INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Attorney fees were subject to offset
Two Maryland police officers were injured in the line of duty and were compensated under two different sources, a Workers Compensation Act (WCA) and an Accidental Disability Retirement (ADR) benefits fund.
The officers both had legal representation to assist in justifying and collecting their awards. The attorneys challenged the amount of fees they received for their efforts.
Attorney fees are based on the amounts that injured workers receive. Under the WCA, there is an important restriction: It includes an offset provision. If more than one source awards payments, there is an offset of any amounts that are determined to be duplicate payments.
In this particular case, the amounts received for both officers under the WCA exceeded what was provided by the ADR. Due to offsets, the total ADR amounts were subject to offset, so were not paid.
The result was that the attorney fees were based on the net payments awarded. They argued that their fees should be calculated according to the total amount, ignoring the offset. They pointed out that there was a distinction between the two sources of payments. The WCA wording used “compensation,” while the ADR referred to “benefits.”
Payment of attorney fees are handled by a separate workers compensation commission and that body stipulated that the fees were also subject to offsets and were calculated accordingly. Both parties requested review of the matter by a circuit court. That court ruled to affirm the Commission’s offset decision. The commission submitted a question to a higher court, asking for clarification on the application of offsets.
The court eventually found no reason to make a distinction between the terms used to describe awards under the two acts. It studied the legislative intent of the acts as well as several relevant cases. In its opinion, the intent has consistently been to give final awards that minimized double-dipping of awards.
The court also considered the impact of calculations on the amounts due to injured parties. They found this to be important, as injured parties are solely responsible for paying attorney fees.
The court reasoned that allowing fees to be calculated before offsets could result in fees that substantially reduce (or even obliterate) awards provided to injured parties. It determined that such results did not align with legislative intent.
Finally, the court addressed the attorney’s arguments that post-offset fee calculations were unconstitutional, alleging that it akin to depriving them of property. The court determined that attorneys have a choice of how they may be compensated, such as flat fees, hourly rates or percentage of awards. These arrangements are long-established practices and contain a risk regarding the adequacy of final fees that are regularly borne by attorneys.
The handling of this particular case did not support a constitutional argument. The lower court decision was affirmed in favor of the commission.
Mark Zukowski, et al. v. Anne Arundel County—Supreme Court of Maryland—No. 14 September Term, 2024—April 24, 2025.
