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Wright v. Philip Electronics North America12/6/1996
Paul Fire & Marine Ins. Co. v. Treadwell, 263 Md. 430, 283 A.2d 601 (1971) (stating that under the Act an employer cannot recover back money already paid to an employee). The "dollar credit" approach operates as a subtle form of this forbidden practice. The "dollar credit" approach monetarily negates previous payments by retroactively cutting short the length of the benefits award, thereby taking money out of the hands of claimants. Proceeds of this practice materialize in the savings an employer gains by not having to pay additional weeks of compensation.
III.
Appellees argue, in a rather agglutinative style, that one Maryland case, Joy M. Renehan Staley v. Board of Education of Washington County, 308 Md. 42, 517 A.2d 349 (1986), and one section of the Act, section 9-804, support the application of a "dollar credit" system. Upon closer examination, however, these two alleged indicia of a "dollar credit" system fail to support appellees' position.
In Staley, the employer paid an employee benefits pursuant to the Commission's compensation order. After the circuit court reduced this award on appeal, it became clear that the employer had already fulfilled its benefits obligation and had actually overpaid by $9,375.68. Id. at 44. The issue presented to the Court of Appeals was whether the employer had to pay the employee's legal fees or whether those fees could be taken out of the overpayment.
Appellees insist that the Court of Appeals in Staley adopted a "dollar credit" approach and that we should follow suit. Relying on Staley to support a "dollar credit" for disability benefits, however, is the legal equivalent of comparing apples and oranges. The Court of Appeals analyzed Staley in terms of the total amount of the overpayment, as opposed to the number of weeks the overpayment constituted, because of the way the Act establishes the payment of attorneys' fees.
Under the Act, once a claimant obtains a compensation award, an attorney can file a petition to have his fees taken out of the money due the claimant and placed into an escrow account. 308 Md. at 47-48; Hoffman v. Liberty Mutual Insurance Company, 232 Md. 51, 55, 191 A.2d 575 (1976). Once the petition is approved, a lien attaches to the funds held in escrow. Staley, 308 Md. at 47-48. In Staley, the Court of Appeals held that the employer had to pay the attorneys' fees and could not rely on the overpayment to offset the obligation to pay attorneys' fees. Id. at 53.
In Staley, even if the Court of Appeals had allowed the employer to credit an overpayment against an outstanding obligation to pay attorneys' fees, it would have been impossible to apply a "weekly credit" approach. Attorneys' fees are not disbursed or calculated by using a weekly scale of disbursement. They are held in escrow and taken directly out of the amount of compensation benefits. Thus, the Court of Appeals's discussion of the overpayment in Staley lends no support to the application of a "dollar credit" approach to this case.
Next, appellees turn to the Subsequent Injury Fund, a section of the Act, to support their "dollar credit" position. Appellees maintain that section 9-804 supports their position because it demands that
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 payments awarded to the covered employee....
Md. Code, LE ยง 9-804(b). This sub-section, however, has nothing to do with credit for previous payments applied to an existing duty to pay disability benefits.
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