Kelly v. Consolidated Delivery Co.

EYLER, DEBORAH S., J. William W. Kelly, the appellant, challenges a judgment by the Circuit Court for Baltimore County affirming a decision by the Workers’ Compensation Commission (“Commission”) denying him benefits for permanent partial disability to his right shoulder. His employer, Consolidated Delivery Co. (“Consolidated”), and its insurer, the Injured Workers’ Insurance Fund (“IWIF”), were the opposing parties before the Commission and the circuit court and are the appellees in this Court. Kelly poses one question on review: “Is [he] entitled to pursue his claim for permanent partial disability benefits?” For the following reasons, we answer that question “Yes.” Therefore, we shall reverse the judgment of the circuit court ¹⁸⁰ and remand the case with instructions to reverse the decision of the Commission and remand to the Commission for proceedings consistent with this opinion. FACTS AND PROCEEDINGS Kelly was employed by Consolidated as a delivery truck driver.

On March 29, 2002, while in the course of his employment, he fell and sustained an accidental injury to his right shoulder. On April 10, 2002, Kelly filed a claim with the Commission. Consolidated and IWIF did not contest it and began paying temporary total disability benefits on April 15, 2002. On May 8, 2002, the Commission passed an order awarding Kelly temporary total disability benefits.

On July 29, 2002, Kelly underwent surgery on his right shoulder. He continued to receive temporary total disability benefits until February 5, 2003. On February 4, 2003, IWIF discovered that Kelly had started working for another employer on July 8, 2002, and had failed to report that employment to IWIF or to the Commission, as required. On February 13, 2003, IWIF filed an application for statement of charges against Kelly in the District Court of Maryland for Baltimore County.

Kelly was charged with one count of theft over $500, under Md.Code (2002), section 7-104 of the Criminal Law Article (“CL”), and one count of making a false claim under Md.Code (1991, 1999 Repl.Vol.), section 9-1106(a) of the Labor and Employment Article (“LE”). That entire statute states: (a) Prohibited act. - A person may not knowingly affect or knowingly attempt to affect the payment of compensation, fees, or expenses under [the Workers’ Compensation] title by means of a fraudulent representation. (b) Penalties.-A person who violates this section, on conviction: ¹⁸¹ (1) is subject to the penalties under Article 27, § 342 of the Code; and (2) may not receive compensation, fees, or expenses under [the Workers’ Compensation] title. Article 27, section 342 is the predecessor theft statute to CL section 7-104.

On May 20, 2003, Kelly appeared for trial and proceeded on a not guilty agreed statement of facts. The prosecutor read into the record the following statement of facts (which we have divided into paragraphs): [B]etween the dates of July 8th, 2002 through February 5th, 2003, at IWIF ..., [Kelly] received temporary total disability benefits, [to] which he was not entitled. The amount he was not entitled to collect was $8,432. On March 29th, 2002, [Kelly] sustained a work-related injury while he was employed as a delivery driver....

As a result ... a claim was filed with [IWIF] for injuries sustained to his right shoulder. All appropriate medical and indemnity benefits were provided by IWIF. [Kelly’s] weekly temporary total benefit was $272. He received this benefit due to the claim that he was physically unable to work. [Kelly] received temporary total disability from March 29th, 2002 through February 5th, 2002[sicJ for a total of 314 days, and $12,201.14. The checks that IWIF sends for temporary total have this written on the upper portion: [‘^Important notice, it is unlawful to knowingly obtain benefits to which you are not entitled.

If you return to work or your doctor releases you to return from work you are no longer eligible for temporary total compensation.[”] On the claim form completed by [Kelly] the [Commission] provided a warning which states, [“]Note: Failure to disclose information or getting false information, including information regarding any work-related activity or return to work either before or after an award of benefits may subject you to fines, imprisonment, or both, and disqualify you from receiving benefits.!”] The form also contains the following: [“]I hereby make claim for compensation for an injury resulting ¹⁸² in my disability due to an accident arising out of and in the course of my employment, and in support of it make the foregoing statements of fact, I hereby certify that the information I have given is accurate and that I have read the information on the form.[”] [Kelly] did sign the claim form and have an attorney represent him. On February 4, 2003, [Kelly’s] work income history was received and revealed employment. The employer ... was contacted and stated that [Kelly] was hired on July 8th of 2002, and was a current employee.... Verification of [Kelly’s] employment was obtained thereafter on October 24th, 2002.

IWIF received a disability slip citing [that Kelly] would be unable to work from September 20th, 2002 to November 6th, 2002. Additional medical records were received by IWIF dated September 3rd, 2002, November 18th, 2002, November 27th, [2002,] and January 6th, 2003 that cited the patient is still unable to work. On January 16th, 2003, vocational rehabilitation services were initiated for [Kelly] since [his] treating doctor stated that in his January 6th, 2003 medical evaluation [that Kelly] would be unable to return to his previous employment as a delivery driver. Thereafter, on January 30th, 2003, Mr. Kelly met with the vocational rehabilitation counselor at his attorney’s office.

At that time [Kelly] stated that he would like to return to work as a light vending driver, newspaper delivery driver, or as a shuttle and limousine driver. He did not indicate that he was already employed. IWIF had evidence in the form of witness payroll records, disability slips, claim forms, sample explanation of benefits and cancelled checks. By claiming inability to work and accepting the temporary total disabilities when he was actually working, it is believed by IWIF that [Kelly] is in violation of the appropriate Maryland statutes, and if called to testify [an IWIF representative], who is present in court today, would state that [Kelly] did not have permission to take this money under the circumstances of this matter.... ¹⁸³ The district court judge found Kelly guilty of theft over $500, and sentenced him to one year and one day imprisonment, all suspended in favor of probation; and ordered him to pay restitution totaling $8,432 (the amount of temporary total disability benefits that IWIF overpaid), within 18 months, in increments of at least $400 per month.

The State nol pressed the LE section 9-1106(a) charge. In the meantime, Kelly requested a hearing before the Commission on the nature and extent of the permanent partial disability to his right shoulder from the accident. The hearing took place on November 25, 2003. At that time, Consolidated and IWIF argued that, under LE section 9-1106(b), Kelly had forfeited his right to receive any workers’ compensation benefits.

Kelly argued, to the contrary, that that statute did not preclude him from receiving benefits; he conceded, however, that, under LE section 9-310.1, any award he would receive would be offset by the temporary total disability benefits he wrongfully had obtained. That statute, entitled “Benefits wrongfully obtained; reimbursement; interest[,]” provides: (a) Reimbursement. - In any administrative action before the Commission, if it is established by a preponderance of the evidence that a person has knowingly obtained benefits under [the Workers’ Compensation] title to which the person is not entitled, the Commission shall order the person to reimburse the insurer, self-insured, employer, the [IWIF], the Uninsured Employers’ Fund, or the Subsequent Injury Fund for the amount of all benefits that the person knowingly obtained and to which the person is not entitled. (b) Interest. -An order of reimbursement required under subsection (a) of this section shall include interest on the amount ordered to be reimbursed at a rate of 1.5% per month from the date the Commission notifies the person of the amount to be reimbursed. A hearing was held on November 25, 2003.

Although Kelly took the witness stand, he did not testify because his lawyer and counsel for IWIF essentially made legal arguments to the Commissioner. After explaining the history of the criminal ¹⁸⁴ case, Kelly’s lawyer argued that LE section 9-1106(b) was not applicable, because Kelly was not convicted of violating LE section 9-1106(a). Rather, the LE section 9-1106(a) charge was nol prossed. He also conceded that, instead, Kelly should be subject to reimbursement, under LE section 9-310.1.

The lawyer for IWIF explained to the Commissioner that Kelly had been working for a different employer, not Consolidated, from July 8, 2002, until February 5, 2003, when that situation was exposed by IWIF; and that during that time, he presented disability slips to IWIF stating that he was unable to work and he met with the rehabilitation counselor and discussed how he wanted to go back to work, without telling her that he had been working (by then) for seven months. IWIF’s lawyer argued that the case was “egregious” and that what Kelly did was not an oversight, or an accident. The Commissioner reserved on the issue of nature and extent and decided to hold the case sub curia to decide “whether 9-1106 applies or whether another section, 9-310, would be more applicable.... ” On December 16, 2003, the Commission issued an order stating that, under LE section 9-1106(b), Kelly was precluded from receiving any workers’