Use this button to switch between dark and light mode.

Massachusetts: Reinsurer, Not Trust Fund, Responsible for Payment of Benefits Following Employer’s Insolvency

May 04, 2018 (1 min read)

Where an insolvent self-insured employer held a $2.4 million surety bond with Safeco Insurance Company and also maintained a reinsurance policy with ACE American Insurance (ACE) that contained a retention provision in the amount of $400,000, continued payment of workers’ compensation benefits to the injured worker was the responsibility of ACE, following exhaustion of the surety bond, and not the responsibility of the Workers’ Compensation Trust Fund, held a Massachusetts appellate court. Mass. Ann. Laws ch. 152, § 65(2)(e) obligated the Trust Fund to pay benefits only when the employer was uninsured in violation of the statute, which the court construed to mean uninsured on “the date of injury.” The court stressed that here, it was undisputed that the employer qualified as a self-insurer on the date of the employee's injury, and therefore was not uninsured on that date, and in fact paid benefits until it went bankrupt some two years later. Therefore, the trust fund had no obligation under § 65(2)(e) to pay compensation benefits to the employee. 

Thomas A. Robinson, J.D., the Feature National Columnist for the LexisNexis Workers’ Compensation eNewsletter, is the co-author of Larson’s Workers’ Compensation Law (LexisNexis).

LexisNexis Online Subscribers: Citations below link to Lexis Advance. 

See Janocha’s Case, 2018 Mass. App. LEXIS 50 (May 2, 2018)

See generally Larson’s Workers’ Compensation Law, § 102.04.

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law