Employees injured on the job are entitled to keep money awarded for pain and suffering, regardless of any workers’ compensation benefits they receive, according to a Supreme Judicial Court ruling last week.
The ruling could mean more money in injured workers’ pockets, but also lead to higher costs for employers, insurance industry executives say.
In Massachusetts, insurance companies can seek reimbursement for workers’ comp payments when additional money is awarded to injured workers in civil lawsuits. The high court’s decision, however, prevents insurers from going after damages granted specifically for physical and emotional distress.
Workers’ compensation insurance offered through employers is generally limited to medical expenses and lost wages. Workers seeking additional damages can’t sue the employer, but they can file claims against a third party. A construction laborer employed by a subcontractor, for example, could sue the project’s general contractor.
In the past, insurers have been able to lay claim to the entire award from these third parties, potentially leaving workers with nothing, said Thomas Murphy, the Salem lawyer who represented two construction workers in the Supreme Judicial Court case.
The workers were injured while working at separate Harvard University job sites. Both collected workers’ compensation benefits and sued the worksite general contractors and others for additional damages.
One worker, electrician Robert DiCarlo, hurt his back in 2004 and received nearly $282,000 in workers’ comp benefits. In addition, he was awarded a settlement of $100,000 — 35 percent of which would go toward his “relentless” pain and depression, among other long-term disabilities, according to Murphy, his lawyer.
The other worker, electrician Bernard Martin, fell off a ladder at a job site in 2010 and got $566,000 in workers’ comp benefits. His civil claim was settled for $1 million, 30 percent of which was for wrist and shoulder pain and other lingering problems, Murphy said.
Neither of the men has been able to return to work, according to the lawyer.
The insurer involved in both cases was Hartford -based The Hartford. The Hartford or a subsidiary sought repayment for workers’ comp benefits from the settlements, including awards for pain and suffering. The SJC denied that right, stating in the decision that “the insurer here did not compensate the employees for their pain and suffering and so cannot seek ‘reimbursement’ from damages paid for those harms.”
The ruling cautioned that settlements that “stack the deck against the insurer by inappropriately allocating the bulk of damages to pain and suffering” would be “eyed by the court with a healthy dose of skepticism.”
The Hartford declined to comment. But insurance industry officials expressed concern, saying the decision could result in higher workers’ compensation rates for employers.
“It gives an incentive for trial lawyers to get 99.9 percent of the award in the form of pain or suffering,” said Robert Hartwig, president of the Insurance Information Institute, a trade association based in New York.
“There’s no question if you deny a long-established avenue of recovery and then create an incentive to stack the deck, as the court said, it’s likely to have an effect on premiums.”