McMichael v. Robertson
| Decision Date | 01 September 1988 |
| Docket Number | No. 277,277 |
| Citation | 549 A.2d 1157,77 Md.App. 208 |
| Parties | Kenneth W. McMICHAEL, et al v. Ronald R. ROBERTSON, et ux. , |
| Court | Court of Special Appeals of Maryland |
James K. Carmody, Annapolis, for appellants.
Ronald H. Jarashow (William A. Franch, and Franch & Jarashow, P.A., on the brief), Annapolis, for appellees.
Argued before WILNER, BISHOP and ALPERT, JJ.
This is yet another appeal whose outcome is decided by that elusive creature known as "legislative intent." It involves an inquiry into the nature, powers, and responsibility of the Property and Casualty Insurance Guaranty Corporation (PCIGC) as created by Sections 504 through 519 of Article 48A of the Maryland Annotated Code. Kenneth W. McMichael and PCIGC (defendants) have appealed a decision of the Circuit Court for Prince George's County denying them the right to set off certain payments made to the plaintiffs from various sources. Ronald R. Robertson (plaintiff) has filed a cross-appeal, claiming that the trial court erred in permitting a setoff deduction for the money he recovered from his insurance company under its personal injury protection (PIP) benefits plan.
The facts are uncomplicated, yet they give rise to a legal question of first impression in this jurisdiction. On August 6, 1987, the court entered a judgment in favor of the plaintiffs in the amounts of $75,000.00 for Ronald R. Robertson and $200,000.00 for his wife, Shirley Robertson, and $1.00 for loss of consortium, against the defendants, Kenneth W. McMichael and Charter Line Bus Company. The defendants had been insured through Transit Casualty Insurance Company, which had been declared insolvent. PCIGC is the Maryland authority that provides a defense to, and pays claims against, an insured when the insured's insurance company becomes insolvent. PCIGC, in this case, did provide the defense and paid part of the judgment, namely $97,480 to Shirley Robertson, $44,808.60 to Ronald R. Robertson, and $1.00 jointly to both plaintiffs. When the remainder of the judgment went unpaid, Plaintiffs, on September 16, 1987, filed a writ of garnishment against PCIGC.
PCIGC responded to the writ of garnishment by asserting that setoffs exist, which it is entitled to deduct from the total judgment. PCIGC alleges that it is entitled to a deduction for any amount received by the plaintiffs from any source that paid the plaintiffs for any loss related to their injuries, regardless of whether the plaintiffs must repay that source. Under this theory, PCIGC claimed the following setoffs:
Category Shirley Robertson Ronald Robertson
-------- ----------------- ----------------
Uninsured Motorist Ins. $ 20,000.00 $20,000.00
PIP (under D.C. Law) 1 $ 43,184.14 $ 8,551.40
Blue Cross/Blue Shield $ 16,394.83
Union Sick Leave Benefit $ 22,841.03
Deductible $ 100.00 $ 100.00
----------------- ----------------
$102,520.00 $28,651.40
Defendants claim that the plaintiffs have received benefits from the above named sources that should be deducted from their judgment. The plaintiffs received their injuries in an automobile accident that occurred on November 27, 1983 in Washington, D.C. Plaintiffs' automobile was insured by Allstate Insurance Company. Each plaintiff received from Allstate $20,000.00 in uninsured motorist benefits, the policy limit. In addition, plaintiffs received personal injury protection benefits in the amounts indicated above. Plaintiffs also possessed medical insurance coverage through Blue Cross/Blue Shield (hereinafter sometimes referred to as BC/BS). These benefits have since been paid back to BC/BS because, under the plaintiffs' contract with them, BC/BS became subrogated to the proceeds of any settlement or judgment received in the plaintiffs' favor. This subrogated amount was paid to BC/BS out of the proceeds received from the partial payment by PCIGC.
Mrs. Robertson was an employee of Safeway and a member of the Food Employees Labor Relations Association and United Food & Commercial Workers Health and Welfare Fund. Pursuant to an agreement between Safeway and the Union, the Union provides its members with disability benefits. Mrs. Robertson received the amount indicated above, but she has since repaid that amount out of the proceeds she received from PCIGC. She was required, under the Union Contract, to repay the Union if she recovered payments from a liable third-party for her injuries.
On December 4, 1987, Judge Jacob Levin in the Circuit Court for Prince George's County, heard arguments on the writ of garnishment against PCIGC. Both parties agreed that the Uninsured Motorist (UM) payments were properly deducted from the amount PCIGC must pay on the judgment. On December 16, 1987, the court entered judgment on the garnishment against PCIGC, finding that PCIGC was entitled, as a setoff against the amount due the plaintiffs, the amount paid by Allstate Insurance Company under Uninsured Motorists coverage and Personal Injury Protection. On the other hand, the court found that PCIGC was not entitled to any amounts that had been paid by Blue Cross/Blue Shield, union sick leave benefits, or "deductible" amounts. From this Order, PCIGC appealed, followed by the cross-appeal of the Robertsons.
Appellants assert that the trial court erred in denying them a right to setoff the amounts plaintiffs received from BC/BS, union sick leave benefits, and the $100.00 deductible. Cross-appellants contend that the trial court erred in permitting PCIGC to deduct the amount they received from PIP benefits.
Subtitle 33 of the Maryland Insurance Code is entitled "Property and Casualty Insurance Guaranty Corporation." It contains sixteen sections, §§ 504 through 519 of Article 48A of the Maryland Code. These sections relate to the organization, operations, duties, power and responsibilities of the PCIGC. 2
Section 504 provides that the purpose of this subtitle is to "provide a mechanism for the prompt payment of covered claims under certain insurance policies and to avoid financial loss to residents of Maryland who are claimants or policyholders of an insurer, ... which has become insolvent; and to provide for the assessment of the cost of such payments and protection among insurers." (Emphasis supplied). The term "covered claims" is defined in § 505(c)(1) to mean "obligations, ... of an insolvent insurer which arise out of the insurance policy contracts of the insolvent insurer issued to residents of this State or which are payable to residents of this State on behalf of insureds of the insolvent insurer."
The procedure for setting forth a claim is set out in Section 512(a):
Any person having a covered claim against an insurer, including surety, under any provision in an insurance policy or surety bond, other than a policy of an insolvent insurer which is also a covered claim, shall be required to exhaust first his right under such policy or bond. Any amount payable on a covered claim under this subtitle shall be reduced by the amount of any recovery under such insurance policy or surety bond.
The present case involves statutory interpretation. The cardinal rule of statutory construction is that the intention of the Legislature be carried out. Such intention is to be gathered from the words of the statute. Kaczorowski v City of Baltimore, 309 Md. 505, 513, 525 A.2d 628 (1987); Atlantic Richfield Co. v. Sybert, 295 Md. 347, 361, 456 A.2d 20 (1983); Blum v. Blum, 295 Md. 135, 140, 453 A.2d 824 (1983). The statute should be construed to effectuate legislative intent. Comptroller of Treasury v. Fairchild Industries, Inc., 303 Md. 280, 284, 493 A.2d 341 (1985); Reid v. State, 302 Md. 811, 816, 490 A.2d 1289 (1985); Willis v. State, 302 Md. 363, 374, 488 A.2d 171 (1985). If there is no ambiguity or obscurity in the language of the statute, there is no need to look elsewhere to ascertain the intent of the General Assembly. Ryder Truck Lines, Inc. v. Kennedy, 296 Md. 528, 535, 463 A.2d 850 (1983); Harden v. Mass Transit Administration, 277 Md. 399, 406, 354 A.2d 817 (1976). Because the plain language of the statute does not clearly indicate what is a "covered claim," we must read and consider all sections of the Act together in order to glean the legislature's intent with respect to deductions required by § 512(a).
PCIGC is a corporation set up by the General Assembly in 1971 "to provide a mechanism for the prompt payment of covered claims under certain insurance policies and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer...." Art. 48A § 504(a). It stands in the shoes of the insolvent insurer and subject to applicable policy limits and conditions, is liable for "covered claims" that could have been brought against the insurer. § 508(a); Muhl 66 Md.App. at 368, 504 A.2d 637.
The parties do not dispute the fact that UM insurance benefits were properly deducted as a setoff. The parties agreed that § 512(a), which requires a person having a covered claim against an insurer to "first exhaust his rights under such policy," means that plaintiffs were required to pursue their own insurance company for UM protection. The parties further agreed that PCIGC was entitled, pursuant to § 512(a), to deduct the amount received by them for UM benefits because UM coverage is considered a "covered claim" within the meaning of the act. UM coverage is mandatory in Maryland. (Art. 48A § 538-547A). Therefore, both defendant's and plaintiff's insurance policies contained UM coverage. When defendant's insurance company became insolvent, PCIGC stepped into its shoes and was obligated to continue UM protection, consequently UM coverage is a covered claim of the insured because it was an obligation of the insolvent insurance company ( § 505(c)(1)). Under ...
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