Kirilenko v. State of Connecticut Department of Children & Families

The respondent State of Connecticut and its third-party administrator Berkley Administrators were represented by Sharon R. McLoughlin, Esq., Berkley Administrators, 195 Scott Swamp Road, P.O. Box 4012, Farmington, CT 06034-4012.

The respondent State of Connecticut and its third-party administrator GAB Robins North America, Inc. were represented by William P. Hogan and Richard Sinclair, 800 Connecticut Boulevard, 5th Floor, East Hartford, CT 06108.

This Petition for Review from the February 24, 2004 Finding and Award of the Commissioner acting for the Eighth District was heard September 24, 2004 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners Charles F. Senich and Donald H. Doyle, Jr.

OPINION

JOHN A. MASTROPIETRO, CHAIRMAN. The respondent State of Connecticut and its third-party claims administrator Berkley Administrators [hereinafter “Berkley”] have petitioned for review from the February 24, 2004 Finding and Award of the Commissioner acting for the Eighth District. Berkley contends in its appeal that the trier went beyond his statutory jurisdiction when he ordered Berkley to reimburse a subsequent TPA, GAB Robins, for an interest penalty that GAB Robins had advanced to the claimant pursuant to § 31-295. We find error, and reverse the decision of the trial commissioner.

The trial commissioner found that the claimant sustained compensable injuries while in the employ of the respondent State of Connecticut on September 21, 1994, May 10, 1995, July 13, 1999, February 17, 2000, and August 23, 2000. At the time of each of those injuries, the respondent’s workers’ compensation claims were being administered by Berkley. In its capacity as TPA, Berkley accepted the claimant’s injuries, drafted some voluntary agreements that noted permanent partial disabilities with dates of maximum medical improvement prior to December 2001, and made “some sporadic payments.” Findings, ¶ 6. GAB took over the role as the state’s claims administrator in December 2001, and confirmed that Berkley had incorrectly processed and paid the claimant’s permanent partial disability payments. GAB Robins was ordered to pay the claimant the unpaid permanency benefits, including a statutory interest penalty of 10% pursuant to § 31-295(c) C.G.S. That penalty amounted to $10,383.42.

GAB complied with the payment order, and then sought reimbursement in this forum from Berkley based on the latter’s failure to properly administer these claims. The trial commissioner found that, during their contract periods, GAB and Berkley both assumed full responsibility for properly administering state claims under chapter 568, and that any failure to do so related back to the TPA who was acting as a state agent at the time the benefits were due and improperly processed. The trier found that Berkley’s failure to properly make payments for permanent partial disability had caused GAB Robins to incur the interest penalty, and ordered Berkley to take responsibility for that interest penalty by reimbursing GAB Robins for that payment. Berkley has filed a petition for review from that decision.

Berkley contends on appeal that the trial commissioner lacked jurisdiction to order it to repay GAB Robins for the § 31-295(c) interest award. Because Berkley is neither an employer or an insurer, it contends that there is no statutory authority for such an order, as the trier did not need to distinguish the respective liabilities of the two TPAs in order to resolve the underlying workers’ compensation claim. “The determination as to which third party administrator is at fault or liable is not ‘incidentally necessary’ to the resolution of this case, as the claimant’s issue is resolved nor does it directly implicate the rights of the claimant or the Commissioner’s administration of the claim.” Brief, p. 9. We concur with this claim of error.

Our decision is primarily controlled by the recent case of Audi v. Blakeslee Arpaia Chapman, 4624 CRB-3-03-12 (February 10, 2004), where this board discussed the role of third-party administrators in workers’ compensation cases. We noted that, in normal circumstances, the use of a TPA is not mandated by the Act. Rather, outside administrators “voluntarily contract with self-insured employers (and, in practice, with some insurance companies as well) to handle the management of workers’ compensation claims on behalf of the companies that hire them. These contracts are not regulated or required by the Workers’ Compensation Act.” Id.

In Audi, this board was asked to review a trier’s refusal to enter a separate order against a TPA whose employees’ actions had led to the imposition of sanctions against the self-insured employer. Upholding that decision, we explained, “The Act contains no indication that [a self-insured] employer may avoid the negative consequences of failing to comply with its duties by attributing blame to an agent. . . . With the privilege of self-insurance comes the responsibility to properly compensate one’s employees. As this commission has no jurisdiction over the employer-administrator contract, primary accountability in this forum must therefore fall on the party charged with the statutory duty to pay compensation. Any question of damages for breach of contract must be raised in another forum; it is not our role to differentiate between the employer and its administrator in apportioning fines and other sanctions.” Id., citing Cirrito v. Resource Group Ltd. Of Conn., 4248 CRB-1-00-6 (June 19, 2001).

It would be inconsistent with our holding in Audi to allow a trial commissioner to enter an award of reimbursement from one TPA to another TPA. Having jurisdiction over neither the state’s contract with GAB Robins nor its contract with Berkley, this Commission is not empowered to issue an order directing one such entity to reimburse the other for sums paid out pursuant to the employer-administrator contract. By recognizing this limitation on our jurisdiction, we remain consistent with the philosophy expressed by our Supreme Court in Stickney v. Sunlight Construction, Inc., 248 Conn. 754 (1999), which held that the Act must explicitly provide authority by which this Commission may resolve a coverage issue involving a dispute between two insurers. Whenever the application of laws outside the Act is required, either a specific reference to those laws must be present within the Act, or the interpretation of outside statutory provisions and/or common law principles must be incidentally necessary to resolve a case arising under the Act. Id., 763-68; 764, n. 5; see also, Hammick v. Hartford, 4608 CRB-1-03-1 (December 29, 2003)(commissioner may resolve common-law issues insofar as is necessary to resolve chapter 568 issue).

It was not necessary for the trial commissioner to determine which TPA was ultimately responsible for the delay in the payment of the claimant’s benefits in order to assess liability against the employer, the respondent State of Connecticut. Thus, the trier lacked the authority to grant GAB Robins’ June 3, 2003 request to consider the reimbursement issue, even though this forum might seem to be an efficient place to resolve the issue. See, e.g., Starks v. State/University of Connecticut, 270 Conn. 1 (2004)(though based on sound administrative reasoning, this Commission’s practice of determining offsets of § 31-308a benefits against state disability retirement benefits could not continue due to lack of legislative authority). Without the authority to consider such a claim, we must leave its determination to another forum.