Gen. 123] 123

WORKERS’ COMPENSATION

INTERPRETATION OF REQUIREMENT THAT INSURER HAVE

“COMPETENT INDIVIDUALS” IN THE STATE TO HANDLE AND

ADJUST DISPUTED CLAIMS

June 21, 2004

The Honorable Thomas Patrick O’Reilly

Chairman, Workers’ Compensation Commission

On behalf of the Workers’ Compensation Commission

(“Commission”), you have asked for guidance on the requirement in

the Workers’ Compensation Act that insurers and self-insured

employers “have in the State competent individuals who: (1) handle

and adjust each disputed workers’ compensation claim in the State

... and (2) possess the knowledge and experience to handle and

adjust each disputed claim.” Specifically, you ask for an

interpretation of several key phrases in that provision:

1. Disputed claim: When does a claim become “disputed”?

2. Competent individual: What is the meaning of the term

“competent individual”? More specifically, is any special training

or ability required for a person to be a “competent individual,” or

would a Maryland attorney be presumed to be a “competent

individual” when representing an insurer in a disputed workers’

compensation matter? Does an attorney whose office is located outof-state, but who is admitted to practice in Maryland, qualify as a

“competent individual” under the law? Does the use of the

undefined phrase “competent individual” render the law

unconstitutionally vague?

3. Handle and adjust in the State: Is a claim being handled

and adjusted “in the State” where the attorney is required to place a

call to an out-of-state insurer for authority to settle or resolve a

disputed claim?

For the reasons given below, it is our opinion that:

1. A claim is “disputed” unless and until it is determined that

the claim will be uncontested. A claim is no longer “disputed” once

any issues have been resolved.
124 [89 Op. Att’y

2. For purposes of the Act, a “competent individual” is a

person who has sufficient skill, knowledge, and experience to handle

and adjust workers’ compensation claims. An attorney may satisfy

that requirement, but there is no presumption to that effect. An

attorney who works outside Maryland is not a competent individual

“in the State,” even if the attorney is admitted to practice in

Maryland. The use of the phrase “competent individual” does not

render the law unconstitutionally vague.

3. The law does not preclude an out-of-state insurer from

exercising oversight of its adjusters and attorneys in Maryland.

However, if an attorney representing an insurer must routinely

contact an out-of-state representative of the insurer for authority to

settle any claim, those claims are not being handled and adjusted “in

the State.” 

I

Introduction

A. Statutory Provisions

The Maryland Workers’ Compensation Act, Annotated Code

of Maryland, Labor and Employment Article (“LE”), §9-101 et seq.,

sets certain standards for an insurer’s accessibility to claimants. In

particular, it states: 

An insurer that provides workers’

compensation insurance in the State shall have

in the State competent individuals who:

(1) handle and adjust each disputed

workers’ compensation claim in the State for

the insurer; and

(2) possess the knowledge and

experience to handle and adjust each disputed

claim.

LE §9-410(a). The statute also requires that the insurer establish a

toll-free telephone number for use during normal business hours by

claimants and insured employers. LE §9-410(b). The Act imposes

similar requirements on employers who self-insure. LE §9-405(d).

The Commission is authorized to impose a fine of up to $1,000 on
Gen. 123] 125

 In the remainder of this opinion, we use the term “insurer” to 1

encompass both insurers and self-insured employers.

 The phrase “undisputed workers’ compensation claim” does not 2

appear in the statute or otherwise in the regulations. Nor does the

definition appear to cover claims for which no issues are ever filed and

that therefore are not the subject of any dispute. Its presence in the

definitions section of COMAR 14.09.01 appears designed simply to

clarify when the Commission will consider a formerly “disputed” claim

to no longer be “disputed.”

an insurer or self-insured employer who fails to comply with these 1

requirements. LE §§9-405(d)(3), 9-410(c).

B. Regulations

For purposes of this law, the Commission has adopted

regulations to distinguish between “disputed” and “undisputed”

workers’ compensation claims. Those regulations state:

(2) “D i sputed w o rkers’

compensation claim” means a:

(a) New claim in which

issues have been filed;

(b) Pending claim in which

one or more issues have been filed; or

(c) Claim that is pending

on appeal.

(3) “Undisputed workers’

compensation claim” means a claim in

which all issues have been: 

 (a) Withdrawn;

(b) Resolved by a decision

of the commission that is not appealed;

or

 (c) Resolved on appeal.

COMAR 14.09.01.01B(2)-(3).2
126 [89 Op. Att’y

The Commission has also adopted regulations for

enforcement of the statutory requirements. COMAR 14.09.06

(Local Office Requirements for Insurers). In large part, those

regulations mirror the language of the statute. However, in several

instances, they elaborate on the statute. For example, the regulations

state that, if an insurer files issues to dispute a claim, the filing itself

must be made by the “competent individuals” who handle and adjust

claims for the insurer. COMAR 14.09.06.02B. The regulations also

specify that a fine of up to $1,000 may be imposed for each

violation, that each day an insurer is out of compliance with the

statute constitutes a separate violation, and that a self-insured

employer risks revocation of self-insurance approval if the employer

does not comply. COMAR 14.09.06.03. Finally, the regulations

detail hearing and appeal procedures for the adjudication of

violations. COMAR 14.09.06.04-.05.

II

Legislative History

A. Local Office Requirement

From the earliest days of the Maryland workers’

compensation law until very recently, the law required that each

insurer maintain a “local office” to handle workers’ compensation

matters. See Chapter 456, §29, Laws of Maryland 1920. That

requirement originally read as follows:

Any insurance company or employer

carrying his own insurance, desiring to

do compensation insurance in this State,

shall be required to keep and maintain a

local office in charge of a competent

person who shall handle all the

compensation work for said insurance

company or self-insurer.

Id. Although we could locate no legislative history concerning the

origin of this provision, it seems evident that its purpose was to

ensure that claims would be handled promptly and effectively and

that an insurer would be responsive to injured employees and insured

employers. This requirement has reflected the concern that

“[c]ompensation administration will be impeded if the everyday

handling of claims requires the contacting of distant insurance

offices.” Workmen’s Compensation and Rehabilitation Law, The

Council of State Governments (1973). 
Gen. 123] 127

 That legislation also recodified the “local office”requirement for 3

workers’ compensation insurers from the Insurance Article to the Labor

and Employment Article, where it was codified with similar provisions

pertaining to self-insured employers and governmental self-insurance

groups.

 Insurers were required to make the toll-free telephone number 4

available for insureds, as well as employees, claimants, and their

representatives. 

B. Effort to Eliminate Local Office Requirement

Some have viewed the local office requirement as

unnecessary in light of modern communications. This has prompted

efforts to modify the requirement. 

1. 2000 Legislation

In 2000, a bill was introduced to limit the local office

requirement for insurers by making it applicable only to “contested

claims.” House Bill 1257 (2000) (first reading). That bill was

substantially amended, with the result that the local office

requirement was retained for all claims and responsibility for its

enforcement, with respect to insurers, was shifted from the Insurance

Commissioner to the Commission. Chapter 468, Laws of Maryland

2000. In addition, the Legislature added a requirement that each

3

insurer maintain a toll-free telephone number through which a

claimant or representative of an employee or claimant can make

direct telephone inquiries during regular business hours. Id.4

2. 2001 Legislation

The next year, legislation was proposed to eliminate the

requirement that an insurer maintain a “local office” and to

substitute a requirement that the insurer have a “competent

individual” in the State to “handle” disputed claims. Senate Bill 592

(2001) (first reading). Prior to passage, the bill was amended to

specify that an insurer must have “in the State competent

individuals who ... handle and adjust each disputed workers’

compensation claim in the State ... and who possess the knowledge

and experience to handle and adjust each disputed claim.” Chapter

609, Laws of Maryland 2001 (emphasis added). The elimination of

a physical office requirement and the limitation to disputed claims

remained in the bill. 
128 [89 Op. Att’y

The deletion of the “bricks and mortar” requirement was

apparently a response to testimony by insurers that centralized claims

operations would result in administrative efficiency. See Bill

Analysis of Senate Bill 592 for Senate Finance Committee (2001).

Proponents of the bill argued that developments in communications

technology would allow uncontested claims to be handled more

efficiently in a centralized location. See Testimony on behalf of

MAC Risk Management before Senate Finance Committee

concerning SB 592 (March 13, 2001). Similarly, a representative of

Giant Food stated that the bill would allow for streamlined

processing of the 85% of its claims that are uncontested. Letter of

Barry F. Scher to Senator Thomas L. Bromwell (March 7, 2001); see

also Letter of Dolores M. Skalski, President of Mid-Atlantic Food

Dealers Association, Inc. to Senator Thomas L. Bromwell (March 8,

2001).

The testimony on the bill echoed presentations made to the

Workers’ Compensation Benefit and Insurance Oversight Committee

during the 2000 interim. That Committee reported that

carriers assert that the process would be

more efficient if they could send bills

for certain simple claims to a central

place, possibly out of State. Some

insurers expressed interest in sending

simple “medical only” claims to a

central processing location, while others

stressed the need to go broader and send

all simple “uncontested” claims

regardless of whether they are “medical

only.” 

Workers’ Compensation Benefit and Insurance Oversight

Committee, Report of the 2000 Interim, p. 2. Proponents of a

limited presence requirement testified that the bill would allow

insurers to reduce costs because bills would be sent to a central

place, and thus enable an insurer to better serve employees. Id.,

p.26.

Concerns were expressed, however, that there would be

delays and that remote offices would be unfamiliar with Maryland

workers’ compensation law and with resources available for injured

workers in Maryland. Testimony of Chesapeake Association of

Rehabilitation Professionals in the Private Sector before Senate

Finance Committee (March 13, 2001); Letter of Chaney Enterprises

to Senator Arthur Dorman (March 13, 2001).
Gen. 123] 129

The amended bill that emerged sought to address the concerns

of both sides by requiring that disputed claims be handled and

adjusted in Maryland while, at the same time, allowing for

centralized processing of undisputed claims. In other words,

disputed or contested claims were to be handled in Maryland, while

uncontested claims could be handled out-of-state.

III

Analysis

A. Disputed Claims

Under LE §9-410(a) and §9-405(d), a “disputed” workers’

compensation claim is to be “handled and adjusted” by a competent

individual in the State. You have asked when a claim is considered

“disputed.” 

The Workers’ Compensation Act does not define “disputed

workers’ compensation claim.” However, the Act sets forth certain

procedures for an employer or insurer to contest a claim. Under LE

§9-713, after a claim is filed with the Commission, the employer or

its insurer must either begin paying benefits or file an issue with the

Commission to contest the claim. As you noted in your request,

some issues may also be filed with the Commission later in the

process – for example, when a claimant seeks reinstatement of

temporary total disability benefits.

The Commission’s regulations reflect this procedure by

defining the phrase “disputed workers’ compensation claim” to

include any claims in which issues are filed with the Commission,

as well as appeals of those claims. COMAR 14.09.01.01B(2).

“Undisputed” claims are those for which issues have been

withdrawn or otherwise resolved. COMAR 14.09.01.01B(3). The

regulations are silent on whether a claim should be considered

“disputed” or “undisputed” during the period between its filing and

the deadline for filing issues. 

In our opinion, a pending claim should be treated as

“disputed” prior to the deadline for filing issues, if the insurer has

not commenced payment of benefits. As outlined above, the

Legislature modified the local office requirement in 2002 to limit it

to “disputed” claims. It is evident from the legislative history that

the purpose of that amendment was to increase administrative

efficiency by allowing an insurer to consolidate the handling of
130 [89 Op. Att’y

 This conclusion is consistent with advice previously provided 5

by this Office. See Letter of Assistant AttorneyGeneral Kathryn M. Rowe

to Senator Thomas L. Bromwell and Delegate Michael E. Busch

(September 18, 2001).

 For a brief period, the Commission’s regulations defined 6

“competent individual” as “an individual possessing the knowledge and

experience to handle claims arising under the Maryland Workers’

Compensation Law.” That definition, which referred to the handling but

not the adjustment of claims, was adopted in 2001, but eliminated the

following year. See 28:10 Md. R. 949 (May 18, 2001); 29:17 Md. R. 1382

(August 23, 2002). When the Commission eliminated the definition in

2002, it also added a new regulation tracking the statutory language that

requires “competent individuals who ... possess the knowledge and

experience to handle and adjust each disputed claim.” Id.

uncontested claims that largely involve administrative processing, if

the insurer finds it more efficient to do so. 

Thus, during the period between the filing of a claim and the

deadline for filing issues, the claim should be treated as “disputed,”

unless the insurer has commenced paying the claim. If issues are 5

filed, it remains a disputed claim until those issues are resolved.

Once it is determined that a claim will be uncontested and that no

issues will be filed, it is not “disputed” and need not be handled by

an individual in Maryland. If issues are later filed for some reason,

the claim would then become “disputed” for purposes of the local

handling requirement.

B. Competent Individual

As noted above, the Act has required since 1920 that an

insurer have a “competent individual” in Maryland in charge of its

workers’ compensation business. Currently, the Act specifies that

an insurer must rely on the services of “competent individuals who

... possess knowledge and experience to handle and adjust each

disputed claim.” You have asked several questions related to the use

of the phrase “competent individual.”

1. Meaning

You ask first the meaning of the phrase “competent

individual.” That phrase is not defined in the statute. The common 6

dictionary meaning provides a useful starting point. See Marriott

Employees Federal Credit Union v. MVA, 346 Md. 437, 447, 697

A.2d 455 (1997). One dictionary defines “competent” as “having
Gen. 123] 131

 While the terms “handle” and “adjust” are not specifically 7

defined in the statute, their meaning is well understood in the context of

insurance. A treatise on insurance law explains that “[o]nce the insured

has provided adequate notice and proof of loss, or notice of claim or

occurrence, the insured’s claim is in the hands of the insurer”, which

marks the beginning of the “claims handling process.” 14 Couch on

Insurance 3d 198:1. To “adjust”an insurance claim is “to determine the

amount that an insurer will pay an insured to cover a loss.” Black’s Law

Dictionary 43 (7 ed. 1999); see also 46A C.J.S. Insurance §1343 th

(“adjuster” is one “whose business it is to ascertain the loss and agree with

insured on the settlement”).

suitable or sufficient skill, knowledge, experience for some

purpose.” Random House Dictionary of the English Language 417

(2 ed. 1987). In the present context, the purpose, as the statute nd

indicates, is the handling and adjustment of workers’ compensation

claims. Thus, a “competent individual,” for purposes of LE §9-

410(a) and §9-405(d), is a person who has sufficient skill,

knowledge, and experience to handle and adjust workers’

compensation claims. 

2. Attorney as Competent Individual

You also ask whether any special training or ability is

required for an individual to qualify as a “competent individual,” and

whether an attorney representing an insurer with respect to a

disputed claim can be presumed to meet that standard. The statute

does not require any particular training, but rather knowledge and

experience in the handling and adjustment of workers’ compensation

claims. The Commission could issue interpretative regulations 7

elaborating on the statutory requirement. See 75 Opinions of the

Attorney General 37, 49-50 (1990) (describing the effect of

interpretative rules). An attorney could meet those qualifications if

the attorney has had experience in handling and adjusting claims.

However, given that most attorneys do not handle or adjust workers’

compensation claims, there is no presumption that an attorney

satisfies the statutory requirement for a “competent individual who

... possess[es] the knowledge and experience to handle and adjust ...

disputed claim[s].” 

You ask whether an attorney whose office is located out-ofstate, but who is admitted to practice in Maryland, could qualify as

a “competent individual” for purposes of the workers’ compensation

law. Even if the attorney otherwise qualified as a “competent

individual” based on his or her knowledge and experience in

handling and adjusting claims, the attorney would not be “in the
132 [89 Op. Att’y

 We assume the reference to an “out-of-state office” in your 8

question means that the attorney would be handling or adjusting claims

from that office. The mere fact that an attorney has an out-of-state office

does not, by itself, disqualify the attorney from handling or adjusting

claims.

State” if the attorney performed such work in an office outside

Maryland. 

8

3. Whether the Phrase is Unconstitutionally Vague

You state that, in an effort to insure compliance with the law,

the Commission hasrequired that an attorney representing an insurer

certify that the claim had been “handled and adjusted by a competent

individual within the State.” Apparently, members of the defense bar

object that they are unable to certify that a person is a “competent

individual” because the term “competent” is not defined. You ask

whether the lack of a statutory definition renders the phrase

unconstitutionally vague.

The void-for-vagueness doctrine is rooted in the Fourteenth

Amendment’s guarantee of procedural due process. Finucan v.

Maryland Board of Physician Quality Assurance, 380 Md. 577, 846

A.2d 377, 385 (2004). It embodies two basic principles: (1) that a

statute give “fair notice” to persons of ordinary intelligence of what

is prohibited; and (2) that it provide legally fixed standards and

adequate guidelines for police, judicial officers, triers of fact and

others who are obliged to enforce, apply, and administer the law. Id

at 385-86. The void-for-vagueness doctrine does not require

absolute precision. There is no requirement that each term in a

statute be defined in that statute. Nor is a statute unconstitutionally

vague merely because it allows for the exercise of some discretion

on the part of agency officials. “It is only where a statute is so broad

as to be susceptible to irrational and selective patterns of

enforcement that it will be held unconstitutional ....” Id., quoting

Bowers v. State, 283 Md. 115, 122, 389 A.2d 346 (1978).

As noted above, the statutory provisions requiring that

insurers have “competent individuals” in the State specify the nature

of the competence required – knowledge and experience in the

handling of claims – and the circumstances under which that

competence is to be exercised – disputed claims. Thus, they

sufficiently inform an insurer of the obligation imposed by the

statute. They state that obligation in plain language that can be

understood by people of ordinary intelligence. See Unnamed
Gen. 123] 133

Physician v. Commission on Medical Discipline, 285 Md. 1, 15, cert.

denied, 444 U.S. 868 (1979). Finally, while the statutes do give the

Commission some discretion to determine whether an individual is

competent in handling and adjusting claims, that discretion is not

unfettered. Thus, the longstanding requirement of the State

Workers’ Compensation Act that an insurer use “competent

individuals” within the State to handle and adjust claims is not void

for vagueness.

C. Consultation with Out-of-State Office

You state that the Commission has required attorneys

representing insurers to certify that they will “handle and adjust”

claims within the State. Some attorneys have objected to the use of

the term “adjust,” stating that they receive authority to compromise

claims on a case-by-case basis by telephone from an out-of-state

adjuster. You ask whether a claim is being “handled and adjusted by

a competent individual within [Maryland]” if an attorney is required

to call an out-of-state insurer for authority to settle or resolve a

disputed claim. 

If an insurer’s primary office is located in another state, there

undoubtedly will be occasions when a “competent individual”

designated to handle and adjust claims in Maryland will need to

contact that office to discuss the insurer’s policies and procedures or

even a particular case. Such consultations do not mean that claims

are being handled and adjusted outside Maryland. On the other

hand, if the insurer’s representative in Maryland has no authority to

settle claims without first contacting the out-of-state office, in reality

the claims are being adjusted by the out-of-state office. Thus, if an

attorney must routinely contact an out-of-state office of an insurer to

settle claims, the insurer is not in compliance with the local office

requirement of the Maryland statute.

IV

Conclusion 

In summary, it is our opinion that:

1. A claim is “disputed” unless and until it is determined

that the claim will be uncontested. A claim is no longer “disputed”

once any issues have been resolved.
134 [89 Op. Att’y

2. For purposes of the Act, a “competent individual” is

a person who has sufficient skill, knowledge, and experience to

handle and adjust workers’ compensation claims. An attorney may

satisfy that requirement, but there is no presumption to that effect.

An attorney who works outside Maryland is not a competent

individual “in the State,” even if the attorney is admitted to practice

in Maryland. The use of the phrase “competent individual” does not

render the law unconstitutionally vague.

3. The law does not preclude an out-of-state insurer from

exercising oversight of its adjusters and attorneys in Maryland.

However, if an attorney representing an insurer must routinely

contact an out-of-state representative of the insurer for authority to

settle any claim, those claims are not being handled and adjusted “in

the State.” 

J. Joseph Curran, Jr.

Attorney General

Kimberly S. Ward

Assistant Attorney General

Robert N. McDonald

Chief Counsel

 Opinions and Advice