Ross v. Agurs

BAIR, J. The instant appeal arises from a third-party claim filed in the Circuit Court for Prince George’s County by appellant, David Ross, against John Agurs and Progressive Casualty Insurance Company (“Progressive”), for damages sustained in a motor vehicle accident for which appellant sought benefits under an underinsured motorist (“UIM”) policy issued by Progressive. The motor vehicle accident that gave rise to appellant’s third-party claim was a rear-end collision caused by Agurs that occurred on December 8, 2006, while appellant was driving within the scope of his employment with Shelton Transportation (“Shelton”). As a result of the accident, appellant also filed a claim for and received workers’ compensation benefits of $84,446.21. On November 21 and 22, 2011, a jury trial was held in circuit court, resulting in a verdict in favor of appellant in the amount of $91,583.90.

On November 30, 2011, the circuit court entered judgment (“the judgment”) in favor of the appellant in the amount of $91,583.90. Subsequent to the entry of judgment, appellant filed a Motion to Enforce Judgment, requesting the trial court order Progressive to pay a portion of the judgment under its UIM coverage. Appellant contended that the amount due and owing from Progressive ¹⁵⁴ was $51,875.58, representing the balance of the judgment after reduction for unreimbursed workers’ compensation benefits. On July 2, 2012, the circuit court denied appellant’s post-trial motion.

On appeal to this Court, appellant presents a single question for our review, which we have slightly rephrased: Did the circuit court err in denying appellant’s motion to enforce judgment against Progressive? For the reasons that follow, we find no error and affirm the judgment of the circuit court. Factual and Procedural History On December 8, 2006, in Washington, D.C., the motor vehicle operated by appellant was struck from the rear by a vehicle driven by John Agurs. Appellant was operating within the scope of his employment with Shelton at the time.

The vehicle driven by appellant was insured by Shelton with a commercial liability policy issued by Progressive that included uninsured/underinsured motorist (“UM/UIM”) coverage with policy limits of $1,500,000. Shelton had a workers’ compensation policy through the Injured Workers Insurance Fund (“IWIF”) providing coverage for bodily injury and medical expenses. The vehicle driven by Agurs was insured by State Farm with third-party liability coverage of $25,000/$50,000. As a result of the accident, appellant sustained injuries to his left knee and lower back.

Appellant sought relief for his injuries by filing a workers’ compensation claim, and a third-party claim against Agurs that was later amended to include Progressive. Appellant initiated this action in the Circuit Court for Prince George’s County on November 25, 2009, by filing a third-party claim against Agurs for damages resulting from the motor vehicle accident caused by Agurs’ negligence. Appellant also submitted a claim for benefits under Shelton’s UIM Policy with Progressive, which was later denied. On December 23, 2009, appellant filed an amended complaint adding Progressive as a defendant and asserting that Progressive’s denial of UIM benefits pursuant to Progressive’s UM/ ¹⁵⁵ UIM insurance policy with Shelton constituted a breach of contract.

On June 17, 2011, prior to the trial in circuit court, Agurs offered his $25,000 policy limits to appellant. Within sixty days of receiving notice of the offer, Progressive notified appellant that it would not consent to acceptance of the offer of policy limits and would not waive subrogation. Progressive therefore tendered a check in the amount of $25,000 to appellant pursuant to Md.Code (1996, 2011 Repl. Vol., Supp. 2012), § 19-511 of the Insurance Article. 1 Accordingly, appellant filed a second amended complaint containing a sole count against Progressive for breach of contract.

On November 21, and 22, 2011, a jury trial was held in the circuit court. The jury returned a verdict in favor of appellant for a total of $91,583.90, comprised of: $24,083.90 in past medical expenses, $30,000.00 in lost wages, and $37,500.00 in noneconomic damages. On November 30, 2011, the circuit court entered judgment in favor of appellant in the amount of $91,583.90. As a result of the $25,000 payment made by Progressive prior to trial, the remaining balance of the judgment was $66,583.90.

At the time of the trial, appellant’s workers’ compensation claim was closed, and the amount of the unreimbursed workers’ compensation lien (“the lien”) held by IWIF was $84,446.21. Following the trial court’s entry of judgment, appellant made a written demand of Progressive for payment of a portion of the judgment under its UIM coverage. Progressive declined to make payment. On April 25, 2012, appellant filed a Motion to Enforce Judgment, requesting that the trial court enter an order directing Progressive to pay the sum of $51,875.58, which appellant contended was the amount due and owing on the balance of the judgment after reduction for unreimbursed workers’ compensation benefits. 2 Progressive ¹⁵⁶ subsequently filed an opposition to appellant’s motion to enforce judgment.

On July 2, 2012, the circuit court denied appellant’s post-trial motion without a hearing. Appellant noted this timely appeal on July 27, 2012. Discussion Both parties agree that the balance of the circuit court judgment is $66,588.90, and that the amount of the workers’ compensation lien held by IWIF is $84,446.21, i.e., the amount appellant received under his workers’ compensation claim. The parties are also in agreement that Progressive is entitled to reduce the benefits payable to appellant under its UIM coverage to the extent of the unreimbursed workers’ compensation benefits pursuant to Md.Code (1996, 2011 Repl.

Vol.), § 19-513(e) of the Insurance Article (“Ins.”), which reads: (e) Reduction due to workers’ compensation benefits.—Benefits payable under the coverages described in §§ 19-505 and 19-509 of this subtitle shall be reduced to the extent that the recipient has recovered benefits under the workers’ compensation laws of a state or the federal government for which the provider of the workers’ compensation benefits has not been reimbursed. Ins. § 19-513(e). 3 Although appellant does not dispute the amount of the workers’ compensation lien, he nonetheless argues that the amount of the lien is not properly applicable as the amount of unreimbursed workers’ compensation benefits for purposes of Ins. § 19-513(e). Appellant maintains that in order to determine the extent to which UIM benefits may be reduced under Ins. § 19-513(e), the amount of unreimbursed workers’ corn ¹⁵⁷ pensation benefits must first be calculated pursuant to Md. Code (1991, 2008 Repl. Vol.), § 9-902 of the Labor & Employment Article (“LE”), which reads, in pertinent part: (e) Distribution of damages.-—If the covered employee or the dependents of the covered employee recover damages, the covered employee or dependents: (1) first, may deduct the costs and expenses of the covered employee or dependents for the action; (2) next, shall reimburse the self-insured employer, insurer, Subsequent Injury Fund, or Uninsured Employers’ Fund for: (i) the compensation already paid or awarded; and (ii) any amounts paid for medical services, funeral expenses, or any other purpose under Subtitle 6 of this title; and (3) finally, may keep the balance of the damages recovered.

(f) Court costs and attorney’s fees.—In an action brought by a covered employee or the dependents of the covered employee under subsection (c) of this section, the covered employee or the dependents of the covered employee, the self-insured employer, the insurer, the Subsequent Injury Fund, and the Uninsured Employers’ Fund shall pay court costs and attorney’s fees in the proportion that the amount received by each bears to the whole amount paid in settlement of any claim or satisfaction of any judgment obtained in the case. LE § 9-902(e)-(f). According to appellant, LE § 9-902 reduces the amount of the reimbursement to the workers’ compensation insurer by a proportional amount of attorney’s fees and costs; therefore, what is due and owing as reimbursement under Ins. § 19-513(e) is the amount of the workers’ compensation lien less attorney fees and costs. Appellant contends that only after calculating the amount due and owing pursuant to this manner under LE § 9-902 can the court determine the amount of unreimbursed workers’ compensation benefits that Progressive is entitled to deduct under Ins. § 19-513(e) from the benefits payable under its UIM coverage. ¹⁵⁸ Applied to the facts here, appellant concludes that the amount of unreimbursed workers’ compensation benefits is $39,708.32.

Appellant’s finding is based on the following calculations: first, under LE § 9-902, the third-party recovery (“tortfeasor money”) of $25,000 must be reduced by a forty percent 4 attorney fee of $10,000, and costs of $4,040.59, leaving the amount of $10,959.41 which IWIF is entitled to recover. 5 Next, the IWIF lien of $84,446.21 must also be reduced, under LE § 9-902, by court costs and attorney’s fees of forty percent, leaving a balance of $50,667.73. Lastly, the IWIF lien of $50,667.73 must be reduced by the amount of $10,959.41 that IWIF is entitled to recover from the tortfeasor money, resulting in the final amount of $39,708.32 in unreimbursed workers’ compensation benefits. Following appellant’s calculation of the unreimbursed workers’ compensation benefits is a straightforward application of Ins. § 19-513(e), in which appellant concludes that Progressive may deduct the $39,708.32 in unreimbursed workers’ compensation benefits from the judgment balance of $66,583.90, leaving a final balance of $26,875.58 due and owing from Progressive to appellant. Progressive argues that LE § 9-902 “does not remotely suggest that a workers’ compensation lien is reduced by costs or attorney fees” and appellant’s reliance on the statute is misplaced.

According to Progressive, the instant case is controlled by Ins. § 19-513(e). Progressive interprets Ins. § 19-513(e), as applied to the facts here presented, as meaning that it is not obligated to make payment to appellant under its UIM policy. In support of its interpretation, Progressive argues that the lien held by IWIF in the amount of $84,446.21 represents the amount of benefits recovered by appellant for which IWIF has not been reimbursed, and that ¹⁵⁹ “there is nothing in Ins. § 19-513 or LE § 9-902 that allows the unreimbursed portion of a workers’ compensation lien to be reduced by attorney fees.” Given the fact that workers’ compensation lien of $84,446.21 exceeds the amount of $66,583.90 remaining on the judgment, it is Progressive’s contention that it owes nothing to appellant. We agree with Progressive.

In Parry v. Allstate Insurance Co., 408 Md. 130 , 968 A.2d 1053 (2009), a case involving a UM claim by the estate of a police officer who died as a result of injuries sustained in an accident while on-duty, the Court of Appeals explained the interplay between Ins. § 19-513 and LE § 9-902. Turning first to the Labor and Employment article, the Court noted that LE § 9-901 provides a choice of remedies to an employee injured on the job by a person other than their employer. Id. at 136, 968 A.2d 1053 . The injured employee may elect to (1) file a claim for compensation against the employer; or (2) bring an action for damages against the person or persons liable for the injury or death.

Id. However, in those situations in which the injured