Baltimore Co. v. Thiergartner Walters v. Balt. Co.

McDonald, j. These cases reach us in somewhat different procedural postures, but the issue is the same in both. Both cases ⁵²⁰ concern a limit that the Legislature has placed on workers’ compensation benefits that a retired public safety employee may receive under a special presumption in the Maryland Workers’ Compensation Act — a limit based in part on the amount of retirement benefits that the individual also receives. A provision of the workers’ compensation law creates a presumption favorable to certain categories of public safety employees.

In particular, the law presumes that certain disabling medical conditions, such as heart disease, hypertension, and lung disease, are occupational diseases suffered in the line of duty and are therefore compensable under the workers’ compensation law. However, the statute caps those benefits: the sum of workers’ compensation benefits and a retired employee’s retirement benefits may not exceed the employee’s average weekly salary during employment. The formula for capping workers’ compensation benefits, seemingly simple in its description, inevitably raises questions in its implementation, particularly when its components take different forms paid on different timetables. The retirement benefits involved in these cases derive in part from an optional retirement program once offered by Baltimore County.

The program was designed to encourage senior employees, otherwise eligible to retire, to remain on the job in return for enhanced retirement benefits — an enhancement that can be taken in a lump sum upon retirement or in other ways that result in higher recurring retirement payments. The two retired firefighters in these cases — Carroll Thiergartner, the Respondent in No. 44, and Jeffrey Walters, the Appellant in No. 58 1 — participated in that program and opted to receive the enhancement as a lump sum payment upon their retirements. Both retirees also qualified for workers’ compensation benefits as a result of the special presumption for public safety employees. The issue in both cases is ⁵²¹ how the lump sum retirement payment is to be included in the formula for capping their workers’ compensation benefits.

We hold that the statute that imposes the cap on weekly workers’ compensation benefits necessarily contemplates a comparison involving payments, such as salary and retirement benefits, that are paid on different time schedules and that must be converted to a weekly number to apply the statutory formula. There is no evident reason to exclude a lump sum paid at the outset of retirement from such a conversion when applying the statutory formula. As to the manner of including the lump sum payment in that formula, we decline to adopt the method proposed by the retirees, which would treat the lump sum differently from other retirement benefits and count it only for the particular week in which it was paid. Nor do we adopt the method proposed by the County which, although it would convert the lump sum to a weekly figure for a period of time, would front-load that amount to offset workers’ compensation benefits completely for that period.

In our view, the most reasonable and accurate way to convert this portion of retirement benefits to a weekly figure would be to compute a figure for a stream of weekly amounts over the course of retirement that equates in some reasonable way to the lump sum payment. Such an approach is consistent with prior appellate decisions concerning another offset provision in the Workers’ Compensation Act. The Workers’ Compensation Commission adopted such a method in the Thiergartner case. I Background Workers’ Compensation and Public Safety Employees The Maryland Workers’ Compensation Act, codified at Maryland Code, Labor & Employment Article (“LE”), § 9-101 et seq., is designed to ensure that employees receive compensation for disabilities resulting from work-related injuries and ⁵²² occupational diseases.

R.P. Gilbert, et al., Maryland Workers’ Compensation Handbook (4th ed. 2013), §§ 1.03, 7.01. That law provides special consideration for public safety employees by creating a presumption that certain disabling diseases or conditions are occupational diseases suffered in the line of duty and therefore compensable under the workers’ compensation law. LE § 9-503. 2 Pertinent to these cases, the statute provides that a paid firefighter who suffers from heart disease, hypertension, or lung disease that results in total or partial disability or death “is presumed to have an occupational disease that was suffered in the line of duty and is compensable under [the workers’ compensation law].” LE § 9-503(a). Many firefighters who qualify for that presumption will be retired and will be receiving retirement benefits as a result of their employment as a firefighter.

The statute provides for an adjustment of any workers’ compensation benefits awarded to such an employee. Under that provision, the workers’ compensation benefits received as a result of the presumption are to be offset in certain circumstances by retirement benefits that the individual receives. 3 In particular, the statute provides as follows: ⁵²³ (1) Except as provided in paragraph (2) of this subsection, any [firefighter] eligible for benefits under [LE § 9-503(a) ] shall receive the benefits in addition to any benefits that the individual ... [is] 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 [the workers’ compensation law] 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).

On its face, the statutory formula appears to be a straightforward exercise that involves (1) adding two numbers (the weekly workers’ compensation benefit and weekly retirement benefit), (2) comparing the result to the weekly salary earned by the firefighter during employment, and (3) if the result exceeds the weekly salary, reducing the workers’ compensation benefit by the amount of the difference. But things are never so simple as they seem. The Baltimore County DROP Program Like a number of other jurisdictions, Baltimore County has included in its personnel law a provision known as the Deferred Retirement Option Program (“DROP”). The DROP is designed to retain certain categories of long-time County employees who might otherwise choose to retire by offering them the option of an enhanced retirement benefit if an employee defers retirement and remains an active County employee.

Under the DROP related to firefighters, a County firefighter who is eligible to retire and has the requisite years of service may elect to participate in the DROP. The employee then continues to work for the County as an active employee while deferring certain compensation related to the forgone pension payments and ongoing employee pension contributions in a special account. Baltimore County Code, § 5-l-302(b)-(e). In particular, when the employee elects to participate in the DROP, an account is created for the employee that includes (1) an amount equivalent to a year’s worth of pension ⁵²⁴ payments for each year that the employee continues to work for the County after the employee becomes eligible for retirement (the “DROP period”); (2) the retirement contributions made by the employee during the DROP period; and (3) interest earned on the amounts in the DROP account.

Baltimore County Code, § 5-l-302(e). When the period of deferred retirement comes to an end and the employee actually retires, the employee has a choice as to how to receive the amount in the DROP account. The employee can elect to receive the accumulated amount in the DROP account as a lump sum or roll it over into an eligible retirement plan and thereby enhance future retirement benefits. Baltimore County Code, § 5-l-302(f).

Thiergartner Mr. Thiergartner was employed as a sworn firefighter with Baltimore County for 33 years. He retired in September 2005. At the time of his retirement, Mr. Thiergartner elected to receive a lump sum from his DROP account. He received a payment of $189,346.90 within 30 days of that election.

He also began to receive a monthly retirement allowance of $3,672.07. Converted to a weekly figure, that amount is $847.40 per week. In February 2011, more than five years after his retirement, Mr. Thiergartner filed a workers’ compensation claim for heart disease related to his employment. In his claim, he identified the date of disablement as May 19, 2010.

In June 2011, applying the presumption in LE § 9-503(a), the Workers’ Compensation Commission found that Mr. Thiergartner had sustained an occupational disease — coronary artery disease — related to his employment as a firefighter and agreed that the first date of disablement was May 19, 2010. It found that he was entitled to a maximum weekly benefit for a permanent partial disability of $307 for 125 weeks. The Commission order identified his “average weekly wage” as $1,213.80. The Commission also computed the offset under LE § 9-503(e)(2).

As described above, in order to apply the offset, ⁵²⁵ one must compare Mr. Thiergartner’s combined retirement and workers’ compensation benefits, expressed as an aggregate weekly amount, with his “weekly salary.” Setting aside the lump sum DROP payment for the moment, Mr. Thiergartner’s ongoing pension payment, converted from a monthly figure to a weekly figure, is $847.40; his maximum weekly workers’ compensation benefit under the Commission’s award is $307.00. Added together, they amount to $1,154.40 per week. Assuming that “weekly salary” for purposes of LE § 9-503(e) is equivalent to “average weekly wage,” 4 there would be no offset, as the combined figure ($1,154.40) does not exceed $1,213.80. Whether there should be an offset under the statutory formula will depend on whether — and how — the DROP benefit is included in this comparison.

In February 2012, the Commission held that the DROP benefit should be included in the computation on a pro-rated basis. To come up with a pro-rated figure, the Commission looked to the higher monthly retirement benefit that Mr. Thiergartner would have received if he had not elected to receive the DROP benefit as a lump sum payment. That amount, converted to a weekly figure, was $946.15. 5 Applying ⁵²⁶ the statutory cap, the Commission set the weekly payment of workers’ compensation benefits, after what amounted to a partial offset, as $272.03 for a period of 125 weeks. The County sought judicial review of the Commission’s decision in the Circuit Court for Baltimore County.

The County did not challenge the Commission’s conclusion that Mr. Thiergartner was entitled to benefits as a result of the statutory presumption, but excepted to its computation of the offset. Following a hearing on the parties’ cross motions for summary judgment, that court granted Mr. Thiergartner’s motion, denied the County’s motion, and affirmed the Commission’s decision. The County appealed the decision to the Court of Special Appeals. The intermediate appellate court affirmed the judgment of the Circuit Court in favor of Mr. Thiergartner, but ordered that the case be remanded to the Commission to recalculate the monthly benefit in a way that eliminated any offset. 216 Md.App. 560 , 88 A.3d 844 (2014).

It held that, because the offset formula in LE § 9-503(e) referred to a “weekly total” of retirement and workers’ compensation benefits, there was no occasion for factoring in the lump sum DROP payment that Mr. Thiergartner had received at the outset of his retirement well before he was awarded any workers’ compensation benefits. We granted the County’s petition for a writ of certiorari to consider whether the lump sum DROP payment should be factored into the computation required by LE § 9-503(e)(2) and, if so, how. Walters Mr. Walters’ case began earlier than Mr. Thiergartner’s case, but arrived at our Court later. Like Mr. Thiergartner, ⁵²⁷ Mr. Walters was a firefighter with Baltimore County for more than 30 years.

He retired in June 2006. Mr. Walters had participated in the DROP and, upon retirement, elected to receive a lump sum in the amount of $146,959.90. He also began to receive monthly retirement benefits of $3,745.00. Converted to a weekly figure, the retirement benefits amount to $846.23 per week.

(The record does not indicate what his monthly retirement benefit — or its weekly equivalent — would have been, if he had elected to take the DROP benefit as an enhanced monthly retirement payment instead of as a lump sum). Two years after his retirement, Mr. Walters had a heart attack and was diagnosed as having heart disease. In July 2008, Mr. Walters filed a claim for workers’ compensation benefits. The County contested the claim.

In February 2009, the Commission awarded Mr. Walters permanent partial disability benefits of $685 per week for 333 weeks. In order to determine the offset under LE § 9-503(e)(2), it determined that his average weekly wage was $1,282.00 and converted his monthly retirement benefits to $864.23 per week. This resulted in a partial offset that reduced Mr. Walters’ workers’ compensation benefit to approximately $417 per week. Unlike Mr. Thiergartner’s case — which would not come before the Commission until two years later — the County initially did not ask the Commission to include the DROP lump sum payment in its computation of the offset amount and the Commission’s order made no reference to the DROP payment.

The County later sought judicial review of the Commission’s award in the Circuit Court for Baltimore County, arguing that there should be an offset for the DROP lump sum, and also asked the Commission to modify its order for the same reason. In the meantime, it did not pay any workers’ compensation benefits to Mr. Walters, apparently on the theory (1) that the offset provision in LE § 9-503(e)(2) was effective as a matter of law, even if not included in the Commission’s order, and (2) that Mr. Walters’ workers’ compensation benefits should be ⁵²⁸ offset dollar for dollar by the lump sum DROP payment until the amount of the offsets equaled the amount of the lump sum — a time that, given the figures involved, would be considerably in the future. 6 There followed litigation before the Commission, the Circuit Court, and the Court of Special Appeals in which Mr. Walters sought to compel the County to pay the Commission’s award while the County pursued judicial review of the award. It resulted in the intermediate appellate court dismissing the County’s appeal and remanding to the Circuit Court to conduct a hearing “on the role of the DROP funds, if any, in the calculation of the offset.” Before the Circuit Court, Mr. Walters won the battle — the court ordered the County to comply with the Commission order while the matter was under judicial review — but lost the war. The Circuit Court eventually sided with the County on its interpretation of the offset provision and, in a written opinion issued in July 2011, ordered that the lump sum be applied to offset workers’ compensation benefits until the full amount of the DROP payment has been credited against the workers’ compensation benefits, a period that it computed to be 852 weeks.

Mr. Walters appealed that decision. After briefs had been filed, but before argument was held in the Court of Special Appeals, the County filed a petition for certiorari and suggested that we hear the case together with the Thiergartner case in the interest of judicial economy. Mr. Walters, who is represented by the same counsel as Mr. Thiergartner, did not oppose the petition. We granted the petition and accepted the County’s suggestion that we consider the cases together. ⁵²⁹ II Discussion There is no dispute as to the underlying facts in either of these cases.

The result in both cases turns on a question of law: Is a lump sum DROP payment a retirement benefit that is to be offset against workers’ compensation benefits pursuant to LE § 9-503(e)(2) and, if so, how? Standard of Review In a judicial proceeding to review an award of the Commission, the decision of the Commission is “presumed to be prima facie correct.” LE § 9 — 745(b)(1). A court may reverse a Commission decision only if the court finds that the Commission’s action was based on an erroneous construction of the facts or law. Frank v. Baltimore County, 284 Md. 655, 658 , 399 A.2d 250 (1979); LE § 9-745(c)(3).

As indicated above, the facts are undisputed and the issue is purely one of law. Because we are dealing with a question of law, we accord no special deference to the decisions of the Circuit Court or the Court of Special Appeals. Of course, as in any case where another court has given thoughtful consideration of the legal issue at stake, this does not prevent us from taking advantage of the reasoning and analysis of the courts that have considered the same issue that is before us. Sturdivant v. Department of Health & Mental Hygiene, 436 Md. 584, 587-88 , 84 A.3d 83 (2014).

Whether the Lump Sum DROP Payment Should be Included in the Offset Computation There can be no dispute that the DROP payment is a retirement benefit for purposes of LE § 9-503(e)(2). See Polomski, 344 Md. at 82, 684 A.2d 1338 (construing “retirement benefits” referenced in statute broadly to “make no distinction between [those] accruing by reason of age and service versus those accruing as the result of a disability”); cf. Dennis v. Fire & Police Employees’ Retirement System, 390 ⁵³⁰ Md. 639, 651, 890 A.2d 737 (2006) (DROP payments are pension benefits for purposes of qualified domestic relations order). Nor does there appear to be any dispute that the lump sum DROP payment must be accounted for in some way in the formula set forth in LE § 9-503(e)(2). 7 How the Lump sum DROP Payment Should be Included in the Offset Computation As noted above, the offset provision in LE § 9-503(e)(2) provides simply that “the benefits received [under the workers’ compensation law] 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.... ” The statutory offset formula thus contemplates a comparison of a retiree’s “weekly salary” with the workers’ compensation award (which is typically expressed as a weekly amount) and retirement benefits which, for purposes of the comparison, must be expressed as a weekly figure. This means that any retirement benefit payment not paid on a weekly basis — which is likely true for most, if not all, retirement payments — must be converted to a weekly figure for this formula.

The statute does not explicitly state how to do this. What legislative history exists is also silent on this question. 8 ⁵³¹ A case concerning another offset provision of the Workers’ Compensation Act provides some guidance. See Blevins v. Baltimore County, 352 Md. 620 , 724 A.2d 22 (1999). Blevins concerned an offset provision, codified at LE § 9-610, that is designed to avoid duplicative disability payments to government employees and retirees. 9 It states that, if a governmental employer provides a benefit to an employee that exceeds the employer’s obligation to pay workers’ compensation benefits, that payment offsets the employer’s obligation to pay workers’ compensation benefits.

This Court held that a workers’ compensation benefit awarded for a period preceding the employee’s disability retirement was not a duplicate benefit that would be offset by the employee’s subsequent disability retirement benefit, even though the worker’s compensation benefit was paid in a lump sum after retirement. 352 Md. at 627 , 724 A.2d 22 . Thus, Blevins held that, for purposes of computing the offset in LE § 9-610, a lump sum benefits payment should be attributed to the period to which the benefits related, as opposed to the period during which the lump sum happened to be paid. Returning to the question before us: how should the DROP lump sum payment be converted to a weekly figure that reflects the entire period of the individual’s retirement? Three possibilities have been proposed in these cases.

For convenience, we shall refer to them as the Retiree Proposal, the County Proposal, and the Commission Approach. 10 ⁵³² (1) Retiree Proposal: Include the lump sum in the formula only for the week in which it was paid and not for any subsequent weeks Before the Commission and in the Circuit Court, counsel for Mr. Thiergartner and Mr. Walters argued that a lump sum DROP