Summary
The Supreme Judicial Court of Maine held that the Maine Insurance Guaranty Association was not required to reimburse the solvent insurer or directly pay inflation adjustments attributable to an injury covered by an insolvent insurer. Under Maine's workers' compensation apportionment provisions, the insurer covering the most recent injury remained responsible for the entire benefit payable to the employee, including inflation adjustments, and could not obtain subrogation reimbursement from MIGA. The court vacated the hearing officer's judgment and remanded for further proceedings, including reimbursement to MIGA for inflation adjustments it had paid during the appeal.
Topics
Practice areas
Questions Presented
- Whether MIGA must pay directly to the employee inflation adjustments attributable to a workers' compensation injury covered by an insolvent insurer.
- Whether the Workers' Compensation Act's requirement that the insurer on the most recent injury initially pay all benefits makes that insurer responsible for the entire benefit when MIGA's apportioned share is excluded from covered claims under the Maine Insurance Guaranty Association Act.
Holdings
- MIGA is not required to pay any portion of the workers' compensation benefit attributable to the 1981 injury, including inflation adjustments.
- The insurer covering the most recent injury must pay the employee the entire benefit, including any amount attributable to the earlier injury, and may seek subrogation from other responsible insurers; MIGA is not liable for the insolvent insurer's apportioned share.
Key quotations
“MIGA is required to pay all covered claims to the extent of its obligations; however, it is also required to "deny all other claims" that are not covered.” (1247)
“The most recent insurer must fill in the gap even when, as here, the gap comprises the earlier insurer's entire apportioned percentage.” (1249)
“Because MIGA had no obligation to do so, it is entitled to be reimbursed by Wausau for the amounts it has paid.” (1250)
Factual background
Frank Juliano worked as a truck driver and mechanic and sustained work-related injuries to his lower back in 1981, his right knee in 1986, and his cervical spine in 1988. American Mutual Insurance Company, the insurer for the 1981 injury, became insolvent, while Employers Insurance of Wausau insured the 1986 and 1988 injuries. The hearing officer found that all three injuries contributed equally to Juliano's total incapacity and ordered Wausau to pay the total benefit initially, with MIGA responsible for inflation adjustments related to the 1981 injury.
Procedural history
Juliano sustained three work-related injuries. After remand from an earlier decree, the hearing officer found that each injury contributed equally to Juliano's total incapacity, ordered Wausau, the insurer on the latest injury, to pay all benefits initially, and required MIGA to pay inflation adjustments attributable to the 1981 injury. The hearing officer had already concluded that MIGA was not required to reimburse Wausau for the apportioned benefit because that claim was excluded as a subrogation recovery. The Supreme Judicial Court vacated and remanded.
Remand instructions
Remanded for proceedings consistent with the opinion. Wausau remains responsible for the entire benefit, and MIGA is entitled to reimbursement from Wausau for inflation adjustments MIGA paid under the vacated decree.