E-Alert Case Updates

Court of Special Appeals of Maryland Holds That Insurer Not Obligated to Pay Underinsured Motorist Coverage Where Workers’ Compensation Lien Exceeded Balance of Judgment

Ross v. Agurs & Progressive Casualty Ins. Co.
Court of Special Appeals of Maryland, No. 978 September Term 2011 (Md. App. September 9, 2013)
by Jhanelle Graham, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In Ross v. Agurs & Progressive Casualty Ins. Co., the Court of Special Appeals of Maryland was asked to determine whether the Circuit Court for Prince George’s County erred in denying Appellant, David Ross’s Motion to Enforce Judgment against John Agurs and Progressive Casualty Insurance Company (“Progressive”). The appeal arose from a third-party claim filed by Ross against John Agurs and Progressive for damages Ross allegedly sustained in a motor vehicle accident for which Ross sought benefits through an underinsured motorist (“UIM”) policy issued by Progressive. The motor vehicle accident that allegedly gave rise to Ross’s third-party claim was a rear-end collision caused by Agurs on December 8, 2006, while Ross was driving within the scope of his employment with Shelton Transportation (“Shelton”). Writing for the intermediate appellate court, Judge Gary E. Bair affirmed the lower court’s finding that Progressive was not obligated to make payments to Ross under its policy.

On December 8, 2006, in Washington, D.C., the motor vehicle that Ross was driving was struck from the rear by a vehicle driven by John Agurs. Ross was operating within the scope of his employment with Shelton at the time. The vehicle driven by Ross was insured by Shelton with a commercial liability policy issued by Progressive that included uninsured/underinsured motorist (“UM/UIM”) coverage with policy limits of $1,500,000. Shelton had a workers’ compensation policy through the Injured Workers Insurance Fund (“IWIF”) providing coverage for bodily injury and medical expenses. The vehicle driven by Agurs was insured by State Farm with third party liability coverage of $25,000/$50,000. As a result of the accident, Ross claimed that he sustained injuries to his left knee and lower back, and he sought relief for his injuries by filing a workers’ compensation claim and a third-party claim against Agurs that was later amended to include Progressive.

On November 25, 2009, Ross filed a third-party claim against Agurs for damages resulting from the motor vehicle accident, alleging Agurs’s negligence. Ross also submitted a claim for benefits under Shelton’s UIM Policy with Progressive, which was later denied. On December 23, 2009, Ross amended his complaint to add Progressive as a defendant, and asserted that Progressive’s denial of UIM benefits pursuant to Progressive’s UM/UIM insurance policy with Shelton constituted a breach of contract. On June 17, 2011, prior to the trial in circuit court, Agurs offered his $25,000 policy limits to Ross. Within sixty (60) days of receiving notice of the offer, Progressive notified Ross that it would not consent to acceptance of the offer of policy limits and would not waive subrogation. Progressive, therefore, tendered a check in the amount of $25,000 to Ross, pursuant to Section 19-511 of the Maryland Insurance Article. MD. CODE ANN. INS. § 19-511 (1996, 2011 Repl. Vol., Supp. 2012). Accordingly, Ross filed a second amended complaint containing a sole count against Progressive for breach of contract.

On November 21, and 22, 2011, a jury trial was held in the Circuit Court for Prince George’s County. The jury returned a verdict in favor of Ross for a total of $91,583.90, comprised of: $24,083.90 in past medical expenses, $30,000.00 in lost wages, and $37,500.00 in noneconomic damages. As a result of the $25,000 payment made by Progressive prior to trial, the remaining balance of the judgment was $66,583.90. At the time of the trial, Ross’s workers’ compensation claim was closed, and the amount of the unreimbursed workers’ compensation lien (“the lien”) held by IWIF was $84,446.21. Following the trial court’s entry of judgment, Ross made a written demand of Progressive for payment of a portion of the judgment under its UIM coverage. Progressive declined to make payment. On April 25, 2012, Ross filed a Motion to Enforce Judgment, requesting that the trial court enter an order directing Progressive to pay the sum of $51,875.58, which Ross contended was the amount due and owing on the balance of the judgment after reduction for unreimbursed workers’ compensation benefits. Progressive subsequently filed an opposition to Ross’s motion to enforce the judgment. On July 2, 2012, the circuit court denied Ross’s post-trial motion without a hearing, and Ross timely appealed to the Court of Special Appeals of Maryland on July 27, 2012

The intermediate appellate court began its analysis by citing to Parry v. Allstate Insurance Co., 408 Md. 130 (2009), a case decided by the Court of Appeals of Maryland involving a UM claim by the estate of a police officer who died as a result of injuries sustained in an accident while on-duty. In Parry, the appellate court explained the interplay between INS. § 19-513 and LE § 9-902. Turning first to the Labor and Employment article, the court of appeals noted that LE § 9-901 provides a choice of remedies to an employee injured on the job by a person other than their employer. Id. at 136. The injured employee may elect to: (1) file a claim for compensation against the employer; or (2) bring an action for damages against the person or persons liable for the injury or death. Id. However, in those situations in which the injured employee “brings an action against and recovers damages from the third-party tortfeasor, following a workers’ compensation award or payment of compensation,” the role of LE § 9-902 is to prevent the injured employee from “receiving a windfall recovery from both sources for the same damages.” Id.

The intermediate appellate court also observed that notably absent in the appellate court’s analysis and application of LE § 9-902 and INS. § 19-513(e) in Parry, was language suggesting that the workers’ compensation lien must be reduced by attorney fees as Ross suggested. The intermediate appellate court, therefore, rejected Ross’s argument that the reimbursement amount under INS. § 19-513(e) was the amount of the workers’ compensation lien less attorney’s fees of forty (40) percent. Rather, the court of special appeals stated that precedent makes clear that the amount of reimbursement under INS. § 19-513(e) is determined by the amount of benefits received. Blackburn v. Erie Ins. Grp., 185 Md. App. 504, 514 (2009) (“Section 19-513(e) is unambiguous.”).

According to the intermediate appellate court, in both Parry and Blackburn, the amount of benefits received by the injured employee, for which the carrier asserted a lien, was accepted by the appellate court as the reimbursement amount under INS. § 19-513(e). The Court of Special Appeals, therefore, found no reason that the amount of the workers’ compensation lien in the instant case should not likewise serve as the amount of reimbursement under INS. § 19-513(e). Absent authority to the contrary, and in light of the foregoing analysis, the intermediate appellate court held that Progressive was not obligated to make payment to Ross under INS. § 19-513(e) because the amount of the unreimbursed workers’ compensation lien exceeded the balance of the judgment.