Workers’ Compensation Law Prof Blog

Pennsylvania Supreme Court: In Upset, Employers Now - at WCJ's Discretion - to Pay Attorney's Fees on Top of Claimant's Award

The Pennsylvania Supreme Court, in a holding at odds with custom and practice, has held that, in all cases where a claimant prevails, the employer is, at the WCJ’s discretion, responsible for claimant’s attorney’s fees.  This is so even when the employer has maintained a reasonable contest.  The decision was unanimous; the court discerned no ambiguity attending the key statutory language.  

Under the longstanding prior practice, the claimant would bear his or her attorney expenses by paying a maximum 20% contingent fee out of his or her share.  Only when the employer had a manifestly unreasonable (arbitrary and capricious) contest would the employer have to pay claimant's fees.  And the Appeal Board, on intra-agency review, always granted a stay on fees (not on the worker's award) in the event of an employer appeal.       

The statute and the foregoing custom and practice is 50 years old, so this 2021 interpretation by the Supreme Court has upset the apple cart in the Pennsylvania practice.  Presumably, the value of claims will be enhanced and carriers will have to review premium levels.  A skilled lawyer colleague of this writer refers to the case as a "game-changer."  (Any comments here are strictly those of the writer.) 

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Lorino v. W.C.A.B. (Commonwealth of PA/Penn DOT), ___ A.3d ___, 2021 WL 6058030, filed 12.22.2021 (Pa. 2021).
 
          The Supreme Court, in a holding at odds with custom and practice, has held that, in all cases where a claimant prevails, the employer is, at the WCJ’s discretion, responsible for claimant’s attorney’s fees.  This is so even when the employer has maintained a reasonable contest.  The decision was unanimous; the court discerned no ambiguity attending the key statutory language. 

          The holding, arguably addressing a sleeper (though long identified) issue – lo these many years – is based upon a reading of Section 440(a), 77 P.S. § 996(a). That statute provides, in pertinent part, that in “any contested case … the employe … in whose favor the matter has been finally determined in whole or in part shall be awarded … a reasonable sum for costs incurred for attorney’s fee …[.] Provided that cost for attorney fees may be excluded when a reasonable basis for the contest has been established by the employer ….” (Emphasis added.)     

          The Supreme Court held that the term “shall” means that an award of fees is mandatory.  Meanwhile, the term “may” indicates that an award of fees is not “automatic” – the determination is for the WCJ, in his or her discretion, on a case-by-case basis. The court, notably, was confident that WCJs were equipped for the task, despite employer’s anxiety that “no standards are provided.” The court, on this point, responded, “We are confident [that] judges will apply their discretion based on the humanitarian and remedial purposes which underlie the WCA.”  Slip op. at p.11, note 7.       

Torrey's Note 1: The court distinguished (effectively overruled) a 1991 Commonwealth Court case where the Section 440 issue was current.  The court there stated, “attorney’s fees are not automatically awarded to a successful claimant under Section 440, when the employer has presented a reasonable contest.”  Mason v. W.C.A.B. (Wheeling-Pitt), 600 A.2d 241 (Pa. Commw. 1991). But, of course, the Supreme Court in this new case is not holding that the award is mandatory; it is discretionary.

Torrey's Note 2: An award of fees on top of compensation where a reasonable contest has been found is foreign to our Pennsylvania sensibilities.  Still, in some states this is the rule, and employers, presumably, simply insure for the same as part of their premiums.  Florida is a major example; New Hampshire is another.  In the latter state, the agency establishes the hourly fee to be assessed by the judge.  Perhaps it was this type of regime that the legislature, fifty years ago, was contemplating.  

Torrey's Note 3: The WCJ has, seemingly, been supplied with significant authority: “An abuse of discretion occurs where the WCJ's judgment is manifestly unreasonable, where the law is not applied or where the record shows that the action is a result of partiality, prejudice, bias or ill will.” Allegis Group v. W.C.A.B. (Coughenaur), 7 A.3d 325, 327 n.3 (Pa. Commw. 2010).

Torrey's Note 4: The lack of any “brightline” as to when to exercise discretion on fees, and how much to award, will be a concern among the WCJs.  Appeals over abuse of discretion may, similarly, be a headache.   

Torrey's Note 5: The court’s holding is not limited to medical-only cases.

Torrey's Note 6: The crux of the court’s holding is found in two paragraphs, which I will reproduce here: 

Based on the established meaning of the terms “shall” and “may,” under Section 440, when a contested case is resolved in favor of an employee, a reasonable sum for attorney’s fees shall be awarded to the claimant. Such an award is mandatory. Where, however, the employer has established a reasonable basis for the contest, an award of attorney’s fees may be excluded. In other words, the WCJ is permitted, but not required, to exclude an award of attorney’s fees. The Commonwealth Court below, in “always interpret[ing] Section 440 to mean that ‘attorney[s’] fees shall be awarded unless a reasonable basis for the employer’s contest has been established,’” … disregarded the distinction between the terms “shall” and “may,” and failed to recognize the discretion afforded to the workers’ compensation judges to award attorney’s fees even when they find a reasonable basis for an employer’s contest.
 

To be clear, we do not suggest that, under Section 440, a WCJ may never deny an award of attorney’s fees when the employer has established a reasonable basis for its contest. As explained above, the language of Section 440 affords the WCJ discretion to refuse an award of attorney’s fees in such circumstances. Rather, it is the Commonwealth Court’s interpretation of Section 440 as a per se disqualification of an award of claimant’s attorney’s fees where the employer has established a reasonable basis for its contest which is contrary to the plain language of the statute.  

Slip op. at 10-11.

Full Text: https://www.pacourts.us/assets/opinions/Supreme/out/J-58-2021mo%20-%20104992019155173360.pdf?cb=1

"Worker Protection Bill," The National Labor Relations Act, and Worker Safety

Although not directly related to workers' compensation, in the aftermath of tornado-related worker deaths in Illinois and Kentucky there have been a number of news stories discussing the need for a worker protection law of some kind. But as I told David Sirota recently, there already is such a law. It is called the National Labor Relations Act.  

Section 7 of the NLRA protects the rights of employees to engage in concerted protests, including concerted work stoppages, over what the employees believe to be unsafe or unhealthy working conditions. Section 502 of the NLRA, as amended by the Labor Management Relations Act (LMRA), states that cessation of labor by an employee or employees, in good faith, because of abnormally dangerous conditions for work at their place of employment is not deemed a strike. It is noteworthy that employees, not unions, possess these rights, although the statutory context of Section 502 assumes union representation. The difference between the two sections is that under Section 502, unionized employees working under a collective bargaining agreement with a "no strike provision" must have an "objectively reasonable" basis for walking off the job for safety reasons. If they have an ojectively reasonable basis, their action is not a strike, and they have therefore not violated their contractual no strike provision (which could lead to legal liability). Non-union employees concertedly walking off the job for safety reasons need only have a "good faith belief" that they are in danger. Paradoxically, union employees may have a greater chance of being second-guessed for safety-related decisions than non-union employees. The lead case for what I have just asserted is Labor Board v. Washington Aluminum Co., 370 U.S. 9 (1962). Isn't it odd how few people know that the NLRA applies to all employees (not just unionized employees) engaging in "protected concerted" activities? The breadth of Section 7 of the NLRA is enormous. We already have a worker protection law.

Employees have six months to file a charge with the National Labor Relations Board (NLRB).

I should also note in passing an interesting recurring issue in workers' compensation "Act of God" cases. Employers (and their carriers) resisting workers' compensation claims in such situations may be opening themselves to tort claims. If the weather knocks the Amazon warehouse down because it was negligently designed or built, workers' compensation exclusivity (which confers tort immunity) may be the employer's best friend. Be careful what you argue.

Michael C. Duff

 

Of Tornado Alleys and Workers’ Compensation

When I wrote the short piece, “Will Workers’ Compensation Work in a Mega-Risk World,” I did not have exactly in mind the overnight death of workers’ at an Amazon facility resulting from freakish (or maybe not so freakish) tornados in mind. But I had something like that in mind: I suspect that pandemics and climate change are related. The families of those workers killed will seek compensation. They will likely have access to a variety of benefits systems. And they will likely be woefully undercompensated. To the extent anything like the negligent construction of the Amazon warehouse, or negligent handling of the aftermath of the calamity begins to surface, we will hear cries that Amazon should be immune from liability as a matter of law because the event was unforeseeable (tornados in December?)—a claim you can believe if you like, but one that loses force the second time around (and I have no doubt there will be a second time around). On the workers’ compensation side of the equation, the defense argument may be that the workplace did not increase the risk of dying because of this “Act of God.” The argument would “work” in some states, but not work in others. I have written about an expanded conception of workers’ compensation causation here (forthcoming in 2022 in the San Diego Law Review). 

My colleague Judge David Torrey wrote on this blog back on November 14 about the impending 50th Anniversary of the National Commission on Workmen’s Compensation that issued a report in 1972 after receiving an investigative mandate in the OSH Act of 1970. I will have a great deal to say about that report soon. Its genesis, in a nutshell, was undercompensation, and I’ll be writing in subsequent posts and articles about how the Federal government and the Council of State Governments understood, as early as 1955, and as reflected in several intragovernmental reports I’ll be analyzing, that undercompensation both shifts the costs of injury in unpredictable ways and provokes structural introspection and arguments for reform or more than reform. 

It comes down to this. When confronted by the reality of injury, illness, and death emerging from foreseeable, predictable economic activity (I’m thinking specifically of “work,” but I suppose we could become more cosmic), any legal system has only a few ways it may proceed. It might compensate through something like a tort system, when obviously wrongful conduct has been perpetrated by an identifiable wrongful actor, with the bad actor entirely footing the bill for the costs of injury. That kind of tort system, for a whole variety of reasons, will lead to uneven coverage: a few big injured “winners,” and many more injured losers. But if the “wins” are big enough it might make the world safer in the long run.  

Alternatively, a legal system might opt to compensate anyone who is the victim of socially useful working activity; both because it is cheaper than trying to find out who was “wrong,” and because it seems unjust for those who profit from the working activity of human beings not to contribute to the costs arising inevitability (or so we are told) from those workers being hurt or killed. This system breaks down at times because those who pay the costs of injury (employers and their carriers) predictably control the costs of payout by very tightly defining eligibility—sometimes to the point where a disinterested observer might be led to wonder if we are looking at the same system. Of course, the workers’ compensation system began as an anti-destitution rather than a make-whole structure. (The earliest systems provided 50% of the average weekly wage as a benefit with no provision for ongoing medical benefits).  

We have been papering over the undercoverage of state compensation systems (whether tort or workers’ compensation) by implementing “Ken Feinberg” systems whenever duty, breach, or causation problems become difficult. That is certainly another approach a legal system might logically take: if it won’t fit in the torts or workers’ compensation bucket, get another bucket. The problem is that the interplay between these three buckets will become extremely complex over time and raise the question of whether we should not have a different, bigger bucket.  

And, of course, a legal system might decide that it prefers not to compensate victims at all for reasons of “efficiency.” When that de facto insulation of employers (or others) from liability extends to harm wrongfully caused, however, we run into questions of constitutional limits. As I am developing in a paper that  I have been writing over the last six months or so, I believe there is a constitutional right to personal security (one of William Blackstone’s absolute rights - see *129-134 here). A government that will not protect me from the wrongful conduct of others by affording an adequate remedy for injury encroaches on my personal security. 

In the end I wonder if events like the terrible tornados in Edwardsville will propel us to a Triangle Shirt Waste Fire state of mind to redouble efforts to adequately compensate the victims of work injury and death (and their families). 

Michael C. Duff