Department Of Industrial Accidents Revamps Procedures

The Workers’ Compensation system was adopted in Massachusetts in 1912 to address the growing number of industrial accidents occurring in the workplace.

The courts in Massachusetts were experiencing a significant increase in the number of lawsuits filed on behalf of injured workers and their families. The workers’ compensation system was created to provide relief to the overburdened court system by establishing a dispute resolution process to address these injuries.

The workers’ compensation system became, in effect, a mandatory alternative to the common law tort system for any work-related injuries or deaths. Workers’ compensation provided for wage replacement and medical costs.

The agency charged with the responsibility of overseeing the workers’ compensation system historically was known as “the Industrial Accident Board,” but has in recent years been referred to as Department of Industrial Accidents (DIA).

By statute, the adjudicators, previously known as “Members of the Board” or “Commissioners” were appointed to travel throughout Massachusetts to resolve workers’ compensation disputes between employers and workers.

As a result of the Workers’ Compensation Reform Act of 1985/1986, “Administrative Judges” appointed by the Governor subsequently replaced the Commissioners to handle disputed claims. Appeals from the Administrative Judges’ decisions were, by statute, directed to be heard by panels of “Administrative Law Judges” serving on the “Reviewing Board.”

The workers’ compensation system is governed by the Workers’ Compensation Act (G.L.c. 152). The DIA is not only charged with the responsibility of administering the system, but enforcing the Workers’ Compensation Act.

In addition to administering the system, the department is responsible for ensuring that every business in Massachusetts required to carry workers’ compensation insurance provides it. This would not only include obtaining workers’ compensation insurance, but paying the assessment rate, which is a percentage of the premium.

In Massachusetts, workers’ compensation premiums, along with unemployment insurance account for the two biggest business expenditures an employer must meet before it even opens its doors for business. For example, a general contractor will pay an average of $5,000 in workers’ compensation premiums per employee on an annual basis. As a result, the DIA has made every effort to reduce the cost of workers’ compensation insurance by ensuring that all businesses are paying their fair share.

Significant Changes

During the past year, the DIA recently revamped its enforcement and compliance system administered by the department’s Office of Investigations.

The DIA’s Office of Investigations is charged with investigating businesses obligated to carry workers’ compensation insurance and may be operating without it. The investigation is usually initiated after a lead comes into the Office of Investigation.

The leads can come from an employee of the company, a competitor or the Massachusetts Rating Bureau. The lead is assigned to an investigator in the area where the business is located who then conducts an investigation.

If the investigation confirms that the business is violating the statute, the investigator will notify the business and allow the business to come into compliance. If the business does not respond to the investigator or refuses to come into compliance by obtaining the requisite insurance, the investigator will then conduct an on-site investigation at the location of the business.

If the on-site investigation confirms the preliminary investigation, the investigator will then issue a Stop Work Order (SWO), which is a cease and desist order requiring the business to shut down. The business will then be given a right to appeal the SWO within 10 days.

If on appeal it is decided that the order was wrongly issued either because the business had insurance or it was not required to carry such insurance the order will be rescinded. If the business does not appeal the order the investigator is obligated under the statute to order the business to be closed until workers’ compensation insurance is obtained.

In addition, the non-compliant business is fined $100 a day for every day the business remains without insurance. If the business appeals the order and loses, the fine is increased to $250 a day for the same period.

If after the issuance of the SWO the business refuses to obtain insurance and attempts to remain open, the case is referred to the DIA’s Office of Legal Counsel. The general counsel will assign the matter to an associate general counsel, who will apply for a criminal complaint in the district court where the business is located. Section 25C(5) of the statute provides for a fine of up to $1,500 or up to one year in prison.

Civil Remedies

In addition to seeking a criminal complaint, the DIA has also used civil remedies to bring non-compliant business into compliance. Recently, a worker who worked for a lumberyard reported an injury. It was determined that the company was operating without workers’ compensation insurance.

The investigator assigned to the case contacted the business, which refused to respond. A SWO was subsequently issued but the business refused to comply and continued to operate. The DIA then sought a criminal complaint in the Lynn, Mass. District Court and a civil injunction in the Salem, Mass. Superior Court, both of which were issued. After months of non-compliance, the lumberyard eventually complied and was ordered to pay $26,000in fines.

The DIA is also going after businesses that fail to maintain workers’ compensation insurance for purposes of restitution. In Massachusetts, if a business fails to carry workers’ compensation insurance and one of their employees is injured on the job, the DIA is responsible for paying wage replacement and medical bills incurred by the injured employee through the Workers’ Compensation Trust Fund.

The Trust Fund receives its’ funding through assessments on businesses’ workers’ compensation premiums. The funds are used primarily to pay out on claims filed by injured employees working for an uninsured business.

If an injured employee prevails on their claim and monies are paid out of the Trust Fund, the DIA will then seek reimbursement from the uninsured employer. These pay outs can be in excess of $1 million especially where the injuries are significant, such as on a quadriplegic case.

Public Awareness Campaign

The DIA recently kicked off a public awareness campaign this summer to coincide with its’ increased enforcement and compliance efforts, and Bob Villa creator of “This Old House” and “Home Again” and spokesperson for Sears agreed to be the spokesperson.

The DIA utilized print and electronic media to get the word out to the business community that workers’ compensation insurance is required for all businesses operating in the Commonwealth that employ one or more employees. The department also established a toll free hotline to report uninsured businesses operating in Massachusetts (877-MASSAFE).

These enforcement and compliance efforts, in conjunction with the public awareness campaign, are all aimed at reducing the cost of workers’ compensation insurance premiums and assessments. Reducing the cost of workers’ compensation insurance thus reduces one of the two biggest expenditures an employer must meet before they open their doors for business. This in turn reduces the cost of doing business in Massachusetts.

Business also benefits by preventing an uninsured business from having an unfair advantage over an insured competitor when bidding for business. Employees also benefit by having the protection that comes with having workers’ compensation insurance.

Workers’ compensation insurance is an integral part of doing business in Massachusetts. The DIA’s continued efforts will enable the system to be more fair and efficient, thus enabling Massachusetts to continue to attract and keep business in the Commonwealth.

Gregory J. White is general counsel at the Department of Industrial Accidents for the Commonwealth of Massachusetts. Prior to joining the agency he served as a prosecutor in the Worcester, Norfolk and Middlesex District Attorneys Office where he gained extensive trial experience. He is also a faculty advisor in the Trial Advocacy program at Harvard Law School. Mr. White can be reached at [email protected].