Blackburn v. Erie Insurance Group

971 A.2d 368, 185 Md. App. 504, 2009 Md. App. LEXIS 54

• Court: Court of Special Appeals of Maryland
• Decided: May 11, 2009
• Docket: 0210, September Term, 2008
• Status: Published

Opinions

SALMON, J.

David and Brigitte Blackburn filed a complaint for declaratory relief against Erie Insurance Exchange (hereinafter “Erie”).¹ Erie filed an answer to the complaint and subsequently the parties entered into a stipulation of facts that reads as follows:

1. On August 12, 2004, Michael David Blackburn was involved in a motor vehicle accident allegedly caused by the negligence of Patrick Joseph Quinn;

2. Mr. Blackburn allegedly suffered serious injuries as a result of the incident;

3. That at the time of the automobile accident, Michael David Blackburn was acting within the scope of his employment with the United States government;

4. That a claim was filed for benefits under the Federal Employees Compensation Act for the Plaintiff with the United States Department of Labor;

5. The United States Department of Labor asserted a worker’s compensation lien in the amount of Two Hundred Forty Six Thousand Three Hundred Five Dollars and Sixty-six Cents ($246,305.66);

6. That at the time of the incident, the Plaintiff was covered under a personal- automobile policy with the Defendant, Erie Insurance Company, which provided uninsured/under insured motorist benefits in the amount of $250,000 per person;

7. At the time of the incident, the alleged tortfeasor, Quinn, was insured by State Farm Insurance Company under a policy of insurance providing liability limits of $100,000 per person;

8. On January 17, 2005, State Farm offered its policy limits of $100,000 to the Plaintiff;

9. That the Plaintiff accepted the $100,000 in compliance with Maryland Insurance Article § 19-511 and thereafter paid to the Department of Labor $27,396.28 in reimbursement of the worker’s compensation lien;

10. That the lien was thereafter closed by the United States government;

11. That the plaintiffs believe Erie Insurances [sic] liability is $150,0000;

12. That Erie Insurance believes its liability to the Plaintiffs does not exceed $3,694.25;²

13. That the parties request that the Court determine under statute what the proper reductions are from the Erie Insurance UM/UIM policy.

Both the Blackburns and Erie filed motions for summary judgment based on the agreed statement of facts. The Circuit Court for Frederick County granted the summary judgment motion filed by Erie on February 29, 2008. As part of that judgment, the court declared “that the liability of ... [Erie] is $3,694.34.” The court also filed a seven-page written opinion in which it explained its reasons for ruling against the Black-burns and in favor of Erie.

The issue that separates the parties is the correct interpretation of Maryland Code (2006 RepLVol.), Insurance Article, § 19-513(e), which reads:

(e) Reduction due to workers’ compensation benefits.—Benefits payable under the coverages described in §§ 19-505 and 19-509 of this subtitle shall be reduced to the extent that the recipient has recovered benefits under the workers’ compensation laws of a state or the federal government for which the provider of the workers’ compensation benefits has not been reimbursed.

Section 19-505 of the Insurance Article deals with personal injury protection coverage and section 19-509 concerns uninsured/underinsured motor vehicle coverage. See Hoffman v. United Services Auto. Asso., 309 Md. 167, 178, 522 A.2d 1320 (1987) (dealing with section 541(c) of Article 48A of the Maryland Code (1957,1986, Repl.Vol.), which was the section of the Maryland Insurance Code that governed uninsured/underinsured motorist coverage prior to its re-codifieation into the present Insurance Article).

Erie now interprets section 19-513(e), as applied to the facts here presented, as meaning that it is obligated to pay the Blackburns zero dollars under the uninsured/underinsured provisions of its policy. Erie’s position is based on the following calculations: the Blackburns had uninsured/underinsured motorist coverage in the amount of $250,000 and it was entitled to deduct $100,000-the amount that the Blackburns received from Quinn’s insurer—from that figure. Erie further contends. it was entitled to deduct the sum of $218,909.38. That $218,909.38 figure was calculated by deducting $27,396.28 (the amount that the Blackburns paid back to the federal government) from $246,305.66 (the amount that Mr. Blackburn had received in worker’s compensation benefits from the federal government). Given the fact that $218,909.38 exceeded $150,000 by more than $68,000, it is Erie’s position that it owes nothing to the Blackburns.

It is important to note that Erie’s present position is slightly different from the position it took in the circuit court. In the circuit court, Erie admitted that it owed $3,694.34 to the Blackburns. That admission was based on the assumption that the Blackburns had repaid the U.S. government the entire amount that they received from State Farm, i.e., $100,000.00. Erie’s calculations in the circuit court were as follows: $250,000 minus $100,000 (paid by State Farm equals $150,000. From this figúre Erie deducted $146,305.66, which was the part of the workers’ compensation lien that Erie believed that Blackburn had not repaid the government— $150,000.00-$146,305.66 equals $3,694.34).

The Blackburns admit that even though the underinsured policy limits set forth in their policy with Erie was $250,000, Erie was entitled to deduct the $100,000.00—the amount that they received from State Farm. The Blackburns contend, in essence, that when the U.S. government received $27,396.28 it closed its lien against them and, as a consequence, the federal government had been fully reimbursed. Therefore, according to the Blackburns, Erie owes them $150,000.00. Appellants express that argument as follows:

The workers’ compensation provider, in this case, voluntarily agreed to accept a portion of the recovery from Mr. Quinn’s liability policy as reimbursement for the benefits it had provided to Mr. Blackburn.

If the United States is satisfied with the payment by Mr. Blackburn, Erie has no cause to assert that the government has not been reimbursed. Nor should Erie be allowed to escape its contractual obligations to pay for underinsured motorist coverage because the United States did not demand a dollar-for-dollar reimbursement for the benefits that it had provided.

The Circuit Court for Frederick County, in declaring the rights of the parties, rejected the Blackburns’ interpretation of section 19-513(e), saying:

When the Court considers the statute as a whole, including its amendment and other statutes in the scheme, the Court finds that under the circumstances and facts of this case, satisfaction of the lien is not synonymous with reimbursement as contemplated by § 19—513(e). To do otherwise would defy common sense. It would result in a duplication of benefits, indeed a windfall, to the Plaintiff.....

II

Section 3 9—513(e) of the Insurance Article was amended in 2001. Prior to the amendment, section 19—513(e) read: “benefits payable under the coverages described in §§ 19-505 and 19-509 of this subtitle shall be reduced to the extent that the recipient has recovered benefits under the workers’ compensation laws of a state or the federal government.”

Recently, the Court of Appeals interpreted the word “recover” as used in section 19—513(e) to mean “ ‘to get,’ ‘to obtain,’ ‘to come into possession of,’ ‘to receive.’ ” Parry v. Allstate Insurance, Co., 408 Md. 130, 145, 968 A.2d 1053 (2009) (citing inter alia, State Farm Mutual v. Insurance Commissioner, 283 Md. 663, 671, 392 A.2d 1114 (1978)).

The 2001 amendment added to that last provision the words “for which the provider of the workers’ compensation benefits has not been reimbursed.” Section 19-513(e) has not been amended since 2001. Therefore, the statute reads in pertinent part: “Benefits payable under the coverages described in ... § 19-509 of this subtitle shall be reduced to the extent that the recipient has recovered benefits under the workers’ compensation laws of a state or federal government for which the provider of the workers’ compensation benefits has not been reimbursed.” (Emphasis added). Plainly appellant recovered $246,305.26 in workers’ compensation benefits and his employer was reimbursed for only $27,396.28 of its payments.

The purpose of the amendment is set forth in Chapter 392, Laws of Maryland, as follows: “For the purpose of limiting the reductions available to personal injury protection and uninsured motorist insurers to the extent that the workers’ compensation insurer is able to recover benefits paid under the workers’ compensation laws of a state or the federal government.”

A clear example of the situation the amendment sought to remedy is provided by the case of State Farm Mut. v. Ins. Comm’r, 283 Md. 663, 392 A.2d 1114, (1978). At issue in the State Farm case was the correct interpretation of Maryland Code (1957, 1972 Repl.Vol., 1978 Cum.Supp.), Article 48A, section 543(d), which was the predecessor statute to section ■19-513(e).³ The Court of Appeals set forth the pertinent facts in State Farm as follows:

Patrick Morris was employed on July 31, 1974, by the Washington Gas Light Company. While driving his own automobile in the course of his employment, Morris’s vehicle was struck in the rear. Consequently, he sought and recovered workmen’s compensation benefits in the amount of $379.50 from his employer’s insurance carrier. Subsequently, Morris pursued a tort claim against the negligent third party, and this resulted in a settlement. Out of the settlement proceeds, Morris reimbursed $379.50 to the workmen’s compensation insurance carrier, as required by Code (1957, 1964 Repl.Vol., 1978 Cum.Supp.), Art. 101, § 58. Morris then filed a claim for PIP benefits in the amount of $1,119.28 against his own automobile insurance carrier, State Farm Mutual Automobile Insurance Company. State Farm paid only $739.78, maintaining that under § 543(d) of Art, 48A, the $1,119.28 PIP benefits should be reduced by the $379.50 workmen’s compensation benefits which Morris received.

Morris filed a protest with the Insurance Commissioner, arguing that since he paid back to his employer’s workmen’s compensation carrier $379.50 out of the proceeds of the settlement with the tortfeasor, he had not “recovered” workmen’s compensation benefits within the meaning of § 543(d). A hearing on the protest was held on August 26, 1975, attended by Morris and his attorney as well as by a representative of State Farm and its attorney. More than thirteen months later, on October 5, 1976, the Insurance Commissioner rendered a decision, holding that Morris’s receipt of the $379.50 workmen’s compensation benefits was “only a technical, and not a true receipt, a [receipt] in name only, and certainly does not fall within the purview of the Statute as monies ‘recovered.’ ” The Commissioner ordered State Farm to pay Morris $379.50 plus interest.

283 Md. at 665-66.

In the State Farm, case, the Court rejected the Insurance Commissioner’s theory “that a claimant who has in fact obtained certain monetary benefits, has nevertheless failed to ‘recover’ those benefits if he must later, out of different proceeds, covering the same loss, repay an equivalent sum of money.” The State Farm Court said:

The critical words in the statute are “has recovered.” The general meaning in law of the verb “to recover” is “to get,” “to obtain,” “to come into possession of,” “to receive.” Garza v. Chicago Health Clubs, Inc., 347 F.Supp. 955, 962 (N.D.Ill.1972); Covert v. Randles, 53 Ariz. 225, 231, 87 P.2d 488, 490 (1939); Swader v. Flour Mills Co., 103 Kan. 703, 704, 176 P. 143, 144-145 (1918); Black’s Law Dictionary, p. 1440 (rev. 4th ed.1968); Webster’s New International Dictionary of the English Language, p.2081 (2d ed. unabridged, 1961). In a narrower sense, “to recover” means “to succeed in a [legal] proceeding,” Webster’s Nero International Dictionary of the English Language, supra, or “to obtain in any legal manner in contrast to voluntary payment,” Black’s Law Dictionary, supra. See also Union Petroleum S.S. Co. v. United States, 18 F.2d 752, 753 (2d Cir.1927), cert denied, 274 U.S. 760, 47 S.Ct. 770, 71 L.Ed. 1338 (1927); Garza v. Chicago Health Clubs, Inc., supra, 347 F.Supp. at 962; Covert v. Randles, supra, 53 Ariz. at 231, 87 P.2d 488. Under either the general meaning of the word or the more narrow meaning, Mr. Morris, the insured, “recovered” workmen’s compensation benefits when he received $379.50 from his employer’s insurance carrier as a result of his claim under the workmen’s compensation law.

The Insurance Commissioner’s theory is that a claimant, who has in fact obtained certain monetary benefits, has nevertheless failed to “recover” those benefits if he must later, out of different proceeds covering the same loss, repay an equivalent sum of money. The accepted definition of the verb “recover” simply does not support this concept. Interpreting § 543(d) in such a manner would be ignoring the plain language of the statute and “resorting to subtle or forced interpretations for the purpose of ... limiting ... its operation.” Wheeler v. State, supra, 281 Md. at 596, 380 A.2d 1052.

283 Md. at 671-72, 392 A.2d 1114.

As can be seen, at least arguably, the State Farm Court reached an unfair result by forcing the insured to reimburse the personal injury protection insurance carrier for monies the insured had already repaid to the workers’ compensation carrier. To remedy that problem, section 19-513(e) was amended to allow the carrier to deduct only the monies that the insured had not already paid back.

As mentioned earlier, the Blackburns contend that the United States Government, as the workers’ compensation provider, “voluntarily agreed to accept a portion of the recovery from ... [State Farm’s] policy as reimbursement for the benefits it had provided to Mr. Blackburn.” Although it is not outcome determinative, it appears that the agreement on the part of the federal government was not, as suggested by the appellants, “voluntary,” at least if the word is used to suggest that the government, for some reason, charitably agreed to take less than what it was owed. This is made clear by 5 U.S.C.S. § 8132 (Lawyers Ed.1987), which reads:

§ 8132. Adjustment after recovery from a third person.

If an injury or death for which compensation is payable under this subchapter [5 USCS §§ 8101 et. seq.] is caused under circumstances creating a legal liability in a person other than the United States to pay damages, and a beneficiary entitled to compensation from the United States for that injury or death receives money or other property in satisfaction of that liability as the result of suit or settlement by him or in his behalf, the beneficiary, after deducting therefrom the costs of suit and a reasonable attorney’s fee, shall refund to the United States the amount of compensation paid by the United States and credit any surplus on future payments of compensation payable to him for the same injury. No court, insurer, attorney, or other person shall pay or distribute to the beneficiary or his designee the proceeds of such suit or settlement without first satisfying or assuring satisfaction of the interest of the United States. The amount refunded to the United States shall be credited to the Employees’ Compensation Fund. If compensation has not been paid to the beneficiary, he shall credit the money or property on compensation payable to him by the United States for the same injury. However, the beneficiary is entitled to retain, as a minimum, at least one-fifth of the net amount of the money or other property remaining after the expenses of a suit or settlement have been deducted; and in addition to this minimum and at the time of distribution, an amount equivalent to a reasonable attorney’s fee proportionate to the refund to the United States.

Unlike the situation in State Farm v. Ins. Comm’n, the workers’ compensation carrier in this case was not paid back, dollar for dollar, what it paid out to Mr. Blackburn in workers’ compensation benefits.

Section 19—513(e) is unambiguous. That section, insofar as is here pertinent, provides that benefits payable under policies providing underinsured motor vehicle coverage “shall be reduced to the extent that the ■ recipient [Mr. Blackburn] has recovered benefits under the workers’ compensation laws of a state or the federal government for which the provider of the worker’s compensation benefits has not been reimbursed.” (Emphasis added). As shown by the stipulated facts, the federal government has not been “reimbursed” for more than $218,000.00 in workers’ compensation benefits it paid to Mr. Blackburn.

The word “reimbursement” is commonly understood to mean “re-payment.” A “useful starting point” in determining the plain meaning of a statutory term is that term’s dictionary definition. Comptroller of the Treasury v. Sci. Applications Int’l Corp., 405 Md. 185, 202, 950 A.2d 766 (2008) (quoting Ishola v. State, 404 Md. 155, 160, 945 A.2d 1273 (2008)). The Merriam-Webster Dictionary defines “reimburse” as “1. to pay back to someone; repay. 2. To make restoration of or equivalent to.” The American Heritage College Dictionary defines “reimburse” as “1. to repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred.”

It is true, as appellants stress, that the lien held by the federal government has been satisfied. But the accepted definition of the word “reimburse” simply does not support appellants’ argument that a carrier has been fully “reimbursed” when it has not been repaid for all the monies it advanced to Mr. Blackburn.⁴

We recognize, of course, that the purpose of uninsured motorist coverage is to “assure financial compensation to the innocent victims of motor vehicle accidents who are unable to recover from financially irresponsible uninsured motorist.” Lane v. Nationwide Mutual Insurance Company, 321 Md. 165, 169, 582 A.2d 501 (1990). But, as was observed in Johnson v. Nationwide, 388 Md. 82, 95, 878 A.2d 615 (2005), that

purpose, however, is not without limits. The words of the statute itself delineate the extent of the statute’s reach. See Stearman v. State Farm Mut. Auto. Ins. Co., 381 Md. 436, 449, 849 A.2d 539, 547 (2004) (noting that the General Assembly’s purpose in enacting the compulsory insurance statutes was not to assure complete insurance recovery for all victims of automobile accidents and reaffirming that the purpose did not extend beyond the prescribed statutory minimum coverage regarding the household exclusion); see also Mayor & City Council of Baltimore v. Cassidy, 338 Md. 88, 97, 656 A.2d 757, 762 (1995) (noting that the court “may not disregard the plain meaning” of the Workers’ Compensation Act).

Id. at 95-96, 878 A.2d 615.

For the reasons set forth above, we hold that the plain language of section 19-513(e) allowed Erie to calculate the benefits payable under the underinsured motorist provisions of its policy by deducting from its $250,000.00—limits: 1) the amount that the Blackburns received from State Farm, and 2) the monies paid out by the federal government as workers’ compensation benefits that Mr. Blackburn did not repay the government (over $218,000).

The above holding, ordinarily, would mean that we would vacate the judgment entered by the circuit court to the extent that the court declared that Erie owed the Blackburns $3,694.34. A problem arises with such a disposition, however, for two reasons.

First, Erie filed a memorandum of law in the circuit court in which it stated: “Erie’s liability to Plaintiff Blackburn is $3,694.25 ($250,000-$100,000, pursuant to § 19-509(g)=$150,000; $150,000-($246,305.75-$100,000), pursuant to § 19—513(e)=$3,694.25).” Ordinarily, a party cannot take a position in an appellate court that materially differs from the position taken in the circuit court.

Secondly, and perhaps more important, Erie never filed a cross-claim. And, without a cross-claim being filed, we have no authority to amend the judgment so as to benefit an appellee. Accordingly, we will adopt an alternative suggestion made by Erie, which is that we simply affirm the judgment entered by the Circuit Court for Frederick County.⁵

JUDGMENT AFFIRMED; COSTS TO BE PAID BY APPELLANTS.

1 . In the complaint, Erie was mistakenly identified as “Erie Insurance Group." Erie filed with its appellate brief a Consent Motion to Correct the Caption, correcting its name to “Erie Insurance Exchange."

2 . Erie's arithmetic was off by nine cents. Under its method of calculation, the actual amount due would have been $3,694.34 [$250,000-$100,000(State Farm payment)$ 150,000 less $146,305.66],

3 . Maryland Code (1957, 1986 Repl.Vol.), Article 48A, which included section 543(d) was recodified into Maryland Code (1995, 1997, Repl. Vol.), Title 19, subtitle 5 of the Insurance Article by 1996 Maryland Laws, Chapter 11.

4 . Mr. Janquilto's answer to the hypothetical quoted in the dissenting opinion (op. at 518-20, 971 A.2d at 377-79) is clearly correct. The insurer obviously should not be allowed to deduct $20,000.00 from the amount it owes to the insured, because in the hypothetical the $20,000.00 had already been repaid by the insured to the workers' compensation carrier. But that result is mandated by the express language of section 19-513(e), as amended, not, as Mr. Janquitto says, by "the spirit of the UM Statute...."

5 . At oral argument Erie acknowledged that if we agreed with its position, the judgment should simply be affirmed and it would be required to pay appellants $3,694.34.