Espinal's Case

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19-P-1483 Appeals Court

19-P-1484

MIGUEL ESPINAL'S CASE (and a companion case1).

Nos. 19-P-1483 & 19-P-1484.

Suffolk. May 20, 2020. - July 29, 2020.

Present: Green, C.J., Wolohojian, & Blake, JJ.

Workers' Compensation Act, Insurer, Cancellation of insurance,

Notice, Findings by administrative judge, Decision of

Industrial Accident Reviewing Board. Insurance, Workers'

compensation insurance, Assigned risk, Cancellation,

Notice. Notice, Cancellation of insurance. Administrative

Law, Agency's interpretation of statute. Mail.

Appeal from decisions of the Industrial Accident Reviewing

Board.

Garrett Harris for ACE American Insurance Company.

Robert S. Martin for Great Divide Insurance Company.

Angel C. Melendez, for Miguel Espinal & another, was

present but did not argue.

GREEN, C.J. Under G. L. c. 152, § 65B, an insurer that

wishes to cancel an assigned risk workers' compensation

1 Martin Herrera's Case.

2

insurance policy is required to give notice to the rating

organization and the insured employer, and no such notice of

cancellation shall become effective until after the employer is

given the opportunity to file objections with the Department of

Industrial Accidents (department), within ten days after receipt

of notice of cancellation. These two appeals present the

question whether an insurer is obliged to prove receipt of such

notice, or whether the insurer may instead give notice to the

insured by first class mail (as prescribed by G. L. c. 175,

§ 187C), and rely on the rebuttable presumption of receipt

furnished by the so-called "mailbox rule." See, e.g., Eveland

v. Lawson, 240 Mass. 99, 103 (1921); Mass. R. A. P. 14 (c), 365

Mass. 859 (1974).2 An administrative judge concluded that the

insurer (here, ACE American Insurance Company [Ace]) was

required to prove receipt of notice by the employer and, on

Ace's appeal, the department's reviewing board affirmed. We

vacate the decision and remand for further proceedings.

Background. The employees, Miguel Espinal and Martin

Herrera, were injured on September 15, 2016, while working for

demolition contractor Cruz Abatement & Contracting Services LLC

(Cruz). Cruz was a subcontractor; the general contractor on the

2 See now Mass. R. A. P. 14 (c), as appearing in 481 Mass.

1626 (2019).

3

project was Moran Environmental Recovery (Moran). Moran was

insured by Great Divide Insurance Company (Great Divide).

After a previous workers' compensation policy held by Cruz

with a different insurer was cancelled for nonpayment, effective

as of February 26, 2015, Cruz applied to the Massachusetts

Workers' Compensation Rating and Inspection Bureau (rating

bureau, also known as the assigned risk pool) for an assigned

risk workers' compensation insurance policy. The rating bureau

assigned the risk to Ace. After issuance, and cancellation for

nonpayment, of two policies by Ace, on or about February 26,

2016, Cruz again applied to the rating bureau for an assigned

risk workers' compensation policy, and the rating bureau again

assigned the risk to Ace. Ace issued a policy to Cruz, to be

effective from February 26, 2016, to February 26, 2017.

In its application, Cruz listed its address as 60 Island

St., Suite 211, Lawrence, MA 01840. On March 18, 2016,

Travelers Indemnity Company (Travelers), as servicer for Ace,

mailed an invoice for the premium due for the new policy.3 Cruz

did not pay either the total balance or the minimum payment

required in the invoice to keep the policy in force. On April

18, 2016, Travelers sent to Cruz a notice of cancellation, by

3 The invoice showed a balance due of $20,204, after

application of a deposit of $7,073 made with the application,

with a minimum payment amount of $6,565.50.

4

first class mail, postage prepaid, addressed to the address

listed in Cruz's application and policy, and listing an

effective date of cancellation of May 8, 2016.4 When it mailed

the notice of cancellation to Cruz, Travelers obtained a stamped

certificate of mailing receipt from the United States Postal

Service, showing Cruz's name and address. On April 22, 2016,

Cruz was issued a certificate of liability insurance stating

that the policy was "canceled effective 05-08-2016."5

The injured employees filed claims against Ace (their

employer's insurer) and Great Divide (Moran's insurer). An

administrative judge consolidated the claims, and ordered Great

Divide to pay benefits under G. L. c. 152, § 34, to both

employees; the judge denied the employees' claims against Ace.

Great Divide and the employees appealed and, after two days of

hearing, the judge issued orders concluding that Ace had not

effectively canceled the policy it had issued to Cruz.

Accordingly, the judge concluded that Ace was obliged for

payment of any remaining benefits to the employees, and to

4 Travelers also mailed a notice of cancellation of Cruz's

policy to the rating bureau.

5 Following cancellation of the policy, an audit revealed

that Cruz owed an additional premium in the amount of $3,469 for

the period in which the policy was in force before cancellation.

Travelers mailed to Cruz a premium adjustment notice on July 8,

2016, and Cruz paid the additional amount on August 16, 2016.

5

reimburse Great Divide for the payments it previously had made.

Ace appealed the decisions of the administrative judge to the

reviewing board, which summarily affirmed. These appeals

followed.6

Discussion. Central to the decision of the administrative

judge is his interpretation of G. L. c. 152, § 65B, to require

that any notice of cancellation concerning an assigned risk

workers' compensation insurance policy must be sent by certified

mail. That interpretation appears to be consistent with the

reviewing board's long established practice. See, e.g.,

Pillman's Case, 69 Mass. App. Ct. 178, 181 n.6 (2007)

(describing reviewing board's practice); Dembitzski v. Metro

Flooring, Inc., 13 Mass. Workers' Comp. Rep. 348 (1999).

"'[A] statute must be interpreted according to the intent

of the Legislature ascertained from all its words construed by

the ordinary and approved usage of the language, considered in

connection with the cause of its enactment, the mischief or

imperfection to be remedied and the main object to be

6 The only issue on appeal is which insurance company -- Ace

or Great Divide -- is the appropriate insurer on the employees'

claims. The parties make no argument on appeal regarding the

administrative judge's determinations on the merits of the

employees' claims, the preservation of their rights under G. L.

c. 152, § 36, the awards to them under G. L. c. 152, §§ 13, 30,

and 34, or the awards of attorney's fees. Accordingly, any such

arguments are waived.

6

accomplished, to the end that the purpose of its framers may be

effectuated.' Scheffler's Case, 419 Mass. 251, 255 (1994),

quoting from Board of Educ. v. Assessor of Worcester, 368 Mass.

511, 513 (1975). '[T]he statutory language itself is the

principal source of insight into the legislative purpose.'

Scheffler's Case, supra, quoting from Hoffman v. Howmedica,

Inc., 373 Mass. 32, 37 (1977). 'The language of the statute is

not to be enlarged or limited by construction unless its object

and plain meaning require it.' Gateley's Case, 415 Mass. 397,

399 (1993). 'The interpretation of a statute by the agency

charged with primary responsibility for administering it is

entitled to substantial deference.' Ibid. However, '[a]n

incorrect interpretation of a statute by an administrative

agency is not entitled to deference.' Kszepka's Case, 408 Mass.

843, 847 (1990)." Murphy's Case, 53 Mass. App. Ct. 708, 713

(2002).

As a general matter, notices of insurance cancellation are

governed by G. L. c. 175, § 187C, the relevant provisions of

which are set out in the margin.7 By its terms, § 187C

7 General Laws c. 175, § 187C, provides as follows:

"A company issuing any policy of insurance which is subject

to cancellation by the company shall effect cancellation by

serving the notice thereof provided by the policy and by

paying or tendering, except as provided in this and the

following section, the full return premium due thereunder

in accordance with its terms without any deductions. Such

7

authorizes notice by first class mail, without requiring proof

of receipt of notice by the insured. According to the reviewing

notice and return premium, if any, shall be delivered in

hand to the named insured, or be left at his last address

as shown by the company's records or, if its records

contain no such address, at his last business, residence or

other address known to the company, or be forwarded to said

address by first class mail, postage prepaid, and a notice

left or forwarded, as aforesaid, shall be deemed a

sufficient notice. No written notice of cancellation shall

be deemed effective when mailed by the company unless the

company obtains a certificate of mailing receipt from the

United States Postal Service showing the name and address

of the insured stated in the policy. A check of the

company or its duly authorized agent shall be deemed a

sufficient tender. The affidavit of any officer, agent or

employee of the company, duly authorized for that purpose,

that such notice has been served and such return premium,

if any, has been paid or tendered, as provided in this

section, shall be prima facie evidence that cancellation

has been duly effected.

"If a policy is made payable to a mortgagee or any person

other than the insured, notice shall be given as above

provided to the payee as well as to the insured.

"Policies subject to cancellation by the insured upon

giving notice to the company may be cancelled by serving

such notice in the manner herein provided upon the company

or upon its agent who issued the policy.

"Whoever knowingly and wilfully makes a false affidavit

under this section shall be punished by a fine of not less

than one hundred nor more than one thousand dollars or by

imprisonment for not more than one year.

"This section shall not apply to nor be deemed to prevent

the termination of any policy by mutual consent of the

parties, nor shall it require the payment or tender of a

return premium upon the cancellation of a policy which

provides for the payment of a return premium when

ascertained or upon demand after cancellation."

8

board, however, the general provisions of § 187C must be

understood by reference to the more specific provisions of G. L.

c. 152, § 65B, pertaining to assigned risk policies.8 Because

§ 65B affords the insured employer an opportunity to file

objections with the department's commissioner within ten days

after receipt of notice of cancellation, the reviewing board

reasons that, to be effective, any notice of cancellation must

include proof of receipt, and accordingly must be sent by

certified mail, return receipt requested. We believe the board

reads into the statute a requirement the statute itself does not

impose.

8 General Laws c. 152, § 65B, provides as follows:

"If, after the issuance of a policy under section sixty-

five A, it shall appear that the employer to whom the

policy was issued is not or has ceased to be entitled to

such insurance, the insurer may cancel or otherwise

terminate such policy in the manner provided in this

chapter; provided, however, that any insurer desiring to

cancel or otherwise terminate such a policy shall give

notice in writing to the rating organization and the

insurer [sic] of its desire to cancel or terminate the

same; and provided further, that if the reason for

cancellation is for nonpayment of premium, if the insurer

receives the amount of premium due on or before the

effective date of cancellation, the assigned carrier shall

issue an accurate renewal policy. Such cancellation or

terminations shall be effective unless the employer, within

ten days after the receipt of such notice, files with the

department's office of insurance objections thereof, and,

if such objections are filed, the commissioner, or his

designee shall hear and decide the case within a reasonable

time thereafter. Further appeal of the decision of the

department may be taken to the superior court for the

county of Suffolk."

9

In addition to the principles of statutory construction

recited at the beginning of our discussion, we observe that when

enacting a statute the Legislature is presumed to be aware of

preexisting common law as established by decisions of the

Supreme Judicial Court. See International Fid. Ins. Co. v.

Wilson, 387 Mass. 841, 854 (1983). The "mailbox rule" was well

established at the time § 65B was enacted in 1991, as part of a

comprehensive reform of the Massachusetts workers' compensation

statute. See Eveland, 240 Mass. at 103. Accordingly, we

presume the Legislature intended the mailbox rule to guide the

question of "receipt" of notice when it incorporated that term

into § 65B. Moreover, on other occasions when the Legislature

intended to impose a requirement for notice by certified mail,

return receipt requested, it has done so explicitly. See, e.g.,

G. L. c. 151A, § 15; c. 175, § 162T (d) (1); c. 183A, § 6 (c);

c. 184, § 15 (b); c. 254, § 2B.

Contrary to the contention of Great Divide and the

employees, this court has not previously endorsed the reviewing

board's requirement of notice by certified mail for cancellation

of an assigned risk policy. The three cases cited by Great

Divide did not involve the question presented in the present

cases, and none conducted an analysis of the question. In

Armstrong's Case, 47 Mass. App. Ct. 693, 696 (1999), the insurer

sent a notice of cancellation to the wrong address, and it was

10

returned unclaimed. The insurer thereafter did not attempt to

send a new notice to the correct address, even though the

employer had supplied a new address in the interim. In

Cummings's Case, 52 Mass. App. Ct. 444, 450 (2001), the

insurer's attempted cancellation was ineffective because it

failed to send notice to the rating bureau, as required by the

statute. And in Pillman's Case, 69 Mass. App. Ct. at 181 n.6,

we merely observed the reviewing board's practice, without

further comment, in a case that did not involve an assigned risk

policy.

Conclusion. Because G. L. c. 152, § 65B, does not require

the insurer to send notice of cancellation by certified mail,

return receipt requested, and allows such an insurer to rely, at

least in the first instance, on a certification that it mailed

the notice by first class mail to the insured's address, the

administrative judge and reviewing board incorrectly concluded

that Ace's notice of cancellation was ineffective. Accordingly,

so much of the decision of the reviewing board as determined

that Ace was the responsible insurer on the employees' claims is

vacated. Because the administrative judge never considered or

reached the question whether Ace's prima facie evidence of

delivery might be rebutted, we remand the matter to the

reviewing board for further proceedings consistent with this

11

opinion. In all other respects, the decision of the reviewing

board is affirmed.9

So ordered.

9 The employees' request for appellate attorney's fees is

denied. See G. L. c. 152, § 12A.