Friday, March 27, 2015

Employer awarded Attorney Fees and Costs payable by Employee!

Extraordinary award of Attorney Fees and Costs in appeal - payable to Employer by Employee and Employee Counsel.

The general rule is that reasonable Attorney Fees are awarded to Employee and payable by Employer, where the Employee succeeds in litigation ... unless the Employer meets its burden to establish sufficient facts to prove a reasonable basis exists for the contest of the petition.
See: Section 440; 77 P.S. 996.

Where there is a reasonable contest of a petition, Section 422 allows the Workers' Compensation Judge to approve a reasonable attorney fee - up to 20% - to be deducted from the Employee indemnity wage loss benefits.

What about the unreasonable contest of a petition by Employee?

There are occasions where the filing and litigation of a petition by an Employee are similar to the circumstances which have resulted in an award of attorney fees and costs against an Employer.
... what's good for the goose, is good for the gander?
Not in PA work Comp practice.

Past appellate decisions interpreted Rule 2744 of the PA Rules of Appellate Procedure to preclude the award of attorney fees and costs to an Employer, even where the Employee pursued what was considered a frivolous appeal.

In an extraordinary set of circumstances, the Commonwealth Court issued a per curiam opinion which sua sponte imposed the sanctions of attorney fees and costs incurred by Employer to defend a frivolous appeal pursued by Employee.
See: Smith v. WCAB (Consolidated Freightways Inc.), No. 606 CD 2014, filed March 9, 2015.

Factual and Procedural Background

As noted above, this case reported an extraordinary set of circumstances.
The extent and duration of litigation are unlike the typical workers' compensation proceeding. Yet this case remains a point of discussion for several reasons, as reviewed below.

In May 1996 Employee filed a Claim petition alleging disability as a result of his brief exposure to a chemical in the course of his work duties as a truck driver.
In October 1997 Employee filed a Review petition alleging entitlement to medical expense payments.
WCJ decision denied both petitions.
WCAB affirmed the WCJ denials.
There were no further appeals.

Subsequently Employee filed "additional petitions" which were described as an effort to re-litigate the same alleged injury. The PA Supreme Court and US Supreme Court declined Employee requests for further review.

The instant petitions were a Petition to Review Medical Treatment and a Penalty petition.
This constituted the 5th time Employee was before the Commonwealth Court for the same injury claim.

The 4th time Employee was before the Commonwealth Court resulted in an unpublished December 2011 Memorandum decision.
This decision affirmed the WCAB dismissal of 6 Review Petitions, on the basis that they were barred by res judicata and collateral estoppel effect of the decision in the 1996 and 1997 petitions.

In the 2011 decision the Commonwealth Court noted the Employee appeal was frivolous and conduct of Employee and his Attorney was "obdurate and vexatious".
... over a period of 15 years Employee filed approximately 15 petitions, all based upon the same incident...
... at least 5 hearings have been held by 4 different WCJs...
... Employee was before the Commonwealth Court 4 times,
...the PA Supreme Court 4 times,
... the US Supreme Court 2 times,

AFTER that 2011 Commonwealth Court decision ... 
Employee and his Attorney filed 2 more petitions in December 2012, raising the same issues.
The WCJ granted Employer's motion to dismiss these petitions. The WCAB affirmed.

So, in this 5th Commonwealth Court appeal, the court concluded (once again) the Employee petitions were barred by the legal doctrines of res judicata and collateral estoppel.

The behavior of Employee and his counsel was described as "precisely the type of obdurate and vexatious conduct which PA RAP 2744 was designed to prevent". 

The 2015 Court looked back to its 2011 review of the caselaw.  The 2011 court referenced the PA Supreme Court decision in Phillips v. WCAB (Century Steel), 721 A.2d 1091 (Pa. 1999).
In Phillips, attorney fees were not awarded to Employer.  
An award of attorney fees to an Employer was said to thwart the declared intent of the Act, which is to give claimants the opportunity to receive attorneys fees in the event of an unreasonable contest by the opposing party.

But the Phillips court specifically distinguished their ruling from a decision where costs were awarded.

In Patel v. WCAB (Saquoit Fibers Company) 520 A.2d 525 (Pa. Cmwlth. 1987) costs were awarded to Employer, payable by Employee pursuant to PA RAP 2744.
The Patel court added, an award of attorney fees to Employer would have been appropriate, had a request been filed.

The Patel procedural history reflected the filing of (only) 3 separate claim petitions with 3 separate appeals to the Commonwealth Court.

2015 Commonwealth Court Decision

In the instant appeal, the Commonwealth Court in Smith asserted that the PA Supreme Court decision in Phillips, which preserved the Patel ruling would support their award of costs and attorney fees incurred by Employer to defend this frivolous appeal.

The Court took the rare affirmative step to award costs and attorney fees, in the absence of a request by Employer. As mentioned in footnote 5, the Court explained,  Employer could not reasonably have been expected to request fees, in light of the prior appellate decisions.


1. What to take away from this unique case...

This award of attorney fees and costs pertained only to the frivolous appeal. There was no award of attorney fees and costs for the time and expense incurred in the underlying litigation. 

2. There is an Employee remedy to receive an award of attorney fees and costs in the litigation of any petition before a Worker's compensation Judge. The statutory language at Section 440 (a) specifically mentions "the employee or dependents" as the party who is entitled to reasonable costs and attorney fees, where the case is decided in their favor. 

This language does not bestow the same right upon Employer.
In my experience, no workers compensation judge will interpret this unambiguous language to provide the Employer with any similar remedy. In fact, on the rare occasion when I have asserted a right to reimbursement of costs, I've been told that my argument may rise to the level of an unreasonable contest and allow Employee to receive an attorney fee award!

3. In appellate matters, this case may provide a stronger argument for an Employer award of attorney fees and costs. However, I believe this type of award will remain the exception, rather than a more common ruling.