Opinion
CLAIM NO. D312450
OPINION FILED MAY 12, 1995
Upon review before the FULL COMMISSION in Little Rock, Pulaski County, Arkansas.
Claimant represented by the HONORABLE GARY DAVIS, Attorney at Law, Little Rock, Arkansas.
Respondents represented by the HONORABLE RANDY P. MURPHY and the HONORABLE MICHAEL VANDERFORD, Attorneys at Law, Little Rock, Arkansas.
Decision of Administrative Law Judge: Reversed.
OPINION AND ORDER
The claimant appeals an opinion and order filed by the administrative law judge on July 28, 1994. In that opinion and order, the administrative law judge found, in part, that the claimant's attorney is not entitled to an additional attorney's fee. The claimant sustained a compensable injury on October 3, 1983. In a previous opinion and order filed September 28, 1989, the Full Commission found that the claimant was permanently and totally disabled as a result of this injury, and, the Arkansas Court of Appeals affirmed the decision of the Commission in a decision delivered by the Court on August 29, 1990. The respondents have continued to pay permanent and total disability compensation in accord with this award of compensation without interruption. However, on July 29, 1992, the respondents filed a request for a hearing, contending that the claimant's physical condition had changed such that he was no longer permanently and totally disabled and that his compensation should be terminated or modified pursuant to Ark. Code Ann. § 11-9-713 (Cumm. Supp. 1993). In the opinion and order filed on August 10, 1994, the administrative law judge found that the claimant's condition had not changed and that he was still permanently and totally disabled, and the respondents have not appealed that decision. Nevertheless, after conducting a de novo review of the entire record, we find that a preponderance of the evidence does not support a conclusion that the claimant's condition changed, and we find that he is still permanently and totally disabled. However, the administrative law judge also found that the respondents did not controvert the claimant's entitlement to continued permanent and total disability compensation, and it is this decision which the claimant has petitioned for review.
Based on our de novo review of the entire record, we find that the respondents did controvert the claimant's entitlement to continued permanent and total disability compensation and that claimant's attorney is entitled to the maximum attorney's fee provided by the law in effect at the time of his injury. See, Ark. Stat. Ann. § 81-1332 (Cumm. Supp. 1985) (currently codified at Ark. Code Ann. § 11-9-715 (Cumm. Supp. 1993). Therefore, we find that the administrative law judge's decision in this regard must be reversed.
The Arkansas Workers' Compensation Law specifically provides that the Commission shall direct that a fee be paid to the claimant's attorney "whenever the commission finds that a claim has been controverted, in whole or part. . . ." Ark. Code Ann. § 11-9-715 (a)(2) (Cumm. Supp. 1993) (previously codified at Ark. Stat. Ann. § 81-1332 (Cumm. Supp. 1985)); see also, Tyson Foods, Inc. v. Fatherree, 16 Ark. App. 41, 696 S.W.2d 782 (1985). Making respondents liable for at least a portion of the attorney's fees serves the legitimate social purposes of discouraging oppressive delays in recognition of liability, deterring arbitrary and capricious denials of claims, and insuring the ability of a necessitous employee to obtain adequate legal representation. See, Aluminum Company of America v. Henning, 260 Ark. 699, 543 S.W.2d 480 (1976). Thus, the purpose of determining whether or not a claim has been controverted, and by whom, "is to place the burden of litigation expense upon the party which made it necessary."Henning, supra; Buckner v. Sparks Regional Medical Center, 32 Ark. App. 5, 794 S.W.2d 623 (1990). Consequently, whether a claim is controverted must be determined from the circumstances of each particular case. Buckner, supra; Masonite Corporation v. Mitchell, 16 Ark. App. 209, 699 S.W.2d 409 (1985); Climer v. Drake's Backhoe, 7 Ark. App. 148, 644 S.W.2d 637 (1983). The mere failure to pay compensation benefits does not amount to controversion, in and of itself. Revere Copper Brass, Inc. v. Talley, 7 Ark. App. 234, 647 S.W.2d 477 (1983). Likewise, controversion may not be found where the respondent accepts its compensability but delays payment in a reasonable attempt to investigate the extent of the disability.Horseshoe Bend v. Sosa, 259 Ark. 267, 532 S.W.2d 182 (1976);Hamrick v. The Colson Company, 271 Ark. 740, 610 S.W.2d 281 (1981). However, assuming a position which requires an injured employee to retain an attorney to take the actions necessary to assure that the employee's rights are protected may constitute controversion. New Hampshire Insurance Co. v. Logan, 13 Ark. App. 116, 680 S.W.2d 720 (1984); Turner v. Trade Winds Inn, 267 Ark. 861, 592 S.W.2d 454 (1980);Buckner, supra. Furthermore, an attorney's fee can be awarded twice on the same benefits if the same benefits are controverted twice. Fatherree, supra; Larry Bothwell v. Shiloh Steel Fabricators, Inc., Full Workers' Compensation Commission, opinion filed Feb. 16, 1993 (Claim No. E017698).
In the present claim, the respondents contend that they were merely attempting to determine whether there had been a change in the claimant's condition, and they point to the fact that they continued to pay the claimant's compensation benefits without disruption. Respondents clearly have a right to continue to monitor and evaluate a claimant's condition to determine whether there has been a change in condition. In fact, the evidence in the present case indicates that the respondents did continue to monitor and evaluate the claimant's condition through the review of medical records and through the use of private investigators. This investigation of the claimant's condition by the respondents began at least by April 29, 1992, when its private investigators began conducting surveillance of the claimant. Obviously, the respondents' July 29, 1992, hearing request was based on their conclusion that the results of their investigation indicated that the claimant's physical condition had changed and that he was no longer entitled to compensation for a permanent and total disability. In fact, the contention that the respondents were merely investigating the extent of the claimant's disability is defeated by the following statement, made by the respondents' attorney at the hearing:
Your Honor, the Respondents contend the Claimant is no longer permanently and totally disabled; that there has been a change in his physical condition justifying a modification or a termination in benefits pursuant to Ark. Code Ann. Section 11-9-713.
As this statement clearly reveals, the respondents' actions were intended to eliminate or reduce the compensation that the claimant was receiving.
Furthermore, the fact that the respondents did not stop paying the claimant the compensation he was awarded does not change the fact that their actions jeopardized his entitlement to continue receiving that compensation. The respondents had no choice but to continue paying the compensation awarded by the Commission, for they would have been in violation of the Commission's order and subject to a penalty and other action if they had simply ceased the payments prior to obtaining a modification of the award from the Commission. See, Fatherree, supra. Ark. Code Ann. § 11-9-713 is not a mechanism to allow respondents to investigate claims, as the respondents assert. Instead, it is a mechanism to allow claimants and respondents to obtain relief when they believe that an award has become inadequate or excessive due to a change in the claimant's physical condition. Moreover, by activating this mechanism, a party sets in motion the adjudicative functions of this Commission and causes the extent of disability sustained by the claimant to be relitigated. Obviously, when a respondent activates this mechanism by contending that the claimant's compensation should be terminated or reduced, that respondent makes litigation of the claim necessary and places the claimant's right to continue receiving compensation in jeopardy, creating the need for the claimant to obtain the services of an attorney to protect his rights.
In reaching this decision, we note that the facts of this claim are similar to the facts of Fatherree, supra. InFatherree, the Commission found that the claimant was permanently and totally disabled as a result of a compensable injury. The respondents made payments pursuant to the Commission's award for a period of time, but, they eventually unilaterally terminated the payment of benefits and filed a motion seeking to have the Commission's order set aside, contending that it was procured through fraud. However, the Full Commission found that the respondents failed to prove by a preponderance of the evidence that the award had been procured by fraud, and a 20% late payment penalty was assessed on the installment of benefits that accrued between the dates of termination and reinstatement of benefits. In addition, the Commission awarded an attorney's fee calculated on all reinstated benefits. The Court of Appeals affirmed the Commission's decision even though the Court recognized that this required the respondents to pay an attorney's fee calculated twice on some of the benefits awarded to the claimant. In so holding, the Court made the following comments:
. . . It is true that the holding of the Commission means that appellant will be required to pay attorney's fees calculated twice on some of the benefits awarded appellee. However, we agree with the Commission that these same benefits have been controverted and placed in jeopardy twice by appellant and appellee has been required to obtain the services of an attorney on both occasions. We find nothing in Section 81-1332 [currently codified at Ark. Code Ann. Section 11-9-715] indicating that there can be only one controversion for the purposes of that section. It specifically provides that whenever the Commission finds that the claim has been controverted it should allow attorney's fees on the controverted portion. The maximum fees provided in that section can only refer to each controversion. Certainly the legislature intended that a necessitous claimant have the ability to obtain counsel in defense of an award as well as in the obtaining of it. Any other meaning ascribed to this section would defeat the stated purpose of the enactment. [Emphasis in original]
In the present claim, we find that the respondents made the litigation of this claim necessary by requesting a hearing before an administrative law judge and contending that the claimant's compensation should be terminated or reduced. Thus, we find that the respondents placed the claimant's right to continue receiving compensation in jeopardy, creating the need for the claimant to obtain the services of an attorney to defend his award. While the respondents could not unilaterally stop paying the compensation prior to obtaining a modification of the award by the Commission, they were clearly prepared to stop or reduce the payments if a modified award had been granted. Furthermore, even though respondents had the burden of proving that the claimant's condition had changed, the claimant had the burden of going forward with evidence, and this involved proving for a second time that he was permanently and totally disabled. Moreover, in doing so, claimant's attorney had to attend the deposition of two physicians, to view the surveillance tape in the respondents' offices, and prepare for a lengthy and complex trial.
Accordingly, based on our de novo review of the entire record, and for the reasons discussed herein, we find that the respondents controverted the claimant's rights to continue receiving permanent and total disability compensation, beginning with the date that the administrative law judge's opinion and order was filed. Furthermore, considering the length and complexity of the services provided by the claimant's attorney, we find that he is entitled to a second award for the maximum attorney's fee allowed by statute for all permanent and total disability benefits accruing after that date. Therefore, we find that the administrative law judge's in this regard must be, and hereby is, reversed. In all other respects, the administrative law judge's decision is affirmed.
IT IS SO ORDERED.
DISSENTING OPINION
I respectfully dissent from the majority's opinion finding that respondent controverted claimant's entitlement to permanent and total disability benefits by requesting a review pursuant to A.C.A. § 11-9-713. The issue on appeal is whether claimant's attorney is entitled to an award of attorney's fees. In my opinion, claimant's attorney is not entitled to an attorney's fee.
Claimant sustained an admittedly compensable injury on October 3, 1985. Eventually, claimant was determined to be permanently and totally disabled as a result of his work-related injury. Respondent has been paying permanent and total disability benefits since the Court of Appeals affirmed the determination of the Full Commission finding claimant permanently and totally disabled.
Respondent requested a hearing to determine whether claimant had sustained a change of condition which would merit a modification of the earlier permanent and total award. A hearing was held and an Administrative Law Judge determined that there was no change in claimant's physical condition to merit a modification of the permanent and total award. The Administrative Law Judge also found that claimant's attorney is not entitled to an attorney's fee. It is from the denial of an attorney's fee that claimant has appealed.
Respondent was merely exercising a right provided to them pursuant to the Arkansas Workers' Compensation Code, § 11-9-713. I am of the opinion that respondent's request for a modification of the permanent and total disability award does not constitute controversion of a claim. Therefore, claimant's attorney is not entitled to an award of attorney's fees.
Arkansas Code Ann. § 11-9-715 provides:
In all other cases, whenever the Commission finds that the claim is being controverted, in whole or in part, the Commission shall direct fees for legal services to be paid by the employer or carrier in addition to compensation awarded, and such fees shall be allowed only on the amount of compensation controverted and awarded. . .
It has been well-established by Arkansas law that a question of controversion is a question of fact to be determined by the Full Commission. Additionally, the Arkansas courts have stated that a carrier has the right to reasonably attempt to ascertain the extent of liability and such a determination does not constitute controversion.Horseshoe Bend Builders v. Sosa, 259 Ark. 267, 532 S.W.2d 182 (1976); Hammerick v. The Colson Co., 271 Ark. 740, 610 S.W.2d 280 (1981).
In this case, respondent requested a hearing pursuant to A.C.A. § 11-9-713. There is no evidence that this request was made in bad faith or to harass claimant. Respondent appears to have been justified in believing that there had been a change in claimant's condition. Respondent continued to pay claimant workers' compensation benefits throughout the entire process. Claimant's benefits were never interrupted and were never stopped. In my opinion, the majority's assertion that requesting a statutorily sanctioned hearing automatically constitutes controversion is unfounded and just plain wrong. Respondent was simply making an effort to determine whether claimant continued to be permanently and totally disabled.
I also find it significant that respondent did not randomly pick out this claimant. Respondent offered evidence at the hearing of claimant lifting and carrying a spare tire. They produced video evidence showing claimant participating in home construction, hammering above his head, sawing, and climbing ladders. Respondent, based upon the evidence, had a reasonable belief that claimant's condition had changed.
In my opinion, A.C.A. § 11-9-715 allows attorney's fees to be awarded when a claim has been controverted. The evidence in this record does not indicate that respondent was controverting claimant's award. Rather, respondent was requesting a review pursuant to A.C.A. § 11-9-713. In my opinion, respondent's request does not constitute controversion. Therefore, dissent from the majority
ALLYN C. TATUM, Commissioner