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Jun 2014

In a matter of first impression for Massachusetts, the Supreme Judicial Court (“SJC”) held that where an employee of a charitable corporation (or the estate of an employee of a charitable corporation) sues the individual directors of the charitable corporation for adopting or failing to adopt workplace policies that allegedly caused or contributed to the employee’s injury or death, the directors of the charitable corporation are “employers” for purposes of the Workers’ Compensation Act (the “Act”), thus baring the suit based on the Act’s exclusivity provision.  The SJC also held that the directors, as the plaintiff’s decedent’s employers, did not owe the decedent a fiduciary duty (based on the basic principle that employers do not owe employees a fiduciary duty) and that, to the extent the directors allegedly breached a fiduciary duty owed to the charitable corporation for which the decedent worked, only the Attorney General may pursue such claims.  As a result of these holdings, the SJC reversed the denial of a motion to dismiss filed by the directors of the charitable corporation below, and remanded the case to the Superior Court for entry of judgment for the directors.  The case is Estate of Moulton v. Puopolo et al., 467 Mass. 478 (2014).

Stephanie Moulton was employed by North Suffolk Mental Health Ass’n, Inc. (“North Suffolk”), a charitable corporation that provides mental health and rehabilitation services.  While at work, Moulton was assaulted by one of the facility’s residents, causing her death. Moulton’s estate sued the individual directors of the board of North Suffolk for adopting or failing to adopt workplace policies regarding the placement of residential clients at North Suffolk, such that the staff at North Suffolk – including Moulton – was allegedly unaware that the particular resident who assaulted Moulton had a lengthy history of convictions for violent crimes and a mental health history exhibiting tendency towards violence.  Moulton’s estate did not sue North Suffolk directly, presumably because of the Act’s exclusivity provision.

The Court discussed the Act’s exclusivity provision, including that the Act is the exclusive remedy for injuries to an employee sustained in the course of employment – including death.  The Act provides that, in exchange for not having to prove the negligence of the employer’s conduct to receive benefits after a workplace injury or death, the employee or employee’s estate waives the right to pursue any common law tort remedies or suits pursuant to the wrongful death statute. 

Rather than sue the employer, North Suffolk, Moulton’s estate sued the individual directors on the board of North Suffolk.  The SJC found that it could not distinguish the individual directors from the corporate employer itself with respect to the act of adopting or failing to adopt policies for the corporate employer.  Also, to the extent the individual directors were alleged to have had the ability to direct or control workplace safety, the complaint impliedly alleged that the directors were acting in the capacity of employers.  Thus, the SJC held that the Act’s exclusivity provision barred any claims against the individual directors in this context.  The SJC also acknowledged in a footnote that the holding regarding the applicability of the Act’s bar to suits against individual directors is consistent with public policy of promoting charitable corporations.  Exposing corporate directors to suits by employees injured while working for the corporation, where the corporation itself is not liable due to the Act’s exclusivity provision, might discourage well-qualified individuals from serving as directors of charitable corporations.

Robert Murphy, Peter Kober, and William Mekrut filed an amicus brief in the case on behalf of the Massachusetts Council of Human Service Providers, Inc., and other similar human service provider corporations.      

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