Arrowood Indemnity Company v. Workers’ Compensation Trust Fund
(Massachusetts Supreme Judicial Court)
Docket Summary – Amicus Brief Filed by the New England Legal Foundation (NELF)
Issue:
Whether an insurer in “run-off” under the Workers’ Compensation Act, which administers existing workers’ compensation policies but no longer issues new policies or pays assessments into the Workers’ Compensation Trust Fund (WCTF), is entitled to reimbursement from the WCTF for second-injury benefit payments.
Background:
Second-injury benefits are workers’ compensation payments made to employees with preexisting physical impairments who suffer compensable work-related injuries. These benefits aim to offset the financial impact of preexisting conditions and encourage employers to hire and retain individuals with disabilities.
NELF’s Argument:
NELF argues that the Workers’ Compensation Act establishes a mandatory funding and reimbursement framework that entitles an insurer in run-off to reimbursement from the WCTF for second-injury benefit payments. Key points include:
- Mandatory Quid Pro Quo: Employers finance the WCTF through assessments collected by insurers, who remit the funds to the Commonwealth. In return, insurers are statutorily entitled to reimbursement for second-injury benefit payments.
- No Exceptions for Insurers in Run-Off: The Act does not exempt run-off insurers from reimbursement eligibility, as employers’ contributions to the WCTF continue through new insurance arrangements, ensuring consistent funding for the Trust Fund.
- Legislative Intent: The Legislature did not equate insurers in run-off with self-insured employers, who may opt out of the Trust Fund’s funding and reimbursement scheme. Unlike self-insured employers, insurers in run-off do not reduce the Trust Fund’s revenue.
- Purpose of the Act: Denying reimbursement would undermine the Act’s purpose of incentivizing employers to hire individuals with disabilities by increasing their financial burden and insurance premiums.
Conclusion:
NELF contends that the Department of Industrial Accidents Reviewing Board erred in denying reimbursement to the insurer in run-off. Upholding the Board’s decision would contravene the Act’s mandatory funding and reimbursement framework and its broader policy goals of supporting employment for individuals with disabilities.