Stevens v. Rite-Aid Corp.

• Decision Date: 01 September 1994
• Docket Number: No. 449,RITE-AID,449
• Citation: 651 A.2d 397,102 Md.App. 636
• Parties: Viola M. STEVENS v.CORPORATION, et al. ,
• Court: Court of Special Appeals of Maryland

Page 636

102 Md.App. 636

651 A.2d 397

Viola M. STEVENS v. RITE-AID CORPORATION, et al.

No. 449, Sept. Term, 1994.

Court of Special Appeals of Maryland.

Dec. 30, 1994.

Philip Sturman (Anne E. Hoke-Witherspoon and Ingerman & Horwitz, on the brief), Baltimore, for appellant.

Michael S. Levin (Debra E. Gandel and Dirska & Levin, on the brief), Columbia, for appellees.

Argued before BLOOM and CATHELL, JJ., and JAMES S. GETTY, Judge (retired, Specially Assigned).

JAMES S. GETTY, Judge, Specially Assigned.

This litigation, which has evolved over a period of 12 years, presents for our determination an issue that has not been heretofore resolved. We are asked to determine whether a monetary award of an attorney's fee imposed by the Workers' Compensation Commission upon an employer/insurer for willful failure to comply with a prior order of the Commission may be considered "compensation" under § 9-101 of the Workers' Compensation Act. ¹ Secondarily, we are asked whether, irrespective of our answer to the first issue, the employer/insurer is estopped from asserting the applicable statute of limitations in this case.

We begin with a chronology of events that preceded and culminated in this appeal.

Viola M. Stevens, appellant herein, was accidentally injured on March 12, 1981, in the course of her employment. Between that date and her final claim for compensation filed in March 1991, appellant had approximately nine hearings before the Commission. Three appeals were taken by the employer/insurer, appellee herein, from the rulings by the Commission. One of those appeals, from a May 25, 1988, ruling by the Commission ordering appellee to provide a cervical fusion operation recommended by appellant's physician, was still pending in March 1991. ² Two of the nine hearings resulted in penalties being imposed on appellee in the form of attorney's fees and costs for causing frivolous proceedings to be filed.

On November 17, 1987, the Commission found appellee liable for payment of costs incurred by appellant for a cervical myelogram. Appellee was ordered to pay $125 for the costs of the hearing before the Commission, plus a fee of $150 payable to appellant's counsel. The penalties were imposed for what the Commission concluded was a frivolous proceeding relating to the necessity of, and payment for, the myelogram.

By order dated May 25, 1988, the Commission ordered that appellee authorize a cervical fusion procedure recommended by appellant's physician. That order was not complied with, and the Commission, on October 4, 1988, ordered appellee to pay a counsel fee of $350.00 to appellant's counsel who initiated the October hearing. Appellant received the fusion operation in December 1988 after arranging for the costs to be paid through a medical assistance program. Appellant did not file for, and appellee did not resume, temporary total benefits following the surgery.

Appellee's appeal from the $350.00 counsel fee order generated a further hearing in the Circuit Court for Baltimore City on February 8, 1989. The trial court affirmed the Commission and ordered that Rite Aid Corporation, the employer, and Twin City Fire Insurance Company, the insurer, pay Dr. Henry Shuey for medical services rendered appellant and that they pay a $350.00 counsel fee to Bruce Ingerman, appellant's counsel.

On October 18, 1991, approximately six years after the last payment of either temporary total or permanent partial disability benefits, but only two or three years after the last payment of penalties imposed by the Commission as attorney fees and costs, appellant sought to reopen her claim. The affirmative defense of limitations was raised by appellee. The Commission held that the claim was not barred by limitations.

The limitations issue was appealed to the Circuit Court for Baltimore City by appellee. The trial judge and counsel agreed that the material facts were undisputed and each party moved for summary judgment. Following arguments of counsel, Judge Marvin Steinberg held that the payment of counsel fees under the awards of "November 17, 1987 and October 4, 1988 were not payments of compensation within the meaning of the law." Judge Steinberg concluded, therefore, that the claimant was barred by limitations from reopening her claims. This appeal followed.

COMPENSATION

Section 9-101(e) of the Workers' Compensation statute defines compensation as follows:

(e) Compensation.--(1) "Compensation" means the money payable under this title to a covered employee or the dependents of a covered employee.

(2) "Compensation" includes funeral benefits payable under this title.

Fees for legal services rendered to a covered employee are controlled by § 9-731 of the statute, which provides in pertinent part:

(a) In general.--(1) Unless approved by the Commission, a person may not charge or collect a fee for:

(i) legal services in connection with a claim under this title;

(ii) medical services, supplies, or treatment provided under Subtitle 6, Part IX of this title; or

(iii) funeral expenses under Subtitle 6, Part XIII of this title.

(2) When the Commission approves a fee, the fee is a lien on the compensation awarded.

(3) Notwithstanding paragraph (2) of this subsection, a fee shall be paid from an award of compensation only in the manner set by the Commission.

Inextricably associated with the two sections of the law quoted above is § 9-736, which controls the reopening of workers' compensation claims. It states:

§ 9-736. Readjustment; continuing powers and jurisdiction; modification.

(a) Readjustment of rate of compensation.--If aggravation, diminution, or termination of disability takes place or is discovered after the rate of compensation is set or compensation is terminated, the Commission, on the application of any party in interest or on its own motion, may:

(1) readjust for future application the rate of compensation; or

(2) if appropriate, terminate the payments.

(b) Continuing powers and jurisdiction; modification.--(1) The Commission has continuing powers and jurisdiction over each claim under this title.

(2) Subject to paragraph (3) of this subsection, the Commission may not modify an award unless the modification is applied for within 5 years after the last compensation payment.

(c) Estoppel; fraud.--(1) If it is established that a party failed to file an application for modification of an award because of fraud or facts and circumstances amounting to an estoppel, the party shall apply for modification of an award within 1 year after:

(i) the date of discovery of the fraud; or

(ii) the date when the facts and circumstances amounting to an estoppel ceased to operate.

(2) Failure to file an application for modification in accordance with paragraph (1) of this subsection bars modification under this title.

In Chanticleer Skyline Room, Inc. v. Greer, 271 Md. 693, 319 A.2d 802 (1974), the claimant sought to reopen her compensation case in December 1971; her last award of 30% permanent partial disability had been entered by the Commission on February 23, 1966. The 1966 award was appealed, and while the appeal was pending the Commission passed an additional order on March 24, 1966, directing that the claimant's attorney be allowed a $500 counsel fee to be paid "from the closing weeks of compensation due the claimant" but not until the appeal had been decided.

For unexplained reasons, the appeal was not dismissed until March 24, 1970, and the $500 fee was paid to claimant's counsel on June 15, 1970. The Commission ruled that the request to reopen claimant's case was not filed within the applicable time limits. The Circuit Court for Baltimore City reversed, and we affirmed the trial court. Id. Upon further appeal, the Court of Appeals affirmed our judgment.

Judge Digges, writing for that Court, concluded that, by definition, compensation is money allowance, provided for in the statute, payable to an insured. Thus, an attorney's fee authorized by the Commission, payable from the claimant's award, said fee being a lien upon the compensation awarded, is a payment of compensation to the claimant. In Chanticleer, supra, therefore, limitations did not begin running until June, 1970, when the counsel fee was paid, and claimant's petition to reopen her case in December, 1971 was timely. Accord Holy Cross Hospital v. Nichols, 290 Md. 149, 161, 428 A.2d 447 (1981).

Section 9-731 of the statute clearly established that counsel fees are compensation within the meaning of that particular section of the law when (1) the fees are approved by the Commission, and (2) the fees are payable from compensation awarded a claimant, at which time, (3) the fee becomes a lien on the compensation payable.

The fees awarded in the case sub judice, however, do not meet the requirements of § 9-731. The November 17, 1987, costs imposed by the Commission included a counsel fee of $150 payable to appellant's attorney and $125 payable to the Commission to cover the costs of the hearing. The costs were assessed to appellee for failing to pay the costs of a myelogram performed on appellant. The October 4, 1988, counsel fee of $350 was assessed by the Commission for what the Commission determined was an unreasonable failure by appellee to approve a cervical fusion operation ordered by the Commission.

Neither payment was from compensation awarded a claimant under § 9-731, and neither payment was subject to any lien. The Commission expressly set forth in each of the orders for counsel fees that it was proceeding under § 57 of Article 101 of the Md.Code, currently Md.Code (1991 Repl.Vol.), § 9-734 of the Lab. & Empl. Article. Derived without substantive change from the first sentence of former Art. 101, § 57, § 9-734 provides:

If the Commission finds that a person has brought a proceeding under this title without any reasonable ground, the Commission shall assess against the person the whole cost of the proceeding, including reasonable attorney's...