Last month, in an unpublished decision, the Massachusetts Appeals Court upheld a superior court judge’s approval of a proposed settlement between an injured worker and an allegedly negligent third party, over the objection of the employer’s workers’ compensation insurer.
In Brady v. Caterino, the plaintiff was working as an equipment operator at a job site. The defendant, who was an employee of a different company, was also working at the job site, operating a skid steer loader owned by his employer. The defendant ran over the plaintiff’s right leg with the machine, causing serious injuries. The plaintiff’s employer’s workers’ compensation insurer, EastGuard Insurance Company, paid the plaintiff workers’ compensation benefits for his injuries arising from the incident, including his medical bills and lost wages. About one-and-one-half years after the incident, the plaintiff was able to return to work and work a regular schedule.
Under the Massachusetts Workers’ Compensation Act, workers’ compensation benefits are an injured worker’s exclusive remedy from his employer when the worker is injured on the job. However, the Act permits the injured worker to make a claim against a third party whose negligence may have caused the worker’s injuries. If the worker recovers any sum from the responsible third party, that sum is first for the benefit of the workers’ compensation insurer who paid benefits to the worker. Thereafter, any sum in excess of the amounts necessary to reimburse the insurer is payable to the injured worker.
In cases where the worker has a foreseeable future need for additional workers’ compensation benefits arising from the same underlying incident, the third-party settlement or recovery is also subject to what has been termed a “Hunter offset.” The Hunter offset prevents the employee from an excess or double recovery for sums paid to him by both the workers’ compensation insurer and the responsible third party.
In Brady, the plaintiff and the defendant third-party reached a settlement of $425,000, to be allocated as follows: $109,610.27 to be paid to EastGuard as reimbursement for benefits paid to the plaintiff, and $315,389.73 to the plaintiff for his pain and suffering (less proportional deductions for attorney’s fees and costs). EastGuard objected to this allocation, and claimed that, in addition to the $109,610.27 reimbursement to EastGuard, $25,000 should be allocated to offset the plaintiff’s future medical expenses, and $100,000 should be allocated to offset the plaintiff’s future lost wages, with the remaining $190,389.73 payable to the plaintiff for his pain and suffering. The judge disagreed, and approved the parties’ original proposed settlement allocation.
On appeal, the Appeals Court upheld the judge’s ruling that the allocation was fair and reasonable. There was evidence that the plaintiff had endured substantial pain and suffering, particularly where the injuries required him to undergo three leg surgeries. And, under Massachusetts law, a workers’ compensation insurer is not entitled to reimbursement for an employee’s conscious pain and suffering, as that is not a compensable injury under the Workers’ Compensation Act.
Additionally, the Appeals Court noted the undisputed evidence that the plaintiff had incurred no lost wages since returning to work, and that there was a significant issue of compensability as to the plaintiff’s future medical expenses for pain management. Accordingly, absent evidence that EastGuard would be required to pay future medical expenses or future lost wages, the Appeals Court found no error in the lower court’s approval of the third-party settlement as fair and reasonable absent any offset allocation.