Mass. Care Self-Ins. Group, Inc. v. Mass. Insurers Insolvency Fund (November 12, 2010)
This appeal involves the determination of what constitutes a covered claim under the Massachusetts Insurers Insolvency fund and whether a claim filed by workers’ compensation self-insurance group is covered. The appellate court held that since plaintiff is a member of the insurance industry, claims filed by it are not a covered claim.
First the appellate court determined what the purpose of the fund is and then it determined whether or not plaintiff can be considered a member of the insurance industry. Finding that inclusion of insurance industry claimants in the fund would be against the purpose of the fund and that plaintiff does qualify as a member of the insurance industry, allowing it to file a claim would be inconsistent with the legislative purpose of the fund.
Specifically, the Appellate Court held that the purpose of the fund is to benefit members of the public, individuals, and entities which are outside the insurance industry, from losses due to the insolvency of a member of that industry.
As to whether plaintiff is a member of the insurance industry, the court held that membership in plaintiff’s program is an alternative to the purchase of traditional workers’ compensation insurance and by selling the same product; plaintiff competes with traditional insurers in the market for workers’ compensation coverage. In addition, plaintiff provides its members with the same range of services traditionally provided by members of the insurance industry. Plaintiff is also subject to all the provisions and regulations governing the conduct of insurers with respect to the payment of workers’ compensation benefits.
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Sarah Fang and Michael Glascott