BRUCE SPANIOL'S CASE. [Note 1]

WOLOHOJIAN, J. At issue is whether the AIM Mutual Insurance Company (AIM) was entitled to use the payment-reduction provision of G. L. c. 152, § 13A(10), which (in certain circumstances) permits a workers' compensation insurer who makes prompt payment of benefits to an injured employee to reduce the amount payable by the amount it statutorily owes to the employee's attorney. Relying on this provision, AIM applied the reduction to the amount it owed to an injured employee under a settlement agreement. Because the settlement did not fall within the scope of the payment-reduction provision, we conclude that AIM was not entitled to the reduction.

Background. On November 19, 2007, the parties appeared for a hearing before the Department of Industrial Accidents (DIA) with respect to the employee's claim for benefits for permanent

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loss of function under G. L. c. 152, § 36. Instead of pursuing the hearing, however, the employee and AIM settled their differences and entered into a written settlement agreement that day.

That agreement was reflected on DIA Form 113, captioned "Agreement to Pay Compensation." The relevant portion of the form, as filled out by the parties, provided as follows:

"THE PARTIES AGREE TO COMPENSATION IN ACCORDANCE TO THE FOLLOWING SCHEDULE: . . .

"G. SPECIFIC PERMANENT INJURIES/SECTION 36. . . .

"S36(G): S[tate] A[verage] W[eekly] W[age] (884.46) x 39 x .10 = $3,449.39 For right knee. Section 36 r[igh]t shoulder $1,500.00

"3 x S[tate] A[verage] W[eekly] W[age] (884.46) = $2,653.38 For limp.

"Total S36 benefit compensation = $7,602.77

"H. Other (specify)

"Attorney fee $2,500, and reasonable costs."

The agreement was signed by the insurer, the employee, and the employee's attorney. The agreement was also approved and signed by a representative of the DIA, as required by statute. See G. L. c. 152, § 19(1).

Both the amount of § 36 compensation to be paid to the employee under the settlement agreement as well as the amount to be paid to the attorney for fees and costs were negotiated figures; in other words, they were less than what the employee originally sought or could potentially recover under the statute. [Note 2] See G. L. c. 152, § 13A(5) ($3,500 attorney's fee to be paid in cases resolved within five days of hearing).

The settlement agreement makes no reference to the payment-reduction provision of G. L. c. 152, § 13A(10), nor does the

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agreement state or imply that the amounts due would be subject to that provision. We nonetheless pause here to set out the payment-reduction provision because it is necessary to understand what happened after the parties reached their settlement. General Laws c. 152, § 13A(10), as appearing in St. 1991, c. 398, § 35, provides in relevant part as follows:

"In any instance in which an attorney's fee under subsection (1) to (6), inclusive, is due as a result of a cash award[ [Note 3]] being made to the employee either voluntarily, or pursuant to an order or decision, the insurer may reduce the amount payable to the employee within the first month from the date of the voluntary payment order or decision,[ [Note 4]] by the amount owed the claimant's attorney; provided, however, that the amount paid to the employee shall not be reduced to a sum less than seventy-eight percent of what the employee would have received within that month if no attorney's fee were payable."

Relying on this payment reduction provision, AIM sent the employee a check for $5,930.16, rather than for the $7,602.77 specified under the settlement agreement. It arrived at this sum by applying a twenty-two percent reduction to the total § 36 compensation amount ($7,602.77). In other words, $7,602.77 - ($7,602.77 x .22 [i.e., $1,672.61]) = $5,930.16.

The employee sought relief from an administrative judge, who ordered AIM to reimburse the employee the deducted

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amount. The reviewing board of the DIA reversed, relying on two unpublished memoranda and orders of this court issued pursuant to our rule 1:28, see Vazquez's Case, 78 Mass. App. Ct. 1112 (2010), and Grogan's Case, 76 Mass. App. Ct. 1132 (2010). This appeal followed.

Discussion. Section 13A of the workers' compensation statute, G. L. c. 152, governs the award of attorney's fees for injured employees. In broad and general terms, the section can be read to reflect two legislative goals: to ensure adequate legal representation of the injured worker or his dependents, and to discourage protracted litigation. See Green's Case, 52 Mass. App. Ct. 141 , 144 (2001); Nason et al., Workers' Compensation § 24.1, at 266 (3d ed. 2003).

One of the ways by which the statute seeks to accomplish these goals is to establish a graduated fee structure:

"The fee structure is linked to the various stages through which a claim or complaint passes as it goes from conciliation to conference, hearing and review in the division of dispute resolution. When the claimant prevails or the insurer accepts a claim or withdraws a complaint, the insurer has to pay a set fee for each step, generally increasing as the case moves forward in the process."

Ibid. See G. L. c. 152, § 13A(1)-(6). Thus, by way of example, if an insurer agrees to pay the claimed compensation prior to conference, it will pay only $700 in attorney's fees, G. L. c. 152, § 13A(1), whereas if it does not agree to pay until within five days of hearing, it will pay $3,500 in attorney's fees, Id. § 13A(5). [Note 5]

In addition to rewarding insurers who agree to pay an employee's claim earlier in the process, rather than later, the

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statute also creates an incentive for insurers who pay awards quickly. As set out above, § 13A(10) permits insurers in certain circumstances to reduce the amount awarded to compensate the employee for his or her injury by up to twenty-two percent if the insurer pays the award within one month. For ease, we repeat the operative language in the margin. [Note 6]

In order to qualify for the § 13A(10) reduction, the insurer must show that there is (a) an attorney's fee under § 13A(1)-(6); (b) due as a result of a cash award; (c) being made to the employee either voluntarily, or pursuant to an order or decision; and (d) which the insurer pays within one month. All four conditions must be met in order to qualify for the reduction. We need look no further than the first condition in this case.

The § 13A(10) reduction applies only to attorney's fees under § 13A(1)-(6), each of which pertains to the fee to be awarded at different stages of the claim process. AIM contends that the $2,500 attorney's fee set by the settlement agreement falls within § 13A(5) because the settlement was reached within five days of the scheduled hearing. Timing, however, is only one of the components of § 13A(5). See Richards's Case, 62 Mass. App. Ct. 701 , 705-706 (2004) (section 13A[5] "plainly and unambiguously" provides for attorney's fees in two defined circumstances, " '[w]henever an insurer [a] files a complaint or [b] contests a claim for benefits' . . . and the employee prevails against the complaint or contest"). As the statute specifies,

"Whenever an insurer files a complaint or contests a claim for benefits and then either (i) accepts the employee's claim or withdraws its own complaint within five days of the date set for a hearing pursuant to section eleven; or (ii) the employee prevails at such hearing the insurer shall pay a fee to the employee's attorney in an amount equal to

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three thousand five hundred dollars plus necessary expenses."

G. L. c. 152, § 13A(5).

We are not here concerned with (ii) because no hearing ever occurred, let alone a hearing at which the employee prevailed. Nor are we concerned with that portion of (i) dealing with an insurer who withdraws its complaint; AIM never filed a complaint in this case. Moreover, AIM did not "accept" the employee's claim for benefits; the § 36 compensation amount agreed upon in the settlement was negotiated down from the amount of the employee's claim. [Note 7] The settlement amounts were the product of compromise; AIM did not accept the employee's claim. We note further (and perhaps most fundamentally) that the settlement agreement reflects a negotiated attorney's fee rather than that set by § 13A(5) or any other of the subsections (1)-(6). In short, apart from the fact that the settlement was reached within five days of the scheduled hearing, the terms of, and circumstances surrounding, the settlement agreement do not satisfy any of the requirements of § 13A(5).

Conclusion. There is no dispute in this case that AIM made its reduced payment within thirty days of the order endorsing the settlement. Prompt payment alone, however, without satisfying the other requirements of the statute, is not enough to qualify for the § 13A(10) reduction. Because AIM did not establish that it met all of the requirements of G. L. c. 152, § 13A(10), it was not entitled to apply that section's reduction to the amount owed to the employee under the settlement agreement. The decision of the reviewing board is reversed and the matter is remanded for entry of an award in favor of the employee's estate, including the unpaid amount of the settlement. Additionally, on remand the board shall reach and consider the pretermitted question whether the employee's estate is entitled to an award of attorney's fees under § 13A(5) for prevailing before the administrative judge on the settlement underpayment claim. [Note 8]

The employee's estate has requested appellate attorney's fees

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and costs and, in light of our disposition, is entitled to them pursuant to G. L. c. 152, § 12A. See Daly's Case, 405 Mass. 33 , 42 (1989). Within two weeks of the date of this opinion, the employee's estate is to submit to the clerk of this court an application for fees and costs that comports with Fabre v. Walton, 441 Mass. 9 , 10-11 (2004). AIM shall file any response within two weeks thereafter.

So ordered.