Schaffer v. Subsequent Injury Fund

• Decision Date: 04 September 2012
• Docket Number: No. 548,Sept. Term, 2011.,548
• Citation: 52 A.3d 122,207 Md.App. 255
• Parties: Russell T. SCHAFFER v. SUBSEQUENT INJURY FUND.
• Court: Court of Special Appeals of Maryland

207 Md.App. 255

52 A.3d 122

Russell T. SCHAFFER

v.SUBSEQUENT INJURY FUND.

No. 548, Sept. Term, 2011.

Court of Special Appeals of Maryland.

Sept. 4, 2012.

Stephen J. Kleeman, Towson, MD, for appellant.

Edward W. Goldsmith (Douglas F. Gansler, Atty. Gen., on the brief) Baltimore, MD, for appellee.

Panel: KRAUSER, C.J., MEREDITH and MATRICCIANI, JJ.

MEREDITH, J.

Russell T. Schaffer, appellant, appeals from a judgment of the Circuit Court for Baltimore County, which affirmed a ruling of the Workers' Compensation Commission which held that the Subsequent Injury Fund (“SIF”), appellee, would not have to accelerate the commencement of its payments to Schaffer, notwithstanding the fact that his employer's payments had been accelerated pursuant to a lump sum settlement. For the reasons set forth herein, we will affirm the judgment of the circuit court.

Background

The origins of the Subsequent Injury Fund were described by the Court of Appeals as follows in Carey v. Chessie Computer Servs., Inc., 369 Md. 741, 743–44, 802 A.2d 1060 (2002):

In an effort to ... encourage employers to hire persons with existing disabilities, the Legislature, in 1963, created a balanced mechanism to provide fair compensation to the subsequently injured employee and yet limit the liability of the employer. In what is now Maryland Code, § 9–802(a) of the Labor and Employment Article (LE), the General Assembly directed, in relevant part, that if an employee, already having a permanent impairment, suffers a subsequent occupational injury that results in a permanent disability that is substantially greater, due to the combined effect of the previous impairment and the subsequent injury, than it would have been from the subsequent injury alone, the employer is liable only for the compensation payable for the subsequent injury.

See Maryland Code (1991, 2008 Repl.Vol.), Labor and Employment Article (“LE”), § 9–801, et seq., and § 10–201, et seq.

As the Court of Appeals observed in Subsequent Injury Fund v. Teneyck, 317 Md. 626, 632, 566 A.2d 94 (1989), the legislature's intent—as expressed in LE § 9–801—in creating the SIF was to provide full compensation for an injury to an employee who already had a permanent impairment at the time of suffering another accidental injury. Section 9–801 states:

When a covered employee has a permanent impairment, suffers a subsequent accidental personal injury, occupational disease, or compensable hernia resulting in permanent partial or permanent total disability, and otherwise meets the requirements of this subtitle, it is the intent of this subtitle that the total compensation to which the covered employee is entitled equal the amount of compensation that would be payable for the combined effects of:

(1) the previous impairment; and

(2) the subsequent accidental personal injury, occupational disease, or compensable hernia.

The Court of Appeals observed in the Teneyck case that the statutory scheme of compensation in such cases provides:

[T]he employer pays for the second injury and the Fund pays for “the balance of the total award, so that the sum of the two payments [will] equal the compensation provided by statute for the combined effects of both the previous disability and the subsequent injury.”

317 Md. at 636, 566 A.2d 94 (second alteration in original) (quoting Subsequent Injury Fund v. Pack, 250 Md. 306, 308, 242 A.2d 506 (1968)).

Turning to the facts which gave rise to the present controversy, Robert Schaffer had pre-existing conditions at the time he was employed by Town & Country Driving School. On December 15, 2006, Schaffer was involved in a serious automobile accident during the course of his employment by Town & Country. Schaffer filed a claim for workers' compensation, and because, prior to the accident, he had conditions that were not related to his employment, he sought part of his compensation from the Subsequent Injury Fund.

In early October 2008, before the Workers' Compensation Commission held a hearing on the claim, Schaffer entered into a settlement agreement with his employer, or its insurer, to accept a lump sum payment of $91,025.00 in satisfaction of the employer's share of compensation. Pursuant to LE § 9–722(a), such settlements must be approved by the Commission. On October 8, 2008, the Commission issued an order approving that settlement, and a lump sum payment was made to Schaffer.

The Commission proceeded with a hearing to apportion liability for Schaffer's disability. The Commission found that Schaffer was permanently and totally disabled. The Commission further determined that 55% of Schaffer's disability resulted from the December 15, 2006, accident (when he was employed by Town & Country), and the remaining 45% of Schaffer's disability was attributable to Schaffer's pre-existing conditions. Had there been no lump sum settlement between Schaffer and the employer's insurer, this award would have obligated the employer to pay its portion of the award at the rate of $339 per week, over a period of 367 weeks, commencing on June 18, 2008, and ending in June 2015. On April 13, 2009, the Commission issued an order indicating that the SIF was required to make weekly permanent total disability payments to Schaffer at the rate of $339 per week, commencing on October 9, 2009.

The SIF objected to the commencement date for its payments, and filed a motion for a rehearing. Because benefits from the SIF are to be paid after payment of the employer's share, it was the SIF's position that its payments should not commence until the date the employer's weekly payments would have ended had there been no lump sum settlement with the employer: i.e., June 2015. If the SIF's weekly payments were accelerated to commence on October 9, 2009, then the SIF would be obligated to pay for an additional seven years of benefits for the sole reason that Schaffer had entered into a settlement agreement to which SIF was not a party.

On September 30, 2009, the Commission held the rehearing. At that hearing, the SIF made the following arguments regarding the April 2009 order that had been issued by the Commission:

[COUNSEL FOR THE SIF]: ... [Y]our order asked that we begin paying immediately on our portion of the payments instead of waiting until the payments would have begun had 55 percent been paid by the employer and insurer.

It's always been the Fund's position that these payments are consecutive not concurrent. That we pay at the end of the payments to be made by the employer and insurer.... And if the Subsequent Injury Fund were to be ordered to pay immediately, it has the effect of Mr. Schaffer collecting from both the employer and the Fund at the same time. It's really—that makes overlapping payments because he did settle the case for $92,000.

The following exchange occurred among the Commissioner, counsel for Schaffer, and counsel for the SIF:

THE COMMISSION: There is dicta in a case [which] basically says that the Subsequent Injury Fund should not be paying anything that would be the employer and insurer's obligation. I have to weigh that in because the employer and insurer's obligation would have been to pay until whatever the 55 percent less your expenses and attorney's fees would have been paid. Even with giving the benefit of the doubt to the claimant, it's a real close call given that benefit of the doubt.

[COUNSEL FOR MR. SCHAFFER]: Well, we would simply argue, you know, that what that does when IWIF settles, it has no—Subsequent Injury Fund has no immediate bearing on that. They can't control that. And it's his prerogative to settle the case.

THE COMMISSION: Of course, but then what that does is that advances the time that the SIF would be required to pay substantially and takes them out of the equation of having any control over their liability.

[COUNSEL FOR THE SIF]: Which could really have poor precedent where we are concerned because claimants can elect to settle cases, get their lump sum money from an employer and insurer under an award and then we would just be paying right away if [counsel for Mr. Schaffer's] scenario is followed in many, many, many cases and I think that goes against the statutory—

[COUNSEL FOR MR. SCHAFFER]: It is against the pure statutory language that says you pay upon completion, not hypothetical completion, of the payments. If the legislature intended it to be the hypothetical completion date, they could have so stated....

THE COMMISSION: It is a tough call here.

The Commission issued a modified order, dated October 9, 2009, which required the SIF to begin making payments (in the same weekly benefit amount as previously ordered) on June 23, 2015—the date requested by the SIF—which would have been the date the employer's share of benefits would have been fully paid if they had been paid weekly instead of being paid in a discounted lump sum.

Schaffer filed a petition in the Circuit Court for Baltimore County, seeking judicial review of the Commission's order of October 9, 2009. The SIF filed a cross-petition for judicial review regarding the same October 9, 2009, order.

Schaffer filed a motion for summary judgment, and the SIF filed a cross-motion for summary judgment. On April 22, 2011, the circuit court held a hearing on the motions, and the circuit court judge provided the following comments in support of her ruling in favor of the SIF, affirming the order of the Commission:

[THE COURT:] The issue before the Court is the effective date of S.I.F. or the Subsequent Injury Fund's obligation to begin payments to Mr. Schaffer.

There was a hearing before ... the Commission, on this issue, and the Workers' Compensation Commission determined that the effective date of S.I.F.'s payments was June 23rd, 2015.

The Claimant has entered into a lump sum settlement with the employer in this case, but his case is based on a statutory scheme. The employer/insurer is responsible for the initial payments, and it is only after that obligation and those payments have...