CASE NO. 4437 CRB-3-01-9
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
AUGUST 8, 2002
GRAPHITE DIE MOLD, INC.
HARTFORD INSURANCE GROUP
CMS GRAPHITE, INC.
KEMPER INSURANCE COMPANIES
The claimant was not represented at oral argument. Notice sent to Angelo Maragos, Esq., 86 Buckingham Street, Waterbury, CT 06710.
The respondents Graphite Die Mold, Inc. and Hartford Insurance Group were represented by Jason M. Dodge, Esq., Pomeranz, Drayton & Stabnick, 95 Glastonbury Boulevard, Glastonbury, CT 06033.
The respondents CMS Graphite and Kemper Insurance Companies were represented by Polly Orenstein, Esq., Law Office of Tracey Green Cleary, 2750 Dixwell Avenue, P.O. Box 187289, Hamden, CT 06518.
This Petition for Review from the September 7, 2001 Finding and Denial Pursuant to C.G.S. 31-299b of the Commissioner acting for the Third District was heard March 22, 2002 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners Donald H. Doyle, Jr. and Amado J. Vargas.
JOHN A. MASTROPIETRO, CHAIRMAN. The respondent employer Graphite Die Mold, Inc. and its insurer Hartford Insurance Group have petitioned for review from the September 7, 2001 Finding of Denial Pursuant to C.G.S. 31-299b of the Commissioner acting for the Third District. They contend on appeal that the trier erred by concluding that § 31-299b does not authorize re-apportionment of an insolvent carrier’s share of liability amongst other carriers that are liable for an apportionment share of a claim. We find error, and reverse the trial commissioner’s decision.
The case below proceeded on stipulated facts. The claimant worked at CMS Graphite from April 1966 through October 1991, and at Graphite Die Mold, Inc. from October 1991 through July 1997. Due to exposure to metallic dust during the course of his employment, he developed pneumoconiosis, and underwent a left lung transplant on December 22, 1998. The respondent Hartford Insurance Group was the last insurance carrier on the risk for Graphite Die Mold, Inc., and has been administering this claim pursuant to § 31-299b C.G.S. The parties reached a settlement, and Hartford Insurance paid $565,000 to the claimant and his wife, while reserving the right to pursue a claim against prior insurance carriers for an apportionment of liability. These prior carriers include the now-insolvent American Mutual, Zurich Insurance, the respondent Kemper Insurance, Travelers Insurance, and Hartford Insurance, all of which covered CMS Graphite during periods of the claimant’s employment. There was also a period of no insurance between January 1988 and January 1989. While the claimant worked at the respondent Graphite Die Mold, the insurers included Royal Insurance, Berkley Insurance, and finally Hartford Insurance. All of these carriers agree that an apportionment of liability for the claimant’s occupational disease is proper under § 31-299b.
The issue in dispute here concerns the period of coverage by American Mutual, which insured CMS Graphite for many years and had 61.2% of the exposure in this case, amounting to $345,780. The parties sought to determine whether liability should be apportioned pro rata amongst all the remaining carriers and the Second Injury Fund for this sum, or whether Hartford Insurance should remain liable for the entirety of American Mutual’s percentage of liability under § 31-299b. After considering the stipulated facts, the trial commissioner determined that such an apportionment was not available, which led Hartford Insurance to file the instant appeal.
The statute in question here, § 31-299b, provides:
If an employee suffers an injury or disease for which compensation is found by the commissioner to be payable according to the provisions of this chapter, the employer who last employed the claimant prior to the filing of the claim, or the employer’s insurer, shall be initially liable for the payment of such compensation. The commissioner shall, within a reasonable period of time after issuing an award, on the basis of the record of the hearing, determine whether prior employers, or their insurers, are liable for a portion of such compensation and the extent of their liability. If prior employers are found to be so liable, the commissioner shall order such employers or their insurers to reimburse the initially liable employer or insurer according to the proportion of their liability. Reimbursement shall be made within ten days of the commissioner’s order with interest, from the date of the initial payment, at twelve per cent per annum. If no appeal from the commissioner’s order is taken by any employer or insurer within ten days, the order shall be final and may be enforced in the same manner as a judgment of the Superior Court.
The issue raised before us in this appeal is one of first impression, though its evolution was anticipated by our Supreme Court when it decided Hunnihan v. Mattatuck Mfg. Co., 243 Conn. 438 (1997).
In Hunnihan, this board had determined that § 31-299b permitted the last insurer on the risk to seek reimbursement from the Connecticut Insurance Guaranty Association (CIGA) for the share of liability attributable to the coverage period of American Mutual Insurance Co., which was determined to be insolvent as of March 9, 1989. Hunnihan, 16 Conn. Workers’ Comp. Rev. Op. 72, 2297 CRB-5-95-2 (Oct. 30, 1996). Our Supreme Court reversed this board’s ruling, holding that the definition of “covered claim” in § 38a-838(6) C.G.S. did not include amounts due to any insurer, including an insurer whose liability is premised on being the last insurer under § 31-299b. The Court’s reasoning was based primarily on the public policy behind the creation of CIGA, which was intended to protect policyholders and claimants from insurer insolvency while placing the risk of insurer insolvency on the insurance industry itself. Because policyholders in effect fund CIGA as per § 38a-849 C.G.S., the Court did not believe that insurers should also benefit from CIGA’s protection. Hunnihan, supra, 450-53.
Then, at the end of its opinion, the Court added:
Although we realize that § 31-299b, by placing initial liability on the last insurer in circumstances where a compensable injury is the responsibility of several insurers, may create a hardship for the last insurer in the event that a prior insurer has become insolvent, we believe that the conclusion we reach reflects the result intended by the legislature. We express no opinion, however, as to whether the last insurer may seek reapportionment among the remaining solvent insurers by the commission when a prior insurer has been adjudicated insolvent, because that decision is not necessary to the resolution of this appeal.
Id., 453-54. Though the Court was unwilling to condone the use of CIGA as a means of reimbursing insurers for sums paid out pursuant to § 31-299b, it specifically recognized and left open the question of whether the liability for an insolvent insurer’s share of the coverage ought to be distributed proportionally among all of the solvent insurers, rather than remaining exclusively with the last insurer on the risk. That question is now ripe for adjudication by this board.
In attempting to derive guidance from § 31-299b, our first consideration must be the language of the statute itself. Hunnihan, supra, 444. Several relevant principles are clearly set forth therein. First, the employer who last employed1 an injured worker prior to his filing of an occupational disease or repetitive trauma claim, or its insurer, is initially liable for the payment of compensation. The law then instructs the commissioner to determine whether prior employers are liable for a portion of the compensation due, and if so, the extent of that responsibility. Reimbursement is to be made by such employers and their insurers “according to the proportion of their liability.” None of the language suggests that the drafters of § 31-299b considered the possibility of an insurer becoming insolvent and being unable to pay its share of the compensation due, much less the aftermath of an unsuccessful attempt to invoke CIGA by an insurer attempting to obtain reimbursement for a proportional share attributable to an insolvent insurer. Instead, the language of the statute is amenable to two different readings—one allowing the last insurer on the risk to seek reimbursement for an insolvent insurer’s share of a claim on a proportional basis from other insurers, and the other leaving the last insurer on the risk with the ultimate financial responsibility for that part of the claim.2
When the meaning of a statute is unclear, we attempt to resolve that ambiguity by looking at the legislative policy it was designed to implement, the legislative history and circumstances surrounding its enactment, and to its relationship with existing statutes and common law principles governing the same general subject matter. Hunnihan, supra, 444, citing Conway v. Wilton, 238 Conn. 653, 663-64 (1996). In this matter, the legislative history does offer us some guidance, albeit in an indirect manner. Over a period of many years, legal practitioners gradually established the custom of apportioning liability in occupational disease and repetitive trauma cases that featured multiple insurers on the risk during the period of exposure. Hatt v. Burlington Coat Factory, 4326 CRB-2-00-12 n.5 (Dec. 19, 2001); Thomen v. Turri Electric, 11 Conn. Workers’ Comp. Rev. Op. 299, 302, 1324 CRD-5-91-10 (Dec. 23, 1993). The origin of this practice hearkens back to our Supreme Court’s decision in Plecity v. McLachlan Hat Co., 116 Conn. 216 (1933), where it was decided that a claimant who had suffered mercury poisoning during the coverage periods of three separate insurers was entitled to collect the entire amount of compensation due him under the Act from any of those entities. The Court held that, “in such a situation the award should be made against all insurers so liable;” Id., 226-27; without discussing the issue of contribution or apportionment rights. Essentially, the 1981 enactment of § 31-299b codified the customary practice of apportionment that had arisen in the years since Plecity.
Section 31-299b, however, was not borne simply of a legislative desire to clarify the law on apportionment. The driving force behind Public Act 81-155 was our state lawmakers’ dismay that employees injured at the workplace, particularly those suffering from occupational diseases, were often being deprived of compensation for long periods of time while multiple employers or multiple insurance carriers were embroiled in litigation over the degrees of their respective financial responsibility. See, e.g., 24 H.R. Proc., Pt. 12, 1981 Sess., pp. 3754-55 (remarks of Rep. Gelsi and Rep. Abercrombie); 24 S. Proc., Pt. 5, 1981 Sess., p. 1416 (remarks of Sen. Skelley). Two methods were proposed for dealing with this mounting problem. The main proposal would make the last employer/insurer on the risk initially liable for administering the claim. If subsequent litigation were to reveal that other employers and insurers were also accountable for some of the claimant’s injurious exposure, the last employer/insurer would be able to obtain reimbursement for those shares of the payments, plus interest.
A counterproposal raised at the Joint Standing Committee Hearings was even simpler, according to its proponents, who allegedly sought to avoid a torrent of “defensive paperwork” by insurers. They advocated making the last employer/insurer who had created an occupational disease exposure liable for full payment on the claim, with no apportionment rights at all. Conn. Joint Standing Committee Hearings, Labor & Public Employees, Pt. 2, 1981 Sess., pp. 355-56 (testimony of Mr. Barnert). It was their feeling that, in the long run, everything would balance out financially, as an insurer who was responsible for a case under § 31-299b today would tomorrow be absolved of liability on a different claim. This idea drew fire from representatives of several other groups, who articulated concerns ranging from the unfairness of making the last employer liable regardless of the safe conditions and limited exposures that might have existed in the last employer’s workplace, to the difficulty of calculating the negative experience modifier in such an employer’s future insurance premiums, to the unintended encouragement of discrimination against prospective employees who have been previously exposed to carcinogens. Id., pp. 358-59 (remarks of Mr. Anderson); pp. 379-80 (remarks of Mr. Brown); pp. 390-91 (remarks of Mr. Soycher).
This alternative proposal was unsuccessful. Our lawmakers preferred the version of § 31-299b that allowed the last insurer to be reimbursed by other carriers, and at a 12% annual interest rate “[s]o that the last carrier and/or employer does not get hurt too much by having to pay the claim and maybe [have] it drag on for two or three years [while] somebody else is using their money.” Id., p. 340 (remarks of Ms. Tianti). The inclusion of this reimbursement protocol in the statute bespeaks a concern for the fate of that last insurance carrier on the risk, and a recognition that this procedure was a better means of protecting the rights of the claimant and, secondarily, the insurance carriers as well. It does not appear that the legislature wished to invest in the theory that “in the long run, it’ll be a wash,” which was unsupported by any verifiable data in the legislative record.
Interestingly, this argument has resurfaced in the current context, where the percentage of liability attributable to a single insolvent insurer is in dispute as opposed to the availability of apportionment for all multiple employer/insurer claims in general. The appellee in the case at bar, Kemper Insurance Companies (Kemper), assures us that “what goes around, comes around,” with every carrier taking turns being the last carrier on the risk in a steady stream of apportionment cases. Brief, p. 6. Again, there is no statistical evidence in the appellate record to support such an assumption. We would also posit that this approach would not be likely to avail an employer that recently became self-insured. Such an entity could end up accepting liability for a number of long-term occupational disease claims without being able to say that a roughly equal number of exposures from its own past, for which it would otherwise be liable, have been assigned to another carrier via § 31-299b. In fact, the pool of claims for many self-insureds would not be large enough to realistically expect any sort of a “balancing out” of gains and losses.
Also, Kemper’s advocated approach would favor insurers who have ceased to write workers’ compensation insurance, as potential claims based upon coverage periods from 15 or 20 years earlier would be assumed by other carriers under § 31-299b, without a corresponding influx of newer claims that would incidentally subsume coverage periods that would be otherwise attributable to those other carriers. This Commission has no desire to reward insurers for removing themselves from the workers’ compensation arena. The appellee’s interpretation of the law might also encourage insurers to stop writing new workers’ compensation policies, at least for certain types of industries that are at high risk for long-term exposure claims. Though the number of cases featuring insolvent insurers is much smaller than the total population of claims to which § 31-299b may be applied, our observations remain relevant to the matter before us today. The reasoning urged by Kemper would likely have a disproportionately negative effect on some insurers and self-insurers, while working to the arbitrary benefit of others.
Section 31-299b, therefore, is primarily designed to protect the interest of claimants, but it was consciously constructed to also allow for an ultimate distribution of liability that would not place an undue burden on the last insurer on the risk. Our legislature would not have directed that 12% interest be paid on reimbursement amounts if it were indifferent to the ultimate assignment of fiscal responsibility. Despite the absence of specific statutory provisions providing for a recalculation of apportionment percentages in the event of insurer insolvency, the law employs language that allows a commissioner some leeway to account for anomalies that might arise in a case. Rather than specifically stating that prior employers or their insurers may be held liable only for their share of causal responsibility, it instructs the commissioner to determine, on the basis of the hearing record, “whether prior employers, or their insurers, are liable for a portion of such compensation and the extent of their liability.” It then instructs such prior employers or insurers to reimburse the initially liable employer/insurer “according to the proportion of their liability.”
We assume that the drafters of § 31-299b were focusing on cases in which some solvent party existed as a source of recovery for a claimant’s periods of employment. There is no indication that active debate took place involving some of the more unusual circumstances that might evolve. However, the legislature consciously chose to adopt language that would allow a commissioner to look at the entire hearing record before deciding what portion of compensation is attributable to a given employer or insurer. The statute does not limit each employer/insurer’s liability as the portion attributable only to its corresponding period of coverage, even if one would expect that this would routinely be the case. Keeping in mind that our legislature wished to afford meaningful protection to the reimbursement rights of the initially liable employer/insurer under § 31-299b, we are of the opinion that this language should be construed to allow the trial commissioner to account for an event such as insurer insolvency in his decision on reimbursement.
The trier accordingly has the authority to adjust the extent of each party’s liability to reflect a proportional distribution of the entire compensable claim among the remaining solvent employers/insurers, thereby dividing responsibility for the insolvent insurer’s share in the most logical and equitable fashion. Such an apportionment would protect the interests of the claimant, and would best avoid the somewhat fortuitous (though not fortunate) devolution of a large financial burden onto only one party. We also remind the appellee that, under Hunnihan and the provisions of the Connecticut Insurance Guaranty Act, the risk of insurer insolvency has been placed on the insurance industry as a whole. Hunnihan, supra, 452. The concept of apportionment under § 31-299b is quite consistent with this theme of risk-sharing throughout the industry, as is the concept of apportioning an insolvent insurer’s liability among the remaining solvent insurers in a case.
We recall our holding in Brown v. Bon Dental Lab, 6 Conn. Workers’ Comp. Rev. Op. 132, 594 CRD-7-87 (March 28, 1989), a case involving a claimant who had worked for several out-of-state employers (as well as some in-state employers) as a dental technician during a 240-month exposure period in which he contracted an occupational disease. The claimant there was attempting to argue that § 31-299b was retroactively applicable to his case, even though the statute did not take effect until several months after his date of injury, because the provision was merely procedural. This board therein explained that § 31-299b affected substantive rights, at least when applied to the case at bar, insofar as this Commission would generally have no jurisdiction over the out-of-state employers involved, which would prevent it from entering an order against such entities to pay their fair shares of the instant claim, based upon the periods of exposure attributable to their employment of the claimant. Section 31-299b was making a substantive change to this equation by implying that the claimant’s occupational disease was a single injury that was initially the responsibility of the last insurer on the risk, with apportionment rights being created against all other parties. As this Commission would not have jurisdiction over the out-of-state employers involved, it would not be able to order such parties to pay their proportional shares of liability. Hence, the statute would have a substantive effect on the rights of the insurer who was initially made liable.
In the case before us today, § 31-299b was in effect long before the claimant’s date of injury, and it clearly applies to this claim. Also, unlike the situation in Brown, this Commission has jurisdiction over all employers responsible for the instant claimant’s occupational exposure, and an order may be entered against those parties. Empirically, the complication of insurer insolvency discussed in Hunnihan is a condition that arises subsequent to the ascertainment of the “total employment res” conceptualized in Brown. Insolvency raises a different set of concerns than those that would surround an identifiable out-of-state job provider who is responsible for a portion of a claimant’s occupational exposure, yet falls outside the definition of “employer” in our Workers’ Compensation Act.3 The issue of insurer insolvency as it is presented here implicates matters that reside within the sphere of this Commission’s legal authority and the authority of the courts and legislature of this state. These subjects may be addressed, governed and remedied by said entities, as evidenced by the Court’s discussion in Hunnihan and the existence of CIGA.
Accordingly, we rule that § 31-299b allows the last insurer on the risk at the time of substantial exposure in an occupational disease or repetitive trauma case to seek reimbursement from all other solvent insurers or self-insured employers not only for the proportional shares of benefits attributable to their periods of coverage, but also for a similarly proportional share of any benefits that were due from an employer whose insurer has been declared insolvent and is therefore unable to remit reimbursement. Here, the 61.2% share of liability attributable to the insolvent American Mutual Insurance Company should be divided among all of the other insurers, based on their proportional periods of coverage, rather than remaining solely with the last insurer for the claimant’s last employer. We believe that this result is consistent with our Supreme Court’s holding and interpretation of the Connecticut Insurance Guaranty Act in Hunnihan, supra, and it best accomplishes the intent of our legislature to offer some protection to the “last insurer on the risk” when it designed the scheme of initial liability and reimbursement codified in § 31-299b.
The trial commissioner’s decision is therefore reversed, and this matter is remanded for further proceedings consistent with this opinion.
Commissioners Donald H. Doyle, Jr. and Amado J. Vargas concur.
1 We have held that “last employer” refers to the most recent term of employment that resulted in injurious exposure to the claimant. Joslyn v. U.S. Silica Co., 16 Conn. Workers’ Comp. Rev. Op. 247, 3281 CRB-8-96-2 (Oct. 24, 1997). For example, an individual who contracted lung cancer as a result of long-term exposure to chemicals used in manufacturing would be entitled under § 31-299b to a full payment of benefits from the last employer at whose plant he was exposed to such chemicals, or that employer’s insurer. If such individual’s lung cancer manifested itself several years after his retirement from the manufacturing industry, while he was working for, say, a video store or a landscaping company, that employer and its insurer would not be responsible for administering the individual’s claim. This is directly supported by the legislative history of Public Act 81-155, which brought § 31-299b into being. 24 S. Proc., Pt. 5, 1981 Sess., p. 1418 (remarks of Sen. Skelley). BACK TO TEXT
2 We disagree with the appellants’ assertion that, following our Supreme Court’s decision in Hunnihan, the claimant’s award might possibly be diminished to the extent that an insolvent insurer was involved in a case, or alternatively, that the employer (in this case, CMS Graphite) would be held responsible for the percentage of liability attributable to the now-defunct insurance carrier. Hunnihan clearly rests its holding of the non-applicability of CIGA on the proposition that an insurance company made liable by the provisions of § 31-299b should not benefit from CIGA’s protection, unlike a claimant or a policyholder. If the result of an insurer’s insolvency were that a claimant or a policyholder (employer) would be “stuck holding the bag” for a portion of a valid claim, then our Supreme Court would not have absolved CIGA from responsibility in the first place. Thus, § 31-299b demands that, at minimum, the last insurer on the risk must take full responsibility for a compensable claim involving an occupational disease or repetitive trauma injury that spans the coverage periods of one or more employers or insurers, with reimbursement available afterward from other insurers. Note also, Simmons v. UTC/Sikorsky Aircraft Div., 3904 CRB-4-98-9 (Sept. 17, 1999)(where claimant sustained two separate compensable injuries to her lungs, and CIGA inherited full liability for one injury as a result of insurer’s insolvency, CIGA could not refuse to pay for its proportional share of medical bills pursuant to 1997 voluntary agreement, as its responsibility ran directly to claimant rather than indirectly to another insurer pursuant to § 31-299b). BACK TO TEXT
3 As a postscript to the Brown decision, we direct the reader’s attention to our ruling in Lowe v. General Dynamics Corp./Electric Boat Div., 14 Conn. Workers’ Comp. Rev. Op. 118, 1746 CRB-2-93-5 (June 5, 1995), where we held that a trier erroneously reduced a claimant’s recovery for a 1989 occupational disease injury by 27% on account of asbestos exposure sustained while he worked for the Brooklyn Navy Yard. As the out-of-state (and likely, federally owned and operated) Navy Yard could not be considered an “employer” under our Act or under § 31-299b, it was improper for the commissioner to factor its causal contribution into the § 31-299b equation. “Apportionment of responsibility for an injury under § 31-299b is not possible unless there is at least one other legally cognizable party to whom some of the liability may be apportioned.” Id. BACK TO TEXT