Uninsured Employers' Fund v. W.M. Schlosser Co.

J. FREDERICK SHARER, Judge (Retired, Specially Assigned). Jehue Q. Johnson suffered a compensable injury and was awarded workers’ compensation benefits by the Maryland Workers’ Compensation Commission. At issue in this appeal is whether those benefits are the obligation of the Uninsured Employers’ Fund (“the Fund”), appellant, or the Injured Workers’ Insurance Fund (“IWIF”), appellee. Commensurate with its award of benefits to Johnson, the Commission ruled that Johnson’s direct employer, Rose Industrial Services (“Rose”), a subcontractor to W.M. Schlosser Co. (“Schlosser”), was uninsured for workers’ compensation in Maryland.

The Commission also ruled that Schlosser, insured for workers’ compensation in Maryland, was Johnson’s statutory employer, but not liable for payment of the award. Finally, the Commission ordered Rose to pay the awarded benefits. A default by Rose, or its inability to pay the benefits, would result in the Fund becoming liable for payment. On the Fund’s petition for judicial review, the Circuit Court for Baltimore County considered the Fund’s motion for summary judgment, in which Johnson joined, and cross-motions for summary judgment by IWIF, in which Schlosser joined.

The circuit court granted the IWIF/Schlosser motion, and denied the Fund/Johnson motion, both without a hearing. This appeal followed, in which the Fund poses one question, which we have slightly rephrased: ⁶⁰⁴ Did the Commission and circuit court erroneously interpret [Maryland Code, Labor and Employment Article] § 9-508 to impose liability for a workers’ compensation claim upon [the Fund], rather than upon [Schlosser], the insured statutory employer? For the reasons that follow, we shall reverse the judgment of the circuit court granting Schlosser’s motion for summary judgment, with directions to grant the Fund’s motion for summary judgment. FACTS and PROCEEDINGS All parties concede that there is no dispute of material fact, and' that the litigation should be determined by summary judgment.

Of course, each asserts that its motion for summary judgment ought to be granted. Although there is no dispute of fact, we shall set out the background of Johnson’s claim in order to establish the relationship of the parties, vis a vis his claim. Johnson, the claimant, was injured on May 8, 2004, at the Blue Plains Wastewater Treatment Plant (“Blue Plains”) in the District of Columbia during the course of his employment as a hazardous waste removal technician. His immediate employer was Joanne H. Rose, trading as Rose Industrial Services (“Rose”).

Rose, based in Glen Burnie, Maryland, had contracts for various hazardous materials clean-up projects in Maryland, Virginia, and the District of Columbia. Rose’s work at Blue Plains was being performed pursuant to a subcontract with Schlosser. Johnson, a Maryland resident, was hired by Rose on March 11, 2003, at a location in Pasadena, Maryland, where Rose stored its equipment. Johnson worked on several clean-up projects and also made repairs to Rose’s trucks, which were kept in Glen Burnie.

Johnson worked 12-hour shifts, but usually did not know at which site he would be working from one day to the next. He either reported to work at one of the Maryland clean-up sites to receive his assignments, or was ⁶⁰⁵ picked up at his home by other Rose employees and taken to a work site. Johnson worked concurrently at three different clean-up sites in Maryland, one site in Virginia, and at Blue Plains in the District of Columbia. He characterized his presence at Blue Plains as “off and on.” In the week he was injured, Johnson worked 12 hours at Blue Plains.

Following his injury, Johnson filed a claim with the Maryland Workers’ Compensation Commission. Although Rose carried workers’ compensation insurance in the District of Columbia, it did not carry such coverage in Maryland. Therefore, Rose was found to be an uninsured employer and the claim before the Commission was defended by the Fund. The Fund impleaded Schlosser, the principal contractor for the Blue Plains project, as Johnson’s “statutory employer,” pursuant to Md.Code (1991, 1999 Repl.Vol.) Labor & Employment (“LE”) § 9-508. 1 The Commission ruled that Schlosser was Johnson’s statutory employer, but that Schlosser, nevertheless, was not liable for Johnson’s claim.

In its order, the Commission set forth its reasoning: Section 9-508 of the Labor Article states that [the statutory employer] is only liable to pay compensation they would have been liable to pay if they were the direct employer. There would be no jurisdiction over a claim against W.M. Schlosser Co., Inc. if it were the direct employer; therefore, W.M. Schlosser Co., Inc. cannot be held liable as a statutory employer. The Commission ordered Rose (and the Fund) to pay the ordered benefits to Johnson. ⁶⁰⁶ The Fund sought judicial review in the Circuit Court for Baltimore County, and requested a jury trial. The Fund later filed a motion for summary judgment and requested a hearing.

Schlosser filed a cross-motion for summary judgment. Although the parties have not provided us with the motions, our review of the record reveals that the only issue presented to the circuit court was whether Schlosser was liable, as a statutory employer, to Johnson for workers’ compensation benefits under the Maryland Act. Although a hearing on the motions was scheduled, it was canceled for reasons that do not appear in the record, and the circuit court ruled on the motions without a hearing, as we have noted. The court denied the Fund’s motion for summary judgment and granted Schlosser’s cross-motion for summary judgment.

The Fund’s appeal to this Court followed. DISCUSSION Standard of Review—Summary Judgment “The standard of appellate review of a trial court’s grant of summary judgment under Maryland Rule 2-501 is whether the lower court was legally correct.” Commercial Union Ins. Co. v. Harleysville Mut. Ins.

Co., 110 Md.App. 45, 51 , 675 A.2d 1059 (1996). Thus, the “standard of review in a workers’ compensation claim disposed of on summary judgment by the circuit court is de novo.” Uninsured Employers’ Fund v. Danner, 388 Md. 649, 658-59 , 882 A.2d 271 (2005). Before ruling on a motion for summary judgment, the trial court must determine whether there is a genuine dispute regarding any material fact that “would preclude the entry of summary judgment.” Commercial Union Ins. Co., 110 Md. App. at 51 , 675 A.2d 1059 . “The general rules pertaining to the entry of summary judgment apply with equal force on appeals from decisions of the Commission.” Id. at 51-52 , 675 A.2d 1059 ; See Baltimore County v. Kelly, 391 Md. 64 , 891 A.2d 1103 (2006); Inner Harbor Warehouse, Inc. v. Myers, 321 Md. 363, 367-68 , 582 A.2d 1244 (1990).

Here, we conclude, and the parties agree, that there was no dispute regard ⁶⁰⁷ ing any material fact before the circuit court. Rather, the sole question was one of the application of the statute. Although we agree that this is a proper case for summary judgment, we do not agree with the circuit court’s ruling. At the outset, we point out that the court granted summary judgment without a hearing, when a hearing had been requested.

To do so is contrary to Md. Rule 2—311(f), which provides: A party desiring a hearing on a motion, other than a motion filed pursuant to Rule 2-532, 2-533, or 2-534, shall request the hearing in the motion or response under the heading “Request for Hearing.” Except when a rule expressly provides for a hearing, the court shall determine in each case whether a hearing will be held, but the court may not render a decision that is dispositive of a claim or defense without a hearing if one was requested as provided in this section. (Emphasis added). “For a decision to be deemed dispositive of a claim or defense within the contemplation of Rule 2—311(f), it must actually and formally dispose of the claim or defense.” Shelton v. Kirson, 119 Md.App. 325, 330 , 705 A.2d 25 , cert. denied, 349 Md. 236 , 707 A.2d 1329 (1998). Summary judgment in this case resulted in the affirmance of the decision of the Commission; thus, the court formally disposed of the case by its ruling. Because the Fund requested a hearing, the parties were entitled to be heard on the motions, and it was error for the court to rule without a hearing.

Notwithstanding that, in this Court, the Fund raised the issue of the circuit court’s failure to hold a hearing on the motions for summary judgment, counsel for the Fund stated at oral argument that the Fund’s preference was not to have this Court decide the case on that basis. We, therefore, deem the issue to have been waived, and will address the merits of the case. Muse v. State, 146 Md.App. 395, 398 , 807 A.2d 113 (2002) (appellate court does not address an issue withdrawn by the appellant after the brief is filed). ⁶⁰⁸ The Statutory Parties The Injured Workers’ Insurance Fund and The Uninsured Employers’ Fund “Maryland was the first state in the nation to enact a workers’ compensation statute.” Harris v. Board of Education of Howard County, 375 Md. 21, 28 , 825 A.2d 365 (2003). The initial legislation, Chapter 139 of the Acts of 1902, created the “Employers and Employees Co-operative Insurance Fund.” 1902 Md. Laws, Ch. 139, § 4.

However, that Act was declared unconstitutional by the Court of Common Pleas of Baltimore City. Franklin v. United Railways and Elec. Co., 2 Balt. City Repts 309 (1904). “The current Maryland Workers’ Compensation Act was initially enacted by Chapter 800 of the Acts of 1914.” Harris, 375 Md. at 28-29 , 825 A.2d 365 .

The stated purpose of the 1914 Act was to compensate employees for accidental injuries sustained in certain enumerated “extra-hazardous employments.” 1914 Md. Laws, Ch. 800, Preamble; Harris, 375 Md. at 29 , 825 A.2d 365 . As to those enumerated employments, the Act eliminated the employers’ fellow servant defense, as well as the defenses of contributory negligence and assumption of risk. 1914 Md. Laws, Ch. 800, § 14. The Act required employers to secure compensation for employees by making payments into a “State Accident Fund,” through either private insurance or self-insurance. Id., § 15.

The State Accident Fund, created by § 16 of the 1914 Act, and codified as former Article 101, § 16 of the Maryland Code, 2 ultimately formed the basis for what is now IWIF. 3 While the applicability of the Workers’ Compensation Act is no longer limited to employees engaged in “extra-hazardous” ⁶⁰⁹ occupations, IWIF has been described as a “statutory insurer of last resort” because it is a source of insurance for employers in ultra-hazardous occupations who might be otherwise unable to obtain insurance in the commercial market. Maryland Workers’ Compensation Handbook § 2.0S[9] (2007). The Uninsured Employers Fund (UEF), on the other hand, has been described as the de facto insurer of last result. 86 Op. Att’y.

Gen. 211, 212 (2001); Maryland Workers’ Compensation Handbook § 2.03[4]. Created in 1967, the purpose of the Fund “is to ‘protect injured workers whose employers failed, either willfully or negligently, to carry workers’ compensation insurance.’ ” 86 Op. Att’y Gen. at 212 (quoting Uninsured Employers’ Fund v. Lutter, 342 Md. 334, 345 , 676 A.2d 51 (1996)). See LE § 10-304.

If an uninsured employer fails to pay an award of compensation, the injured employee may apply to the Fund for payment of the award. LE § 9-1002(e). When the Fund pays an award of compensation, it becomes subrogated to the rights of the injured employee against the uninsured employer to collect the amount paid, and it may, and often does, fully participate in the proceedings concerning the injured worker’s claim. 4 LE § 9-1003. The Fund is further sustained by the imposition of assessments against uninsured employers (LE § 9-1005), insurers (LE § 9-1006), and against awards and settlements (LE § 9-1007).

As described by one commentator, the Fund protects its interests in this regard, “by pointing its finger at every possible insurer/self-insurer or statutory employer/employer connected with a claim.” Maryland Workers’ Compensation Handbook § 2.03[4], Stated otherwise, the Fund’s litigation efforts are largely focused on pursuing any other entity that might be liable to pay an award, thereby reducing payments from the Fund. The result is that in cases where the “com ⁶¹⁰ pensability of an injury is clear[,] the claimant is assured that benefits shall be paid; the question is, by whom?” Id. That, of course, is the issue presented in this appeal. Statutory Employer The question before us, then, is whether