Did you ever think about what happens in cases where multiple workers’ comp policies cover a workplace? The Massachusetts Supreme Judicial Court just ruled on such a case and they determined that the first insurer was allowed to seek an equal contribution from the second insurer to cover the costs for a work injury. The employer could not choose one insurer to cover the whole bill, in this case “choosing” meant they only informed one insurance company of the accident and the other did not know.

A worker for Progression, Inc. was on a business trip out of the country and was injured in a car accident. Progression had bought a general workers’ comp policy from the Insurance Company of the State of Pennsylvania (ISOP). They had also purchased workers’ compensation coverage for employees traveling abroad from the Great Northern Insurance Company.

After the accident the employee filed a claim with Progression and they notified ISOP but did not notify Great Northern. ISOP began making payments on this claim. They learned that Progression had this other policy with Great Northern a little later and sent Great Northern a notice of the claim along with a requested contribution amount. Great Northern declined to pay, and they said that by not notifying them, Progression had intended to have ISOP to pay for the entire claim.

ISOP then filed a complaint in the U.S. District Court for the District of Massachusetts to get a judgment that would require Great Northern to pay half of this claim. The case went to the Supreme Judicial Court who decided that under the equitable contribution doctrine, an insurer who has paid more than their fair share of costs can request a contribution from any coinsurers. There does not have to be a formal agreement between insurers, it is more of a right that exists between insurers. Since both policies were a primary policy (the Great Northern policy was not considered an excess policy) the two insurers shared the obligation to pay so that one company would not be paying an unfair amount. This is not like subrogation, where an insurer can seek damages from a third party it deems responsible.

Great Northern then claimed that since Progression purposely told one insurer, ISOP, about the injury that they should not have to pay because Progression violated their insurance policy by not notifying Great Northern about it. They argued they should not have to provide any coverage if Progression did not comply with all the terms of the policy, so they should not have to be responsible for any contribution either. The court recognized that this selective tender exception has been applied in a few jurisdictions, but it does not comply with Massachusetts law. Under Massachusetts law the payer is responsible to the injured worker; they pay the employee directly rather than reimburse the employer who has paid the employee. If the injured worker notified either the insurer or the insured then the payer is responsible. Since this employee notified the insured (his employer) Great Northern is responsible to them even if they were not told immediately. That they were not notified in a timely manner does not get them out of their responsibility.