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‘Compensation’ is money, not time, appeals court holds

In a decision that could prove costly to businesses and workers’ compensation insurers, a Maryland appeals court has found that a law passed a dozen years ago does not mean what those groups thought it did.

The Court of Special Appeals resolved a longstanding conflict in workers’ compensation cases over what happens when a court finds that an award of weekly benefits was too low, and orders an increase.

Employers argued that the increase should only apply to future payments, not to those weeks for which payment had already been made. Injured employees argued that the change should be retroactive to the date of the first award.

The prospective approach is known as the “weeks credit,” while the retroactive approach is known as the “dollar credit.”

Last week’s decision adopted the dollar-credit calculation in a case brought by an employee of Columbia-based W.R. Grace & Co. As a result, Andrew Swedo Jr. will receive $43,253 more than the company argued he was owed.

Julie D. Murray, an attorney for W.R. Grace, declined to address the case specifically or whether an appeal is in the offing.

However, she said, “We are assessing the particulars of this decision and seeking to have the credit for weeks reaffirmed.”

The Court of Special Appeals said its holding marked the first reported appellate decision to interpret a 2001 law enacted in response to four appellate decisions in the late 1990s, which ultimately favored the weeks-credit approach.

The 2001 legislation said employers were entitled to credit for “compensation” paid when an award was later changed.

The Court of Special Appeals concluded that the legislative history and the plain meaning of the term “compensation” both favored the dollar-credit approach.

Swedo’s attorney, Matt M. Paavola, called the decision “logical.”

“When did the word ‘compensation’ mean anything other than money?” said Paavola, of the Workers Comp Law Firm in Baltimore. “It can’t mean anything other than money.”

The Court of Special Appeals acknowledged that its holding contrasts with a comment made by Maryland’s highest court in a 2007 decision, Del Marr v. Montgomery County, that credit should be given for weeks of benefits paid. But the intermediate court said the Court of Appeals’ comment was merely a legal aside, or dicta, and had no precedential value — a conclusion that drew skepticism from Murray.

“That was the Court of Special Appeals’ interpretation, yes,” said Murray, of Semmes, Bowen & Semmes in Baltimore.

The case arose in November 2002 when Swedo fell from a ladder on the job, injuring his right shoulder and left leg.

The Workers’ Compensation Commission awarded him permanent partial disability benefits of $234 per week for 200 weeks, which would result in a total of $46,800.

Swedo sought judicial review, and a Baltimore City Circuit Court jury concluded he was entitled to $525 per week for 333 weeks, for a total of $174,825.

By the time the jury’s verdict was entered, W.R. Grace had already paid Swedo at the lower rate for 148 weeks, for a total of $34,632.

The company argued it was obliged to pay $525 per week for the remaining 185 weeks, or $96,940. That would have resulted in a total payment of $131,572.

Swedo countered that the award was $174,825, minus the $34,632 already paid, for an outstanding balance of $140,193.

The Court of Special Appeals agreed with Swedo, reversing the Baltimore County Circuit Court and the Workers’ Compensation Commission.

Paavola, Swedo’s attorney, called the May 1 decision significant because it removes an incentive for companies to drag out workers’ compensation claims in court, effectively reducing the award if a jury eventually decides to raise the compensation amount.

The dollar-credit system can also work against an employee if the jury eventually reduces the compensation amount, Paavola said.

“The door swings both ways,” he said. “That’s only fair.”

Paavola added that he expects a further challenge by W.R. Grace, but is confident of an ultimate win.

“I’m rather imagining that the defense bar will try to get the Court of Appeals to address this,” Paavola said. “It’s good law. It’s logical law.”

SALMON

WHAT THE COURT HELD

Case:

Swedo v. W.R. Grace & Co., CSA No. 998, Sept. Term 2011. Reported. Opinion by Salmon, J. (retired, specially assigned). Argued Oct. 2, 2012. Filed May 1, 2013.

Issue:

Did the Workers’ Compensation Commission and trial court err in applying a “weeks credit” calculation in determining workers’ compensation owed following a court’s readjustment?

Holding:

Yes; the legislative history and use of the term “compensation” in the 2001 revision LE 9-633 indicate that a “dollar credit” calculation should have been applied.

Counsel:

Matt M. Paavola for appellant; Julie D. Murray for appellee.

RecordFax # 13-0501-07 (29 pages)