Massachusetts Court Discusses Workers’ Compensation Trust Fund

The Massachusetts Workers’  Compensation system includes two distinct statutory safety nets designed to ensure benefit continuity for injured workers: the Massachusetts Insurers Insolvency Fund (Insolvency Fund) and the Workers’ Compensation Trust Fund (Trust Fund). In cases involving uninsured employers and insolvent insurers, disputes may arise over which fund must assume responsibility for ongoing benefit payments. A recent decision by a Massachusetts court addresses this complex statutory overlap and clarifies the obligations of the Trust Fund when an insurer is declared insolvent after benefits have already been paid. If you were hurt while working, it is important to understand your rights, and you should talk to a Massachusetts workers’ compensation attorney.

Factual Background and Procedural History

It is reported that the plaintiff, a statutory insolvency fund responsible for claims arising from insolvent insurers, made benefit payments to injured workers whose employers were later revealed to be uninsured at the time of injury. These payments were made after the plaintiff stepped in following insurer insolvencies and sought reimbursement from the Workers’ Compensation Trust Fund under G.L. c. 152, § 65(2)(e), which authorizes the Fund to reimburse insurers for claims involving uninsured employers.

It is alleged that the Trust Fund denied the reimbursement requests on the basis that the Insolvency Fund does not meet the statutory definition of an “insurer” entitled to recover under § 65(2)(e). The Trust Fund contended that the Legislature intended the reimbursement provision to apply only to active insurers that voluntarily pay benefits, not to a fund acting in the capacity of a failed insurer’s successor. The plaintiff filed suit in the Superior Court, seeking declaratory relief to compel reimbursement. The trial court ruled in favor of the Trust Fund, and the plaintiff appealed.

Appellate Review and Legal Analysis

The Appeals Court affirmed the Superior Court’s decision, concluding that the plaintiff Insolvency Fund is not entitled to reimbursement from the Workers’ Compensation Trust Fund under the current statutory scheme. The Court’s analysis centered on the interpretation of G.L. c. 152, § 65(2)(e), which authorizes reimbursement for an “insurer” that makes payments on behalf of an uninsured employer. The Court held that the term “insurer” as used in the statute refers to an entity licensed to write workers’ compensation policies in Massachusetts—not to the statutory insolvency fund, which functions as a guarantor of last resort.

The Court reasoned that the Legislature could have expressly included the Insolvency Fund within the definition of “insurer” for purposes of § 65(2)(e) but chose not to do so. The absence of such language, combined with the distinct statutory functions of the two funds, supported the conclusion that reimbursement was not authorized. The Trust Fund exists to protect workers whose employers fail to carry insurance, while the Insolvency Fund exists to pay claims when insurers fail. According to the Court, the Legislature did not intend to allow the Insolvency Fund to use the Trust Fund as a secondary reimbursement source.

Furthermore, the Court rejected the plaintiff’s argument that it should be deemed a stand-in for the insolvent insurer and therefore entitled to the same reimbursement rights. The Court emphasized that statutory funds do not stand in each other’s shoes unless explicitly authorized by statute. The Insolvency Fund’s obligation to pay benefits does not create a corresponding right to seek reimbursement absent legislative authority. The Court found that the plaintiff’s equitable arguments—based on fairness and shared public purpose—could not override the plain language of the statute.

Lastly, the Court noted the administrative and financial implications of allowing such reimbursement. Expanding § 65(2)(e) to include the Insolvency Fund could significantly increase the liabilities of the Workers’ Compensation Trust Fund and disrupt the carefully balanced funding mechanisms that support both entities. The Appeals Court deferred to the Legislature to make any such policy determination through statutory amendment.

Talk to a Trusted Massachusetts Workers’ Compensation Attorney

If you were hurt while on the job, it is important to understand your rights and how other parties may impact your workers’ compensation claim, and you should talk to a lawyer. Attorney James K. Meehan is a trusted Massachusetts workers’ compensation attorney who can provide you with knowledgeable guidance and help you protect your interests. Contact the Law Office of James K. Meehan at 508-822-6600 or reach out through our online form to schedule a confidential consultation.