Uninsured Employers' Fund v. Danner

HARRELL, Judge. Gerald E. Danner was injured in Baltimore City while performing carpentry services at the behest of his employer, Timothy Stivers (“Stivers”). Danner lost the use of his left hand and was unable to work. He filed for workers’ compensation benefits with the Workers’ Compensation Commission (“Commission”).

On 14 June 2002 the Commission ordered Stivers to pay workers’ compensation benefits to Danner. Stivers, who did not carry workers’ compensation insurance, did not make the advanced payments. Accordingly, Danner requested payment from the Uninsured Employers’ Fund (“the Fund”), initially in a letter dated 17 July 2002 and thereafter in letters dated 23 August 2002 and 25 September 2002. The Fund refused to pay Danner.

Danner petitioned the Commission for relief and it ordered the Fund to pay, in addition to the earlier ordered benefits, a 40% penalty on all monies due Danner and a $500 attorney’s fee. The Fund sought judicial review in the Circuit Court for Baltimore County. The Circuit Court granted Danner’s motion for summary judgment and denied the Fund’s cross-motion for summary judgment. The Fund appealed to the Court of Special Appeals.

The intermediate appellate court, although holding that the Fund had an obligation to pay compensation to Danner pursuant to the Commission’s 14 June 2002 order, reversed on the penalty and attorney’s fee awards because it believed the Maryland Workers’ Compensation Act did not permit the imposition of such sanctions against the Fund. The Fund petitioned this Court to issue a writ of certiorari to consider the order to pay compensation to Danner. Danner petitioned us regarding the intermediate appellate court’s reversal of the award of the penalty and attorney’s fee. We ⁶⁵⁵ granted both petitions, 384 Md. 448 , 863 A.2d 997 (2004), to consider the following questions, which we reword for clarity: I. Whether the Commission erred by ordering the UEF to pay workers’ compensation benefits when the Fund had no duty to pay the award while the issue of the possible statutory employer was awaiting resolution by the Commission and the ultimate rejection of that issue was before the Circuit Court in the judicial review action;[ 1 ] II.

Whether the Court of Special Appeals erred by reversing the judgment imposing penalties and attorney’s fee for failure to pay workers’ compensation benefits to Danner upon default in payment by an uninsured employer under the 14 June 2002 award? We shall affirm the judgment of the Court of Special Appeals regarding the Fund’s obligation to pay workers’ compensation benefits and the penalty to Danner, but shall reverse with regard to the attorney’s fee award. I. On 16 February 2001, Danner was working as a carpenter on the 2nd floor of the Wentworth Building on 300 Cathedral Street in Baltimore. His employer was Timothy Stivers, who had no workers’ compensation insurance at the time.

One of Danner’s responsibilities while performing wood and trim work was to operate a band saw. He lacerated his left arm when his sweatshirt sleeve became ensnared in the saw blade, pulling his left arm into the blade. As a result, Danner lost substantial use of that arm and hand. Danner filed with the Commission a timely claim for workers’ compensation benefits.

On 6 June 2002, 2 a Commission ⁶⁵⁶ hearing on Danner’s claim was attended by Danner and the Fund. 3 In a 14 June 2002 order, the Commission awarded compensation benefits to Danner, deciding, among other things, the following: 1. Danner sustained an accidental personal injury arising out of and in the course of employment on 16 February 2001; 2. Danner’s disability resulted from that accidental personal injury; 3. Danner be paid temporary total disability at the rate of $400.00, payable weekly beginning 16 February 2001 and continuing as long as the claimant remains temporarily totally disabled; 4. the correct name of the employer to be Timothy Stivers; 5.

Timothy Stivers was uninsured at the time of the accidental injury.... The Commission, at the request of the Fund, 4 deferred a decision on an issue raised by the Fund as to whether an entity identified as “NWJ” was Danner’s statutory employer pursuant to § 9-508 of the Labor and Employment Article of the Maryland Code. (1991, 1999 Repl.Vol.). 5 Neither the Fund nor Stivers sought immediate judicial review of the Commission’s 14 June 2002 Award of Compensation. 6 ⁶⁵⁷ Danner promptly sent Stivers a copy of the award and demanded payment. Nonetheless, Stivers did not pay the award.

On 17 July 2002, Danner notified the Fund of Stivers’s non-payment and requested payment from the Fund. The Fund refused. On 13 September 2002 the Commission decided that NWJ was not Danner’s statutory employer. On the same day, the Fund filed in the Circuit Court for Baltimore County for judicial review regarding the Commission’s decision as to NWJ’s status. 7 The Fund did not seek in that action review of the 14 June 2002 award of benefits to Danner.

Contemporaneous with the filing of the Fund’s initial judicial review petition, Danner filed a complaint with the Commission that the order to pay him workers’ compensation benefits remained unfulfilled. On 26 November 2002 the Commission held a hearing to determine whether Danner was entitled to sanctions against the Fund for its failure to pay the compensation benefits as ordered. On 11 December 2002, the Commission found as follows, in pertinent part: The Commission finds on the issue presented that the answer is “YES”; and finds that the Fund shall pay unto Frederick W. Miller, Esquire, counsel for [Danner], a counsel fee in the amount of $500.00; and shall pay unto the claimant a 40% penalty on all moneys due the claimant beginning February 16, 2001 and ending November 12, 2001. The Fund sought judicial review on the record in the Circuit Court of the sanctions order.

After oral argument, the court granted Danner’s motion for summary judgment and denied ⁶⁵⁸ the Fund’s cross-motion for summary judgment. The Circuit Court directed the Fund to pay Danner the benefits that he was awarded on 14 June 2002 and left undisturbed the Commission’s order for payment of the penalty and attorney’s fee. On 14 August 2003, the Fund appealed to the Court of Special Appeals. It alleged first that workers’ compensation benefits were not owed by the Fund to Danner because the Fund’s legal obligation to pay under the Workers’ Compensation Act had not been triggered.

Second, the Fund alleged that it could not be ordered, as a matter of law, to pay a penalty or an attorney’s fee. As to the first contention, the intermediate appellate court answered that the pendency following the Commission’s 14 June order of the question of whether NWJ was Danner’s statutory employer did not operate to defer the Fund’s legal obligation to pay the unappealed 14 June 2002 compensation award following Stivers’s failure to pay. Uninsured Employers’ Fund v. Danner, 158 Md.App. 502, 514 , 857 A.2d 615, 622 (2004). To the second point, the Court of Special Appeals found that the penalty and attorney’s fee were not authorized by law to be imposed against the Fund.

Id. at 515, 518 , 857 A.2d at 623, 624-25 .

II

The issues framed by the parties in this case are solely legal ones. We must decide: (a) whether the Fund’s obligation to pay a claimant when the employer is in default is suspended by operation of § 9-1002; (b) whether, as a matter of law, a penalty may be assessed against the Fund; and, (c) whether, as a matter of law, an attorney’s fee may be assessed against the Fund. Because this case was decided in the Circuit Court by the grant of summary judgment where cross-motions were filed, our appellate review begins with the question of whether the Circuit Court, in reviewing the Commission’s decision, properly determined that there was no genuine dispute as to a material fact. Richard P. Gilbert & Robert L. Humphreys, Jr., Maryland Workers’ Compensation Handbook § 17.7 at 348 (2d ed.1993).

We then review the resultant questions of law de novo. Md. Rule 2-501(a); John ⁶⁵⁹ son v. Mayor of Balt. City, 387 Md. 1, 5-6 , 874 A.2d 439, 442 (2005) (holding that the standard of review in a workers’ compensation claim disposed of at summary judgment by the Circuit Court is de novo ). A. In interpreting a statute, the overarching objective is to ascertain the legislative intent.

Shah v. Howard County, 337 Md. 248, 254 , 653 A.2d 425, 427 (1995). The primary source from which to determine legislative intent is the plain meaning of the statutory language. Pelican Nat. Bank v. Provident Bank of Maryland, 381 Md. 327, 336 , 849 A.2d 475, 480 (2004). “When the plain meaning is clear and unambiguous, and consistent with both the broad purposes of the legislation and the specific purpose of the provision being interpreted, our inquiry ordinarily is at an end.” Lewis v. State, 348 Md. 648, 653 , 705 A.2d 1128, 1131 (1998).

If, after considering the plain language in its ordinary and common sense meaning, two or more equally plausible interpretations arise, however, then the general purpose, legislative history, and language of the act as a whole is examined in an effort to clarify the ambiguity. Haupt v. State, 340 Md. 462, 471 , 667 A.2d 179, 183 (1995). We will “neither add nor delete words in order to give the statute a meaning.... ” Harris v. Bd. of Educ. of Howard County, 375 Md. 21, 31 , 825 A.2d 365, 371 (2003) (citations omitted). Because this case involves the Workers’ Compensation Act, we also endeavor to interpret its provisions liberally, where possible, in order to effectuate the broad remedial purpose of the statutory scheme. § 9-102; Bowen v. Smith, 342 Md. 449, 454 , 677 A.2d 81, 84 (1996) (citing Para v. Richards Group of Wash.

Ltd. P’ship, 339 Md. 241, 251 , 661 A.2d 737, 742 (1995)). B. The Fund generally exists as a source of last resort in Maryland to provide workers’ compensation benefits to a claimant and protect that claimant from an uninsured employ ⁶⁶⁰ er who refuses to pay a workers’ compensation award. Gilbert & Humphreys, Jr., supra, at § 2.2-4 at 24; Workmen’s Comp. Comm’n v. Property & Casualty Ins.

Guar. Corp., 319 Md. 1 ,. 3, 570 A.2d 323, 324 (1990); Uninsured Employers’ Fund v. Hoy, 23 Md.App. 1, 5 , 325 A.2d 446, 448-49 (1974); Uninsured Employers’ Fund v. Lutter, 342 Md. 334, 361 , 676 A.2d 51, 64 (1996) (Karwacki, J., dissenting); 1967 Md. Laws, Chap. 152, § 86 (stating the purpose of the Uninsured Employer’s Fund). 8 The Fund primarily receives its funds from assessments collected under the Workers’ Compensation Act. It also receives interest and investment income derived from those funds. § 10-314. 9 The General Assembly intended generally to maintain a balance within the Fund of between $3,000,000 and $5,000,000 by directing the Director of the Fund to suspend collection of assessments against employers and insurers when the Fund’s balance equals $5,000,000 and commence collection of the assessments when the balance is less than, or approaches within a three month projection, $3,000,000.00. § 9-1011(a) & (b). 10 When the Commission grants an award against an uninsured employer, it assesses a penalty against that employer to be paid to the Fund. 11 § 9-1005. The Fund also is subrogated to the rights of claimants and uninsured employers in order to assist it in recouping moneys disbursed by the Fund to claimants where a third party ultimately is determined to be hable for those payments. §§ 9-1003-9-1004. ⁶⁶¹ The Fund’s obligation to pay workers arises not from an award of compensation by the Commission, but from § 9-1002 of the Labor and Employment Article.

There are procedural steps within that statute necessary to be accomplished in order to trigger the Fund’s obligation to pay. The statute states, in pertinent part, as follows: § 9-1002 — Payment from the Uninsured Employer’s Fund. (a) In general. — An award is payable out of the Fund in accordance with this section. (b) Default. — Unless an application for review has been timely filed under subsection (g) of this section or a notice of appeal timely served,[ 12 ] an employer is in default on a claim by a covered employee or the dependents of a covered employee if the employer fails to: * * * * (3) pay compensation in accordance with an award within 30 days after the date of the award. * * * * (d) Payment; notice of objection. — (1) On receipt of a notice of default, an employer promptly shall pay the award.

(2) To object to an award, the employer, within 30 days after receipt of the notice of default, shall notify the Commission of the reasons why the employer objects to the award. (3) The notice of objection by the employer to the Commission selves as an application for review under subsection (g) of this section. (e) Application for payment from Fund. — If the employer does not pay the award and does not notify the Commission of its objection to the award in accordance with subsection (d) of this section, the covered employee or the dependents ⁶⁶² of the covered employee may apply to the Director for payment from the Fund. (f) Payment or application for review. — On receipt of an application for payment, the Fund may: (1) pay the award; or (2) apply for review under subsection (g) of this section.

(g) Procedure; review. (1) The provisions of Subtitle 7 of this title about procedure and the right to appeal apply to: (i) a covered employee or the dependents of a covered employee who file a claim; (ii) the uninsured employer; and (iii) the Fund. (2) The right of review of the Fund includes: (i) raising issues; (ii) discovery; and (iii) a hearing before the Commission. The Fund contends that § 9-1002(b), read with § 9-1002(g), operated to stay the Fund’s obligation to pay compensation to Danner pursuant to the 14 June 2002 order because an application for review and a subsequent appeal were timely served by the Fund regarding the reserved issue of whether NWJ was the statutory employer of Danner.

Under those circumstances, the Fund argues, the “employer” cannot be “in default,” within the meaning of § 9-1002(b), for two reasons. First, had NWJ been adjudicated to be a statutory employer, that decision would have placed NWJ in the shoes of Danner’s actual employer, Stivers. Because a demand for payment of benefits was not made to NWJ, the thirty day time period for default by the employer could not have run. 13 On a second, more procedural tack, the mere fact that the Commission had not adjudicated NWJ’s status (and the Fund ultimately ap ⁶⁶³ pealed the adverse determination) precluded the Fund’s obligation from arising. Danner counters that Stivers was in default because he refused to make payment within thirty days following receipt of notice of the 14 June 2002 award of temporary total disability (TTD) benefits, a final order.

That award was not contested on appeal, rendering § 9-1002(g) inapplicable here. Section 9-1002(b) states there is no “default” by an employer if there is a timely application for review to the Commission or a notice of timely appeal served. 14 This provision does not operate regarding Danner’s TTD award, however, in the manner the Fund contends. Although including the descriptive term “temporary,” a temporary total disability benefits award describes the quantity of time the claimant is deemed totally disabled and entitled to receive benefits, not whether the award is an interlocutory order. Great Am.

Ins. Co. v. Havenner, 33 Md.App. 326, 331 , 364 A.2d 95, 98 (1976); §§ 9-618-622. The award of TTD benefits was a final, appealable order because it finally adjudicated Danner’s legal right to TTD benefits. Id. at 332, 364 A.2d at 99 ; see Montgomery County v. Ward, 331 Md. 521, 528-29 , 629 A.2d 619, 623 (1993) (holding that action of administrative agency is final if “it determines or concludes the rights of the parties ...”.) (quoting Md. Comm’n on Human Rel. v. Balt.

Gas & Elec. Co., 296 Md. 46, 56 , 459 A.2d 205, 211 (1983)); see Paolino v. McCormick & Co., 314 Md. 575, 583 , 552 A.2d 868, 871-72 (1989) (holding order denying TTD benefits finally adjudicated claimant’s potential legal rights was final and appealable). Neither Stivers nor the Fund appealed this award. The Fund argues that it could not have appealed the 14 June 2002 order because it was not ordered thereby to pay compensation.

The Fund, however, may appeal an order by the Commission if it is aggrieved by that order. The Fund ⁶⁶⁴ is aggrieved when the claimant satisfies its obligation of application to the Fund under § 9-1002(e) and makes demand for payment. That occurred in this case when Danner’s counsel sent the Fund a letter, dated 17 July 2002. 15 Neither Stivers nor the Fund timely raised any issue concerning the legitimacy or amount of that award. The Fund claims, however, that the deferred administrative adjudication of the issue of whether NWJ was Danner’s statutory employer foreclosed the occurrence of a default under § 9 — 1002(b) because it believes that NWJ, as an alleged statutory employer, also should be considered an “employer” within the meaning of § 9-1002(b).

In Para v. Richards Group of Wash. Ltd. P’Ship, 339 Md. 241, 252 , 661 A.2d 737, 743 (1995), we explained that the statutory employer provision of the Workers’ Compensation Act is for: the protection of the injured worker who might otherwise receive no compensation for work-related injuries if the workers’ immediate employer had not obtained workers’ ⁶⁶⁵ compensation coverage and had little resources to pay damages in a personal injury action. Those provisions permitted the principal contractor to be considered as “an employer” of the subcontractors’ workers. Id. at 253 , 661 A.2d at 743-44 .

The Fund’s view would embrace the term “statutory employer” within the meaning of “employer” in the statute. The Fund’s view may not be reconciled with the language of the statute or the undisputed facts of the present case. Danner had an employer, Stivers, regardless of the resolution of NWJ’s status. Although the issue of whether a statutoiy employer existed, if resolved affirmatively, could relieve the Fund ultimately from the obligation to continue to pay the compensation order, Danner’s “employer” at the time of the award was Stivers.

Moreover, the potentiality for NWJ to be found to be Danner’s statutory employer should not provide the basis for the Fund to avoid, delay, or defer its obligation to pay because the Fund is entitled to full subrogation rights should it pay benefits to a claimant and later gain the right to recover the payment of those benefits from a statutory employer. 16 Hence, the Fund subsequently could recover from NWJ, if, as, and when the latter was determined to be liable, for any payments the Fund made previously to Danner as the result of the 14 June 2002 Commission order. Given that both ⁶⁶⁶ the uninsured employer and the Fund presumably are better able to bear the cost of deferred adjudication of collateral issues than the injured worker who has been found to be entitled to relief, the adverse effects of an unpaid compensation award upon the injured worker are far greater than those