Injured Workers' Insurance Fund v. Subsequent Injury Fund

REPORTED
IN THE COURT OF SPECIAL APPEALS

OF MARYLAND

Nos. 0358 and 1258

September Term, 2014

No. 0358
INJURED WORKERS’ INSURANCE FUND

v.

SUBSEQUENT INJURY FUND, ET AL.
--------------
No. 1258
BALTIMORE COUNTY, MARYLAND

v.

SUBSEQUENT INJURY FUND, ET AL.

Wright,
Berger,
Nazarian,

JJ.

Opinion by Wright, J.

Filed: April 3, 2015
 This consolidated appeal arises from decisions of the Workers’ Compensation

Commission (“Commission”) in two separate cases concluding that, pursuant to Md.

Code (1991, 2008 Repl. Vol.), Labor & Employment Article (“LE”), employers must

compensate appellee, the Subsequent Injury Fund (“SIF”), a 6.5% assessment based on

the Commission’s entire award to the employee, not merely the amount payable after any

offsets for retirement benefits. The employer in the first case, appellant, Maryland

Transit Administration (“MTA”),1 filed a petition for judicial review of the

Commission’s decision regarding MTA employee, Salvatore Glorioso’s, claim in the

Circuit Court for Baltimore City on December 26, 2013. Following a hearing on April

21, 2014, the Circuit Court for Baltimore City affirmed the Commission’s decision. The

employer in the second case, appellant, Baltimore County (“County”), filed a petition for

judicial review of the Commission’s decision regarding County firefighter, Gary Shipp’s,

claim in the Circuit Court for Baltimore County on December 18, 2013. Subsequently,

the County and SIF filed cross-motions for summary judgment. Following a hearing on

July 29, 2014, the Circuit Court for Baltimore County granted SIF’s motion and denied

the County’s. Both MTA and the County timely appealed.2

We are asked to determine whether LE requires employers to pay the 6.5%

assessment to SIF based on the full amount of all permanent disability awards regardless

MTA is represented by counsel for its insurer, the Injured Workers’ Insurance
1

Fund (“IWIF”), because IWIF is responsible for paying the assessment to SIF.
2
Neither Glorioso nor Shipp is a party to this consolidated appeal.
of any offset for retirement benefits.3 We answer this question in the affirmative and,

accordingly, affirm the circuit courts’ judgments.

Facts

SIF is a State agency created by the Maryland General Assembly to pay part of a

workers’ compensation claim when an injured employee has a preexisting medical or

physical condition that exacerbates his or her work-related injury. See LE § 9-802.

When an employee who is injured on the job has this type of preexisting condition, the

employer compensates the employee only for any disability directly attributable to the

employment-related incident, and SIF compensates the employee for the additional extent

of the disability attributable to the preexisting condition. Id.; Subsequent Injury Fund v.

Kraus, 301 Md. 111, 115 (1984). In establishing SIF, the General Assembly sought to

encourage employers to hire individuals with preexisting medical or physical conditions.

Subsequent Injury Fund v. Pack, 250 Md. 306, 308 (1968) (“Its purpose was to persuade

the employer to employ the handicapped individual by limiting the liability, which the

employer may otherwise have incurred”).

In its brief, MTA asked: “Should [SIF’s] Assessment be calculated based on the
3

amount of the award prior to or after the offset granted under [LE], § 9-610?”
Meanwhile, the County asked:

(1) Whether the Circuit Court erred, as a matter of law, in its rulings on the
parties’ respective motions for summary judgment.

(2) Whether an employer/insurer, when entitled to a statutory offset of an
award of permanent partial disability issued by the [] Commission, is
obligated to pay an assessment to [SIF] based on the amount of the award
before or after the offset is calculated.
2
 SIF’s sole revenue source is a statutory assessment that the Commission imposes

on an employer or its insurer whenever the Commission makes an “award . . . for

permanent disability or death” or approves a settlement. See LE § 9-806(a). The

assessment is “6.5%, payable to [SIF], on: (i) each award against an employer or its

insurer for permanent disability or death, including awards for disfigurement and

mutilation;” or “(ii) . . . each amount payable by an employer or its insurer under a

settlement agreement approved by the Commission[.]” Id.

A. The MTA Award

It is undisputed that in 2010, Glorioso suffered a work-related injury and

subsequently filed a claim with the Commission. After hearing the matter on August 30,

2012, the Commission issued a decision on September 11, 2012, finding that Glorioso

had a permanent partial disability “amounting to 30% industrial loss of use of the body as

a result of an injury to the back.” As a result, the Commission awarded $46,050.00,

which it detailed as follows: “at the rate of $307.00, payable weekly, beginning May 3,

2012, for a period of 150 weeks.” Because Glorioso also received disability retirement

benefits from the MTA, however, the Commission added that pursuant to LE § 9-610,4

4
The pertinent part of that statute states:

(c)(1) The Commission may:

(i) determine whether any benefit provided by the employer is equal to or
greater than any benefit provided for in this title; and

(ii) make an award against the employer or the Subsequent Injury Fund or
both to provide an additional benefit that equals the difference between the
benefit provided by the employer and the benefits required by this title.
3
the compensation was “subject to an offset effective April 1, 2012 in the amount of

$118.27,” thus lowering the award to $28,309.50. In addition, the Commission noted that

the award was “subject to a total assessment of . . . 6.5% . . . on the amount payable

pursuant to [LE] § 9-806[.]”5

On August 9, 2013, SIF filed Issues with the Commission, asserting that that MTA

and its insurer “refuse to pay the 6.5% assessment on the award dated 9/11/12.” SIF

requested a hearing and took “the position . . . that the assessment is due on the amount of

the award regardless of any offset for retirement benefits,” for a total of $2,993.25.

Following a hearing on November 20, 2013, the Commission issued an order on

December 17, 2013, directing MTA to “pay the assessment of 6.5% on the award of 30%

loss of use of the body, as awarded [on] September 11, 2012[.]” The Commission

reasoned that the General Assembly specifically used the term “amount payable” when

imposing the assessment on settlement agreements but not when imposing it on awards

for permanent disability or death.

B. The County Award

It is undisputed that in 2002, Shipp became disabled as a result of hypertension

and coronary artery disease and, thereafter, filed a claim with the Commission. After

hearing the matter on February 9, 2012, the Commission issued a decision on March 5,

LE § 9-610(c)(1).

In closing, the Commission “further ORDERED that from the final weeks of
5

compensation the following fees shall be paid: Todd L. Schuler, Esquire in the amount of
$4,954.16, (after offset)[.]” (Emphasis in original).
4
2012, finding that Shipp had a permanent partial disability “amounting to 50% industrial

loss of use of the body.” As a result, the Commission awarded $174,825.00, which it

detailed as follows: “at the rate of $525.00, payable weekly, beginning May 14, 2012, for

a period of 333 weeks[.]”

On March 7, 2012, upon realizing that the Commission did not account for the

statutory offset resulting from Shipp’s service retirement, the County filed a request for

rehearing. Subsequently, the Commission issued a new order, adding the following

paragraph:

The Commission finds that the claimant is receiving a service retirement
effective year 2002 in the amount of $31,488.54 per year or $605.55 per
week. Pursuant to LE [§] 9-503(e),[6] the employer is entitled to offset as
follows: Average Weekly Wage: $800.00 minus $605.55 = $194.45.
Therefore, the claimant’s permanent partial disability shall be paid at the
weekly rate of $194.45.

6
That section states:

(e)(1) Except as provided in paragraph (2) of this subsection, any paid
firefighter . . . who is eligible for benefits under subsection (a), (b), (c), or
(d) of this section or the dependents of those individuals shall receive the
benefits in addition to any benefits that the individual or the dependents of
the individual are entitled to receive under the retirement system in which
the individual was a participant at the time of the claim.

(2) The benefits received under this title shall be adjusted so that the
weekly total of those benefits and retirement benefits does not exceed the
weekly salary that was paid to the . . . firefighter . . . .

LE § 9-503(e). Because Shipp was a firefighter, the County’s offset was based on LE §
9-503(e) instead of LE § 9-610. As SIF notes, “it does not appear that there is any
functional difference between an offset for retirement benefits under LE § 9-503(e) and
the more common offset under LE § 9-610.”
5
This modification lowered the Commission’s award to $64,751.85. In its order, the

Commission also noted that the award was “subject to a total assessment of . . . 6.5% . . .

on the amount payable pursuant to [LE] § 9-806[.]”

Thereafter, the County made payment to SIF in the amount of $4,208.87, or 6.5%

of the award that resulted after subtracting the statutory offset. SIF requested a hearing,

arguing that it was entitled to the balance of $11,363.63, which was 6.5% of the total

award made by the Commission prior to accounting for the offset. Following a hearing

on October 29, 2013, the Commission issued an order on December 12, 2013, directing

the County to “pay the assessment of 6.5% on the award of 50% loss of use of the body,

as awarded [on] March 29, 2012[.]” As in the MTA’s and Glorioso’s case, the

Commission reasoned that the General Assembly specifically used the term “amount

payable” when imposing the assessment on settlement agreements but not when imposing

it on awards for permanent disability or death.

Standard of Review

An appellate court reviews a grant of summary judgment by the Commission for

“legal correctness.” Wal Mart Stores, Inc. v. Holmes, 416 Md. 346, 358 (2010). Our role

in reviewing an administrative agency adjudicatory decision is “narrow,” however, and

“is limited to determining if there is substantial evidence in the record as a whole to

support the agency’s findings and conclusions, and to determine if the administrative

decision is premised upon an erroneous conclusion of law.” W.M. Schlosser Co. v.

Uninsured Employers’ Fund, 414 Md. 195, 204 (2010) (citation omitted).

6
 Generally, “the decision of the Commission is presumed to be prima facie

correct[.]” LE § 9-745(b)(1); see also Cmty. Realty Co., Inc. v. Siskos, 31 Md. App. 99,

105 (1976) (citations omitted); Ackerhalt v. Hanline Bros., Inc., 253 Md. 13, 20 (1969)

(citation omitted); Krell v. Maryland Drydock Co., 184 Md. 428, 435 (1945). Although

this presumption of correctness “does not extend to questions of law,” we nonetheless

“afford the Commission a degree of deference, as appropriate, in its formal

interpretations of the Workers’ Compensation Act.” Montgomery Cnty. v. Deibler, 423

Md. 54, 60 (2011) (citations omitted); see also W.M. Schlosser Co., 414 Md. at 205 (“an

administrative agency’s interpretation and application of the statute which the agency

administers should ordinarily be given considerable weight by reviewing courts”)

(citations omitted); Hart v. Subsequent Injury Fund, 172 Md. App. 159, 166 (2006) (“we

give due deference to the Commission’s own interpretation of the statute it administers”)

(citation omitted).

Discussion

Appellants argue that SIF’s assessment should be calculated using the amount

payable to the claimant after the offset is granted. According to MTA, when LE § 9-806

is read in its entirety, “[t]he most commonsensical and natural reading would be that the

amount awarded is the amount actually [] paid,” which then “forms the basis of the

calculation for the SIF assessment.” Meanwhile, the County argues that the Commission

did not have jurisdiction to determine the calculation of the assessment and, furthermore,

that the Commission’s decision goes against “clear legislative intent.” Based upon these

contentions, appellants ask us to reverse the circuit court’s judgment and remand with

7
instructions to send the case back to the Commission for the purpose of recalculating

SIF’s assessment using the amount payable to the claimant after the offset.

In response, SIF argues that the Commission had jurisdiction to determine the

correct amount of the assessment, and that its decision was correct because “the plain

language of [LE § 9-806(a)] requires that the Commission order a 6.5% assessment on

the full amount of all awards for permanent disability or death.” Alternatively, SIF

asserts that, “even if the statute were ambiguous, this Court should defer to the

Commission’s reasonable interpretation.”

At the outset, we address the County’s assertion that the Commission did not have

jurisdiction to determine the calculation of the assessment pursuant to LE § 9-806

because “the SIF assessment is clearly a tax” and “the Commission’s jurisdiction does

not extend beyond administrative imposition of the same.” As SIF correctly notes, the

County’s argument is “based entirely on a Court of Appeals opinion that the General

Assembly later abrogated by statute.” See Workmen’s Comp. Comm’n v. Prop. & Cas.

Ins. Guar. Corp., 319 Md. 1 (1990), abrogated by 1995 Md. Laws, ch. 293. Indeed, the

Court in Workmen’s Comp. Comm’n held that the assessment under LE § 9-806 was a

“tax[]” for purposes of a statute exempting the Property and Casualty Guaranty Insurance

Corporation from “all taxes levied by this State.” Id. at 4, 6. In 1995, however, the

General Assembly amended LE § 9-806 – specifically subsection (e) – to clarify that

“[t]he assessment imposed under this section is for payment of claims submitted to the

Subsequent Injury Fund and is not a tax intended to benefit the State.” (Emphasis

added). See 1995 Md. Laws, ch. 293 (“AN ACT concerning Subsequent Injury Fund –

8
Assessments Not a Tax FOR the purpose of providing that the assessment payable to the

Subsequent Injury Fund is not a tax; and providing that the Property and Casualty

Insurance Guaranty Corporation is subject to the assessment.”). As such, we agree with

SIF that even if the rationale in Workmen’s Comp. Comm’n could be extended to this

context, it no longer has any force.

Having established that the Commission had jurisdiction over this matter, we turn

to determine whether it was legally correct in reaching its conclusion. The relevant

statute in this case, LE § 9-806, states in pertinent part:

(a)(1) The Commission shall impose an assessment of 6.5%, payable to the
Subsequent Injury Fund, on:

(i) each award against an employer or its insurer for permanent
disability or death, including awards for disfigurement and
mutilation;

(ii) except as provided in paragraph (2) of this subsection, each
amount payable by an employer or its insurer under a settlement
agreement approved by the Commission; and

(iii) each amount payable under item (i) or (ii) of this paragraph by
the Property and Casualty Guaranty Corporation on behalf of an
insolvent insurer.

In interpreting this section, we begin by looking at the statutory language. Philip

Electronics N. Am. v. Wright, 348 Md. 209, 216-17 (1997), superseded by statute on

other grounds as stated in W.R. Grace & Co. v. Swedo, 439 Md. 441 (2014). If its plain

meaning “is clear and unambiguous, and consistent with both the broad purposes of the

legislation, and the specific purpose of the provision being interpreted, our inquiry is at

an end.” Id. at 217 (citations omitted). Only “when the meaning of the plain language is

9
ambiguous or unclear [do] we seek to discern the intent of the legislature from

surrounding circumstances, such as legislative history, prior case law, and the purposes

upon which the statutory framework was based.” Id. (citation omitted).

LE § 9-806(a)(1)(i) directs the Commission to “impose an assessment of 6.5%,

payable to [SIF], on . . . each award against an employer or its insurer for permanent

disability or death[.]” (Emphasis added). When the Commission issues an award for

permanent disability, as it did in these consolidated cases, it determines the percentage

loss of the body that the employee has suffered. Although that percentage is then used to

calculate the dollar amount due to the claimant, the “award” itself is based on the

claimant’s “permanent disability,” which does not change simply because the employer is

entitled to an offset for some other reason.

Stated differently, the Commission awards the claimant a particular sum of money

based on the extent of his or her injury. The final amount payable directly by the insurer

or employer under the award may be reduced because of an offset for retirement benefits,

but the “award . . . for permanent disability” remains the same. Accordingly, regardless

of whether there is an offset for retirement benefits, the claimant is still entitled to receive

the full dollar amount of the award before the offset; however, a portion of the award is

instead paid by the retirement system rather than directly by the employer. As SIF notes

in its brief, “this in no way absolves the employer (or its insurer) from paying the

assessment based on the full award.”

Other provisions of the statute further show that the “award against an employer or

its insurer for permanent disability or death” must include more than just the “amount

10
payable” for purposes of calculating SIF’s assessment. As the Commission noted, in

contrast to LE § 9-806(a)(1)(i), which imposes the assessment on “each award,” LE § 9-

806(a)(1)(ii) imposes the assessment on the “amount payable by an employer or its

insurer under a settlement agreement approved by the Commission[.]” (Emphasis

added). The General Assembly specifically chose not to use the same language when

imposing the assessment on Commission awards. Had the General Assembly intended to

limit SIF’s assessment to the “amount payable” under the award, it could have specified

as such.

Moreover, the Commission’s interpretation is consistent with the purpose of the

assessment statute, which is to provide the “primary sources of monies for [SIF].”7

Cooper v. Wicomico Cnty., Dep’t of Pub. Works, 284 Md. 576, 578 (1979). The

assessment is “essential to [SIF’s] solvency” and its mission to compensate employees

with preexisting medical conditions after work-related accidents. Id. at 583. If we adopt

the appellants’ argument, SIF would lose revenue whenever the employer or insurer is

entitled to an offset for retirement benefits.

7
We emphasize that appellate courts “give due deference to the Commission’s
own interpretation of the statute it administers.” Hart, 172 Md. App. at 166. And, even
“greater weight [is] placed on those agency interpretations that are the product of
adversarial proceedings” or where the agency “engaged in a process of reasoned
elaboration in formulating its interpretation.” Stachowski v. Sysco Food Servs. of Balt.,
Inc., 402 Md. 506, 517 (2007) (citation omitted). Whereas here, the Commission in these
two cases carefully considered the statutory language during an adversarial adjudicatory
proceeding and issued formal, written opinions that detailed the reasons for reaching its
conclusion, we would have deferred to the Commission’s interpretation had we found the
language of LE § 9-806 to be ambiguous.
11
 Appellants argue that it would be unfair to impose SIF’s assessment on the full

amount of the award when they are not actually paying the full amount of the award

themselves. The assessment, as interpreted by the Commission, however, does not place

a double burden on the public employer when the amount is based on the total award

because the employer or its insurer pays no more to SIF than it would have paid had the

employee not received any offsetting disability retirement benefits. Thus, the

Legislature’s goal of preventing government employers from having to pay disability

benefits to an employee twice for the same injury would still be satisfied. See Tsottles v.

Mayor & City Council of Baltimore, 55 Md. App. 58, 59 (1983) (“the Maryland

Workmen’s Compensation Act . . . attempts to prevent double payment from the public

treasury to civil servants for an injury arising out of the employment relationship”)

(citations omitted); Nooe v. City of Baltimore, 28 Md. App. 348, 352 (1975) (“the

General Assembly was concerned with, and attempted to prohibit, governmental

authorities being obliged to pay benefits to an employee twice as a result of the same

injury”).

12
 Finally, the MTA cites two unrelated statutes, LE §§ 9-804(b)8 & 9-656(b),9 to

support its proposed interpretation.10 Those statutes, however, do not have any direct

8
LE § 9-804(b) states:

Deduction for prior award. – (1) When the Commission makes an award
against the Subsequent Injury Fund, if the prior permanent disability
contributes to the covered employee’s current permanent disability, the
Commission shall deduct from the award the amount of all prior permanent
disability payments received by the covered employee under:

(i) each prior award for permanent disability made by the Commission
or a similar unit in another state; or

(ii) any prior final compromise and settlement agreement approved by
the Commission or a similar unit in another state.

(2) In the case of a permanent total disability under Subtitle 6, Part V of
this title, the deduction shall be made by reducing the weekly rate of
compensation in accordance with § 9-729 of this title until the amount of
the prior permanent disability payments awarded would have been paid if
they had been paid in weekly payments.
9
LE § 9-656(b) states:

Payment of compensation. – The covered employee:

(1) is entitled to compensation for the portion of the disability of the
covered employee that is reasonably attributable solely to the accidental
personal injury or occupational disease; and

(2) is not entitled to compensation for the portion of the disability that is
reasonably attributable to the preexisting disease or infirmity.
10
MTA also notes that, in Glorioso’s case, the amount paid to the attorney was
calculated using the amount after the offset. According to MTA, it follows that “the
Employer and Insurer should not have to pay the SIF Assessment” based on the amount
prior to the offset. This argument is flawed. Had the Commission intended for the
employer to calculate SIF’s assessment after the offset, it would have so specified as it
did when it “further ORDERED that from the final weeks of compensation the following
13
bearing on the meaning of an “award . . . for permanent disability or death” as stated in

LE § 9-806. For example, LE § 9-656(b) does not even use the word “award,” but rather

focuses on SIF’s liability for preexisting diseases or infirmities. And, although LE § 9-

804(b) uses the word “award,” its usage supports to an extent our holding as to LE § 9-

806 by differentiating between an “award” and a “final compromise and settlement

agreement” when it provides that any prior permanent disability payment received by the

covered employee must be deducted. In other words, LE § 9-804(b) creates a further

distinction between those two separate sums of money.

Therefore, having found no error in the Commission’s interpretation of LE § 9-

806, we uphold its ruling in both cases and affirm the circuit courts’ judgments.

JUDGMENTS OF THE CIRCUIT COURT
FOR BALTIMORE CITY AND THE
CIRCUIT COURT FOR BALTIMORE
COUNTY AFFIRMED.
COSTS TO BE DIVIDED EQUALLY
BETWEEN APPELLANTS.

fees shall be paid: Todd L. Schuler, Esquire in the amount of $4,954.16, (after offset)[.]”
(Emphasis in original).
14