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Firefighter’s full disability pension requires Workers’ Compensation offset

The Maryland Court of Appeals held that full disability retirement usually precludes additional Workers’ Compensation benefits even if they are for a different injury.

The Maryland Court of Appeals, the highest court in our state, decided a Workers’ Compensation case that has raised eyebrows among advocates for injured state and local government employees. In August 2022, the court in a 6-1 decision said that under state law a public employee receiving retirement benefits for permanent total disability from a work injury must set off a Workers’ Compensation award for a separate work injury or illness that manifests later.

What this means is a state or local government employee eligible for full disability retirement who later develops a different work injury or sickness will not receive anything for the second injury if that award is less than the retirement benefits. Should the later Workers’ Compensation award be more, either the employer or the Subsequent Injury Fund or both pays the difference.

In other words, the court held that in this scenario, the claimant will receive the amount of the higher of the two awards, but the two benefits cannot be combined for a larger overall payout.

The real story

The facts of this case, Spevak v. Montgomery County, help to clarify these complex legal issues. Patrick Spevak was a firefighter in Montgomery County, Maryland, for three decades until he retired because of a permanently disabling back injury received at work. For this he received total disability retirement benefits of $1,859.07 per week.

Years later, Spevak developed hearing loss from his earlier, repeated work exposure to loud sounds. The Maryland Workers’ Compensation Commission (WCC) found Spevak eligible for Workers’ Compensation for this injury and awarded 26.25 weeks of $322 weekly payments. But he could not collect the temporary weekly benefit because the WCC and two lower courts found that the offset provision in the Workers’ Compensation statute essentially voided the later hearing-loss award.

The high court agreed, affirming the Maryland Court of Special Appeals. (In a previous article, we focused on the lower court’s opinion.)

The legal reasoning

The Workers’ Compensation offset statute provides that (with narrow exception) if a governmental employee receives a benefit – pension or otherwise – similar to Workers’ Compensation, “payment of the [other] benefit by the employer satisfies, to the extent of the payment, the liability of the employer and the Subsequent Injury Fund for payment of similar benefits under [the Workers’ Compensation] … title.”

The court wrote that Workers’ Compensation is a “similar benefit” to the disability retirement benefits. Because the retirement award was for total disability, any additional wage replacement-type benefit like Workers’ Compensation would provide a windfall representing more than the wage replacement from the retirement benefits for “full” disability. The disability retirement covered all benefits for all work injuries because it was for total disability. To pay out both would be “duplicative recovery at the taxpayers’ and state’s expense,” wrote the court.

Outstanding questions

One judge disagreed in a dissenting opinion. She said that previous decisions had focused on whether the two kinds of benefits compensated for the same injury – that “similar benefits” means the disabled worker under these circumstances should not receive wage replacement twice for the same injury or illness. Here, Spevak’s injuries were entirely separate, so in her judgment, they were not similar, and no setoff should occur.

The majority emphasized the legislative policy of protecting taxpayers financially from duplicate payouts. The dissent countered that this was true, but only multiple payments for the same injury were truly similar, focusing more on fairness to the worker. While the majority pointed out prior holdings that relied on whether the two kinds of benefits were for the same injury, it seemed to create a concept that an award for total disability (here for a back injury) encompasses all injuries, including anything different that develops later – that total disability status can only be awarded once and applies to all other injuries that are work related.

Workers’ Compensation systems were created to lessen conflict between employer and employee, to make outcomes predictable and to give preset benefits regardless of who was at fault for work-related injury, illness or death. The law is to be applied liberally on the side of worker protection and benevolence in a close call.

Some question whether the court’s interpretation in Spevak’s case was in the spirit of Workers’ Compensation law, penalizing government employees who develop multiple work injuries and illnesses. We will follow this issue closely to see if the legislature steps in response to change the law or if the offset provision ends up before the high court again for further interpretation.

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