Insurance Co. of the State of Pennsylvania v. Great Northern Insurance Co.
473 Mass. 745
| Mass. | 2016Background
- Progression, Inc. had two primary workers’ compensation policies for the same employees: ISOP (domestic coverage) and Great Northern (coverage for employees traveling outside U.S./Canada).
- An employee was injured abroad in 2010 and gave timely written notice to Progression and pursued a claim before the Department of Industrial Accidents.
- Progression notified only ISOP of the claim; ISOP paid benefits and defended the claim before the department.
- ISOP later notified Great Northern and requested contribution; Great Northern declined, asserting Progression had not tendered the claim to it and that its policy conditions (notice by employer) were unmet.
- ISOP sued Great Northern seeking equitable contribution for defense and indemnity; the district court granted summary judgment to Great Northern, prompting certification of the legal question to the Massachusetts Supreme Judicial Court.
- The SJC held that under Massachusetts law an insurer who pays its share may obtain equitable contribution from a coinsurer despite the employer’s selective notice to only one insurer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insured’s intentional selective tender to one insurer bars other coinsurer’s right to equitable contribution | ISOP: insurer who pays may seek equitable contribution from coinsurer covering same risk | Great Northern: selective tender means it had no duty to defend/indemnify (policy required employer notice), so no contribution obligation | No — selective tender does not bar equitable contribution for workers’ compensation coverage under MA law |
| Whether equitable contribution applies where contractual notice condition was not met | ISOP: statutory scheme makes insurers directly liable to injured employee when employee notifies employer; insurer’s obligation is triggered by employee notice | Great Northern: policy language makes coverage contingent on employer notice; absent notice, insurer has no obligation | MA law renders employer-notice condition void to the extent it conflicts with statutory liability; insurer remains liable and subject to contribution |
| Whether the selective-tender exception (recognized in some jurisdictions) governs workers’ compensation claims in MA | ISOP: selective-tender exception conflicts with MA statutory framework and public policy; would reward nonperforming insurers and burden insolvency fund | Great Northern: selective-tender exception prevents contribution where insured did not tender claim to coinsurer | Court rejected selective-tender exception for workers’ compensation claims in MA |
| Whether insurers’ right to equitable contribution depends on contract between insurers or on equitable principles | ISOP: contribution is an equitable right independent of express inter-insurer contract | Great Northern: emphasizes policy terms and conditions as limiting coverage obligations | Court held contribution is equitable, not contractual, and exists where multiple insurers share primary liability for same risk |
Key Cases Cited
- Mission Ins. Co. v. United States Fire Ins. Co., 401 Mass. 492 (recognition of contribution among insurers where policies overlap)
- Travelers Ins. Co. v. Aetna Ins. Co., 359 Mass. 743 (affirming coinsurer contribution for jointly covered claim)
- Lexington Ins. Co. v. General Acc. Ins. Co. of Am., 338 F.3d 42 (discussing equitable contribution principles)
- Fireman's Fund Ins. Co. v. Maryland Cas. Co., 65 Cal. App. 4th 1279 (equitable contribution independent of insured’s rights)
- Truck Ins. Exch. v. Unigard Ins. Co., 79 Cal. App. 4th 966 (explaining purpose and mechanics of equitable contribution)
- Mutual of Enumclaw Ins. Co. v. USF Ins. Co., 164 Wash. 2d 411 (selective-tender exception adopted by a minority of jurisdictions)