for the second injury. After a reviewing board conference on the motions, an administrative judge denied Liberty’s request for recoupment of overpayment, allowed Liberty’s motion to join MIIF and denied the employee’s claims against Liberty for the first injury, without adjudicating MIIF’s liability, the Appeals Court document said. Liberty and the employee both appealed.

“Over the next eleven years, although a number of hearings were scheduled, for reasons unknown, they did not take place and the litigation languished,” the court document stated.

On July 10, 2008, the parties entered into two agreements – one agreement was between the employee and Wausau (now Liberty), and the other was between Wausau and Eastern (now MIIF). In both agreements, Wausau agreed to withdraw its appeal of the order denying recoupment. In the agreement between the employee and Wausau, the employee agreed to withdraw his appeal of the conference order denying disability, reserving the right to raise a disability claim in the future. The employee also stipulated to an overpayment by Wausau of almost $35,000. Wausau agreed not to pursue the employee for the overpayment unless the employee filed a future claim for disability and that claim was resolved. The agreements did not mention interest or the date from which it would accrue if the employee ever received an order for unpaid benefits.

“In short, the effect of the agreements, which were filed with the department and approved by the administrative judge, was to terminate the pending proceedings without final adjudication and without prejudice in the event the employee again filed a claim,” the court document said. “The employee decided to do just that.”

He first filed claims again in 2008, but withdrew them in 2009. He then refiled the claims in 2009, and then again withdrew them. The employee’s present claims were filed on January 25, 2010, seeking benefits from April 1, 1996, until now. Ultimately, through a series of rulings, MIIF was ordered to pay the employee benefits for permanent and total incapacity from April 1, 1996, the date the employee first filed a claim relating to the second injury. Those benefits were ordered to be paid through the present and continuing, the court document explained.

Although the reviewing board affirmed the administrative judge’s award of benefits, it assessed interest only from January 25, 2010, the filing date of the employee’s most recent claim. On appeal, the employee argued that he should have been awarded interest from December 17, 1996, the date the department received notice of his claim for the second injury.

According to the Appeals Court’s decision, Massachusetts workers’ comp law imposes interest only if there is an order awarding unpaid benefits. Without that, it does not apply.

“The employee is not entitled to interest simply because he filed a notice of claim; that act merely supplies the date from which interest will be calculated in the event an award of unpaid benefits is ultimately made in the employee’s favor,” the decision document stated. “Thus, in this case, the employee was not entitled to interest until the order awarding unpaid benefits on his January 25, 2010, notice of claim. Before that point, although there had been several notices of claim, none had been adjudicated to resolution, let alone in the employee’s favor.”

Pointing to additional language in the statute that the Appeals Court deemed unambiguous, the court sided with the reviewing board in its decision.

“We are sensitive to the fact that the employee made his initial claim on April 1, 1996, and that he has been deprived of his benefits for many years,” the decision document stated. “Had he not terminated his 1996 claim, and had it resulted in a favorable award, he would have received interest from the date of the 1996 filing. But, in fact, his 1996 claim for benefits was denied after conference, and he thereafter agreed to terminate it. That claim never led to an order awarding unpaid benefits. For these reasons, we affirm the decision of the board.”

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