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New England Survey Systems, Inc. v. Department of Industrial Accidents

Appeals Court of Massachusetts, Suffolk

June 30, 2016

New England Survey Systems, Inc.
v.
Department of Industrial Accidents

         Argued December 8, 2015

          Civil action commenced in the Superior Court Department on April 26, 2013.

         The case was heard by Frances A. McIntyre, J., on a motion for judgment on the pleadings.

          Judgment affirmed.

          Timothy K. Cutler for the plaintiff.

          Douglas S. Martland, Assistant Attorney General, for the defendant.

         Present: Grainger, Hanlon, & Agnes, JJ.

          OPINION

          [53 N.E.3d 676] Agnes, J.

          The Workers' Compensation Act, G. L. c. 152 (act), provides that whenever the Commissioner of the Department of Industrial Accidents (the department) determines that an employer has not provided the insurance required by law,[1] " a stop work order shall be served on said employer, requiring the

Page 632

cessation of all business operations at the place of employment or job site." G. L. c. 152, § 25C(1), as amended through St. 1989, c. 341, § 82. The stop work order takes effect upon service on the employer, and remains in effect until the employer satisfies the commissioner [53 N.E.3d 677] that it has obtained the required insurance and paid the $100 per day civil penalty for each day it was in violation of the law, beginning with the date of service of the order. Ibid. Section 25C also provides for additional civil and criminal penalties against employers who do not obtain the insurance required by law. See G. L. c. 152, § 25C(5)-(6), (9)-(11). Subsection (10) of § 25C sets forth one of the additional civil penalties that an employer who fails to obtain the insurance required by the act may face. It states:

" In addition to being subject to the civil penalties herein provided, an employer who fails to provide for insurance or self insurance as required by this chapter or knowingly misclassifies employees, to avoid higher premium rates, will be immediately debarred from bidding or participating in any state or municipal funded contracts for a period of three years and shall when applicable be subject to penalties provided for in section fourteen" (emphasis supplied).[2]

G. L. c. 152, § 25C(10). The issue before us, which is one of first impression, is whether the phrase " to avoid higher premium rates," as it appears in subsection (10), modifies the two preceding clauses (" who fails to provide for insurance or self insurance as required by this chapter or knowingly misclassifies employees" ) or modifies only the immediately preceding clause (" knowingly misclassifies employees" ).

         The plaintiff, New England Survey Systems, Inc. (NESS), contends that the placement of the comma after the word " employees" means that the phrase " to avoid higher premium rates," modifies the two preceding clauses with the effect that an employer like NESS -- against whom a stop work order issued due to its failure to have the insurance required by law, but who was not shown to have acted with the intent to avoid higher insurance premiums -- is not subject to automatic debarment. In essence, NESS claims that prior to implementing the penalty of debarment, the department was required to prove that NESS's admitted

Page 633

failure to provide insurance was motivated by a desire to avoid higher premium rates. The department, on the other hand, asserts that under § 25C(10), debarment occurs whenever a stop work order issues against an employer who failed to obtain or provide the required insurance, regardless of the employer's intent or motivation. While we agree with NESS that the penalty of debarment for three years is a severe sanction, we do not agree with its reading of subsection (10). Instead, we conclude that the words used by the Legislature express its intention that the debarment provision contained in subsection (10) applies when an employer fails to obtain or provide workers' compensation insurance, without the need to establish that this was the result of the employer's intent to avoid higher insurance premiums. Accordingly, we affirm the ruling made by the Superior Court judge which, in turn, is consistent with the interpretation followed by the department.[3]

          [53 N.E.3d 678] 1. Background.

          a. Stop work order and debarment.

          On December 28, 2012, an investigator with the department was working in the Brookline area and came upon NESS's place of business. The investigator queried the Workers' Compensation Rating and Inspection Bureau's computer system and discovered that NESS had a canceled workers' compensation insurance policy. The investigator issued NESS a stop work order pursuant to G. L. c. 152, § 25C. NESS's president, John Roberge, who maintained he was unaware that the policy had lapsed, contacted its insurance provider that day, and the provider reinstated coverage immediately.[4] The department nevertheless maintained that debarment

Page 634

was automatic and nondiscretionary under § 25C(10).

         b. Appeal history.

         NESS filed an administrative appeal from the debarment order.[5] The department held an appeal hearing on January 16, 2013, and issued a written decision upholding the stop work order and debarment penalty on March 29, 2013. NESS filed a further appeal in the Superior Court under G. L. c. 30A, § 14. NESS moved for judgment on the pleadings, and the department filed an opposition. On July 15, 2014, after hearing, a Superior Court judge issued a memorandum and order affirming the department's decision. Judgment entered for the department on October 20, 2014, and this appeal followed.

         2. Discussion.

         a. Applicable principles ...


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