Summary
In Brown overpayments were not engendered by receipt of a decision indicating that overpayments had been made pursuant to a conference order.
Summary of this case from Loudenslager v. Mass. College of Art, NoOpinion
BOARD No. 06980990
Filed: May 28, 1998
REVIEWING BOARD DECISION
(Judges Wilson, Fischel and Levine).
APPEARANCES
Theodore R. Brown, pro se.
Thomas G. Brophy, Esq., for the insurer.
The insurer contends on appeal that an administrative judge erred in finding that she had no authority to issue an order of recoupment where she found an overpayment of compensation had been made to the employee. Because we conclude that the judge did indeed have the authority to issue such an order, or not, in the exercise of her discretion, we recommit this case for further findings consistent with this opinion.
The employee was injured in the course of his employment as a maintenance man at Highland House on April 15, 1983. (Dec. 1 (taking judicial notice of a prior May 11, 1990 decision), 4.) He was paid § 34 benefits for temporary, total incapacity until their exhaustion on December 12, 1989, and § 34A permanent and total compensation thereafter until September 23, 1996, together with the § 50 interest that was due on both claims. (Dec. 4-5; see Dec. 4-9, discussing the tortuous course of the extensive litigation in this case.)
According to the insurer counsel, the employee's § 34A benefits were unilaterally suspended on September 23, 1996, pursuant to § 45, for failure to submit to examination by the insurer's physician, and had not been restored at the time of hearing. No claim seeking restoration of benefits was filed up to the date of the filing of the decision before us, nor was a claim made under § 8(2)(d) to join such an action with the insurer's claim for recoupment, which was the subject of the hearing and decision at issue. (Dec. 5, n. 3.)
Following a November 15, 1994 hearing decision, which denied the insurer's request for modification and the employee's claim for underpayment and interest, the insurer filed a complaint for an order of recoupment, alleging that during 1991 and 1992 it had mistakenly overpaid § 34A benefits and interest in the amount of $38,388.19. (Dec. 4-6.)
An administrative judge denied the insurer's request after a conference and the insurer filed a timely appeal. The case was then reassigned to another administrative judge when the first judge left the department. After a reaffirmation conference, the second judge also declined to issue an order of recoupment. Once again, the insurer appealed. (Dec. 3.)
After a de novo hearing conducted on March 26, 1997, the judge issued a decision on April 28, 1997 and found that the employee had been overpaid by $38,338.19. But she denied the claim for recoupment on the basis that she had no authority to do so under G.L.c. 152, § 11D. (Dec. 9, 12.) She explained:
The employee did not appear at either the conference or the hearing. The judge found that he waived the right. (Dec. 4.) The issue of waiver is not before us as the employee did not appeal.
Despite the fact that the insurer made voluntary, mistaken payments in excess of those to which the Employee was statutorily entitled at the time of the overpayments, it would appear that if the Insurer has a cause of action it must lie in another forum. After careful consideration, I find that the terms of the statute do not confer upon me the jurisdiction to order recoupment. (Dec. 11.)
It was error for the judge to find that there was no jurisdiction to order recoupment. General Laws c. 152, § 11D, confers discretionary authority to order recoupment of overpayments. Beal v. City of Newton, 9 Mass. Workers' Comp. Rep. 248, 251 (1995). Section 11D(3) first provides that where an insurer is in receipt of a decision indicating that overpayments have been made pursuant to a conference order, the insurer is entitled to unilaterally reduce weekly payments by no more than 30%. The next sentence provides that "where overpayments have been made that cannot be recovered in this manner, recoupment may be ordered pursuant to thefiling of a complaint pursuant to section 10 or by bringing an action against the employee in superior court." (emphasis added). Seesupra note 5 (text of § 11D (3). It is the latter sentence that applies in the case before us, as the 1991 and 1992 overpayments were made not by a conference order, but through error. The insurer correctly brought a complaint for recoupment under § 10 to the Department, which has jurisdiction over the matter. The insurer concedes, however, that while the judge has the authority to decide the issue, any order of recoupment is discretionary in that it "may" be ordered.Beal, supra at 251; Insurer's Brief at 10.
Sections (1) and (2) of § 11D apply where overpayment is the result is the result of an employee's earnings. Section (4) of § 11D applies where an overpayment occurs and there are two insurers involved. None of these sections apply to this case.
Section 11D(3), as added by St. 1991, c. 398, § 32, provides:
An insurer that has paid compensation pursuant to a conference order, shall, upon receipt of a decision of an administrative judge or a court of the commonwealth which indicates that overpayments have been made be entitled to recover such overpayments by unilateral reduction of weekly benefits, by no more than thirty percent per week, of any remaining compensation owed the employee. Where overpayments have been made that cannot be recovered in this manner, recoupment may be ordered pursuant to the filing of a complaint pursuant to section ten or by bringing an action against the employee in superior court (emphasis supplied).
In addition to this express statutory authority under § 11D(3), a judge has a parallel authority under her equitable powers to address the recoupment issue. See Utica Mut. Ins. Co. v. Liberty Mut. Ins. Co., 19 Mass. App. Ct. 262, 267 (1985) (court recognized that board "is not bound by strict legal precedent or legal technicalities, but rather, [is] governed by the practice in equity."). See also Duggan's Case, 315 Mass. 355, 357 (1944). We think that allowing a degree of flexibility in applying G.L.c. 152, § 11D(3) to varying circumstances arising in compensation cases comports with the Legislature's goal that the Act "should be given a broad interpretation" to supplant existing common law and those remedies available in tort. Neff v. Commissioner of the Dept. of Indus. Accidents, 421 Mass. 70, 73 (1985); Young v.Duncan, 218 Mass. 346, 349 (1914). And in Olivieri's Case, 42 Mass. App. Ct. 1115 (1997), the court summarily affirmed a reviewing board summary disposition of a decision in which an administrative judge exercised her equitable powers in an analogous recoupment case.
Indeed, throughout its history the reviewing board has found that a judge is authorized to address the recoupment issue. Prior to the 1985 amendments to G.L.c. 152, the board found it a reciprocal right of the insurer to a retroactive discontinuance [and a right to recoup overpayments made to employees] by a "fair inference" from the "clear legislative grant of authority" because of the employee's right to obtain retroactive benefits under then § 7 of the Act. D'Angeli v. McDonald's Restaurant, 1 Mass. Workers' Comp. Rep. 193, 195-196 (1987); L. Locke, Workmen's Compensation § 7.18 at 148-150 (Nason Wall Supp. 1995); L. Locke, Workmen's Compensation § 482 at 565 (2d. ed. 1981). When § 7, as then constituted, was repealed effective November 1, 1986 by the 1985 reform act, the board announced a right of recoupment in the constitutional right of due process, as there was no longer any explicit statutory authority. See Pedro v. Spaulding Co., Inc., 3 Mass. Workers' Comp. Rep. 76, 80-82 (1989). The reviewing board reasoned that the conference-hearing system would fail on due process grounds unless there was a recoupment provision for overpayments made pursuant to conference orders that issued without the full protections of a due process hearing. Id.; L. Locke, supra, § 7.18 at 149 (Nason Wall Supp. 1995); see 452 Code Mass. Regs. § 1.24. Subsequently, a recoupment provision that has its origins in the repealed 1972 version of § 7 was reintroduced in the 1991 amendments to G.L.c. 152 as the new § 11D at issue in this case. In our view, the language of § 11D(3), when considered together with the board's equitable powers and the historic right of recoupment, confers authority to an administrative judge to order recoupment.
General Laws c. 152, § 7, at that time read in pertinent part:
If the insurer and the injured employee . . . disagree as to the continuance of any weekly payments . . .the division, . . . shall . . . assign the case for a conference by a member . . . . Any party aggrieved by an order . . . may . . . request . . . a hearing . . . . Pending a decision rendered after such hearing, compensation shall be paid, modified or discontinued in accordance with the order filed under this section. Such an order shall for all purposes be enforceable . . . . until a decision has been rendered after such hearing. If . . . a decision is rendered that weekly payments made under the original order were not due, the state treasurer shall reimburse the insurer and the employee shall reimburse the state treasurer for the amounts paid the insurer.
St. 1971, c. 974, effective January 30, 1972.
The board stated in Pedro:
Although it failed to make express provision for recoupment, the legislature was careful to provide a catch-all provision covering extraordinary situations when it provided in § 10:
Upon the receipt of . . . a complaint from any party requesting resolution of any other issue arising under this chapter unless otherwise expressly provided, the division of administration shall notify the parties that it is in receipt of such claim or complaint (emphasis supplied).
To be sure, the reviewing board has expressed concern with interrelated issues of the insurer's ability to recoup overpayments made to a possibly judgment-proof employee and the potentially devastating financial effect on "an often economically strapped employee" of a cessation or reduction in compensation as a result of recoupment. L. Locke, supra, § 7.1 at 149 (Nason Wall Supp. 1995). These concerns were not compelling before 1986, as insurers recouped overpayments from the state treasurer. Id. at 151. In D'Angeli, supra at 196, the reviewing board cautioned that "[b]ecause the economic circumstances of the vast majority of injured workers is precarious, we anticipate that retroactive termination or modification [with its corresponding right to recoupment] is a power to be exercised with circumspection." In cases where the overpayments have been made without a conference order and, therefore, cannot be recovered unilaterally under § 11D (3), recoupment "may be ordered" by a judge in the exercise of her statutory and equitable powers after weighing the competing considerations. The fair inference from the plain language of the statute is that a judge may order none, some, or all of the overpayments as appropriate.
This approach comports with that followed by other states. For example, in Apex Lines, Inc. v. Lopez, 112 N.M. 309 (1991), the New Mexico Court of Appeals applied a test of "fundamental fairness" to the question of recoupment of an insurer's voluntary overpayment of benefits. It balanced several equitable considerations including the degree of culpability of the worker, the employer's negligence, the worker's ability to repay, the hardship the worker would suffer, and the amount of the overpayment. Id. At 311-312.
Accordingly, we recommit this case to the administrative judge to address the recoupment issue and exercise her discretion in that regard. See Beal, supra at 251.
So ordered.
_____________________ Sara Holmes Wilson Administrative Law Judge
_____________________ Carolynn N. Fischel Administrative Law Judge
_____________________ Frederick E. Levine Administrative Law Judge
SHW/amt
FILED: May 28, 1998