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Hincks v. Robert Mitchell Co.
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision:1999 ME 172
Docket:WCB-98-430
WCB-98-437
Argued: September 7, 1999
Decided: November 24, 1999
Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and
CALKINS, JJ.
PETER HINCKS
v.
ROBERT MITCHELL CO. et al.
WATHEN, C.J.
[¶1] The insurers, Great American Insurance Co. and Maine
Employers' Mutual Insurance Co. ("MEMIC") appeal from a decision of the
Workers' Compensation Board, granting the employee's petitions relating to
work-injuries that occurred in 1985 and 1994. The insurers challenge the
retroactive application of 39-A M.R.S.A. § 201(6) (Supp. 1998), the
apportionment of liability between insurers pursuant to 39-A M.R.S.A. § 354
(Supp. 1998), and the inclusion of fringe benefits in the employee's average
weekly wage. We vacate that decision.
[¶2] The employee, Peter Hincks, suffered two injuries while
employed by Robert Mitchell Co., d/b/a Douglas Brothers. The first injury
occurred on November 20, 1985, while Douglas Brothers was insured by
Great American. The second injury occurred on May 9, 1994, while Douglas
Brothers was insured by MEMIC. The employee's average weekly wage at
the time of his 1994 injury was $717.37, based on an hourly rate of $23.06.
A portion of that hourly rate consisted of $5.60 in employer-contributions to
union-established benefit funds, which included: a $3.00 contribution to a
health and welfare fund; a $1.60 contribution to a pension fund; and a $1.00
contribution to a local annuity fund.
[¶3] Hincks filed several petitions with the Board in 1994 seeking
compensation for the two injuries. The Board granted the petitions in 1997
awarding ongoing seventy-two percent partial incapacity benefits. Although
the Board found a causal relationship between the employee's incapacity and
both dates of injury, the Board ordered the most recent insurer, MEMIC, to
pay all incapacity benefits pursuant to 39-A M.R.S.A. § 354. The Board also
concluded, however, that "payments for medical service related to his back
injury are to be divided equally between the two carriers; payments for
treatments related to Mr. Hincks' depression/anxiety are solely the
responsibility of the May 9, 1994 date of injury." Finally, relying on Ashby v.
Rust Eng'g Co., 559 A.2d 774, 775 (Me. 1989), the Board concluded that
the employer-contributions to employee benefit funds were not fringe
benefits, but more akin to bargained-for, dollar-for-dollar contributions on
behalf of an employee, and, therefore, should be treated as part of the
employee's average weekly wage.
[¶4] All parties filed motions for further findings of fact and
conclusions of law following the Board's decision in 1997. While the
motions were pending, the Legislature enacted P.L. 1998, ch. 647 (effective
June 30, 1998), codified at 39-A M.R.S.A. § 201(6).{1} In its subsequent
decision in response to the motions for findings of fact, the Board concluded
that subsection 201(6) applied to the pending proceeding, and that Hincks
is therefore entitled to inflation adjustment for that portion of his incapacity
attributable to his 1985 injury.{2} We granted both insurers' petitions for
appellate review pursuant to 39-A M.R.S.A. § 322 (Supp. 1998).
[¶5] We agree with the insurers that the Board's decision to apply
subsection 201(6) to a proceeding pending on the effective date of the
statute was error pursuant to our recent decision in Loud v. Kezar Falls
Woolen Co., 1999 ME 118, ¶11, 735 A.2d 965, 969. Because the Legislature
chose not to make subsection 201(6) applicable to matters pending at the
time of the amendment's enactment, the liabilities of the parties are
governed by our decision in Ray v. Carland Constr., Inc., 1997 ME 206, ¶4,
703 A.2d 648, 650. Pursuant to Ray, when more than one injury contributes
to an employee's incapacity and the most recent injury occurred after the
effective date of title 39-A, the employee's entitlement to benefits is
governed exclusively by title 39-A. Id. Accordingly, because title 39-A does
not provide an inflation adjustment for partial benefits, Hincks is not
entitled to an inflation adjustment for any portion of his incapacity.
[¶6] Great American contends further that, pursuant to section 354
and Rosetti v. Land Reclamation, 1997 ME 197, ¶ 5, 704 A.2d 312, 313, the
Board had no authority to apportion medical benefits on a 50%/50% basis.
We agree. Subsection 354(2) unmistakably provides that "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." 39-A M.R.S.A. §
354(3). After liability is assessed against the most recent insurer, that
insurer is entitled to proceed against the previous insurers pursuant to
section 354 for an apportionment. 39-A M.R.S.A. § 354(3); Rosetti, 1997
ME 197, ¶ 5, 704 A.2d at 313. As we stated in Rosetti, subsection 354(3)
provides that apportionment before the Bureau of Insurance is the
"exclusive means" of resolving apportionment issues between insurers.{3} We
conclude that the Board lacked authority to determine an apportionment of
medical benefits between the insurers.
[¶7] MEMIC also contends that the Board erred in placing sole
responsibility for the psychological condition on the 1994 injury. As we
have stated, "[w]e give deference to the factual findings of the [Board],
particularly when those findings require an evaluation of medical evidence."
See Mathieu v. Bath Iron Works, 667 A.2d 862, 864 (Me. 1995).
Accordingly, we decline to disturb this factual finding on appeal.
[¶8] Finally, MEMIC contends that the Board erred in concluding that
the employer-payments to union-established funds were not fringe benefits.
Paragraph 102(4)(H) provides:
H. "Average weekly wages, earnings or salary" does not include
any fringe or other benefits paid by the employer that continue
during the disability. Any fringe or other benefit paid by the
employer that does not continue during the disability must be
included for purposes of determining an employee's average
weekly wage to the extent that the inclusion of the fringe or
other benefit will not result in a weekly benefit amount that is
greater than 2/3 of the state average weekly wage at the time of
the injury.
39-A M.R.S.A. § 102(4)(H) (Supp. 1998). MEMIC argues that, because the
employer-contributions are a fringe benefit and because the inclusion of
those contributions increases the employee's weekly benefits above two-
thirds of the state average weekly wage at the time of his injury, the
employer is entitled to a limited reduction in benefit payments pursuant to
paragraph 102(4)(H). See, e.g., O'Neal v. City of Augusta, 1998 ME 48A, ¶4-
6, 706 A.2d 1042, 1043-44.
[¶9] There is no dispute that the employer-contributions are identical
to those in Ashby, 559 A.2d at 775. In Ashby, we held that employer
payments to union-negotiated funds must be included in the average weekly
wage when the benefits are paid out of bargained-for, dollar-for-dollar
deductions from the employee's pay. Id. As MEMIC suggests, however,
shortly after our decision in Ashby, the Legislature enacted P.L. 1991, ch.
615, § A-20, providing that fringe benefits may not be included in an
employee's average weekly wage. P.L. 1991, ch. 615, § A-20, codified as 39
M.R.S.A. § 2(2)(G) (Supp. 1991), repealed and replaced by P.L. 1991, ch.
885, §§ A-7, A-8.{4} As we have stated, paragraph 2(2)(G) was enacted with
the express legislative purpose of reversing the effects of our decision in
Ashby in future cases. See Ciampi v. Hannaford Bros. Co., 681 A.2d 4, 9 (Me.
1996); Tompkins v. Wade & Searway Constr. Corp., 612 A.2d 874, 876 (Me.
1992).
[¶10] Notwithstanding the enactment of paragraph 2(2)(G), Hincks
contends that the Ashby-type benefit plan is a "special case" that is
unaffected by the subsequent statutory amendments intended to affect fringe
benefits. Hincks contends that because the Ashby-plan involves an election
by the employee's labor union to spend a portion of the employee's ordinary
pay for union-established benefit funds, the employer-contributions are
more akin to actual wages than traditional fringe benefit plans. Hincks
relies primarily on our decisions in Fletcher v. Hanington Bros., Inc., 647
A.2d 800, 803 (Me. 1994), holding that the employee's voluntary deductions
from weekly pay for purchase of family health insurance are not fringe
benefits, and Clukey v. Piscataquis County Sheriff's Dept., 1997 ME 124, ¶¶
9-10, 696 A.2d 428, 431, holding that certain military meal and housing
allowances are not "fringe or other benefit[s]" for purposes of paragraph
102(4)(H)).
[¶11] Contrary to the employee's assertions, our decisions in Fletcher
and Clukey are not directly controlling in the present case. Our decision in
Fletcher, 647 A.2d at 801, was governed by the law at the time of Ashby, and
involved neither paragraph 102(4)(H) nor former paragraph 2(2)(G). Our
decision in Clukey, 1997 ME 124, ¶¶ 6-8, 696 A.2d at 430-31, moreover,
hinged on the unique legislative history and purpose of the federal military
compensation statutes. More importantly, the housing and food allowances
at issue in Clukey were not payments made to third-parties as contributions
to a benefit plan, but payments in cash made directly to the employee along
with his base pay. Id. at ¶ 9, 696 A.2d at 431.
[¶12] The employee argues that the Legislature could not have
intended to exclude from the average weekly wage funds that an individual
employee might contribute from his wages to the direct purchase of family
medical insurance as in Fletcher. In the present case, however, there is no
room for doubt. The legislative response to Ashby, in former 39 M.R.S.A. §
2(2)(G) and the subsequent enactment of paragraph 102(4)(H), reflects an
unmistakable legislative intent to include the Ashby-type benefit plan within
the meaning of a "fringe or other benefit" as referred to in paragraph
102(4)(H). 39-A M.R.S.A. § 102(4)(H) (emphasis added). We conclude that
the $5.60 an hour employer-contribution to the employee's benefit plan is
excluded from average weekly wage by operation of subsection 102(4)(H).
MEMIC is therefore entitled to a limited reduction of compensation to the
extent that the inclusion of those contributions increase the employee's
weekly benefit amount above two-thirds of the state average weekly wage at
the time of the injury. See O'Neal, 1998 ME 48A, ¶¶ 4-6, 706 A.2d at
1043-44.
The entry is:
The decision of the Workers' Compensation Board is
vacated. Remanded to the Workers' Compensation
Board for further proceedings consistent with the
opinion herein.
Attorneys for employee:
James G. Fongemie, Esq., (orally)
James J. MacAdam, Esq.
McTeague, Higbee, MacAdam, Case, Cohen & Whitney, P.A.
P O Box 5000
Topsham, ME 04086-5000
Attorneys for employer:
Thomas R. Kelly, Esq., (orally)
Elizabeth Eddy Griffin, Esq.
Robinson Kriger & McCallum
P O Box 568
Portland, ME 04112-0568
(for Maine Employers' Mutual)
Stephen Hessert, Esq., (orally)
Norman, Hanson & DeTroy, LLC
P O Box 4600
Portland, ME 04112-4600
(for Great American)
FOOTNOTES******************************** {1} 1. Subsection 201(6) provides:
6. Prior work-related injuries. If an employee suffers a work-related injury
that aggravates, accelerates or combines with the effects of a work-related
injury that occurred prior to January 1, 1993 for which compensation is
still payable under the law in effect on the date of that prior injury,
the employee's rights and benefits for the portion of the resulting disability
that is attributable to the prior injury must be determined by the law in
effect at the time of the prior injury. 39-A M.R.S.A. § 201(6). {2}
2. The Board declined, however, to determine the contribution attributable
to each injury, concluding that it lacked authority to determine an apportionment
pursuant to our decision in Rosetti v. Land Reclamation, 1997 ME 197, ¶¶
5-6, 704 A.2d 312, 313. Hincks contends that, notwithstanding our decision
in Rosetti, the Board is required to determine an apportionment pursuant
to subsection 201(6). Because we conclude that subsection 201(6) does not
apply, it is not necessary to address this issue in the present appeal.
{3} 3. Subsection 354 was recently amended to permit the Board to determine
apportionment. P.L. 1999, ch. 354, § 9 (effective September 18, 1999).
The parties do not contend that the recently amended subsection 354 applies
to this appeal. {4} 4. Former paragraph 2(2)(G) provided as follows: "Average
weekly wages, earnings or salary" does not include fringe benefits,
including but not limited to employer payments for or contributions to a
retirement, pension, health and welfare, life insurance, training, social
security or other employee or dependent benefit plan for the employee's
or dependent's benefit or any other employee's dependent entitlement. 39
M.R.S.A. § 2(2)(G) (Supp. 1991).
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