Close
Updated:

Massachusetts Court Discusses Offsets in Workers’ Compensation Cases

In Massachusetts, the Workers’ Compensation Act (the Act) dictates that employers must pay employees hurt while performing job duties benefits. Typically, such benefits are actually paid by insurers, not the employers themselves. In such instances, it is not uncommon for an insurer to withhold disability payments to offset workers’ compensation payments. As discussed in a recent case, it is unlikely that such offsets will be deemed reimbursable in the event the injured party recovers damages from a third party. If you were injured while working, it is critical to speak to a  Massachusetts Workers’ Compensation lawyer about your possible claims.

Case Setting

It is alleged that the plaintiff suffered a severe injury to his right hand in a workplace accident, rendering him disabled for three years. At the time, the plaintiff was insured under a group disability insurance policy issued by the defendant, a life insurance company. During his disability, the plaintiff received disability payments from the defendant and workers’ compensation benefits from his employer’s workers’ compensation insurer. The defendant withheld about twenty thousand dollars from its disability payments to the plaintiff to offset the workers’ compensation payments for lost time in accordance with the terms of its policy.

It is reported that the plaintiff and his family subsequently filed a third-party lawsuit against the machine manufacturer that allegedly caused his injury, resulting in a settlement of $300,000. The workers’ compensation insurer had a lien on the settlement proceeds and was reimbursed $65,050. The remainder of the settlement was allocated to attorneys’ fees and the plaintiff’s family. The plaintiff then demanded that the defendant refund the amount it had withheld for the workers’ compensation offset, arguing that because the workers’ compensation insurer had been reimbursed, the offset was no longer necessary. When the defendant refused, the plaintiff brought the subject lawsuit against the employer. The defendant moved for summary judgment.

Reportedly, the trial court ruled in favor of the defendant. The plaintiff appealed the district court’s decision, with the central dispute focusing on the interpretation of the defendant’s policy regarding the offset and the subsequent reimbursement of the workers’ compensation insurer.

Offsets in Workers’ Compensation Cases

On appeal, the court reviewed the district court’s ruling under the Employment Retirement Income Security Act (ERISA), which governs the case. In ERISA cases, courts typically defer to the decisions made by the trustees of benefit plans unless those decisions are deemed “arbitrary and capricious.”

The court found that the defendant’s interpretation of its disability policy was reasonable, rejecting the plaintiff’s argument that he was entitled to a refund because the workers’ compensation insurer had been reimbursed from the third-party settlement. The court agreed with the district court that the defendant properly withheld funds from the plaintiff’s disability payments as an offset against workers’ compensation, and there was no provision in the policy addressing reimbursement to the insurer from a third-party recovery.

The court explained that allowing the plaintiff to recover the withheld amount would result in a double recovery, which the court noted would be inconsistent with the Act’s goal of avoiding such outcomes.

As such, the court held that the defendant’s withholding of funds was proper and consistent with both the policy and the underlying legal principles, and it affirmed the trial court’s judgment in favor of the defendant.

Talk to a Dedicated Massachusetts Workers’ Compensation Lawyer

If you were injured while working, you might be able to recover workers’ compensation benefits from your employer, and you should talk to an attorney as soon as possible. Attorney James K. Meehan is a dedicated Massachusetts workers’ compensation lawyer who can advise you of your options and gather the evidence needed to help you seek a just outcome. You can contact Attorney Meehan at 508-822-6600 or via our online contact form to set up a private conference.

Contact Us