Failure to Provide for Payment of Compensation; Stop Work Orders; Penalties; Liens; Actions Brought by Losing Bidders; Civil Actions for Violations of Chapter

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Section 25C. (1) Whenever the commissioner or his designee determines that an employer who is required to provide for the payment to his employees of the compensation provided for by the chapter has failed to do so, a stop work order shall be served on said employer, requiring the cessation of all business operations at the place of employment or job site. Such order shall take effect immediately upon its service upon said employer, unless such employer provides evidence, satisfactory to the commissioner or his designee, of having secured any necessary insurance or self-insurance and pays a civil penalty into the private employer trust fund in the amount of one hundred dollars per day for each day such employer was not in compliance with this chapter, counting the date of service of the stop work order as the first day and date of payment of the penalty herein provided and of production of evidence of insurance or self-insurance as the final day.

(2) Any employer who is aggrieved by the imposition of a stop work order shall have ten days from the date of its service to appeal such order. Any employer who timely files such appeal shall be granted a hearing by the commissioner or his designee within fourteen days of receipt of appeal. The stop work order shall not be in effect during the pendency of any timely filed appeal. Any stop work order and monetary penalty shall be rescinded if the commissioner or his designee finds at the hearing that the employer has at all times been in compliance with this chapter. If the commissioner or his designee finds at the hearing that the employer did or has not provided for all insurance or self-insurance required by this chapter, the stop work order shall be effective immediately on the conclusion of the hearing and shall remain in effect until such time as the employer provides evidence, satisfactory to the commissioner or his designees, of having secured any necessary insurance or self-insurance and pays a civil penalty into the private employer trust fund in the amount of two hundred and fifty dollars per day for each day such employer was not in compliance with this chapter, counting the date of service of the stop work order as the first day and the date of payment of the penalty herein provided and of production of evidence of insurance or self-insurance as the final day.

A stop work order and any monetary penalties assessed by the commissioner after a hearing as authorized in this section shall be final at the expiration of thirty days if no action for judicial review of such decision is commenced pursuant to chapter thirty A. Any person who institutes proceedings for judicial review of the final assessment of a penalty by the commissioner pursuant to this section, shall place the final amount of the assessment in an interest-bearing escrow account in the custody of the clerk/magistrate of the reviewing court. The establishment of such interest-bearing account shall be a condition precedent to the jurisdiction of the reviewing court unless the party demonstrates in a preliminary hearing held within twenty days of the filing of the complaint either the presence of a substantial question for review by the court or an inability to pay. Upon such a demonstration, the court may grant an extension or waiver of the interest-bearing escrow account or may require, in lieu of such account, the posting of a bond payable directly to the Private Employer Trust Fund in the amount of one hundred and twenty-five per cent of the assessed penalty. If, after judicial review, in the case where the requirement for an escrow account has been waived, and in the case where a bond has been posted, the court affirms the penalty in whole or in part, the penalty assessed by the commissioner shall be paid with interest at the rate set forth in section six C of chapter two hundred and thirty-one. If, after such review in a case where an interest-bearing escrow account has been established, the court affirms the penalty in whole or in part, the penalty shall be paid with accumulated interest from such account. If the court sets aside the penalty the amount placed in such account or the amount posted for such bond shall be repaid together with any interest thereon.

(3) Any law enforcement agency in the commonwealth shall, at the request of the commissioner, render any assistance necessary to carry out the provisions of this section, including but not limited to preventing any employee or other persons from remaining at a place of employment or job site after a stop work order has taken effect.

(4) Any employee affected by a stop work order pursuant to this section shall be paid for the first ten days lost pursuant to such order and any time lost pursuant to this section not exceeding ten days shall be considered time worked under the provisions of chapter one hundred and forty-nine.

(5) In addition to being subject to the civil penalties herein provided, an employer who fails to provide for insurance or self-insurance as required by this chapter shall be punished by a fine of not more than one thousand five hundred dollars or by imprisonment for not more than one year, or both. Failure of an employer, after imposition of such fine or imprisonment, to provide for insurance or self-insurance under this chapter after notice by the department to do so shall, as to each notice, be deemed a further violation in respect thereof, subject to an additional fine and imprisonment. If such employer is a corporation, the president or treasurer or both shall be liable for said punishment. The commissioner or his designee shall have power to bring complaints against employers, including the president and treasurer of a corporation which is an employer, for violations of the provisions of this subsection, and to prosecute the same, and for such purpose may deputize one or more employees of the department to make and prosecute complaints. Complaints under this subsection shall be brought in the district court in which the principal place of business of such employer is situated, or in the district court in whose district such president or treasurer of a corporation resides.

(6) Every state or local licensing agency shall withhold the issuance or renewal of a license or permit to operate a business or to construct buildings in the commonwealth for any applicant who has not produced acceptable evidence of compliance with the insurance coverage required by this chapter.

(7) Neither the commonwealth nor any of its political subdivisions shall enter into any contract for the performance of public work until acceptable evidence of compliance with the insurance requirements of this chapter have been presented to the contracting authority.

(8) Any judgments obtained by the department requiring employer reimbursements or other payments into the private employer trust fund, and any penalties due pursuant to the service of a stop work order under this section shall, until collected, constitute a lien upon the entire interest of the employer, legal or equitable, in any property, real or personal, tangible or intangible; provided, however, that such lien shall be subordinate to claims for unpaid wages and any prior recorded liens; and provided, further, that no lien created by this section shall be valid against a subsequent purchaser or mortgagee in good faith and for value of real or personal property from or of such employer, or against a subsequent attaching creditor, unless, with respect to real estate of the employer, a notice of such lien is recorded in the registry of deeds for the county where such real estate is located, and, with respect to personal property of the employer, said notice is recorded with the clerk of the city or town where such personal property is located.

(9)(a) Any person or firm that loses a competitive bid for a contract including but not limited to construction, repair, remodeling, alteration, conversion, modernization, replacement or renovation of a building, roadway or structure may bring an action for damages against another person who is awarded the contract for which the bid was made, if the other person was awarded the contract because of cost advantages achieved by violating the provisions of section twenty-five A or section twenty-five C of this chapter or by the deliberate misclassification of employees for the purpose of avoiding full payment of workers' compensation insurance premiums.

(b) A person or firm bringing an action under this section must establish a violation of said subsection or chapters by a preponderance of the evidence. Upon establishing that the violation occurred, the person bringing the action shall recover, as liquidated damages, ten percent of the total amount bid on the contract, or fifteen thousand dollars, whichever is lesser.

(c) An action under this subsection shall be commenced within one year from the date when the contract is awarded.

(d) No plaintiff shall be allowed to recover any amounts under this subsection if said plaintiff was in violation of sections twenty-five A or twenty-five C at the time of making the bid on the contract.

(e) In any action under this section, the prevailing party shall be entitled to an award of reasonable attorneys fees.

(10) In addition to being subject to the civil penalties herein provided, an employer who fails to provide for insurance or self insurance as required by this chapter or knowingly misclassifies employees, to avoid higher premium rates, will be immediately debarred from bidding or participating in any state or municipal funded contracts for a period of three years and shall when applicable be subject to penalties provided for in section fourteen.

(11) Whenever facts exist showing that an employer has failed to comply with this chapter, then any 3 persons may bring a civil action and that civil action shall be deemed a private attorney's general action. Before bringing a civil action under this subsection, the 3 persons shall provide notice, by certified mail, return receipt requested, of what might become the substance of a complaint to the employer and any insurer that was or is entitled to collect amounts not paid. The notice shall include a statement of intent to file suit under this subsection. After the expiration of 90 days after delivery of the notice to the employer and the insurer, the 3 persons may file a civil action under this subsection, but they shall not be bound by the notice provided to the employer and the insurer.

Plaintiffs shall prove a violation of this chapter by a preponderance of the evidence. An employer shall be liable for all amounts which should have been paid by the employer. Upon establishing that a violation occurred, plaintiffs shall be collectively entitled to recover 25 per cent of the amount not paid or $25,000, whichever is less, plus costs and reasonable attorneys' fees, and an additional amount from the employer as compensatory and liquidated damages which shall be equal to 25 per cent of the amount that should have been paid or $25,000, whichever is less.

After a civil action is commenced under this subsection, any insurer that has failed to file a complaint or seek arbitration to recover or collect all of the amounts which would have been due to the insurer from an employer in the action shall be barred from recovering, attempting to recover or collect any amounts sought in the action unless the insurer obtains the voluntary, written consent of the plaintiffs. When such written consent is provided, a court may substitute the insurer as the plaintiff and, upon substitution, the case shall proceed without further regard to this subsection or to the Workers' Compensation Trust Fund.

No settlement between an insured and an insurer shall prohibit or limit an action under this subsection to recover other amounts that should have been paid under this chapter. The insurer shall, upon demand, provide a copy of any settlement to the 3 persons who sent notice under this subsection. Except as provided herein and unless the insurer has been substituted in the action, any amounts recovered by the plaintiffs under this subsection shall be deposited into the Workers' Compensation Trust Fund established in section 65, except those amounts payable to those plaintiffs in accordance with this subsection. An insurer who has been served with notice under this subsection and who pays a claim may recover from the amounts that are deposited into the trust fund any premium that should have been paid to that insurer which would have provided coverage for that specific claimant and claim.

Nothing in this subsection shall limit or prohibit a political subdivision, public entity or office, division, commission, commissioner, director, attorney general or a law enforcement agency or office entitled to bring a civil or criminal action against a defendant to an action under this subsection from proceeding against such defendant in an appropriate forum. The judge or other hearing officer in that forum may consider and offset the amounts recovered, or likely recoverable, by an action pursuant to this subsection in imposing a verdict or judgment or against imposing a fine or other penalty.

Any action filed under this subsection shall be filed only after 90 days following the expiration of a workers' compensation policy affected by the action, if such policy existed.

Actions under this subsection shall be commenced within 6 years after the cause of action accrues.


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