Does Maryland reduce a retired public employee's pension by workers' compensation benefits, even if the pension isn't for a disability?

Plain-English summary

Maryland's retirement and pension laws reduce, or "set off," a retired public employee's pension by the amount of any workers' compensation benefits the employee also receives for the same injury. The state retirement agency asked whether that offset applies to every kind of retirement benefit, or only to disability retirements connected to an on-the-job injury, especially in light of a recent Court of Appeals decision limiting a similar workers'-compensation offset to "similar" benefits. The Attorney General concluded that the pension offset applies only to disability retirement benefits paid on account of an on-the-job accidental injury or occupational disease. An employee's ordinary service retirement (based on age or years of service) or a disability retirement unrelated to a job injury is not reduced by workers' compensation, because the two kinds of benefits are not paying for the same thing.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

If a retired Maryland teacher or state employee also collects workers' compensation, does their pension get cut?
Only in a specific situation. The opinion concluded the reduction applies only where the person retired on accidental disability retirement because of an on-the-job accidental injury or occupational disease and is also receiving workers' compensation for that same injury; an ordinary age-and-service retirement pension is not affected.

Why did the Attorney General read the set-off statute so narrowly, when the text doesn't use the word "disability"?
The opinion found that although the word "disability" doesn't appear in the set-off statute, the qualifying language about an "accidental personal injury or occupational disease arising out of and in the course of the retired member's employment" grammatically modifies "retirement," not "benefits," under ordinary rules of statutory construction, and that reading also fits the statute's own legislative history and title.

Does this offset rule apply the same way to teachers, state police, and municipal employees, not just general state employees?
Yes. The opinion noted that the Employees' Retirement System, Teachers' Retirement System, Employees' Pension System, Teachers' Pension System, and State Police Retirement System all have substantially identical set-off provisions, so the same disability-only limitation applies across each of those systems.

Did the retirement agency's own past practice of applying the offset to all pensions matter to the outcome?
No. The opinion found the agency's more recent practice of applying the offset broadly was inconsistent with how the agency and the Secretary of Personnel had described the same provision shortly after it was enacted, when it was described as applying only to disability benefits, so that inconsistent agency history was given little weight.

Background and statutory framework

The request followed the Court of Appeals' decision in Newman v. Subsequent Injury Fund, which addressed a similar (but separate) set-off statute, Article 101, §33(c), covering workers' compensation payments made by public employers. In Newman, a county stopped paying workers' compensation to an employee who had since retired on an ordinary age-and-service basis, arguing the retirement benefits offset the workers' compensation. The Court of Appeals held that §33(c) requires an offset only between "similar" benefits, and that a service retirement (based on age or years of service) is not "similar" to a disability benefit tied to a workplace injury, so no offset applied.

The opinion then turned to the parallel set-off provision in the state retirement and pension statutes themselves, Article 73B, §11(20) (with substantially identical provisions for teachers, pension-system members, and state police), which reduces "any pension allowance" by workers' compensation "paid or payable... on account of an accidental personal injury or occupational disease arising out of and in the course of the retired member's employment by the State." The opinion identified the core ambiguity: does that injury-and-disease qualifying language modify "benefits" (making the offset apply to any pension, however earned) or "retirement" (limiting the offset to disability retirements tied to a job injury)? Working through ordinary rules of statutory construction, the opinion concluded the clause grammatically attaches to the word immediately preceding it, "retirement," and that reading also avoids making the clause redundant, since workers' compensation is by definition already limited to job-related injuries.

The opinion supported this reading with the set-off provision's legislative history and title. The 1977 legislation that created the current set-off language replaced an earlier bill draft that would have applied the reduction only to "disability retirement payments," and the enacting act's own title described its purpose narrowly, as "clarifying the administrative procedure prohibiting multiple payments," language the opinion read as signaling a limited fix rather than an expansion of scope. The opinion also read the provision to harmonize with the underlying Workers' Compensation Act set-off addressed in Newman, since both were meant to prevent an employee from receiving duplicate compensation for the same injury, not to strip away separately earned benefits. Finally, the opinion found the retirement agency's own more recent practice of applying the offset broadly was undercut by an inconsistent history, including a 1977 letter from the Secretary of Personnel describing the new law as reducing only "disability benefits," which the opinion treated as further support for the narrower reading.

Citations and references

Statutes:

• Article 101, §33(c)
• Article 101, §33
• Article 101, §§15 and 22(a)
• Article 73B, §11(20)
• Article 73B, §§11(1), 86(1), 117(1), 145(1)
• Article 88B, §53(a)
• Article 73B, §§11(4), 86(3), 117(5), 145(5)
• Article 88B, §53(c)
• Article 73B, §§11(6) and 86(4a)
• Article 73B, §§117(7) and 145(7)
• Article 88B, §53(e)
• Article 73B, §86(7a)
• Article 73B, §§117(18)
• Article 73B, §145(18)
• Article 88B, §53(h)
• Chapter 911, Laws of Maryland 1977
• Chapter 23, Laws of Maryland 1979
• Chapter 24, Laws of Maryland 1979
• Chapter 377, Laws of Maryland 1941
• Chapter 117, Laws of Maryland 1947
• Article III, §29 of the Maryland Constitution
• Chapter 506, Laws of Maryland 1982
• Chapter 509, Laws of Maryland 1980

Cases:

• Newman v. Subsequent Injury Fund, 311 Md. 721, 537 A.2d 274 (1988)
• Oros v. City of Baltimore, 56 Md. App. 685, 468 A.2d 693 (1983), aff'd on other grounds 301 Md. 460 (1984)
• Comptroller v. Fairchild Industries, 303 Md. 280, 284, 493 A.2d 341 (1985)
• Boulden v. Mayor and Commissioners of Town of Elkton, 311 Md. 411, 414, 535 A.2d 477 (1988)
• Management Personnel Serv. v. Sandefur, 300 Md. 332, 341, 478 A.2d 310 (1984)
• Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628 (1987)
• In re Mid-Atlantic Toyota Antitrust Litigation, 525 F.Supp. 1265, 1286 (D. Md. 1981), aff'd 704 F.2d 125 (4th Cir. 1983)
• Sullivan v. Dixon, 280 Md. 444, 451, 373 A.2d 1245 (1977)
• City of Baltimore v. Hooper, 312 Md. 378, 388-90, 539 A.2d 1130 (1988)
• McAlear v. McAlear, 298 Md. 320, 343 n.25, 469 A.2d 1256 (1984)
• Willis v. State, 302 Md. 363, 375, 488 A.2d 171 (1985)
• Haskell v. Carey, 294 Md. 550, 558, 451 A.2d 658 (1982)
• Frank v. Baltimore County, 284 Md. 655, 659, 399 A.2d 250 (1979)
• Supervisor v. Chase Associates, 306 Md. 568, 574, 510 A.2d 568 (1986)
• Batterton v. Francis, 432 U.S. 416 (1977)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1988/Volume73_1988.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Retirement Systems—Workers' Compensation—Set-Off For Workers' Compensation Benefits Applicable Only to Disability Retirement Benefits Payable on Account of On-The-Job Accidental Injury or Occupational Disease.

December 23, 1988

Mr. Bennett H. Shaver
Executive Director
Maryland State Retirement
and Pension Systems

You have asked for our opinion on the proper interpretation of provisions of the retirement and pension laws that require certain retirement benefits to be reduced by the amount of workers' compensation benefits paid or payable after the date of retirement. Specifically, you have asked whether these provisions apply only to disability retirement benefits payable on account of an on-the-job injury or occupational disease, in light of the recent Court of Appeals decision in Newman v. Subsequent Injury Fund, 311 Md. 721, 537 A.2d 274 (1988).
For the reasons stated below, we conclude that the offset requirements apply only to disability retirement benefits payable on account of injuries or occupational disease for which the State must pay workers' compensation.

                               I
                   The Newman Decision

Newman v. Subsequent Injury Fund arose when Prince George's County stopped making workers' compensation payments to an employee who had retired on the basis of her age and length of service after her injury. The county relied upon Article 101, §33(c) of the Maryland Code, which provides that workers' compensation benefits payable by public employers must be offset by retirement benefits furnished by those employers. The Court determined that the provision requires a setoff only of "similar benefits" and that retirement benefits based on age or length of service are not "similar" to disability benefits under the Workers' Compensation Act. 311 Md. at 724. See also Oros v. City of Baltimore, 56 Md. App. 685, 468 A.2d 693 (1983), aff'd on other grounds 301 Md. 460 (1984).
In reaching its conclusion, the Court of Appeals reviewed prior decisions finding a policy on the part of the General Assembly that public employees receive only one benefit for a single injury. 311 Md. at 724-26. As a corollary, the Court held, "when the benefits are dissimilar, the set-off provisions of [Article 101,] §33(c) do not apply." 311 Md. at 728.

                                     II
          The State Retirement and Pension Systems

The retirement and pension systems with which you are concerned are the Employees' Retirement System, the Teachers' Retirement System, the Employees' Pension System, the Teachers' Pension System, and the State Police Retirement System.
Each of these systems offers three types of retirement benefits to State and municipal employees, teachers, and State police officers: service retirement, ordinary disability retirement, and accidental disability retirement. Service retirement is available to any member upon attainment of a specified age or the completion of a specified number of years of service. Article 73B, §§11(1), 86(1), 117(1), 145(1); Article 88B, §53(a). Ordinary disability retirement is available to any member with five or more years of creditable service who becomes physically or mentally incapacitated for the further performance of duty otherwise than as a result of an on-the-job injury. Article 73B, §§11(4), 86(3), 117(5), 145(5); Article 88B, §53(c). Finally, accidental disability retirement is available to "any member who has been totally and permanently incapacitated for duty as the natural and proximate result of an accident occurring while in the actual performance of duty at some definite time and place, without willful negligence on his part." Article 73B, §§11(6) and 86(4a). See also Article 73B, §§117(7) and 145(7); Article 88B, §53(e).1

                                      III
                         The Set-Off Provision

Article 73B, §11(20) provides:

     Any pension allowance shall be reduced by the amount of any workmen's compensation benefits paid or payable after the effective date of retirement on account of an accidental personal injury or occupational disease arising out of and in the course of the retired member's employment by the State if such workmen's compensation benefits are paid or payable for a period during which a pension allowance is paid or payable. This provision is applicable to both the retired member and any beneficiary designated under any option provided under this article. Provided, however, the pension allowance to be reduced shall be the allowance at the time of retirement, and shall not include any adjustment of the allowance after retirement, and this provision shall be retroactive to benefits received before July 1, 1980.2

This provision, far from a model of legislative drafting, presents a difficult interpretive issue: whether the phrase "on account of an accidental personal injury or occupational disease arising out of and in the course of the retired member's employment by the State" was meant to qualify the word "benefits" or the word "retirement." One reading is that the provision concerning accidental personal injuries and occupational diseases qualifies the word "benefits", that is, any pension allowance, no matter the basis for it, would "be reduced by the amount of any workmen's compensation benefits paid or payable ... on account of an accidental personal injury or occupational disease arising out of and in the course of the retired member's employment by the State." If this interpretation is correct, the set-off would apply to all retirement allowances.
The other reading is that the provision concerning accidental personal injuries and occupational diseases qualifies the word "retirement", that is, a pension would be set off by workers' compensation benefits from the State if the "retirement [is] on account of an accidental personal injury or occupational disease." If this latter interpretation is correct, the set-off would apply only to disability retirement allowances because of job related accidental personal injury or occupational disease, not to service retirement allowances or disability retirement allowances unrelated to such injury or disease.

                              IV
             Interpretation of Set-Off Provisions

A. Introduction
The aim of interpreting statutory language is to identify the legislative intent. Comptroller v. Fairchild Industries, 303 Md. 280, 284, 493 A.2d 341 (1985). The primary source of legislative intent is the language of the provision itself, which must be given its natural and ordinary meaning, bearing in mind the statutory objective. Boulden v. Mayor and Commissioners of Town of Elkton, 311 Md. 411, 414, 535 A.2d 477 (1988). If possible, statutory language is to be read so that no word or phrase is rendered surplusage or superfluous. Management Personnel Serv. v. Sandefur, 300 Md. 332, 341, 478 A.2d 310 (1984). In addition to the language itself, we should consider other "external manifestations" of legislative intent like the title and function paragraphs of the enactment, its legislative history, and its relationship to other laws on the same subject. Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628 (1987).

B. Language
The term "disability" does not appear in the set-off provisions. Indeed, all explicit references to disability pensions were deleted from the bill that enacted the provisions pertaining to the Employee's Retirement System, Teachers' Retirement System, and State Police Retirement Systems. See Chapter 911, Laws of Maryland 1977 (enacting Senate Bill 796). The provisions pertaining to the Employees' and Teachers' Pension Systems, enacted in 1979, were patterned on the earlier enacted provisions; accordingly, they likewise do not refer explicitly to disability pensions. See Chapter 23, Laws of Maryland 1979 at 105 and 135; and Chapter 24, Laws of Maryland 1979 at 185 and 215 (both enacting Article 73B, §§117(18) and 145(18)).3 However, the structure of the provisions, and the language used, indicate an intention to limit their applicability to disability retirement benefits.
It is generally recognized that a qualifying clause is confined to the immediately proceeding word or phrase, particularly in the absence of a comma before the qualifying clause. In re Mid-Atlantic Toyota Antitrust Litigation, 525 F.Supp. 1265, 1286 (D. Md. 1981), aff'd 704 F.2d 125 (4th Cir. 1983); Sullivan v. Dixon, 280 Md. 444, 451, 373 A.2d 1245 (1977). Here, the qualifying clause "on account of an accidental personal injury or occupational disease arising out of and in the course of the retired member's employment by the State" follows the word "retirement," and no comma separates them. Thus, the clause should be read to modify that term, not some other part of the provision.
Furthermore, workers' compensation benefits are payable only on account of injuries or occupational diseases arising out of and in the course of the workers' employment. Article 101, §§15 and 22(a). Therefore, reading the qualifying clause as modifying "workmen's compensation benefits" would render the clause superfluous.

C. Legislative History
One source of information that can be used in determining the legislative intent regarding a provision is the legislative history of its enactment. See, e.g., City of Baltimore v. Hooper, 312 Md. 378, 388-90, 539 A.2d 1130 (1988). The legislative history of Chapter 911 of the Laws of Maryland 1977, while not conclusive, nonetheless sheds some light on the set-off provisions.
As introduced, Senate Bill 796 of 1977 would have repealed the workers' compensation set-off provision in Article 101, §33, substituting requirements that disability retirement payments under the State retirement and pension systems be reduced by the amount of concurrently paid workers' compensation and that the pension reserves be reduced by the amount of any lump sum workers' compensation payments. Those original provisions of the bill were deleted in their entirety by the Finance Committee and replaced by the current pension set-off provisions. 1977 Maryland Senate Journal 2613. See Chapter 911, Laws of Maryland 1977. Notations in the committee file reveal that one reason for the change was that the repeal of Article 101, §33, would have left those counties and municipalities that are not part of the State systems with no set-off provision at all.
The language of the set-off provisions was taken from Senate Bill 1191, also introduced in 1977, which died in the Rules Committee. See 1977 Senate Journal 1459. A marked-up copy of Senate Bill 1191 that appears in the committee file on Chapter 911 indicates that, while references to disability pensions were deleted from Senate Bill 1191, a suggestion to move the qualifying clause so that it would clearly modify "workmen's compensation benefits," and thereby apply it to all retirement benefits, was rejected.

D. Title
Another source of legislative intent is the title of the bill. McAlear v. McAlear, 298 Md. 320, 343 n.25, 469 A.2d 1256 (1984). The title of Chapter 911 was taken directly from Senate Bill 1191. It reflects that the act was "[f]or the purpose of clarifying the administrative procedure prohibiting multiple payments in certain cases." Compare Chapter 911, Laws of Maryland 1977 with 1977 Maryland Senate Journal 1459 (introduction of Senate Bill 1191).
To have the effect of "clarifying administrative procedure," the act must have been intended, at most, to make minor changes in an existing procedure. Under then-existing law, the State had no authority to offset workers' compensation benefits against retirement benefits.4 Instead, State accidental disability retirement payments were offset against workers' compensation benefits for the same injury pursuant to Article 101, §33.5
Thus, the title of Chapter 911 indicates that its purpose was not to extend the situations in which the set-off was applied, but to change the way in which the existing set-off operated.6 Indeed, if the act had purported to do more, its title might have rendered it ineffective under Article III, §29 of the Maryland Constitution.

E. Other Statutes
When two or more statutory provisions deal with the same subject, they should be construed in harmony with each other, to give full effect to each and to fully carry out the intent of the statutory scheme. Willis v. State, 302 Md. 363, 375, 488 A.2d 171 (1985); Haskell v. Carey, 294 Md. 550, 558, 451 A.2d 658 (1982). Therefore, the set-off provisions in the retirement and pension laws should be construed to harmonize with the set-off provision of the Workers' Compensation Act.
The underlying purpose of all of the set-off provisions is to prevent an employee of a public entity from receiving dual compensation from the employer for the same injury. See Frank v. Baltimore County, 284 Md. 655, 659, 399 A.2d 250 (1979). However, as the Court of Appeals made clear in Newman, it was not the legislative intent to deprive government employees of benefits that accrue to them on differing bases, merely because those different benefits would be paid by the same employer. 311 Md. at 728. Because the set-off provisions in the retirement and pension laws were clearly intended to complement that in the Workers' Compensation Act, the retirement and pension provisions should be construed to reflect and effectuate the same intent.

F. Agency Interpretation
An additional source for legislative intent is the interpretation placed on the statute by the agency responsible for its administration. Supervisor v. Chase Associates, 306 Md. 568, 574, 510 A.2d 568 (1986). However, the deference to be given to agency interpretation varies, based on such factors as the timing and consistency of the agency's position and the nature of the agency's expertise. Batterton v. Francis, 432 U.S. 416 (1977).

The Maryland State Retirement and Pensions Systems have consistently interpreted Article 73B, §11(20) to apply to all retirement benefits since the Systems were separated from the Department of Personnel.7 However, prior agency interpretation was to the contrary.
Shortly after the passage of Senate Bill 796 (1977), then-Secretary of Personnel Henry G. Bosz wrote to then-Governor Marvin Mandel, encouraging him to sign the bill. The letter reflected the agency's view that the bill would reduce "the disability benefits payable by the State Retirement Systems by the amount of any Workmen's Compensation benefits." Letter from Henry G. Bosz, Secretary of Personnel, to the Honorable Marvin Mandel, Governor (April 20, 1977) (emphasis added). In addition, updates to the Retirement Coordinators Manual dated July 1, 1978, reflected only that disability benefits would be reduced: The Manual's provisions on service retirement were left unchanged. See Retirement Coordinators Manual, former §§11.01.00.00 (July 1, 1975) and 11.02.00.00 (July 1, 1978).8 In light of this inconsistency, the agency interpretation cannot be given great weight.

                                       V
                                 Conclusion

For all of the above reasons, it is our opinion that the provisions of the retirement and pension laws requiring the offset of workers' compensation benefits apply only to disability retirement allowances payable on account of injuries or occupational disease for which the State must pay workers' compensation.

        J. Joseph Curran, Jr., Attorney General
        Kathryn M. Rowe, Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions & Advice

1
These other provisions of Article 73B vary only slightly in language from the quoted provisions and are identical in substance. The State Police Retirement System provision authorizes "special disability" retirement benefits for "any member who has been totally and permanently incapacitated for duty arising out of or in the course of the actual performance of duty, without wilful negligence on his or her part ..." Thus, "special disability" benefits are available to members of the State Police Retirement System under broader circumstances than are "accidental disability" benefits for other State employees.
2
This provision applies to the Employees' Retirement System. Substantially identical provisions apply to each of the other State retirement and pension systems. Article 73B, §86(7a) (Teachers' Retirement System); Article 73B, §§117(18) (Employees' Pension System); Article 73B, §145(18) (Teachers' Pension System); and Article 88B, §53(h) (State Police Retirement System). For convenience we will refer principally to Article 73B, §11(20).
3
Chapter 23 enacted Senate Bill 394 and Chapter 24 enacted House Bill 636 of 1979. The acts were identical.
4
The retirement law as originally enacted provided that benefits from workers' compensation were to be offset against retirement benefits paid "on account of the same disability." Chapter 377, Laws of Maryland 1941. However, this provision was repealed six years later by Chapter 117 of the Laws of Maryland 1947. The repeal was made retroactive to June 1, 1941 "in order not to deprive any member of the Employees' Retirement System of any of the benefits of said System on account of the payment of any compensation under Article 101 of the Annotated Code on account of injuries received in the performance of duty."
5
While the limitation of this provision to disability retirement was not decided by the Court of Appeals until the Newman decision, testimony by representatives of the Workmen's Compensation Commission before the House Appropriations Committee on April 7, 1977, reflects that the Commission had so interpreted Article 101, §33.
6
By doing so, the General Assembly provided a tax benefit to those subject to the setoff, as workers' compensation benefits, unlike pension benefits, are not taxable.
7
The Systems were removed from the Department of Personnel by Chapter 506 of the Laws of Maryland 1982. The new position was reflected in the updated Retirement Coordinators Manual §§12.01.01.00, 12.01.02.00, 12.03.01.00 and 23.03.02.00 (July 1982).
8
The Department of Personnel was not alone in this interpretation. The bill analysis of House Bill 2026 of 1980 (enacted as Chapter 509 Laws of Maryland 1980), stated that it added "with respect to an accidental disability benefit reduced by workmen's compensation benefits" a provision that the deduction does not apply to cost of living adjustments. And in 69 Opinions of the Attorney General 260, 268 n. 9 (1984), this office described Article 73B, §11(20) as a statute "under which the State pension of an employee who retired because of a disability is reduced by the amount of any workers' compensation benefits payable to the employee."