Court: Massachusetts Appeals Court; September 25, 1995; Massachusetts; State Appellate Court
An appeal was made regarding a summary judgment favoring plaintiff CNA, which sought reimbursement for workers’ compensation benefits paid to defendant Semedo-Anacleto, who was injured at work. Semedo-Anacleto settled with the Massachusetts Insurers Insolvency Fund (Fund) and the insured of an insolvent insurer, which was Marriott. G. L. c. 175D prohibits reimbursement by contributors to the settlement amount, meaning Semedo-Anacleto would not be in a better position than if the tortfeasor’s insurer had remained solvent. Semedo-Anacleto was injured due to Marriott's negligence, receiving $80,451.27 in workers' compensation from CNA. After American Mutual Insurance Company, Marriott's insurer, became insolvent, the Fund assumed its obligations, offering a settlement of $395,000, which was accepted after negotiations. The Fund's contribution to the settlement was $219,548.73, with Semedo-Anacleto entering an agreement ensuring indemnification against any potential lien by CNA. The Superior Court judge approved the settlement but ruled on the assumption that indemnity from the Fund was valid, leading to the conclusion that CNA should not be precluded from reimbursement. The decision was reversed, aligning with the interpretation that G. L. c. 175D limits CNA's ability to enforce any lien against Semedo-Anacleto.
CNA's right to reimbursement from Semedo-Anacleto’s settlement proceeds hinges on the interpretation of G. L. c. 152, § 15, and G. L. c. 175D. G. L. c. 152, § 15 stipulates that any recovery from a third party benefits the workers’ compensation insurer, with excess amounts retained by the employee to prevent double recovery. In the context of Semedo-Anacleto’s negligence claim against Marriott, the Fund, due to Marriott’s insurer's insolvency, was obligated to pay up to $300,000 for covered claims, excluding workers’ compensation payments. Despite Marriott’s primary policy limit of $500,000, the Fund contributed the maximum allowed by statute.
CNA contends it can seek reimbursement from the settlement, arguing that the total settlement exceeds the compensation benefits paid. However, the comparison to Gaeta v. National Fire Ins. Co. is significant; in that case, reimbursement was permissible from a party other than the insured of the insolvent insurer. Here, only the Fund and Marriott contributed to the settlement, with Marriott being the insured of the insolvent insurer, thus precluding reimbursement under G. L. c. 175D.
This ruling aligns with the purposes of both G. L. c. 152, § 15 and G. L. c. 175D, maintaining the legislative intent to prevent double recovery for workers while ensuring that victims are indemnified. Semedo-Anacleto’s recovery of $395,000 would be adversely impacted if required to reimburse CNA, reducing her net settlement significantly below her initial bargaining position. Consequently, while CNA incurs a loss from this interpretation, it is consistent with public policy and legislative intent.
The judgment is reversed, and the case is remanded to the Superior Court for summary judgments in favor of the defendants. The issue of whether the indemnity agreement is null and void is not considered in this appeal. Concerns about the enforceability of the agreement are rendered moot because CNA is barred from seeking reimbursement from Semedo-Anacleto. There is disagreement about CNA’s knowledge of the settlement of Semedo-Anacleto’s tort claim, but CNA does not argue that this affects the summary judgment. The Superior Court noted that the settlement structure undermines the protections provided to the workers’ compensation insurer by G. L. c. 152, § 15. Citing Gaeta v. National Fire Ins. Co., if American Mutual had remained solvent and contributed to the settlement, the workers' compensation payments would have belonged to CNA. G. L. c. 175D allows CNA to recover from the defendants indemnified by the Fund. CNA's assertion that the $475,000 settlement figure is speculative is dismissed, as the severity of Semedo-Anacleto’s injuries and the undisputed fact indicate that any reimbursement to CNA would not be less than $475,000.
