O’Connor Constructors, Inc. v. HVAC Compensation Corporation, et al. (Lawyers Weekly No. 12-099-17)
1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION NO. 15-0205-BLS1 O’CONNOR CONSTRUCTORS, INC. vs. HVAC COMPENSATION CORPORATION and others1 MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT In this action, the plaintiff, O’Connor Constructors, Inc. (O’Connor), seeks to recover sums paid by the defendant HVAC Compensation Corporation (HVAC), a non-profit corporation established as a workers compensation self-insurance group or SIG, to purchase a loss portfolio transfer (LPT) insurance policy. O’Connor withdrew from HVAC at the end of 2009. It asserts that a substantial portion of the surplus that HVAC used to purchase the LPT policy should have been distributed to it as dividend. O’Connor also seeks to set aside an assessment that HVAC issued against O’Connor for additional funds to cover a liquidity deficit created by the purchase of the LPT policy. The additional defendants are the trustee/directors of HVAC (hereafter referred to as the Directors), each of whom are representatives of the companies that comprise the SIG, as well as the member companies themselves. While O’Connor’s complaint initially pled seven counts, four were previously dismissed. Three counts remain: breach of contract (Count I), breach of fiduciary duty (Count VI), and violation of G.L. c. 93A (Count VII). The 1 (i) Richardd Donohoe, William J. Lynch, Kevin R. Gill, James Morgan, Paul M. Level, Jr., and Shane B. Hamel, each sued individually and as Trustee/Director of HVAC, and (ii) Harrington Bros. Corporation, William V. Lynch Co., Inc., McCusker-Gill co., Inc., Worcester Air Conditioning, LLC, Le Bel, Inc., and Hamel & McAlister, Inc. 2 case is now before the court on the defendants’ motion for summary judgment. For the following reasons, the motion is DENIED as to Counts I and VI and ALLOWED as to Count VII. FACTS The following facts are either undisputed or viewed in the light most favorable to O’Connor, the non-moving party. In 1992, HVAC was organized to operate as a workers’ compensation SIG pursuant to G.L. c. 152, §§25E – 25U. Its members were companies principally engaged in the heating, ventilation, and air conditioning trades in Massachusetts. While a SIG is permitted to organize itself in various forms, HVAC was organized as a not-for-profit corporation under G.L. c. 180, § 4(n). Each HVAC member is required to enter into an Application and Indemnity Agreement (Indemnity Agreement) and is bound by HVAC’s by laws. Material to this case is a provision in G.L. c. 180, § 3 which provides that not-for-profit corporations, like HVAC, may not through their articles of organization or bylaws eliminate the personal liability of its directors “ (i) for any breach of the . . . director’s duty of loyalty to the corporation or its members, (ii) for […]
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Lumbermens Mutual Casualty Company v. Workers’ Compensation Trust Fund (Lawyers Weekly No. 11-128-15)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 13-P-1982 Appeals Court LUMBERMENS MUTUAL CASUALTY COMPANY vs. WORKERS’ COMPENSATION TRUST FUND. No. 13-P-1982 Suffolk. June 2, 2015. – September 3, 2015. Present: Vuono, Grainger, & Blake, JJ. Workers’ Compensation Act, Reimbursement of insurer. Insurance, Insolvency of insurer. Administrative Law, Primary jurisdiction, Exhaustion of remedies, Agency’s interpretation of statute. Civil action commenced in the Superior Court Department on May 21, 2013. The case was heard by Heidi E. Brieger, J. W. Frederick Uehlein for the plaintiff. Douglas S. Martland, Assistant Attorney General, for the defendant. GRAINGER, J. Lumbermens Mutual Casualty Company in liquidation (Lumbermens) appeals from the Superior Court judgment dismissing its claim against the Workers’ Compensation Trust Fund (trust fund). Lumbermens sought partial reimbursement from the fund for workers’ compensation payments made pursuant to G. L. c. 152, §§ 37 and 65. A Superior Court judge dismissed the claim under the doctrine of primary jurisdiction. We affirm. Background. We summarize the undisputed facts. Lumbermens, an Illinois Corporation, was licensed to issue workers’ compensation insurance policies in Massachusetts. Payments under these policies included so-called “second injury” benefits awarded pursuant to G. L. c. 152, § 37.[1] The trust fund is authorized by that statute to provide partial reimbursement to insurers for second injury payments. Between 2000 and 2008 Lumbermens and the trust fund entered into agreements in six separate cases, referred to as Form 123 agreements,[2] establishing the reimbursement percentage to be applied to “second injury” payments made by Lumbermens in each case. In July, 2012, Lumbermens was placed into rehabilitation, also referred to as a “run-off” period, whereby it could not issue new policies but continued to administer existing policies. The trust fund, which had made reimbursement payments pursuant to the Form 123 agreements until Lumbermens entered the run-off period, thereafter refused further payment. The trust fund asserted that Lumbermens was no longer entitled to reimbursement once the run-off period commenced because it was no longer an “insurer” able to issue policies, as that term is defined in G. L. c. 152, § 1(7). Ten months later, in May, 2013, Lumbermens was placed in liquidation. Approximately one year thereafter Lumbermens filed a complaint for enforcement of the six Form 123 agreements in Superior Court. A Superior Court judge dismissed the complaint, finding that Lumbermen’s claims were more properly heard before the reviewing board (board) of the Department of Industrial Accidents (DIA) under the […]
The Home Insurance Company v. Workers’ Compensation Trust Fund (Lawyers Weekly No. 11-127-15)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us 14-P-1356 Appeals Court THE HOME INSURANCE COMPANY vs. WORKERS’ COMPENSATION TRUST FUND. No. 14-P-1356 Suffolk. June 2, 2015. – September 3, 2015. Present: Vuono, Grainger, Blake, JJ. Workers’ Compensation Act, Reimbursement of insurer, Cost of living allowance. Insurance, Insolvency of insurer. Practice, Civil, Standing. Administrative Law, Agency’s interpretation of statute. Statute, Construction. Appeal from a decision of the Industrial Accident Reviewing Board. Eric A. Smith (Donald E. Wallace with him) for the plaintiff. Douglas S. Martland, Assistant Attorney General, for the defendant. W. Frederick Uehlein & Dorothy M. Linsner, for Lumbermens Mutual Casualty Company, amicus curiae, submitted a brief. Joseph C. Tanski, Gregory P. Deschenes, & Kurt M. Mullen, for Massachusetts Insurers Insolvency Fund, amicus curiae, submitted a brief. GRAINGER, J. We are called upon to analyze certain rights and obligations resulting from the liquidation of a New Hampshire insurance company that issued workers’ compensation policies in Massachusetts. At issue in this appeal is the company’s entitlement pursuant to G. L. c. 152, § 65(2), to reimbursement for cost of living adjustments (COLA, COLA increases), as prescribed by G. L. c. 152, § 34B, to eleven individuals receiving workers’ compensation benefits. Both an administrative judge (judge) and the reviewing board (board) of the Department of Industrial Accidents (DIA) determined, albeit on different rationales, that the company was not entitled to reimbursement. Background. The undisputed facts, excerpted below, are recounted in detail in the board’s comprehensive decision. COLA payments as part of the workers’ compensation scheme. Persons receiving workers’ compensation benefits in Massachusetts are entitled to receive annual COLA increases to reflect changes in the cost of living. See G. L. c. 152, § 34B. These COLA increases are funded, then subject to reimbursement, as follows: Revenues to fund the defendant Workers’ Compensation Trust Fund (trust fund) are raised by an annual assessment[1] on employers pursuant to G. L. c. 152, § 65. Under normal circumstances (i.e., involving solvent insurers), the yearly assessments are collected from employers by their insurers such as the plaintiff Home Insurance Company (Home), who transmit them to the trust fund. The insurers then pay the COLA increases together with other monthly benefits to injured workers. See G. L. c. 152, § 65(2). This, in turn, entitles the insurers to reimbursement from the trust fund for the COLA payments on a quarterly basis. Ibid. Home’s […]