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Chesapeake Haven Land Corporation v. Litzenberg11/30/2001
213,000 paid by the third parties, because those damages are not part of the compensation insurer's past or future liability to the injured worker. Appellant claims that the Commission had no authority to reduce appellant's credit against future benefits under section 9-902 of the Labor and Employment Article of the Md. Code (1999 Repl. Vol.) ("LE"), and, therefore, the entire $213,000 should be credited to appellant against future claims for compensation filed by appellee.
Analysis
Sec. 9-902(a) authorizes an insurer, when compensation is awarded or paid, to bring an action for damages against a third party who is liable for the injury or death of a covered employee. Sec. 9-902(b) provides that, if the insurer recovers damages exceeding the amount of compensation awarded and the amount of payments made for medical or funeral services, the insurer shall
(1) deduct from the excess amount its costs and expenses for the action; and (2) pay the balance of the excess amount to the covered employee, or to the dependents of the employee in case of death.
Under Sec. 9-902(c), if the insurer does not bring an action against a third party within two months after the Commission makes an award, the covered employee may bring the action for damages against the third party. When the covered employee recovers damages, the distribution under Sec. 9-902(e) shall be as follows:
(1) deduct the expenses for the action; (2) reimburse the insurer for the compensation already awarded, including amounts paid for medical services; and (3) keep the balance of the damages recovered.
Sec. 9-903 provides that if a covered employee receives damages less than the amount he or his dependents would be entitled to receive under this title, the employee or dependents may reopen this compensation claim to recover the difference between the amount of damages received and the full amount of compensation payable.
Appellee complied with sec. 9-902(d)(2), requiring that the employer-insurer be reimbursed for compensation already paid and amounts paid for medical services. Appellant's total expenditures amounted to $64,812, which was reduced by appellant's pro rata share of attorney's fees and costs of $23,538.95. The balance, $41,273.05, was distributed to appellant.
The appellate courts of Maryland have recognized consistently that the allowance to a compensation insurer of an interest in a third-party recovery obtained by a claimant is a right of subrogation. Brocker Manufacturing & Supply company, Inc. v. Mashburn, 17 Md. App. 327 (1973); Cogley v. Schnaper & Koren Construction Company, 14 Md. App. 322 (1972); Baltimore Transit Co. v. State to Use of Shriefer, 183 Md. 674 (1944); see also Anne Arundel County v. McCormick, 323 Md. 688 (1991); Smith v. Bethlehem Steel Corp., 303 Md. 213 (1985). LE sections 9-902 and 903 are the statutory codification of the compensation insurer's rights of subrogation, Johnson v. Miles, 188 Md. 455 (1947), and provide for the distribution of third-party claim recoveries after payment of compensation benefits, and for the compensation insurer's responsibility to make future payments thereafter.
Both appellant and appellee cite Brocker v. Mashburn, supra, as the "only case on point," although they interpret it differently. That case, authored by Judge Richard P. Gilbert, involved payment of compensation benefits based on permanent injuries, a third-party suit filed by the wife as guardian of the claimant, and a separate count by the wife for loss of consortium.
The litigation was settled by payment of $100,000 to the wife as guardian of her husband, and $140,000 to the wife for her
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