Are car accident settlements marital property under Maryland Divorce laws?
The purpose of this article is to determine whether a personal injury settlement is considered Marital property under the Maryland Marital Property act and therefore subject to division between spouses if they are divorced. The Maryland appellate courts have interpreted the Maryland Marital Property act to conclude the following with regard to car accident settlements:
- The date of accident and the date of the settlement or verdict are not determinative.
- The purpose of the benefits is determinative in characterizing a car accident settlement or verdict as marital or non-marital property
- If a car accident victim is injured prior to a marriage and settles or resolves his case before he/she is married, the car accident settlement or verdict is not marital property subject to distribution by the courts even if some or all of the benefits remain unspent during any time during the marriage.
- If a car accident victim is injured prior to the marriage, and if the settlement compensates for lost premarital or after divorce- post-marital wages or for medical expenses paid from non-marital assets funds, then that portion of the settlement should be characterized as non-marital.
- With regard to any car accident that occurs during the marriage and a settlement or verdict received before a divorce decree, the car accident settlement can be either marital property or not marital property or a combination of both.
- With regard to any car accident settlement or verdict received after the divorce decree for a car accident that occurs during the marriage, the car accident settlement can be either marital property or not marital property or a combination of both.
- The part of the settlement or verdict that is marital property for a car accident that occurs during the marriage and a settlement or verdict received either before or after a divorce decree,
- is any settlement or verdict money paid or awarded that is paid for the purpose of lost wages paid to cover periods of lost wages that occurred during the period the parties were married?
- settlement or verdict money paid or awarded for medical expenses reimbursements for previously paid medical expenses from marital assets,
- settlement or verdict money paid or awarded for loss of earning capacity that are ordered for periods during the marriage are marital property.
- settlement or verdict money paid or awarded money paid for loss of consortium is marital property. These include wrongful damage to the marital relationship, loss of companionship, affection, assistance, and loss or impairment of sexual relations.
- settlement or verdict money paid or awarded monies paid to reimburse spouse for wages he/she would have earned if he/she had not stayed home to care for the injured party are marital property;
- The part of the settlement or verdict that is non-marital property for a car accident that occurs during the marriage and a settlement or verdict received either before or after a divorce decree
- Examples of non-marital property are non-marital contributions which flowed from the injured party’s inchoate personal injury claim including the loss of or loss of use of a body part, the pain and suffering attendant thereto, and the loss of earnings for the period after dissolution of the marriage.
- Examples of what is part of pain and suffering particular to the injured party and therefore money awarded for these injuries and these are not marital property are, mental pain and suffering, fright, nervousness, indignity, humiliation, embarrassment and insult. In addition, pre-impact fright, actual personal injuries sustained and their extent and duration, effect injuries have on overall physical and mental health and well-being, physical pain and mental anguish suffered in the past and which can be reasonably expected to be experienced in the future, disfigurement and humiliation and embarrassment associated therewith are not marital property.
- Past medical expenses incurred by the injured party not already paid by marital assets in the past and medical expenses expected in the future are not marital property
- loss of earnings after the termination of the marriage or the loss of earning capacity wages awarded for period after the termination of the marriage are not marital property.
- In the normal settlement situation, the settlement is not apportioned between marital property damages and non- marital property damages, but the check is paid in one lump sum. Ideally, it would be helpful if the release characterized how much of the settlement was for loss of consortium, medical expenses directly or indirectly paid by the marital entity, and lost wages prior to the break-up of the marriage. This part of the settlement would be considered marital property. The balance of any settlement would be apportioned among non-marital contributions which flowed from injured party’s inchoate personal injury claim including the loss of use of a body part, the pain and suffering attendant thereto, and the loss of earnings for the period after dissolution of the marriage.
- Even if the release, made the apportionment as suggested above, it could be potentially subject to attack if one party to the marriage could show at a divorce hearing that the apportionment was not done fairly.
- Ideally, if the parties both actively participated in the apportionment and understood the consequences of the apportionment on any future divorce proceeding, then the court could find an agreement between the parties to designate certain property as marital and others as non- marital and perhaps the agreement would be enforceable. Family law article 8-201 (E) (3) (iii).
- An attempt by the parties after the case is settled to segregate the funds into separate accounts will not be found to be an agreement under Family law article 8-201 ( E ) ( 3 ) ( iii ).Where injured party attempts to argue that the way the funds were treated during the marriage constituted a “shared recognition” by the parties that the settlement proceeds belonged ninety-five percent to him and five percent to his former spouse when the funds were divided in those percentages and deposited into separate bank accounts for each party, the court rejected this as an agreement by the parties under Family law article 8-201 ( E ) ( 3 ) ( iii ).
- In a court trial or jury trial, the verdict will be apportioned among all of the measure of damages. That finding should control as to what part is marital and what part is non-marital. A quick look at the court docket will only reveal the final verdict, so the parties may have to order the transcript in a court trial or look at the verdict sheet in a jury trial.
- The Unklecase seems to suggest that if the injured party’s accident and his/her recuperation occurred after he/she and his/her spouse separated, and suit has not been filed before the parties separate, then none of the settlement would be marital property even though technically the parties were still married.
- The party trying to prove a portion of the personal injury settlement or verdict is marital property has the burden of proof.
- Settlements are also used to close out cases and end all litigation. Each party to the process has a different interpretation of the benefits that the claimant might receive. A settlement is a compromise of those issues. When trying to decide what part of the settlement is for benefits that might be considered marital property, the same principles as above apply, but how to figure out which portions of the settlement are for which benefits is more difficult. The lawyer who prepares the settlement agreement on behalf of the injured car accident victim may want to consider some language in the agreement outlining, what portion is for benefits that would have been paid during the marriage for lost wages, medical expenses reimbursements for previously paid medical expenses from marital assets, future lost wages, loss of consortium and pain and suffering. If the lawyer does not do such an allocation in the settlement agreement, then expert testimony may be necessary to present to the divorce court. I will outline what form that expert testimony might look like later in this article. Even if the settlement agreement provides a breakdown, the court may still set aside the apportionment, if counsel attempts to apportion the amount in a matter inconsistent with the facts of the case.
- Car accident settlement proceeds, that are not considered marital property, together with other income of a spouse, may be considered when determining what, if any, maintenance to award to the other spouse, (alimony or child support) but the nonworking spouse is not entitled to any specific portion of the future income from the worker’s disability compensation.
The above principles are based upon the following statutes and case law.
The State of Maryland Marital property act states when parties get divorced, they may be required to divide up assets and income sources even if only titled in one spouses name. The law recognizes that when parties marry, they agree on issues like who will work and how many hours vs who may stay home, however this decision- making process should not affect the financial positions of the parties if their marriage fails. The law attempts to protect both spouses and to equal out the distribution of assets acquired during the marriage no matter who earned them or how they are titled.
The case of Dennis Gordon v. Patricia Gordon 174 Md. App. 583, 923 A.2d 149 (2007) cites Maryland Code § 8-201(e) of the Family Law Article (“F.L.”), explains what is marital property and what is not marital property.
(e) Marital property. —
(1) “Marital property” means the property, however titled, acquired by 1 or both parties during the marriage…
(3) Except as provided in paragraph (2) of this subsection, “marital property” does not include property:
(i) acquired before the marriage;
(ii) acquired by inheritance or gift from a third party;
(iii) excluded by valid agreement; or
(iv) directly traceable to any of these sources.
Maryland Code § 8-205. of the Family Law Article
Marital property — Award.
(a) Grant of award. — (1) Subject to the provisions of subsection (b) of this section, after the court determines which property is marital property, and the value of the marital property, the court may transfer ownership of an interest in property described in paragraph (2) of this subsection, grant a monetary award, or both, as an adjustment of the equities and rights of the parties concerning marital property whether or not alimony is awarded.
It is well settled that, when a party petitions for a monetary award, the trial court undertakes “a three-step process which may culminate in a monetary award.” Alston v. Alston 331 Md. 496, 629A.2d 70 (1993); see F.L. §§ 8-203, 8-204, 8-205. See also First, for each disputed item of property, the court must determine whether it is marital or nonmarital. F.L. §§ 8-201(e)(1); 8-203; 8-205(a)(1). Second, the court must determine the value of all marital property. F.L. §§ 8-204; 8-205(a)(1). Third, the court must decide if the division of marital property according to title would be unfair; if so, the court may make a monetary award to rectify any inequity “created by the way in which property acquired during marriage happened to be titled.” Doser 106 Md. App. At 349; see F.L. § 8-205(a)(1);
Before making a monetary award, the court is required to consider the numerous statutory factors set forth in F.L. § 8-205(b).
Maryland Code § 8-205(b) of the Family Law Article provides
(b) Factors in determining amount and method of payment or terms of transfer. — The court shall determine the amount and the method of payment of a monetary award, or the terms of the transfer of the interest in property described in subsection (a)(2) of this section, or both, after considering each of the following factors:
(1) the contributions, monetary and nonmonetary, of each party to the well-being of the family;
(2) the value of all property interests of each party;
(3) the economic circumstances of each party at the time the award is to be made;
(4) the circumstances that contributed to the estrangement of the parties;
(5) the duration of the marriage;
(6) the age of each party;
(7) the physical and mental condition of each party;
(8) how and when specific marital property or interest in property described in subsection (a)(2) was acquired, including the effort expended by each party in accumulating the marital property or the interest in property described in subsection (a)(2) of this section, or both;
(9) the contribution by either party of property described in § 8-201(e)(3) of this subtitle to the acquisition of real property held by the parties as tenants by the entirety;
(10) any award of alimony and any award or other provision that the court has made with respect to family use personal property or the family home; and
(11) any other factor that the court considers necessary or appropriate to consider in order to arrive at a fair and equitable monetary award or transfer of an interest in the pension, retirement, profit sharing, or deferred compensation plan, or both.
The first Maryland case to address whether a personal injury settlement is marital property was WILLIAM EDWARD UNKLE v. GYPSY JO UNKLE. 305 Md. 587, 505 A.2d 849 (1986). In Unkle the primary issue was whether a spouse’s inchoate personal injury claim which accrued during marriage is “marital property” within the contemplation of the statute.
William and Gypsy Unkle were divorced a vinculo matrimonial on October 11, 1984 by the Circuit Court for Carroll County. In its decree the court (Burns, J.) ordered that any monies realized by William “by and through a personal injury claim … for injuries suffered at Wild World, Inc. in August 1983 … are determined to be marital property.” The evidence at trial showed that William suffered two broken legs in the accident, that he missed approximately seven and one-half months from work and accumulated medical expenses of $1,824.36. At the time of William’s accident, he and Gypsy were separated He received no assistance from Gypsy during his convalescence. While convalescing from his injuries, William lived with his parents and received no assistance from his estranged wife. William hired a lawyer to handle his personal injury claim, but by the time his divorce case was heard, no personal injury suit had been filed. William contended on his appeal that the trial court erred in including his inchoate personal injury claim in its entirety as marital property.
The Maryland Court of Appeals held we do not think that any part of William’s unliquidated personal injury claim fits within the legislatively intended definition of marital property in § 8-201(e). On the contrary, the claim is uniquely personal to the holder. And while it may have some attributes of personal property, the claim was not, within the ambit of the statutory language, “acquired” during the marriage by one or both spouses. It arose from purely fortuitous circumstances and not from any on-going marital initiative to acquire marital assets. The claim simply accrued to the injured spouse as a result of an accident and was his separate property. …As we have said, however, the claim is simply not the type of resource contemplated by the statutory definition of marital property even though, in part at least, payment of the claim would produce monies which would replenish marital assets previously diminished through payment of medical expenses and the loss of wages.
The next case that addressed this issue was of whether any part of a personal injury settlement is marital property was Blake v. Blake 341 Md 326 (1996). The appellate court granted certiorari on our own motion and prior to consideration of this case by the Court of Special Appeals in order to decide whether personal injury settlement proceeds, acquired during marriage, constitute marital property. However, the issue was only addressed in the concurring opinion of Judge Chasanow because the majority of the court dismissed the appeal on a technicality and never reached the issue. Judge Chasanow ruled husband’s personal injury settlement proceeds obtained during the parties’ marriage did constitute marital property
The facts of the Blake case were Clifton Avon Blake and Luvenilde Margott Blake were married on November 8, 1976. They separated in January 1987. In late 1990 Mr. Blake filed a complaint for limited divorce, for sole custody of the two minor children of the marriage, …By an amended counterclaim filed February 5, 1993, Mrs. Blake renewed the claims asserted in her original counterclaim and added additional claims, including a claim for an equitable award of marital property.
On February 9, 1984, Mr. Blake was injured while working as a seaman on board the S.S. Santa Elena in Ecuador. As a result of the accident, his left leg was amputated below the knee. Mr. Blake now receives accidental disability benefits from the Seafarers’ International Union. Mr. Blake also sued Delta Steamship Lines, Inc. and Crowley Maritime Corporation alleging damages for personal injury, wage loss, loss of consortium, and compensation for present and future economic loss. The case settled on November 4, 1985 for one million dollars in return for releases signed by both Clifton and Luvenilde Blake. Mr. Blake’s release was signed in consideration for the one- million- dollar settlement, while Ms. Blake released the steamship company from liability “for consideration of One Dollar and No Cents ($1.00) and other good and valuable consideration (including a settlement made by Delta Steamship Lines, Inc. with my husband, Clifton Blake for injuries sustained by him …).” Clifton Blake received $637,483.09 of the one- million- dollar settlement after attorney fees and court costs. Of that sum, approximately $115,000.00 remained in Mr. Blake’s possession at the time of the divorce.
The trial judge properly concluded that the remaining portion of Mr. Blake’s settlement proceeds was not marital property. I reach this conclusion because Ms. Blake failed to prove what, if any, portion of the personal injury settlement proceeds at issue constituted marital property. A substantial portion of Mr. Blake’s settlement compensated him for the loss of his leg, pain and suffering incident thereto, and loss of wages for the period after the divorce. That portion was properly considered his separate property. If Ms. Blake had proven that a portion of the personal injury proceeds compensated for loss to the marital entity, the trial judge could have found that portion of the proceeds to be marital property. Ms. Blake, however, failed to meet that burden of proof. See Odunukwe v. Odunukwe,98 Md. App. 273, 282, 633 A.2d 418, 422 (1993) (party asserting a marital interest in specific property bears the burden of proving that the property is “marital”); Noffsinger v. Noffsinger, 95 Md. App. 265, 281, 620 A.2d 415, 422 (party asserting marital property interest must produce evidence as to its identity and value), cert. denied, 331 Md. 197, 627 A.2d 539 (1993).
In holding that Ms. Blake failed to prove what, if any, portion of the personal injury proceeds was marital property, the trial judge found our opinion in Unkle v. Unkle,305 Md. 587, 505 A.2d 849 (1986), to be dispositive. In Unkle, we held that an unliquidated personal injury claim was not marital property within the definition intended by the legislature under FL § 8-201(e). Commenting on the nature of the inchoate claim, we noted that it was “uniquely personal to the holder” and that, “while it may have some attributes of personal property, the claim was not … `acquired’ during the marriage by one or both spouses. It arose from purely fortuitous circumstances and not from any on-going marital initiative to acquire marital assets.” Unkle, 305 Md. at 596, 505 A.2d at 854. But we also recognized that “in part … payment of the claim would produce monies which would replenish marital assets previously diminished through payment of medical expenses and the loss of wages.” Id. (emphasis added).
At the time of the husband’s accident in Unkle, the couple was separated. The husband had not filed suit on his personal injury claim prior to the decree of absolute divorce. This claim, therefore, was inchoate and conjectural at the time the marriage was terminated. In the case sub judice, however, the husband’s proceeds amounted to more than a mere expectancy. The personal injury settlement was received (as well as substantially spent) well before the Blakes separated and then divorced. Based upon the date Mr. Blake’s proceeds were received and the liquidated nature of the award, Ms. Blake argues that Unkle is distinguishable and that all of her former husband’s personal injury proceeds are marital property.
The settlement proceeds are unquestionably property, but I do not believe that the legislature intended for the entire settlement to be considered marital property. Although we noted in Unkle, supra, that the inchoate right to personal injury proceeds had “some attributes of personal property,” we held that the claim was Mr. Unkle’s “separate property,” and not marital property. 305 Md. at 596, 505 A.2d at 854. Likewise, when that right is reduced to an actual liquidated amount as in the instant case, it is not primarily marital property. In Archer v. Archer, 303 Md. 347, 493 A.2d 1074 (1985), we defined “property” quite broadly as including “`every interest or estate which the law regards of sufficient value for judicial recognition.'” 303 Md. at 356, 493 A.2d at 1079 (quoting Deering v. Deering, 292 Md. 115, 125, 437 A.2d 883, 889 (1981) (citation omitted)). A spouse’s body, although generally not considered property, is analogous to property and is “of sufficient value for judicial recognition” when compensation is paid for loss or injury to a part of the body. When so considered, compensation for injury to the body is closely analogous to compensation for injury to property “acquired before the marriage.” Clearly, the latter is not marital property within the statute. I believe that the legislature intended that compensation received for loss of, or injury to, the body should be treated the same as property “directly traceable” to property “acquired before the marriage.” The compensation is reparation for the damage to Mr. Blake’s body, and since Ms. Blake cannot share or assume any part of Mr. Blake’s bodily pain, suffering, and loss, it would be inequitable for her to share in the compensation “directly traceable” to Mr. Blake’s “uniquely personal” bodily pain, suffering, and loss. See Unkle, supra. A significant portion of Mr. Blake’s personal injury settlement proceeds, therefore, does not constitute marital property.
It is conceivable, however, that Mr. Blake’s personal injury settlement was part marital and part non-marital. See Harper v. Harper, 294 Md. 54, 80-81, 448 A.2d 916, 929 (1982). We held in Harper that there are occasions when property can flow from both marital and non-marital sources. We use the source of funds theory to make the determination under those circumstances.
The Washington Supreme Court applied similar reasoning in finding that recovery for a personal injury occurring during the marriage is at least in part a loss to the marriage. Brown v. Brown, 100 Wash.2d 729, 675 P.2d 1207 (1984). The Brown court held that “[s]ince the recovery is intended to make whole an injury, it should partake of the same character as that which has suffered injury or loss. Thus, damages for physical injury and pain and suffering, which compensate the injured spouse for the harm to his or her separate individuality, should be separate property. Damages for injury-related expenses should be community or separate according to which fund incurs the expenses. Similarly, damages for lost wages and diminished earning capacity should partake of the same community or separate character as the wages and earning capacity they are intended to reimburse or make whole.” (Citation omitted).675 P.2d at 1212 (applying community property standards).
Applying these principles to the instant case, the settlement proceeds contained both marital and non-marital elements. Examples of non-marital contributions which flowed from Mr. Blake’s inchoate personal injury claim include the loss of his leg, the pain and suffering attendant thereto, and the loss of earnings for the period after dissolution of the marriage. See Queen v. Queen, 308 Md. 574, 587, 521 A.2d 320, 327 (1987) (The uninjured spouse cannot “share in the compensation for the injured spouse’s loss of future earning capacity representing a time period beyond the dissolution of the marriage.”). On the other hand, loss of consortium, medical expenses directly or indirectly paid by the marital entity, and lost wages prior to the break-up of the marriage could constitute marital property.
Ms. Blake would not be entitled to the portion of the settlement that was “uniquely personal” to Mr. Blake and traceable to loss or injury to his body. Unquestionably, a significant portion of Mr. Blake’s settlement compensated him for the loss of his leg, his bodily pain and suffering, and his loss of future earning capacity. It is also possible, however, that a portion of the proceeds were intended as payment for loss to the marital unit, such as paid medical expenses, loss of wages during the marriage, and loss of consortium. Ms. Blake offered no evidence of medical expenses, loss of wages prior to the break-up of the marriage, or any claim for loss of consortium. Thus, the trial judge was unable to say what, if any, portion of the award may have constituted marital property as compensation for these items. The fact that Ms. Blake signed a general release waiving liability in consideration of one dollar and Mr. Blake signed a general release in consideration of the full one million dollars, may have lent further support to the trial judge’s ruling. Blake v. Blake 341 Md 326 (1996)
The next relevant case in line is Herbert Newborn v. Donnie Newborn 133 Md. App.64, 754 A.2d 476 (2000). The issue in Newborn was if one spouse suffers personal injury prior to separation, do the proceeds from the settlement of that claim constitute marital property? The holding in Newborn was “In this case, we shall hold that part of the proceeds from the personal injury settlement are marital and part are not.”
The facts in Newborn were the Newborns married on September 6, 1953, when he was seventeen and she was thirteen. Four children were born of the marriage, all of whom are now emancipated adults. The parties permanently separated on August 12, 1996. Mr. Newborn was involved in a serious automobile accident on March 28, 1978. A car in which he was a passenger was rear-ended by a school bus. After the accident, Mr. Newborn was homebound for about two years. During part of that time, he used a wheelchair. While he was at home, Ms. Newborn was his sole caretaker. As a result of the accident, the Newborns filed suit against the driver and owner of the school bus. Included in the suit was a joint claim by the Newborns for loss of consortium. Discovery was conducted, and in June 1981 the defendants’ insurer settled with the Newborns for $339,000. A check in that amount was made payable to “Herbert and Donnie Newborn individually, and as Husband and Wife [and their attorneys].” After payment of attorneys’ fees and costs, $220,000 remained. The Newborns immediately purchased two automobiles, leaving a $200,000 balance. Mr. Newborn invested the $200,000 with the Legg Mason investment firm; $190,000 was put in an account in Mr. Newborn’s name alone, and $10,000 was invested in Ms. Newborn’s name. On March 26, 1998, the lower court, after two days of trial, announced that it would dissolve the Newborns’ marriage by granting an absolute divorce. The trial judge filed an opinion and order granting Ms. Newborn a monetary award in the amount of $50,000. The trial judge acknowledged that Judge Chasanow’s concurring opinion in Blake v. Blake, 341 Md. 326, 670 A.2d 472 (1996), was not binding because five members of the Court declined to join in the concurring opinion. Nevertheless, he quoted the part of that opinion that said that a settlement of a personal injury claim could result in the injured spouse receiving both non-marital and marital property. Blake, 341 Md. at 348-49, 670 A.2d 472. He also quoted the following excerpt: Examples of non-marital contributions which flowed from Mr. Blake’s inchoate [sic] personal injury claim includes the loss of his leg, the pain and suffering attendant thereto, and a loss of earnings for the period after dissolution of the marriage. See Queen v. Queen, 308 Md. 574, 587, 521 A.2d 320, 327 (1987)…. On the other hand, loss of consortium, medical expenses directly or indirectly paid by the marital entity, and lost wages prior to the break-up of the marriage could constitute marital property.
The relevant issues presented in Newborn case on appeal were:
- Did the trial court err when it failed to find that the parties had made their own division of the proceeds from the personal injury settlement?
III. Did the trial court err by finding that a portion of the proceeds from a personal injury settlement constituted marital property?
- Did the trial court err by finding that the appellee met her burden in proving that a portion of the settlement was marital property?
ISSUE II Did the trial court err when it failed to find that the parties had made their own division of the proceeds from the personal injury settlement?
Mr. Newborn asserts that the trial judge erred “when he failed to recognize that the parties made their own division of the proceeds of the personal injury settlement.” In support of this allegation, appellant accurately says: Appellant testified, and [a]appellee was forced to admit that, following receipt in 1981, the bulk of the settlement funds were deposited in investment accounts directed by appellant, but separately titled in the individual names of the parties. Appellant’s account consisted of 95% of the settlement proceeds, while that of appellee accounted for 5%. These ratios remained fixed and constant throughout the years to come and the parties received regular statements indicating the respective values of their shares. Appellant goes on to argue that the way the funds were treated during the marriage constituted a “shared recognition” by the parties that the settlement proceeds belonged ninety-five percent to him and five percent to his former spouse.
One way to prevent assets acquired during the marriage from meeting the definition of “marital property” is to exclude them by valid agreement. See FA § 8-201(e). Although appellant does not say so explicitly, he evidently contends that the parties mutually agreed that the settlement property was not to be treated as marital property.
The trial judge did not err in the manner appellant alleges. First of all, Mr. Newborn’s testimony that the parties agreed as to how the accounts should be titled was rebutted by the testimony of Ms. Newborn. According to her testimony, Mr. Newborn acted alone when he decided to title the Legg Mason accounts ninety-five percent to five percent in his favor. Second, even if the parties did agree as to how the accounts were to be titled, that agreement would not be determinative as to whether the property was marital. See FA § 8-201(e). What would be determinative under FA section 201(e) would be an agreement by the couple to exclude as marital property certain (or all) of the proceeds from the personal injury settlement. Here, there was no evidence of such an agreement. Herbert Newborn v. Donnie Newborn 133 Md. App.64, 754 A.2d 476 (2000)
ISSUE III in the Newborn case.Did the trial court err by finding that a portion of the proceeds from a personal injury settlement constituted marital property?
Appellant’s principal contention in this case is that, as a matter of law, no portion of the monies received from the settlement of a suit for personal injuries should be considered marital property. In support of this argument, he relies on Unkle v. Unkle, 305 Md. 587,505 A.2d 849 (1986).
Appellant’s reliance upon Unkle is understandable. But there are several factual differences in the case at bar that distinguish it from Unkle, viz: (1) Unkle involved an inchoate claim, whereas in the case subjudice, the claim was not inchoate since suit was settled prior to the dissolution of the marriage; (2) Mr. Unkle’s accident and his recuperation occurred after he and his spouse separated; (3) in their lawsuit, the Newborns made a joint claim for loss of consortium; and (4) Ms. Newborn helped her husband during his period of recuperation—in fact, she apparently missed approximately two years of employment while helping her husband during his recovery.
Ten months after the Unkle decision was announced, the Court of Appeals decided Queen v. Queen, 308 Md. 574, 521 A.2d 320 91987). The main issue in Queen was whether a lump sum workers’ compensation award for permanent partial disability arising out of injuries sustained during the marriage constituted marital property within the contemplation of FA section 8-201(e). The question arose after David Queen was injured on his job approximately six months before he and his wife (Dora) separated. Id. at 576, 521 A.2d 320. As a result of his injury, Mr. Queen received weekly workers’ compensation benefits for about twenty-five months. Id.at 576, 521 A.2d 320. He then received a payment of $55,000 as a lump sum benefit payment for his permanent partial disability.
The Court of Appeals held in Queen that under Maryland’s workers’ compensation law the award of permanent partial disability represented an amount “based on the loss of future earning capacity and not merely upon the loss of wages.” Id. at 586, 521 A.2d 320. Chief Judge Robert Murphy said for the Queen Court: “Nonetheless, we hold that only the portion of the husband’s award compensating for loss of earning capacity during the marriage is marital property subject to equitable distribution by the trial judge. Due to the personal nature of the injuries giving rise to a permanent partial disability award, we cannot conclude that the General Assembly intended a non-injured spouse to share in the compensation for the injured spouse’s loss of future earning capacity representing a time period beyond the dissolution of the marriage. Because the record before us fails to disclose the information essential to computing the portion of the husband’s award, if any, allocable as marital property, we shall remand the case to the trial court for additional fact-finding and disposition consistent with these principles. ” Id. at 586, 521 A.2d 320 (emphasis added).
This Court was presented with a case much like Queen in Lowery v. Lowery, 113Md app.423, 688A.2d65 (1997) except for the fact that the injured spouse in Lowery received a workers’ compensation settlement for injuries that occurred prior to his marriage. Id. at 427, 688 A.2d 65. After filing three separate workers’ compensation claims, Mr. Lowery, the injured spouse, finally reached a settlement with the employer/insurer in April 1995. By virtue of the settlement, he received a lump sum of $7,500 and an annuity of $500 a month for life (or a minimum of twenty years), with a guaranty of a minimum of $120,000 payable to either him or his estate. Id. at 428, 688 A.2d 65. The agreement was silent, however, as to whether the purpose of the award was to compensate Mr. Lowery for lost wages, medical expenses, or otherwise. Id. One month later, in May 1995, Mrs. Lowery obtained a judgment of absolute divorce. Id. at 429, 688 A.2d 65. In Lowery, the trial court concluded that $44,000 of the settlement was marital property because it was compensation to the husband for loss of his earning capacity during the marriage. Id. at 429, 688 A.2d 65.
In Lowery, we interpreted Queen as holding that the purpose of the benefits, rather than the timing of the accrual of the underlying claim or the award/settlement, is determinative in characterizing a workers’ compensation settlement or award as marital or separate property. Id. at 434, 688 A.2d 65 (emphasis added). We noted that “to the extent that [the award] compensated Mr. Lowery for lost wages or future earning capacity during the marriage or medical expenses paid for out of marital assets” it would be considered marital property. Id. at 436-37, 688 A.2d 65.
As already mentioned, in the case sub judice, the trial judge, based on the concurring opinion in Blake, supra, opined that some, but not all, of the proceeds from the personal injury settlement constituted marital property.
The court then analyzed the Blake case mentioned above. As mentioned by the trial court in the April 3 rd. preliminary opinion, Judge Chasanow went on to say that the portion of the personal injury settlement that involved reimbursement for lost wages, prior to the divorce, together with damages for loss of consortium and reimbursement for medical expenses paid, either directly or indirectly, by the marital unit, should be considered marital property…. The third view is called the analytical approach. See, e.g. Mathew v. Palmer, 8 Neb.App.128, 589 N.W.2d.343 (1999) see also Lowery,113 Md. App.at 434,688 A.2d 65. This analytical approach asks what the award, settlement, or judgment was intended to replace and looks to the nature of the personal injury award or settlement to explain why the property is the separate asset of a spouse or why it should be considered marital property subject to equitable distribution. The approach was endorsed by Judge Chasanow in Blake and also in both Queen and Lowery (in a workers’ compensation context). Recompense to the injured spouse for non-economic damages—such as pain, suffering, disability, and loss of ability to lead a normal life—are not considered marital property.
The Court of Appeals used the analytical approach in Queen and said that proceeds from a workers’ compensation award, for the most part, were intended by the legislature to be the separate property of the injured spouse and should not be considered marital property. Queen, 308 Md.at 586,521 A.2d 320. As implicitly recognized by Judge Chasanow in Blake, there is no good reason why we should use the analytical approach when considering workers’ compensation awards and use a different approach when considering a recovery by a spouse that comes about as a result of a tort judgment or settlement.
We also reject Mr. Newborn’s suggestion that the Unkle case is controlling. In Unkle, at the time the divorce was granted, suit had not even been filed and the injured spouse’s claim was both inchoate and almost entirely speculative. Here, the value of the claim was established approximately sixteen years prior to the Newborns’ separation.
We hold that Judge Cawood correctly decided to use the analytical approach in his treatment of the personal injury settlement. Accordingly, all of the proceeds from the settlement were the separate and non-marital property of Mr. Newborn except: (1) monies that were paid to reimburse the Newborns for medical expenses; (2) monies paid to reimburse Mr. Newborn for wages he lost as a result of the accident prior to September 1981— when he returned to work; (3) monies paid to reimburse Ms. Newborn for wages she would have earned if she had not stayed home to care for appellant; and (4) monies paid to the Newborns for their joint claim for loss of consortium. Herbert Newborn v. Donnie Newborn 133 Md. App.64, 754 A.2d 476 (2000)
The final issue that the parties have to deal with is often the most difficult. If a personal injury case is tried by a judge and or judge and jury, the judge or jury will make a determination as to what each measure of damages will be considered by the trier of fact. Careful consideration of what measure of damages a jury will decide should be suggested by counsel especially if he knows the parties are having marital problems. Once, the trier of fact is told to itemize their verdict, then after the verdict is rendered, the judge or jury will explain what amount was awarded for each measure of damages. In theory, once the trier of fact makes such findings the parties should easily, based upon the principles established above determine what is marital property vs what is not marital property. If there is not enough insurance to cover the full amount of damages that was awarded, then even this method will not be so clear. In a situation where there is not enough insurance to cover the full value of the loss, then the parties should develop a fractional equivalent method.
If there is no jury verdict, or an itemization of a verdict by judge or jury, then a division between marital and non-marital property is not so easy. Based upon a series of cases to follow, the following guidelines would be appropriate to consider:
- Get an expert if possible- an experienced lawyer who has handled many personal injury claims
- Whether you have an expert or not the following should be reviewed and taken into consideration.
- Review all available documents
- demand letter
- Affidavit in Support of Plaintiffs, Motion for Summary Judgment.
- Circuit Court of Maryland Case Information Search.
- Pre-Trial Statement of Plaintiffs
- Defendant’s Pre-Trial Statement Answers to Interrogatories
- Medical Bill Summary
- Depositions of all parties and witnesses
- Deposition of all medical and liability experts
- Reports of Vocational and Rehabilitation Counselor
- Designation of Expert Witnesses
- All Medical records and Doctors depositions
- Police reports
- Accident investigation reports
- Insurance policies and declaration pages
- A life care plan
- economist evaluation as to his lost wages and lost wage capacity
- determine the non-economic cap on pain and suffering, which included non-economic damages such as loss of consortium and pain and suffering
- Did counsel in the demand letter put a dollar figure on loss of consortium damages
- Whether the parties jointly were involved in separating and apportioning the settlement at the time f settlement
- Depose accident adjuster to see what he considered when making his offer
- Depose accident opposing counsel as to what was considered when making his offer
- Did the parties reach an agreement on how the monies were to be apportioned?
- parties should be afforded the opportunity to engage in appropriate discovery, in advance of an evidentiary hearing, so that all available information bearing on this matter can be placed before the trial judge.
- the proportion of the loss of consortium settlement proposed compared to the overall settlement;
- whether a lawsuit was filed on behalf of the spouse or settlement demand made for loss of consortium;
- the overall amount of recovery assigned to the loss of consortium claim;
- the difficulty and cost of proving the injured party’s damages versus loss of consortium;
- the third-party defendant’s ability (usually insurance coverage) to pay the full value of the employee’s claim.
- comparison of the amount asked for in each count of the complaint and converting that it to a percentage and then multiplying that percentage against the total recovery.
- the fact that the auto adjustor handling the case for the defendant in the case put little or no value into the loss of consortium claim when he valued the case.
- comparison of the ad damnum clauses in the complaint
- the value placed by the auto adjustor on the loss of consortium, and the value placed by auto counsel for the defendant on the loss of consortium claim
- the pretrial settlement statements filed by the parties,
- answers to interrogatories outlining plaintiff’s damages,
- amount of time spent at settlement conference outlining the facts of the loss of consortium vs. the injuries to the injured party
- testimony parties gave on the damages issue.
These 21 suggestions of how to apportion a settlement listed above were derived from a close reading of all of the below cases. While no case has given an exact formula, all of the cases point out the problem and attempt to offer some solutions.
One issue in the Herbert Newborn v. Donnie Newborn 133 Md. App.64, 754 A.2d 476 (2000) case was, “Did the trial court err by finding that the appellee met her burden in proving that a portion of the settlement was marital property?”
Additional facts in the newborn case: As the trial judge suggested, counsel for Mr. Newborn, post-trial, sent the judge certain documents that he evidently believed related to the issue to be decided. Those documents were: (1) demand letter dated January 28, 1980, to St. Paul Insurance Company from the attorney who represented the Newborns in their tort action; (2) Herbert Newborn’s interrogatory answers filed in the personal injury suit;
The demand letter from the Newborns’ tort counsel said that Mr. Newborn earned $8.80 per hour (presumably on the date he last worked). He gave no current lost-wage information but said that Mr. Newborn, then age forty-three, had twenty-two years remaining in his expected work life. Counsel calculated Mr. Newborn’s future lost wages as $264 per week ($8.80 X 30) or $13,728 per year (52 X $264). Based on those figures, he projected future lost wages of $302,000 ($13,728 X 22). Like, most demand letters, the letter from the Newborns’ attorney made no effort to downplay the seriousness of the injuries suffered by his clients. Taking into consideration his medical expenses to date, medical expenses he will have in the future, past and future wage loss, painful and disabling nature of his injuries, the damage it has done to the marital relationship and the wife’s loss of income, we hereby submit our demand for settlement of this case in the amount of $1,500,000.00.The letter explained that, although Ms. Newborn was not employed when the accident occurred, she would have sought employment but for the March 28, 1978, accident and would have earned between $7,657 and $7,957 annually.
Counsel put no dollar figure on loss of consortium damages but said: damage to marital relationship. Enclosed you will also find a copy of the report of Baltimore City Hospital dated January 25, 1980. This report sets forth not only the effect that this horrendous accident has had on Mr. Newborn, but the effect that it has had on Mrs. Newborn and their life together. Their sex life has been greatly disrupted due to Mr. Newborn’s injuries, and most specifically due to the urethral trauma. To this date, they have not yet resumed normal marital relations which they had enjoyed for over 20 years of married life.
The exact date that Mr. Newborn’s interrogatory answers were signed in the Newborns’ tort action does not appear in the record in this case, but it is evident that these answers were filed after September 1980—when Mr. Newborn went back to work as a longshoreman. Presumably because he had already returned to work, no claim for future lost wages was mentioned in the interrogatory answers, nor did Mr. Newborn claim that he would incur future medical expenses. The interrogatory answer listed past medical expenses of $13,726.55, and a claim for past lost wages was also mentioned. But the exact amount of that wage-loss claim cannot be ascertained because material relevant to it was attached to the original interrogatory answer but not attached to the answers provided to the trial judge in the case at bar.
The court in the subject suit resolved the marital property issues by an opinion and order dated October 30, 1998, which adopted the reasoning of Judge Chasanow set forth in Blake. The trial judge said: We find that the proper measure of marital interest in the settlement is the loss of consortium, medical expenses directly or indirectly paid by the [marital] entity, and lost wages prior to the breakup of the marriage. Our next question is to apportion the amount of the settlement to reflect what is marital and non-marital.
The medicals schedule clearly indicates $13,659 in medicals. The demand letter seeks $302,016 in lost wages, which would be both marital and non-marital, but, as usual, this is not reflected dollar for dollar in the settlement. The courts in Bandow, Bandow, 794 P.2d 1346 (Alaska 1990), and Landwehr v. Landwehr,111 N.J. 491, 545 A.2d 738] (N.J. ), indicate that the mathematical allocation may not be precise, but we can make a reasonable apportionment. In this case, considering the length of the marriage after the award was received, we believe an allocation of 55% of the amount received after deduction for attorney’s fees etc. is a fair allocation, albeit not an exact one. As indicated, much of the lost wages would have occurred during marriage.
The Maryland Court of Appeals decided that the proof as outlined above was not sufficient. In a divorce case, a party asserting a marital interest in property has the burden of producing evidence as to the identity of the property and of its value. Odunukwe v. Odunukwe, 98 Md.App.273,282, 633 Md.App.418 (1993); Appellant contends that, even if the court did not err in utilizing the analytic approach, appellee failed to meet her burden of proving what portion of the settlement proceeds were marital property. We agree. There was evidence presented showing that some of the $339,000 settlement was intended to reimburse the Newborns for medical expenses in the amount of $13,726.55, but this was less than five percent of the entire $339,000 settlement. Without exception, no figures were presented as to what claim was made for any other element of damages. The trial judge said in his opinion that counsel for the Newborns had made claim for $302,016 in lost wages; that lost wages were not reflected in the settlement “dollar for dollar”; but that nevertheless, he could make a “reasonable apportionment” of the settlement proceeds. A reasonable apportionment was impossible given the meager evidence presented. The demand letter made it clear that the $302,016 was a claim for future lost wages, but as far as it is possible to ascertain the defense paid nothing for future lost wages due to the fact that Mr. Newborn went back to work prior to the settlement. One cannot tell what portion, if any, of the settlement was for Ms. Newborn’s lost wages.
If the figures set forth in the demand letter are accurate, it can be approximated that Ms. Newborn lost roughly $7,800 per year when she refrained from seeking employment outside the home so that she could help with the chores associated with Mr. Newborn’s recuperation. Under the analytical approach, reimbursement for those wages would be marital property to the extent that they were reflected in the settlement. But we do not know how long she stayed away from work or whether the defense accepted her contention regarding this wage loss. Moreover, there is no evidence, whatsoever, to determine what amount, if any, of the settlement proceeds were intended to reimburse the parties for their joint loss of consortium. Because of the very limited information produced in the lower court, there plainly was insufficient evidence to support the trial judge’s conclusion that fifty-five percent of the settlement proceeds was marital. We therefore hold that the appellee did not meet her burden of producing evidence showing what portion of the property traced to the personal injury settlement was marital.
We acknowledge that it is often very difficult to produce evidence necessary to apply the analytical approach. This is especially true in a case like this one where a great deal of time has passed since the personal injury claim was settled. The same is also true in many cases where lump-sum settlements or jury awards are made at a time when no divorce is contemplated. Because the third issue resolved in this case was one of first impression, we think that fundamental fairness requires us to remand the case to give Ms. Newborn an opportunity to put on evidence to prove what portion of the personal injury settlement was marital.
Where the non-injured spouse is claiming a portion of the other spouse’s [personal injury settlement or jury award] as marital property, it is important for that spouse, and the court, to be able fully to explore and, if possible, label the components of the settlement or award as compensation for past lost wages, future loss of earning capacity, losses to the marital estate, future medical expenses, or damages for injury to the property or person. See, e.g., In Re Marriage of Blankenship, 210 Mont. 31, 682 P.2d 1354 (1984); Gibson-Voss, 4 Neb. App. at 241-42, 541 N.W.2d at 78-79; Crocker, 824 P.2d at 1121-22. Thus, although we shall vacate the judgment of the circuit court for the reasons stated, we are moved to remand this matter to the circuit court for further proceedings to re-determine an appropriate monetary award, if any. We presume that the parties, and particularly [Ms. Newborn] will be afforded the opportunity to engage in appropriate discovery, in advance of an evidentiary hearing, so that all available information bearing on this matter can be placed before the trial judge. Herbert Newborn v. Donnie Newborn 133 Md. App.64, 754 A.2d 476 (2000)
The case of Diamond v. Diamond 298 Md 24, 467A.2d 510 (1983) a divorce case is instructive. In Diamond husband and wife had sued for the personal injuries of Husband and a second count for loss of consortium. The case was settled with no apportionment between the two claims. A settlement check was issued payable to husband and wife and the attorney. Shortly after receipt of the check, an attachment was filed on the attorney by a judgment creditor of the husband only. The Court of Appeals held there was no intent to create a tenant by the entireties in the settlement proceeds so some portion of the check would be attachable by the judgment creditor. The next question the Court of Appeals had to address was the Circuit Court method of dividing which funds belonged to each spouse since the parties did not apportion the amount when they settled the case. The Court of Appeals affirmed the trial courts method of apportioning the settlement proceeds between husband and wife. [ most likely the parties did not present experts or have discovery]. The trial court considered two factors. The first factor was a comparison of the amount asked for in each count of the complaint and converting that it to a percentage and then multiplying that percentage against the total recovery. The second factor the court looked at was the fact that the adjustor handling the case for the third- party defendant in the case put little or no value into the loss of consortium claim when he valued the case. The Court of Appeals stated, “We agree with the Court of Special Appeals that the apportionment of the circuit court was not clearly erroneous. The trial court found that the ad damnum clause conveys the value placed on each claim by the Diamonds themselves and their attorneys. The ad damnum is two million dollars ($2,000,000.00) for Mr. Diamond’s individual claim and only $85,000.00 for the joint claim for the loss of consortium. Scaled down to the total amount of the final settlement (Thirty Thousand Six Hundred Dollars ($30,600.00), the relative values for the claims, as established by Mr. Diamond and his wife, are approximately: Twenty-Nine Thousand Three Hundred Dollars ($29,300.00) for Mr. Diamond’s individual claim for damages; One Thousand Three Hundred Dollars ($1,300.00) for the joint claim of husband and wife for lost consortium. In fact, this apportionment was rather generous considering that the claims representative for Fireman’s Fund, Michael Barnaba, answered in his deposition that he did not consider any factors other than Willard’s disability and loss of wages in authorizing the settlement amount: Q [Mr. Gladstone, Lois’ attorney] — * * * What, if any, considerations were given by you, sir, in making your offer of settlement to the claim of loss of consortium of Mr. and Mrs. Diamond? A I would have to say none. Q Did you have any discussions, sir, with Mr. Leech insofar as the value of the loss of consortium claim or offering anything for the loss of consortium claim. A None whatsoever.”
The Diamond case reasoning suggests factors the court in our case might look at (most likely when there are no experts) when deciding whether the apportionment in our case of the loss of consortium claim was prejudicial to the workers compensation insurance carrier. In addition to a comparison of the ad damnum clauses in the complaint, the court can look at the value placed by the third party adjustor on the loss of consortium, and the value placed by third party counsel for the defendant on the loss of consortium claim , the pretrial settlement statements filed by the parties, demand letters filed by plaintiffs’ counsel, answers to interrogatories outlining plaintiffs damages, amount of time spent at settlement conference outlining the facts of the loss of consortium vs. the injuries to the husband and the depositions given as part of the third party case of husband and wife as to testimony they gave on the damages issue. Discovery including requests for admissions of fact, answers to interrogatories and requests for production of documents of all parties, the depositions of the defense lawyer in the third-party case as well as the adjustor in the third-party case.
While the next several cases cited including Brocker, Chesapeake Haven Land, and Ankeny involve a different issue regarding evaluating portions of a settlement or jury verdict in a third-party case that are subject to a worker’s compensation lien, the language in these cases is instructive regarding parsing out a settlement into its many pieces.
Brocker Manufacturing and Supply Company v. Mashburn 17 Md App 327, 301A2d 501 (1973) discusses the issue of whether a worker’s compensation insurer can contest the apportionment of a third-party settlement between the injuries for the injured employee and the loss of consortium claim. In Brocker Manufacturing and Supply Company v. Mashburn 17 Md App 327, 301A2d 501 (1973), the Court of Special Appeals found the Employer and insurer had agreed to the settlement including the apportionment of damages and the allocation to the loss of consortium when they signed the release and settlement check. The third- party settlement provided for two separate settlements. One settlement was for $100,000.00 dollars to the injured employee and another settlement to the wife for $140,000.00. Both the workers compensation insurer’s name as well as the injured party name appeared on the release in that case and both parties signed the release given to the injured employee as part of the third- party case. Apparently separate drafts may have been issued by the third -party defendant, one for the claim of the injured worker party as well as one for the wife and her loss of consortium claim. The workers compensation insurers name was on the draft to the injured worker and the draft was delivered to the workers compensation insurer who ultimately made the distributions to the injured worker’s third- party lawyer after deducting the workers compensation lien from the $100,000.00-dollar check.
The Court of Special Appeals in Brocker held that under the special circumstances of that case the employer and insurer could not make a claim to any money apportioned for loss of consortium. The Court ruled because the workers compensation carrier participated in the settlement and signed a settlement check and settlement release in the third- party case with their name on it that they had agreed to the apportionment. The Court held that the workers compensation insurance company should have objected when the release and draft and settlement was presented and not after the release was signed and the settlement check was deposited.
The Brocker court stated “An employee’s receipt of third party funds in excess of the employer/insurer lien doesn’t totally extinguish the right of the employee to claim additional workers’ compensation benefits. Instead the amount the employee receives operates as a credit against any future worker’s compensation benefits that may be payable.” Labor and Employment Article of the Annotated Code of Maryland 9-903. Brocker Manufacturing and Supply Company, Inc. vs. Mashburn, 17 Md. App. 327, 301 A. 2nd 501 The Brocker court stated “It is obvious that, under the circumstances of this case, Mrs. Mashburn was not entitled to proceed against her husband’s employer under the Workmen’s Compensation Act for recovery for loss of consortium. Although the Workmen’s Compensation Act provides a right of subrogation to an employer and insurer, § 58, Cogley v. Schnaper and Koren Construction Co., 14 Md. App. 322, 286 A.2d 819 (1972), there must be some act performed or committed by, for, or against the subrogee that gives rise to the right to subrogate. In the instant case the appellants (workers compensation insurance company) did not, nor were they legally obligated to, pay any sum to Mrs. Mashburn. We perceive no act performed or committed by Mrs. Mashburn that would justify the appellants’ (workers compensation insurance company) being subrogated to any of her claim against Mrs. Vallone. It is difficult to follow the appellants’ reasoning that they should be allowed to present testimony in order to show in some vague way that they are entitled to participate in the proceeds recovered by Mrs. Mashburn. Appellants attempt to imply that the amount paid to Mashburn was insufficient and disproportionate to his injuries and that the amount received by Mrs. Mashburn was in excess of a reasonable sum for loss of consortium. Appellants, we observe, joined in the release of Mashburn’s claim against the third- party tortfeasor and knew, or should have known, that Mrs. Mashburn did not execute that release individually, but only in her capacity as guardian of her husband. The Circuit Court of Baltimore City approved the settlement. After the amount of the wife’s individual recovery had been called to the attention of the Chancellor, he investigated and again approved the guardian’s settlement nunc pro tunc. We know of no theory of law, nor have we been referred to any by appellants, that would justify this Court’s authorizing appellants to conduct a “fishing expedition” into the circumstances surrounding Mrs. Mashburn’s individual settlement…We hold that the trial judge properly refused to consider appellants’ assertion of a right to share in the monies recovered by Mrs. Mashburn in her derivative action.”
In Chesapeake Haven Land Corporation v. Litzenberg 141 Md App 411, 785A2d 859(2001) the facts showed that Litzenberg was injured in a work-related injury that also involved a third-party claim. One of the damages awarded was for lost wages covered by a second job not covered by the workers compensation claim. The Workers Compensation insurer was asserting a lien on these funds in order to recover for other benefits they had paid in the workers compensation claim. The allocation for lost wages for the second job not covered by Workers Compensation was made by a jury after a trial. Maryland requires juries to allocate their verdicts before they arrive at one number. In that case the insurer asserted that their lien applied to the award made for future economic loss award for damages to his self-employment business, unrelated to his Chesapeake Haven employment, and not compensated for by any past or future workers’ compensation award. The Court of Special Appeals rejected that argument because after a fully contested trial, with no possibility for collusion, the jury determined the value of the economic loss for his second job and the court was not going to question the province of the jury. If the parties in Chesapeake Haven had settled the case without a trial the decision of the Court of Special Appeals may have been different. Although the Chesapeake Haven case cited favorably the findings in the Brocker case including the rejection of insurers attempt to claim a subrogation interest in the loss of consortium claim it also repeated the other language quoted above in Brocker, “Although the Workmen’s Compensation Act provides a right of subrogation to an employer and insurer § 58, Cogley v. Schnaper and Koren Construction Co., 14 Md.App. 322, 286 A.2d 819 (1972), there must be some act performed or committed by, for, or against the subrogee that gives rise to the right to subrogate.”
In Ankney v. Franch 103 Md App 83 (1995) the Maryland Court of Special Appeals later reversed on other grounds by the Court of Appeals 341 Md 350 (1996), outlined that the Workers Compensation Commission was to hear the issues of prejudice and inadequate settlement and outlined a procedure to be used by the Workers Compensation Commission. While the Ackney Court outlines the problem and gives the Workers Compensation Commission the authority to resolve the dispute, it does not detail how this determination regarding the value of the loss of consortium is to be made. One can presume that testimony from the parties involved as well as the experts would be necessary but what else.
In Maryland Workers Compensation treatise by Clifford Sobin Section 20.6 entitled INJURY CAUSED BY NEGLIGENCE AND INTENTIONAL Acts pages 677-678 the author makes reference to factors that he feels are important for the commission or reviewing court to look at although he cites no authority for his assertions. Factors the author believes are relevant when determining the appropriateness of a loss of consortium allocation of a settlement are:
“the proportion of the loss of consortium settlement compared to the overall settlement;
whether a lawsuit was filed on behalf of the spouse or settlement demand made for loss of consortium;
the overall amount of recovery assigned to the loss of consortium claim;
whether the amount of recovery for the employee is sufficient to repay the lien of the employer/insurer as it existed on the date of settlement plus any benefits that were previously awarded, but not yet paid;
the difficulty and cost of proving the employee’s damage versus loss of consortium;
the third-party defendant’s ability (usually insurance coverage) to pay the full value of the employee’s claim. None of the criteria listed above are dispositive of the issue. Since many fact patterns have their own nuances, it is difficult for the author to provide a rule for what is an appropriate division. At pages 677-678”
Finally, expert testimony on the issue would be crucial. Below is a sample affidavit used in order to determine whether the allocation for loss of consortium in a third-party case that was settled before trial was fair.
Example AFFIDAVIT OF PAUL D. BEKMAN in a case to determine the value of a loss of consortium claim in an auto settlement.
I, Paul D. Bekman, hereby certify that I am competent to testify as to the matters stated in the enclosed Affidavit based upon my personal knowledge, experience and training, and that I am over eighteen years of age.
I solemnly declare and affirm under the penalties of perjury that the matters and facts set forth are true and correct to the best of my knowledge, information and belief.
I am an attorney admitted to practice law in the State of Maryland since January of 1972. My practice has been limited to the handling of serious personal injury and wrongful death cases. I am a Fellow in the American College of Trial Lawyers, a Fellow of the International Academy of Barristers, a Fellow in the International Academy of Trial Lawyers, I have been a Super Lawyer and noted to be in the top ten for every year of its publication since 2006. I have also been listed in Best Lawyers in America for twenty-five years in the categories of personal injury, medical malpractice products liability, maritime law-and alternative dispute resolution. I have tried over one hundred personal injury and other related cases to a jury. I have handled Workers’ Compensation cases since beginning my practice of law in 1972. I have tried cases in the trial level for the Commission, the Circuit Court, the Court of Special Appeals and the Court of Appeals of Maryland. I am also the Managing Partner in the law firm of Salsbury, Clements, Bekman, Marder & Adkins, L.L.C.
I have reviewed the following material for purposes of rendering an opinion as to whether or not the allocation of $152,500.00 to Linda Criswell from the $507,500.00 settlement of the John L. Criswell, Sr. and Linda Criswell case was fair and reasonable. It is my opinion as set forth below that that allocation was unreasonable, not supported by the facts, or by the law in connection with my opinion I have reviewed the following material:
Affidavit in Support of Plaintiffs, Motion for Summary Judgment.
Circuit Court of Maryland Case Information Search.
Pre-Trial Statement of Plaintiffs
Defendant’s Pre-Trial Statement Answers to Interrogatories in Criswell, et al. v. Lambert. et al. of Linda Criswell.
Answers to Interrogatories
Medical Bill Summary
Depositions of all parties and witnesses
Deposition of all medical and liability experts
Reports of Vocational and Rehabilitation Counselor
Designation of Expert Witnesses
All Medical records and Doctors depositions
Accident investigation reports
Insurance policies and declaration pages
A life care plan
An evaluation was performed by economist as to his lost wages
non-economic cap on pain and suffering, which included non-economic damages such as loss of consortium and pain and suffering
It is clear from a review of all of the medical records, including the depositions, Answers to Interrogatories and Responses to Requests for Production of Documents, that Plaintiff. sustained serious and permanent injuries as a result of his injury at work on March 21, 2007 while working for employer. He was injured in an automobile collision. He has received extensive treatment from a significant number of well-regarded health care professionals,
As a result of his significant injuries he underwent two very serious operations.
Following that surgery Plaintiff did not obtain full relief. He underwent enumerable tries at physical therapy and epidural steroid injections. Plaintiff continued to have pain in his low back with radiation into his right hip. He had the feeling of swelling in both feet and pain in both feet, which he described as burning and tingling with numbness. He developed cramping in his toes. He underwent pain management and again had injections of steroids. Treating Doctor opined that plaintiff was going to need future treatment literally for the rest of his life and further recommended that he have a spinal cord stimulator inserted.
As of the time of the last evaluation, Plaintiff was on the following medication: …All of these medications are pain medications which did not relieve his symptoms. He had chronic, unremitting pain.
Plaintiff did not return to work. An evaluation was performed by economist as to his lost wages which ranged between $531,749.00 and $896,446.00, depending upon how long he would have expected to work. A life care plan was prepared which had a present value of $145,620.00.
At the time of the March 21, 2007 accident the non-economic cap on pain and suffering, which included non-economic damages such as loss of consortium and pain and suffering, was $680,000.00. Accordingly, damages attributable to Mr. Criswell’s claim alone would be the following:
Non-economic cap — $680,000.00
Loss of wages — $896,446.00
Life care plan — $145,620.00
Medical expenses — $100,000.00
The total of these claims is $1,822,066.00.
In addition, a claim could be maintained for loss of household services, which is an
economic loss. Even in light of Mr. Plaintiff’s age, it would not be unusual to have an additional claim which could bring the value of Plaintiff’s individual claim to $2,000,000.00.
With regard to the loss of consortium claim, it is significant to note that in the Complaint filed by the Plaintiff the first Count for Plaintiff was $2,000,000.00. The third count for loss of consortium was $300,000.00. This is ratio of almost 7 to 1.
It is also of significant note that there was no claim in the depositions or in the Answers to Interrogatories that there was any interference in the intimate relationship between the parties. It is my opinion that the full value of Plaintiff’s case was $2,000,000.00 and the value of the consortium claim at best would have been $100,000.00, particularly since it is part of the non-economic cap and Plaintiff’s pain, suffering, physical and emotional dwarfs the consortium claim.
It should be noted that the total amount of coverage that was available was $507,500.00. Accordingly, when the case was settled for that amount a fair and reasonable allocation had to be made to Plaintiffs case individually and the loss of consortium sustained by him and his wife together. In light of that fact, it is my opinion that no more than 5% of the total settlement offer would have been reasonable to attribute to the loss of consortium claim and 95% to Plaintiff’s case individually.
Accordingly, it is my opinion that the allocation of $355,000.00 to Plaintiff individually and $152,000.00 to spouse for loss of consortium is unreasonable. The loss of consortium claims in my view, based on this settlement, should be no more than 5% of the settlement attributable to spouse, or approximately $25,000.00.
The above opinions have been made with a reasonable degree of probability within my field of expertise which is the handling of serious personal injury and wrongful death cases.
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