Lumbermens Mutual Casualty Co. v. Workers' Compensation Trust Fund

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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.