Maryland Workers’ Compensation Commission Intensifies Enforcement of Attorney Appearance Requirements

Recently, insurers and self-insured employers have begun receiving Show Cause Orders from the Commission when an attorney fails to enter their appearance within ten days after issues are filed in a claim.  Although the Workers’ Compensation Commission generally provides written warnings before issuing a Show Cause Order, this recent enforcement activity highlights the importance of promptly referring claims to counsel once issues are filed.

Under COMAR 14.09.12.05, when the Commission has reasonable cause to believe an insurer has violated the requirements of COMAR 14.09.12.03, it must provide reasonable notice of the alleged violation and the action it proposes to take.  The Commission’s notice must be provided within twenty days of the hearing date if it requires a hearing to address the violation, and it must identify the alleged facts in accordance with the violation and the potential penalty.

COMAR 14.09.12.03 requires that an insurer providing workers’ compensation coverage in Maryland must maintain competent individuals who are responsible for handling and adjusting disputed workers’ compensation claims on behalf of the insurer, possess sufficient authority to resolve claims, and have the knowledge and experience necessary to properly handle and adjust disputed claims.

The regulation also establishes a specific requirement concerning obtaining legal representation and the timing of the same.  Once issues are filed in a claim by any party, the insurer must have an attorney complete and file an entry of appearance with the Commission within ten days, consistent with COMAR 14.09.04.01C(2).

When the Commission determines that an insurer has failed to satisfy this requirement, it may issue a Show Cause Order requiring the insurer to appear at a hearing and explain why it should not be found in violation of COMAR 14.09.12.03 and why a monetary penalty should not be imposed.  The Commission has indicated that penalties may reach $1,000.00, although recent Show Cause Orders have proposed penalties in the range of $500.00 to $1,000.00.

Although COMAR 14.09.12.03 was enacted in March 2014, the Commission’s recent activity represents a more visible and active enforcement of the attorney-appearance requirement.  Because this enforcement appears to be relatively new, it remains to be seen how consistently the Commission will impose penalties and what factors it will consider when determining the appropriate amount.

For insurers and self-insured employers, the practical takeaway is straightforward: claims should be referred to counsel promptly, if not immediately, after issues are filed.  Early referral allows counsel sufficient time to enter their appearance within the required ten-day period and ensures that the claim is positioned for any subsequent litigation or hearings before the Commission.  It will also prevent any penalties from being imposed, as all issues can be timely addressed without any prejudice to the claimant or employer.

We anticipate that Show Cause Orders may become more frequent as the Commission continues its efforts to ensure that claims proceeding to hearing have appropriate representation.  Increased enforcement also raises several questions regarding how these hearings will be conducted, what explanations the Commission will find sufficient to excuse a late appearance, and how penalties will ultimately be assessed.

Insurers and self-insured employers should therefore take care to monitor the filing of issues closely and implement procedures to ensure that claims are timely referred to counsel.  If a Show Cause Order is received, the matter should be referred to counsel immediately, with particular attention given to the scheduled Show Cause hearing and the Commission’s stated basis for the alleged violation.  If there are any questions regarding Show Cause Orders or the ten-day attorney appearance requirement, please contact Franklin & Prokopik.