Subsequent Injury Fund v. Ehrman

CATHELL, Judge. The trial court in this workers’ compensation case fashioned a decision that was unsatisfactory to all parties. Not surprisingly, all the parties subsequently appealed. The statement of facts contained in the claimant’s brief best establishes the process by which the matter reaches us. ⁷⁴⁴ We paraphrase it with certain omissions and addendums as is necessary.

Wayne Ehrman (Claimant) injured his back during the course of his employment while working for Culligan Water Conditioning Company (Employer). 1 Ehrman filed a claim with the Workers’ Compensation Commission (Commission) pursuant to the provisions of Maryland Annotated Code article 101. 2 The Commission, on July 20, 1982, found that Claimant had sustained an accidental injury on May 6, 1982, arising out of and in the course of his employment and that he was temporarily totally disabled. Insurer was ordered to pay temporary total disability benefits and did not contest the findings in any manner. Almost four years later, Insurer was directed to furnish vocational rehabilitation to Claimant. Again, Insurer took no appeal from the Commission’s determination.

On June 14, 1985, Claimant again filed issues with the Commission and, for the first time, impleaded the Subsequent Injury Fund as a party. He requested that the Commission determine the extent of his permanent disability resulting from both the 1982 accident and certain alleged pre-existing conditions. When impleaded, the Subsequent Injury Fund (Fund) responded by filing issues which included: (1) whether Claimant had sustained an accidental injury in 1982 arising out of or in the course of his employment; ⁷⁴⁵ and (2) whether there was a causal connection between the accidental injury of 1982 and Ehrman’s claimed disability. Insurer raised no issues with respect to the 1985 filing.

The Commission reopened the proceeding and conducted a hearing on February 4, 1988, on the issues filed in 1985. On March 14, 1988, the Commission determined that Claimant had not suffered an accidental injury in 1982 arising out of or in the course of his employment and, accordingly, his disability was not a result of that injury. Ehrman appealed to the circuit court and ultimately filed a Motion for Summary Judgment in which he contended that the Commission erred when it permitted the Fund to raise the issues of accidental injury and causal connection at the 1988 hearing. He further asserted that the Fund and Insurer should be estopped from denying the claim.

The trial court incongruously found that Claimant was not entitled to a judgment on his motion but then, nevertheless, granted it based on its conclusion that it had the power to fashion an equitable remedy. On appeal, the Subsequent Injury Fund raises one question to which it presents three arguments: Can the Subsequent Injury Fund be estopped from asserting a defense to its liability based on procedural defaults of another party, the insurer, which occurred before the Fund was made a party? It argues: 1. The Fund has the full authority of a party before the Commission. 2.

There is no basis for estoppel in the Fund’s conduct. 3. The lower court abused its discretion in fashioning what it viewed to be an equitable result. Insurer presents the question differently: Did the trial court err in granting partial summary judgment in favor of the Claimant as a matter of law? It posits four arguments: 1.

The trial court exceeded its statutory appellate authority. ⁷⁴⁶ 2. Even if authorized Claimant waived the issue by failing to raise the procedural issue before the Commission. 3. Even if authorized Claimant’s Motion for Summary Judgment was procedurally deficient. 4. Even if authorized Claimant’s motion was insufficient on the merits.

Claimant also presents the questions somewhat differently. We list his questions in reverse order: 1. Does the Subsequent Injury Fund, a legislatively created entity, possess the power to assert the issues of accidental injury and causal connection upon being impleaded into a proceeding, when it was delegated neither the express nor implied authority to do so in its enabling act or subsequent amendments thereto? 2. Is the Subsequent Injury Fund equitably estopped from contesting the issues of accidental injury and causal connection because it is in the same equitable shoes as the employer and its insurer where inequitable voluntary conduct induced the Claimant’s reliance?

Claimant’s Issues We have determined that the case sub judice can best be resolved by first addressing the issues presented by Claimant. The Law In Subsequent Injury Fund v. State Roads Commission, 35 Md.App. 353, 355 , 370 A.2d 597 (1977), we were faced with a matter of statutory interpretation relating to whether the Fund’s liability may be satisfied when an employer furnishes certain pension benefits. We were charged with interpreting the provisions of Section 33. This Court then quoted from the Court of Appeals’ decision in Mazor v. Dep’t of Correction, 279 Md. 355 , 369 A.2d 82 (1977), six principal guidelines of statutory interpretation: ⁷⁴⁷ “[T]he cardinal rule of construction of a statute is to ascertain and carry out the real intention of the Legislature ____ The primary source from which we glean this intention is the language of the statute itself____ And in construing a statute we accord the words their ordinary and natural signification....

If reasonably possible, a statute is to be read so that no word, phrase, clause or sentence is rendered surplusage or meaningless____ Similarly, wherever possible an interpretation should be given to statutory language which will not lead to absurd consequences____ Moreover, if the statute is part of a general statutory scheme or system, the sections must be read together to ascertain the true intention of the Legislature.” The Court of Appeals, in Subsequent Injury Fund v. Pack, 250 Md. 306, 311 , 242 A.2d 506 (1968), held that the Fund did not have the authority to appeal a Commission order. It emphasized that portion of Maryland Annotated Code article 101 which permitted an appeal to the courts by a “person” and framed the issue before it as: “[W]hether the Fund is a ‘person’.” Id. at 311 , 242 A.2d 506 . The Court then held that the Fund was not a person and thus had no right to appeal. The Court opined that the Fund was “nothing more than a glomerate of money”; that it was not supervised by a governing board with authority to appeal; and that it was not an artificial person, i.e., corporation.

Id. It further opined, however, that if the Legislature intended for the Fund to have the right to appeal, it could have given it that right. Id. The Legislature responded with Chapter 394 of the Acts of 1969, passed as an emergency measure, specifically providing that the Fund would have the right to appeal to the circuit court and to this Court.

This was primarily accomplished by expanding the definition of “person” to include the Fund in the appeal section of Article 101 of the Code. ⁷⁴⁸ In Subsequent Injury Fund v. Howes, 11 Md.App. 325, 333 , 274 A.2d 181 , cert. denied, 261 Md. 725 (1971), we opined that until 1969 the Fund could not be a party in any proceeding and then emphasized that the 1969 Act merely permitted the Fund to appeal. We concluded that even after the enactment of Chapter 394 of the Acts of 1969 the Fund had no standing to be a party before the Commission. Because the Commission’s findings in Howes had predated the modification of the statute, we held the Fund had no standing in the circuit court. Howes, 11 Md.App. at 333 , 274 A.2d 131 .

We did, however, “assume” that the Fund was properly before us under Chapter 394 and, accordingly, disposed of the issues presented on appeal. In discussing the incongruous situation as to the Fund’s status, we said: “However, this dilemma is for legislative, not judicial correction.” Id. Again, the Legislature responded by enacting Chapter 551 of the Laws of 1974. The Act stated that its purpose was to provide that no award could be made against the Fund by the Commission or by any court unless the Fund is a party to the proceeding.

The body of the statute complied with the stated purpose and required the Fund to be a party to any proceeding in which an award was rendered against it. Act of April 30, 1974, Ch. 551, 1974 Md. Laws 1882 . Even more importantly, it added to section 66 of Article 101 a provision that reads: The Fund may be impleaded at any stage of the proceedings, either before the Commission, or on appeal; but if impleaded on appeal from the decision of the Commission or on further appeal to the Special Court of Appeals [Court of Special Appeals], the court shall suspend further proceedings and remand the case to the Commission for further proceedings in order to afford the fund an opportunity to defend the claim. Act of April 30, 1974, Ch. 551, 1974 Md. Laws 1882 .

It is clear that by directly specifying that the Fund was to be a party the Legislature did not intend that the Fund’s status as a party was to be in any way limited in its ability ⁷⁴⁹ to act as a party, i.e., to raise and assert defenses. The last phrase of the 1974 Act requires that, when the Fund is impleaded during a court stage, the proceedings must be suspended and remanded to the Commission so that the Fund can defend the claim. To argue that, while on remand after being impleaded at the court level, the Fund can defend the action but if impleaded prior to the court stage it cannot, is to argue an absurdity. In statutory construction, absurd results are to be avoided.

The Court of Appeals stated in D & Y, Inc. v. Winston, 320 Md. 534, 538 , 578 A.2d 1177 (1990), that “construction of a statute which is unreasonable, illogical, unjust, or inconsistent with common sense should be avoided.” (Citations omitted.) See also Blandon v. State, 304 Md. 316, 319 , 498 A.2d 1195 (1985) (rules of statutory construction require us to avoid construing a statute in a way which would lead to absurd results); Erwin and Shafer, Inc. v. Pabst Brewing Co., Inc., 304 Md. 302, 311 , 498 A.2d 1188 (1985) (a court must shun a construction oí a statute which will lead to absurd consequences); Comptroller of the Treasury v. Fairchild Industries, Inc., 303 Md. 280, 284 , 493 A.2d 341 (1985) (statute should not be construed by forced or subtle interpretations). The Legislature’s 1974 enactment established the Fund’s status as a party by affording it the right to defend against the claim. 3 Section 66(5) of Article 101 further provides that in any case before the Commission when the Fund is impleaded the fund may hire any experts necessary to “defend the action.” (Emphasis added.) As to court actions, Maryland Rule 1-202 provides that “ ‘Action’ means collectively all the steps by which a party seeks to enforce any right in a court....” Thus, an “action” before the Commission means all of the proceedings necessary to ⁷⁵⁰ enforce or to defend against a claim, not just the steps necessary to defend against or assert part of a claim. The Court of Appeals in Anchor Motor Freight, Inc. v. Subsequent Injury Fund, 278 Md. 320, 325 , 363 A.2d 505 (1976), citing its previous case of Subsequent Injury Fund v. Thomas, 275 Md. 628, 632 , 342 A.2d 671 (1975), restated the three prerequisites for compensation from the Fund. They are: (1) a permanent injury from a previous accident or disease; (2) a subsequent compensable disability from a subsequent injury; and (3) the combined disability must be more than 50% and substantially greater than that resulting “from the subsequent injury alone.” Maryland Code Article 101, section 56(a) provides in pertinent part that the word “person” as used in the statute includes the Fund and that no award can be made against the Fund unless it is a party and represented by counsel.

No limitation on its status as a party is contained in or implied by the statute. Section 40 provides that upon application of either party, the Commission “shall order a hearing.” Obviously, the Fund, prior to being impleaded, cannot request a hearing. Sections 40, 56 and 66 appear to afford to the Fund all the rights of a party when impleaded. Thus, the Fund, upon being impleaded, has the right to request a hearing.

The purpose of the hearing contemplated by the statute is to permit the relevant matters to be litigated. Prior conduct of other parties who are, or may be, in an adversarial relationship cannot estop the Fund from full participation as a “party” entitled to raise defenses at that hearing or any subsequent proceedings. It is thus clear, reading Maryland Code Article 101 as a whole, and especially considering the legislative history of the amendments to Sections 56 and 66, that the Legislature intended that the Fund be a complete party in those cases in which its liability for compensation is at issue. See Subsequent Injury Fund v. Chapman, 11 Md.App. 369, 375 , 274 A.2d 870 , aff'd, 262 Md. 367 , 277 A.2d 444 (1971).

As we perceive them, the terms “party,” “person,” “defend the action,” and “afford the Fund an opportunity to defend the ⁷⁵¹ claim” are unambiguous. “[Wjords of the statute are deemed to be used in their ordinary and popular sense.” Thomas, 275 Md. at 632 , 342 A.2d 671 (citations omitted). The terms in no way, in and of themselves, conflict with any other terms or provisions of the Act. They merely permit the Fund to exercise the full right to defend against a claim. While it is correct to state that the Workers’ Compensation Act is to be construed liberally in favor of injured employees, “this does not mean that the Act should be construed to provide for compensation beyond that authorized....” Thomas, 275 Md. at 635, 342 A.2d 671 .

The Act requires that the Fund be impleaded as a person and party to defend against the claim or action before any award can be made against it. The existence of a subsequent accident and a causal connection are prerequisites for establishing the Fund’s liability. To hold that the Fund is not entitled to challenge the conditions precedent to a claim against it would be to make meaningless the Legislature’s granting to the Fund status as a party with an opportunity to defend. It is clear that when the Legislature conferred party status on the Fund it was as a full, not a titular, party.

On the two occasions where the courts have issued holdings limiting the rights of the Fund to be a full party the Legislature has responded by statute clarifying that its intentions were, and are, that the Fund have full rights as a party. (Subsequent Injury Fund v. Pack, supra, modified by Chapter 394 of the Acts of 1969; Subsequent Injury Fund v. Howes, supra, modified by Chapter 551, Acts of 1974.) “In determining ... legislative intent, the court may consider the statute’s legislative history____” Montgomery v. State, 292 Md. 155, 159 , 438 A.2d 490 (1981). The interpretation urged upon us by the appellant would result, and apparently has resulted, in a situation where claimants and employers could, by failing to implead the Fund at an early stage and by either reaching a settlement between them or by an employer’s failure to file issues, foreclose to the Fund an opportunity to assert some of its ⁷⁵² defenses. It is certainly beneficial to the employee at that stage to resolve the accidental injury/causal connection issues without the presence of another adversarial party— the Fund.

The claimant, the employer, and the Commission have the right to implead the Fund. If the timing of that impleading requires issues to be relitigated, it is through no fault of the Fund. The necessity for relitigation is, under those circumstances, caused by the failure of the other parties or the Commission to implead the Fund at an earlier stage. Accordingly, we hold that when the Subsequent Injury Fund is impleaded at any stage of a proceeding pursuant to Maryland Annotated Code article 101, sections 56 and 66, it has the right to assert a complete defense to the claim against it, including raising the issues of accidental injury and causal connection. 4 We shall next address Claimant’s other question— the issue of equitable estoppel.

In addressing this question, ⁷⁵³ we first note that we have been directed to no Maryland cases on this issue and know of no Maryland precedent holding that the Fund would be estopped from raising defenses under circumstances similar to those in this case. Secondly, we discern that, to us, Claimant poses the question with a flawed ingredient, i.e., that the Fund is “in the same equitable shoes” as the Employer. For the reasons that follow, that simply is not correct. Initially, the statute provides that the employer is responsible for compensating that part of the disability caused by the subsequent injury.

Md.Ann.Code art. 101, § 66(1) (1985 & Supp.1990). Whether the Fund is impleaded does not in and of itself affect the employer’s liability. An employer who has previously not contested the existence of an accidental injury or the causal connection and thus is liable for compensation relative to the subsequent injury remains liable to the same extent unless that issue is reopened by the Commission. The Fund’s assertion of defenses need not be automatically attributable to the employer, though it may be if the Commission chooses to reconsider under Section 40(c).

The Commission’s authority to reopen does not necessarily depend upon the impleading of the Fund. In no event is the Fund ever liable for that portion of the disability attributed to the subsequent injury. Md.Ann. Code art. 101, § 66 (1985 & Supp.1990). If the Fund prevails, all that remains for compensatory purposes is that degree of disability attributed solely to the subsequent accident. 5 From the inception of the claim, the employer, and only it, was liable for the subsequently caused disability, if any.

Likewise, the employer is not, and never was, liable for the disability attributable to the pre-existing accident or disease. 6 The Fund should not be affected to its ⁷⁵⁴ detriment by the employer’s lack of diligence in contesting the subsequent accidental injury; nor should the claimant benefit by the timing of the impleading of the Fund. The Fund and the employer, under these circumstances, do not stand in each other’s shoes. We have been cited to no authority and we have found none elsewhere squarely on point involving a Subsequent Injury Fund (or its equivalent). Reversing an intermediate appellate court that had held that a statute put a statutory employer 7 “into privity with the immediate employer”, Race Fork Coal Co. v. Turner, 363 S.E.2d 423, 426 (Va.

App.1987) 8 , the Supreme Court of Virginia in Race Fork Coal Co. v. Turner, 237 Va. 639 , 379 S.E.2d 341 (1989), stated: “We are faced with an adjudication of which the defendant had no notice and, therefore, no opportunity to defend.” Id. at 343. The Fund, in the case at bar, likewise had no notice of the prior hearing and thus no opportunity to defend itself. The Virginia Supreme Court then noted that the interest of the statutory employer and immediate employer (like the relationship between the Fund and the employer in Maryland) were “not sufficiently identical in interest to regard the employer as representing all of the legal rights and defenses the statutory employer may have against the claimant.” Id. It then concluded: Because the rules of privity bind a non-party ... and thus implicate due process, their application does not turn upon the merits of a possible defense but upon the ⁷⁵⁵