Insolvency fund tells SJC it is "deemed insurer" and entitled to COLA reimbursements from trust fund

At an oral argument before the Massachusetts Supreme Judicial Court, the Massachusetts Insurers Insolvency Fund asked the court to rule that it is “deemed the insurer” under Chapter 175D and therefore entitled to reimbursement from the Workers’ Compensation Trust Fund for cost-of-living-adjustment payments required by G.L. c.152, §34B.

Kurt Mullin, counsel for the Massachusetts Insurers Insolvency Fund (MIF), told the court: “The legislature created the insolvency fund to pay covered claims when an insurer, covered by Chapter 175 D, its enabling act, is declared to be insolvent.” Mullin said Section 5 of Chapter 175D makes the insolvency fund “deemed the insurer with respect to its obligations on the covered claims, and to that extent has all the insolvent insurer’s rights, duties, and obligations.”

Mullin framed the dispute as two narrow questions on stipulated facts: whether the insolvency fund’s status as the insurer for purposes of paying COLA also gives it the statutory right to reimbursement under G.L. c.152, §34B and related provisions, and whether the Reviewing Board erred in denying reimbursement.

Assistant Attorney General Arjun Jacob, representing the Department of Industrial Accidents (DIA) and the Workers’ Compensation Trust Fund, told the court the Reviewing Board should be affirmed. Jacob said the workers’ compensation statutes entitle an insurer to reimbursement and that the insolvency fund is not an insurer as defined in chapter 152. “This starts and ends with the plain definition of the term insurer as far as the workers’ comp statute goes,” Jacob said.

Justices pressed both sides on practical and statutory consequences. Chief Justice Bridal and other justices asked whether the universe of claimants was limited and how many claimants remained; Mullin said the insolvency fund’s initial claim list was about “86 or so” claimants and, because the claimant pool is aging, that the number had declined “to the 40s” by the end of the stipulated facts. Mullin also said the relevant reimbursement provision applies only to a subset of COLA claims tied to older injury dates and increases in the average weekly wage above 5 percent, an effect the 1991 amendments limited.

Jacob and the DIA argued that treating MIF as an insurer for reimbursement purposes would have broader consequences beyond the COLA claims at issue and could affect other reimbursement regimes (for example, second-injury reimbursements under §37). The DIA also raised administrability concerns: if an entity that does not participate in assessment reporting pays benefits, loss experience may not be captured accurately for the trust fund’s assessment base, potentially skewing employer assessments.

The court also discussed the mechanics of past reimbursements: the Justices questioned whether, before insolvency, reimbursements were paid to the primary insurer (American Mutual) and whether MIF stepped into that role after American Mutual became insolvent. Counsel agreed the insolvency fund currently pays the COLA benefits that the insolvent insurer had paid and that the underlying dispute is whether the statutory right to reimbursement follows that obligation.

No decision was announced at the argument. The issues presented focus on statutory interpretation (how to read the definitions and cross-references in Chapter 175D and Chapter 152) and on practical effects for the trust fund’s administration.

Context and next steps: the transcript reflects that the case arises from long-running, diminishing cohorts of legacy workers’ compensation COLA claimants injured decades ago; parties and justices discussed the 1991 statutory amendments that altered the COLA calculation and the difficulty of tracking decades-old employers. The court’s ruling will resolve whether the insolvency fund may recover from the trust fund for the COLA payments it currently makes.