Wednesday, June 29, 2005

Commonwealth Court Holds Attorney Fees For Unreasonable Contest Are Not Automatic When A Penalty Is Granted

In B. Bates v. WCAB (Titan Construction Staffing, LLC) the Commonwealth Court expressly overruled its holding that a finding of a violation of the Workers' Compensation Act mandates the imposition of attorney's fees for unreasonable contest. Hoover v. WorkersÂ? Comp. Appeal Board (ABF Freight Systems), 820 A.2d 843, (Pa. Cmwlth. 2003), overruled on other grounds by Snizaski v. WorkersÂ? Comp. Appeal Board (Rox Coal Co.), 847 A.2d 139 (Pa. Cmwlth.), alloc. granted, ___ Pa. ___, 862 A.2d 582 (2004). The Court stated the Employer has the right to establish a reasonable basis for contest in any case.

In Hoover, the issue was the conflict between the thirty day requirement to pay and the Board regulations that gave the Board more than thirty days to rule on supersedeas. The WCJ granted a penalty of 10% rather than the requested 50% on payments of over 85,000.00 that were only (arguably) a few days late. The WCJ found a reasonable contest because the effect of the Board regulations on the Employer's duty to pay was unsettled at the time. The Commonwealth Court affirmed the penalty and further held that due to the Employer's violation of the Act I erred as a matter of law in failing to award attorneys fees to the Claimant.

In the Bates case, the Claimant requested a penalty because SWIF paid him biweekly rather than weekly, as he was paid on the job. The WCJ awarded a reduced penalty of 10% rather than the 50% requested on this, what the WCJ determined to be a violation of the Act. The WCJ recognized, however, and explained that reasonable minds could differ on this issue and the WCJ found a reasonable contest. The Commonwealth Court agreed the contest was reasonable based on the genuine issue of law and on the basis the WCJ awarded less than the 50% requested.

Accordingly, counsel fees for unreasonable contest will be awarded only where the Claimant asserts a reasonably clear violation of the Act and requests an appropriate penalty.

This raises the issue of whether any penalty between 10% and 50% can be granted, since these are the only numbers the statute provides. I still may award 20%, 30% or 40%. Other Judges award only 10% or 50%.

The best practice would be to request the minimum 10% and amend the request in the course of litigation if a higher penalty seems warranted. Counsel could then seek guidance from the WCJ on whether the WCJ will consider numbers in between 10% and 50%.

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