(1) An insurer which makes timely payments pursuant to subsection one of section seven, may make such payments for a period of one hundred eighty calendar days from the commencement of disability without affecting its right to contest any issue arising under this chapter. An insurer may terminate or modify payments at any time within such one hundred eighty day period without penalty if such change is based on the actual income of the employee or if it gives the employee and the division of administration at least seven days written notice of its intent to stop or modify payments and contest any claim filed. The notice shall specify the grounds and factual basis for stopping or modifying payment of benefits and the insurer's intention to contest any issue and shall state that in order to secure additional benefits the employee shall file a claim with the department and insurer within any time limits provided by this chapter.

Any grounds and basis for noncompensability specified by the insurer shall be the sole basis of the insurer's defense on the basis of compensability, unless based on newly discovered evidence; provided, however, that an insurer's inability to defend on any issue shall not relieve an employee of the burden of proving each element of any case. Any failure of an insurer to make all payments due an employee under the terms of an order, decision, arbitrator's decision, approved lump sum or other agreement, or certified letter notifying said insurer that the employee has left work after an unsuccessful attempt to return within the time frame determined pursuant to paragraph (a) of subsection (2) of this section within fourteen days of the insurer's receipt of such document, shall result in a penalty of two hundred dollars, payable to the employee to whom such payments were required to be paid by the said document; provided, however, that such penalty shall be one thousand dollars if all such payments have not been made within forty-five days, two thousand five hundred dollars if not made within sixty days, and ten thousand dollars if not made within ninety days. No penalty shall be assessed a self-administered public employer or the Workers' Compensation Trust Fund under this paragraph where delivery has been made to the employee or other recipient of a copy of an official request made by such employer or fund to the appropriate authority for the issuance of a check in the appropriate amount to said recipient, provided that delivery of such copy to said employee or recipient has been made within fourteen days of the employer or fund's receipt of the order, decision or agreement.

(2) An insurer paying weekly compensation benefits shall not modify or discontinue such payments except in the following situations:

1. (a) compensation has been modified or discontinued pursuant to an order or decision of an arbitrator, an administrative judge, the reviewing board or court of the commonwealth;
2. (b) the compensation recipient has assented thereto in writing on a form prescribed by the department and the original of such form has been filed with the department;
3. (c) the employee has returned to work; provided, however, that the insurer shall forthwith resume payments if, within twenty-eight calendar days of return to such employment, the employee leaves such employment and, within twenty-one calendar days thereafter, informs the employer and insurer by certified letter that the disability resulting from the injury renders him incapable of performing such work; provided, further, that if due, compensation shall be paid under section thirty-five;
4. (d) the insurer has possession of (i) a medical report from the treating physician, or, if an impartial medical examiner has made a report pursuant to section eleven A or subsection (4) of this section, the report of such examiner, and either of such reports indicates that the employee is capable of return to the job held at the time of injury, or other suitable job pursuant to section thirty-five D consistent with the employee's physical and mental condition as reported by said physician and (ii) a written report from the person employing said employee at the time of the injury indicating that such a suitable job is open and has been made available, and remains open to the employee; provided, however, that if due, compensation shall be paid under section thirty-five; provided, further, that if such employee accepts said employment subsequent to a modification or termination pursuant to this paragraph, compensation shall be reinstated at the prior rate if the employee should cease work in accordance with paragraph (c) of this section or should be terminated by the employer because of the employee's physical or mental incapacity to perform the duties required by the job;
5. (e) payments are terminated or modified pursuant to subsection (1);
6. (f) the insurer has received a communication from the office of education and vocational rehabilitation authorizing suspension or reduction of payment under section thirty G;
7. (g) the benefits payable to the employee have been exhausted pursuant to sections thirty-one, thirty-four, or thirty-five;
8. (h) payments are suspended or reduced pursuant to section eleven D for failure to respond to an insurer's written request to provide an earnings report, or for past overpayments;
9. (i) payments are suspended pursuant to section forty-five, provided that the department shall provide by rule for the manner of any such suspension, and subsequent reinstatement or forfeiture;
10. (j) the employee has been incarcerated pursuant to conviction for a felony or misdemeanor and has thereby forfeited any right to compensation during such period; or
11. (k) payments are suspended or reduced pursuant to section thirty-six B; or

12. (l) the employee has died.

    For purposes of clause (d) of this section, any termination of an employee within one year of resumption of work with his prior employer will be presumed to be for the reason that the employee was physically or mentally incapable of performing the duties required by the job or that the job was unsuitable for the employee, unless the insurer demonstrates the contrary by a preponderance of evidence at a subsequent proceeding.

    [There is no subsection (3).]