Arrowood Indemnity Company v. Workers' Compensation trust fund, SJC-13696

Background

Arrowood Indemnity Company, a licensed Massachusetts insurer now in run-off, provided workers' compensation insurance to Scully Signal Company when an employee suffered a second work-related injury in 2001.
Arrowood continued paying workers' compensation benefits to the injured employee after entering run-off status in 2003 (i.e., stopped issuing new policies but administered legacy claims).
The Massachusetts Workers' Compensation Trust Fund is funded by assessments collected from employers (via their insurers), reimbursing insurers for certain payments related to second injuries under G.L. c. 152, §§ 37 and 65.
Arrowood stopped collecting and transmitting employer assessments after entering run-off but continued submitting required reports showing zero premiums/assessments.
Arrowood's claims for statutory second-injury reimbursements were approved until 2015, when the Trust Fund denied further requests, relying on the DIA's interpretation that run-off insurers are ineligible for reimbursement.
Appeals Court reversed the denial, holding nothing in the statutes barred reimbursement to insurers in run-off; Supreme Judicial Court granted further appellate review and ultimately agreed with the Appeals Court.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are insurers in run-off status statutorily eligible for second-injury reimbursement under G.L. c. 152, §§ 37 and 65?	Arrowood argued statutes only exclude self-insurers, non-insuring public employers, or non-participating employer groups—not run-off insurers.	Trust Fund argued run-off insurers should be treated as excluded because they no longer collect/transmit trust fund assessments, analogizing to statutory exclusions.	Yes, run-off insurers are eligible if they paid the benefits; statutes’ language does not exclude them.
Should administrative interpretation excluding run-off insurers be deferred to?	Arrowood claimed the DIA's reading contradicted the statute's plain meaning.	Trust Fund asserted its longstanding, reasonable interpretation filling a statutory gap deserved deference.	No deference required; the agency's interpretation was inconsistent with statutory text and purpose.
Does Arrowood receive a windfall by being reimbursed while not transmitting new assessments?	Arrowood argued reimbursement merely offsets benefits paid and employer continues to contribute through current insurer.	Trust Fund claimed reimbursement without current assessment payments results in an unjust windfall.	No windfall; reimbursement is for paid claims, and employer continues paying assessments.
Did the Legislature implicitly adopt the administrative/Trust Fund interpretation by not amending the statute after Home?	Arrowood maintained subsequent amendments unrelated to reimbursement eligibility.	Trust Fund argued legislative inaction equaled endorsement of their interpretation.	No; the amendments focused on unrelated auditing issues, not substantive reimbursement eligibility.

Key Cases Cited

American Mut. Liab. Ins. Co. v. Commonwealth, 379 Mass. 398 (explains the purpose of the Workers' Compensation Trust Fund as encouraging employment of previously injured workers by apportioning costs)
McLean's Case, 326 Mass. 72 (early articulation of the statutory purpose for second-injury fund reimbursement)
Fallon's Case, 322 Mass. 61 (further explanation of fund's role in second-injury cases)
Deerfield Plastics Co. v. Hartford Ins. Co., 404 Mass. 484 (application of experience rating in workers' compensation for premium adjustments)
Craft Beer Guild, LLC v. Alcoholic Beverages Control Comm'n, 481 Mass. 506 (standards for judicial review of agency statutory interpretation)
Commerce Ins. Co. v. Commissioner of Ins., 447 Mass. 478 (agency interpretations not entitled to deference when contrary to statutory text)