Summary
The Massachusetts Supreme Judicial Court held that an insurer must pay double workers’ compensation benefits under G. L. c. 152, § 28, when the employer is insured but insolvent and unable to reimburse the insurer. The court concluded that § 28 double compensation is intended as extra compensation for the injured employee rather than as a punitive award. It further held that the risk of the employer’s insolvency falls on the insurer, not the injured employee.
Topics
Practice areas
Questions Presented
- Whether double compensation under G. L. c. 152, § 28, is punitive damages or compensation intended to benefit the injured employee.
- Whether an insurer must pay § 28 double compensation when the insured employer is insolvent and therefore unable to reimburse the insurer for the extra compensation.
- Whether requiring the insurer to pay unreimbursable § 28 compensation violates public policy or the insurer's due process rights.
- Whether the 1991 amendment excluding § 28 benefits from the Workers' Compensation Trust Fund also excludes private insurers from responsibility for those benefits.
Holdings
- Double compensation under G. L. c. 152, § 28, is compensatory rather than punitive. Its purpose is to provide equitable additional compensation to an injured worker whose injury resulted from serious and wilful employer misconduct, in recognition of the tort recovery the worker gives up under the workers' compensation system.
- When an employer is insured, the insurer must initially pay the employee's § 28 double compensation even if the employer is insolvent and cannot reimburse the insurer.
- Requiring CNA to pay § 28 double compensation despite the employer's insolvency does not violate public policy, and CNA's due process argument fails because it rests on the incorrect premise that § 28 awards are punitive.
- The 1991 amendment excluding § 28 benefits from the Workers' Compensation Trust Fund does not exclude private insurers from paying § 28 double compensation when an insured employer is insolvent.
Key quotations
“In light of this unambiguous history, we conclude that the purpose of § 28 has never been punitive.” (495)
“The purpose of the workers’ compensation laws in general, and § 28 in particular, is properly effectuated by placing the risk of the employer’s insolvency on the insurer, and not the injured employee.” (496-497)
“The Legislature has determined that only the trust fund is not responsible for payment of double compensation to an injured worker whose employer is insolvent.” (499)
Factual background
James Sliski, an eighteen-year-old employee of Doane & Williams, Inc., suffered spinal injuries and paraplegia after falling through an elevator shaft at work on June 9, 1988. Doane & Williams was insured by CNA, which accepted liability and began paying ordinary workers' compensation benefits. Sliski alleged serious and wilful misconduct by the employer and sought double compensation under G. L. c. 152, § 28. Before the claim was resolved, Doane & Williams ceased business, its assets were sold in lieu of foreclosure, and the employer became unable to reimburse CNA for any extra compensation paid.
Procedural history
Sliski filed a claim with the Department of Industrial Accidents for double compensation under § 28 after suffering catastrophic workplace injuries allegedly caused by his employer's serious and wilful misconduct. After the employer ceased doing business and became insolvent, CNA denied the refiled claim and sought dismissal on limitations, laches, and insolvency grounds. An administrative judge denied CNA's motion, and the administrative claim was stayed while CNA pursued this declaratory judgment action. The Superior Court ruled that CNA had to pay, and the Supreme Judicial Court affirmed.