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13-P-1982 Appeals Court
LUMBERMENS MUTUAL CASUALTY COMPANY vs. WORKERS' COMPENSATION
TRUST FUND.
No. 13-P-1982
Suffolk. June 2, 2015. - September 3, 2015.
Present: Vuono, Grainger, & Blake, JJ.
Workers' Compensation Act, Reimbursement of insurer. Insurance,
Insolvency of insurer. Administrative Law, Primary
jurisdiction, Exhaustion of remedies, Agency's
interpretation of statute.
Civil action commenced in the Superior Court Department on
May 21, 2013.
The case was heard by Heidi E. Brieger, J.
W. Frederick Uehlein for the plaintiff.
Douglas S. Martland, Assistant Attorney General, for the
defendant.
GRAINGER, J. Lumbermens Mutual Casualty Company in
liquidation (Lumbermens) appeals from the Superior Court
judgment dismissing its claim against the Workers' Compensation
Trust Fund (trust fund). Lumbermens sought partial
reimbursement from the fund for workers' compensation payments
2
made pursuant to G. L. c. 152, §§ 37 and 65. A Superior Court
judge dismissed the claim under the doctrine of primary
jurisdiction. We affirm.
Background. We summarize the undisputed facts.
Lumbermens, an Illinois Corporation, was licensed to issue
workers' compensation insurance policies in Massachusetts.
Payments under these policies included so-called "second injury"
benefits awarded pursuant to G. L. c. 152, § 37.1 The trust fund
is authorized by that statute to provide partial reimbursement
to insurers for second injury payments. Between 2000 and 2008
Lumbermens and the trust fund entered into agreements in six
separate cases, referred to as Form 123 agreements,2 establishing
the reimbursement percentage to be applied to "second injury"
payments made by Lumbermens in each case.
In July, 2012, Lumbermens was placed into rehabilitation,
also referred to as a "run-off" period, whereby it could not
issue new policies but continued to administer existing
policies. The trust fund, which had made reimbursement payments
pursuant to the Form 123 agreements until Lumbermens entered the
run-off period, thereafter refused further payment. The trust
1
These may be generally described as injuries resulting
from aggravation of preexisting conditions. See Oakes's Case,
67 Mass. App. Ct. 81, 82-83 (2006), S.C., 451 Mass. 190 (2008).
2
The nomenclature refers to the form used by the Department
of Industrial Accidents to memorialize the § 37 reimbursement
agreements between the trust fund and the insurer.
3
fund asserted that Lumbermens was no longer entitled to
reimbursement once the run-off period commenced because it was
no longer an "insurer" able to issue policies, as that term is
defined in G. L. c. 152, § 1(7). Ten months later, in May,
2013, Lumbermens was placed in liquidation.
Approximately one year thereafter Lumbermens filed a
complaint for enforcement of the six Form 123 agreements in
Superior Court. A Superior Court judge dismissed the complaint,
finding that Lumbermen's claims were more properly heard before
the reviewing board (board) of the Department of Industrial
Accidents (DIA) under the primary jurisdiction doctrine.
Lumbermens filed a timely appeal.
During the pendency of the appeal the trust fund modified
the application of its § 37 reimbursement policy to insurers in
liquidation and reimbursed Lumbermens pursuant to the Form 123
agreements. In August, 2014, Lumbermens filed claims before the
board for interest and attorney's fees generated by the trust
fund's initial refusal, and ultimate delay, in providing
reimbursement.3
3
After the trust fund changed its § 37 reimbursement
policy, it secured a stay of Lumbermens's appeal to assess
whether Lumbermens's claims would be paid voluntarily. During
the stay, the trust fund reimbursed Lumbermens in full. The
trust fund requested that the stay continue until the parties
could resolve Lumbermens's related claims for interest and
attorney's fees then pending before the DIA. The stay initially
was continued for that purpose but subsequently was vacated when
4
Discussion. Mootness. The trust fund asserts that payment
of the amounts specified by the Form 123 agreements renders
Lumbermens's appeal moot, as the parties' remaining dispute over
interest and fees was voluntarily presented to the board by
Lumbermens itself. We are persuaded by Lumbermens's rejoinder
that this case presents a recognized exception to the mootness
doctrine, because the jurisdictional issue, fully briefed and
argued, can be rendered "capable of repetition, yet evading
review" by the simple expedient of payment in a case whenever
denial of reimbursement is challenged. Lockhart v. Attorney
Gen., 390 Mass. 780, 783 (1984), quoting from Wolf v.
Commissioner of Pub. Welfare, 367 Mass. 293, 298 (1975); Souza
v. Registry of Motor Vehicles, 462 Mass. 227, 228 n.3 (2012).
We consider Lumbermens's submission of its remaining claims to
the board simply to be recognition that further efforts in the
Superior Court would have been a futile expenditure of time and
resources. We note as well that the jurisdictional interplay
between the board and the Superior Court has been discussed by
the Supreme Judicial Court, see Weitzel v. Travelers Ins. Cos.,
the parties could not reach an agreement on reimbursement of
interest and fees. The parties thereafter filed their briefs in
this case.
5
417 Mass. 149 (1994),4 but that the specific provision here in
dispute has been addressed to date only by the Superior Court.5
Primary jurisdiction. We turn first to the language of
G. L. c. 152, § 19(1), inserted by St. 1987, c. 691, § 9:
"Except as otherwise provided by section seven, any
payment of compensation shall be by written agreement by
the parties and subject to the approval of the department.
Any other questions arising under this chapter may be so
settled by agreement. Said agreements shall for all
purposes be enforceable in the same manner as an order
under section twelve."
The general import of this paragraph is easily discerned.
Because the purpose of the workers' compensation scheme is to
protect injured workers, agreements that determine the
compensation to be paid to injured workers are subject to DIA
review and approval. Weitzel, supra at 153. However, "[a]ny
other questions," which would include the reimbursement
agreements underlying the dispute in this case, may be settled
by agreement without DIA approval. Moreover, these
noncompensation related agreements may be enforced under the
provisions of G. L. c. 152, § 12, which provide for submission
"to the superior court department of the trial court for the
county in which the injury occurred or for the county of
4
Weitzel, unlike this case, concerned a compensation
agreement; those are made explicitly subject to DIA approval by
the first sentence of G. L. c. 152, § 19(1).
5
Arrowood Indem. Co. vs. Workers' Compensation Trust Fund,
Suffolk Superior Court, No. SUCV-2015-00585 (March 24, 2015).
6
Suffolk." G. L. c. 152, § 12(1), inserted by St. 1985, c. 572,
§ 26. Otherwise stated, they are enforceable just as though
they had been the subject of an administrative order.6
It is thus made explicit by statute that the Superior Court
has jurisdiction to enforce a noncompensation related agreement
that was not subject to prior DIA approval. This determination
does not, however, end our inquiry. Specifically, we must
consider whether the judge erred in determining in this case
that the doctrine of primary jurisdiction justified requiring
the parties to submit this question to the board.
"The doctrine of primary jurisdiction . . . 'is concerned
with promoting proper relationships between the courts and
administrative agencies charged with particular regulatory
duties.'" Murphy v. Administrator of the Div. of Personnel
Admin., 377 Mass 217, 221 (1979), quoting from Nader v.
Allegheny Airlines, Inc., 426 U.S. 290, 303 (1976). The
doctrine applies to promote "'[u]niformity and consistency in
the regulation of business entrusted to a particular agency' or
'when the issue involves technical questions of fact uniquely
within the expertise and experience of an agency.'" Casey v.
6
We are unpersuaded by the trust fund's assertion, contrary
to the clear language of G. L. c. 152, § 19(1), that the DIA
must convert a noncompensation related agreement into an
administrative order or decision as a prerequisite for
enforcement in the Superior Court pursuant to G. L. c. 152,
§ 12(1).
7
Massachusetts Elec. Co., 392 Mass. 876, 879 (1984), quoting from
Nader, supra at 303-304.7
Comparison with the closely related doctrine of exhaustion
of administrative remedies is instructive. While both doctrines
are rooted in the principle of administrative expertise, they
differ in two respects. First, the exhaustion doctrine applies
to the failure to obtain final resolution at the agency level of
a dispute or an issue already committed to the administrative
process. Murphy, supra at 220. By contrast, as in this case,
"primary jurisdiction situations arise in cases where a
plaintiff, in the absence of pending administrative proceedings,
invokes the original jurisdiction of a court to decide the
merits of a controversy." Ibid.
The second distinction is found in the more definitive
nature of the exhaustion doctrine -- a court is without
jurisdiction to entertain an appeal from administrative
proceedings that are incomplete. This "preserve[s] the
integrity of the administrative process while sparing the
judiciary the burden of reviewing administrative proceedings in
7
We do not suggest that every noncompensation related
agreement will be appropriately remanded to the board to satisfy
the doctrine of primary jurisdiction. To the contrary, there
are circumstances involving "questions of law which have not
been committed to agency discretion," where such agreements are
properly resolved by a court in the first instance. Murphy,
supra at 221. Any other result would vitiate the difference in
wording between the first two sentences of § 19(1).
8
a piecemeal fashion." Id. at 220, citing Assuncao's Case, 372
Mass. 6, 8-9 (1977). Where, however, a plaintiff invokes the
jurisdiction of a court in the absence of administrative
proceedings, it becomes necessary to make a determination
(generally unnecessary to a matter already before an agency)
whether the nature of the controversy is "uniquely within the
expertise and experience of [the] agency" in question. Casey,
supra at 879, quoting from Nader, supra at 304.
We conclude that the dispute in this case satisfies that
test enunciated by Nader and found in Massachusetts cases such
as Murphy and Casey. The fund's determination that Lumbermens
no longer qualified as an insurer eligible for reimbursement
under the form 123 agreements was based on its interpretation of
G. L. c. 152, § 37. The DIA was established to apply its
"expertise to the statutory scheme which . . . it has the
primary responsibility of enforcing." Assuncao's Case, supra at
9. We accord "substantial deference to a reasonable
interpretation of a statute by the administrative agency charged
with its administration." Molly A. v. Commissioner of the Dept.
of Mental Retardation, 69 Mass. App. Ct. 267, 280 (2007),
quoting from Commerce Ins. Co. v. Commissioner of Ins., 447
Mass. 478, 481 (2006).
In this case the requirement of deference, hence the
invocation of primary jurisdiction, is reinforced by the
9
particulars of the interpretive dispute, involving reasonably
plausible arguments on each side. The trust fund relies on the
words "authorized so to do" in the definition of an "insurer" as
these words modify "any insurance company . . . which has
contracted with an employer to pay [workers'] compensation."
G. L. c. 152, § 1(7). The trust fund points out that, once the
run-off period commenced, Lumbermens was not "authorized" to
enter into any contracts with employers; hence it can no longer
be considered an insurer. Lumbermens, by contrast, relies on
the past tense of the phrase "which has contracted with an
employer" and argues that its previous contracts, made with
then-existing authority, serve to define it as an insurer
entitled to reimbursement under § 37 on a continuing basis.
Ibid. "Given . . . two equally plausible readings of the
statutory language [courts are required to] defer to [an
agency's] reasonable interpretation." Falmouth v. Civil Serv.
Commn., 447 Mass. 814, 821 (2006).
Conclusion. The Legislature has directed that, unlike
agreements related to the compensation paid to injured workers,
noncompensation agreements may be enforced in the Superior Court
without the mandatory prerequisite of DIA approval. G. L.
c. 152, § 19(1). The legislative direction, however, does not
relieve a court of its obligation to determine whether a
specific noncompensation issue is subject to the doctrine of
10
primary jurisdiction and the underlying policies that weigh in
favor of "[u]niformity and consistency in the regulation of
business entrusted to a particular agency." Casey, 392 Mass. at
879, quoting from Nader, 426 U.S. at 303-304. The judge
determined correctly that this case falls into that category.
Judgment affirmed.