The Pennsylvania Supreme Court clarified that a worker can recover an award of attorney fees if he prevails against a carrier’s effort to terminate his benefits.
Case: Lorino v. WCAB (Commonwealth), No. 8 EAP 2021, 12/22/2021, published.
Facts: Vincent Lorino worked as an equipment operator for the Pennsylvania Department of Transportation. He slipped and fell at work in August 2016, suffering injuries.
The insurance carrier for the DOT was Inservco Insurance Services. Inservco accepted liability for a low-back sprain/tear and a left hip sprain/tear, pursuant to two medical-only notices of compensation payable.
Lorino did not miss any work and did not receive wage or indemnity benefits.
In February 2017, Lorino underwent an independent medical examination by Dr. Lawrence Barr.
Barr opined that Lorino had fully recovered from his injuries, that any pain was the result of preexisting degenerative disc disease and that Lorino required no further treatment.
After receiving Barr’s report, Inservco filed a petition to terminate Lorino’s treatment. Lorino retained counsel to challenge the termination petition.
At the hearing on the petition, Lorino testified that he had been receiving treatment from Dr. Shivani Dua, who administered epidural steroid injections to alleviate the pain in his back and left hip. He indicated that he received his most recent injection two to three weeks before the IME.
Lorino requested that his medical benefits be continued and that he receive $14,050 in attorney fees, pursuant to Section 440 of the Workers’ Compensation Act.
Section 440 provides that in any case where the insurer has contested liability in whole or in part, a prevailing employee shall be awarded a reasonable sum for attorney fees.
Lorino asserted that he received only medical benefits, was unable to retain the services of an attorney based on a traditional contingent fee arrangement and instead was required to enter into an hourly-rate fee agreement for counsel at $400.
Procedural history: A workers’ compensation judge denied the termination petition, relying on Dua’s reports to conclude that Lorino had not fully recovered from his injuries. The WCJ also denied Lorino’s request for attorney fees under Section 440. Instead, the judge opined that $2,000 was a reasonable sum for fees pursuant to Section 442 and that Lorino was responsible for the amount.
Section 442 provides that in cases where the efforts of counsel produce a favorable result but where no immediate award of compensation is made, such as in cases of termination or suspension, counsel is entitled to a reasonable fee, as agreed upon by the claimant and his attorneys.
Both parties appealed, but the Workers’ Compensation Appeal Board affirmed the WCJ’s rulings. The Commonwealth Court, in an unpublished memorandum opinion, affirmed the WCAB.
The court ruled that Section 440 provides for fees only if an employer or carrier lacked a reasonable basis for its contest and that Inservco had a reasonable basis for its termination petition.
Analysis: The Pennsylvania Supreme Court said the Commonwealth Court’s interpretation of Section 440 was contrary to its express language.
The Supreme Court said Section 440’s use of the term “shall” establishes a mandatory duty, which means that when a contested case is resolved in favor of an employee, a reasonable sum for attorney fees shall be awarded to the claimant. “Such an award is mandatory,” the court said.
Where the employer has established a reasonable basis for the contest, an award of attorney fees may be excluded, the court continued, but fees can still be awarded even if there was a reasonable contest.
“To be clear, we do not suggest that, under Section 440, a WCJ may never deny an award of attorney fees when the employer has established a reasonable basis for its contest,” the Supreme Court said. “Rather, it is the Commonwealth Court’s interpretation of Section 440 as a per se disqualification of an award of claimant’s attorney fees where the employer has established a reasonable basis for its contest which is contrary to the plain language of the statute.”
Disposition: Reversed in part and remanded.
To read the court’s decision, click here.