Tabler v. Medical Mutual Liability Insurance Society

ORTH, Judge. When the dominant insurer in Maryland decided to cease writing medical malpractice insurance in this State, 1 the General Assembly responded by creating the Medical Mutual Liability Insurance Society of Maryland (the Society). Acts 1975, Ch. 544; Md.Code (1957, 1979 Repl.Vol., 1983 Cum.Supp.), Art. 48A, §§ 548-556. The purpose of the Society is: to provide for the payment of indemnities to persons suffering injury arising out of the rendering of or the failure to render professional services by physicians and to provide means whereby physicians may obtain insur ¹⁹² anee against liability for injury due to the rendering of or failure to render any professional service____Art. 48A, § 548.

This physician controlled insurance company provides medical liability insurance to a majority of the physicians practicing in this State. See Attorney General v. Johnson, 282 Md. 274, 280-281 , 385 A.2d 57 , appeal dismissed, 439 U.S. 805 , 99 S.Ct. 60 , 58 L.Ed.2d 97 (1978). The same year in which the Society was created, a Medical Malpractice Insurance Study Committee, appointed by the presiding officers of both houses of the General Assembly, in its subsequent report to the legislature, indicated that the creation of the Society “represented only temporary relief for ‘the myriad problems of medical malpractice insurance,’ ” and recommended additional legislation. Id. 282 Md. at 281 , 385 A.2d 57 .

The result was the Health Care Malpractice Claims statute, Acts 1976, Ch. 235; Md. Code (1974, 1984 Repl.Vol.) §§ 3-2A-01 to 3-2A-09 of the Courts and Judicial Proceedings Article (the Act). “In general, the Act requires certain medical malpractice claims to be submitted to an arbitration panel for initial ascertainment of liability and damages before resort may be had to a court of law for final determination.” Oxtoby v. McGowan, 294 Md. 83, 86 , 447 A.2d 860 (1982). The Act created the Health Claims Arbitration Office (the Office) headed by a Director, § 3-2A-03(a). The Office promulgated “general regulations” implementing the Act. COMAR, Title 01, Subtitle 03, Ch. 01.

The Society’s standard policy of medical professional liability insurance, which has been approved by and is on file with the Maryland Insurance Division, requires the Society to pay on behalf of its insured physicians certain sums which the insureds may become legally obligated to pay as damages because of medical malpractice, and to provide the insured physicians with a defense to any action at law potentially within policy coverage. It must also pay all costs taxed against the insured. Section 3-2A-05(d) of the Act provides: ¹⁹³ The arbitration panel shall first determine the issue of liability with respect to a claim referred to it. If the arbitration panel determines that the health care provider is not liable to the claimant or claimants the award shall be in favor of the health care provider.

If the arbitration panel determines that a health care provider is liable to the claimant or claimants, it shall then consider, assess, and apportion appropriate damages against one or more of the health care providers that it has found to be liable. Section 3-2A-05(e) declares that “[t]he award shall include an assessment of costs, including the arbitrators’ fees.” COMAR 01.03.01.12 D.(l) reads: An arbitration panel shall determine the arbitration costs, including arbitrators’ fees, and may apportion the costs among parties. It is not disputed that in the light of these statutes and the regulation that various arbitration panels in their awards have assessed arbitration costs against health care providers, 2 including physicians insured by the Society, in whose favor awards have been made on the issue of liability. The Society, aggrieved by this, filed a petition in the Baltimore City Court (now the Circuit Court for Baltimore City) against Walter R. Tabler, Director of the Office, and Dr. H. Louis Stettler, III, Secretary of the Department of Budget and Fiscal Planning (Tabler). 3 The Society requested the following relief: ¹⁹⁴ A. A declaratory judgment to the effect that regulation 01.03.01.12 D.(l) is invalid and unenforceable; 4 ' B. The issuance of a writ of mandamus directing the Director to issue an instruction to all health claims arbitration panel members "that under no circumstances may costs of arbitration be assessed against any party to a Health Claims Arbitration procedure in whose favor an award has been rendered, or in any proceeding where the case has been terminated by voluntary dismissal or otherwise, prior to the entry of an arbitration award;” C. and D. The issuance of a decree permanently (C) and interlocutorily (D) enjoining Respondents from further efforts to collect any costs of arbitration which have heretofor or may be, assessed against a health care provider in any case where an award has been entered in favor of the health care provider, or where the proceeding in arbitration has been terminated, by voluntary dismissal or otherwise, prior to the entry of an arbitration award; E. The award of damages to which the Society may be entitled by virtue of the collection of arbitration costs wrongfully assessed against. physicians insured by it.

After the petition was duly answered, the Society filed a motion requesting that the court: . (a) grant summary judgment in favor of it by issuing a declaratory judgment to the effect that regulation 01.03.-01.12 D.(l) is invalid and unenforceable; (b) issue a writ of mandamus directing the Director to issue an instruction to all health claims arbitration panel members that under no circumstances may costs of arbitration be assessed against any party to a health claims arbitration proceeding in whose favor an award has been rendered, or in any proceeding where the case has been terminated, by voluntary dismissal or otherwise, prior to the entry of an arbitration award; ¹⁹⁵ (c) issue a decree permanently enjoining Tabler, the Office and the Central Collection Unit from further efforts to collect any costs of arbitration which have hereto-for been assessed against a health care provider in any case where an award has been entered in favor of the health care provider, or where the proceeding in arbitration has been terminated, by a voluntary dismissal or otherwise, prior to the entry of an arbitration award. Tabler filed a motion for summary judgment in their favor “because there is no material dispute as to fact and they are entitled to judgment as a matter of law.” Under date of 4 May 1983 the court executed an order which vacated two orders previously issued on the motions and which stated that it was pursuant to and incorporated therein an “opinion letter” of the court dated 1 March 1983. The order: (1) declared that COMAR 01.03.01.12 D.(1) was invalid as beyond the scope of the statutory provision, § 3-2A-05(d) of the Act; (2) called for the issuance of a writ of mandamus to the Director ordering him to instruct all health claims arbitration panel members that costs may not be assessed against any party in whose favor an award has been entered in an arbitration proceeding; (3) denied all other relief requested by the Society.

In the court’s opinion letter incorporated in the order the court decided the “two main issues” it deemed were before it. The first is relevant to these appeals: Is COMAR 0.1.03.01.12 D.(1) “an unfair and improper interpretation” of § 3-2A-05(d) of the Act? The court thought that “the administrative regulation clearly goes beyond the language of the statute____ [It] clearly exceeds its statutory origin.” It found “as a fact that [the regulation] is an incorrect interpretation to Section 3-2A-05(d)____” The court added that it found that the Society has had more than sufficient time to raise the issue with respect to ongoing cases, and, therefore, the court denies ¹⁹⁶ the requests contained in paragraphs C, D and E of the Society’s petition. Tabler appealed from the order of 4 May 1983.

The Society cross-appealed from those portions of the order denying relief it requested. We ordered, ex mero motu, the issuance of a writ of certiorari prior to consideration by the Court of Special Appeals. On appeal Tabler asks only whether COMAR 01.03.01.12 D.(1) is consistent with § 3-2A-05 of the Act. On cross-appeal the Society asks whether the trial court erred in (1) failing to invalidate COMAR 01.03.01.12 F.(3) permitting health care claims arbitration costs to be assessed and apportioned among the parties prior to entry of an award by the arbitration panel; (2) failing to apply its order and writ of mandamus prohibiting the imposition of arbitration costs on prevailing parties to cases where costs of arbitration have already been imposed on prevailing parties.

I. We shall not decide the validity of COMAR 01.03.01.-12 F.(3). That regulation provides: An arbitration panel shall determine the amount of arbitration costs incurred before settlement and may apportion the cost among the parties unless the settlement provides for payment of the costs. The validity vel non of the regulation was never presented to the trial court as such and express reference to it is made for the first time in the Society’s brief as cross-appellant. Obviously, the regulation concerns cases which have been terminated by voluntary dismissal or otherwise prior to the entry of an arbitration award.

Although such cases are included in the relief requested by the Society’s petition and in the relief requested in its motion for summary judgment, the body of the petition contained no allegations with respect to such cases. It is clear from the events leading to the final judgment in this case that the matter of assess ¹⁹⁷ ment of costs where a health claim had been terminated by voluntary dismissal or otherwise prior to the entry of an arbitration award was never litigated in the trial court. We recount those events. On 8 March 1983 the court signed an order which included a direction to the Director to issue an instruction to all health claims arbitration panel members that under no circumstances may costs of arbitration be assessed or levied ... in any health claims arbitration proceeding where the case has been terminated, by voluntary dismissal or otherwise, prior to the entry of an arbitration award.

In memoranda in support of a motion by Tabler to revise the judgment, it was pointed out that the matter of assessment of costs as to cases settled prior to an award had not been litigated. Tabler expressed and documented the serious problems which would result were the order to stand as rendered. A supplemental memorandum in support of Tablets motion to revise concluded that in light of the problems involved and to avoid present unnecessary financial hardship to the Health Claims Arbitration Office and unnecessary problems on appeal, [Tabler] asks this Court to vacate the Opinion and Orders entered in this case and enter a revised Order (a copy of the proposed order is attached). If the Court and counsel are agreeable to this course of action, [Tabler] will dismiss their present appeal and take an appeal from the Court’s revised order.

Tabler’s suggestion in this regard was followed. By its order of 4 May 1983, approved in form by the Society, the court vacated its previous orders. The new and final order made no reference, as we have seen supra, to the assessment of costs with respect to cases settled before an arbitration award. It is clear that neither the matter of the validity of COMAR 01.03.01.12 F.(3) nor the propriety of the purported assessment of costs in cases settled prior to an arbitration award was properly before the court, and that there was no final decision regarding them.

Therefore, we ¹⁹⁸ shall not entertain any issue pertaining to the regulation or such cases. Md.Rule 885.

II

In arguing the validity of COMAR 01.30.01.12 D.(l) the Society notes that when the Office regulations were adopted shortly after the passage of the Act, the Director had “no explicit statutory authority to promulgate regulations at all.” It is correct that the Director was not expressly granted the power to adopt “reasonable rules and regulations to govern procedures” until § 3-2A-03 of the Act was amended by Acts 1981, Ch. 588 which added subsection (b)(3) to so provide. But after observing that “the regulation at issue in this case was adopted long before the director was given express power to adopt general regulations,” the Society presents no argument that therefore the regulation is invalid. Rather, it proceeds on the assumption “for the sake of argument” that the Director did have the power to adopt the regulation. The question of