Limitations Period for Reimbursement Claims Does Not Apply in Industrial Accident Case

By | August 20, 2020

Reimbursement claims made against the town of Adams, Mass., by the town’s workers’ compensation insurer are not subject to the two-year statute of limitations established in a Department of Industrial Accidents (DIA) regulation, a Massachusetts Appeals Court has ruled. This ruling upholds an earlier decision made by the DIA reviewing board.

The case comes after a town employee suffered a fatal industrial accident in 1976, and Royal Insurance Company began paying weekly benefits to his widow until at least 2016.

Beginning in 1986, Royal also paid supplemental cost of living adjustment (COLA) benefits to the widow and was initially reimbursed for the COLA payments by the Workers’ Compensation Trust Fund, according to the appeals court opinion document.

At some point before July 1, 1992, the town joined the Massachusetts Interlocal Insurance Association (MIIA), a licensed self-insurance group, and became responsible for paying new workers’ compensation claims. Effective July 1, 1992, the MIIA opted out of participation in the trust fund. Royal continued to receive reimbursement from the trust fund for the widow’s COLA benefits for various periods of time, including a period in 2008 to 2009, the opinion document explained.

In 2012, however, the trust fund notified Royal that because of the MIIA’s opt-out, it would not pay Royal’s pending or future claims for reimbursement of the COLA benefits. Royal continued to submit claims to the trust fund, but the claims were not paid.

As a result, Royal submitted COLA reimbursement claims directly to the town in 2016 for periods from 2007 to 2016 and continuing, excluding the 2008-2009 period that was already reimbursed. The town agreed that as a member of the MIIA, it was liable to Royal for reimbursement of the widow’s COLA benefits for the period following the MIIA’s opt-out, but the town argued that Royal’s claims were subject to the two-year limitations period established by a DIA regulation.

A DIA administrative judge initially agreed with the town and ordered the town to reimburse Royal for the COLA benefits only for two year period prior to Royal’s 2016 claim and continuing. Royal appealed to the board, which decided that the regulation containing the statute of limitations was not applicable in this case, ordering the town to pay all of Royal’s claims. The town then filed an appeal.

On appeal, the town claimed that the board erred in making this decision, but didn’t point to specific errors in the board’s reasoning, the appeals court opinion document stated.

“That reasoning appears to us to be well-grounded in the plain language of the statute and regulation,” Associate Justice Peter Sacks wrote in his opinion. “The town identifies no ambiguity in the language of either, let alone one that could support a ruling in the town’s favor.”

The town also argued that limitations periods serve valuable purposes as a policy matter, and many types of claims are subject to some limitations period. It contended that applying a limitations period in this case would protect municipalities.

However, the appeals court contended that even in the workers’ compensation context, not all claims are subject to limitations periods. Therefore, it affirmed the reviewing board’s decision that the DIA regulation’s statute of limitations does not apply in this context.

“The town’s policy concerns are most appropriately directed to the DIA, insofar as the regulation is concerned,” Sacks wrote in the opinion. “As for the statute, any inconsistencies are for the Legislature to remedy.”

About Elizabeth Blosfield

Elizabeth Blosfield is the East region editor for Insurance Journal. She can be reached at eblosfield@wellsmedia.com. More from Elizabeth Blosfield

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