Balt. Cnty. v. Ulrich

Decision Date30 January 2020
Docket NumberNo. 2541, Sept. Term, 2018,2541, Sept. Term, 2018
Citation244 Md.App. 410,223 A.3d 1111
Parties BALTIMORE COUNTY, Maryland v. Charles ULRICH
CourtCourt of Special Appeals of Maryland

Argued by: John S. Hashim, Jr. (Michael E. Field, County Atty., on the brief), Towson, MD, for Appellant.

Argued by: Alison D. Kohler (Dugan, Babij, Tolley & Kohler, LLC, Timonium, MD, Michele Y. Gallagher, Glen Arm, MD), all on the brief, for Appellee.

Panel: Nazarian, Arthur, Gary E. Bair (Specially Assigned), JJ.*

Arthur, J. Baltimore County, as a self-insured employer, paid for medical services to treat an employee's work-related injury. The employee later recovered a monetary settlement in a tort action for medical malpractice in the treatment of that injury. The County demanded reimbursement, out of the settlement proceeds, for all medical expenses that it had paid.

Both the Workers' Compensation Commission and the Circuit Court for Baltimore County determined that the County was not entitled to reimbursement for those medical expenses. The rationale for both decisions was that the medical expenses resulted solely from the work-related injury; the medical expenses would have been incurred even if no malpractice had occurred; and, thus, the malpractice defendants had no liability to pay those medical expenses.

In this appeal, Baltimore County contends that the Commission and the circuit court misconstrued the reimbursement requirement codified at Md. Code (1991, 2016 Repl. Vol.), § 9-902(e) of the Labor and Employment Article ("LE"). Because the County has failed to establish any error, we affirm the judgment upholding the Commission's decision.

A. Injury Arising out of Mr. Ulrich's Employment with Baltimore County

On June 20, 2011, Charles Ulrich suffered an accidental injury arising out of his employment as a maintenance specialist for the Baltimore County Department of Recreation and Parks. Mr. Ulrich had been lifting a heavy trash receptacle when he suddenly felt a painful "snap" near his left elbow.

Later that day, Mr. Ulrich sought treatment at a facility operated by Concentra Health Services. A family practitioner diagnosed him with a strain of the left biceps and forearm. He soon returned to work with restrictions on the maximum weight that he could lift or carry, but he continued to experience pain and weakness in his left arm.

Five weeks after the injury, a hand specialist examined Mr. Ulrich and determined that he had suffered a complete tear of the left distal biceps tendon. Mr. Ulrich stopped working and promptly underwent surgery to repair the tendon


Mr. Ulrich filed a claim with the Workers' Compensation Commission regarding his work-related injury. Baltimore County, a self-insured employer, paid for the surgery and related medical services. The County also paid temporary total disability benefits for an approximately four-month period in which Mr. Ulrich was completely unable to work.

Upon his return to work, Mr. Ulrich found himself unable to meet his job responsibilities, even after limiting his duties to try to avoid any heavy lifting. He retired in early 2013 and received disability retirement benefits through the Employees' Retirement System of Baltimore County. The Workers' Compensation Commission later determined that, under LE § 9-610, these benefits satisfied the County's obligation to pay additional disability compensation under the Workers' Compensation Act.

B. Mr. Ulrich's Medical Malpractice Action

In 2014, Mr. Ulrich filed a malpractice claim against Concentra. He alleged that he "experienced permanent and disabling injuries, a severe shock to his nerves and nervous system, pain, mental anguish, [and] unnecessary procedures, ha[d] been and w[ould] continue to be obligated to receive hospital and medical care, ha[d] been and w[ould] continue to be prevented from engaging in his usual activities, duties and pursuits, ha[d] incurred and w[ould] continue to incur medical expenses in the future, and ha[d] otherwise been hurt, injured and damaged." His certifying expert opined that Concentra's employees had breached the standard of care when they failed to diagnose the ruptured tendon at the time of the initial injury. According to the expert, Mr. Ulrich suffered permanent damage to the strength and functioning of his left arm because of the misdiagnosis.

Concentra removed the action to the United States District Court for the District of Maryland, based on diversity of citizenship.

Through interrogatories, Concentra asked Mr. Ulrich to "[s]tate in detail all of the injuries and damages, including but not limited to physical, mental, emotional, or financial [injuries and damages]" caused by the alleged negligence. In response, he asserted that the permanent weakness in his left arm, in combination with other ailments, left him unable to perform manual labor. He explained that he had retained an expert to calculate the loss of income resulting from his disability. He stated that his "future medical needs [were] still being evaluated" at that time.

C. Settlement of the Medical Malpractice Action

The federal district court referred Mr. Ulrich's malpractice case for a mediation session before a magistrate judge. In advance of the mediation, Mr. Ulrich's attorney summarized the nature of his claims in a letter to the court and a settlement demand letter to opposing counsel.

In both letters, Mr. Ulrich's attorney wrote that "the standard of care requires that a distal biceps tendon rupture

be surgically repaired as soon as possible and no later than 4 weeks following injury because the tendon becomes entrapped in scar tissue after that time[.]" According to his attorney, a "prompt surgical repair ... typically returns a patient to full strength and motion[,]" but a "[d]elayed repair or no repair typically results in decreased strength and endurance." His attorney represented that an expert economist had assessed Mr. Ulrich's "economic loss" and that Mr. Ulrich would seek non-economic damages because he "suffers daily from his weakened left arm." His attorney specified: "No medical bills are being claimed, since Plaintiff's claim in this case was that Mr. Ulrich needed surgery sooner – not that he didn't need surgery."

Before the mediation, a Baltimore County claims adjuster sent Mr. Ulrich a "lien statement" documenting that, in addition to temporary total disability benefits, the County had paid $17,152.42 for medical services to treat his arm injury. Mr. Ulrich's attorney notified the claims adjuster that her client was not seeking to recover medical expenses in the malpractice action and that he did not intend to reimburse the County for those expenses out of the proceeds of the malpractice action.

As a result of the mediation, Mr. Ulrich and Concentra reached a confidential agreement to settle the malpractice claim. After deducting attorneys' fees and other costs of the action, the net proceeds exceeded the total amount of temporary total disability benefits and medical expenses paid by the County.

In a letter informing the claims adjuster of the settlement, Mr. Ulrich's attorney wrote: "As I had told you prior to mediation, no medical bills were claimed in the underlying tort case because Mr. Ulrich would have needed the surgery regardless of the malpractice of Concentra." To satisfy Mr. Ulrich's statutory obligation to reimburse his employer for the "compensation already paid or awarded" (see LE § 9-902(e) ), the attorney sent the County a check equal to the amount of temporary total disability benefits previously paid, minus the County's proportionate share of attorneys' fees and expenses incurred in the malpractice action. The County declined to accept that amount and demanded that Mr. Ulrich also reimburse the County for medical expenses in the amount of $17,152.42, minus a proportionate share of fees and expenses.

D. Decision of the Workers' Compensation Commission

On January 27, 2017, the Workers' Compensation Commission held a hearing on several issues in Mr. Ulrich's case, including his obligation to reimburse the County out of the proceeds of the malpractice settlement. Mr. Ulrich had agreed to reimburse the County for the temporary total disability benefits already paid, after a reduction for the County's proportionate share of fees and expenses. The County contended, however, that it was also entitled to pro rata reimbursement for all amounts it had paid for medical services.

At the hearing, Mr. Ulrich's malpractice attorney acknowledged that the complaint included allegations that Mr. Ulrich had incurred and would continue to incur medical expenses. She characterized those allegations as "boilerplate" language that she would include "at the beginning" of any malpractice case. The attorney explained that she did not ultimately seek to recover any medical expenses in the action, because she reasoned that the medical care providers could not be held liable for the costs of treating the pre-existing, work-related injury. In Mr. Ulrich's view, the surgery would have been required even if the healthcare providers had fully complied with the standard of care in all respects.

The Commissioner concluded that the County was not entitled to reimbursement for the cost of medical services necessary to treat the work-related injury. The Commissioner reasoned that the County would be entitled to reimbursement for the cost of any medical services "necessitated as a result of the medical malpractice." The Commissioner observed, however, that the County did not offer "any evidence" that the medical expenses were "related to malpractice" as opposed to the work-related injury.

On February 1, 2017, the Commission issued an order stating that Mr. Ulrich was entitled to retain all proceeds from the malpractice settlement, except that he must reimburse the County for temporary total disability benefits, after deducting a pro rata share of attorneys' fees and costs. The order stated: "The Employer/Insurer is not...

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