Trayco Insurance v. Williams

Citations: 430 Md. 396; 61 A.3d 50Docket: Misc. Docket No. 7

Court: Court of Appeals of Maryland; February 25, 2013; Maryland; State Supreme Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The United States District Court for the District of Maryland has certified legal questions regarding the interpretation of Md.Code (1996, 2011 Repl. Vol. 19-513(e) of the Insurance Article, specifically whether an insurance company must deduct workers’ compensation (WC) benefits from uninsured motorist (UM) and personal injury protection (PIP) benefits when the insured has not reimbursed the WC provider. The court seeks clarification on the resolution of disputes over the WC provider’s subrogation rights and whether insurers can reduce benefits for medical bill "write-downs" that qualify as WC benefits.

The ruling clarifies that under the plain meaning of 19-513(e), UM and PIP benefits payable to an insured must be reduced by any WC benefits received, provided the WC provider has not been reimbursed. Additionally, if medical bill "write-downs" are considered WC benefits and remain unreimbursed, the insurer must deduct these discounts from the benefits owed to the insured.

The case involves Crystal Williams, insured under a Maryland auto policy issued by TravCo Insurance Company, which provided UM coverage with limits of $100,000 and PIP coverage of $2,500. The policy stipulates reductions in UM and PIP benefits for sums paid under WC laws if the WC insurer has not been reimbursed. On August 2, 2007, while working as a passenger in a government vehicle, Williams was injured in an accident caused by an unknown driver, leading to significant medical expenses and loss of earnings. She missed nine weeks of work and received a 22% disability rating.

Medical invoices from Ms. Williams to TravCo show that her medical providers implemented "write-downs" totaling at least $3,591.53. The District of Columbia’s workers' compensation (WC) third-party administrator claims a subrogation right of $11,043.60 against any personal injury protection (PIP) or uninsured motorist (UM) recovery by Ms. Williams. Although Ms. Williams plans to reimburse the District of Columbia government, TravCo contests her obligation to do so. The exact amount of reimbursement cannot be determined until a settlement or judgment with TravCo, and Ms. Williams lacks the funds for out-of-pocket reimbursement.

While TravCo acknowledges that Ms. Williams' claims are covered by PIP and UM agreements, disputes regarding the implications of Section 19-513(e) of the Insurance Article hinder settlement. Consequently, the District Court certified several legal questions to clarify the interpretation of Section 19-513(e), particularly regarding the impact of unreimbursed WC benefits on PIP and UM claims. The questions include whether Section 19-513(e) applies when the insured has not reimbursed the WC provider but is expected to do so from any UM or PIP recovery, the method for resolving disputes regarding the validity and extent of a WC provider’s subrogation right, and whether "write-downs" of medical bills count as WC benefits that would reduce benefits under Section 19-513(e).

The statute indicates that benefits under PIP and UM should be reduced based on unreimbursed WC benefits. PIP offers no-fault coverage for medical expenses and lost income from motor vehicle accidents, while UM coverage allows recovery when the at-fault driver lacks insurance or sufficient funds. Both coverages aim to provide financial compensation to victims of motor vehicle accidents and financially irresponsible uninsured motorists, respectively.

TravCo asserts that Maryland statute 19-513(e) clearly mandates insurers to reduce Personal Injury Protection (PIP) and Uninsured Motorist (UM) benefits when an insured has received Workers' Compensation (WC) benefits that have not been reimbursed. TravCo believes it must reduce Ms. Williams’s benefits because she received WC benefits from the District of Columbia without repaying it. The company argues that the purpose of UM and PIP benefits is to serve as protective compensation when other options are unavailable, which is partially fulfilled by the receipt of WC benefits. TravCo contends that if the statute's plain meaning results in unfair outcomes for the insured, the legislature can amend it, noting the General Assembly has made several amendments since 1999, including one in 2001.

Conversely, Ms. Williams argues she plans to reimburse the District for her WC benefits, either legally or voluntarily, and thus should not face a reduction in her settlement from TravCo. She believes the statute aims to prevent windfalls for insured parties rather than hinder fair recovery due to a work-related accident. Ms. Williams emphasizes that the 2001 amendment allows reductions only to the extent that WC benefits remain unreimbursed, which she interprets as remedial legislation favoring injured workers. She argues TravCo’s interpretation leads to impractical outcomes, penalizing insured individuals who cannot afford immediate reimbursement to their WC providers. Ms. Williams maintains that the legislature could not have intended for reimbursement under 19-513(e) to apply solely if repayment occurs before settlement or judgment.

In interpreting the statute, the principles of statutory construction dictate that the real legislative intent should be ascertained from the statute's plain language. Courts are to adhere to the ordinary meaning of the statute's words, avoiding forced interpretations that alter its intended operation. If the statute's language is clear and unambiguous, there is no need to seek outside sources to determine legislative intent.

The predecessor to § 19-513(e) of the Maryland Code, specifically Md.Code, Art. 48A, § 543(d), mandated that Personal Injury Protection (PIP) and Uninsured Motorist (UM) benefits be reduced by any benefits recovered under Workers' Compensation (WC) laws. Court interpretations established that the statute's language was clear and required insurers to decrease PIP benefits by the amount received from WC. In *State Farm*, the court clarified that "has recovered" pertained to any monetary payments actually received from WC, regardless of reimbursement to the WC provider. The definition of "to recover" encompassed obtaining or receiving benefits through legal means. 

In *Gable v. Colonial Ins. Co.*, the court reiterated that the term "has recovered" referred strictly to benefits actually received, not potential future entitlements. The Maryland statute's wording explicitly indicated a distinction between received and unrecovered WC benefits, contrasting with similar statutes in other jurisdictions that included "recoverable" benefits. Consequently, the insurer could not offset PIP payouts based on WC benefits not actually received.

In 2001, the Maryland General Assembly amended the statute to stipulate that insurers must reduce UM and PIP benefits only for unreimbursed WC benefits the recipient has recovered, highlighting a legislative intent to address the reimbursement issue for WC providers.

In *Parry v. Allstate Ins. Co.*, the Maryland Court addressed a 2001 amended statute concerning uninsured motorist (UM) claims filed by the estate of a police officer who died from injuries sustained on duty. The officer's employer covered medical expenses under workers' compensation (WC) law but did not seek reimbursement. The estate subsequently filed for UM benefits, and the insurer sought to reduce its liability by the unreimbursed WC benefits. The court reaffirmed that under both the previous and current versions of the statute, insurers must reduce UM and personal injury protection (PIP) benefits by any unreimbursed WC benefits, regardless of whether a formal WC claim was filed. The court found the statute unambiguous and noted that the 2001 amendment did not alter this interpretation, emphasizing the phrase "for which the provider of the WC benefits has not been reimbursed." The court cited dictionary definitions of "reimburse" to clarify its meaning as a repayment, and interpreted the statutory phrase "has not been reimbursed" as indicating a lack of reimbursement up to the present time. This interpretation aligns with prior case law, indicating that the right to offset WC benefits is based on actual receipt of those benefits, rather than potential future claims.

Under the current interpretation of the statute, a workers' compensation (WC) provider must have been actually reimbursed for benefits provided; mere future reimbursement does not satisfy the statutory requirement. The statute explicitly omits variations of the term "reimburse," reinforcing that only past or present reimbursements qualify for exemptions. In the case of Ms. Williams, she has received WC benefits, but her provider has not been reimbursed, which necessitates a reduction in her personal injury protection (PIP) and uninsured motorist (UM) benefits according to Md. Code § 19-513(e). The court's interpretation aligns with legislative intent to prevent the duplication of insurance benefits, as established in prior cases such as Parry and State Farm. The 2001 amendment aimed to ensure that only unreimbursed WC benefits could reduce PIP and UM benefits, distinguishing this case from State Farm, where the WC provider had already been reimbursed. The court determined that the plain meaning of the statute dictates the outcome, rendering any disputes over reimbursement between TravCo and Ms. Williams unnecessary for this case, and leaving unresolved questions regarding the District of Columbia's subrogation rights.

The legal document addresses the treatment of "write-downs" of medical bills in relation to workers' compensation (WC) benefits and uninsured motorist (UM) benefits under Maryland Insurance Article § 19-513(e). It concludes that if the District of Columbia considers these write-downs as WC benefits and Ms. Williams has received them without reimbursement to the WC provider, then TravCo must reduce the UM benefits payable to her accordingly. This determination is based on the statute's clear language stipulating that benefits under personal injury protection (PIP) and UM coverage must be reduced by amounts recovered under state WC laws that have not been reimbursed. 

In the medical context, "write-downs" refer to the difference between billed charges and negotiated payments accepted by medical providers as full payment. The parties have not engaged in discovery, and TravCo has not contested the facts presented. Additionally, the parties discussed various sub-disputes, including categorization of attorney's fees related to refunds to the District of Columbia government. The court previously struck a fourth certified question as resolvable by an earlier decision. Ms. Williams argues that individuals injured in non-work-related incidents can recover both from tortfeasors and their insurance for PIP benefits, even if this results in duplicative recoveries. The document notes that the interpretation of "reimbursement" regarding total or partial repayment of WC benefits is not currently under consideration, and TravCo concedes that write-downs do not apply to PIP claims.