Westfield Insurance v. Gilliam, 269 A.3d 1047

Background

On Jan. 6, 2017 Michael Gilliam was rear-ended while driving a company vehicle; the tortfeasor’s liability carrier paid $30,000.00.
Gilliam’s health-care providers billed $243,399.33 for accident-related treatment; the workers’ compensation (WC) insurer paid $118,369.15 pursuant to the WC Fee Guide and providers accepted those payments as full satisfaction.
The WC insurer paid a total of $628,685.62 (medical + other WC benefits) and asserted a statutory lien; it accepted $10,000 of the $30,000 tort recovery in satisfaction of part of its lien.
Gilliam sued his employer’s insurer, Westfield, under the policy’s underinsured motorist (UIM) coverage (policy limit $1,000,000); Westfield sought to offset UIM benefits under Md. Code, Ins. §19-513(e) by the WC benefits Gilliam recovered.
Dispute: whether the $125,030.18 difference between providers’ billed amounts and amounts actually paid by the WC insurer (the “write-down”) is a “benefit recovered under the workers’ compensation laws” subject to the §19-513(e) offset.
The U.S. District Court certified that question to the Maryland Court of Appeals, which held the write-down is not a recoverable WC benefit for purposes of §19-513(e); only amounts actually paid by the WC insurer may be offset.

Issues

Issue	Gilliam (plaintiff)	Westfield (defendant)	Held
Whether the difference between providers’ billed amounts and WC Fee Guide payments (the “write-down”) counts as "benefits recovered under the workers’ compensation laws" for purposes of Md. Ins. §19-513(e)	The write-down is not a recovered WC benefit; only payments actually made by the WC insurer qualify	The write-down is a WC benefit recovered by the claimant and may be offset against UIM benefits	No — the write-down is not a recovered benefit; only amounts actually paid by the WC insurer are includable in the §19-513(e) offset
Whether a "benefit" for §19-513(e) must be expressible as a monetary amount that can be reimbursed to the WC insurer	A qualifying benefit must be an amount actually paid or at least reimbursable to the WC insurer	The statute’s language permits treating discounts/write-downs as benefits even if not separately reimbursable	The Court: benefit must be a sum that was recovered and capable of reimbursement; a write-down (amount never paid) cannot be reimbursed and thus is not a recovered benefit
Whether including write-downs in the offset would frustrate the remedial and parity purposes of UIM coverage	Offsets should not reduce a claimant’s net recovery vis-à-vis being injured by a fully insured tortfeasor	Offset should prevent duplication of recovery even if it reduces parity	The Court favored parity and legislative purpose: excluding write-downs avoids unfairly diminishing UIM recovery compared to a fully insured tortfeasor

Key Cases Cited

TravCo Ins. Co. v. Williams, 430 Md. 396 (2013) (considered whether write-downs count under §19-513(e) where non‑Maryland WC law applied)
State Farm Mut. Auto. Ins. Co. v. Ins. Comm'r, 283 Md. 663 (1978) (statutory coordination of benefits prevents duplication of recovery)
Erie Ins. Co. v. Curtis, 330 Md. 160 (1993) (WC statutory lien does not attach to UM/UIM recoveries)
Parry v. Allstate Ins. Co., 408 Md. 130 (2009) (scope of §19-513(e) offset can reach elements of UIM recovery not compensable under WC law)
Podgurski v. OneBeacon Ins. Co., 374 Md. 133 (2003) (WC subrogation and lien serve to avoid windfall and ensure tortfeasor liability)
Shpigel v. White, 357 Md. 117 (1999) (plaintiff entitled to fair and reasonable value of medical services; billed or paid amounts are not conclusive indicators)