Westfield Insurance v. Gilliam , 477 Md. 346 ( 2022 )

Westfield Insurance Company v. Michael Gilliam
Misc. No. 4, September 2021 Term
Motor Vehicle Insurance – Uninsured Motorist Benefits – Statutory Offset for
Benefits Recovered Under Workers’ Compensation Claim. When a person injured in
an automobile accident during the course of employment is eligible for benefits under both
the workers’ compensation law and the uninsured motorist coverage of a motor vehicle
insurance policy, Maryland law seeks to avoid a duplication of benefits by means of an
offset provision in the statute governing motor vehicle insurance. Under Maryland Code,
Insurance Article, §19-513(e), a motor vehicle insurer that pays uninsured motorist benefits
to an injured person may deduct from those benefits any benefits recovered by the injured
person as a result of a workers’ compensation claim for which the workers’ compensation
insurer has not been reimbursed.
Motor Vehicle Insurance – Uninsured Motorist Benefits – Statutory Offset for
Benefits Recovered Under Workers’ Compensation Claim – Medical Benefits. As part
of benefits provided under the workers’ compensation law, a workers’ compensation
insurer is to pay medical benefits on behalf of a claimant “in the amount that prevails in
the same community for similar treatment of an injured individual with a standard of living
that is comparable to that of the covered employee.” Providers must accept those amounts,
set by the Fee Guide of the Workers’ Compensation Commission, in satisfaction of the full
cost of treatment. An injured person who has received such medical benefits under the
workers’ compensation law may also seek benefits under the uninsured motorist coverage
of an appropriate motor vehicle insurance policy. Assuming that the fair and reasonable
value of the medical treatment exceeds the payments made by the workers’ compensation
insurer according to the Fee Guide, that difference is not part of the offset against uninsured
motorist benefits under IN §19-513(e), because that amount was not recovered by the
claimant and is not capable of reimbursement to the workers’ compensation insurer.
United States District Court
for the District of Maryland
Case No. 1:19-cv-03550-SAG
Argued: October 8, 2021
IN THE COURT OF APPEALS
OF MARYLAND
Misc. No. 4
September 2021 Term
WESTFIELD INSURANCE COMPANY
v.
MICHAEL GILLIAM
Getty, C.J.,
McDonald
Watts
Hotten
Booth
Biran
Gould,
JJ.
Opinion by McDonald, J.
Filed: February 8, 2022
Pursuant to Maryland Uniform Electronic Legal
Materials Act
(§§ 10-1601 et seq. of the State Government Article) this document is authentic.
2022-02-08
08:54-05:00
Suzanne C. Johnson, Clerk
The United States District Court for the District of Maryland has certified to this
Court, pursuant to statute and rule,1 a question of law regarding the calculation of the
damages payable to an injured person under the underinsured motorist provision of a motor
vehicle insurance policy (“auto policy”) when a workers’ compensation insurer has paid
the injured person’s medical expenses at rates set by the State Workers’ Compensation
Commission. Maryland law permits the auto policy insurer to reduce its payment of
benefits under the underinsured motorist coverage to the extent that the injured person has
“recovered benefits under the workers’ compensation laws … for which the provider of the
workers’ compensation benefits has not been reimbursed.”2
The case before the federal district court arose after Michael Gilliam was injured in
an automobile accident while driving in the course of his employment. He received
payments from his employer’s workers’ compensation insurer and the other driver’s
liability insurer, and now seeks to recover, from the insurance policy covering the vehicle
he was driving (issued by Westfield Insurance Co.), the amounts by which the other driver
was underinsured. The health care providers who treated his injuries had generated bills
in face amounts greater than the amounts set by the Workers’ Compensation Commission,
but (as required by Maryland law) accepted payments at those lower amounts in full
satisfaction for their services. The question asked of this Court is whether the difference
between the amount of those bills – or perhaps more precisely, the fair and reasonable value
1
Maryland Uniform Certification of Questions of Law Act, Maryland Code, Courts
& Judicial Proceedings Article (“CJ”), §12-601 et seq; Maryland Rule 8-305.
2
Maryland Code, Insurance Article (“IN”), §19-513(e).
of those providers’ services – and the payments made by the workers’ compensation insurer
constitutes a “benefit” that the injured person has “recovered” under the Workers’
Compensation Act that is to be offset against any recovery the person would obtain from
the underinsured motorist coverage of the auto policy.
For the reasons set forth in this opinion, we hold that only the amount that the
workers’ compensation insurer actually paid for medical expenses is part of the statutory
offset against underinsured motorist benefits. Thus, a difference between a higher face
amount billed by a health care provider and the amount actually paid by the workers’
compensation insurer is not part of that offset.
I
Legal Landscape
The question of law certified by the federal district court arises from litigation over
insurance coverage for a motor vehicle tort. It concerns damages related to the plaintiff’s
resulting medical treatment and involves the interplay between the State workers’
compensation law and motor vehicle insurance law as they provide compensation for the
victim of an automobile accident. It thus arises against the backdrop of tort and contract
law. To set the stage for that question – and our answer – we first review its legal context.
A. Damages for Health Care Treatment Occasioned by a Tort
An individual who is the victim of a tort may recover compensatory damages from
the person responsible for that tort – commonly referred to as the tortfeasor. Anne Arundel
County v. Reeves, 474 Md. 46, 66 (2021); Restatement (Second) of Torts §903. Such
damages include, among other things, compensation for medical treatment that the victim
2
obtained – or will obtain – as a result of the tort. Restatement (Second) of Torts §924(c)
& comment f. As a general rule, it does not matter if those health care services were
initially financed by someone other than the victim – for example, the victim’s health care
insurance, other insurance, or a relative. Plank v. Summers, 203 Md. 552, 562 (1954). The
tortfeasor remains responsible for paying the victim the “fair and reasonable” value of the
health care services that the victim needed as a result of the tort. Shpigel v. White, 357 Md.
117, 128-29 (1999).
1. The Fair and Reasonable Value of Health Care Services
Determining the fair and reasonable value of health care services is not easy. There
are often two readily available benchmarks: (1) the amount billed by health care providers
and (2) the amount actually paid – whether by the patient or by some other payor.3 But
those two benchmarks seldom align. And neither figure alone may represent the actual
value of the services. Higgs v. Costa Crociere S.P.A. Co., 969 F.3d 1295, 1311-14 (11th
Cir. 2020). The fair and reasonable value of health care services can be quite distinct from
the amounts billed by health care providers or the amounts actually paid to the providers
by the tort victim or other payor. Shpigel, 357 Md. at 128-29.
In many instances the nominal list price generated by a health care provider billing
service may be a less meaningful indicator of market value than the MSRP4 sticker on a
3
To reduce the expense of litigating cases in which smaller amounts are in
controversy, a statute provides an evidentiary shortcut for admitting provider bills to
establish the fair and reasonable value of medical treatment in those cases. CJ §10-104(e);
see James v. Butler, 378 Md. 683 (2003). That statute does not apply to this case.
4
“Manufacturer’s suggested retail price.”
3
new car in an auto showroom.5 See George A. Nation III, The Valuation of Medical
Expense Damages in Tort: Debunking the Myth That Chargemaster-Based “Billed
Charges” Are Relevant to Determining the Reasonable Value of Medical Care, 95 Tul. L.
Rev. 937 (2021). That is because, among other things, health care billing involves nominal
prices seldom actually paid, alternative charges negotiated between providers and insurers,
and rates set by government entities. “The complexities of health care pricing structures
make it difficult to determine whether the amount paid, the amount billed, or an amount in
between represents the reasonable value of medical services.” Stanley v. Walker, 906
N.E.2d 852, 857 (Ind. 2009). And, “[b]ecause this market structure may obscure the real
value of medical services, courts have struggled to square tort law with the realities of
modern healthcare finance.” Higgs, 969 F.3d at 1309.
Under Maryland law, the amount of a bill or an actual payment is inadmissible
without evidence to prove that the bills or payments actually reflect the “fair and
reasonable” value of the services. See Shpigel, 357 Md. at 128; see also Brethren Mut. Ins.
Co. v. Suchoza, 212 Md. App. 43, 57 (2013) (holding that trial court properly excluded
evidence of actual payments when record contained no expert or other evidence that they
reflected the fair and reasonable value of providers’ services).
5
Perhaps in recognition of this, a statute governing medical malpractice cases limits
a judgment against a health care provider for the plaintiff’s medical expenses incurred as a
result of malpractice to what was paid, or is obligated to be paid, by or on behalf of the
plaintiff rather than what the plaintiff was billed. CJ §3-2A-09(d).
4
2. Collateral Source Rule
As a general rule, whatever value can be determined for health care treatment
required as a result of a tort, “a plaintiff is entitled to but one compensation” for the loss,
regardless of whether there are multiple causes of action or multiple tortfeasors. That
principle is sometimes called the “one recovery rule.” Beall v. Holloway-Johnson, 446
Md. 48, 70 (2016); Reeves, 474 Md. at 67.6 And, generally, under a sometimes
countervailing principle known as the “collateral source rule,” the tortfeasor should be
responsible for that recovery, regardless of whether the victim has another source of
compensation. Haischer v. CSX Transp., Inc., 381 Md. 119, 132 (2004).7
The label “collateral source rule” actually denotes two related common law “rules”:
one is a substantive principle of damages; the other is an evidentiary rule. The substantive
principle of damages provides that an injured person is ordinarily entitled to full
compensation from the tortfeasor, regardless of any compensation the person has received
from sources unrelated to the tortfeasor with respect to the same injury. Haischer, 381 Md.
at 132. Such collateral benefits may include insurance payments, negotiated lower rates,
statutory benefits, or simply an affluent family member’s goodwill. See Restatement
(Second) of Torts §920A, comment c (providing examples of collateral benefits not
subtracted from the plaintiff’s recovery from the tortfeasor).
6
The one recovery rule originated in English common law. Gunther v. Lee, 45 Md.
60, 66-67 (1876).
7
See also St. Louis v. Beckles, 81 Md. App. 41, 52 (1989) (describing the collateral
source rule as an exception to the one recovery rule).
5
The primary purpose of the collateral source rule, as substantive law, is to ensure
that a tortfeasor does not escape liability by enjoying a benefit accruing to the injured party.
Haischer, 381 Md. at 132; see also Restatement (Second) of Torts §920A, comment b.
Thus, a plaintiff may recover damages for a harm for which the plaintiff has already been
compensated and, as a result, in some instances be made “more than whole.” Higgs, 969
F.3d at 1310. Given a choice between a windfall for the tortfeasor and a windfall for the
tort victim, the law favors the victim. In addition, to the extent that the collateral source is
an insurance policy, the rule favors the maintenance of insurance. Haischer, 381 Md. at
132. In that sense, the rule ensures that a plaintiff is not penalized for prudence.
In support of that substantive principle of damages, the evidentiary aspect of the
collateral source rule ordinarily renders inadmissible evidence that a plaintiff received
compensation from a third party. See Eastern Shore Title Co. v. Ochse, 453 Md. 303, 341-
43 (2017) (discussing application of collateral source rule and exceptions to the rule).
The matter becomes more complicated when the tort is an automobile accident to
which motor vehicle insurance applies – particularly when the tortfeasor’s liability
coverage is inadequate and the tort victim must look to the underinsured motorist coverage
under the policy applicable to the victim’s vehicle. The matter becomes yet more
complicated if the accident occurs in the course of the victim’s employment and a workers’
compensation insurance policy comes into play. In such a case, the victim will typically
first seek benefits under the workers’ compensation policy. We turn to that law next.
6
B. Medical Benefits Paid by Workers’ Compensation Insurance
1. Generally
The Maryland Workers’ Compensation Act is intended to ensure that employees
receive sufficient and timely compensation for work-related injuries and occupational
diseases regardless of fault. As amended and recodified since its initial enactment more
than a century ago,8 the law is now codified in Maryland Code, Labor & Employment
Article (“LE”), §9-101 et seq. The statute is to be construed liberally to achieve its remedial
purpose. Reger v. Washington Co. Board of Education, 455 Md. 68, 96 (2017); see also
LE §9-102.
The Workers’ Compensation Commission (“Commission”) administers the law.
Benefits under the Act are generally paid by an insurer with whom an employer contracts
or by a self-insured employer.9 For simplicity, in this opinion, we shall refer to a payor of
workers’ compensation benefits as the “WC insurer.”
2. Medical Benefits
As part of the compensation provided by the law, the WC insurer may be required
to provide and pay for health care services for the injured employee occasioned by the
work-related injury or occupational disease. LE §9-660. The Act authorizes the
8
The predecessor of the current statute was enacted in 1914. Chapter 800, Laws of
Maryland 1914.
9
In certain circumstances, the Subsequent Injury Fund or the Uninsured Employers’
Fund may pay benefits under the Act. See LE §9-801 et seq.; §9-1001 et seq.; §10-201 et
seq.; §10-301 et seq. Based on the facts presented to us in the certified question, those
circumstances do not pertain to this case.
7
Commission to oversee and adopt regulations concerning the provision of health care
services and the payment for those services. LE §§9-662, 9-663.
The fees and other charges for medical services approved by the Commission are to
be limited to “the amount that prevails in the same community for similar treatment of an
injured individual with a standard of living that is comparable to that of the covered
employee.” LE §9-663(b)(2). The Commission has adopted regulations concerning
compensation for health care services since the inception of the workers’ compensation
statute. See COMAR 14.09.08.10 The allowable fees and charges are regularly updated
and published in the Commission’s Guide of Medical and Surgical Fees, commonly
referred to as the “Fee Guide.” Falik v. Prince George’s Hosp. & Med. Ctr., 322 Md. 409,
414-17 (1991). Those fees and charges may not always equal the rates prevailing in a
particular locality, but are not to exceed them. Id. at 415.
A health care provider that treats an injured individual as part of the individual’s
benefits under the Act may not charge more than the amounts set by the Commission in
the Fee Guide without the Commission’s approval. LE §9-731(a)(1)(ii). This provision is
intended to “protect[] the economic integrity of injured employees by preventing
unreasonable or excessive charges for health care services.” Queen v. Agger, 287 Md. 342,
346 (1980).
10
Those regulations derive the specified fees from a number of sources, including
the federal Center for Medicare and Medicaid Services and the State Health Services Cost
Review Commission.
8
3. Coordination of Workers’ Compensation Benefits with Other Benefits
When an employee covered by the law incurs a work-related injury, the WC insurer
is to pay benefits under that law to the covered employee. However, the workers’
compensation law “neither excuses third-parties from their own negligence nor limits their
liability.” Great Atl. & Pac. Tea Co. v. Imbraguglio, 346 Md. 573, 583 (1997).
If an injured employee brings an action against a tortfeasor related to the incident
underlying the employee’s workers’ compensation claim, the collateral source rule
excludes evidence that the plaintiff previously received workers’ compensation benefits.11
Restatement (Second) of Torts §920A, comment c; Ochse, 453 Md. at 341-42. However,
the WC insurer is subrogated to the employee’s claim against the tortfeasor and has a
statutory lien on any recovery with respect to that claim in an amount equivalent to the
workers’ compensation benefits paid. LE §9-902(e)-(f).12 The employee must reimburse
the WC insurer out of the monetary damages awarded from the tortfeasor (minus court and
attorney’s fees). Id. The employee may keep the balance of the damages awarded. LE
11
Typically, a person injured during the course of employment pursues a workers’
compensation claim before resolving a tort claim against a third party or, as in this case,
before seeking recovery under the underinsured motorist coverage of a motor vehicle
insurance policy. See Clifford Sobin, 2 Maryland Workers’ Compensation (Sept. 2021
update) §25:21.
Some types of damages that may be recoverable in a tort action are not included in
the benefits that may be recovered through a workers’ compensation claim – for example,
pain and suffering and loss of consortium. See, e.g., LE §§9-101(e)(1), 9-601 et seq.
12
Under LE §9-902, a WC insurer that pays benefits to an employee may bring an
action against the tortfeasor. If the WC insurer does not do so within two months of an
award under the workers’ compensation law, the employee or the employee’s dependents
may pursue an action against the tortfeasor. LE §9-902(c); see Erie Ins. Co. v. Curtis, 330
Md. 160, 164 (1993).
9
§9-902(e). This subrogation right serves the legislative goal of “protect[ing] both the
employee and the employer by ensuring that a third party tort-feasor will not escape
liability by having another pay its debt.” Podgurski v. OneBeacon Ins. Co., 374 Md. 133,
148 (2003) (emphasis in original). The statutory lien also avoids a situation where an
injured employee receives “a windfall recovery from both sources for the same damages.”
Parry v. Allstate Ins. Co., 408 Md. 130, 136 (2009).
It is sometimes in the WC insurer’s interest to accept less than the full amount of a
lien in satisfaction of the lien as part of the employee’s settlement of a claim against a
culpable tortfeasor. See Richard Gilbert, et al., Maryland Workers’ Compensation
Handbook, §15.07[7]; Clifford Sobin, 2 Maryland Workers’ Compensation (Sept. 2021
update) §25:21 (“Many employer/insurers will agree to reduce their lien to less than the
statutory lien if there is a significant issue which may impair the ability to successfully
prosecute the third party claim.”); cf. 5 U.S.C. §8132 (providing, in federal workers’
compensation scheme, for federal government lien on any third-party recovery by claimant
beneficiary, but allowing beneficiary to retain at least one-fifth of that recovery after
deduction of legal fees).
The WC insurer’s statutory lien does not apply, however, to a particular source of
recovery of the tortfeasor’s liability pertinent to this case – uninsured or underinsured
motorist coverage under a motor vehicle insurance policy. Erie Ins. Co. v. Curtis, 330 Md.
160, 169 (1993). Instead, the benefits provided pursuant to the workers’ compensation law
and those provided pursuant to compulsory motor insurance law are coordinated
differently, as we explain in the next section of this opinion.
10
C. Underinsured Motorist Coverage
1. Generally
In Maryland, an owner of a registered motor vehicle must carry prescribed minimum
levels of liability and other types of auto insurance. Maryland Code, Transportation Article
(“TR”), §§17-103, 17-104; IN §19-501 et seq. Among the types of insurance included in
a motor vehicle policy is uninsured motorist (“UM”) coverage. TR §17-103(b)(4); IN
§19-509. It is well-settled that UM coverage includes coverage for accidents caused by
underinsured motorists – what we shall refer to as “UIM” coverage – and the phrases
“uninsured motorist” and “underinsured motorist” are often used interchangeably.
Connors v. Gov’t Emps. Ins. Co., 442 Md. 466, 474 n.4 (2015); Swartzbaugh v. Encompass
Ins. Co., 425 Md. 614, 617 (2012).13 This Court has frequently observed that this coverage
is to be “liberally construed to ensure that innocent victims of motor vehicle collisions are
compensated for their injuries.” E.g., Connors, 442 Md. at 475 (quoting Brethren Mut.
Ins. Co. v. Buckley, 437 Md. 332, 347 (2014)) (internal quotation marks omitted).
UM/UIM coverage aims to “provide an injured insured with resources equal to those
which would have been available had the tortfeasor carried liability coverage equal to the
amount of uninsured motorist coverage which the injured insured purchased from his own
insurance company.” Connors, 442 Md. at 475 (quoting Waters v. U.S. Fidelity & Guar.
13
In 2017, after the incident giving rise to this case, the General Assembly provided
an option for a vehicle owner to purchase “enhanced underinsured motorist coverage.”
Chapters 20, 815, Laws of Maryland 2017, codified at IN §19-509.1. That provision does
not pertain to this case.
11
Co., 328 Md. 700, 714 (1992).14 It is often referred to as a form of “first-party coverage,”
based on the insurance contract under which the UM/UIM insurer directly covers the
injured insured person when “third-party coverage” is inadequate – i.e., “the at-fault
tortfeasor has no liability insurance or insufficient insurance funds.” TravCo Ins. Co. v.
Williams, 430 Md. 396, 403 (2013). However, this coverage also has aspects of third-party
coverage, as it is based not only on the insurance contract, but also on a showing of fault
of the alleged tortfeasor. See Andrew Janquitto, Maryland Motor Vehicle Insurance §8.5
at 323-24 (3d ed. 2011).
2. Coordinating Workers’ Compensation Benefits and UM/UIM Benefits
An employee who receives workers’ compensation benefits as a result of an
automobile accident during the course of employment may also have a claim against the
alleged tortfeasor and, if the tortfeasor’s liability coverage is inadequate, a claim for
UM/UIM coverage under the relevant motor vehicle insurance policy. In that case, the
benefits provided by the WC insurer may overlap those provided by the tortfeasor’s
liability policy and the UM/UIM coverage.
As noted above, the WC insurer has a statutory lien against any recovery from the
tortfeasor or the tortfeasor’s liability insurer. However, as also noted earlier, the statutory
lien under the workers’ compensation law does not extend to a recovery based on UM/UIM
coverage. Instead, the State insurance law provides that UM/UIM benefits are reduced as
14
To the extent that the injured person is able to obtain compensation from the
tortfeasor, or the tortfeasor’s insurer, UM/UIM benefits are reduced. IN §19-509(g).
12
a result of the claimant’s receipt of worker’s compensation benefits. The statute provides
for an offset against UM/UIM benefits as follows:
Benefits payable under the coverages described in … [IN §]
19-509 [uninsured motorist coverage] 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.
IN §19-513(e).15 As is evident, this statute offsets UIM coverage benefits by the amount
of workers’ compensation benefits recovered by the employee for which the WC insurer
has not been reimbursed.16 Like the WC insurer’s statutory lien on compensation received
from a tortfeasor or the tortfeasor’s liability policy, IN §19-513(e) serves to avoid “the
duplication of benefits” provided to the employee. State Farm Mut. Auto. Ins. Co. v. Ins.
Comm’r, 283 Md. 663, 675 (1978).
D. Some Principles to Apply
The discussion above yields the following principles, some in tension with each
other, pertinent to our decision in this case:
15
IN §19-513(e) also provides for an offset against other coverage under a motor
vehicle insurance policy, known as personal injury protection (“PIP”) coverage, under IN
§19-505. The offset against PIP benefits is not part of the question before us.
16
This provision applies with respect to the entire UM/UIM coverage benefits and
can thus offset elements of a UM/UIM recovery that are not compensable under the
workers’ compensation law, such as damages for pain and suffering. Parry v. Allstate Ins.
Co., 408 Md. 130, 142-43 (2009) (quoting Hines v. Potomac Electric Power Co., 305 Md.
369, 376-77 (1986)).
13
1 – Although the victim of a tort is entitled to only one recovery for the injuries
incurred, a wrongdoer – i.e., a tortfeasor – should be responsible for the damages caused
by the tortfeasor’s conduct and should not benefit from the victim’s prudence.
2 – The workers’ compensation and UM/UIM laws are to be liberally construed to
compensate an injured person, but any construction of those laws must be consistent with
the statutory language and legislative purpose.
3 – Under UM/UIM coverage in a motor vehicle insurance contract, the insurer steps
into the shoes of the tortfeasor and, subject to policy limits, is to provide the remedy that
would otherwise be provided by a similarly-insured tortfeasor.
4 – Consistent with the one recovery rule, duplication of benefits is avoided through
subrogation, liens, and offsets.
The certified question in this case concerns the application of the offset provided by
IN §19-513(e) with respect to medical benefits recovered under the Maryland Workers’
Compensation Act. The next section of this opinion outlines the circumstances in which
that question arises.
14
II
Background
A. The Accident and Insurance Claims
On January 6, 2017, while driving a vehicle provided by his employer, Mr. Gilliam
was rear-ended by another vehicle. The driver of the other vehicle had a motor vehicle
insurance policy with a liability coverage limit of $30,000.17
As the driver of a company vehicle, Mr. Gilliam was covered by his employer’s
motor vehicle insurance policy with Westfield. The Westfield policy included UM/UIM
coverage with a policy limit of $1,000,000. Mr. Gilliam’s employer also carried workers’
compensation insurance.18
Mr. Gilliam filed a workers’ compensation claim with his employer’s WC insurer.
Mr. Gilliam’s health care providers billed Mr. Gilliam a total of $243,399.33 for services
related to his care following the January 6 incident. In accordance with the Fee Guide of
the Workers’ Compensation Commission, the WC insurer paid $118,369.15 to the health
care providers for the health care services provided to Mr. Gilliam.19 As indicated earlier,
17
The driver of the other car, Nicholas Tinsley, had a motor vehicle insurance policy
with USAA Auto Insurance Company. To minimize the number of proper names in the
text, we refer to Mr. Tinsley and USAA as the tortfeasor and the tortfeasor’s motor vehicle
insurer, respectively.
18
Mr. Gilliam’s employer was Ecomize USA, LLC, which had obtained workers’
compensation insurance from Chesapeake Employers’ Insurance Company. Again, for
simplicity, we refer to them in the text as Mr. Gilliam’s employer and the WC insurer.
19
A cursory review of a spreadsheet of bills and payments that was filed in federal
district court and that is appended to Westfield’s brief in this Court reveals that, in most
15
the health care providers were required to accept those amounts as full compensation for
their services unless they sought an exception to the Fee Guide; apparently, none of the
providers did so. Thus, neither Mr. Gilliam, nor his employer, nor the WC insurer was
responsible for paying any additional sums to the health care providers.
In addition to the medical benefits, the WC insurer paid Mr. Gilliam $510,316.47 in
other benefits related to the accident.20 In sum, the WC insurer paid a total of $628,685.62
($118,369.15 medical payments + $510,316.47 other benefits). The WC insurer asserted
a statutory lien under the workers’ compensation law in that amount against any
compensation related to the accident that Mr. Gilliam might recover from a third-party
tortfeasor.
In fact, Mr. Gilliam did recover some compensation from the tortfeasor. The
tortfeasor’s motor vehicle insurer paid Mr. Gilliam a settlement award of $30,000.00 – the
policy limits.21 The WC insurer accepted one-third of that amount – $10,000.00 – in
satisfaction of its statutory lien.22
instances, there is a substantial difference between the amount billed and the amount paid
to a particular provider.
20
Among other benefits, Mr. Gilliam received temporary total disability benefits in
the amount of $117,621.47 and permanent disability benefits in the amount of $375,000.
21
Westfield consented to that settlement with the tortfeasor’s insurer. See IN §§19-
511(f)-(g), 19-511.1(f)-(g) (requiring consent of UIM insurer for injured person’s
settlement with tortfeasor’s liability insurer in order to preserve UIM claim).
22
As noted earlier, a WC insurer in some instances may consider it to be in its
interest to compromise its lien as part of the employee’s settlement with a tortfeasor. See
Part I.B.3 of this opinion.
16
Mr. Gilliam also made a claim against Westfield under the UIM portion of his
employer’s motor vehicle insurance policy with Westfield. As indicated earlier, any
recovery Mr. Gilliam might obtain from Westfield would not be subject to a statutory lien
by the WC insurer. However, under IN §19-513(e), any recovery from Westfield would
be offset by any benefits that Mr. Gilliam received from the WC insurer for which the WC
insurer had not been reimbursed.
Mr. Gilliam and Westfield were apparently unable to resolve his UIM claim
informally. Litigation ensued.
B. The Lawsuit
On October 29, 2019, Mr. Gilliam filed a one-count complaint in the Circuit Court
for Baltimore City asserting a breach of contract claim against Westfield. Westfield
removed the case to the federal district court on the basis of the parties’ diversity of
citizenship. Although Mr. Gilliam’s complaint is not in the record before us, we understand
that he seeks, as one element of damages in the case, the fair and reasonable value of the
medical treatment necessitated by the accident.23
Mr. Gilliam’s counsel has indicated that he intends to argue at trial that the health
care providers’ bills represent the fair and reasonable value of the health care services Mr.
Gilliam received. Westfield’s counsel in turn indicates that Westfield intends to challenge
23
We take judicial notice of the copy of the complaint available on the federal
court’s PACER system. Paragraph 2 of that complaint alleges that Mr. Gilliam suffered
“permanent physical injuries, conscious pain and suffering, medical expenses, lost wages
and other damages.”
17
“as appropriate” whether those amounts represent the fair and reasonable value of
necessary and appropriate treatment resulting from the accident.
In federal court, the parties filed cross-motions for partial summary judgment
concerning the offset based on workers’ compensation benefits. The parties agree that the
terms of the Westfield policy and the UM/UIM statute allow Westfield to deduct the
amount paid by the tortfeasor’s insurer ($30,000.00) from the policy limits of UIM
coverage provided by the Westfield policy. See IN §19-509(g). The parties also agree
that, pursuant to IN §19-513(e), Westfield may deduct $618,685.62 in unreimbursed
benefits paid by the WC insurer.24
What the parties do not agree on – and the matter at issue in the cross-motions for
summary judgment – is whether the statute permits Westfield to deduct the difference
between the face amount of the bills submitted by the health care providers ($243,399.33)
and the amount paid by the WC insurer ($118,369.15) to the providers – that is,
$125,030.18. In Westfield’s view, that amount is a “recovered benefit” for purposes of IN
§19-513(e) and therefore is also deductible from the UIM benefits. In Mr. Gilliam’s view,
it is not a “recovered benefit” and therefore is not deductible.
24
As noted above, the WC insurer paid a total of $628,685.62 in benefits with respect
to the accident and was previously reimbursed $10,000 as a result of its statutory lien
relating to third-party recoveries. The unreimbursed payments thus equal $618,685.62.
18
The resolution of this dispute turns on the proper interpretation of IN §19-513(e).
For that purpose, the federal district court has certified a question of law concerning the
interpretation of the statute that we rephrase as follows:25
For purposes of determining the reduction of a plaintiff’s
underinsured motorist benefits required by IN §19-513(e),
does Maryland law treat a difference between the amount of
medical bills submitted by a workers’ compensation claimant’s
health care providers and a lower amount actually paid to the
providers by a workers’ compensation insurer to satisfy those
bills, pursuant to the Fee Guide, as a benefit recovered by the
plaintiff under the Maryland Workers’ Compensation Act?
The certification order designated Westfield as the appellant in this Court and, accordingly,
Mr. Gilliam is to be treated as appellee. Maryland Rule 8-305(b).
25
The federal district court worded the certified question as follows:
For purposes of determining the reduction of a plaintiff’s
underinsured motorist benefits required by Maryland
Insurance Code §19-513(e), does Maryland law treat the
“write-down,” or the difference between medical bills
submitted by a workers’ compensation claimant’s health care
provider and the lower amount actually paid by a workers’
compensation insurer to satisfy those bills, pursuant to the
Maryland Guide of Medical and Surgical Fees, as “recovered
benefits” to the plaintiff under the Maryland Workers’
Compensation Act?
Neither the Maryland workers’ compensation law nor the UM/UIM statute includes the
phrase “write down.” Nor does the workers’ compensation law necessarily contemplate
that medical bills that exceed payments under the Fee Guide represent the fair and
reasonable value of medical services. Accordingly, we have rephrased the question as
indicated in the text, as permitted by the statute governing certified questions.
19
III
Discussion
A. Certified Questions of Law
Under the Maryland Uniform Certification of Questions of Law Act, Maryland
Code, Courts & Judicial Proceedings Article (“CJ”), §12-601 et seq., this Court may
“answer a question of law certified to it by a court of the United States or by an appellate
court of another state or of a tribe, if the answer may be determinative of an issue in pending
litigation in the certifying court and there is no controlling appellate decision, constitutional
provision, or statute of this State.” CJ §12-603; see also Maryland Rule 8-305. For that
purpose, we may reformulate the question certified to us, as we have done in this case. CJ
§12-604. In responding to a certification from another court, this Court resolves only issues
of Maryland law, not questions of fact. Parler & Wobber v. Miles & Stockbridge, 359 Md.
671, 681 (2000).
We note that the premise of the question before us is that the fair and reasonable
value of the medical services, as ultimately determined in the action by Mr. Gilliam against
Westfield in federal court, will exceed the amount actually paid by the WC insurer to Mr.
Gilliam’s health care providers. Perhaps that is a reasonable assumption; perhaps it is not.
It is not our role to resolve that factual question in answering a certified question of law.
But we will accept that premise in answering the legal question.26
26
In any event, it appears that, even if it were determined that the fair and reasonable
value of the medical services provided to Mr. Gilliam is less than the amount paid by the
WC insurer to his health care providers, the parties agree that any recovery by Mr. Gilliam
20
B. The TravCo Case
Nearly a decade ago, in a case that also arose from an automobile accident and that
also resulted in a workers’ compensation claim by the injured person,27 the federal district
court certified a somewhat similar question to this Court. TravCo Ins. Co. v. Williams, 430
Md. 396 (2013). In TravCo, the federal court asked three questions concerning the
operation of IN §19-513(e). The third of those questions was “whether, assuming that the
law applicable to the underlying automobile accident and to the [workers’ compensation]
claim treats ‘write-downs’ of medical bills as [workers’ compensation] benefits, such
‘write-downs’ would reduce benefits payable under §19-513(e) of the Insurance Article.”
430 Md. at 412.
in the UIM action will be offset by the full amount paid by the WC insurer in unreimbursed
medical benefits.
27
In TravCo, the facts were essentially identical to this case except that the injured
person was an employee of the District of Columbia government and the applicable
workers’ compensation benefits were determined by the law of the District of Columbia.
In that case, the employee was riding in a car on a work assignment when the car was rear-
ended by an unknown driver. She suffered various injuries and recovered workers’
compensation benefits from her employer, including the payment of medical expenses.
According to the facts certified by the federal district court, her health care providers had
applied “write-downs” with respect to those medical expenses.
The injured employee was covered by a Maryland motor vehicle insurance policy
issued by TravCo and made a claim under that policy for UM benefits. The administrator
of workers’ compensation benefits for the District of Columbia asserted a subrogation right
– presumably under the workers’ compensation law of the District – against any UM
benefits recovered by the employee. TravCo conceded that the injured employee was
entitled to UM benefits under the policy, but the parties disagreed as to whether the “write-
downs” should be included as part of the offset against UM benefits under IN §19-513(e).
21
In answering that question, this Court assumed that the applicable workers’
compensation law treated “write-downs” as “benefits,” that the claimant received such
benefits, and that the WC insurer had not been reimbursed for those benefits. 430 Md. at
412. In those circumstances, the Court concluded that the offset under IN §19-513(e)
would include the amount of the “write-downs.” Id.
Because the workers’ compensation claim in TravCo was governed by the law of
the District of Columbia, not the law of Maryland, this Court essentially answered the
certified question of law with another question of law – are “write-downs” benefits under
the workers’ compensation law of the District of Columbia? And that was a question that
this Court could not answer in the context of a certified question of Maryland law.
The question posed in TravCo thus differs from the question in this case in two
respects. First, the question posed in TravCo assumed that the difference between a
medical bill and the amount paid under a workers’ compensation law – what was referred
to as a “write-down” – could be a benefit under the applicable workers’ compensation law.
By contrast, that is the essence of the question in this case. Second, the issue in that case
ultimately turned on whether the law of the District of Columbia recognized a “write-
down” as a benefit under its workers’ compensation law. By contrast, in this case,
Maryland law governs Mr. Gilliam’s workers’ compensation claim and we do not assume
that a “write down” – however defined – necessarily has any standing as a benefit under
that law. The question posed by the federal district court in this case is resolved solely by
reference to Maryland law – in particular, IN §19-513(e).
22
C. Statutory Construction of IN §19-513(e)
Longstanding principles of statutory construction guide the interpretation of IN
§19-513(e). The goal of statutory interpretation is to “ascertain and effectuate the real and
actual intent of the Legislature.” Gardner v. State, 420 Md. 1, 8 (2011). One begins with
the text of the statute and the statutory scheme of which it is part. Nationstar Mortg. LLC
v. Kemp, 476 Md. 149, 169 (2021). An examination of the legislative history helps “to
confirm conclusions drawn from the text or to resolve ambiguities.” Id. at 170. Finally,
consideration is given to the consequences of alternative interpretations of the statute in
order to avoid constructions that are absurd or unreasonable and to “ground[] the court’s
interpretation in reality.” Blue v. Prince George’s County, 434 Md. 681, 689 (2013)
(citation omitted).
1. Text in Context
Under IN §19-513(e), UIM benefits “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.” The key phrase in the statute for our purposes is, of course, “workers’
compensation benefits.” In Mr. Gilliam’s view, the phrase is limited to money paid to a
workers’ compensation claimant or on the claimant’s behalf. In Westfield’s view, the
phrase can include a discount of an expense when the claimant enjoys the discount as a
result of the workers’ compensation law.
The statutes governing UM/UIM coverage – of which §19-513(e) is part – do not
define that phrase. See IN §19-501 et seq. More broadly, the State insurance law does not
23
define “workers’ compensation benefit” specifically or the term “benefit” generally,
although the latter word is used throughout the Insurance Article. Nor does the workers’
compensation law itself have an applicable general definition of “benefit,” although that
term appears frequently in that statute. See LE §9-101 et seq.
In ordinary parlance, the word “benefit” could mean any number of things besides
a monetary payment.28 However, statutory interpretation does not occur in the silo of a
single word; the context of a word or phrase in a statute, and other language that relates to
the word or phrase, is critical to understanding its meaning. Nationstar, 476 Md. at 169.
In the context of IN §19-513(e) the offset provided by that statute is against “benefits
payable” under UIM coverage (and certain other coverages) – i.e., a sum of money. The
“workers’ compensation benefit” that comprises the offset thus must be expressible as a
monetary amount for the offset to make sense.
Related language in IN §19-513(e) further clarifies the meaning of “workers’
compensation benefit” in two ways. First, the offset applies to “the extent that the recipient
has recovered benefits.” IN §19-513(e) (emphasis added). This qualifying language
supports a more tangible understanding of the word “benefit” – one that denotes the amount
of money already actually paid on behalf of or directly to an injured employee rather than
28
The American Heritage College Dictionary, for example, offers “something that
promotes or enhances well-being; an advantage” as a common meaning of “benefit.” See
American Heritage College Dictionary (3d ed. 1993) at 127. In terms of law-related uses
of the word, a recent edition of Black’s Law Dictionary contains similarly expansive
alternative meanings; it includes a definition of “benefit” as an “advantage” or “privilege”
as well as “profit or gain” and defines separately almost two dozen phrases including the
word. Black’s Law Dictionary (9th ed. 2009) at 178-79.
24
an amount never owed by anyone. See State Farm, 283 Md. at 671-72 (stating that “has
recovered” generally refers to something obtained); Parry, 408 Md. at 145 (statute requires
UM/UIM insurers to reduce such benefits “by the amount of workers’ compensation
benefits paid…”) (emphasis added).
Second, the statute refers to benefits “for which the provider of the workers’
compensation benefits has not been reimbursed.” IN §19-513(e) (emphasis added). This
clause indicates that the “workers’ compensation benefits” received by the claimant are
capable of being reimbursed; reimbursement is accomplished by a repayment of a sum
previously received. See TravCo, 430 Md. at 408-11 (a reimbursement affects amount of
offset under IN §19-513(e) only after repayment is made).
While the Workers’ Compensation Act also does not define “benefit,” the use of the
term in that statute supports the same reading. Subtitle 6 of the Act (entitled “Benefits”)
identifies the different types of workers’ compensation benefits available to a claimant
(e.g., temporary partial disability, temporary total disability, wage reimbursement, death
benefits, vocational rehabilitation benefits). See LE §9-601 et seq. Part IX of that subtitle,
entitled “Medical Benefits,” protects against unreasonable medical fees charged to WC
insurers and employers. As indicated earlier, the Workers’ Compensation Act
contemplates that fees paid under that Act are intended to reflect “prevail[ing]” charges in
the community for such services and to protect claimants from “unreasonable and
excessive charges for health care services.” LE §9-663(b); Queen, 287 Md. at 346.
There is no reference in the workers’ compensation law to “write-downs” or
discounts of medical bills – much less any characterization of such a thing as a “benefit”
25
under that law. Moreover, it is impossible for Mr. Gilliam to “reimburse” the WC insurer
for an amount it never paid – i.e., the $125,030.18 difference between what the health care
providers billed and what they accepted as full payment for their services. The face amount
of a bill generated by a provider simply has no role under the workers’ compensation law
governing medical benefits. The fact that a “reimbursement” cannot occur – even if Mr.
Gilliam for some reason decided to make a voluntary payment of that amount to the WC
insurer – indicates that it is not a “workers’ compensation benefit” for purposes of IN §19-
513(e). Westfield’s interpretation of “workers’ compensation benefit” to include a
discounted portion of a health care provider’s fee thus does not comport with the statutory
scheme.
2. Legislative History
The legislative history of the statute confirms that the phrase “workers’
compensation benefit” does not include the amount by which the face amount of a health
care provider’s bill may differ from the charge allowed by the Fee Guide. For our purposes,
there are three key episodes in the legislative history of IN §19-513(e): the original
enactment of the offset provision in 1972, its recodification in the Insurance Article in
1996, and its amendment in 2001 to include the non-reimbursement condition.
1972 – Enactment of compulsory insurance law including benefits coordination.
The predecessor of IN §19-513 was first enacted as part of the UM/UIM provisions of the
compulsory motor vehicle insurance law in 1972. Chapter 73, Laws of Maryland 1972.
As this Court has previously noted, both the purpose section of that bill’s title and a heading
in the bill (“Duplication of benefits; coordination of policies”) indicated that the
26
coordination of benefits provision was designed to preclude injured persons from receiving
duplicate recoveries. State Farm, 283 Md. at 674-75 & nn.3-4.29 The provision relating
to coordination with workers’ compensation benefits was codified in former Article 48A,
§543(d). At that time, the statute provided that the offset of recovered workers’
compensation benefits applied against UM/UIM and PIP benefits without any distinction
between a situation where the WC insurer had been reimbursed and one where it had not
been reimbursed.
1996 – Recodifying coordination provision as IN §19-513. In 1996, the offset
provision was incorporated in the new Insurance Article and codified as IN §19-513(e).
Headings in that bill similarly indicated a legislative intent to avoid duplication of benefits.
Chapter 11, Laws of Maryland 1996 at pp. 516-17.30 The revisor’s note states that the
provision was recodified without substantive change. Id. at p. 518 (Revisor’s Note).
2001 – Amendment of IN §19-513(e) to include reimbursement condition. Five
years later, subsection (e) of the statute, concerning coordination of UM/UIM and PIP
benefits with workers’ compensation benefits, was amended to add the reimbursement
condition that currently appears in the statute. Chapter 392, Laws of Maryland 2001. The
purpose paragraph of the title of the bill that became Chapter 392 stated that the bill was
29
The Court noted in State Farm that the statutory heading was created by the
Legislature itself and was not, as is often the case, simply a caption added by a legal
publisher. 283 Md. at 675 n.4.
30
The general heading given by the General Assembly to IN §19-513 was
“Limitations on Recovery of Benefits”; the heading given to subsection (e) was “Reduction
due to Workers’ Compensation Benefits.”
27
intended to limit the offset under IN §19-513(e) “to the extent that the workers’
compensation insurer is able to recover benefits paid under workers’ compensation laws
….” Senate Bill 509 (2001) (emphasis added). The offset thus was to apply only to the
extent that the WC insurer has not been reimbursed for benefits paid to or on behalf of the
claimant. As a result, if the WC insurer, via its lien, recovered some of the proceeds of
injured person’s recovery from the tortfeasor, the UM/UIM insurer did not reap a windfall
from the coordination provision in IN §19-513(e). According to materials submitted by
proponents of the amendment, it was intended to equalize the total compensation received
by persons injured in work-related automobile accidents – who, as a result of the receipt of
workers’ compensation benefits, were subject to the coordination provision – with the total
compensation received by persons whose claim for UM/UIM benefits did not result from
a work-related accident. See Bill File for Senate Bill 509 (2001).
The legislative history of the compulsory insurance law, and of IN §19-513(e) in
particular, confirms that the purpose of the UM/UIM coverage mandate was to help ensure
both that an injured person is compensated for injuries suffered in an automobile accident
and that such benefits would not result in a windfall to that party or to the UM/UIM insurer.
To the extent possible, an injured employee covered by both workers’ compensation
insurance and UM/UIM coverage is to be in the same place at the end of the day as an
employee who could recover compensation from a tortfeasor covered by liability insurance
with similar limits. We have not been directed to anything in the legislative history of IN
§19-513(e) – nor have we found anything – that indicates that the General Assembly
28
understood that a “write-down” or discount of some sort was an element of the benefits
that were being coordinated by that statute.
3. Consequences of Alternative Constructions
To compare the alternative interpretations proposed by Westfield and Mr. Gilliam,
we consider three simplified scenarios in which a person injured in an automobile accident
in the course of the person’s employment seeks compensation for those injuries. For that
purpose, a little math is helpful. To make the computations easier, we use round numbers.
For each scenario, we assume that the injured person’s total damages equal
$1,000,000. The WC insurer pays $150,000 under the Fee Guide to compensate health
care providers for services provided to the injured person. Consistent with the assumption
we are making to answer the certified question, we assume that the “fair and reasonable
value” of those health care services is something greater than $150,000 – i.e., $150,000 +
x. The WC insurer pays $600,000 to the injured person for other benefits. The WC insurer
thus pays a total of $750,000 in benefits for which it has a statutory lien as to any liability
recovery from the tortfeasor.31
The three scenarios are:
(1) an accident involving a fully insured tortfeasor against whom the injured person
obtains a judgment of $1,000,000 (i.e., no UIM claim);
(2) an accident involving an underinsured tortfeasor whose insurance covers only
$100,000 of the injured person’s damages. The injured person makes a UIM claim against
31
For purposes of these scenarios, we disregard allowances for attorney’s fees and
costs.
29
a policy with a $1,000,000 policy limit. In this scenario, the offset under IN §19-513(e)
includes the difference between the fair and reasonable value of the medical services and
what the WC insurer paid the providers – i.e., the offset includes x (Westfield’s position);
(3) the same facts as scenario 2, except that, in this scenario, the offset under IN
§19-513(e) does not include x (Mr. Gilliam’s position).
(1) WC claim and fully insured tortfeasor (no UIM claim).
The injured person obtains a judgment against the tortfeasor for $1,000,000. The
WC insurer has a statutory lien against that judgment in the amount of $750,000. Assuming
the WC insurer obtains the full amount of its lien, the injured person nets $250,000 from
the judgment against the tortfeasor. This can be represented as follows:
Net Recovery From Fully Insured Tortfeasor (no UIM Claim)
Damages Award $1,000,000
WC Insurer Statutory Lien ($750,000)
Net Recovery $250,000
(2) WC claim and UIM claim; x part of offset (Westfield’s position).
The injured person recovers $100,000 from the tortfeasor’s liability insurer. The
injured person also makes a claim against the applicable UIM coverage. Pursuant to IN
§19-509(g), the UIM policy limits are reduced by the $100,000 recovered from the
tortfeasor’s insurer. The WC insurer also recovers its statutory lien in that amount.
Assuming that x is considered an unreimbursed workers’ compensation benefit recovered
by the injured person (as Westfield argues), the UIM insurer offsets $150,000 + x with
respect to workers’ compensation medical benefits and $600,000 with respect to other
30
workers’ compensation benefits, for a total offset of $750,000 + x. Because the WC insurer
has been reimbursed, via the statutory lien, for $100,000 of its payments, the offset is
reduced by that amount and therefore equals $650,000 + x. The injured person nets
$250,000 - x from the liability judgment and the claim against the UIM coverage. This can
be represented as follows:
Net Recovery From Tortfeasor and UIM Claim After WC Offset
Tortfeasor Liability Coverage $100,000
UIM Policy Limits $1,000,000
Reduction of UIM Limits by Liability Recovery ($100,000)
WC Insurer’s Statutory Lien ($100,000)
Offset for WC Benefits: ($650,000 + x)
WC Non-Medical Payments ($600,000)
WC Medical Payments and Discount ($150,000 + x)
Reimbursed WC Benefits (Lien) $100,000
Net Recovery $250,000 – x
(3) WC claim and UIM claim; x not part of offset (Mr. Gilliam’s position).
The injured person recovers $100,000 from the tortfeasor’s liability insurer. The
injured person also makes a claim against the applicable UIM coverage. Pursuant to IN
§19-509(g), the UIM policy limits are reduced by the $100,000 recovered from the
tortfeasor’s insurer. The WC insurer also recovers its statutory lien in that amount.
Assuming that the offset for workers’ compensation medical benefits is limited to the
$150,000 actually paid by the WC insurer (as Mr. Gilliam argues), the UIM insurer is to
offset $150,000 with respect to workers’ compensation medical benefits and $600,000 with
respect to other workers’ compensation benefits, for a total offset of $750,000. Because
31
the WC insurer has been reimbursed, via the statutory lien, for $100,000 of its payments,
the offset amount equals $650,000. The injured person nets $250,000 from the liability
judgment and the claim against UIM coverage. This can be represented as follows:
Net Recovery From Tortfeasor and UIM Claim After WC Offset
Tortfeasor Liability Coverage $100,000
UIM Policy Limits $1,000,000
Reduction of UIM Limits by Liability Recovery ($100,000)
WC Insurer’s Statutory Lien ($100,000)
Offset for WC Benefits: ($650,000)
WC Non-Medical Payments ($600,000)
WC Medical Payments ($150,000)
Reimbursed WC Benefits (Lien) $100,000
Net Recovery $250,000
These examples illustrate that, in the situation where the responsible tortfeasor is
fully insured (scenario 1), the injured person obtains a net recovery of $250,000, after
application of the WC insurer’s statutory lien. If the tortfeasor was underinsured and the
incremental value of the health care services above what was paid by the WC insurer (i.e.,
x) is part of the offset of UIM benefits (scenario 2 – Westfield’s position), the injured
person has a net recovery from UIM coverage of $250,000 - x after application of the offset.
On the other hand, if the offset does not include x (scenario 3 – Mr. Gilliam’s position),
then the injured person’s net recovery from UIM coverage after application of the offset is
the same as when the tortfeasor is similarly insured.
As explained above, the goal of the UM/UIM coverage is to place the injured person
in the same position as if the person had been injured by a tortfeasor with liability insurance
32
equivalent to the UIM coverage. Including x as part of the offset under IN §19-513(e) is
not consistent with that purpose.32 This analysis confirms our construction of the text of
the statute and is consistent with the legislative history.
4. Summary
In this case, we do not know what the fact finder in the trial in federal court will
determine to be the fair and reasonable value of the health care services Mr. Gilliam
received as a result of the accident and therefore to what extent, if at all, that value exceeds
the $118,369.15 paid by the WC insurer. In short, we do not know the value of x in this
case.33 Mr. Gilliam will apparently argue that it equals $125,030.18 – the difference
between the face amount of the provider bills ($243,399.33) and the amount paid by the
WC insurer ($118,369.15); Westfield may argue otherwise. For purposes of answering the
question of law presented to us, the value of x does not matter. Whatever it is, it is not part
of the offset under IN §19-513(e).
This result places Mr. Gilliam in the same position as if he had been injured by a
tortfeasor with insurance coverage equivalent to that of the UIM coverage of his
employer’s motor vehicle insurance policy. This outcome not only interprets “workers’
compensation benefit” consistently with its usage in the UM/UIM statutory scheme, but
Under Westfield’s interpretation, even if Mr. Gilliam had fully reimbursed the
32
WC insurer for the amounts paid by that insurer, Westfield could still use the offset under
IN §19-513(e) to reduce his recovery of UIM benefits by the “written-down” amount.
33
Similarly, we do not know, and the record does not indicate, what Mr. Gilliam, or
someone on his behalf (e.g., health insurance, Medicare, Medicaid) would have paid the
health care providers in the absence of a workers’ compensation claim.
33
also serves the legislative purposes of both the workers’ compensation law and the
UM/UIM law: compensating the employee, see Podgurski, 374 Md. at 148; placing the
claimant of UIM coverage in the same position as if the tortfeasor had been sufficiently
insured, see Curtis, 330 Md. at 174; and avoiding double recovery by the employee from
both the WC insurer and the UIM insurer, see State Farm, 283 Md. at 675. We hold that
the difference between the amount nominally billed for Mr. Gilliam’s health care and the
amount the WC insurer actually paid is not a “recovered benefit” under IN §19-513(e).
IV
Conclusion
The federal district court has asked whether a positive difference between (1) the
fair and reasonable value of health care services made necessary by an automobile accident
and (2) the amount paid by a workers’ compensation insurer in full satisfaction for those
services (for which the workers’ compensation insurer has not been reimbursed) is, for
purposes of the offset against underinsured motorist benefits under IN §19-513(e), a
“benefit” recovered by the injured person under the workers’ compensation law.
For the reasons set forth in this opinion, the answer to that question is “no.”
CERTIFIED QUESTION OF LAW ANSWERED AS SET FORTH
ABOVE. COSTS TO BE DIVIDED EQUALLY BETWEEN THE
PARTIES.
34