Risk & Insurance Online

The Massachusetts Appeals Court vacated the amount of a partial disability award and returned the case for a "reasoned computation" of the award, as it was unclear how the administrative judge determined that the claimant had a weekly earning capacity of $975.

Case name:Eady's Case, No. 07-P-1610 (Mass. App. Ct. 09/29/08).

What it means: Under Massachusetts case law, an administrative judge must consider three elements when assigning an employee a specific earning capacity: 1) the employee's medical limitations; 2) his employment capabilities, including age, education, work experience and transferable skills; and 3) the market for his skills. When the judge's wage-earning capacity analysis is silent on one of these elements, the case must be remanded for additional findings.

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Summary: An ironworker welder injured his back on the job and began receiving temporary total disability benefits. An administrative judge ordered discontinuation of those benefits and ordered the insurer to pay partial disability benefits based upon an earning capacity of $975 per week. The welder argued that the AJ's decision was arbitrary and capricious and an abuse of discretion because the judge did not include a reasoned explanation as to how he arrived at the $975 figure. The appeals court agreed and set the award aside, directing the AJ to provide a "reasoned computation" of the employee's wage-earning capacity, including a reference to "the factual source(s) for the monetary figure."

The court explained that although the AJ referred to the employee's medical limitations and personal capabilities in the wage-earning capacity analysis, the judge's decision was "wholly silent with respect to the third element, namely what [the employee] might reasonably command as a salary in the marketplace." Citing its recent decision in Dalbec's Case, 69 Mass. App. Ct. 306, 313, 867 N.E.2d 792 (2007), the court reiterated its holding that "[a] monetary figure cannot emerge from thin air and survive judicial review as a mystery."

January 8, 2009

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