Blackburn v. Erie Insurance Group

MEREDITH, J.

Because the majority opinion misconstrues the legislature’s intent for the workers’ compensation offset, and deprives the insured of the underinsured motorist coverage for which the insured paid premiums, I dissent.

Andrew Janquitto, Esquire, in his treatise entitled Maryland Motor Vehicle Insurance (2d ed.1999), describes the development of underinsured motorist coverage, noting in § 8.6 at 308: “UM coverage \ie., uninsured/underinsured motorist coverage] in Maryland was originally designed to place the accident victim in the same position he or she would occupy if the uninsured tortfeasor maintained liability cover*517age in an amount equal to the minimum required coverage under the financial responsibility laws of Maryland.” That purpose has evolved, Mr. Janquitto explains, into one of placing the accident victim in the same position the victim would occupy if the underinsured tortfeasor maintained liability insurance coverage equal to the limits of coverage under the victim’s own underinsured motorist policy. Mr. Janquitto summarizes the progression of the statutory scheme as follows, id. at 314 (footnotes omitted):

The 1981 and 1983 amendments modified the underlying purpose of the UM statute. Before the introduction of reduction underinsured motorist coverage in Maryland, courts uniformly stated that the purpose of UM coverage was to place the insured in the same position he or she would have occupied if the uninsured tortfeasor maintained the minimum amounts of required security mandated by Title 17 of the Transportation Article. In light of the 1981 and 1983 amendments, the UM statute is now designed to place the injured insured in the same position he or she would have occupied if the tortfeasor maintained liability insurance in amounts equal to the injured insured’s uninsured motorist limits. Thus, the financial responsibility provisions of Title 17 are no longer the benchmark. Rather, the injured insured’s uninsured motorist limits are now the guide. This is a substantial change in the public policy, and, in this regard, it is no longer accurate to state that the UM statute is designed solely to protect victims from financially irresponsible uninsured motorists. A motorist may, under the current statute, be financially responsible, yet still, by statutory definition, be uninsured because he or she is not as financially responsible as the injured motorist.

In the present case, Blackburn purchased from Erie uninsured/underinsured motorist coverage providing benefits with a limit in the amount of $250,000 per person. Accordingly, under Maryland’s statutory scheme, Blackburn was entitled to be placed in as good a financial position as he would have enjoyed if the negligent driver had maintained liability insurance with a limit of $250,000 per person. The statutory *518construction adopted by the majority opinion does not achieve such a result.

The majority opinion interprets the statutory offset described in Maryland Code (1997, 2006 Repl.Vol.), Insurance Article, § 19-513(e) in a manner that is, in my view, (a) not consistent with the expressed legislative purpose set forth in the enacting statute, and (b) not consistent with the overall objective of underinsured motorist insurance, i.e., permitting the insured to recover an amount based upon his own policy’s UM limits rather than the tortfeasor’s inadequate policy limits.

As Mr. Janquitto points out in § 8.10(C) of his treatise at 419, § 19-513(e) “is designed to prevent double recovery.” That being so, Mr. Janquitto notes that the offset is intended to be applied in a manner that nevertheless enables the injured party to receive the benefit of the underinsured motorist coverage for which he has paid:

Section 19-513 (e)’s offset provision reflects a legislative intent that the injured worker’s UM claim be excluded by the availability of workers’ compensation benefits only to the extent necessary to avoid a double recovery. To hold that an injured worker is restricted to filing a workers’ compensation claim and to pursuing the uninsured motorist, from whom he or she will, no doubt, not be able to collect even if he or she obtains a judgment, is inconsistent with the public policy of providing a full recovery to a victim of an uninsured motorist. UM coverage and workers’ compensation provide separate and distinct types of coverage, but workers’ compensation benefits certainly do not compensate the injured worker fully.

Id. at 421 (footnotes omitted). In one of the footnotes to the above quoted passage, Mr. Janquitto emphasizes that “[w]orkers’ compensation benefits do not provide for pain and suffering, but UM coverage does.” Id. at 421 n. 582. The purpose of Maryland’s uninsured motorist insurance statute remains the same even when the victim receives workers’ compensation benefits: “The UM Statute, with the workers’ compensation *519offset, is designed to place the insured in the position he or she would have occupied had the tortfeasor had liability insurance in an amount equal to the insured’s UM coverage.” Id. at 424.

Mr. Janquitto gives the following hypothetical to illustrate the correct result when the workers’ compensation lien has been satisfied out of the amount paid pursuant to the tortfeasor’s liability policy, id. at 424-25:

The following hypothetical illustrates this situation: An insured is seriously injured while working. His damages exceed $100,000. The insured has collected $20,000 in workers’ compensation. The tortfeasor has a liability policy that provides $50,000 of coverage. The insured has a motor vehicle policy that provides $100,000 of UM coverage. The policy allows an offset of workers’ compensation benefits received by the insured. The insured collects the $50,000 from the tortfeasor’s liability insurer and satisfies the workers’ compensation insurer’s subrogation interest by repaying the $20,000. The insure[d] then seeks $50,000 from his or her UM insurer, which claims that its policy and the UM Statute allow for a reduction of workers’ compensation benefits. From this, the UM insurer takes the position that it owes $30,000 ($100,000 uninsured motorist limit minus $50,000 from the tortfeasor minus $20,000 of workers’ compensation). This position is untenable because the spirit of the UM Statute would be violated if the UM insurer were allowed to take the offset. Again, the analysis must focus on what the insured would have received had he or she been injured by a tortfeasor with $100,000 of liability coverage. The answer is that the insured would have netted $100,000 ($20,000 in workers’ compensation benefits plus $100,000 in liability coverage minus $20,000 to pay back the workers’ compensation).

The extra wrinkle that is presented by Blackburn’s case is that the workers’ compensation carrier—more precisely, the United States Department of Labor, acting pursuant to the Federal Employees’ Compensation Act—accepted an amount less than the total benefits paid, and accepted such lesser *520amount in full satisfaction of its right to seek reimbursement of any amounts paid to Blackburn. Erie argued that, under § 19-513(e), it was entitled to reduce its UM liability to its insured by the entire amount of the workers’ compensation benefits paid to Blackburn over and above the amount which Blackburn paid in full satisfaction of the lien, notwithstanding the fact that the workers’ compensation carrier has waived any further claim for reimbursement of benefits. So, even though Blackburn owes no further reimbursement to the workers’ compensation provider, Erie claims that it is still entitled to reduce its underinsured motorist benefit by the amount for which the workers’ compensation provider waived reimbursement. The majority opinion adopts Erie’s position as correct. The result is that the victim of the auto accident, Blackburn, ends up with uncompensated damages for which his own underinsured motorist carrier escapes responsibility, even though there is no outstanding balance for which the workers’ compensation provider seeks any further reimbursement.

This result does not place the insured in as good a position as he would have occupied if the tortfeasor had maintained similar policy limits of $250,000. Under a scenario in which the negligent driver maintained policy limits of $250,000, Blackburn would have received $246,305.66 from the workers’ compensation provider, and he would have received the $250,000 policy limits from the tortfeasor’s insurance carrier, out of which he would have had to reimburse the workers’ compensation provider $27,396.28 to satisfy its lien.6 The net recovery to Blackburn would have been $468,909.38 (i.e., $246,305.66 plus $250,000 minus $27,396.28). That is $150,000 more than the amount the majority opinion holds that Blackburn is entitled to (which was $318,909, based upon *521$246,805.66 from the workers’ compensation carrier, plus $100,000 from the tortfeasor’s insurance carrier, minus the $27,896.28 paid to satisfy the lien of the workers’ compensation carrier).

The difference in these results cannot be justified by a policy consideration of avoiding double recovery by the accident victim. It is agreed in this case that Blackburn’s damages would not be fully compensated in either event. There would be no double recovery by Blackburn under either scenario.

The recent Court of Appeals decision in Lynne Parry, Personal Representative of the Estate of Mark Parry, Deceased v. Allstate Insurance Company, 408 Md. 130, 968 A.2d 1053 (2009), does not alter my view. The Parry ease gave no indication that the workers’ compensation carrier’s right of reimbursement in that matter had been satisfied by compromise. Indeed, the Parry case indicates in footnote 6 that the Court of Appeals did not consider the reimbursement limitation in § 19-513(e) to be pertinent to the issues there under consideration.

When § 19-513(e) was most recently amended, Chapter 392 of the Laws of 2001 specifically stated that the General Assembly’s “purpose” was “limiting the reductions available to personal injury protection and uninsured motorist insurers to the extent the workers’ compensation insurer is able to recover benefits paid under the workers’ compensation laws of a state or the federal government.” (Emphasis added.) We do not need to resort to any aids to statutory construction to divine the General Assembly’s intent. The legislature’s intent is stated explicitly in the enactment itself. And that expressed purpose is to limit the offset that may be taken by an uninsured motorist insurer to the extent that the workers’ compensation insurer “is able to recover” (emphasis added) the benefits that have been paid. The limitation in § 19-513(e), as amended, should be read in a manner that is consistent with that stated purpose.

*522Plainly, at all times since Blackburn made his claim upon Erie for underinsured motorist benefits, because the lien had already been fully satisfied, the amount which Blackburn’s workers’ compensation insurer “is able to recover” for benefits paid is zero dollars. And that should have been “the extent” of the reduction available to Erie for the workers’ compensation offset under § 19-513(e). A contrary construction of the statute results in a windfall of nearly $150,000 to Blackburn’s underinsured motorist insurance carrier. I consider that result contrary to the legislature’s purpose and untenable. I would reverse.

. Although it is possible the Department of Labor would have required reimbursement in an amount greater than the $27,396.28 it accepted in full satisfaction of its lien if it had known that the tortfeasor's policy limits were $250,000, we have no evidence of that in the record, and must assume, for current purposes, that the lien could have been compromised for the same amount as it was in this case.