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Adams v. Liberty Mutual Insurance Company

11/20/2003

Middlesex.


April 10, 2003


Consumer Protection Act, Insurance. Malicious Prosecution. Insurance, Workers' compensation insurance, Fraud and concealment. Workers' Compensation Act, Insurer, Exclusivity provision, Fraud, Exhaustion of administrative remedies. Statute, Construction. Administrative Law, Exhaustion of remedies.


After providing chiropractic treatment in February, 1992, to James Pittsley, an employee of Brake & Truck Supply, Inc., who had injured his right foot by dropping a brake shoe on it at work, Dr. William Adams sent the bill for his professional services to Liberty Mutual Insurance Company (Liberty), the employer's workers' compensation insurer, in April, 1992. Liberty refused to pay on the basis of claimed billing irregularities. Adams's subsequent effort, in December, 1992, to collect his relatively modest fee by filing a third-party claim against Liberty with the office of claims administration within the Department of Industrial Accidents (DIA) produced nightmarish consequences for him.


Liberty resisted the claim and asserted a charge of fraudulent billing against Adams, purportedly under G. L. c. 152, § 14(2). After hearings, an administrative law judge (ALJ) of the DIA to whom Adams's claim had been assigned rendered a final decision on September 20, 1993, distinctly adverse to Adams. The ALJ dismissed Adams's claim for payment upon determination that Liberty had paid the medical expenses associated with the injury to the employee's foot; that the employee had never received treatment from Adams for a work-related back injury; that Adams's proffered "computer glitch" explanation for the altered treatment records was not credible; and that "the alteration of these documents . . . outrageous, egregious, and the basis of an attempt to defraud [Liberty]."


Invoking the provisions of G. L. c. 152, § 14(2), the ALJ ordered Adams to pay Liberty's costs and attorney's fees in the sum of $3,500.00 and assessed a penalty of $3,259.80 against Adams (an amount equal to six times the then-average weekly wage in the Commonwealth, see note 5, supra). He also forwarded a copy of his decision to the insurance fraud bureau (IFB) and to the Board of Registration of Chiropractors (board of registration), purportedly but erroneously "as required by Section 14(2)."


At least six months before the ALJ "determined" under G. L. c. 152, § 14(2), that Adams had knowingly made a false statement, Liberty had decided to act on its own initiative by complaining of Adams's alleged fraud to the IFB and requesting an investigation into his supposed "false billing." After considering the evidence against Adams provided by Liberty and conducting its own independent investigation of the claim, the IFB determined, in January, 1995, that there was insufficient evidence of criminal conduct to warrant further action against Adams. Despite keeping the file open for the receipt of any additional information bearing on Liberty's accusations against Adams and notwithstanding the ALJ's final decision against Adams, the IFB did not thereafter pursue further investigation of Liberty's claim of Adams's supposed fraud.

The outcome of the ALJ's referral of his decision to the board of registration was far less fortunate for Adams. On the basis of the administrative record and opposing memoranda, and without a hearing, the board of registration on September 11, 1996, ordered the revocation of Adams's license to practice as a chiropractor. The board of registration stated that, in light of Adams's "deceit and gross misconduct" in connection with the "fraudulent" billings to Liberty, it could "conceive of no circumstances under whic

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