Conley v. Trumbull Ins. Co., No. 0081-2021 (Md. Ct. Spec. App. Jul. 18, 2022)
In a recent unreported opinion by the Court of Special Appeals, a three-judge panel confirmed that the Appellee did not waive their subrogation interest by failing to expressly reserve that right in the final settlement agreement between the parties. This case stemmed from an on-the-job injury that occurred due to the negligence of a third-party tortfeasor. Following the injury, the Appellant retained an attorney and filed a workers’ compensation claim against Appellee, the employer’s workers’ compensation carrier. Additionally, Appellants filed a “third-party claim” against the tortfeasor, an employee of a national bottling company. Appellants and Appellee reached an “Agreement of Final Compromise and Settlement” which concluded Appellants’ claim against Appellee. Appellants' claim against the Third Party was subsequently settled.
Appellee then sought reimbursement from Appellants’ third party settlement under Appellee’s right of subrogation under the Maryland Workers’ Compensation Act (“MWCA”). However, Appellants refused to provide the proceeds of the third party settlement because they believed Appellee waived its right to subrogation by failing to preserve that right in the final settlement agreement between the parties. In turn, Appellee filed a complaint against Appellants in an attempt to enforce Appellee’s subrogation right under the statute. On July 17, 2020, the Circuit Court of Baltimore County granted summary judgment in favor of Appellee, finding as a matter of law that Appellee’s statutory lien under the MWCA, survived the full and final settlement agreement. Appellants filed a notice of appeal.
The main question on appeal was did the Circuit Court err in granting summary judgment of Appellee’s statutory subrogation claim against Appellant, where Appellee did not expressly reserve their statutory subrogation interest in the full and final settlement agreement between the parties? Appellants believed that Appellee had waived their right to the third party proceeds by failing to reserve their statutory right under the details of the full and final settlement. Appellee argued that their silence concerning their subrogation rights did not amount to a waiver of their statutory lien on any of Appellants’ recoveries from the third-party tortfeasor. Since the decision to grant summary judgment is purely legal, the case was reviewed de novo.
No case law in Maryland had determined whether an employer/insurer’s subrogation right may be extinguished by failing to reserve that interest in a settlement agreement. However, after analyzing the MWCA’s amended history, along with general provisions, this indicated to the court that before October 1, 2018, an employer/insurer’s subrogation interest was not waivable by agreement. The court held that at the time of this claim, an employer’s subrogation interest was not waivable by agreement under Md. Code Ann., Lab & Empl. §9-104. As a result, Appellee did not waive its subrogation interest by failing to expressly reserve it in the final settlement agreement between the parties. This decision clarified workers’ compensation carrier’s subrogation rights against claimants in the state of Maryland.
-- Scott Mitchell, Law Clerk