Maine attorney for workers' compensation, criminal defense, civil litigation, and small business matters.

Maine Workers' Compensation Law blog

A humble collection of pieces about issues in Maine workers' compensation law by Attorney Zachary J. Smith.

Notes on a new Law Court decision about coordination of benefits

The Maine Supreme Judicial Court recently issued a decision on an appeal from a workers’ compensation decision. The case, Urrutia v. Interstate Brands Intl., 2018 ME 24, was surprisingly resolved in favor of the employer and insurer. I had expected the Court to affirm the workers’ compensation Appellate Division’s decision, but the majority of the justices on the Law Court interpreted the workers’ compensation statute section differently from the ALJs who had reviewed the Maine Workers’ Compensation Board’s original decree. This is a 25-page decision, and I won’t delve into the details here. However, it’s important for people who are receiving or will soon receive workers’ compensation benefits.

Coordination of benefits refers to the procedure by which an injured worker’s compensation is reduced to account for other sources of income, such as retirement benefits. It can get complicated, but the essence is that, depending on the source of the income and certain other factors, a person who is receiving both workers’ compensation cash benefits and another form of income may have his or her workers’ compensation benefits reduced to prevent “double recovery” or “double-dipping.” Most of the time this is an entirely fair way to keep costs down. So, for example, a person cannot collect full unemployment benefits and full workers’ compensation benefits at the same time, but someone who gets paid from a retirement account from a job with a different employer should not have any reduction in his or her workers’ compensation benefits as a result.

Mr. Urrutia received both Social Security (early) retirement benefits and workers’ compensation full incapacity benefits simultaneously for over three years, and after learning of this his former employer (or its insurer, in reality) sought to reduce his workers’ compensation benefits and then take a payment “holiday” to get credit for what it considered excessive prior payments to him. The Maine Workers’ Compensation Board, first through an individual ALJ and then through a panel of ALJs sitting as the Appellate Division, reached different results on the issue of whether the insurance company could get credit for its excessive previous payments. The state’s supreme court, on a 5-2 vote, decided that “the plain language” of a subsection of the workers’ compensation statute entitles the employer or insurer to reduce future payments until it has, in effect, recovered the excessive compensation amount. The decision, however, also remanded (sent back) the case to the administrative agency for development of a new and related issue, i.e., whether and to what extent Mr. Urrutia may qualify for a hardship exemption.

The majority and minority (dissent) opinions in this case read the statute differently, and their differing interpretations dictated the ultimate outcome of the case. Although I personally find both interpretations entirely valid, I think the dissent makes a slightly more persuasive argument. For one thing, the majority opinion completely ignores the reality that an injured worker who is unable to work but gets no workers’ compensation income must do something for income; in this case, when the employee, out of financial necessity, took early retirement benefits, he lost a substantial sum of money over his entire retirement period. So, while the decision makes a good public-policy argument against double-dipping, it ignores another good public-policy argument against delay in paying workers’ compensation benefits. For another thing, I am not convinced that its reading of the “plain language” is accurate. (The mere fact that so many qualified readers of this language disagree about what it means suggests to me that it’s not truly “plain,” but that is beside the point.)

In addition, the majority’s remand order obviously is sending the matter back to the original ALJ for a potential “hardship analysis” that is simply inapplicable under the circumstances. That means we probably haven’t heard the last of this case.