Gaines, 062719 MAWC, 069406-76

• Case Date: June 27, 2019
• Court: Massachusetts

Raymond F. Gaines Employee Town of Adams Employer Royal Insurance Company Insurer No. 069406-76 Massachusetts Workers Compensation Decisions Commonwealth of Massachusetts Department of Industrial Accidents June 27, 2019          This case was heard by Administrative Judge Herlihy.           W. Frederick Uehlein, Esq., for the insurer at hearing and on appeal           Dorothy M. Linsner, Esq., for the insurer at hearing           Edmund R. St. John, Esq., for the employer at hearing and on appeal           Long, Fabricant and Harpin, Judges.^[1]           REVIEWING BOARD DECISION           LONG, J.          The insurer appeals from an administrative judge’s decision wherein the judge invoked a two-year statute of limitations to limit the period of time that the insurer was entitled to reimbursement from the employer for cost of living adjustments (hereinafter “COLA”), pursuant to M.G.L. c. 152, § 34B and § 65(2).^[2] Finding merit in both of the insurer’s appellate arguments, we reverse the decision and order the employer to reimburse the insurer for all claimed COLA reimbursements.          The case was tried by the parties by way of a joint hearing stipulation, accompanied by oral presentations at the hearing held on July 19, 2017, and hearing briefs filed thereafter. The judge listed the issues in dispute as follows:

1. Is a notice of opt out is [sic] required

2. Has the Town met its burden of proof on affirmative defenses

3. Amount of reimbursement due

(Dec. 4.)          The joint stipulation provides the factual and pre-hearing procedural history of the claim as follows:

1. The employee, Raymond Gaines, suffered a fatal industrial injury on December 11, 1976 during the course of his employment with the Town of Adams.

2. Arrowood Indemnity Company, the insurer, was the insurer for the Town of Adams, the Town, on December 11, 1976.^[3]

3. From December 11, 1976 through October 31, 1986 the insurer paid weekly benefits to the employee’s widow, but no supplemental benefits were due under G.L. c. 152, § 34B and § 65(2)(a).

4. During the period beginning November 1, 1986 and continuing to this date, the insurer has paid weekly benefits to the employee’s widow, as well as supplemental benefits concurrent with base benefits pursuant to G.L. c. 152 § 34B and § 65(2)(a), COLA.

5. Prior to July 1, 1992, the Town joined the Massachusetts Interlocal Insurance Association, MIIA, and thereafter became responsible for payment of workers’ compensation benefits for the Town’s new claims. It has continued to be a member of MIIA to this date.

6. On February 14, 1992, MIIA notified the Department of Industrial Accidents of its decision to opt out of participation in the Trust Fund as of July 1, 1992.

7. MIIA is a licensed self-insurance group that is incorporated in Massachusetts.

8. The insurer received COLA reimbursement from the Workers’ Compensation Trust Fund, from October 20, 1988 to July 14, 1997, including for the period after MIIA opted out of the Trust Fund on July 1, 1992.

9. On March 22, 2011 counsel for the insurer refiled a claim for reimbursement of COLA benefits with the Trust Fund which was previously filed by the insurer but not reimbursed in the amount of $33,714.52 for the period of October 1, 2007 to December 31, 2010. On August 4, 2011 counsel for the insurer filed a claim for reimbursement of COLA benefits with the Trust Fund in the amount of $7,511.04 for the period from January 1, 2011 to June 30, 2011. On May 25, 2012 counsel for the insurer filed a claim for reimbursement of COLA benefits with the Trust Fund in the amount of $11,812.21 for the period July 1, 2011 to March 31, 2012. Only the period from April 1, 2008 to March 31, 2009 was reimbursed by the Fund.

10. On or about May 20, 2012 the Trust Fund notified counsel for the insurer that it no longer would reimburse the insurer for COLA benefits it had paid to the employee’s widow because the Town had opted out of the Trust Fund pursuant to G.L. c. 152, § 65(2) by virtue of the fact that MIIA had opted out. As of May 20, 2012 the insurer had direct knowledge that the Trust Fund denied responsibility for payment of COLA reimbursement as a result of MIIA’s opt-out from the Trust Fund.

11. The insurer continued to file with the Trust Fund for COLA reimbursement for benefits paid between April 1, 2012 and March 31, 2016, submitting requests on January 24, 2014 in the amount of $28,783.69, on May 5, 2015 in the amount of $21,109.54 and on April 21, 2016 in the amount of $17,678.48.

12. The Secretary of the Commonwealth lists MIIA with a date of organization of April 12, 1982.

13. Counsel for the insurer filed a written demand against the Town on April 11, 2016 for reimbursement in the amount of $120,609.48 for COLA payments made from October 1, 2007 through March 31, 2016, excluding the period of April 1, 2008 through March 31, 2009, which was already reimbursed by the Trust Fund, on the ground that it was the Town’s obligation to reimburse the insurer pursuant to G.L. c. 152 § 65(2) because it had opted out of the Trust Fund. No other written demand from counsel for the insurer prior to April 11, 2016 was made against the Town.

14. On April 26, 2016 the insurer filed a claim against the Town pursuant to G.L. c. 152 § 65(2) for reimbursement of COLA benefits paid to the employee’s widow from October 1, 2007 through March 31, 2016 in the amount of $120,834.50, subsequently revised to $120,609.48 and continuing COLA benefits paid after March 31, 2016 plus interest under § 50.

15. A conference on the insurer’s claim for reimbursement from the Town was held on November 8, 2016. An order was entered on November 10, 2016 requiring the Town to pay reimbursement of COLA benefits under G.L. c. 152 § 34B from April 11, 2014 and continuing. The town reimbursed the insurer $2,242.60 which is the amount by which the COLA payments increased each year during that period. The insurer filed a timely appeal of the order.

16. At hearing the insurer is supplementing its claim for reimbursement to include payments made from April 1, 2016 through March 31, 2017 for a total of $18,276.62. Added to the initial reimbursement claim of $120,609.48, the total amount of the

...