CNA INSURANCE COMPANIES vs. JAMES SLISKI

MARSHALL, C.J. In this declaratory judgment action, CNA Insurance Companies (CNA) seeks to establish that it is not responsible to an injured worker for payment of double compensation under G. L. c. 152, s. 28, of the workers' compensation act (act) for the alleged serious and wilful misconduct of the worker's employer because the employer is

Page 492

insolvent and unable to repay CNA as provided in the statute [Note 1]. A judge in the Superior Court concluded that CNA must pay the double compensation and entered a final declaratory judgment to that effect. CNA appealed and we transferred the case to this court on our own motion. We affirm the judgment.

1. On June 9, 1988, when James Sliski was eighteen years old, he fell through an elevator shaft at work and suffered spinal injuries that left him a paraplegic. At the time of his injuries, Sliski was employed by Doane & Williams, Inc. (Doane & Williams), which was insured by CNA. CNA accepted liability for Sliski's injury and commenced payment of weekly workers' compensation benefits pursuant to G. L. c. 152, s. 34 [Note 2].

Sliski alleged that his injuries were the result of serious and wilful misconduct by Doane & Williams, and on March 23, 1989, he filed with the Department of Industrial Accidents (department) a claim for double compensation pursuant to G. L. c. 152, s. 28. Notice of the claim was given to both CNA and Doane & Williams, but the record does not indicate what, if any, action was taken on that claim. In 1991, Doane & Williams ceased to do business, and its assets were sold in lieu of foreclosure by a secured creditor. On June 2, 1992, Sliski refiled his claim for double compensation. CNA filed a denial of the refiled claim on June 5, 1992, and subsequently filed with the department a motion to dismiss, raising the statute of limitations and laches as defenses, and claiming that it was not liable for payment of double compensation to Sliski because its insured had become insolvent. An administrative judge in the department denied the motion on June 8, 1993. Sliski's s. 28

Page 493

claim remains pending before the department and has been stayed pending the outcome of this action.

2. CNA argues that, because double compensation is available to an employee only on a showing of serious and wilful misconduct by the employer, the purpose of the provision is to punish the employer and to deter other employers from engaging in such misconduct. To require CNA to make such payments to Sliski with no possibility of repayment by Doane & Williams, it argues, defeats the punitive purpose of the statute, violates the public policy against providing insurance coverage for punitive damages, and violates its due process rights. It likens the s. 28 double compensation to multiple damage awards for a wilful and knowing violation of G. L. c. 93A, s.s. 9 and 11, which we have acknowledged are avowedly punitive. Kapp v. Arbella Mut. Ins. Co., 426 Mass. 683, 686 (1998).

The language of the statute suggests that the purpose of s. 28 is to benefit an injured worker, not to punish the employer, for it describes the double payments as "extra compensation." G. L. c. 152, s. 28. See Hoffman v. Howmedica, Inc., 373 Mass. 32, 37 (1977) (statutory language principal source of insight into legislative purpose). See also Thayer's Case, 345 Mass. 36, 43 (1962) ("extra or double award which ensures to the benefit of the injured employee under s. 28 constitutes, in our opinion, compensation as that term is used in the [act]"). In Boardman's Case, 365 Mass. 185, 193 (1974), this court noted in passing that the doubling provision of s. 28 "may have a punitive aspect." But we were not asked in that case to decide whether s. 28 was punitive, and any suggestion to that effect does not reflect the legislative intent as evidenced by the legislative history that we discuss below.

We have long recognized that the workers' compensation statute was enacted as a "humanitarian measure" in response to strong public sentiment that the remedies afforded by actions of tort at common law did not provide adequate protection to workers who were the victims of industrial accidents. Young v. Duncan, 218 Mass. 346, 349 (1914). LaClair v. Silberline Mfg. Co., 379 Mass. 21, 27 (1979). We have stressed that the statute should be given a broad interpretation, viewed in light of that purpose. Roberge's Case, 330 Mass. 506, 509 (1953). Against

Page 494

that general background we turn to the legislative history of s. 28.

Section 28 has existed in essentially the same form since the statute was first enacted in 1911. See St. 1911, c. 751, Part II, s. 3 [Note 3]. Prior to enactment in 1911, the Commission on Compensation for Industrial Accidents submitted a report to the Legislature describing the nature of the proposed new workers' compensation laws, stating they were "not intended to be punitive in any sense, but [were] founded on the principle that the whole community for which production is carried on should bear the burden of all the costs of production" (emphasis added). 1911 House Doe. No. 300, at 2-3.

Then, in 1912, the Massachusetts Commission on Compensation for Industrial Accidents again submitted a report to the Legislature describing the history of the legislation, and providing a commentary on the new act. See Report of the Massachusetts Commission on Compensation for Industrial Accidents (July 1, 1912) (unnumbered). See also Ferriter v. Daniel O'Connell's Sons, 381 Mass. 501, 519-525 n.21 (1980). Commenting specifically on what is now s. 28, the commission noted that this section "grants double compensation for injuries occasioned by the serious and wilful misconduct of the employer," adding that the provision was made because the commission "thought it equitable to provide a double compensation for the injuries occasioned by serious and wilful misconduct of the employer." Report of the Massachusetts Commission on Compensation for Industrial Accidents, supra at 48. There is no hint of any punitive intent. Rather, the sole focus was on the equitable compensation of injured workers. We recognize, as does the dissent, that the award of double compensation is determined "by the character of the employer's conduct."'Post at 499. A worker who is injured by the "serious and wilful misconduct" of an employer must forgo the recovery of tort damages that would likely be far more substantial and a

Page 495

common-law claim with a greater likelihood of success than his recovery or claim could be for injuries resulting from an employer's mere negligent conduct. The Legislature could, and in our judgment did, conclude that it would be equitable to award such a worker double compensation in recognition of the greater value of the common-law claim given up. These were not punitive damages by some other name. See post at 500.

In light of this unambiguous history, we conclude that the purpose of s. 28 has never been punitive. See Assessors of Newton v. Pickwick Ltd., 351 Mass. 621, 625 (1967) ("a construction [of a statute which] would completely negate legislative intent . . . is to be avoided"). One respected commentator has reached the same conclusion:

"The double compensation paid the employee where the

injury is the result of the employer's serious and wilful misconduct is not . . . a 'penalty.' It is compensation, in the generic sense, encompassing all monetary payments under the act. Proceedings under [s.] 28, therefore, should be subject to the general rule of liberal construction applicable to other cases under the act . . . ."

L. Locke, Workmen's Compensation s. 286, at 327 (2d ed. 1981). Because we conclude that s. 28 is not punitive, we need not consider CNA's due process claim that rests on such an assumption. For the same reason, there is no merit to CNA's argument that it would be against public policy to require CNA to pay "punitive" damages targeted at the employer. Public policy, as articulated by the Legislature, clearly places on CNA the obligation to pay this double compensation, however it is characterized.

3. Our conclusion that s. 28 double compensation is not punitive does not end our inquiry, for we still must decide whether the risk of an employer's insolvency should be home by the insurer or by the injured employee. Both CNA and Sliski argue that the language of the statute compels the result each seeks. But resort to that familiar rule of construction sheds little light here. The statute unambiguously mandates double payment to the injured employee by the insurer if the employer is insured. See West's Case, 313 Mass. 146, 154 (1943) (under s. 28, claim for double compensation "in the first instance is to be paid by

Page 496

the insurer"). See also L. Locke, Workmen's Compensation, supra at s. 289, at 341. However, the statute then provides that the employer "shall repay to the insurer the extra compensation paid to the employee." G. L. c. 152, s. 28.

CNA asserts that the statute "clearly places the ultimate responsibility of making the s. 28 payment on the employer and not the insurer." But the text of s. 28 does not mandate that result: it is silent as to the allocation of risk where the employer itself is insolvent [Note 4]. The legislative scheme as a whole, and the legislative history of the specific provision at issue, however, suggest a resolution. The purpose of the workers' compensation laws in general, and s. 28 in particular, is properly effectuated by placing the risk of the employer's insolvency on the insurer, and not the injured employee.

"The history of workmen's compensation in this Commonwealth shows that the Legislature gradually but consistently has enlarged the scope of the laws pertaining to it, and that the courts have construed those laws liberally for the protection of the injured employee." Roberge's Case, 330 Mass. 506, 509 (1953), and cases cited. To this end, in LaClair v. Silberline Mfg. Co., 379 Mass. 21 (1979), we recognized a common-law right against the individual officers of an insolvent company for negligent failure to procure workers' compensation insurance. We noted that insolvency "is a risk of the free enterprise system, and that the penalties should not be assessed on disabled employees," who are entitled to full compensation, even though their employer suffered bankruptcy. [Note 5] Id. at 29-30 n. 11. For much the same reason we discern that the Legislature did not intend that a worker who suffers a catastrophic injury because of the serious and wilful misconduct of his employer should bear the

Page 497

brunt of the employer's insolvency. See Armstrong's Case, 416 Mass. 796, 801 n.9 (1994) ("We think it probable, therefore, that the reference to compensation in s. 28 also contemplates benefits paid by the insurer"). See also Boardman's Case, 365 Mass. 185, 193 (1974), where we observed that double compensation is a "tacit acknowledgment" that the act "ordinarily affords the employee rather slim recovery, which deserves to be increased down the line when the employer is conceived to be seriously at fault [Note 6]."

Unlike some other States, the Massachusetts statute makes no provision insulating insurance carriers from payment of double compensation. [Note 7] In recent years our Legislature has enacted significant revisions to the workers' compensation statute. See, e.g., St. 1991, c. 398; St. 1985, c. 572. Had the Legislature

Page 498

intended to accomplish the result sought here by CNA, it could readily have made such a provision explicit. For example, the Legislature, in 1985, established for the first time a trust fund through which an injured employee, whose employer had illegally failed to obtain workers' compensation insurance, could be compensated. See G. L. c. 152, s. 65 (2) (e), as appearing in St. 1985, c. 572, s. 55. There was no explicit limitation on the compensation available to the injured worker from the trust fund, including double compensation for a worker injured by the serious and wilful misconduct of an uninsured employer. Id. In 1991, in response to a growing concern that the trust fund was seriously under-funded [Note 8], the Legislature amended the statute to provide explicitly that the statutory fund (and only the fund) would no longer be responsible for double compensation provided under s. 28 [Note 9]. G. L. c. 152, s. 65 (2) (e), as appearing in St. 1991, c. 398, s. 85. See generally 452 Code Mass. Regs. s. 3.04 (1997). It is argued that when, in 1991, the Legislature specified that s. 28 benefits were not payable from the trust fund, it must have intended to prohibit payment of double compensation by all insurers who would not be reimbursed by their insured, such as CNA. But it is a familiar principle of

Page 499

statutory interpretation that express mention of one matter excludes other similar matters not mentioned. Spence, Bryson, Inc. v. China Prods. Co., 308 Mass. 81, 88 (1941). The Legislature has determined that only the trust fund is not responsible for payment of double compensation to an injured worker whose employer is insolvent.

Judgment affirmed.

SPINA, J. (dissenting, with whom Ireland, J., joins). I respectfully dissent. In my view, an award of compensation under G.L. c. 152, s. 28, is punitive, or exemplary, in nature. Although it inures to the benefit of the party injured, that is generally true of all punitive damages awards. The award is not determined by the injury to the employee, except indirectly; it is determined by the character of the employer's conduct. See Restatement (Second) of Torts s. 908 (1979). We have said that "serious and wilful misconduct" under s. 28 "is much more than mere negligence, or even than gross or culpable negligence. It involves conduct of a quasi criminal nature, the intentional doing of something either with the knowledge that it is likely to result in serious injury or with a wanton and reckless disregard of its probable consequences." Thayer's Case, 345 Mass. 36, 39-40 (1962), quoting Scaia's Case, 320 Mass. 432, 433-434 (1946).

A claim under s. 28 is generally not included in the agreement for compensation. See West's Case, 313 Mass. 146, 154 (1943). The real party in interest is the employer, not the insurer, and s. 28 permits the employer to "appear and defend against such claim only." See Thayer's Case, supra at 44; West's Case, supra. The insurer's involvement is purely administrative, as the Legislature intended the insurer to be reimbursed by the employer. See Burke v. Atlantic Research Corp., 358 Mass. 764, 766 (1971) (no conflict of interest between insurer and employee in third-party action brought by insurer in employee's name, pursuant to G. L. c. 152, s. 15, where insurer is also defending against employee's s. 28 claim, because "the insurer stands to suffer no loss from the plaintiffs claim" under s. 28).

Page 500

Punitive damages, by any other name, are still punitive damages. I would reverse the judgment.