Cooper v. Wicomico County, Dept. of Public Works

• Decision Date: 30 November 1976
• Docket Number: No. 8,8
• Parties: Ollie Richard COOPER v. WICOMICO COUNTY, DEPARTMENT OF PUBLIC WORKS, at al.
• Court: Maryland Court of Appeals

Page 596

278 Md. 596

366 A.2d 55

Ollie Richard COOPER v. WICOMICO COUNTY, DEPARTMENT OF PUBLIC WORKS, at al.

No. 8.

Court of Appeals of Maryland.

Nov. 30, 1976.

Don E. Richardson, Salisbury (Kenneth V. Heland, Salisbury, on the brief) for appellant.

Theodore B. Cornblatt and Alfred M. Porth, Baltimore (Smith, Somerville & Case, Baltimore, on the brief) for appellees.

Argued before MURPHY, C. J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and ORTH, JJ.

MURPHY, Chief Judge.

We granted certiorari in this workmen's compensation case to determine whether a supplemental award of compensation to the appellant Cooper, which increased the amounts payable to him under a prior award for permanent total disability, unconstitutionally disturbed the contractual or other vested rights of the appellees-Cooper's employer and the employer's insurer. ¹ On February 7, 1969, Cooper sustained an accidental injury in the course of his employment by Wicomico County. On March 17, 1971, the Commission found Cooper to be totally and permanently disabled and ordered that he paid compensation at the rate of $45.33 per week, not to exceed $30,000 in total, the maximum payable at that time under Maryland Code (1957, 1964 Repl. Vol.), Art. 101, § 36(1)(a). By Chapter 832 of the Laws of Maryland of 1973 the General Assembly added new subsection (10) to § 36; it provided in pertinent part that any employee permanently and totally disabled as a result of any injury suffered before July 1, 1973, and after July 1, 1965, who, on July 1, 1973, was receiving benefits for permanent and total disability 'shall be entitled to a supplemental allowance of compensation as calculated under paragraph (b) . . . (to) continue only for the number of weeks that the employee is entitled to receive benefits under his original award.' Paragraph (b) of § 36(10) directs how the additional allowances are to be calculated; the result in this case, under the order of the Workmen's Compensation Commission of August 1, 1973 directing the appellees to comply with the mandate of ch. 832 of the Laws of 1973, was to increase the weekly payments to Cooper from $45.33 to $57.96 and the limit of the total payable from $30,000 to $38,397.00.

On appeal to the Circuit Court for Wicomico County, Judge Pollitt accepted the argument of the appellees that ch. 832 could not constitutionally be applied retrospectively, although the legislature clearly intended that it should, since to do so would divest or otherwise adversely affect contractual or other vested rights of the appellees by increasing their obligation under the basic award to pay the maximum set by the law as of the time of the injury. Judge Pollitt reversed the Commission, holding that ch. 832 was unconstitutional and invalid.

We think the lower court was correct if the operational effect of ch. 832 requires an employer or insurer to pay more than it was required to pay under the law in effect at the time of the injury. It is generally held that the basis of a compensation award is contractual and that the amount payable thereunder by an employer or insurer cannot be increased retrospectively.

In State Industrial Commission v. Nordenholt Corp., 259 U.S. 263, 271, 42 S.Ct. 473, 474, 66 L.Ed. 933 (1922), the Supreme Court said:

". . . An award under the Workmen's Compensation Law is not made on the theory that a tort has been committed; on the contrary, it is upon the theory that the statute giving the commission power to make an award is read into and becomes a part of the contract. . . . The contract of employment, by virtue of the statute, contains an implied provision that the employer, if the employee be injured, will pay to him a certain sum to compensate for the injuries sustained, or if death results, a certain sum to dependents. . . . It is a part of the compensation agreed to be paid for services rendered in the course of the employment."

To the same effect is Bradford Electric Light Co. v. Clapper, 286 U.S. 145, 159, 52 S.Ct. 571, 575, 76 L.Ed. 1026 (1932), where the Court observed that '(f)or the purpose of that act, as of the workmen's compensation laws of most other states, is to provide . . . not only for employees a remedy which is both expeditious and independent of proof of fault, but also for employers a liability which is limited and determinate.' See also Magnolia Petroleum Co. v. Hunt, 320 U.S. 430, 64 S.Ct. 208, 88 L.Ed. 149 (1944), holding that a workmen's compensation award which has become final is entitled to the same full faith and credit as a judgment of a court, so that another state may not increase that judgment for the same injury. Compare Ireland v. Shipley, 165 Md. 90, 102, 166 A. 593, 598 (1933), wherein our predecessors noted that '(t)he rational basis of the policy underlying the (workmen's compensation) act is that there be some definite time limit in respect to the award of compensation, in order that employers may organize their businesses and insurers adjust their rates with an intelligent comprehension of the demands they may be called upon to meet.'

A number of courts throughout the country have held that to give effect to a legislative enactment increasing the amount payable to an employee to a sum greater than that payable at the time of the injury would impermissibly alter a substantial term of an existing contract between an employer and an employee (and derivately as to an insurer). See, for example, Loveless v. State Workmen's Compensation Commissioner, 155 W.Va. 264, 184 S.E.2d 127 (1971); Mitchell v. U.S.F. & G. Co., 206 F.Supp. 489 (E.D.Tenn.1962); Noffsker v. K. Barnett & Sons, 72 N.M. 471, 384 P.2d 1022 (1963); Lyon v. Wilson, 201 Kan. 768, 443 P.2d 314, 319 (1968). See also Preveslin v. Derby & A. Developing Co., 112 Conn. 129, 151 A. 518 (1930).

We think that Maryland law is consistent with these decisions. In Crowner v. Balto. Butchers Association, 226 Md. 606, 612-13, 175 A.2d 7, 10 (1961), the Court recognized the contractual nature of an employer's obligation to his employees when it observed that the terms of the contract of hire 'were specific as to all factors,' that the claimant's employment was insured 'in accordance with the provisions of the Workmen's Compensation law,' and that '(b)y reason of the contract of hire the employer incurred certain obligations under the Compensation law.' Once these obligations are formally determined by an order of the Workmen's Compensation Commission, the rules of Janda v. General Motors Corp., 237 Md. 161, 169, 205 A.2d 228, 232 (1964), are applicable and consequently '(a) statute, even if the Legislature so intended, will not be applied retrospectively to divest or adversely affect vested rights, to impair the obligation of contracts, or so as to violate the due process clause . . ..' See also Silberman v. Jacobs, 259 Md. 1, 19, 267 A.2d 209, 219 (1970) ('the legislature could not impair . . . (dower rights) retroactively by expanding the husband's interest in the land') Smith v. Westinghouse Electric, 266 Md. 52, 291 A.2d 452 (1972); Cline v. City of Baltimore, 13 Md.App. 337, 345, 283 A.2d 188, 192 (1971), aff'd, 266 Md. 42, 291 A.2d 464 (1972) ('the rights and liabilities of the parties (under the compensation statute) became fixed for the first time (when injury or death, as the case may be, occurred) and the rate of compensation could not thereafter, with respect to such event, be changed').

The facts of a case are, however, all important. The record before us does not contain facts which afford us the opportunity to determine-and the trial court did not go into the matter-whether any substantial vested right of either appellee was divested or any obligation either had was substantially increased. During the course of its passage through the General Assembly, ch. 832 was amended to provide: 'Whenever the State Accident Fund, insurance carrier or self-insured employer makes a supplemental allowance payment under § 36(10) of this article, he shall be reimbursed from the Subsequent Injury Fund (annually by payment made by the State Treasurer).' The Fund was created by ch. 637 of the Laws of 1945, now codified as § 66 of Art. 101 of the Code; its original purpose was to create a Fund to pay previously disabled or injured employees who sustain a subsequent injury which is not of itself disabling but which, coupled with the prior impairment, renders the employee permanently disabled. See Subsequent Injury Fund v. Pack, 250 Md. 306, 242 A.2d 506 (1968). The primary sources of monies for the Fund are payments by employers, insurance carriers and the State Accident Fund of a percentage (originally 1%, now 5%) 'on all awards rendered against such employer . . . for permanent disability or death' and interest earned on the Fund from investments. Whenever the Fund equals or exceeds $1,000,000, no further contributions are required but when the Fund is reduced below $500,00, or the Commission determines that payments from the Fund in the next three months will probably cause it to go below $500,000, contributions must be resumed.

In Gange Lumber Co. v. Rowley, 326 U.S. 295, 66 S.Ct. 125, 90 L.Ed. 85 (1945), the Supreme Court dealt with a Washington statute which was described as neither an employers' liability act nor an ordinary workmen's compensation law, but rather as an industrial insurance statute 'having all the features of an insurance act' (a characterization applicable to the Subsequent Injury Fund).

The Washington statute provided a state Fund created by annual assessments on employers. Awards were paid solely from the Fund and neither the employer nor the employee had a vested interest in the Fund because 'the moneys when collected are public moneys, held and administered by the state, albeit pursuant to the statutory purpose they constitute a 'trust fund' for the benefit of injured workmen and their dependents.' 326 U.S. at 301, 66 S.Ct. at 128. The controversy in Gange stemmed from a...