Xudong Yang's Case , 95 Mass. App. Ct. 749 ( 2019 )

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18-P-1309 Appeals Court
XUDONG YANG'S1 (dependents') CASE.
No. 18-P-1309.
Suffolk. May 8, 2019. - August 13, 2019.
Present: Milkey, Hanlon, & Sacks, JJ.
Workers' Compensation Act, Decision of Industrial Accident
Reviewing Board, Street risk. Insurance, Workers'
compensation insurance.
Appeal from a decision of the Industrial Accident Reviewing
Board.
Beth R. Levenson for the claimant.
Richard L. Neumeier (John C. White also present) for the
insurer.
MILKEY, J. Xudong Yang (the decedent) was the principal of
a family-owned business known as Oriental International Trading
Corp. (OITC). On February 4, 2014, he died in an automobile
accident. His widow, Chuan Zhang,2 filed a claim seeking death
1 Also known as Mark Yang and Mark Young.
2 Also known as Joanne Young.
2
benefits from Norfolk & Dedham Mutual Fire Insurance Company,
OITC's workers' compensation insurer (the insurer).3 An
administrative judge at the Department of Industrial Accidents
(department) denied the claim after a three-day hearing,
concluding that the trip during which the decedent was killed
was not undertaken in the course of OITC's business.4 After the
department's reviewing board summarily adopted the
administrative judge's decision, Zhang appealed to this court
pursuant to G. L. c. 152, § 12 (2).5 For the reasons that
follow, we affirm.
Background.6 According to its articles of organization,
OITC was formed "[t]o own and operate [an] import and export
3 The benefits Zhang sought included survivor benefits
pursuant to G. L. c. 152, § 31, and burial expenses pursuant to
G. L. c. 152, § 33. Zhang filed the claim on her own behalf and
on behalf of the couple's minor daughter.
4 Prior to the formal hearing held pursuant to G. L. c. 152,
§ 11, Zhang proceeded through the first two steps of the
department's dispute resolution process: namely, she entered
into an initial informal conciliatory proceeding with the
insurer, pursuant to G. L. c. 152, § 10, and then, when an
agreement was not reached, the case was referred to the
Industrial Accident Board of the department for an informal
conference before an administrative judge, pursuant to G. L.
c. 152, §§ 10-10A. See Murphy v. Commissioner of the Dep't of
Indus. Accs., 415 Mass. 218, 223 (1993).
5 The reviewing board is a panel of three administrative law
judges. See G. L. c. 23E, § 5; Murphy v. Commissioner of the
Dep't of Indus. Accs., 415 Mass. 218, 225 n.13 (1993).
6 The factual recitations that follow are drawn from the
administrative judge's findings, although we additionally
3
business in Norwood, Massachusetts, and to generally engage in
and carry on any business related thereto." OITC specifically
served as a "manufacturer's representative" that imported
chemicals from China for sale to domestic companies that
manufactured pharmaceuticals, food supplements, and animal feed.
The decedent was "solely responsible for running [OITC's]
business at all times prior to his death." In Zhang's own
words, the decedent "called all the shots." Zhang also worked
at OITC, and she and the decedent were OITC's sole officers,
directors, and shareholders.
In 2005, OITC purchased a workers' compensation policy from
the insurer to cover its employees. On its application for the
policy, OITC listed four employees (including the decedent and
Zhang), two in sales and two doing clerical work. No out-of-
State travel was indicated on the application, which also stated
that OITC was not "engaged in any other type of business." OITC
renewed its workers' compensation policy annually, and the
insurer performed "premium audits" to review whether its
premiums should be adjusted based on the risks presented.7
"mention for purposes of clarity undisputed facts not expressly
found." Caron's Case, 351 Mass. 406, 407 (1966).
7 Depending on the type of coverage plan that an employer
elects, insurers may be able to adjust premiums retrospectively
as a result of the premium audits. See generally Home Indem.
Ins. Co. v. Merchants Distribs., Inc., 396 Mass. 103, 104 & n.1
(1985) (explaining that under "a retrospective premium
4
According to the insurer's underwriter, OITC's being engaged in
"any other business . . . was never indicated at any point in
the file including [through] subsequent premium audits that were
done over the course of the policy." Premiums periodically were
adjusted to reflect up-to-date information regarding the number
of employees, their job classifications, and their current
salaries.
The decedent also was engaged in various other commercial
enterprises. One of those businesses was a restaurant in
Belmont, New Hampshire, known as the Garden Oasis Family
Restaurant (the restaurant).8 The restaurant was operated by
Garden Oasis Family Restaurant LLC, a limited liability
corporation that the decedent formed and incorporated in New
endorsement, . . . an employer's premium obligation, subject to
maximum and minimum limits, is affected by the employer's loss
experience during the policy period"). There was testimony from
the insurer's underwriter suggesting that the plan chosen by
OITC was of the sort for which premiums could be adjusted
retrospectively. The policy itself seems to suggest that the
option of retrospective adjustments was not selected, and the
administrative judge did not address this specific point in her
findings. In arguing that allowing coverage here would not be
unfair, Zhang seeks to make use of the fact that premiums could
be adjusted retrospectively. For purposes of this appeal, we
assume arguendo that this is the case, even though the point
lies in some doubt.
8 Notably, OITC's insurance underwriter testified that the
insurer did "not write workers' compensation in the [S]tate of
New Hampshire. So if [it] had been made aware of [a new
business entity in New Hampshire], [it] would not have been
insuring [it] for workers' comp[ensation]."
5
Hampshire. The New Hampshire property formally was managed by a
separate entity, 223 DW Highway, LLC.9
The restaurant, which opened in 2010, had its own New
Hampshire-based staff (a manager, cooks, and waiters). However,
the restaurant's bookkeeping was done out of OITC's Norwood
offices by the person who served as OITC's accounts manager.
OITC itself entered into the construction contracts for the
restaurant, and "[t]he funds to build the restaurant came from
the main checking account at OITC." Moreover, although the
restaurant had its own bank account, at the direction of the
decedent, OITC's accounts manager frequently used OITC's bank
account to pay the restaurant's ongoing bills, including
mortgage payments, utility bills, and the like. Such financial
intermingling extended beyond the decedent's corporate entities
to his personal finances as well. For example, "OITC paid bills
personal to the [decedent] including but not limited to his
daughter's college tuition, personal loans[,] and his mother's
funeral."
The restaurant venture was short-lived, and it closed by
the end of 2010, the same year it opened. According to Zhang's
testimony, the decedent eventually decided to sell the property
9 The record suggests that 223 DW Highway, LLC, held title
to the restaurant property, but the administrative judge did not
directly address this in her findings.
6
on which the restaurant had been located, because the failed
venture had become a financial drain.10 While driving to New
Hampshire to meet a real estate broker and a potential buyer,
the decedent was killed in a car accident.
Discussion. From its enactment in 1911, the workers'
compensation act has covered injuries "arising out of and in the
course of [an employee's] employment." G. L. c. 152, § 26. The
just-quoted language was interpreted generally as covering
injuries incurred at the workplace, but not those incurred in
travel away from the workplace.11 Bell's Case, 238 Mass. 46, 50
(1921) ("If [an employee] is injured on the public street, he
does not come within the benefit of the act, unless his work is
of a kind which is pursued on the highway and he is engaged at
the time of the accident in the actual work for which he is
10There was evidence that OITC covered all ongoing expenses
of the New Hampshire venture after the restaurant failed, but
Zhang has made no argument that OITC was legally obligated to do
so based on a theory of veil piercing or otherwise. See
Attorney Gen. v. M.C.K., Inc., 432 Mass. 546, 557 (2000), citing
My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614,
618-619 (1968). Nor did Zhang argue that OITC and the entities
owning or operating the restaurant "were engaged in a 'joint
venture' so as to constitute a 'single employer' for the purpose
of G. L. c. 152." Gurry v. Cumberland Farms, Inc., 406 Mass.
615, 622 (1990).
11We note that injuries caused by work-related automobile
travel likely were relatively rare at the time the act was
enacted.
7
employed, and not merely using the highway in the exercise of
the public right of passage").
In 1927, the Legislature amended the statute to expand its
coverage regarding work-related travel.12 St. 1927, c. 309, § 3.
See Higgins's Case, 284 Mass. 345, 349 (1933) (characterizing
1927 amendment as creating "an additional class of compensable
personal injuries"). Specifically, the Legislature expanded the
language of the statute to also cover injuries "arising out of
an ordinary risk of the street while actually engaged, with
[the] employer's authorization, in the business affairs or
undertakings of [the] employer." St. 1927, c. 309, § 3. In
determining whether employee travel was covered under this
language, "[t]he test or legal standard to be applied is whether
the employment or something else sent the employee on the
journey." Mandell's Case, 322 Mass. 328, 331 (1948).13 "If the
12As a general rule, "going to or coming from [an
employee's] place of employment," (that is, ordinary commuting),
is still not covered. Caron's Case, 351 Mass. 406, 409 (1966),
and cases cited.
13The parties agree that Mandell's Case, despite its age,
remains the leading case on whether injuries sustained during
travel away from the workplace are covered under the statute.
In that case, the principal of a company became seriously ill
while in Mexico on a trip that had been wholly funded by the
company. 322 Mass. at 329. In addition, there was evidence
that the principal purchased some office furniture while on the
trip. Id. Nevertheless, the Industrial Accident Board denied
the principal's claim for workers' compensation benefits on the
ground that the trip "was undertaken mainly for pleasure or for
8
former, the risk of the journey is a hazard of the employment;
if the latter, it is the personal risk of the employee." Id.
Accord Caron's Case, 351 Mass. 406, 409 (1966). So long as the
injured party's employment with the insured was "one of the
causes which impelled him to make th[e] trip," he would not lose
coverage simply because he obtained independent personal
benefits from it. Mandell's Case, supra at 330. "While an
employee may have more than one motive for performing an act, as
long as one significant purpose is related to the employment the
employee will be considered to be acting in the course of her
employment." Mendes v. Tin Kee Ng, 400 Mass. 131, 134-135
(1987), citing Wang Labs., Inc. v. Business Incentives, Inc.,
398 Mass. 854, 859-860 (1987).
"The purpose of the trip [during which the employee was
injured] and its relation, if any, to the employment [are]
questions of fact." Mandell's Case, 322 Mass. at 331. In the
case before us, the administrative judge found that the decedent
"at the time of the accident was advancing his own personal
interest, heading to meet the real estate broker to sell the
vacant property of his failed business in New Hampshire, and not
the interest of OITC." As a result, the administrative judge
some other purpose than in the interest of the employer." Id.
at 330. The Supreme Judicial Court affirmed. Id. at 333.
9
denied and dismissed the claim. The reviewing board summarily
affirmed the administrative judge's decision.
We review decisions of the reviewing board in accordance
with G. L. c. 30A, § 14 (7), and "may reverse or modify the
board's decision where it is based on an error of law, or is
arbitrary, capricious, or otherwise not in accordance with law."
Wilson's Case, 89 Mass. App. Ct. 398, 400 (2016). We do not
review the underlying factual findings for substantial evidence.
Id. See G. L. c. 152, § 12 (2). Rather, settling questions of
fact is "the exclusive function" of the agency fact finders, and
findings "are to be sustained whenever possible." Mandell's
Case, 322 Mass. at 330.14
At the time Mandell's Case was decided, claims initially
14
were heard by a single member of the Industrial Accident Board,
and then reviewed by the full board. See 322 Mass. at 329. In
1985, the Legislature "limit[ed] the reviewing board's ability
to overturn a decision of a member of the Industrial Accident
Board to instances where the decision '[was] beyond the scope of
his authority, arbitrary or capricious, contrary to law, or
unwarranted by the facts.'" Pospisil's Case, 402 Mass. 820, 820
(1988), quoting G. L. c. 152, § 11C. Then, in 1991, the
Legislature implemented a formal division of dispute resolution
within the department, pursuant to St. 1991, c. 398, and
"overhaul[ed] the procedures by which injured workers
(claimants) [could] seek compensation under the [workers'
compensation] [a]ct." Murphy v. Commissioner of the Dep't of
Indus. Accs., 415 Mass. 218, 223 (1993). This dispute
resolution process consists of four steps: conciliation,
informal conference, formal hearing, and finally, appeal to the
reviewing board. See id. at 223-225 & n.13. See also note 4,
supra. The reviewing board still may overturn an administrative
judge's decision only "if it determines that such administrative
judge's decision is beyond the scope of [her] authority,
10
The administrative judge's finding that the decedent was
traveling to New Hampshire to serve his personal interests, not
those of OITC, is amply supported in the record. The undisputed
financial intermingling that was present here does not dictate a
different result. Certainly, the fact that OITC largely funded
the restaurant venture is a factor to be considered in examining
whether it was part of OITC's business, but we do not consider
that conclusive. Cf. id. at 331 (fact that employer had fully
funded trip in which employee was injured was "important" factor
in determining "purpose of the trip and its relation, if any, to
the employment" but it was "not a decisive factor"). In this
regard, the administrative judge properly could take into
account that the injured employee here was the principal of the
company. See id. at 331-332 (fact that payments from employer
to fund trip were made "to one who held the principal offices
and a majority of [the employer's] capital stock might properly
be regarded in a somewhat different light than a similar payment
to one who stood in no other relation to the corporation than
that of an employee whose only duty was to purchase merchandise
for the corporation"). In other words, where the travel at
issue was by a person who had unfettered control of the "strings
of the corporate purse," there might be cause for greater
arbitrary or capricious, or contrary to law." G. L. c. 152,
§ 11C.
11
scrutiny whether the travel properly should be considered as
being undertaken at the employer's behest or instead for
personal reasons. Id. at 332.
The administrative judge's decision is consistent with
sound policy considerations, because it does not render the
insurer liable for risks beyond those the insurer agreed to
cover. This is not a case where there was a "natural
connection" between the business of OITC and that of the
restaurant. Pallotta's Case, 251 Mass. 153, 155 (1925).
Compare Wright's Case, 291 Mass. 334, 335, 336-337 (1935)
(Vermont lumber business operated by Massachusetts ice business
not "separate and distinct" for purposes of worker's
compensation where two businesses "complement[ed] each other and
together . . . constitute[d] a single year around business,
carried on by the same corporation under one management and
control and with largely the same employees"), with Pallotta's
Case, supra (employee working as "digger and loader of sand" was
not covered by workers' compensation policy for employer's
trucking business where there was no "natural connection"
between two businesses, and policy applied only to "driver,
chauffeur or helper of such, . . . stableman, garageman,
blacksmith, repairman or rigger").
To be clear, we are not saying that there is no workers'
compensation coverage unless the injured employee's position was
12
specifically identified on the employer's application.
Moreover, assuming that the policy here allowed for the insurer
to use the premium audit process to adjust rates retrospectively
-- see note 7, supra -- this may create some additional play in
the system. However, in any event, we do not believe the
Legislature intended workers' compensation insurers to be
required to cover risks posed by undisclosed business
enterprises of an entirely different nature from the ones for
which coverage had been sought.
Finally, we address Zhang's argument that the
administrative judge applied the wrong legal standard. The
administrative judge declined the claim for death benefits on
the specific ground that the accident "did not arise out of or
in the course of the employee's employment with OITC." In this
manner, the administrative judge looked to the original, and
still-existing, statutory language that covers injuries "arising
out of and in the course of [an employee's] employment." G. L.
c. 152, § 26. With at least some force, Zhang argues that the
relevant test for a travel-related injury is the one set forth
in the language that was added in 1927. As noted, the language
now covers injuries both "arising out of and in the course of
[an employee's] employment," as well as "arising out of an
ordinary risk of the street while actually engaged, with [the]
employer's authorization, in the business affairs or
13
undertakings of [the] employer." G. L. c. 152, § 26. See
Caron's Case, 351 Mass. at 408 (employee "must show that his
injury arose from one of those two sources of injury
alternatively stated in the statute" [citation omitted]). The
problem with Zhang's argument is that she has not persuasively
explained how the 1927 language is more forgiving than the
original language with respect to whether the relevant travel
was sufficiently related to the work of the employer.15
Accordingly, even were we to conclude that the administrative
judge strictly speaking applied the wrong standard, this would
be of no consequence here.16
Decision of reviewing board
affirmed.
15Certainly, the language added in 1927 sought to broaden
coverage so as to include injuries that "ar[ose] out of an
ordinary risk of the street." However, to demonstrate coverage,
the employee still would need to show that while undertaking the
travel, he was "actually engaged, with [the] employer's
authorization, in the business affairs or undertakings of [the]
employer." G. L. c. 152, § 26. On its face, such language
would appear to require a connection to the employer's work at
least as strong as that required by the original language. Put
differently, while the 1927 amendment intended to allow coverage
for a greater set of work-related injuries incurred away from
the workplace, Zhang has failed to demonstrate that the
amendment intended to loosen the test for whether the travel at
issue was work related.
16 We deny Zhang's request for appellate attorney's fees.