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Hanover Ins. v. W.C.B.
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MAINE SUPREME JUDICIAL COURT				Reporter of Decisions
Decision:1997 ME 104
Docket:Ken-96-426
Argued:December 2, 1996
Decided:	May 16, 1997

Panel:  WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN,  and LIPEZ, JJ.




HANOVER INSURANCE CO. v. WORKERS' COMPENSATION BOARD


LIPEZ, J.

	[¶1]  The Workers' Compensation Board appeals from a decision of the
Superior Court (Kennebec County, Atwood, J.), vacating a Board assessment
against Hanover Insurance Co. for the 1995 fiscal year.  P.L. 1993, ch. 619
(effective April 7, 1994) (codified as 39-A M.R.S.A. §154 (Supp. 1994)),
repealed and replaced by P.L. 1995, ch. 59, § 1.  The Board contends that
the Superior Court lacked subject matter jurisdiction to review the Board's
assessment pursuant to the Maine Administrative Procedure Act, 5 M.R.S.A.
§11001(1) (1989).  Since Hanover failed to file a timely petition for
appellate review with the Law Court pursuant to 39-A M.R.S.A. § 322 (Supp.
1996), the Board further contends that its decision is final.  Guaranty Fund
Management Servs. v. Workers' Comp. Bd., 678 A.2d 578, 582 (Me. 1996). 
The Board also contends that, even if the Superior Court had jurisdiction to
review the assessment, the assessment was valid and should have been
upheld.  We disagree with the contentions of the Board and affirm the
judgment.
	[¶2]  The Board's funding is provided through assessments levied
against self-insured employers and insurance companies, who pass the
assessment through to their insured employers.  39-A M.R.S.A. § 154 (Supp.
1996).  The assessment is based on the insurers' and self-insured
employers' pro rata share of the total premium volume for all workers'
compensation insurers doing business in the state, and the total aggregate
benefits paid by all in-state self-insured employers, during the previous year. 
39-A M.R.S.A. § 154(5).  Prior to the creation of the Board in 1993, Hanover
was a major servicing carrier in the workers' compensation insurance
residual market safety pool.  24-A M.R.S.A. § 2366, repealed by P.L. 1991,
ch. 885, § B-11.  In 1993, operating pursuant to the original version of
section 154, the Board calculated a $1.68 million assessment against
Hanover based on its premium volume for 1992.  Because Hanover lost a
large share of its premium volume when the residual market mechanism
was eliminated in 1993, Hanover was unable to collect its entire assessment
obligation from its insured employers in 1993.  
	[¶3]  Hanover and three other large insurance carriers filed petitions
for reconsideration with the Board challenging the assessment.  The
insurers contended that section 154 did not permit the Board to levy a
specific dollar assessment against insurers, but required the Board to
calculate a percentage rate assessment that insurers could apply against
their insureds based on the premium volume for the current year.  The
Board denied the petitions and the insurers paid the assessment without
appealing the decision.  The Legislature amended the statute, however, in
1994.  P.L. 1993, ch. 619.  The legislative purpose for the amendment is
stated in the emergency preamble:

	Whereas, the Legislature intended that the assessment be
a direct pass through to state employers such that insurers
would suffer no financial loss as a result of the assessment; and

	Whereas, the implementation of the assessment by the . . .
Board has caused workers' compensation insurers to suffer
financial loss . . . .

Emergency Preamble, P.L. 1993, ch. 619. 
	[¶4]  On May 2, 1994, the Board, now operating pursuant to the
amended statute, sent notices of assessment to Hanover, stating that
Hanover must pay $391,624 for the 1995 fiscal year.  The Board arrived at
this specific dollar amount by first calculating a percentage applicable to all
insurers (1.4%) and then applying that percentage to Hanover's total
premiums less dividends for the prior calendar year.  Again, the large
insurers disputed the assessment determination, contending that the Board
should have assessed a percentage rate that the insurers could then apply to
the premiums actually received in the 1995 fiscal year.  Representatives of
the Board met with four large insurance companies, including Hanover,
several times over the course of the year to resolve the dispute.  According
to the Board, it decided to "agree to disagree" on the interpretation of the
amended statute and to wait and see if the insurers' calculation method
would bring in enough funds to meet the Board's $5.75 million budget. 
Hanover's quarterly assessment payments, based on 1.4% of its actual
premium volume, fell far short of the Board's budget goals.  Although the
Board sought quarterly assessments of $97,906, Hanover paid $17,308 in
the first quarter and $52,339 in the second quarter.  On February 10, 1995
the Board issued an order stating that Hanover owed $126,165 in arrearages
from the shortfall in its first two quarterly payments, and stating that
"Hanover is hereby ordered to pay the arrearage in full on or before April
30, 1995 at which time the third quarter installment is also due."  
	[¶5]  Hanover filed a petition for judicial review with the Superior
Court pursuant to the Maine Administrative Procedure Act, 5 M.R.S.A.
§ 11001(1).  On June 3, 1996, the Superior Court vacated the Board's
February 10, 1995 order and the May 24, 1994 assessment, concluding that
section 154 "unambiguously require[s] that the Board establish a percentage
rate that is applied to an insurer's actual premiums in a particular quarter." 
The Board appeals from that decision. 
 
Appeal to the Superior Court
	[¶6]  The Maine Administrative Procedure Act provides: "Except
where a statute provides for direct review or review of a pro forma judicial
decree by the Supreme Judicial Court or where judicial review is specifically
precluded or the issues therein limited by statute, any person who is
aggrieved by final agency action shall be entitled to judicial review thereof in
the Superior Court in the manner provided by this subchapter."  5 M.R.S.A.
§ 11001(1).  The Board contends that pursuant to our recent decision in
Guaranty Fund, 678 A.2d at 581, Hanover was limited to discretionary
review in the Law Court pursuant to 39-A M.R.S.A. § 322, and therefore the
Superior Court lacked authority to review the Board's assessment pursuant
to the Maine Administrative Procedure Act.  We disagree.
	[¶7]  Prior to 1993, a party was entitled to an appeal as of right from
the decision of an individual commissioner to the former Workers'
Compensation Commission Appellate Division, 39 M.R.S.A. § 103-B (1989),
repealed by P.L. 1991, ch. 885, § A-7, and a discretionary appeal to the Law
Court after a decision by the Division.  39 M.R.S.A. § 103-C (1989), repealed
by P.L. 1991, ch. 885, § A-7; Mathieu v. Bath Iron Works, 667 A.2d 862, 865
(Me. 1995).  When the Appellate Division was eliminated in 1993, the
Legislature provided for discretionary review to the full Board when a
hearing officer requests such review, based on a determination that the
decision "involves an issue that is of significance to the operation of the
workers' compensation system," 39-A M.R.S.A. § 320, and discretionary
review in the Law Court from any decision of a hearing officer or the Board
"if the board has reviewed a [hearing officer's] decision pursuant to section
320," 39-A M.R.S.A. § 322.  Mathieu, 667 A.2d at 865.  
	[¶8]  Pursuant to the plain language of section 322, because the
assessment determination did not involve a decision of a hearing officer, or a
review of a hearing officer's decision by the Board pursuant to section 320,
the discretionary review procedure provided in section 322 does not apply
to assessment decisions of the Board.  Accordingly, because the Act is silent
regarding judicial review of assessment decisions, the decision was properly
appealed to the Superior Court pursuant to the Maine Administrative
Procedure Act.  5 M.R.S.A. § 11001(1).  
	[¶9]  We do not agree that our decision in Guaranty Fund, 678 A.2d at
582, compels a different result.  In that case, we held that forfeiture
decisions of the Workers' Compensation Board Abuse Unit, although not
technically decisions of a hearing officer or the Board pursuant to section
320, are nevertheless subject to discretionary review in the Law Court
pursuant to section 322.  Id.  We stated:
Although section 322 does not expressly provide for Law Court
review of Abuse Unit decisions, section 323, governing the
Superior Court's enforcement authority, expressly provides that

'[a]ppeals from a board decision, order or agreement must be in
accordance with section 322.'  39-A M.R.S.A. § 323.  Because
the Abuse Unit was acting pursuant to the delegation of authority
from the Board, the forfeiture orders were tantamount to
decisions of the Board and therefore reviewable by the Law
Court.

Id. at 581.  Relying on the above-quoted language from Guaranty Fund, the
Board  contends that the last sentence of section 323 expands the Law
Court's appellate authority beyond the strict requirements of section 322,
making Law Court review no longer contingent upon a prior decision of a
hearing officer.  
	[¶10]  The Board reads the last sentence of 323, and our decision in
Guaranty Fund, too broadly.  Section 323 provides limited authority in the
Superior Court to enter pro forma decrees to enforce Board decisions. 
Beaulieu v. Dirigo Housing Assocs., 648 Me. 968, 969 (Me. 1994).  The last
sentence of section 323 was intended to clarify that the grant of authority to
enforce Board decisions should not be construed as a grant of authority in
the Superior Court to review those decisions on the merits.  Beaulieu, 648
Me. 968, 969 (Me. 1994); Banker v. Bath Iron Works Corp., 507 A.2d 602,
604 (Me. 1986).  Section 323 was not intended to provide an independent
grant of authority in the Law Court to review Board decisions.  This purpose
is manifest in its plain language,  providing that "[a]ppeals from a board
decision, order or agreement must be in accordance with section 322."  39-
A M.R.S.A. § 323.  
	[¶11]  Our decision in Guaranty Fund was inextricably tied to the
section 324 forfeiture context.  678 A.2d at 581-82.  As we explained,
because forfeiture decisions were traditionally rendered by commissioners,
they were automatically eligible for discretionary Law Court review under
former section 103-C.  39 M.R.S.A. § 103-C (1989).  It was only after the
Board chose to delegate forfeiture authority to an Abuse Unit, instead of
individual hearing officers, that the issue of appellate review arose.  Id. 
Based on the unbroken history of Law Court review of forfeiture decisions,
we concluded that the Legislature did not intend "to significantly alter the
appellate procedure for forfeitures that existed under the prior Act," nor
did it intend to permit "workers' compensation appellate procedure to
hinge on the fortuity of whether the Board delegates the authority to assess a
forfeiture to a hearing officer or to some other individual or entity."  Id. at
582.   We found further support from policy considerations in the forfeiture
context.  As we stated, "[t]o provide for an automatic appeal of forfeiture
decisions in the Superior Court, followed by an appeal as of right to the Law
Court, would accord an enhanced right of judicial review not afforded to
other workers' compensation litigants.  We do not presume that the
Legislature intended to provide an extra layer of appellate review in
forfeiture proceedings that are designed primarily to encourage the prompt
and timely payment of benefits. . . ."   Id.  
	[¶12]  None of the reasons that we cited in Guaranty Fund in support
of discretionary Law Court review of Abuse Unit penalty decisions are
present in the assessment context.  Unlike the forfeiture situation, the
Commission/Board did not render assessments prior to the enactment of
title 39-A, and, therefore, there is no time-honored practice regarding
appellate review of Board assessment decisions.  Although the Legislature
has traditionally sought to limit Superior Court involvement in workers'
compensation proceedings, Superior Court review is traditionally available in
the context of assessment determinations involving insurers.{1}  More
importantly, assessment determinations do not involve an inquiry into the
circumstances of an individual employee's claim for benefits, a role
traditionally delegated to individual hearing officers.{2}  Assessments are
based on a system-wide analysis of the insurance market, and are applicable
to all insurers providing coverage in the state.  In all likelihood, therefore,
the Legislature envisioned that assessment determinations would be
conducted by the full Board, as was done here, and not by individual hearing
officers.  We see no evidence that the Legislature intended section 322,
expressly permitting discretionary Law Court review from decisions of
hearing officers, to apply to assessment determinations of the full Board. 
Accordingly, we conclude that Hanover's challenge to the Board's
assessment was properly before the Superior Court pursuant to the
Administrative Procedure Act. 
The Assessment
	[¶13]  The Board contends that, pursuant to the plain language of
section 154, the assessment must be expressed in terms of a specific dollar
amount, calculated according to each insurer's premium volume for the
previous year.{3}  We disagree.  The first sentence of subsection 3(B) provides
that the "assessment must be a percentage of gross direct premiums
written . . ."  39-A M.R.S.A. § 154(3)(B).  We agree with the Superior Court
that the word "percentage" suggests a percentage rate, not a specific dollar
amount.  Our conclusion is also supported by subsection 3(D), requiring
insurers to "remit payment of the assessment based upon the results for the
quarter reported."  39-A M.R.S.A. § 154(3)(D).  This language is not
consistent with the Board's interpretation that the assessment must be
expressed as a specific dollar amount based on each insurer's premium
volume for the previous year.  Pursuant to our interpretation, insurers are
required to apply a Board-determined percentage rate to their own
quarterly premium volume.  While the percentage rate will stay the same
over the course of the year, the assessment payment will vary from quarter-
to-quarter, depending on each insurer's quarterly premiums, and,
accordingly, insurers are required to "remit payment of the assessment
based upon the results for the quarter reported."  39-A M.R.S.A.
§ 154(3)(D).  Our interpretation is also supported by analogy to 39-A
M.R.S.A. § 404(4)(A)(2)(a) (Supp. 1996).  Subsection 404(4) permits the
Maine Self-Insurance Guarantee Association to assess individual self-insurers
"an amount equal to 1% of the annual standard premium that would have
been paid by that individual self-insurer during the prior calendar year."  39-
A M.R.S.A. § 404(4)(A)(2)(a).  As Hanover contends, had the Legislature
intended the section 154 assessment to be a dollar amount, as clearly
required by section 404, the Legislature could have drafted subsection
154(3)(B) to provide that "[t]he assessment must be [an amount equal to] a
percentage of gross premiums written . . . ." 
	[¶14]  The Board contends that its interpretation is supported by
subsection 6 requiring the Board to make "assessments" (plural) and to
"assess each insurance company and self insured employer its pro rata share
for expenditures during the fiscal year . . . ," 39-A M.R.S.A. § 154(6).  The
Board contends that the use of the plural and the word "each" in subsection
6 suggests that the assessment is not a single percentage to be applied
globally to all insurance companies, but a dollar-specific assessment against
each insurer separately.  Subsection 6, unlike subsection 3, addresses both
the insurers' assessment and the assessment against self-insured employers. 
The use of the plural in subsection 6, therefore, describes the assessments
levied against insurers and self-insurers and does not suggest multiple
dollar-specific assessments against individual insurers.  Moreover,
subsection 3(D), by contrast, begins: "Every insurance company or
association subject to the assessment imposed by this section . . . ."  39-A
M.R.S.A. § 154(C) (emphasis added).  Use of the word "the" instead of "an"
to describe the assessment suggests a single assessment applicable to all
insurers.  Similarly, subsection C provides: "The assessment must be
determined by the board by May 1st of each year.  Insurance companies or
associations must begin collecting the assessment from all employers on
July 1st of each year."  39-A M.R.S.A. § 154(C) (emphasis added).  
	[¶15]  We also reject the Board's contention that subsection 3(D),
requiring insurers with an assessment exceeding $5,000 to make quarterly
assessment payments, supports the assessment of a specific dollar amount. 
39-A M.R.S.A. § 154(3)(D).  While it is true that an insurer cannot know with
certainty if it will be assessed above the $5,000 threshold until the actual
quarterly assessment payments are determined, we agree with the Superior
Court that the Legislature could have intended that the determination to
require quarterly assessment payments could be based on an estimate of the
projected yearly assessment payments based on the prior year's premium
volume.  We do not agree that the uncertainty concerning whether an
insurer's assessment payments will fall above or below $5,000 compels the
conclusion that the assessment must be expressed in a specific dollar
amount in the face of clear statutory language to the contrary.
	[¶16]  Although it is not necessary to examine other indicia of
legislative intent when statutory language is unambiguous, Jordan v. Sears
Roebuck & Co., 651 A.2d 358, 360 (Me. 1994), our interpretation finds
strong support from the legislative history.  After the Board levied a specific
dollar assessment against insurers in 1993, the Legislature amended section
154 in 1994, stating in the Preamble that "the implementation of the
assessment by the . . . Board has caused workers' compensation insurers to
suffer financial loss . . . ."  Emergency Preamble, P.L. 1993, ch. 619.  The
preamble states further that the assessment is intended to "be a direct pass
through to state employers such that insurers would suffer no financial loss
as a result of the assessment."  Id.  As Hanover contends, the Board's
interpretation does not meet the legislative goal of preventing insurers from
incurring financial loss because an insurer that did more business the
previous year will be assessed a higher dollar amount than it can bill its
insureds.
	[¶17]  Section 154 was amended more recently in 1995.  P.L. 1995,
ch. 59, §1 (codified as 39-A M.R.S.A. § 154 (Supp. 1996)).  This amendment
is illuminative because it unequivocally emphasizes that the insurers'
assessment must be expressed as a percentage rate and not a specific dollar
amount.  The following underscored language was added to subsection 3(B):
"The assessment must be stated as a percentage of each employer's
premium base.  In determining the assessment percentage, consideration
must be given to the balance in the Workers' Compensation Board
Administrative Fund."  P.L. 1995, ch. 59, §1.  Subparagraph 3(C) was
amended as follows:
 
For each fiscal year, the initial assessment percentage must be
determined by the board by May 1st of the prior fiscal year. 
Insurance companies . . . must begin collecting the initial
assessment from all employers on July 1st of each year.  In
establishing the assessment percentage, the board shall estimate
the expected premium base for the upcoming fiscal year based
on the returns filed under paragraph D and anticipated trends in
the insurance marketplace. . . . .

(emphasis added.)  P.L. 1995, ch. 59, §1.{4}  The legislative history of the
1995 amendment suggests that it was intended to clarify the law, not alter
it.  The statement of fact provides: "Without this emergency legislation, the
basis for the assessment may be in doubt and the services of the board may
be seriously interrupted."  L.D. 953, Statement of Fact (117th Legis. 1995)
(emphasis added).
	[¶18]  Because the Board is the administrative agency authorized to
implement the workers' compensation law, we give deference to decisions
of the Board interpreting the Act.  Curtis v. National Sea Prods., 657 A.2d
320, 322 (Me. 1995); Larochelle v. Crest Shoe Co., 655 A.2d 1245, 1248
(Me. 1995).  We have stated, however, that "'deference to the agency's
construction must yield to the fundamental approach of determining
legislative intent, particularly as it is manifest in the language of the statute
itself.'"  Lewiston Raceway, Inc. v. Maine State Harness Racing Comm'n, 593
A.2d 663, 665 (1991) (quoting Central Me. Power Co. v. Maine Pub. Util.
Comm'n, 436 A.2d 880, 885 (Me. 1981)).  We are persuaded that the
statutory language unambiguously requires the Board to express its
assessment in terms of a percentage rate.  Accordingly, we affirm the
judgment of the Superior Court.
	The entry is:
Judgment affirmed.
                                                               

Attorneys for plaintiff: Charles C. Soltan, Esq. (orally) Seth W. Brewster, Esq. Verril & Dana P O Box 586 Portland, ME 04112-0586 Attorney for defendant: Julia A. Finn, Esq. (orally) General Counsel Workers' Compensation Board 27 State House Station Augusta, ME 04333-0027
FOOTNOTES******************************** {1} See, e.g., 24-A M.R.S.A. § 237 (Supp. 1996) (assessment to fund the Bureau of Insurance); 24-A M.R.S.A. § 4609 (Supp. 1996) (assessment to fund the Maine Life and Health Guaranty Association); 39-A M.R.S.A. § 409 (Supp. 1996) (assessment by Superintendent of Insurance to fund the Self-Insurer's Workers' Compensation Program). Decisions of the Superintendent of Insurance may be appealed to the Superior Court pursuant to the Maine Administrative Procedure Act. 24-A M.R.S.A. § 236 (1989). {2} Neither party contends that the assessment determination was an adjudicatory proceeding. The Maine Administrative Procedure Act defines an "adjudicatory proceeding" as "any proceeding before an agency in which the legal rights, duties or privileges of specific persons are required by constitutional law or statute to be determined after an opportunity for a hearing." 5 M.R.S.A. § 8002(1) (1989). Cumberland Farms Northern v. Maine Milk Comm'n, 428 A.2d 869, 874 (Me. 1981); Hale v. Petit, 438 A.2d 226, 231 (Me. 1981); see generally 2 K.C. Davis, Administrative Law, § 7.2-7.3 (2d Ed. 1979). Adjudicatory proceedings of the Board are expressly excluded from the application of the Administrative Procedure Act. 5 M.R.S.A. § 9051(1) (Supp. 1996) ("In any adjudicatory proceedings, except those proceedings involving . . . the Workers' Compensation Board . . . , the procedures of this subchapter apply"). {3} The relevant version of section 154, as amended in 1994, provides, in pertinent part: 3. Assessment on workers' compensation insurance. The following provisions apply regarding the Workers' Compensation Board assessment on workers' compensation insurance. A. Every insurance company or association that writes workers' compensation insurance in the State and that does business or collects premiums or assessments in the State shall pay to the board the assessment determined pursuant to this section for the purpose of providing partial support and maintenance of the board. B. The assessment must be a percentage of gross direct premiums written, whether in cash or in notes abso