Federal Court Asks Massachusetts Supreme Court for Guidance with Regard to How Two Insurance Companies Should Pay a Workers’ Compensation Claim Covered by Both

A Massachusetts worker was seriously injured while traveling on business. He filed a claim with the Massachusetts Department of Industrial Accidents, asking for workers’ compensation benefits.

The good news is that the worker’s employer had not one but two policies of insurance that covered the worker’s claim. The bad news is that not even the federal court of appeals was sure how to allocate payment of the worker’s claim between the respective insurance companies.

The Facts of the Underlying Case

In the case of Insurance Company of the State v. Great Northern Insurance Co., a man who was hurt on a business trip sought workers’ compensation benefits. His employer had purchased two separate insurance policies, either of which could have covered the claim. One of the policies was with the appellant, Insurance Company of the State (hereinafter “State”), and the other was with the appellee, Great Northern Insurance Co. (hereinafter “Great Northern”). The employer submitted a claim to State only, and State made payments under the policy. The employer did not initially notify State of its policy with Great Northern, but State eventually discovered the existence of the other policy.

State contacted Great Northern, asking for contribution towards the worker’s claim. Great Northern refused, arguing that the employer had intentionally filed a claim only with State and that Great Northern thus had no obligation to handle the claim.

Proceedings in Federal District Court

State filed a declaratory judgment action against Great Northern in the United States District of Massachusetts. State then sought summary judgment, urging that the Massachusetts doctrine of equitable contribution required Great Northern to pay half of the defense costs and indemnity payments related to the worker’s claim. Great Northern cross-moved for summary judgment on the basis that it had no obligation to cover the worker’s claim because the employer had not complied with its duty to provide Great Northern with notice of the claim.

The federal district court opted to grant summary judgment in favor of Great Northern. According to the trial court, the employer’s decision to tender the claim only to State defeated State’s later action for equitable contribution from Great Northern. State appealed.

On Appeal to the United States Court of Appeals for the First Circuit

After a lengthy discussion, the federal court of appeals opted to certify the following question to the Massachusetts Supreme Court:  “Where two workers’ compensation insurance policies provide coverage for the same loss, may an insured elect which of its insurers is to defend and indemnify the claim by intentionally tendering its defense to that insurer and not the other and thereby foreclose the insurer to which tender is made from obtaining contribution from the insurer to which no tender is made?”

It is not certain when the state high court will rule on the certified question.

To Speak to a Knowledgeable Massachusetts Attorney about Your Work-Related Accident

As this case shows, many complications can arise in what initially appears to be a routine case. To have an experienced workers’ compensation attorney review your case, call the Law Firm of John C. Manoog, III at 888-262-6664 for an appointment. The initial consultation is free, and most cases are accepted on a contingency fee basis, so legal fees are not required to be paid up front. With offices in Plymouth and Hyannis, we have been helping injured workers throughout the Cape Cod area for many years. We look forward to assisting you and your family.

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