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Implications of General Releases in Massachusetts Workers' Compensation Law

Massachusetts
September 12, 2019
January 17, 2019
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In workers’ compensation matters, insurers strive to reach a full and final resolution of claims whenever possible, to limit future exposure. Ideally, the best settlement results are settlements which resolve ongoing indemnity, medical, release the employer from future liability, and include resignation of employment, to protect the employer and insurer from the potential for future exposure.

Unfortunately, in Massachusetts a resignation and a general release cannot be achieved under the workers’ compensation statute. In Massachusetts, M.G.L. c. 152 s. 48 covers lump sum settlement agreements and specifically provides that, “[n]o lump sum agreement shall contain as part of a settlement a general or specific release that would serve as a bar to (i) employment with the employer, (ii) the receipt by the employee of any pay or benefits due to him by an employer; (iii) the bringing of any future workers’ compensation claim or (iv) the bringing of any claims of wrongful discharge or breach of contract. All such general or specific releases shall be null and void. Any employer, insurer, or attorney attempting to obtain such a release from an employee shall be punished by a fine of ten thousand dollars.” M.G.L. c. 152 § 48(3) (emphasis added).

However, Section 48 does provide a statutory presumption of ongoing disability against the employee, stating that: “the acceptance of any amount in return for the right to claim future weekly benefits shall create a presumption that the employee is physically incapable of returning to work with the employer where the alleged injury occurred. Such a presumption shall continue for a period of one month for each fifteen hundred dollar amount included in the settlement for future weekly benefits. No re-employment rights shall inure to such employee under this chapter during any period of presumption of incapacity as herein provided.” M.G.L. c. 152 § 48(4).

On January 3 2019, Senior Judge Omar Hernandez of the Department of Industrial Accidents released an Administrative Bulletin indicating that lump sum settlement agreements that attempt to close out “any and all dates of injury” with a specific employer are not permissible. Additionally, any settlement papers that purport to close out more than one board numbers are also impermissible. Therefore, any insurer that has an injured worker with multiple dates of incident, must execute separate settlement papers for each date of loss. Settlements not executed in this manner may be considered contrary to M.G.L. c. 152 § 48(3). Including separate settlements for each date of injury also serves the dual function of avoiding closing out board numbers for unrepresented insurers for other dates of injury.

If the parties decide to settle old claims for a dollar each, the insurer is required to pay the actual dollar to the employee. This can become a problem if the attorney does not represent the insurance company for the claim the parties are settling, or if the actual dollar is not paid. In the Administrative Bulletin, Judge Hernandez provides the following example: “[I]f the attorney for Insurer A signs all of the documents, pays the money in one check and Insurer B never pays the employee the one dollar, Insurer B is technically in violation of Section 8(1) for failure to pay the employee and may be subject to a $10,000.00 penalty.”

Fortunately, Judge Hernandez has indicated that the DIA will approve lump sum language that states “any and all claims arising out of said date of injury”. This will allow an insurer to limit exposure for all injuries relating to a specific date of loss.

Insurers must pay careful attention to what injuries, and dates of injury they intend to settle with claimants, and be aware that if multiple dates of injury are being settled, additional settlement documents must be executed and approved by the DIA.