E-Alert Case Updates

Maryland Legislature to Consider Dram Shop Liability, Maryland Trust Act, and Workers’ Compensation Issues in Upcoming 2014 Legislative Session

Maryland Legislature to Consider Dram Shop Liability, Maryland Trust Act, and Workers’ Compensation Issues in Upcoming 2014 Legislative Session
2014 Legislative Session
by Colleen K. O’Brien, Associate
Semmes, Bowen & Semmes (www.semmes.com)

During the upcoming 2014 Legislative Session, the Maryland General Assembly will consider several issues pertinent to Maryland Defense Council (“MDC”) members, including:

Dram Shop Liability

The Court of Appeals recently declined to change the common law to impose civil liability on an alcoholic beverage licensee that serves a visibly intoxicated patron, who then drives drunk, and causes an injury or death, stating that the issue involves significant public policy considerations that are best left to the General Assembly. See Warr v. JMGM Group, LLC, 433 Md. 170 (2013). A "dram shop law" is a law that allows a person to sue an alcoholic beverage licensee, such as a restaurant, bar, or liquor store, for damages incurred as a result of a patron's intoxication. While a majority of states do have dram shop laws, Maryland does not. A majority of states that have adopted the doctrine of dram shop liability have limited liability to cases where a licensed establishment served alcohol to an obviously intoxicated individual or an individual under the legal drinking age. Generally, only individuals injured by the underage or visibly intoxicated individual who had been furnished alcohol by the licensee may recover under a dram shop law. Several states have adopted specific limits on the amount of damages that may be recovered in a dram shop action. Some states have imposed notice requirements and statutes of limitation for causes of action for dram shop liability. Several states require a plaintiff to provide a licensee written notice of intent to bring an action for dram shop liability within a specified period of time. Since 2002, three bills proposing dram shop liability have been introduced in the General Assembly. Senate Bill 739 of 2002 received an unfavorable report from the Judicial Proceedings Committee. More recently, House Bill 1120 of 2011 and House Bill 1000 of 2012 received no action after being heard by the Judiciary Committee.

Maryland Trust Act

The proposed Maryland Trust Act is a major revision and codification of the law of trusts, modeled mostly on the Uniform Trust Code drafted by the Uniform Law Commission. It is a modified version of the Uniform Trust Code, and has been proposed in varied forms in Maryland each year since 2011. Currently, the law of trusts in Maryland is reflected in discrete provisions in the Maryland Code, certain provisions in the Maryland Rules, and some Maryland case law. The proposed legislation is a modified version of the Uniform Trust Code, which was initially completed by the Uniform Law Commission in 2000 and last amended in 2005. The initial version of the bill was first introduced in the General Assembly in 2011 (SB 745/HB 750), and reintroduced in 2012 (SB 722/HB 682). The most recent versions of the bill introduced in 2013 (SB 753/HB 437) were revised to delete or modify several proposed changes to Maryland law. The Uniform Trust Code has been enacted in some form by 25 states. Commentators have observed that the use of trusts has evolved and become increasingly complex to the point where case law, from which trust law originates and in which trust law has a long history, is less suited to governing modern trusts due to its incremental development. Although the proposed legislation incorporates existing Maryland statutory law and conforms to principles in Maryland case law, in some cases, the proposed legislation would change or add to Maryland law. A discussion of notable provisions that would have changed or added to Maryland law, as well as of portions of the Uniform Trust Code that are not included in the bill, is included in the fiscal and policy note for HB 437 of 2013.

Workers’ Compensation

Expected discussion includes the State insurer of last resort, physician dispensing of pharmaceuticals, and employer retaliation for filing a claim.

The State's workers' compensation insurer of last resort is the Chesapeake Employers' Insurance Company (Chesapeake)/Injured Workers' Insurance Fund (IWIF). During the 2012 session, Senate Bill 745 (Chapter 570) was adopted to convert IWIF into a private, nonprofit and non-stock workers' compensation insurer. Effective October 1, 2013, Chesapeake serves as the workers' compensation insurer of last resort in the State. IWIF continues to exist. There may be a desire to clarify the responsibilities of the restructured organization and to eliminate some unintended changes made by the conversion legislation. During the 2013 session, Senate Bill 962/House Bill 1438 (both failed) would have subjected Chesapeake to rate regulation and would have required the company, Maryland Insurance Administration, and a rating organization to develop a plan to ensure the company's membership in the rating organization by a certain date. Rating continues to be a topic for discussion.

Physician-dispensing of repackaged pharmaceuticals increases costs for the workers' compensation system because physicians are not bound by state fee schedules and pharmacy cost controls. A recent study concluded that on a per-pill basis, prices paid to physician-dispensers for generic medications were often more than double the prices paid for the same medications dispensed at pharmacies. Regulatory and legislative proposals introduced over the last few years have taken two different approaches to attempt to address the differential cost and patient outcome issues. Under the first approach, the proposals have attempted to restrict or more stringently regulate the practice of physician dispensing. Senate Bill 247/House Bill 174 of 2013 (both failed) would have specified that an employer, or its insurer, may not be required to pay for a prescription drug that is dispensed by a physician unless the prescriptions were dispensed within 72 hours of discovery of the disease or injury and were limited to a 30-day supply of medication. Under the second approach, rather than restrict the practice of physician dispensing, some proposals have sought to eliminate the cost differential by requiring the establishment of a uniform reimbursement rate for both physician —and pharmacist-dispensed medications. Senate Bill 914/House Bill 1389 of 2013 (both failed) would have required the Workers' Compensation Commission (WCC) to adopt a pharmaceutical fee schedule in regulation. WCC previously proposed two sets of regulations that would have established a pharmaceutical fee schedule. The Administrative, Executive, and Legislative Review Committee, however, did not approve either set of regulations. The issues of patient outcomes and rising, inflated prescription drug costs continue to generate interest.

Finally, Maryland law prohibits an employer from discharging a covered employee from employment solely because the covered employee files a claim for workers' compensation benefits. Legislation introduced during the 2013 session (Senate Bill 609/House Bill 595 — both failed) would have expanded employee protections by prohibiting an employer from retaliating in any way against a covered employee because the employee files a claim for workers' compensation benefits. In addition to making the existing criminal penalties apply, the bill would have authorized a covered employee who is aggrieved by a violation of the statute to bring a civil action against the employer. Proponents characterized the proposal as necessary because of the limiting qualities of the statute —the "sole cause" threshold and the protection against discharge, but not other types of employer retaliation. The proponents indicated that most states have broader anti-retaliation statutes. Opponents criticized the proposal for (1) attempting to merge tort law with workers' compensation law; (2) intruding upon WCC's jurisdiction; (3) causing litigation costs to escalate; and (4) defining "retaliation" in such a vague manner that the statute would prohibit appropriate employment practices. The House Economic Matters Committee referred House Bill 595 to interim study for further examination of the issues raised by the proponents and the opponents.