Can You Recover Against Both an Uninsured Employer and the Fund?

In a recent Massachusetts Appeals Court case, a man suffered a work injury in 2003. His company didn’t have workers’ compensation insurance because its insurer had cancelled the policy. The man filed a Superior Court action against the company under G. L. c. 152, §§ 66 and 67. The man also filed a claim with the Fund at the Department of Industrial Accidents. He received compensation and the insurer that had cancelled the policy and a subsequent insurer of his employer became parties to the case.

The case was settled in 2008 and the old insurer paid $20,000 and the new insurer paid $6500. That summer the Fund intervened in the worker’s lawsuit in order to assert a claim against the employer to obtain reimbursement for the payments it had made to the worker. In 2010, a trial was held of the worker’s claims. The Fund’s claims were still left to be determined.

The jury awarded the worker $70,702.64. This sum was reduced by almost $29,000 to offset certain payments made by the company to the worker after the accident. No additional offsets were permitted for payments made to the worker by the Fund and the insurers.

Three years later, the Fund prevailed in a summary judgment motion against the employer, obtaining an award of $27,593.02 for the sum paid by the Fund to the worker. The employer appealed, arguing that (1) it was immune because Peirce had accepted lump sum settlement payments from the insurers, (2) there should have been a credit against the jury verdict for the Fund’s payments to Peirce, and (3) the Fund should have had to recover from the amount the worker had recovered at trial.

The appellate court explained that to be immune from suit under the workers’ compensation law, an employer must be insured as required by law. The employer did no contest the validity of cancelling the insurance policy. Rather, it argued that the insurer’s payments to the worker should be viewed as being made on its own behalf and therefore it should have been protected from the worker’s lawsuit.

The appellate court reasoned that the record didn’t show that payments made by the insurers weren’t made on behalf of the employer. They were not made on a liability basis, nor resulted from claims brought against the insurers. Rather the worker could only get Fund benefits by getting a certification that the employer was not insured.

Further, the employer wasn’t entitled to credit. An injured employee can recover claims against both an uninsured employer and the Fund. The company is engaged in illegal conduct by failing to maintain worker’s compensation insurance. It is not then entitled to credits for amounts paid by the insurer. It is also not entitled to a reduction of prejudgment interest.

The employer argued that double recovery by its employee was unfair, but it did not raise it until the appeal at hand, so it was not considered by the court. The court did note that the Fund could choose its remedy for recovery.

If you are hurt on the job, you may be entitled to workers’ compensation benefits. An experienced Massachusetts workers’ compensation attorney can evaluate whether you have a sound claim and fight to make sure that your employer and its insurer follow the rules. Contact us by calling 800-367-0871 or using our online contact form.