State of Connecticut Workers' Compensation Commission, John A. Mastropietro, Chairman
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McCoy and Anthem Blue Cross & Blue Shield v. Cook Willow Convalescent Home

CASE NO. 5456 CRB-5-09-4

COMPENSATION REVIEW BOARD

WORKERS’ COMPENSATION COMMISSION

MAY 18, 2010

CARMEN McCOY

CLAIMANT-APPELLEE

and

ANTHEM BLUE CROSS & BLUE SHIELD

v.

COOK WILLOW CONVALESCENT HOME

EMPLOYER

and

CONNECTICUT INSURANCE GUARANTY ASSOCIATION

GUARANTY FUND MANAGEMENT SERVICES

INSURER

RESPONDENTS-APPELLANTS

APPEARANCES:

Claimant did not appear at oral argument on October 23, 2009 or at the formal hearing of October 28, 2008. At proceedings below, claimant was represented by Mark D. Malley, Esq., Seabourne & Malley, 30 Main Street, P.O. Box 487, Thomaston, CT 06787.

Anthem Blue Cross & Blue Shield was represented by Richard T. Stabnick, Esq., Pomeranz, Drayton & Stabnick, LLC, 95 Glastonbury Boulevard, Glastonbury, CT 06033.

Respondents Cook Willow Convalescent Home and Connecticut Insurance Guaranty Association were represented by Kevin Blake, Esq., Welch, Teodosio, Stanek & Blake, 375 Bridgeport Avenue, P.O. Drawer 668, Shelton, CT 06484 and Mark D. Robins, Esq., Nixon Peabody, LLP, 100 Summer Street, Boston, MA 02110.

This Petition for Review from the April 22, 2009 Finding and Award of the Commissioner acting for the Fifth District was heard on October 23, 2009 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners Randy L. Cohen and Stephen B. Delaney.

OPINION

JOHN A. MASTROPIETRO, CHAIRMAN. The respondents have petitioned for review from the April 22, 2009 Finding and Award of the Commissioner acting for the Fifth District. We find error and accordingly reverse the decision of the Commissioner.1

The trial commissioner made the following factual findings which are essentially undisputed. On January 27, 1997, the claimant sustained a compensable injury to her left leg while in the employ of Cook Willow Convalescent Home. The Workers’ Compensation Commission approved a voluntary agreement on April 15, 1999. On the date of the claimant’s injury, Cook Willow Convalescent Home insured its workers’ compensation liability with Reliance Insurance Company, which was subsequently ordered to liquidate on October 3, 2001 by the Commonwealth Court of Pennsylvania.2

During the period from October 20, 2000 through May 17, 2002, Anthem Blue Cross & Blue Shield (“Anthem”) paid $5,068.84 in medical expenses relative to the claimant’s compensable leg injury. On May 24, 2001, the Workers’ Compensation Commission received a certified letter dated May 23, 2001 from Anthem asserting a lien for benefits paid on the claimant’s behalf pursuant to § 31-299a(b) C.G.S.3 The Connecticut Insurance Guaranty Association (“CIGA”) has refused to satisfy the lien asserted by Anthem, contending that Anthem’s claim is not a “covered claim” and, as such, is ineligible for reimbursement by CIGA pursuant to the terms of § 38a-838(5) C.G.S.4 The trial commissioner determined that Anthem was entitled to recover from CIGA the payments expended on behalf of the claimant and ordered CIGA to reimburse Anthem in the amount of $5,068.84.

Respondent CIGA appealed, arguing that the trial commissioner committed reversible error when he ordered CIGA to reimburse Anthem for the benefits paid on behalf of the claimant.5 CIGA contends that “Anthem’s reimbursement claim falls squarely within the CIGA Act’s unambiguous prohibition on CIGA paying a claim by or for the benefit of an insurer.” Appellant’s Brief, p. 1. As a corollary, CIGA also asserts that the trial commissioner erroneously ordered CIGA to reimburse Anthem for benefits paid to the claimant during the period between October 2000 and October 2001 when the claim was still being administered by Reliance Insurance Company. “… CIGA does not succeed to the general liabilities of Reliance but is only the statutory guarantor of ‘covered claims’ as defined by Conn. Gen. Stat. §§ 38a836-853.” Id., at 2. Given that we find persuasive CIGA’s arguments relative to the trier’s decision to order CIGA to reimburse Anthem in toto, we do not reach the merits of CIGA’s corollary argument.6

We begin our analysis with a recitation of the standard of appellate review applicable to this matter. As this board has previously remarked, “we have a limited scope of review, as our standard of review is deferential to the finder of fact…. This presumption, however, can be challenged by the argument that the trial commissioner did not properly apply the law or has reached a finding of fact inconsistent with the evidence presented at the formal hearing.” Christensen v. H & L Plastics Co., Inc., 5171 CRB-3-06-12 (November 19, 2007). See also Caraballo v. Specialty Foods Group, Inc./Mosey’s Inc., 5082 CRB-1-06-4 (July 3, 2007). Thus, “appellate review requires every reasonable presumption in favor of the action, and the ultimate issue for us is whether the trial court could have reasonably concluded as it did.” Daniels v. Alander, 268 Conn. 320, 330 (2004).

In order to address the issues raised by this appeal, a brief review of the history of the origins of the Connecticut Insurance Guaranty Association is instructive. CIGA

was established for the purpose of providing a limited form of protection for policyholders and claimants in the event of insurer insolvency. The protection it provides is limited based upon its status as a nonprofit entity and the method by which it is funded. Specifically, the association is a nonprofit legal entity created by statute to which all persons licensed to transact insurance in the state must belong.

Hunnihan v. Mattatuck Mfg. Co., 243 Conn. 438, 451 (1997).

Because CIGA was created by statute, its powers are narrowly defined and strictly limited. As a result, “the association is authorized to pay only covered claims, and must deny all other claims.”7 Id., at 449. Pursuant to § 38a838(5) C.G.S. (Rev. to 1997), the definition of a “covered claim” specifically excludes “any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise. . . .” The public policy goal behind this exception is deliberate. “The exclusion of claims by insurers leaves the risk of insurer insolvency on the insurance industry. The result is that policyholders, who in effect fund the association, pay only for protection for fellow policyholders and claimants in the event that an insurer becomes insolvent.” Hunnihan, supra, at 452. In Hunnihan, the court affirmed the decision of the trial commissioner to deny an apportionment claim brought by a solvent insurer against CIGA pursuant to § 31-299(b) C.G.S.8 The court chose to broadly interpret the words “or otherwise” contained in § 38a-838(5) C.G.S., stating, “[c]ontrary to the assertion … that the phrase ‘or otherwise’ is of uncertain meaning, we conclude that the language provides a strong indication that under the guaranty act, all claims by insurers are excluded from the definition of a covered claim.” (Emphasis added.) Id., at 450-451.

In the matter at bar, Anthem asserts that this exception is not applicable to claims brought pursuant to § 31-299a C.G.S. because “Anthem does not contribute to the Association and the claim by Anthem is directed against the employer.” Appellee’s Brief, pp. 6-7. Thus, “[t]he Guaranty Fund, as the substitute for the insurer at the time of the injury is responsible for all benefits including medical bills which arise as the result of the accident in question.” Id., at 7. Anthem also likens itself to the self-insured employer in Doucette v. Pomes, 247 Conn. 442 (1999), arguing that because the Doucette court determined that the self-insured employer was “neither a policy holder nor a claimant and was also found not to be a member of the insurance industry,” Appellee’s Brief, p. 9, “the self-insured in Doucette was characterized more accurately as a resident company that had substantial losses due to the insolvency of a member of the insurance industry, rather than a member itself of that industry.” Appellee’s Brief, p. 9. In accordance with that holding, Anthem argues that it, too, “is not a member of the workers’ compensation insurance industry and simply stands in the shoes of the claimant and therefore, is more akin to a member of the general public that has sustained losses or incurred bills due to the insolvency of a member of the insurance industry.” Id.

We are not so persuaded. In Doucette, the court concluded, “[t]he fact that a selfinsuring employer has chosen to retain its own workers’ compensation risk rather than purchase insurance does not transform a company’s business to that of insurance, that is, the employer is not ‘doing any kind or form of insurance business’ within the meaning of § 38a-1(11).”9 Id., at 457. Consequently, the Doucette court “join[ed] . . . the majority of courts that have decided the status of self-insured employers under an insurance guaranty act, and we hold that self-insured employers are not insurers for purposes of Connecticut’s guaranty act.” Id., at 466. Our Supreme Court subsequently referred to this holding in Esposito v. Simkin Industries, Inc., 286 Conn. 319 (2008) in which the court remarked, “[w]e note that, in the nine years since our decision in Doucette, the legislature has revisited the definitional section of the guaranty act, § 38a838, on three occasions, but has made no revisions to the definition of covered claims to indicate its disagreement with our conclusion therein that a self-insurer is not an insurer.” Esposito, supra, at 335.

In light of the fairly broad definition ascribed by the Doucette court to the term insurer, i.e., “persons doing any kind or form of insurance business,’” we confess to being somewhat at a loss as to how Anthem may be removed from that ambit. This is particularly so in light of § 38a-1(10) C.G.S., which defines the term “insurance” as “any agreement to pay a sum of money, provide services or any other thing of value on the happening of a particular event or contingency or to provide indemnity for loss in respect to a specified subject by specified perils in return for a consideration.” We fail to comprehend how Anthem’s business model can be credibly distinguished from the foregoing definition. As such, the strictures of § 1-2z C.G.S. compel the rejection of Anthem’s argument in light of the plain language of the exclusion contained in the definition of a “covered claim” pursuant to § 38a-838(5) C.G.S.10 Furthermore, while we recognize that in its different sections the guaranty act does distinguish between “insurer” and “member insurer,” we deem it a distinction without a difference for our purposes, given that the plain language of the § 38a-838(5) G.S.G. refers to “any insurer” and not to a “member insurer.”

Anthem also asserts that CIGA, “as the substitute for the insurer at the time of the injury is responsible for all benefits including medical bills which arise as the result of the accident in question.” Appellee’s Brief, p. 7. While this statement may be an accurate recitation of CIGA’s responsibilities toward a workers’ compensation claimant, it certainly does not extend to all the parties involved in a workers’ compensation claim.

The members of the insurance industry itself bear the risk of loss of their own direct claims against the insolvent carrier, which they still may assert against the insolvent carrier’s receiver. In other words, the Guaranty Act does not provide a solvent substitute for an insolvent insurer, but, rather, is a limited form of protection for the public.

Hunnihan, supra, at 453.

Anthem also contends that the distinction drawn by CIGA between the factual circumstances in Franklin v. Superior Casting, 5269 CRB-7-07-9 (June 15, 2009), appeal pending, S.C. 18501, and the case at bar are “specious or at the very least, unpersuasive.” Appellee’s Brief, p. 12. We disagree. In Franklin, the trial commissioner, in his Finding and Award dated August 28, 2007, ordered CIGA, pursuant to the terms of § 31-299(b) C.G.S, to “reimburse any group carrier or Medicare for any medical expenses incurred for treatment of Claimant’s silicosis.” Findings, ¶ M. On appeal, we affirmed the decision of the trier, noting that “a contrary result would be counter to our statutory mission which promotes the prompt provision of medical care to injured workers.” Franklin, supra. We also held that “not honoring such liens could cause employees of firms who were covered by defunct insurers to question how to obtain health care without impairing their rights to compensation under our Act.” Id. However, the critical distinction to be drawn between Franklin and the instant matter is that in Franklin, it was CIGA, rather than the insolvent insurer, who made the initial decision to deny the claimant’s medical treatment. Clearly, any decision that released CIGA from its obligations under such a fact pattern would indeed “yield absurd or unworkable results.” Section 1-2z C.G.S. In fact, CIGA concedes as much, stating in its brief that it

does not contend that CIGA can make a decision to deny a valid claim and thereby force a health insurer to pay such claim, and then take the position that CIGA is prohibited from reimbursing the health insurer by reason of the exclusion of insurer claims. . . . The insurer exclusion is not intended as a license to allow CIGA to wrongfully deny coverage and thereby shift a burden from CIGA to an insurer.

Appellant’s Brief, p. 10.

Given that in the matter at bar, the insolvent insurer, and not CIGA, was responsible for denying the claimant’s medical treatment, the resolution reached by this board in Franklin, supra, is simply inapposite here.

We are cognizant that our decision in this matter is not without its own potentially chilling public policy implications. In Franklin, we referenced Doucette, supra, wherein the Supreme Court stated, “[i]t does not make sound policy to compel an employer, prior to paying benefits to an employee, to determine its rights and obligations in light of other potential sources of recovery by the employee.” Doucette, supra, at 473. We also noted that “equally meritorious policy arguments weigh against forcing claimants or medical care providers to question whether reimbursement is contingent on the solvency of insurance carriers, particularly during the present economic crisis.” Franklin, supra. Obviously, any decision which could jeopardize a claimant’s access to medical treatment while a workers’ compensation claim is being litigated is of grave concern to this board. We recognize that such a decision could both “ultimately result in a detriment to the employee who would then incur additional costs through increased premiums on his or her health insurance,” Appellee’s Brief, p. 12, and could “also result in a detriment to society by causing Anthem and other health insurers to increase their premiums to cover medical expenses which should rightfully fall under the Workers’ Compensation Act with responsibility placed on the employer and its insurer.”11 Id.

Nevertheless, having reviewed the language of the relevant statutes along with the pertinent case law, we believe that while a different result would perhaps better serve the interests of equity, it would not be sustainable under the existing language of § 38a-838(5) C.G.S.12 As we observed in Christensen, supra, “we cannot find legislative authority to expand the role of CIGA to become a de facto receiver responsible for addressing the commercial undertakings of insolvent insurance carriers.” Id. Changes to the law, if any, are in the sole discretion of the legislature. Consequently, this board is unable to provide the relief sought by Anthem in this forum.

Having found error, the April 22, 2009 Finding and Award of the Commissioner acting for the Fifth District is hereby reversed.

Commissioner Randy L. Cohen concurs in this opinion.

STEPHEN B. DELANEY, COMMISSIONER, CONCURRING. I concur with the result reached by the panel and agree that our decision herein was compelled by the current composition of § 31-838(5) C.G.S. However, I write separately to underscore my concerns regarding the potentially chilling effect this decision may have on public policy. There is no question that the access to group health insurance coverage afforded by the provisions of § 31-299a(b) C.G.S. all too often constitutes the only avenue to medical care for claimants whose workers’ compensation claims are being contested by their employer. This coverage is particularly vital in matters where litigation generated by the contest of the claim can take many months. Lacking recourse to medical care through the employer’s workers’ compensation carrier, those claimants fortunate enough to have group medical insurance are able to garner the medical care they require through private insurance while their claim is litigated.

Unfortunately, I very much fear that the decision we reach today will imperil this lifeline. Group health insurers may, quite understandably, find themselves reluctant to step in and provide coverage for medical care to claimants while their workers’ compensation claims are being contested. This reluctance may prove disastrous for injured claimants as, at best, it would force the health insurer to attempt to assess the long-term solvency of the implicated workers’ compensation carrier before authorizing medical care or, at worst, would result in the denial of coverage altogether. While I recognize that the legislature, in establishing CIGA, never intended that it operate as a “de facto receiver” for insolvent insurance carriers, I do question whether the relatively broad language of § 31-838(5) C.G.S. contemplated the exclusion from CIGA’s definition of “covered claims” the liens of health insurers incurred pursuant to § 31-299a(b) C.G.S. If not, corrective action should be taken in order to protect both the interests of the health insurance companies and future claimants who, through no fault of their own, may find themselves in the same position as the instant claimant did.

1 We note that a motion for extension of time was granted during the pendency of this appeal. BACK TO TEXT

2 See Commonwealth Court of Pennsylvania Case No. 269 M.D. 2001. BACK TO TEXT

3 Sec. 31-299a(b) C.G.S. (Rev. to 1997) states: [w]here an employer contests the compensability of an employee’s claim for compensation, and the employee has also filed a claim for benefits or services under the employer’s group health, medical, disability or hospitalization plan or policy, the employer’s health insurer may not delay or deny payment of benefits due to the employee under the terms of the plan or policy by claiming that treatment for the employee’s injury or disease is the responsibility of the employer’s workers’ compensation insurer. The health insurer may file a claim in its own right against the employer for the value of benefits paid by the insurer within two years from payment of the benefits. The health insurer shall not have a lien on the proceeds of any award or approval of any compromise made by the commissioner pursuant to the employee’s compensation claim, in accordance with the provisions of section 38a-470, unless the health insurer actually paid benefits to or on behalf of the employee. BACK TO TEXT

4 Sec. 38a-838(5) C.G.S. (Rev. to 1997) states, in pertinent part: “‘[c]overed claim’ means an unpaid claim … provided the term ‘covered claim’ shall not include any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise….” BACK TO TEXT

5 Respondent CIGA filed a Motion to Correct which was denied save for a correction intended to address a typographical error and, arguably, to “promote clarity” in ¶ 5 of the Finding and Award. As no appeal from the Motion to Correct was taken by either party, we decline to address the merits herein. BACK TO TEXT

6 In support of its position, CIGA has provided a number of cases from other jurisdictions which are not binding on this board. Given that we believe Connecticut precedent satisfactorily addresses the issues before us, we decline to comment on the cases cited. BACK TO TEXT

7 See § 38a-841(1)(d) C.G.S. (Rev. to 1997) which states, in pertinent part, that CIGA shall “investigate claims brought against said association and adjust, compromise, settle, and pay covered claims to the extent of said association’s obligations, and deny all other claims.” BACK TO TEXT

8 Sec. 31-299b C.G.S. (Rev. to 1997) states, in pertinent part: “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. . . .” BACK TO TEXT

9 Section 38a-1(11) C.G.S. (Rev. to 1997) states, in pertinent part: “‘Insurer’ or ‘insurance company’ includes any corporation, association, partnership or combination of persons doing any kind or form of insurance business other than a fraternal benefit society, and shall include a receiver of any insurer when the context reasonably permits….” BACK TO TEXT

10 Section 1-2z C.G.S. states, “[t]he meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.” BACK TO TEXT

11 However, CIGA argues that “[t]he use of the broader term ‘insurer’ in provisions that reduce CIGA’s obligations reflects the Legislature’s determination that a solvent insurer such as Anthem, which has collected premiums to cover the loss in question, should absorb that loss instead of CIGA, regardless of whether that insurer pays assessments to CIGA.” Appellant’s Reply Brief, p. 6. BACK TO TEXT

12 See footnote 4, supra. BACK TO TEXT

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