Petition of City of Manchester et al.

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Good morning. May it please. The court name is Gary Harding from Bernard and Merrill on behalf of a group of eight employers aggrieved by the Department of Labor's actions. We are here today 'cause the Department of Labor is denying the employers the right to any hearing on disputed second injury fund claims section 43. And we're dealing with workers' compensation statute 2 81 dash A. So this section of the statute 43 requires an initial level hearing to be held based on the dispute between the second injury fund and these employers. The plain reading of the statute requires the department to schedule a hearing. The statute is not ambiguous, assuming an ambiguity, then a liberal interpretation of the statute read as a whole, along with the legislative intent, still requires a hearing to be scheduled. Excuse me. The heart of the department's argument is that a right to a hearing on denied second injury fund claims is not allowed because section 54 of the statute quote says nothing about a right to a hearing. That's a quote from the department. Well, this argument fails because there are other sections of the statute for which there is no express provision for a hearing, but the department routinely schedules hearings on those sections. What are those sections? Well, first and foremost, the most notable section is causation of injury to employment. This is the most, or one of the most important sections under the statute. But section two says nothing about a right to a hearing, yet the department schedules and holds hearings on this issue on an almost daily basis, other sections of the statute. And That's under section 43 section that that's the, I understand that the dispute is to causation, but the hearings are held pursuant to section 43, Correct? Correct. And that's how they scheduled Section 43 is the mechanism of which the procedure is to schedule these hearings and other sections of the statute that say nothing about the right to a hearing are injuries outside the state computing average weekly wage determining date of injury contractors, liabilities to subcontractors, employees Right to reinstatement award of fees and interests. Yet the department routinely grants initial level hearings for these sections. So is that, so is that a administrative gloss issue or argument you're making? And how does that pertain to this particular provision? Well, in this, in this particular provision, administrative gloss is moot at this point because they were trying to apply this administrative gloss to the procedure where once the fund denies the claim, it goes straight to the CAB hearing. But now the department says, and concedes you're right, employers, you don't get a hearing at the CAB in the first instance. So administrative gloss is moot essentially because they've already conceded it doesn't go that way. And so what's the remedy? They're saying you don't get a hearing at all. That's, that's what they're telling the employers. Well, if there were, there were hearings, Correct? Correct. And the department at some point, 10 years ago or so, stop doing hearings and there was no legislative response. Well, they didn't know this was an unwritten policy by the department about just going straight to the CAP. Now that they've conceded a doesn't, where are we left? Why don't we just go back to having Department of Labor hearing compensation, appeals hearing, and then appeal to this court? That's what the employers are looking for. Now, section 43, the argument that section 43 does not provide a right to the hearing on second injury fund fund claims is simply wrong. Employers are requesting this court to order the department to schedule an initial level hearing pursuant to section 43, which plainly states in a controversy as to the responsibility of an employer or employer's carrier for the payment of compensation and other benefits under this chapter. Any party at interest may petition the commissioner in writing for a hearing and award. Well, let's look at this. The statute, unambiguous unambiguously grants a right to a hearing to any party at interest in a controversy as to the responsibility for the payment of compensation and other benefits in a controversy takes two. And this statute says the employer and the employer's insurance carrier is gonna be one of those parties under the statute. The other party is the second entry fund in this case. Does the, uh, Vasquez case shed any light on this? Yes. It Vasquez case said, department, you have the authority to schedule these hearings on, uh, coverage issues. And here in this case, these cases, there is a controversy as to the responsibility of the employer or the employer's carrier for the payment of compensation and other benefits. I Is there a controversy? Yes. And the very question is who, who is responsible for the payment, the fund or the employer? Because these payments have already been made. Correct? Correct. They've been made. And what happens is the employers and the carriers are required to pay their money into this fund, and they're requesting reimbursement from the fund because of the employee second injury. So how do you address the fund's argument that the statute focuses on controversies as to the responsibility of an employer or the employer's insurance carrier and says nothing about the fund or any other party? Well, that section under 43, the employer and the employer's carrier are always gonna be a party. This section of the statute doesn't mention anything about claimants having a right or attorneys having a right for attorney's fees or hospital or a provider having issues, uh, for payment. And the under section 58 of the statute subject matter, the commissioner shall administer and enforce all provisions of this chapter except otherwise provided by this chapter. And there are no exceptions regarding enforcement on denied second injury fund claims or applications. Therefore, a Department of Labor hearing must be scheduled under section 43 in order to enforce the provisions of section 54. These employers are simply looking for a hearing so they can prove their case to the fund that they're entitled to Reimbursement. I realize that your position is that the department has, uh, moved the goalposts here, um, from the original positions and briefing so that now there's no right to a hearing. But what's, what's the problem with just having, um, a hearing in front of the cab or making these arguments in front of the cab in the first instance rather than with a hearings officer? Well, the statute doesn't allow it at first. So that would be ultra various. Yes. And what happens is because of, and This was because of the complexity of the statute, and this is under appeal of Fay in re fey and appeal of Daniels, uh, limiting the, the issues reviewable by the Compensation of Appeals Board ensures that parties can reasonably anticipate the issues for which they must prepare evidence and argue. So that's what these employers are trying to do, find out what the issue is at a Department of Labor hearing, and if the department comes with a decision or an order that says, no, you're not allowed reimbursement, then that gives the employer the right to have an appeal hearing so it can present evidence to the Compensation Appeals Board. And only on those issues identified, there can't be new issues added in before the cab. Right. I I mean, issues identified at the hearing would be those that would be then able to be appealed to the cab. Correct. Yeah. And, and essentially it helps everybody resolve the issues at first and then figure out on appeal, okay, this is where we need to bolster our evidence or whatnot under the lab rules. And there's already a procedure in place for these types of hearing. All other sections of the statute go through this process of Department of Labor hearing appeal to the CAB and appeal to this car. So why not Section 15? Can you address the issue of the A PA, The a PA, The Administrative Procedure Act? What does that have application here? The the state raises that? No, the a PA argument is when there's two conflicting statutes, a general provision and a specific statute, the more specific applies. And that's what would happen in this case. These hearings aren't held under the A PA 5 41 A I believe it is. It's under 2 81 dash a. That's where the argument arises or that's where the issue arises under section 54 of the statute. So the more specific statute controls over the general statute and the A PA is simply a generalized statute helping agencies develop their procedure. And the department already has that procedure in place. And do, do you agree that the, the practice for the past 10 years has been not to have these initial hearings as you contend you have, your clients have a right to I I don't know the, the amount of years that it's been since it just went straight from a denied letter from the fund straight to A CAB. I'm not too sure when that practice was established. And in the department's brief, they said they don't even know, but assuming it's 10 years, so for those past 10 years, it has gone that way, I don't know. But now that they've conceded, that's not the proper way to do it. I think now the only alternative because then the employers have absolutely no remedy for their protected property interest. Go ahead, go. No, I mean, just to follow up on the chief's question earlier, given that it's been functioning this way for 10 years and the legislature hasn't done anything about it, why isn't that the, the proper interpretation and construction of the statute? Uh, that's almost like the administrative gloss type Argument? Yes, it is. It is. That is what it is. It is what it is. And as I stated, they've conceded that that's not the proper way to go. So what is the remedy in there? And there's no been no decision changing that process that could have been challenged? Correct. There, there has been no promulgation of any rules to that effect. There's no rules. They didn't, and I believe I I mentioned this in the brief, that this didn't go through the a PA process of rulemaking procedures. They just did this on an unwritten policy. So, and just to get to it, it was, and This court doesn't ordinarily accept sort of a practice as an administrative gloss, um, proof, if you will. Yes. May I just make sure I understand your plain language argument? Mm-Hmm. Under section 54, an employer or carrier notifies the commissioner of a possible claim against the fund, correct? Correct. And then the commissioner, as I understand, has delegated this to a fund administrator. The fund administrator issues a denial letter. Correct. And your argument is that under 43 1 A, that implicates the responsibility of an employer or an employer's carrier for the payment of compensation. Is that right? Yes. That's, And that's why there needs to be a hearing correct. Or an employer or a carrier can petition

the commissioner for a hearing Correct. In order to resolve the dispute under section 54. Okay. Thank you. Thank you, attorney Lombardi. Good morning. May it please the court, Laura Lombardi for the Department of Labor Employee. Do, do you mind just responding to that interpretation right away? Why is that incorrect? That is incorrect because section 43 is dealing with controversies involving the payment of benefits to injured employees. Um, and I think you also, you the employers are taking individual words and sentences outta context if you look at the entire, uh, statute itself. Um, and in the context of the entire statutory scheme, first, within section 43, um, you have in paragraph one A, it talks about holding the hearing at a location nearest the employee, showing that an employee is one of the parties to the controversy. Um, paragraph two, which requires that paint, um, payments begin as soon as possible after a decision, um, describes the payments as quote, payment of weekly compensation and entitlement to medical and vocational benefits. This shows that the benefits being discussed in paragraph one A, are benefits being paid to an injured employee? They are not anything being paid to, um, an employer or an insurance carrier. Um, paragraph one B, um, says that an appeal to the cab, uh, does not suspend the award. And again, this is the award of weekly compensation and benefits to the injured employee. And that goes to the very purpose of section 43, which is to ensure that an injured employee, um, receives as timely as possible, um, the benefits to which they're entitled to under the statute. But in Vasquez, we said that 43 applied to disputes and contractual interpretations between insurance companies. Correct. And in Vasquez, um, there was an injured employee at the party to the case, and the issue involved, the injured employee in Vasquez was not receiving benefits. There was large outstanding, uh, medical bills still at issue. Right. But the employee wasn't an effective participant in the dispute. He was sort of collateral damage in Vasquez. He was a party, um, to the appeal. And I believe he was a party below in terms of He was a party, but still it was, he had very little control over the dispute that got to us. Was The dispute below? I mean, he was part of the dispute below because it was his request for benefits, right? That was essentially he was granted the benefits, right? But then there was no, but the dispute Between his employer and the insurance carrier was out of his hands. Correct. And, um, and this goes back to, um, the, the numerous statutes, um, that were just referenced that do not, um, cite to 43, um, but which do come up within a hearing under 43. All of those statutes involve, um, issues that would arise in an employee's claim for benefit. Isn't there an injured employee here? There's an in the focus of the second injury fund payment, But there's no controversy about that injured employee's, uh, right to benefits, Right? It's just a question of who pays the benefits. No, uh, there's not even a question as to the responsibility to pay benefits. The, the statute 54 4. Well, whether there's reimbursement of payment of benefits from the second injury fund, the ultimate responsibility for who pays for this series of benefits, that's a dispute similar to whether the employer in Vasquez or the insurance company in Vasquez was responsible. But is is it's entirely separate from the employee's interest and the employee's access to benefits. So the employee, a no claim can be made on the fund until the employee has been provided the benefits. So this is an entirely separate, um, issue in terms of a claim on the fund. And again, the fund is money that the employers have paid into, so it is, right. So Without section 43, where is the due process for the employers to access these funds that they paid for a specific purpose? It's through the Administrative Procedures Act. So, and I think it's important to point out here, there has been no claim of a due process violation at all times in the history of the second Injury fund. Employers have been provided a hearing most recently. That hearing has been before the Compensations appeal board, Which isn't really authorized. We we do agree. Um, and I think part of the confusion in the past history of how the process has played out is that the department recognized that employers should be given a hearing. They have always been given a hearing, not necessarily two hearings. They've always received a hearing. Um, the department was looking within the framework of the workers' compensation statutes to find the authority to give that hearing. Um, but that statute does not provide that authority. Uh, this, So now there's no hearing? No, there is a hearing. It comes out of the Administrative Procedures Act, which applies to all agencies. And so it, And that's being implemented now as we speak It. The department has a proposed draft rule, um, to change the process to provide a department level hearing, um, for denied second injury funds. Um, but due to this ongoing litigation, did not feel it would be appropriate to, to send that to jail car at that point. But there's no, there's no, um, intent to stop the hearings. They've always had a hearing. Um, and again, I wanna point out too, this Is, so these people would then get a hearing in the case in front of us. Yes. Um, I don't believe the hearing should be at the CAB. Um, so those should be, um, dismissed. And I guess I wanna point out too, that this is a petition for a writ of mandamus. So there's no allegation that employers have had their due process VI rights violated at any time. There is the suggestion that there's a concern that the department, because of the way our, our brief was written might in the future deprive due process. So, but That if we were to mandate the department to provide a hearing, this process that's stalled at the moment could go to JL Carr and satisfy that mandate. I don't believe that they, this court should mandate that. I think to have a petition for a WR of Man Davis, that's a very, um, high remedy. It's an extraordinary remedy where there has been no allegation of an actual due process violation. Um, I don't think, um, that the employers have made a case to require this court to order the department to do anything. It's clear that the department has at all times provided a hearing. So the department has complied with due process, um, to the extent that there is a property interest. And now, again, I don't think that, um, the issue of due process is before the court because there's been no, um, allegation of a denial yet. Um, so what we would ask, but the department would ask, would be for the court to hold, um, that section 43 does not apply to deny second injury fund applications. Um, and then to deny the employer's request for a WR written of mandate, and then the department would go forward with their proposed rule, um, would, which would permit employers a department level hearing, um, under the a PA complying with the Administrative Procedures Act. Um, Would these folks be time barred or somehow procedurally barred from accessing that process? That's a very good question. Um, I, I would assume there would be a way to ensure that these pending, um, hearings would, they would be able to get their hearing. So how long has this proposed rule been in, in the making? Um, I I, during the context of this litigation? So Why not stay, stay the appeal and enact the, the rule, give the appellants what they're looking for a hearing at and be done with it, Because it's not what they're looking for. Uh, and again, they're not looking for a hearing. They're looking for two hearings. So they're looking for a department level hearing. The reason why they want that to fall under section 43 is because then they could get an appeal to the CAB. Um, and I wanna point out too, that's not the process. Not all, uh, workers' comp related department level hearings follow that process. Um, And if they got a department level hearing, the appeal would be where? Under the a PA Superior court? Under the AP P? No, under the a PA, uh, there would be no appeal because under the a PA, there would have to be, um, authorized by law. So the, the legislature would have to put it within section, um, 54 to have that erci. So it would be right, it would be, there would be no right to appeal, but they could always do a petition for tertiary to get here, but they wouldn't have that second de novo hearing. And, And the cab hearing, sorry to be so complex on this, but is not de novo. No. The cab hearing is De novo Is de novo. Okay. Right. Um, and I think to point out with the cab too, the cab, the purpose of that is for these, um, hearings related to an injured employee's rights to benefits. And so the cab sits as a three, three members, one member from Labor, one member from sort of to represent employee interests. And that kind of shows also, the intent is this is dealing with, uh, benefits to employees, not benefits to employers. Um, under section seven of the workers' comp statute, which deals with civil penalties that could be assessed against the employer, employers get a, um, department level hearing under that section, um, under 2 73 11 A, um, those department level hearings that relate to the employer, but not an injured employee, are not appealable to the cab. They're appealable to the penalty appeals board. Um, and then also within section 43 itself, if you looked at the third paragraph of section 43, um, disputes between an employer and the carrier regarding premium charges for independent contractors, they're given a department level A hearing, um, but not under section A. So there's no right to appeal to the CAB, but those which do not involve, um, an employer's ability to access benefits are not appealable to the CAB, um, they're appealable to the Superior Court. Um, so I just wanna point out there, these, there Are other, these dispute, these disputes that don't involve employees do have an appellate avenue, Correct? Yeah. Statutory created by the legislature. So here, if the legislature wanted to create that, If it knew there was no two step process, it could create it, It could create it. In the meantime, the department's looking at finding a way to at least provide one hearing. Yes. And the department has always provided a hearing. The issue is, Till now, No. They have always provided a hearing. Okay, What do we do with the fact that for 10 years, the department apparently has said, oh, go to the CAB for a de novo hearing. But now they're saying, oh geez, 10 years we've been making a mistake. That's a legal error. Sorry. You can't rely on that. Yes. Um, and, and I think that goes to, so the, the administrative gloss argument, um, I acknowledge it cuts both ways, and I don't, I don't think it really applies. I agree with them. It doesn't apply because if a statute's clear and ambiguous, um, you wouldn't apply the administrative law. So, I mean, we've had, So the fact that they've done the CAB for 10 years, um, and realize now that that's not the way the statute is, is written, you, you wouldn't continue to do that improper process. I mean, you acknowledge, we've had a series of cases here most recently appeal of Lawson Group last year, where it came to us through the, through a de novo review at the CAB. And nobody said boo about it. Like, geez, sorry. We shouldn't have done that. Correct. It's the way it's been going for at least 10 years. Uh, we don't know when exactly the process changed, but there has always been a hearing. What was the authority to hold the hearings 10 years ago When they were doing the two mm-Hmm. Uh, they believed it was under section 43. Um, and so then, and, and so now it's, it's recently we've realized that does not fall within section 43. And again, I think it goes to the department recognizing that there should be a hearing, and they were looking within the workers' comp statute that appeared to be the section that could most, you know, could work the best. Um, but it, it, it's not consistent with the statute, the purpose of the statute, the language of the statute. Um, it really is the Administrative Procedures Act. 'cause again, this is an application too. So we're not talking about a controversy between multiple parties. We're talking about an application for benefits. Well, It is a controversy between the employer at the second injury fund, which is not specifically the department. It, it's the administrator of, of the fund. It's the Administrator, but it's a different thing. But the fund is something created paid into by all the employers. So it's kind of the employer, the, the fund is protecting the funds on behalf of all employers. So it's almost like the two, the two different parties are the employers, the employer seeking reimbursement and the second injury fund saying, Right, it's almost like a dispute between the employer and his insurance carrier as to who is responsible ultimately for the payment to the employee. It's another kind of group pooled insurance, if you will. And so it, they're seeking to get a claim. So it's an application and application under the a, the Administrative Procedures Act can either be done by non adjudicative processes, and the employers agree that it's fine to do the first step non with a non adjudicative process because this is an application. Um, and then the department after that, if it's denied, then has the authority under 5 41 a 29 to provide an adjudicatory hearing. And that rendered that would, I'm sorry. No, no, go ahead. That would render it a contested case under the definitions of the A PAI, I don't think that issue should be decided in this case, because a contest to be it, it's not to Be a contested Well, it is, it is. The department's position is a little bit confusing because for purposes of rulemaking, wouldn't it be conceding that this is a contested proceeding? It's a contested case where the rights and liabilities of the either the employer or the insurance carrier are, are at risk or at issue. That that is true. So I mean, yes, if we cr actually, you're, you're exactly correct. If once they create the rule, then there is requirement by rule. And so it would be a contested case. And the requirement by rule would be what is required by law under that eight, I'm sorry, it would be a contested case. It would be required by statute rule or due process. Okay. So I don't think you need to reach the due process issue. Um, their plan is to do the rule, and that'd be required by rule would be a contested case. And then you go through all the a PA, um, and I see my light is on, Is it a legitimate concern for us to pull back and look at the overall purpose of the statute, which is liberal, to compensate employees. And here we have a fund that is designed to, uh, overcome re uh, an employer's reluctance to hire an injured employee. And if it becomes more difficult and more cumbersome, and ultimately you might go through the A PA and never get a right to appeal. Um, should we be thinking about that, that, uh, this could result if we were to adopt the, your view, um, make it, make employers less willing to hire injured employees, which would be completely counter to the purpose of the fund and the overall statute? I, I don't believe so because, um, they're entitled to a hearing. The question is, are they entitled to two hearings under a specific section of a statute that just linguistically does not, um, provide the authority to do that? So I think there's still, if they meet the eligibility requirement for reimbursement, um, they get reimbursed. And if they're denied, they get a hearing. Um, so I don't believe, you know, whether you get one hearing or two hearings.

I don't think that would, I would hope that wouldn't encourage employers not to hire disabled, um, employees. Thank you very much. Attorney Lab. Attorney Harding. Thank you. Just a couple points. And I'm hoping I, Have you seen the proposed draft rule? No, no. I don't know what it says, but hopefully I didn't mishear her. Uh, the department here, when they said they didn't always allow two hearings for second injury fund claims, that's wrong. Peel of Hartford, it went through a Department of Labor hearing, then it went to a CAB hearing, then it came up to this court. So there has always been two hearings allowed until they changed the procedure. Would, Would a department level hearing followed by possible appeal to this court by sir, satisfy your client's? Uh, no. No, because the statute doesn't allow that. And in fact, I believe I mentioned this in my brief, um, that's Ritz of, have been taken away out of the statute by the legislature, specifically when Section 24 provided the exclusive remedy was with the department that only went up to the Supreme Court after the Department of Labor hearing. But the legislature removed that section, excuse me, and the sections CI cited by the department, uh, where there wasn't a Compensation Appeals Board. The legislature specifically provided that under section 43, Roman three, that paragraph, it's specifically stated for that premium dispute between employers and independent contractors or what have you. It specifically states, it goes to the Supreme, I mean the Superior Court for the appeal. Same with section seven. It provided a second hearing penalties appeal board. So there's always, the Legislature can't take away the writ of certain option. Well, they, they can, they can, They can take it out of the statute, but that doesn't mean it disappears. Correct. But here in section 54, there is no right or WR provided written of search already provided. So thank you. Thank you. Case is submitted. Thank in Recess, Rise.