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Advocating for Fairness: NELF Takes Stand in Workers’ Compensation Trust Fund Case
Arrowood Indemnity Company v. Workers’ Compensation Trust Fund
(Massachusetts Supreme Judicial Court)
Boston, MA (1/7/2025) – The New England Legal Foundation (NELF) has filed an amicus brief in the Massachusetts Supreme Judicial Court in the case of Arrowood Indemnity Company v. Workers’ Compensation Trust Fund. The brief responds to the Court’s call for amicus input on a pivotal question:
Whether, under the Workers’ Compensation Act, an insolvent insurer in “run-off”—continuing to administer existing workers’ compensation policies but no longer issuing new policies or paying into the Workers’ Compensation Trust Fund (WCTF)—is entitled to reimbursement from the WCTF for second-injury benefit payments.
Second-injury benefits are workers’ compensation payments provided to employees with preexisting physical impairments who suffer compensable work-related injuries. These benefits are designed to mitigate the financial burden of exacerbated injuries and encourage employers to hire and retain employees with disabilities.
In its brief, NELF argues that the Workers’ Compensation Act unambiguously entitles insurers in run-off to reimbursement from the WCTF for second-injury benefits paid under existing policies. The Act mandates a funding and reimbursement structure in which private employers contribute to the WCTF through their insurers. In return, the Commonwealth reimburses insurers for second-injury benefit payments, reducing the financial burden on employers and lowering insurance premiums.
NELF contends that the Act does not exempt insurers in run-off from this scheme, nor does the Legislature have any reason to deny their reimbursement. Employers remain responsible for funding the WCTF regardless of their insurer’s operational status. When an insurer enters run-off, employers simply purchase coverage from a new insurer, ensuring that WCTF contributions continue uninterrupted.
“The Workers’ Compensation Act establishes a clear quid pro quo that protects employers, insurers, and the Trust Fund,” said Natalie Logan, NELF President. “Denying reimbursement to insurers in run-off undermines the Act’s purpose to incentivize the hiring of individuals with physical impairments and disrupts its carefully crafted funding mechanism.”
NELF also asserts that the Department of Industrial Accidents Reviewing Board erred in denying reimbursement to the insurer in run-off. Upholding this decision would conflict with the Act’s explicit requirements and undermine its goal of encouraging employment opportunities for individuals with disabilities.
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About the New England Legal Foundation: Founded in 1977, the New England Legal Foundation (NELF – www.newenglandlegal.org) is the leading non-partisan, non-profit public interest law firm in the region dedicated to economic liberty. NELF’s ongoing mission is to champion free enterprise, property rights, limited government based on rule of law, and inclusive economic growth. We believe that free enterprise is a foundational value of a democratic society and the best opportunity for people to lift themselves to prosperity.