SJC: Pain and Suffering Damages Beyond the Reach of Workers’ Compensation Lien

By Reza Breakstone

On February 12, 2016, the Supreme Judicial Court issued its ruling in the cases of DiCarlo v. Suffolk Construction Co., Inc. (SJC-11854); Martin v. Angelini Plastering, Inc. (SJC-11853).

Introduction

In Massachusetts, if an employee is injured on the job, and chooses to accept workers’ compensation, that employee is then foreclosed from suing their employer for those injuries. If the employee wishes to bring a claim against their employer, they may opt out of the workers’ compensation system at the time of their hire. An employee may bring a claim and recover damages, however, from a liable thirty party while collecting workers’ compensation from the employer. In this instance, the workers’ compensation insurance company is entitled to a lien for their payments to the employee once there is a recovery from the liable third party. The question in DiCarlo was: how much of the recovery from a liable third party can be subjected to the workers’ compensation lien? Just lost wages and medical expenses? Or pain and suffering, as well?

DiCarlo and Martin – Similar Cases with Different Superior Court Outcomes

The SJC examined two instances where employees were injured on the job, received workers’ compensation benefits, and recovered damages from a third party including damages for pain and suffering. DiCarlo and Martin received workers’ compensation from their respective employers who happened to be insured by the same workers’ compensation insurance company. They then both entered into settlement agreements with third parties for their injuries. In the case of DiCarlo, the Superior Court judge rejected the settlement agreement because it exempted the pain and suffering portion of the damage from the employer’s lien. In Martin, the Superior Court accepted the same type of settlement agreement that exempted the third party recovery for pain and suffering from the employer’s workers’ compensation lien. Both cases were appealed to the Appeals Court.

The Appeals Court Exempted Pain and Suffering from the Employer’s Liens

In reaching its decision, the Appeals Court relied on Curry v. Great American Ins. Co., 80 Mass. App. Ct. 592, 595 (2011), which held that an insurer’s lien does not attach to damages paid for pain and suffering because workers’ compensation does not cover those harms. Thus, the Appeals Court determined that the employees’ awards for pain and suffering were exempt from the insurer’s liens.

The Supreme Judicial Court’s Decision: Workers’ Compensation Doesn’t Pay for Pain and Suffering; Therefore, Cannot Seek “Reimbursement” from Third Party Pain and Suffering Recoveries

The nub of the issue for the SJC’s consideration was whether the term “injury” in the statute included pain and suffering. General Laws c. 152, § 15 generally provides that, where an injured employee collects workers’ compensation benefits and then recovers damages for the same injury from a third-party tortfeasor, “[t]he sum recovered [from the third party] shall be for the benefit of the [workers’ compensation] insurer.” The “sum” to which the insurer is entitled is described, in the next sentence, as “the gross sum received in payment for the injury.” G. L. c. 152, § 15.

The SJC specifically examined this: what is the meaning of the phrase “gross sum received in payment for the injury,” and, in particular, the meaning of the word “injury.” Did it mean only those injuries for which workers’ compensation benefits are payable, thereby excluding pain and suffering from the reach of an insurer’s lien? Or is the meaning of “injury,” all damages awarded the employee?

The SJC concluded that both statutory language and legislative intent supported the meaning of “injury” as those injuries which workers’ compensation benefits are payable: lost wages and medical expenses. Thus damages for pain and suffering are not within the insurer’s lien. In its holding, the Court argued that an insurer “cannot be reimbursed for something that it did not pay.” The insurers in DiCarlo and Martin did not compensate the employees for their pain and suffering, and so they could not seek “reimbursement” from damages paid for those harms.

In other words, the goal of § 15 was not to return to the insurer the full dollar amount paid to an employee, but, rather, to avoid having an employee collect both benefits and damages for the same harm. “Here, the employees recovered separately for two separate harms: from the insurer, workers’ compensation benefits covering lost wages and medical expenses; and from the third-party defendants, damages for pain and suffering.”

Conclusion – A Sea-Change Opinion

The SJC has now unequivocally clarified the relationship of workers’ compensation benefits and third party recoveries. No longer can a tort recovery from a third party be subsumed in the workers’ compensation lien wholly. Where there has been an apportionment of damages for pain and suffering, an employee may now retain that portion of the payment for his or her benefit. 

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