Ajax Construction Company, Inc.
Liberty Mutual Insurance Company et al.
Compensation Court 04-7659 Acting Chief Judge Debra Olsson
Associate Judge Janette Bertness Associate Judge George
Plaintiffs: Susan Pepin Fay, Esq. Ryan C. Hurley, Esq. James
T. Hornstein, Esq.
Defendants: Jeffrey M. Liptrot, Esq. Daniel J. Archetto, Esq.
Conrad M. Cutcliffe, Esq.
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and
Gilbert V. Indeglia Associate Justice
Construction Company (Ajax) and Beacon Mutual Insurance
Company (Beacon) are before this Court on consolidated writs
of certiorari from a decree of the Appellate Division of the
Workers' Compensation Court (the Appellate Division), in
favor of Liberty Mutual Insurance Company
(Liberty). The Appellate Division
vacated a prior decree of a judge of the Workers'
Compensation Court and entered a new decree ordering Beacon
to pay workers' compensation benefits to an injured Ajax
employee and to reimburse Liberty for any benefits paid to
Beacon by Liberty under the prior decree. For the reasons set
forth in this opinion, we quash the Appellate Division's
Facts and Travel
facts are largely undisputed. On October 26, 2004, an Ajax
employee, Mark Furia, was injured while working as an iron
worker on a job site in Milton, Massachusetts. Following his
injury, Furia filed a petition against Ajax in the Rhode
Island Workers' Compensation Court. Shortly thereafter,
on November 18, 2004, Ajax petitioned the Rhode Island
Workers' Compensation Court, pursuant to § 28-35-12
and G.L. 1956 § 28-30-13, to determine which insurer
(Beacon or Liberty) was obligated to pay Furia's claim.
On December 22, 2004, a judge of that court entered a
pretrial order with respect to Furia's petition that held
that Furia sustained a work-related injury that resulted in
total incapacity. That same day, the judge also entered an
interlocutory order on Ajax's petition that required
Beacon to pay benefits to Furia, pursuant to G.L. 1956 §
28-35-12(b)(1). The interlocutory order also stated that, if
Beacon was found liable after trial, it would be entitled to
receive a credit for all payments that it made to Furia; and,
if Liberty was found liable, it would be ordered to reimburse
Beacon for all payments that Beacon made to him. The same
judge who entered the abovementioned orders conducted the
trial on Ajax's petition on July 11, 2005, September 8,
2005, and May 11, 2006.
Morel, Ajax's president, was the only witness to testify.
He stated that Ajax was located in Harrisville, Rhode Island,
but he added that it did business in Connecticut,
Massachusetts, New Hampshire, New York, and Rhode Island. He
testified that Ajax's insurance agent, Christopher &
Regan Insurance Inc., handled all of Ajax's insurance.
Morel stated that Ajax carried workers' compensation
insurance in every state that it worked in, which included
insurance with Liberty in Massachusetts and Beacon in Rhode
Island. Morel discussed the calculation of each insurer's
premium and explained that "[a]ny wages that were worked
in Massachusetts on any Massachusetts job would be reported
to Liberty like every other state. Whatever wages are worked
on those jobs get reported to that insurance company, and our
tax returns are used as back up for the wages." The
Liberty policy's annual premium for workers'
compensation coverage was $282, 707, and the Beacon
policy's annual premium was approximately $69, 000.
testimony, Morel discussed Furia, who had been employed with
Ajax for between fifteen and twenty years. He stated that
Furia was injured while working in Milton,
Massachusetts. Morel explained
that the particular job site where Furia was working when he
was injured was not his sole place of employment, as Ajax
moved iron workers to other job sites periodically.
testified that, after Furia's injury, a Liberty
representative called him and inquired as to where Furia had
been hired and where he worked. Morel stated that he told the
representative that he was unsure, but that Furia was likely
hired at Ajax's Rhode Island office. He said that he was
uncertain because, at the time of his hire, Ajax was not
located at its present office and did much of its hiring at
the job sites.
was asked about his response to the Liberty representative
who, during the phone call, inquired about the amount of work
Ajax performed in Massachusetts and in Rhode Island. Morel
testified that he may have told the representative that Ajax
performed about 50 percent of its work in Massachusetts and
50 percent in Rhode Island, although he did not recall saying
that to the representative. He stated that, at times, Ajax
could have performed more work in Rhode Island; historically,
however, 80 percent of Ajax's work had been in
Massachusetts. Morel testified that for any given year, Ajax
was unsure of where it would perform the majority of its
work. In the year of Furia's injury, however, Ajax did
more work in Massachusetts than Rhode Island. Morel also
noted that, for employees who worked in Massachusetts, Ajax
withheld Massachusetts income taxes and paid Massachusetts
unemployment taxes. He said that his next contact with
Liberty after the phone call was a letter from Liberty
denying coverage for the claim. Morel stated that he did not
personally discuss Furia's claim with a Beacon
parties also introduced various documents into evidence,
including the deposition transcripts of Furia and Jessica
Reardon, a Liberty case manager. In Furia's March 3, 2005
deposition, he stated that he was hired at the Ajax
headquarters in Rhode Island and had worked for Ajax as an
ironworker for twelve to fifteen years. Furia stated that,
since his hire, he had worked in Connecticut, Massachusetts,
and Rhode Island. When asked what percentage of work he did
in Massachusetts compared to Rhode Island, Furia responded
"70/30." Furia was asked whether Massachusetts or
Rhode Island taxes were deducted from his Ajax paychecks, to
which he replied, "Both, I believe."
stated that, after his injury, his wife brought him to Kent
Hospital, and he was later transferred to Rhode Island
Hospital. He recalled a visit from a Liberty representative,
Don Friar, while in the hospital. Friar told Furia that his
claim was a "no-brainer" Rhode Island workers'
compensation case because Furia lived in and was hired in
Rhode Island. Furia stated that Friar, before leaving, handed
him a business card for a Rhode Island workers'
compensation attorney and told him to contact the attorney.
Reardon's deposition, she stated that she was, at that
time, assigned to handle Furia's claim, but she noted
that another adjuster, Ellen Cunningham, previously handled
it. Reardon was unsure whether Liberty sent a representative
to speak with Furia in the hospital. She was also asked about
various case notes on Furia's claim file, including a
note that said, "Claim is Rhode Island jurisdiction
based on PWALSH." Reardon explained that
"PWALSH" was an acronym for a test that Liberty
used to determine a claim's jurisdiction; she said that
it stood for "[p]aid, works, accident, lives,
supervised, hired." Reardon testified that Cunningham
performed the PWALSH test for Furia's claim and denied it
on jurisdictional grounds.
11, 2006, the trial judge issued a bench decision. In it, he
discussed G.L. 1956 § 28-36-5, which states, in
pertinent part, "Every policy shall cover the entire
liability of the employer under chapters 29 -- 38 of this
title * * * ." He cited to an opinion of the Appellate
Division of the Workers' Compensation Court,
Flaxington v. Persona Management, W.C.C. No.
92-14565 (App. Div. 1995), for the proposition that an
insurer violates § 28-36-5 if it insures an employer but
excludes coverage of a particular class of employees. Thus,
the trial judge rejected Beacon's argument that it had a
right to limit the coverage it provided to various groups of
employees by listing specific classes of covered employees in
its policy. The trial judge stated that any attempts by
Beacon to limit its coverage or exclude classes of employees
from coverage were a nullity and, thus, did not exempt Beacon
trial judge stated that Ajax was liable to Furia under the
Rhode Island Workers' Compensation Act (the act) because
Furia was hired in Rhode Island. He determined that Beacon
was primarily liable to Furia because he brought his claim in
Rhode Island and Beacon issued a policy to Ajax pursuant to
the act. The trial judge stated, "I do believe that Mr.
Furia has a right to expect payments from a single entity,
and in this case, I have designated Beacon Mutual as that
entity." He also found that Ajax had dual or overlapping
coverage regarding this claim because Furia had a right to
compensation under the workers' compensation laws of both
Rhode Island and Massachusetts. Given the overlapping
coverage, he determined that Liberty was required, under the
policy it issued to Ajax, to share in Beacon's
responsibility to pay Furia. As such, the trial judge held
that Liberty must reimburse Beacon for 50 percent of the
benefits that Beacon paid to Furia.
trial judge stated that the act lacked a particular remedy
that addressed the matter at hand. He noted, however, that
workers' compensation law was "equitable in nature,
" so he fashioned a remedy that was "equitable and
in accordance with the existing law." As such, the trial
judge ordered that: Beacon provide workers' compensation
benefits to Furia, Beacon receive a credit for all sums paid
to Furia after the interlocutory order entered, and Liberty
indemnify Beacon for 50 percent of the workers'
compensation benefits paid to Furia.
2006, following the decree, Ajax, Beacon, and Liberty each
appealed to the Appellate Division. On appeal, Ajax argued
that the trial judge erred in assigning Liberty only 50
percent liability for the payment of Furia's benefits. It
argued that Liberty should have been 100 percent liable for
the payment of benefits because Ajax paid Liberty a premium
exceeding $280, 000 to ...