eNotes: Workers’ Compensation – August 2022 – Maryland

SIGNIFICANT CASE SUMMARIES

MD CASE SUMMARY

Conley v. Trumbull Insurance Company and Mars Supermarkets, Inc.
In the Court of Special Appeals- Unreported
Filed: July 18, 2022

The carrier does not waive its right to recoup its lien in a related third party action when the carrier does not expressly preserve its statutory lien in the language of the Agreement of Final Compromise and Settlement.

Background

Charles Conley was injured on the job by a negligent third party tortfeasor. He filed a WC claim against his Employer and the Insurer. A suit was filed against the third party. Eventually Claimant settled his WC claim against Employer and Insurer. The Agreement of Final Compromise and Settlement contained waivers of various rights held by Claimant. There was no mention or preservation of rights of third party rights of the Employer and Insurer contained within the Agreement of Final Compromise. At the time of the third party settlement Claimant’s attorneys, Appellants, retained the share of the third party lien proceeds due under 9-902 to the Employer and Insurer. The Appellants reasoned that since the Agreement of Final Compromise was silent as to the Employer and Insurer’s rights to subrogate and recover their lien, those rights were waived. The Employer/Insurer/Appellees filed suit to recoup the lien proceeds.

Before the Circuit Court, Appellees argued that 9-902 provides rights to recover Employer and Insurer’s WC costs against a third party tortfeasor that are statutory and cannot be waived by an absence of preservation in a separate contract. Appellees also argued that Appellees were unjustly enriched by retention of the Employer and Insurer’s lien recovery. The Circuit Court ruled in favor of Appellees and Appellants then appealed to the Court of Special Appeals.

Holding

The Court of Special Appeals considers the version of 9-902 that was in effect at the time of the claim in question, and rule that 9-902 contained no provision that allowed waiver of the statutory right to subrogation. The Court goes on to rule that a different statutory provision 9-104 provides that neither a Claimant nor an Employer can waive the rights of the opposing party. However the Court of Special Appeals finds that the subsequent version of 9-902 does now provide that the right of subrogation can be waived and so going forward 9-104 would not ensure the same result in a case brought under the current version of 9-902.

Takeaway

If Employer/Insurer wishes to preserve its subrogation rights in a third party action it may be the wisest course of action to preserve those rights expressly in any Agreement of Final Compromise of a Workers’ Compensation claim while the third party claim is pending.

Questions about this case can be directed to Ruth Jacobs at (443) 641-0573 or rjacobs@tthlaw.com.