Opinion ID: 2343176
Heading Depth: 2
Heading Rank: 2

Heading: Workers' Compensation Apportionment Principles

Text: [¶ 10] Title 39-A M.R.S. § 354(2) authorizes apportionment of workers' compensation benefits between employers or insurers in multiple injury cases, and provides, the insurer providing coverage at the time of the last injury shall initially be responsible to the employee for all benefits payable under this Act. The historical underpinning of apportionment in workers' compensation cases is subrogation. Dorr v. Bridge Constr. Corp., 2000 ME 93, ¶ 7, 750 A.2d 597, 600; accord Lamonica v. Ladd Holmes, 1998 ME 190, ¶ 5, 718 A.2d 182, 183-84; Kennedy v. Brunswick Convalescent Ctr., 584 A.2d 678, 680 (Me.1991). This view is supported by the plain language of the Workers' Compensation Act, which provides: 3. Subrogation. Any insurer determined to be liable for benefits under subsection 2 must be subrogated to the employee's rights under this Act for all benefits the insurer has paid and for which another insurer may be liable. Apportionment decisions made under this subsection may not affect an employee's rights and benefits under this Act. The board has jurisdiction over proceedings to determine the apportionment of liability among responsible insurers. 39-A M.R.S. § 354(3) (2005). [¶ 11] We considered the relationship between an insurer's right of subrogation established by section 354(3) and the MIGA Act's exclusion of subrogation recoveries from covered claims in Maine Insurance Guaranty Association v. Folsom, 2001 ME 63, 769 A.2d 185. The employee in Folsom had suffered three work-related injuries, the second of which was covered by an insolvent insurer. Id. ¶ 2, 769 A.2d at 186. The apportionment statute in effect at the time of the second injury provided that arbitration was the exclusive means for apportioning liability between insurers. Id. ¶ 3, 769 A.2d at 186; 39-A M.R.S.A. § 354 (Supp.1998), amended by P.L.1999, ch. 354, § 9. The hearing officer concluded that he did not have the authority to apportion liability between insurers, and ordered the insurer covering the most recent injury to pay full benefits. Folsom, 2001 ME 63, ¶ 3, 769 A.2d at 186. [¶ 12] Thereafter, MIGA sought and obtained a declaratory judgment in the Superior Court declaring that it was not liable to reimburse any other insurer for an apportioned share of the employee's workers' compensation benefits. Id. ¶ 4, 769 A.2d at 186-87. We affirmed the judgment, reasoning that because MIGA's potential liability to the other insurers pursuant to the apportionment statute was in the nature of subrogation, and the definition of covered claim pursuant to the MIGA Act excludes subrogation recoveries or otherwise, any amount apportioned to MIGA was not a covered claim, and MIGA had no obligation to reimburse the solvent insurer. [5] Id. ¶ 6, 769 A.2d at 188. [¶ 13] The hearing officer in the present case applied Folsom and concluded that MIGA is not obligated to reimburse Wausau for the benefits apportioned to the 1981 date of injury. The hearing officer also decided, however, that MIGA is responsible to pay the inflation adjustments related to that injury, reasoning that the inflation increases constitute a direct obligation of MIGA to the employee, rather than rights of the employee to which Wausau is subrogated. The hearing officer concluded that [a]s to the Employee's entitlement to his inflation adjustment, MIGA is the insurer of last resort, citing Dunson, 2003 ME 16, 814 A.2d 972, as authority for the proposition that the inflation increases constitute a direct obligation to the employee. [¶ 14] In Dunson, we held, pursuant to sections 201(6) and 354 of the Act, that in multi-injury cases the most recent employer is required to pay the employee total incapacity benefits to be calculated according to the applicable total incapacity statutes for each date of injury and, in turn is entitled to reimbursement from the employers responsible for prior injuries, according to their respective obligations to pay under the law at the time of those injuries. Id. ¶ 16, 814 A.2d at 979. We emphasized that [a]ny increase in benefits resulting from the application of the inflation adjustment must be paid to the employee.  Id. (emphasis added). [¶ 15] Our statement in Dunson that the inflation adjustment must be paid to the employee was not intended to affect the obligation of the insurer providing coverage at the time of the last injury to initially be responsible to the employee for all benefits payable under this Act. 39-A M.R.S. § 354(2). Rather, it reiterates the proposition that [a]pportionment decisions made under this subsection may not affect an employee's rights and benefits under this Act. Id. § 354(3). That is, an employee may not suffer a decrease in benefits if an earlier insurer's obligation turns out to be less than the apportioned percentage of the total benefit after the appropriate law has been applied. The most recent insurer must fill in the gap even when, as here, the gap comprises the earlier insurer's entire apportioned percentage. [¶ 16] At first blush, Wausau's argument that it should not be held responsible for paying benefits resulting from an injury that predates its coverage because it did not underwrite for the higher level of benefits required by the law in effect at the time of the injury has merit. In the final analysis, however, Wausau's position cannot prevail because it is contrary to the Legislature's decision to allocate the risk among insurers in multiple injury cases so that the most recent insurer has the exclusive responsibility to pay the employee and is then subrogated to the employee's rights as against any other insurers. As we have previously observed, absent the apportionment statute, the most recent insurer would be liable for 100% of the compensation due. Johnson v. S.D. Warren, 432 A.2d 431, 436 (Me.1981). [¶ 17] We vacate the judgment because Wausau's obligation to Juliano constitutes the entire benefit, including the portion of the benefit related to the 1981 injury as adjusted for inflation. In ordinary cases, Wausau would be entitled to seek subrogation from other insurers. This is not an ordinary case, however, because MIGA has replaced the insolvent insurer on the 1981 injury and, in accordance with section 4435(4) of the MIGA Act, is not responsible for Wausau's subrogation claim. [¶ 18] MIGA has been paying the inflation adjustments pursuant to the hearing officer's decree pending this appeal. Because MIGA had no obligation to do so, it is entitled to be reimbursed by Wausau for the amounts it has paid. The entry is: Judgment vacated. Remanded for proceedings consistent with this opinion.