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Jasch v. The Anchorage Inn
Cowperthwaite v. M.E.R. Assessment Corp.

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MAINE SUPREME JUDICIAL COURT					                            Reporter of Decisions
Decision:	2002 ME 106
Docket:	   WCB 01-370 & WCB-01-389
Argued:		May 7, 2002
Decided:	July 2, 2002










	[¶1]  In this consolidated case, an employee, Robert J. Jasch Sr., and an
employer, M.E.R. Assessment Corp., appeal from decisions of hearing officers of
the Workers' Compensation Board, reaching contradictory results concerning the
employees' entitlement to prejudgment interest in cases in which the employer
agrees to voluntarily pay benefits pursuant to an agreement, but the agreement is
silent concerning interest.  Because we conclude that a consent decree is an
"award" for purposes of 39-A M.R.S.A. § 205(6) (2001), and also falls within the
ambit of W.C.B. Rule ch. 8, § 7 (1999), we conclude that Jasch is entitled to the
payment of prejudgment interest on the consent decree, even in the absence of a
specific agreement with respect to interest, and, therefore, we vacate the hearing
officer's decision in Jasch v. Anchorage Inn.  Because we conclude that W.C.B.
Rule ch. 8, § 7, controls the issue of interest in cases involving mediation
agreements, we affirm the hearing officer's decision to award prejudgment
interest in the case of Cowperthwaite v. M.E.R. Assessment Corp.  


	A. Jasch v. Anchorage Inn

	[¶2]  Robert J. Jasch Sr. suffered a work-related left elbow injury on May
5, 1999, while employed at The Anchorage Inn, and filed a petition for award in
August 1999.  After an unsuccessful mediation, the parties subsequently reached
an agreement, and the Board issued a consent decree in April 2000 in which
Anchorage Inn accepted liability and agreed to pay short-term total incapacity
benefits.  The consent agreement and decree were silent with respect to the
payment of prejudgment interest.

	[¶3]  Pursuant to the consent decree, Anchorage Inn paid forty-seven
weeks of past-due benefits, but failed to include interest, and Jasch filed a second
petition seeking the prejudgment interest.  In 2001 a hearing officer denied the
employee's request for interest.  The hearing officer also denied the employee's
motion for further findings of fact, and we granted Jasch's petition for appellate
review pursuant to 39-A M.R.S.A. § 322 (2001), and ordered that the appeal be
consolidated with Cowperthwaite v. M.E.R. Assessment Corp., for purposes of
oral argument.
	B. Cowperthwaite v. M.E.R. Assessment Corp. 	

	[¶4]  Hugh S. Cowperthwaite filed a petition for award with the Workers'
Compensation Board in August 2000, alleging that he suffered a work-related
back injury on January 29, 1999, while employed by M.E.R. Assessment Corp. 
Pursuant to a mediated agreement dated August 7, 2000, Cowperthwaite agreed to
dismiss his petition in exchange for M.E.R.'s agreement to pay short-term total
and partial incapacity compensation.  M.E.R. paid a total of $4,348.43.

	[¶5]  In December 2000 Cowperthwaite filed a petition seeking the
payment of interest on the payments made pursuant to the agreement.  On May
31, 2001, a hearing officer granted the employee's petition seeking interest, and
we granted M.E.R.'s petition for appellate review pursuant to 39-A M.R.S.A.
§ 322.


	A. Jasch v. Anchorage Inn	

	[¶6]  Section 205(6) of the Act provides, in pertinent part: 

6. Interest. When weekly compensation is paid pursuant to an
award, interest on the compensation must be paid at the rate of 10%
per annum from the date each payment was due, until paid.

39-A M.R.S.A. § 205(6).  

	[¶7]  Pursuant to its rulemaking authority, see 39-A M.R.S.A. § 152(2)
(2001), the Board promulgated Rule ch. 8, § 7, providing, in pertinent part:

Interest on awards of compensation must be calculated by the
employer and paid to the employee pursuant to 39-A M.R.S.A.
Sec. 205(6). Interest must be paid to the employee even if there is no
express language in the decision of the mediator or hearing officer
ordering such payment. . . .

W.C.B. Rule ch. 8, § 7. 

	[¶8]  Anchorage contends that a consent decree is not an "award" pursuant
to section 205(6), nor is it a "decision" of a "hearing officer" pursuant to Board
Rule ch. 8, § 7.  Moreover, Anchorage contends that even if a consent decree
could be considered a decision of a hearing officer pursuant to Board Rule ch. 8,
§ 7, and if the Board Rule could be interpreted to require prejudgment interest in
this case, then the Board Rule is inconsistent with the statutory language and
beyond the Board's rulemaking authority.

	[¶9]  We have recognized a legislative intent to delegate broad authority
to the Board to interpret the Act, either by Board Rule or through its appellate
authority, when the statutory language is ambiguous.  See Russell v. Russell's
Appliance Serv., 2001 ME 32, ¶ 10 n.3, 766 A.2d 67, 71 n.3.   As one legislator
remarked prior to the enactment of title 39-A:

It seems to me that the idea is in fact to change . . . from an
adversarial type of neverending conflict between management and
labor to one where they may work together. And I am optimistic
about the formation of a board that is governed by the players, by
those who pay the bills, by those who receive the benefits. It seems
to me that it's worth trying. Lord knows we've failed in the present

Legis. Rec. S-36 (3d Spec. Sess. 1992) (statement of Sen. Collins).  Moreover, as
we have stated, the Workers' Compensation Act "reflects not so much a legislative
intent to comprehensively address every workers' compensation issue in a detailed
and specific way, but to commit some issues to a process in which the participants
in the system, labor and management, can work out flexible and realistic
solutions."  Bureau v. Staffing Network, Inc., 678 A.2d 583, 588 n.2 (Me. 1996).  	 
 [¶10]  Although we have invalidated Board Rules when we have found
those rules to be in direct contravention of a statute, see e.g., Beaulieu v. Maine
Med. Ctr., 675 A.2d 110, 111 (Me. 1996),{1} we will defer to the Board where
there is no direct conflict between the rule and the statutory language.  

	[¶11]  Employees have been entitled to prejudgment interest on workers'
compensation awards since 1975.  39 M.R.S.A. § 72 (Supp. 1991), repealed by
P.L. 1991, ch. 885, § A-7.  Although an employee can agree to forego
prejudgment interest, in the same way that an employee can forego other benefits,
e.g., incapacity or medical benefits, employees are entitled to prejudgment interest
pursuant to section 205(6) as a matter of law.  Accordingly, Board Rule ch. 8,
§ 7, requiring employers to pay prejudgment interest in the absence of an express
agreement to the contrary is not ultra vires, but consistent with the statute.

	[¶12]  We do not agree with M.E.R. that the term "award" has the limited
meaning that M.E.R. ascribes to it.  The term "award" is not defined in the Act. 
Traditionally, a consent decree is memorialized by a Board order, signed by a
hearing officer, and is accorded the same finality and res judicata effect as any
other decree or award of a hearing officer.  See Dufault v. Midland-Ross of
Canada, Ltd., 380 A.2d 200, 205 (Me. 1977).  Moreover, we have occasionally
referred to voluntary agreements in our decisions as "awards," or "settlement
awards," or "lump sum awards."  See, e.g., Doucette v. Washburn, 2001 ME 38,
¶ 9 n.4, 766 A.2d 578, 582 n.4 ("settlement award"); Cummings v. Cummings,
540 A.2d 778, 779 (Me. 1988) ("lump sum award"); Soper v. St. Regis Paper
Co., 411 A.2d 1004, 1007 (Me. 1980) (same); Steeves v. Irwin, 233 A.2d 126,
130 (Me. 1967) ("settlement award").  We conclude that a consent decree, signed
by a hearing officer and issued through the auspices of the Board, is an "award"
for purposes of section 205(6), and also falls reasonably within the ambit of a
decision of a "hearing officer" for purposes of Board Rule ch. 8, § 7.  

	[¶13]  Our interpretation is consistent with the policy of the rule and the
statute.  We have discussed the purpose of prejudgment interest in the workers'
compensation setting:

[T]he assessment of prejudgment interest serves two purposes in the
ordinary civil context: first, it "compensate[s] an injured party for
the inability to use money rightfully belonging to that party between
the date suit is filed and the date judgment is entered," Osgood v.
, 1997 ME 192, ¶ 10, 698 A.2d 1071, 1073-74; and second, it
"'encourages the defendant to conclude a pretrial settlement of clearly
meritorious suits,'" Pierce v. Central Maine Power Co., 622 A.2d 80,
85 (Me. 1993) (quoting Simpson v. Hanover Ins. Co., 588 A.2d
1183, 1185 (Me. 1991)). Similarly, the assessment of pre-decree
interest serves two purposes in the workers' compensation context:
(1) to compensate the employee for delay in the receipt of benefits;
and (2) to discourage employers from contesting valid workers'
compensation claims.

Guiggey v. Great N. Paper, Inc., 1997 ME 232, ¶ 7, 704 A.2d 375, 377.  

	[¶14]  Anchorage contends, however, that applying the Board Rule to
consent decrees will discourage employers from entering into settlement
agreements.  Jasch, on the other hand, contends that applying the Board Rule to
consent decrees will encourage early agreements because interest is running and
will encourage employers to negotiate agreements, because the only way for an
employer to avoid prejudgment interest would be to expressly structure an
agreement so providing. 

	[¶15]  We see no reason in the legislative purpose of the statute to
distinguish between awards rendered by a hearing officer following an adversarial
hearing, and awards issued by a hearing officer with the consent of the parties. 
Applying the Board Rule in this case, we conclude that Jasch is entitled to
prejudgment interest in the absence of an express agreement to the contrary.

	B.  Cowperthwaite v. M.E.R. Assessment Corp. 

	[¶16]  M.E.R. contends that Cowperthwaite is distinguishable from Jasch,
because, in Cowperthwaite, the parties did not enter into a consent decree, but a
mediated agreement.  M.E.R. does not appear to dispute that this case falls within
the language of Board Rule ch. 8, § 7, which refers to mediation agreements that
are silent with respect to interest.  Instead, M.E.R. contends that the term "award"
in section 205(6) cannot be interpreted to include an agreement reached at
mediation, and, therefore, Board Rule ch. 8, § 7, is contrary to the plain language
of the Act and invalid. 	

	[¶17]  We have previously recognized a legislative intent in title 39-A to
encourage mediation.  Indeed, we have stated that mediation pursuant to the new
Act was intended to "replace litigation whenever possible."  Bureau, 678 A.2d at
590.{2}  Accordingly, we have held that mediated agreements are accorded the same
res judicata effect and enforceability as a Board or judicial decree.  Id.
	[¶18]  While we need not decide whether the term "award" will always
include an agreement reached at mediation, in light of the legislative policy to
equate mediated agreements with formal hearing officer decrees, we cannot
conclude that the Board exceeded its authority in treating mediated agreements as
"awards" with respect to the payment of prejudgment interest.  We conclude that
the hearing officer correctly applied Board Rule ch. 8, § 7, in awarding
prejudgment interest for payments made pursuant to a mediated agreement that
was silent with respect to interest.

	The entry is:	

The hearing officer's decision in
Cowperthwaite v. M.E.R. Assessment Corp.,
WCB-01-370, is affirmed.

The hearing officer's decision in Jasch v.
Anchorage Inn, WCB-00-389, is vacated.
Remanded to the Workers' Compensation
Board for further proceedings consistent
with the opinion herein.

Attorneys for employees:

James G. Fongemie, Esq. (orally)
Jeffrey Neil Young, Esq.
McTeague, Higbee, Case, Cohen, Whitney & Toker, P.A.
P O Box 5000
Topsham, ME 04086-5000
(for Hugh Cowpertwaite)

Anthony J. Peverada Jr., Esq.  (Orally)
Benjamin Yardley, Esq.
Worker Advocate Division
62 Elm Street
Portland, ME 04101-3061
(for Robert Jasch)

Attorneys for employers:

Richard D. Bayer, Esq.  (orally)
Maine Employers Mutual Ins. Co.
P O Box 3606
Portland, ME 04104
(for M.E.R. Assessment Corp.)

Joy L. McNaughton, Esq.  (orally)
Law Offices of Gerard O. Fournier 
P O Box 7109
Portland, ME 04112-7109
(for The Anchorage Inn)

FOOTNOTES*******************************{1}. In Beaulieu v. Maine Med. Ctr., 675 A.2d 110, 111 (Me. 1996), we struck 
down a Board Rule providing that the decision to include fringe benefits in the 
average weekly wage must be "governed by the law in effect at the time of the 
employee's injury." Me. W.C.B. Rule 1.4(B) (adopted January 8, 1993) (subsequently 
contained in Me. W.C.B. Rule 4.2). We concluded that the Board Rule was inconsistent 
with P.L. 1991, ch. 885, § A-10, which expressly provides for the retroactive 
application of 39-A M.R.S.A. § 102(4)(H), which permits consideration of fringe 
benefits for pre-1993 injuries. Beaulieu, 675 A.2d at 111.

{2}. As one legislator 
remarked in the legislative debates, the administrative changes brought about 
by title 39-A were designed to "mov[e the system] from the judicial model to the 
administrative model which, hopefully, can shorten that time frame so that the 
emphasis can finally be on getting injured people back to work and avoiding accidents, 
instead of appeal after appeal after appeal and of someone finally getting their 
benefits." Legis. Rec. S-53 (3d Spec. Sess. 1992) (statement of Sen. Kany); see 
also Legis. Rec. H-45, 3d Spec. Sess. 1992 (statement of Rep. Anthony) ("[T]he 
strength of [Title 39-A] is to convert from a litigated system to a system of 
centered around mediation.").