Massachusetts Insurers Insolvency Fund v. Berkshire Bank, 475 Mass. 839

Background

Donna Poli, an employee of Woronoco Savings Bank, was injured in 2003 and received workers' compensation benefits under a Centennial policy; Woronoco merged into Berkshire in 2005.
Centennial entered liquidation in 2011; the Massachusetts Insurers Insolvency Fund (Fund) assumed administration and in 2011 paid Poli $85,000 plus future medical costs under a lump-sum agreement approved by the DIA.
The Fund demanded reimbursement from Berkshire in 2012 under G. L. c. 175D, § 17 (the high net worth insured provision); Berkshire refused.
The Fund sued in Superior Court; both parties moved for summary judgment. The motion judge ruled for Berkshire, holding the Fund could not recover because payments were not made “on behalf of” the insured under § 17(3).
The Supreme Judicial Court granted direct appellate review and considered whether § 17(3)’s phrase “to or on behalf of the insured, whether for indemnity, defense, or otherwise” authorized recovery of workers’ compensation payments made by the Fund.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 17(3) allows the Fund to recover workers' compensation amounts it paid when the insured is a "high net worth insured"	Fund: payments to Poli were made "on behalf of" Berkshire because the insurer acts to satisfy Berkshire's statutory obligation; thus § 17(3) permits recovery	Berkshire: under Massachusetts law insurer bears direct liability to pay WC benefits, so payments are not "on behalf of" the employer; § 17(3) should not reach WC claims	Held: § 17(3) authorizes recovery; Fund's payments were made "to or on behalf of" Berkshire and fall within "indemnity, defense, or otherwise"
Whether the statutory phrase must be read to exclude workers' compensation because employers have no continuing liability once insured	Fund: employer retains a statutory obligation to provide coverage; insurer's payments fulfill that obligation and therefore are "on behalf of" the employer	Berkshire: technical meanings of "indemnity" and "defense" imply third-party liability context that excludes WC	Held: insurer policy language and statutory scheme show indemnity/defense concepts encompass employer's entitlement; no textual or historical basis to exempt WC from § 17
Whether § 8(1) (no cause of action against insured) overrides § 17 recovery rights	Fund: later and more specific § 17 governs and conflicts with § 8(1) so § 17 controls	Berkshire: § 8(1) bars Fund suits against insureds for sums paid	Held: § 17, being later and specific, controls; § 8(1) does not bar § 17 recovery
Whether legislative history/structure implies an implicit WC exception to § 17	Fund: Legislature explicitly treated WC differently when intended (removed WC exclusion, lifted cap), so absence of an express exception means none	Berkshire: contends Model Act or WC scheme suggests exclusion	Held: legislative history and Model Act commentary support that § 17 applies to WC; no implicit exemption found

Key Cases Cited

Massachusetts Care Self-Ins. Group, Inc. v. Massachusetts Insurers Insolvency Fund, 458 Mass. 268 (summary judgment standard and statutory interpretation)
Massachusetts Insurers Insolvency Fund v. Smith, 458 Mass. 561 (describing Fund's role and purpose)
Clark Equip. Co. v. Massachusetts Insurers Insolvency Fund, 423 Mass. 165 (background on Fund and Model Act provenance)
HDH Corp. v. Atlantic Charter Ins. Co., 425 Mass. 433 (worker's compensation policy provisions as indemnity/defense of employer)
Insurance Co. of Penn. v. Great Northern Ins. Co., 473 Mass. 745 (insurer's direct liability for WC benefits)