Maryland Widow's Death Benefits Claim Not Barred by Husband's Earlier Broad Settlement Agreement

Citing Larson’s Workers’ Compensation Law, the Court of Appeals of Maryland held that the Workers’ Compensation Commission’s approval of a settlement agreement that purported to release a dependent’s future claims for death benefits did not render the release enforceable against a dependent who was not a party to the agreement [In re Collins, 2020 Md. LEXIS 263 (May 26, 2020)]. The Court added that while it is certainly true that a dependent’s claim for death benefits under the Act is based on an employee’s compensable injury or disease, the claim for death benefits is independent of the employee’s own claim for benefits.

Background

Ms. Collins, the widow of firefighter Bernard Collins, filed a dependent’s claim for death benefits under the Maryland Workers’ Compensation Act against her late husband’s employer and its insurers (hereinafter collectively referred to as “the employer”). Two years before he died, Mr. Collins settled claims he had filed under the Act against the employer for workers’ compensation disability benefits related to his heart disease. In the parties’ settlement agreement, Mr. Collins purported to release the employer from any and all claims that Mr. Collins, his personal representative, dependents, spouse, children, and other potential beneficiaries might then or could later have “of whatsoever kind” which might arise under the Act from Mr. Collins’s disability. In exchange for the release, the employer agreed to make various payments to Mr. Collins upon approval of the settlement agreement by the Commission.

The Commission subsequently issued an order approving the parties’ settlement, and the employer made the agreed-upon payments to Mr. Collins. Ms. Collins was not a party to Mr. Collins’s settlement. The employer contested Ms. Collins’s claim before the Commission, contending that her husband’s prior release of claims barred Ms. Collins from recovering death benefits. The Commission agreed and denied Ms. Collins’s claim. When Ms. Collins sought judicial review, the Circuit Court for Calvert County granted summary judgment in favor of the employer based on the release, thereby upholding the denial of Ms. Collins’s claim. Ms. Collins appealed.

Court of Special Appeals

The Court of Special Appeals reversed the circuit court’s judgment and remanded the case to the Commission for further proceedings, holding that Mr. Collins’s release did not bar Ms. Collins’s claim for death benefits because: (1) Ms. Collins was not a party to the settlement; and (2) an employee’s settlement of claims for disability benefits relating to an accidental injury or occupational disease did not extinguish the independent claim for death benefits that a surviving dependent may bring if the employee dies of the same compensable injury or disease.

Court of Appeals Affirms Court of Special Appeals

The Court of Appeals initially reminded the parties of something taught in the first semester of every law school contracts course: A person who is not a party to a contract is not bound by its terms. The Court stressed that under the Act, in addition to the disability benefits an employer owed its employee for injuries and illnesses arising out of and in the course of the employment, the employer or insurer is separately liable to pay death benefits to surviving dependents of employees who die as a result of a workplace injury or occupational disease.

Two Views Regarding the Release

The employer stated its interpretation of the release agreement — that in exchange for the payments the employer would provide to Collins, neither Mr. Collins nor Ms. Collins would ever assert any additional claims against the employer relating to Mr. Collins’s heart disease and hypertension, including a claim for death benefits. Ms. Collins countered that the release unambiguously evinced the parties’ understanding and intent that Ms. Collins’s potential future death benefits claim was not being released, because the release was “completely devoid of language as to death claims.”

The Court of Appeals acknowledged that there was merit to both of these interpretations of the release. The Court indicated that while Mr. Collins may have intended to release the employer from future liability for death benefits, that was not the relevant issue.

Dependents May Settle Future Claims for Death Benefits

The Court held that the Act permitted dependents to release future death benefits claims while the employee upon whom they depend is still alive. They may do so either as part of a global settlement also resolving the claims of an employee under the Act, or in a separate agreement submitted to the Commission after an employee files a claim for benefits resulting from a compensable injury or occupational disease. The Court stressed, however, that while dependents may release their current or future claims for death benefits under the Act, employees do not have the power to release their dependents’ independent claims for death benefits.

The Court observed that the Act provides that a settlement agreement approved by the Commission “is binding on all of the parties to the agreement” [Md. Labor and Employment Code Ann. § 9-722(d)(1)]. The Court noted that Ms. Collins did not inherit her claim for death benefits as Mr. Collins’s heir. To the contrary, Ms. Collins’s claim for death benefits was created by the Act and was independent of Mr. Collins’s prior claim for disability benefits. Because Mr. Collins never could assert a claim for death benefits himself, it was not his prerogative to release such a claim. Only Ms. Collins could release her claim to death benefits by personally entering into a settlement agreement with the employer that was subsequently approved by the Commission. She did not do so.

Death Claim Not Extinguished by Settlement

As to the employer’s contention that the settlement of Collins’s disability claim extinguished Ms. Collins’s claim for death benefits before she filed her claim, the Court again disagreed. The Court said the fundamental problem with the employer’s argument is that a dependent’s claim for death benefits does not derive from the deceased employee’s claim for disability benefits. Rather, a dependent’s claim for death benefits was independent of the deceased employee’s claim for compensation, and belonged only to the dependent.

Decision Consistent With Majority and With Larson

Citing Larson’s Workers’ Compensation, § 98.01, the Court indicated its decision was consistent with the great weight of authority in other jurisdictions interpreting similar workers’ compensation statutes.