April 5, 2021 Article

Maine Workers' Comp Alert: Maine Supreme Court Issues Decision Regarding Statute of Limitations in Coordination of Benefits

Maine Workers' Comp Alert

Maine Supreme Court Issues Decision in Charest v. Hydraulic Hose Dealing with Unique Statute of Limitations Issue in the Context of the Coordination of Benefits

On March 30, 2021, the Law Court issued a decision vacating the Appellate Division’s decision in a case dealing with a statute of limitations issue in the context of the coordination of benefits.

In Charest v. Hydraulic Hose (2021 ME 17 [March 30, 2021]), the Employee sustained a back injury in 2001. The Board issued a decree March 27, 2006, awarding ongoing partial incapacity benefits. Following that, Hydraulic Hose, through its insurer Hanover Insurance, made two payments to the Employee: one check for accrued benefits, and one check for weekly benefits in the amount of $94.92. The last payment was made April 11, 2006. Thereafter, Hanover advised the Employee through counsel that it would be taking an offset for Social Security retirement benefits that the Employee had been receiving since 2003. See 39-A M.R.S.A. § 221(3)(A)(1) (authorizing a reduction of workers’ compensation benefit by “[f]ifty percent of the amount of old-age insurance benefits received or being received under the United States Social Security Act”). Because the offset reduced Hydraulic Hose’s payment obligation under the Act to zero, no additional benefit payments were made to the Employee after April 11, 2006.

The Employee filed a Petition for Review in 2017. The ALJ denied the petition, concluding that the claims were barred by the applicable statute of limitations, 39-A M.R.S.A. § 306(2) (“If an employer or insurer pays benefits under this Act, with or without prejudice, within the period provided in subsection 1, the period during which an employee or other interested party must file a petition is 6 years from the date of the most recent payment.”). The Employee argued that the employer’s ongoing obligation to pay benefits and the Social Security payments he received served to toll the limitations period.

On Appeal, the Employee argued that the statute of limitations has not expired because Hydraulic Hose retained an obligation to pay benefits, even though this obligation is subject to statutory offsets that eliminated its responsibility to send checks to the Employee. The Appellate Division rejected this, finding that the language of the statute supports the ALJ’s conclusion that the limitations period has run as to the Employee’s claims for the 2001 injury. Section 306 provides that the six-year period begins to run from a payment of benefits, not from an ongoing obligation to pay benefits that is eliminated when payments are properly coordinated pursuant to section 221.

The Employee also argued that his receipt of Social Security retirement benefits tolled the statute of limitations, citing Stockford v. Bath Iron Works Corp. (482 A.2d 843 [Me. 1984] [payments under the federal Longshore Act are “essentially equivalent” to Workers’ Compensation Act payments and operate to toll the limitations period]).

The ALJ declined to extend Stockford to this case because Social Security retirement benefits are not similarly equivalent to workers’ compensation benefits; they do not represent compensation for inability to work due to a workplace injury. They are available to qualifying individuals regardless of whether they sustain work injuries. The Employee argued this was an error, citing Urrutia v. Interstate Brands International (2018 ME 24) for the proposition that Social Security retirement benefits and workers’ compensation benefits are equivalent because they both serve to replace income and are treated as equivalent by the Legislature. However, the issue in Urrutia was whether section 221 permitted the employer to take a credit in the present for past Social Security payments made to the employee while he was also receiving workers’ compensation benefits. The Court determined that a credit was authorized. The Court reasoned in part that if the credit were not allowed, the employee would receive an impermissible double recovery. The Appellate Division found Urrutia was concerned about the level of income from different sources when combined, rather than the purpose of the sources of income. The Appellate Division found, “We do not read that case as analogizing Social Security retirement and workers’ compensation benefits in the manner that Longshore and workers’ compensation benefits were analogized in Stockford.”

The Law Court vacated the decision of the Appellate Division, holding: (1) offsetting Social Security old-age insurance benefits must be treated as primary payments of workers’ compensation; and (2) the “date of the most recent payment” under 39-A M.R.S.A. section 306 is the date of most recent payment of offsetting Social Security old-age insurance benefits. The Law Court recognized, “the legislative intent that the offsetting old-age Social Security benefit payments constitute primary payments of workers’ compensation under the Act” and, as such, “’the date of the most recent payment’ is the date of the most recent offsetting old-age Social Security benefit payment” (39-A M.R.S. § 306(2). Charest, 2021 ME 17 ¶ 17). The Law Court specifically held:

Given the plain language of the applicable statutes in the context of a scheme that provides for ongoing payments until discontinuance, we conclude that offsetting Social Security old-age insurance benefits must be treated as primary payments of workers’ compensation. See 39-A M.R.S. § 221(3)(A)(1), (E). The “date of the most recent payment” is therefore the date of most recent payment of offsetting Social Security old-age insurance benefits. Id. § 306(2)…. Id. at ¶ 26.

The Charest decision is significant in that it makes clear that even when no benefits are being paid under the Maine Workers’ Compensation Act, the date of the most recent payment for purposes of the statute of limitations in section 306 is the date of the most recent payment of offsetting Social Security retirement benefits.