Brocker Mfg. & Supply Co., Inc. v. Mashburn

• Decision Date: 19 March 1973
• Docket Number: No. 726,726
• Citation: 301 A.2d 501,17 Md.App. 327
• Parties: BROCKER MANUFACTURING AND SUPPLY COMPANY, INCORPORATED, et al. v. William Maddox MASHBURN et al.
• Court: Court of Special Appeals of Maryland

Page 327

17 Md.App. 327

301 A.2d 501

BROCKER MANUFACTURING AND SUPPLY COMPANY, INCORPORATED, et al. v. William Maddox MASHBURN et al.

No. 726.

Court of Special Appeals of Maryland.

March 19, 1973.

K. Donald Proctor, Baltimore, with whom was John S. Hebb, III, Baltimore, on the brief, for appellants.

Joseph S. Matricciani, Baltimore, with whom was Robert E. McManus, Baltimore, on the brief, for appellees.

Argued before GILBERT, MENCHINE and DAVIDSON, JJ.

GILBERT, Judge.

This appeal involves an interpretation of Md.Ann.Code art. 101, § 58. It is concerned with the question of whether vel non an employee, after an award by the Workmen's Compensation Commission, may recover from a third party tortfeasor and continue to derive some benefits under the Workmen's Compensation Act.

The factual situation out of which this case arose is undisputed. On April 11, 1970, William Maddox Mashburn, then age 30, was seriously and permanently injured as the result of an automobile collision occurring on the northern approach to the Baltimore Harbor Tunnel. At that time, a vehicle operated by Mrs. Mary C. Vallone sustained a tire blowout, left the south bound lane in which it had been operated, hurtled the concrete median wall that divided north and south bound traffic, and landed atop the vehicle being driven by Mashburn. That Mashburn was in the course of his employment, and that he is now in a state of akinetic mutism, is not challenged. ¹

A claim was filed with the Workmen's Compensation Commission and after a hearing the Commission passed an award in which it ordered the payment of temporary total disability of Mashburn. Subsequently, on September 16, 1970, the Commission found Mashburn to be totally permanently disabled and ordered the payment of compensation at the rate of $70.00 per week, not to exceed $30,000.00, to the claimant. The next day, the award was amended so that compensation was ordered to be paid at the rate of $85.00 per week, not to exceed $45,000.00. Md.Ann.Code art. 101, § 36(1). In the meantime, the claimant's wife, Diane F. Mashburn, had apparently qualified as the guardian of her husband, Md.Ann.Code art. 93A, § 201(b), and had instituted suit against Mrs. Vallone in the United States District Court for the District of Maryland. The litigation was settled by the payment of the sum of $100,000.00 to Mrs. Mashburn, as guardian of her husband. The Circuit Court of Baltimore City, having assumed jurisdiction over the guardianship, approved the settlement. Aetna Casualty and Surety Company (Aetna), Mashburn's employer's insurer, joined in the release to Mrs. Vallone. Mrs. Mashburn also settled her loss of consortium claim against Mrs. Vallone for $140,000.00. ²

The draft in payment of Mashburn's third party claim was delivered to Aetna's counsel. From the draft, Aetna deducted $29,466.49, as reimbursement for monies it had expended on behalf of Mashburn. Md.Ann.Code art. 101, § 58. The deduction represented the following sums previously paid by the insurer:

                Temporary total disability         $ 2,051.49
                Permanent total disability           9,000.00 3
                Medical bills                       15,470.00
                Hospital bill 9/15/70 to 10/19/70    2,945.00
                

The balance of $70,533.51 was delivered to appellee's then counsel. An attorney's fee of $33,333.33 was deducted, so that the claimant actually received the net sum of $37,200.18.

Aetna, on October 29, 1970, notified the City Hospitals, where the claimant was a patient, that it was no longer responsible for the payment of medical bills that the claimant might incur from October 16, 1970 forward. ⁴

Mashburn's then counsel, upon learning of Aetna's position, sought and obtained a hearing before the Commission on the following issue: 'Payment of Medical Expenses in accordance with Art. 101, Sec. 37.' The hearing was held on December 22, 1970, and on February 4, 1971, the Commission concluded that the 'employer and insurer are not liable for payment of medical expenses as a result of the claimant's accidental injury on April 11, 1970.' The claimant, through his guardian, promptly filed a 'Petition For Appeal' to the Circuit Court for Baltimore County. Appellants filed a demurrer to the petition. Before there was a ruling on the demurrer, the appellees submitted a 'Suggestion For Removal' and the matter was transferred to the Circuit Court for Anne Arundel County, where the demurrer was overruled. The appellants then filed an answer to the petition. The case was decided on its merits by a judge on the basis of a written stipulation of facts, argument of counsel and memoranda of law. The trial court vacated the Workmen's Compensation Commission's order of February 4, 1971, and remanded the case to the Commission 'for entry of an award consistent with the findings in the Memorandum Opinion' dated November 3, 1972. The court declined to hear testimony 'regarding the circumstances surrounding the . . . settlement' of Mrs. Mashburn's claim and denied a request for further hearing. The trial judge rejected the employer's and insurer's contention that the settlement of the third party claim acted to relieve them of the obligation to pay medical expenses, and held that the employer and insurer were 'liable for . . . medical expenses from and after October 19, 1970.'

Here, the appellants argue that the order of the Circuit Court for Anne Arundel County should be reversed because:

1. 'Settlement Of Third Party Claim Instituted By An Employee Constitutes A Bar To Any Subsequent Workmen's Compensation Claim For Payment Of Medical Expenses.'

2. 'The Employer And Insurer Are Entitled To a Credit Of The Net Amount Received By The Claimant In His Third Party Action Against Subsequent Awards By The Workmen's Compensation Commission.'

3. That the employer and insurer are entitled to a credit 'for some portion' of the wife's settlement, and they should be allowed to present testimony in order to determine what 'portion' they are entitled to receive.

It is patent that arguments 1 and 2 are in the alternative.

I

The Workmen's Compensation Act was first adopted in Maryland in 1914. Ch. 800 Md.Laws. Section 57 thereof conferred upon an injured employee an election of remedies whereby he could proceed under the Compensation Act or against the third party, but not both. Hagerstown v. Schreiner, 135 Md. 650, 109 A. 464 (1920). If a claim was made under the Act, then the employer was given the right to proceed against the third party for his own benefit and that of his insurer, provided that any excess over and above their actual expenses was to be paid to the injured employee. Baltimore Transit Co. v. State, 183 Md. 674, 39 A.2d 858 (1944). By the Acts of 1920 and 1922, the employee was granted the right to sue the third party if the employer had not done so within two months following an award of compensation to the injured employee or his dependents. The employee, or his dependents, if successful, were required to reimburse the employer or his insurer out of the proceeds that were recovered. Clough & Molloy, Inc. v. Shilling, 149 Md. 189, 131 A. 343 (1925). In 1957, 'The Commission to Study Maryland's Workmen's Compensation Laws and the Operation of the State Industrial Accident Commission' submitted a report to then Governor McKeldin in which they said:

'The Study Commission believes that the fact that disability or death resulted under circumstances giving rise to an action against a third party tortfeasor, should not a operate, under any circumstances, to decrease the benefits properly allowable under Article 101. To this end we recommend the repeal of Section 59 (now Section 58) and its reenactment with amendments . . ..' ⁵ (Emphasis supplied).

The amendment proposed by the Study Commission was adopted, Ch. 814 (1957) Md.Laws. Section 58 (then § 59) reads in pertinent part as follows 'Where injury . . . for which compensation is payable under this article was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof, the employee . . . may proceed either by law against that other person to recovery damages or against the employer for compensation under this article, or in case of joint tortfeasors against both; and if compensation is claimed and awarded or paid under this article, any employer, if he is self-insured, (or) insurance company . . . may enforce for their benefit . . . the liability of such other person; provided, however, if damages are recovered in excess of the compensation already paid or awarded to be paid under this article, and also any payments made for medical or surgical services, funeral expenses or for any of the other purposes enumerated in § 26 of this article, then any such excess shall be paid to the injured employee . . . less the expenses and costs of action incurred by the employer (or) insurance company. . . . If any such employer (or) insurance company . . . shall not, within two months from the passage of the award . . ., start proceedings to enforce the liability of such other person, the injured employee . . . may enforce the liability of such other person, provided, however, that if damages are recovered the injured employee . . . may first retain therefrom the expenses and costs of action incurred by the said employee . . ., and the employer (or) insurance company . . . shall be reimbursed for the compensation already paid or awarded and any amount or amounts paid for medical or surgical services . . . or for any of the other purposes enumerated in § 36 of this article, except court costs and counsel or attorney's fees, which shall be paid by the injured employee . . . and the employer (or) insurance company . . . in the proportion that the amount received by each shall bear to the whole . . . and the balance in excess of these items shall inure to the injured employee . . ., and the amount thus received by the injured employee . . . shall be in lieu of...