Heard: November 2, 2017.
from a decision of the Industrial Accident Reviewing Board.
D. Hacker, of the District of Columbia (John J. Canniff, III,
also present) for ACE American Insurance Company.
Douglas S. Martland, Assistant Attorney General, for
Workers' Compensation Trust Fund.
H. Barry, Jr., for the employee.
J. Eisenhaure, for Self-Insurance Institute of America, Inc.,
amicus curiae, submitted a brief.
Present: Neyman, Henry, & Lemire, JJ.
an appeal by ACE American Insurance Company (ACE), from a
decision of the reviewing board (board) of the Department of
Industrial Accidents (department). The board held that ACE,
rather than the Workers' Compensation Trust Fund (trust
fund), was responsible for the continued payment of
compensation benefits to Robert Janocha (employee) because G.
L. c. 152, § 25A(2) (c), of the Workers'
Compensation Act (act), G. L. c. 152, as amended, requires
ACE as a reinsurer to pay benefits in the event of exhaustion
of a self-insurer's surety bond. We affirm.
and procedural background.
parties agree that there are no material facts in dispute.
The employee worked for Maiden Mills Industries, Inc.
(employer), until the date of his workplace injury. The
employee's injury resulted in permanent and total
incapacity for work, and the employee is entitled to benefits
under the act.
date of the employee's injury, the employer was an
approved self-insurer pursuant to G. L. c. 152, §
25A(2). In accordance with § 25A(2)(b), the employer
also held a surety bond in the amount of $2.4
million with Safeco Insurance Company of America
(Safeco or bond holder). In addition, the employer maintained
a reinsurance policy with ACE in accordance with §
25A(2) (c) . The reinsurance policy between the
employer and ACE contained a retention provision in the
amount of $400, 000.All terms of the bond and the reinsurance
policy were approved by the department in accordance with
§ 25A(2) during initial approval and after every yearly
the employee's date of injury until the employer's
bankruptcy in 2007, the employer as the self-insurer issued
direct benefit payments to the employee. Following the
employer's insolvency, the bond holder issued direct
benefit payments to the employee. In 2012, the $2.4 million
bond became exhausted and payments to the employee
ceased. On the date of exhaustion, and on the date
of oral argument, the employee had not reached the $400, 000
retention floor contained within the reinsurance contract.
the exhaustion of the bond, the employee filed a claim with
the department against ACE for resumption of
benefits.After a full evidentiary hearing, the
administrative judge ruled that once the employer's bond
was exhausted, the employer became "uninsured in
violation of [the statute]" under the provisions of G.
L. c. 152, § 65(2)(e), as amended by St. 1991, c. 398,
§ 85. The administrative judge concluded that this
interpretation of the act made the trust fund the
"responsible party for providing workers'
compensation benefits" and that ACE was not required to
make payments until the employee's benefits reached the
$400, 000 retention amount. The trust fund appealed to the
board reversed the administrative judge, interpreting §
65(2) (e) to apply only where an employer is
uninsured "on the date ... of injury." Accordingly,
the board ordered ACE to make direct payments to the employee
upon the exhaustion of the bond, and to reimburse the trust
fund for any payments it had made that were not covered by
reimbursement from Safeco. The board also ruled that §
25A(2)(c0 required ACE to pay the employee's benefits
because in the event of bond exhaustion, the reinsurer must
act as a "further guarantee of a
self-insurer's ability to pay the [employee's]
benefits" (emphasis added).Relying on Insurance Co.
of the State of Pa. v. Great Northern Ins.
Co., 473 Mass. 745, 750 (2016) (Great
Northern), the board also voided the $400, 000 retention
provision as a matter of law because it is in direct conflict
with ACE's "statutory obligation to assure that
benefits are received by the employee." ACE appealed the
board's decision to this court pursuant to G. L. c. 152,
of review. We review the board's decision in
accordance with the standards set forth in G. L. c. 30A,
§ 14 (7) (a)-(d), (f), and (g) . See Scheffler's
Case, 419 Mass. 251, 257-258 (1994). "The board, as
the agency charged with administering the workers'
compensation law, is entitled to substantial deference in its
reasonable interpretation of the statute."
Sikorski's Case, 455 Mass. 477, 480 (2009).
However, this principle is one of deference, not abdication,
and "ultimately the ...