Maryland Employer’s Subrogation Interest Does Not Extend to Employee’s Medical Malpractice Settlement
Where an employer paid for medical services exclusively to treat the compensable injury, but not to treat any additional harm from medical negligence, the employer had no subrogation interest in repayment of those medical expenses out of the employee’s third-party recovery for negligent treatment, held a Maryland appellate court recently in Baltimore Cty. v. Ulrich, 2020 Md. App. LEXIS 77 (Jan. 30, 2020). The court stressed that the employer was not entitled to a windfall. Where the employee had sustained injuries from medical negligence, the employer should not better off than it would have been if the medical negligence had never occurred.
Background
Baltimore County, as a self-insured employer, paid for medical services to treat an employee’s work-related injury. Later, the employee settled a tort action for medical malpractice in the treatment of that injury. The County demanded reimbursement out of the settlement proceeds for all medical expenses that it had paid. The Workers’ Compensation Commission and the Circuit Court for Baltimore County determined that the County was not entitled to reimbursement for those medical expenses on the grounds that the medical expenses resulted solely from the work-related injury. The employee argued and the Commission and Circuit Court agreed that the medical expenses would have been incurred even if no malpractice had occurred.
Appellate Court Affirms
The appellate court affirmed, stressing that in any action to enforce the employer’s subrogation rights, the employer must prove that the injuries suffered by the employee were the result of the tortfeasor’s negligence. That simply was not the case, as the need for the initial medical treatment was the result of the work-related injury, not any malpractice on the part of any of the third-party healthcare providers. Those providers were liable only for additional harm caused by negligent treatment.
Complications Flowing From Treatment
The appellate court acknowledged that any complications flowing directly from treatment of a compensable injury were covered by the Workers’ Compensation Act, even if the complications resulted from negligent medical treatment. In such cases, the second injury was also compensable under the Act. Had the employer paid compensation under the Act for the aggravation of the claimant’s medical condition due to medical malpractice in the treatment of the workplace injury, it would have been entitled to a subrogation interest in that amount. Here, the employer offered no evidence that it had paid medical expenses based on the negligent treatment; it had only paid for treatment related to the initial injury.
The appellate court concluded that requiring the employee (through the diminution of the employee’s malpractice settlement) to repay the employer for expenses that the employer alone was obligated to pay, and for which no third person was ever liable to pay the employee, failed to serve the purposes of the subrogation doctrine.