Massachusetts’ highest court ruled Monday that the state insurance commissioner properly rejected proposed workers compensation rate changes but failed to explain how he arrived at a 14.6% statewide rate decrease.
In The Workers’ Compensation Rating and Inspection Bureau of Massachusetts v. Commissioner of Insurance, the court considered challenges to rate decisions affecting policies that took effect in 2024 and 2025.
The Supreme Judicial Court of Massachusetts remanded the matter to the commissioner for further consideration, ruling that although the regulator had authority to disapprove the proposed rates and determine that existing rates were excessive, he did not provide a reasoned explanation for the size of the 2024 reduction.
The Workers’ Compensation Rating and Inspection Bureau of Massachusetts in December 2023 proposed a 7.6% average statewide rate decrease, effective July 1, 2024. The commissioner rejected the filing and instead ordered a 14.6% decrease.
The bureau later proposed a 7.1% average statewide increase for rates effective July 1, 2025. The commissioner rejected that filing and kept in place the rates reflecting the earlier 14.6% decrease.
The high court upheld the commissioner’s authority to reject the bureau’s proposed rates, including his decision to use five years of historical data rather than two years to estimate indemnity paid losses. The court said the broader period reasonably accounted for unusual loss patterns surrounding the COVID-19 pandemic, including historically lower losses in 2020 and higher losses in 2021 and 2022.
But the court said the commissioner gave no explanation for selecting a 14.6% decrease after rejecting the bureau’s proposed 7.6% reduction. The court noted that the 14.6% figure fell between the bureau’s proposal and the Massachusetts attorney general’s recommended 17.5% decrease, but said that alone did not explain the result.
The court also directed the commissioner to further explain his treatment of class code 9033, which primarily covers public housing authority employees. The commissioner had ordered the bureau to change the methodology used to calculate rates for the classification, but the court said legitimate questions about the reliability of the alternative data and the decision to single out the class code had not been adequately addressed.
The court directed the commissioner to provide a reasoned explanation for the 14.6% decrease and address the class code 9033 issues in connection with both the 2024 and 2025 rate decisions.