Neves v. Workers' Comp. Appeal Bd.
| Decision Date | 14 May 2020 |
| Docket Number | No. 1431 C.D. 2018,1431 C.D. 2018 |
| Citation | 232 A.3d 996 |
| Parties | Robert NEVES, Petitioner v. WORKERS’ COMPENSATION APPEAL BOARD (American Airlines), Respondent |
| Court | Pennsylvania Commonwealth Court |
Joseph A. Prim, Jr., Philadelphia, for Petitioner.
Christian M. Stein, Pittsburgh, for Respondent.
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE P. KEVIN BROBSON, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge, HONORABLE MICHAEL H. WOJCIK, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge
OPINION BY PRESIDENT JUDGE LEAVITT
Robert Neves (Claimant) petitions for review of an adjudication of the Workers’ Compensation Appeal Board (Board) that refused to approve his attorney fee agreement setting the fee at 20% of Claimant's medical compensation award. In doing so, the Board affirmed the decision of the Workers’ Compensation Judge (WCJ) that Claimant did not prove that the fee was reasonable, given the legal work provided. Claimant contends that Section 442 of the Workers’ Compensation Act (Act)1 requires the WCJ to approve a counsel fee that is capped at 20% of the compensation award and does not vest the WCJ with discretion to evaluate the reasonableness of a 20% counsel fee for a medical compensation award. Concluding that the Board erred in its construction of Section 442 of the Act, we reverse.
Background
Claimant worked for American Airlines, Inc. (Employer) as a baggage handler. On February 3, 2015, he filed a claim petition alleging that on January 5, 2015, he suffered a work-related heart attack that damaged his heart muscle. On May 3, 2016, WCJ Joseph Stokes granted the claim petition. In his decision, the WCJ specifically found that Claimant's counsel (Counsel) was entitled to "20% of any benefits awarded to be paid as counsel fees" under the fee agreement Claimant signed. WCJ Stokes Decision, 5/3/2016, at 8, Finding of Fact No. 15 (emphasis added). WCJ Stokes issued the following order:
Id. at 10 (emphasis added). Employer appealed to the Board, and Claimant cross-appealed, asserting that WCJ Stokes erred in the calculation of his average weekly wage.2
On August 18, 2016, Claimant filed a review petition and a penalty petition, alleging that Employer "refuses to pay for medical treatment [C]laimant incurred as a result of his work injury" and "has withheld payment of counsel fees on benefits awarded as a result of the WCJ decision from Mercy Fitzgerald Hospital [ (Hospital) ]." Certified Record (C.R.), Item No. 2 at 1. The case was assigned to WCJ Geoffrey Lawrence.
In support of his claim for counsel fees, Counsel submitted the fee agreement that Claimant signed on January 29, 2015, which states in pertinent part, as follows:
In consideration for services rendered and to be rendered, I agree to pay my attorney a sum equal to 20% percent (sic) of whatever may be recovered from said claim either by suit, settlement, or in any other manner or of whatever may be recovered if a second trial or appeal is taken.
Reproduced Record at 1 (R.R. ––––) (emphasis added). Counsel also submitted an affidavit of Claimant dated October 11, 2016, in which Claimant attested, inter alia , to the following:
I entered into a fee agreement with my attorney for twenty (20%) percent of whatever benefits I received. I understand that that applies to past due medical expenses as well as any wage loss benefits. It is my understanding that providers may seek the balance of the twenty (20%) percent of the bill from me should they be dissatisfied with the eighty (80%) percent they will receive. I entered into this fee agreement with full understanding with my rights and liabilities.
R.R. 2-3. Thereafter, the parties agreed to have Employer pay 80% of the amount owing to the Hospital for its repriced medical bills. The remaining 20% was placed in escrow.
On September 8, 2017, the parties entered into a compromise and release (C & R) agreement. It settled the penalty petition and authorized continued litigation on Claimant's review petition to determine "whether a 20% attorney fee is to be deducted and paid from the repriced medical bills from [the] Hospital as they pertained to the 1/05/2015 hospitalization." R.R. 24.
On November 6, 2017, WCJ Lawrence denied Claimant's review petition, holding that Counsel was not entitled to an attorney fee of 20% of Claimant's medical compensation. WCJ Lawrence held that Claimant's review petition was barred by the doctrine of res judicata because Claimant did not appeal WCJ Stokes’ order that Counsel was "entitled to 20% of the compensation benefits awarded as counsel fees payable from Claimant's share of the award." See WCJ Stokes Decision, 5/3/2016, at 10. WCJ Lawrence construed this order to cover only the award of indemnity compensation because the 1993 amendments to the Act, Act of July 2, 1993, P.L. 190, No. 44 (Act 44), changed the medical bill payment scheme. On the merits, WCJ Lawrence held that Claimant did not establish that Counsel's fee was reasonable. In so holding, WCJ Lawrence relied upon Piergalski v. Workmen's Compensation Appeal Board (Viviano Macaroni Company) , 153 Pa.Cmwlth. 321, 621 A.2d 1069 (1993), for the proposition that a contingent fee based upon an award of medical compensation will not be approved unless the fee is shown to be reasonable, after examining the amount and complexity of legal work involved.
Claimant appealed to the Board, arguing that WCJ Lawrence erred in his application of the res judicata doctrine. Claimant noted that WCJ Stokes approved the fee agreement and found, as fact, that the agreement gave counsel "20% of any benefits awarded." WCJ Stokes Decision, 5/3/2016, at 8, Finding of Fact No. 15 (emphasis added). Claimant was not aggrieved and, thus, could not appeal to the Board. On the merits, Claimant argued that WCJ Lawrence erred because the fee agreement capped Counsel's fee at 20%, which made the fee per se reasonable under Section 442 of the Act.
The Board affirmed the WCJ. It sidestepped the WCJ's holding on res judicata , explaining that it "assum[ed] without deciding that Claimant was not aggrieved by WCJ Stokes’ Order" on counsel fees and, thus, could not appeal the decision. Board Adjudication, 10/17/2018, at 3. The Board agreed with WCJ Lawrence that Claimant needed to prove the reasonableness of a fee of 20% of the medical compensation, given the legal work performed, and he did not present such evidence. In support, the Board cited Righter v. Workers’ Compensation Appeal Board (Righter Parking) , 141 A.3d 628 (Pa. Cmwlth. 2016).
Appeal
On appeal to this Court,3 Claimant raises two issues. First, Claimant argues that the Board erred because Section 442 of the Act establishes that a 20% counsel fee is per se reasonable, regardless of whether the award is for disability or medical compensation. Second, Claimant argues that WCJ Lawrence erred in holding that his contingent fee agreement was governed in any way by Act 44.
Employer responds that the decision of WCJ Lawrence was correct in its application of res judicata and on the merits. Nevertheless, before WCJ Lawrence, Employer acknowledged that it has no interest in the matter of Counsel's fee. Its only concern is that the Hospital not have recourse against Employer should it pay the 20% of the medical compensation award, presently held in escrow, to Counsel.
I. The Workers’ Compensation Act on Counsel Fees
As enacted in 1915, the Act did not address contingent fee agreements between claimants and their counsel. The Board adjudicated disputes that arose about counsel fees, but it did so without express authority in the Act. See David B. Torrey & Andrew E. Greenberg, WORKERS’ COMPENSATION LAW & PRACTICE , § 15:5 (3d ed. 2008). In 1972, significant reforms were enacted to correct the "deficiencies in the workmen's compensation laws with respect to the procedures for processing work-connected injury cases and payment of compensation due." Act of February 8, 1972, P.L. 25, Preamble.
Among these "procedures" addressed was the contingent fee agreement between a claimant and his counsel. Section 442 was added to the Act and stated as follows:
Act of February 8, 1972, P.L. 25 (emphasis added). One month later, the legislature amended Section 442 to eliminate the discretion of the referee to disapprove a fee agreement that capped the counsel fee at 20% by deleting "may allow" from that sentence and placing it in the following sentence. The amended version of Section 442 stated as follows:
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