Sharbono v. Steve Lang & Son Loggers

• Decision Date: 01 July 1997
• Citation: 696 So.2d 1382
• Parties: 97-0110 La
• Court: Louisiana Supreme Court

Page 1382

696 So.2d 1382

97-0110 La. 7/1/97

James E. SHARBONO v. STEVE LANG & SON LOGGERS.

No. 97-C-0110.

Supreme Court of Louisiana.

July 1, 1997.

Walter O. Hunter, Jr., Shreveport, for applicant.

George Arthur Flournoy, Philip G. Hunter, Alexandria, for respondent.

[97-0110 La. 2] CALOGERO, Chief Justice.

The sole issue presented for our consideration in this case is whether interest on an award of attorney's fee and penalties in a worker's compensation case is to be calculated from the date of judicial demand or from the date of the hearing officer's award. The hearing officer granted claimant Sharbono legal interest on the award of penalties and attorney's fees only from the date of the judgment, November 28, 1995. The court of appeal amended the judgment to grant plaintiff interest on penalties and attorney's fees from the date of claimant's judicial demand, that is, from the date that claimant lodged his claim with the Office of Worker's Compensation, and affirmed the judgment as amended.

For the reasons which follow we reverse the court of appeal on this discrete point of law.

I. Background

James E. Sharbono (Sharbono) sustained injuries in an accident on September 15, 1994, while in the course and scope of his employment with defendant, Steve Lang & Son Loggers (Lang). Sharbono was measuring a log while atop a pile of logs, approximately seven to eight feet from the ground. He slipped and fell onto his buttocks on a log below, then pitched to his knees on the ground. The fall caused Sharbono to sustain low back trauma. He filed a worker's compensation claim with the Office of Worker's Compensation, seeking to recover benefits, medical expenses, attorney's fees, and penalties. Trial of the matter was held on September 29, 1995. The hearing officer rendered judgment in favor of Sharbono in open court on all issues except Sharbono's claim for attorney's fees and penalties, which issue she took under advisement. Sharbono had argued that Lang was arbitrary and capricious in refusing to pay necessary medical expenses and in refusing timely to seek additional, updated medical opinions on claimant's condition. Thereafter, the hearing officer agreed with Sharbono that defendant Lang was arbitrary and capricious in handling his claim. The court awarded a penalty in the amount of $2,000, and attorney's fees in the amount of $4,750. Costs were assessed against defendant Lang, and "interest [was] awarded in accordance with law." [97-0110 La. 3] The later signed judgment issued by the hearing officer on November 28, 1996 provided that legal interest on the award of benefits was "awarded from the due date of each benefit, until paid, subject to credit for all benefits previously paid." The judgment further provided that legal interest on the $2,000 in penalties and on the $4,750 in attorney's fees would be assessed "from the date of this judgment until paid." Sharbono appealed, urging that the hearing officer was wrong in assessing interest on the attorney's fees and penalties only from the date of their award.

On appeal, Sharbono pointed out that the Third Circuit Court of Appeal in prior cases had consistently awarded legal interest on penalties and fees from the date of judicial demand, rather than from the date of judgment. In contrast, defendant Lang argued that interest on attorney's fees and penalties in a worker's compensation case may be awarded only from the date of judgment. For that proposition, defendant cited La.R.S. 23:1201.3(A), which was amended effective January 1, 1990. The last sentence of subsection (A) of R.S. 23:1201.3 reads, "Any compensation awarded and all payments thereof directed to be made by order of the hearing officer shall bear judicial interest from the date ordered paid by the hearing officer until the date of satisfaction."

The court of appeal found R.S. 23:1201.3 inapplicable because "[p]enalties and attorney's fees are neither benefits nor compensation ... [but] are penal in nature and meant to punish recalcitrant employers or insurers for failing to honor statutorily imposed obligations." ¹ The court went on to award interest on these fees and penalties from the date of judicial demand, citing the "jurisprudential [97-0110 La. 4] rule that interest on penalties and attorney's fees runs from the date of judicial demand." One judge on the five-judge panel dissented. While agreeing with the majority that R.S. 23:1202.3(A) applies only to compensation benefits and not to penalties and attorney's fees, he would have awarded interest on attorney's fees and penalties only from the date of judgment, in line with the reasoning of the Second Circuit Court of Appeal, Louisiana, as expressed in the insurance context in Williams v. Louisiana Indem. Co., 26-887 (La.App.2d Cir. 6/21/95), 658 So.2d 739. The dissenting judge acknowledged that "a number of cases award interest from date of judicial demand," but he found no statutory basis exists for their having done so. Finally, the dissenting judge noted that the question regarding when interest on fees and penalties is due was not squarely presented in those cases.

II. Discussion

Before deciding what, if any, jurisprudential rule should govern the date upon which to commence the running of legal interest on awards of attorney's fees and penalties in a worker's compensation case, we must first address whether R.S. 23:1201.3, granting interest on "compensation awarded and all payments thereof" from the date ordered by the hearing officer, applies to interest stemming from penalties and attorney's fees. We hold that it does not.

R.S. 23:1201.3 was enacted as part of Acts 1988, No. 938, a sweeping bill aimed at reforming worker's compensation law, in particular, the administration of claims. Prior to Act 938, since 1983 and the passage of Acts 1983, 1st Ex.Sess., No. 1, § 1, worker's compensation disputes were resolved by nonbinding arbitration, conducted by administrative officers in the office of worker's compensation administration. The officer's recommendation for resolution was appealable to the district court, which then had original jurisdiction over the claim. ²

According to the minutes of the House Committee on Labor and Industrial Relations, Senate Bill No. 943 (later to become Act 938, Louisiana Acts 1988) was a legislative attempt to reduce the costs of worker's compensation in Louisiana, primarily by creating a system of regional hearing officers with quasi-judicial authority. Pursuant to R.S. 23:1310.3(E), nine regional hearing officers [97-0110 La. 5] are now "vested with original, exclusive jurisdiction over all claims or disputes arising out of this Chapter." An officer's decision is final "unless an appeal is made to the appropriate circuit court of appeal," R.S. 23:1310.5, thus taking the district courts out of the process. ³ The portion of Act 938 under scrutiny here is § 1201.3A, which provides:

A. If payment of compensation or an installment payment of compensation due under the terms of an award, except in case of appeals from an award, is not made within ten days after the same is due by the employer or insurance carrier liable therefor, the hearing officer may order a certified copy of the award to be filed in the office of the clerk of court of any parish, which award whether accumulative or lump sum, when recorded in the mortgage records, shall be a judicial mortgage as provided in Civil Code Article 3321. Any compensation awarded and all payments thereof directed to be made by order of the hearing officer shall bear judicial interest from the date ordered paid by the hearing officer until the date of satisfaction. (Emphasis supplied).

In interpreting R.S. 23:1201.3, we are guided by the Civil Code's maxim in Article 9 that clear and unambiguous laws "shall be applied as written and no further interpretation may be made in search of the intent of the legislature," and in Article 11 that "[t]he words of a law must be given their generally prevailing meaning." Further, this Court has held that "legal interest is statutory and should be strictly construed." Cole v. Celotex Corp., 599 So.2d 1058, 1081 (La.1992), quoting Cole v. Celotex Corp., 588 So.2d 376, 389 (La.App. 3d Cir.1991). With these guides in mind, we turn to examination of the statute at hand.

By its plain language, R.S. 23:1201.3 does not govern interest on attorney's fees and penalties. Nor does the statute's legislative history reflect discussion of the subject. The "generally prevailing meaning" of the word "compensation," as used in the statute, would not include attorney's fees and penalties. See Broussard v. U.S. Fire Ins. Co., 96-668 (La.Ct.App.3d Cir. 12/11/96), 685 So.2d 494 ("We do not find that a strict construction of the term 'compensation' encompasses penalties and attorney's fees."). Further, attorney's fee awards and penalty awards are not intended to "compensate" a plaintiff and thereby make him whole, but rather to discourage certain behavior(s) on the part of the offending party. In this case, the discouraged behavior is employers', and employers' insurers', indifference toward injured employees. Hood v. C.J. Rogers, Inc., 94-1162 (La. [97-0110 La. 6] App.3d Cir. 3/8/95), 654 So.2d 371; Lutz v. Jefferson Parish Sch. Bd., 503 So.2d 106 (La.Ct.App. 5th Cir.1987).

It is clear that fees and penalties are not "compensation" within the meaning of the statute. Accordingly, R.S. 23:1201.3 does not govern the calculation of interest on a hearing officer's award of penalties and attorney's fees.

Because R.S. 23:1201.3 does not address the date from which interest on attorney's fees and penalties will run, and in the absence of any Code article governing awards of interest on attorney's fees and penalties, ⁴ we must look to the jurisprudence to determine whether interest on such must be awarded from the date of judicial demand, as alleged by Sharbono, or from the date of the hearing officer's award, as argued by defendant Lang...