Opinion
No. 1528 C.D. 2013
03-21-2014
Robert Scott, Petitioner v. Workers' Compensation Appeal Board (Ames True Temper, Inc.), Respondent
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
This case returns to us after our remand for an assessment of costs and benefits for an appropriate healing period in Scott v. Workers' Compensation Appeal Board (Ames True Temper, Inc.), 957 A.2d 800 (Pa. Cmwlth. 2008) (Scott I). Robert Scott (Claimant) petitions for review of the order of the Workers' Compensation Appeal Board (Board), which affirmed as modified the Workers' Compensation Judge's (WCJ) decision. Claimant argues the WCJ and Board erred by failing to award attorney fees for unreasonable contest, a six-week healing period, penalties, and litigation costs pursuant to the Workers' Compensation Act (Act). Discerning no error, we affirm.
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1-1041.4, 2501-2708.
I. Background
Claimant worked for Ames True Temper, Inc. (Employer) as a press operator and, on April 27, 2006, he sustained an amputation to his finger. Claimant, through then counsel, Sharon Fox Zanotto (Former Counsel), filed a claim petition seeking compensation for the loss of his finger. In response, Employer denied the material allegations and, in accordance with a previous notice of compensation denial, it asserted Claimant violated a positive-work order by bypassing two safety devices and was under the influence of marijuana at the time of injury.
The WCJ found, in relevant part, as follows. Claimant suffered an amputation of his fourth finger (little finger) at the middle phalanx or knuckle. The injury occurred when Claimant attempted to dislodge a piece of steel that was stuck in a machine. However, the WCJ found Claimant, in attempting to unjam the machine, violated a positive-work order. WCJ's Op., 6/7/07, Findings of Fact (F.F.) Nos. 29, 31-33.
Additionally, the WCJ found Claimant was released to return to light-duty work on May 9, 2006, and to full-duty work on June 6, 2006. Employer paid Claimant from the date of the injury until May 4, 2006. Claimant's loss of earnings resulted from the termination of his employment for violation of Employer's drug policy as light-duty work would have been available on May 9, 2006, if Employer did not terminate Claimant's employment for cause. WCJ's Op., 6/7/07, F.F. Nos. 29, 33, 34.
Ultimately, the WCJ determined Claimant was not entitled to benefits because his injury was caused by a violation of a positive work order. Thus, the WCJ denied and dismissed Claimant's claim petition.
At this point, Former Counsel's representation of Claimant concluded. Attorney Ronald Tomasko (Current Counsel) assumed representation, and he has represented Claimant since that time.
Claimant appealed to the Board, which affirmed. On further appeal to this Court, we reversed. Scott I. The Court, speaking through then Senior Judge Flaherty, concluded that, although Claimant may have violated a work order, he was permitted to unjam the machine in the execution of his duties, so long as he followed proper procedures. The fact that Claimant violated a work rule was not necessarily dispositive. Because Claimant was "engaged in an activity that was part of his work duties at the time of injury," he was entitled to specific loss benefits. Id. at 806. However, Claimant's discharge for cause precluded an award of indemnity benefits. Thus, we granted the claim petition and awarded Claimant 28 weeks of benefits for the specific loss of the fourth finger consistent with Section 306(c)(13) of the Act, 77 P.S. §513(13). Further, we remanded "to the Board for further remand to the WCJ for an assessment of costs, including counsel fees, if any, as well as an assessment of benefits for an appropriate healing period." Id.
Shortly after the Board remanded to the WCJ, Claimant filed a penalty petition asserting Employer violated the Act by not tendering specific loss benefits to Claimant within 30 days of this Court's remand order. Reproduced Record (R.R.) at 577a-578a. Employer filed an answer denying any violation of the Act, and, on December 12, 2008, it tendered payment for the specific loss claim and attorney fees representing 20 percent of the claim per Current Counsel's contingency fee agreement. Id. at 612a-613a.
On remand, the WCJ found Employer's defense of the claim petition was reasonable. Regarding the issue of penalties, the WCJ found Employer made the required payments, at most, two days late, and Claimant suffered no real harm from the delay. WCJ's Op., 3/24/2010, F.F. No. 4. Thus, the WCJ denied Claimant's request for unreasonable contest attorney fees and the penalty petition.
Claimant appealed to the Board, which affirmed in part but again remanded for consideration of litigation costs as well as an assessment of benefits for an appropriate healing period. Claimant then filed a second penalty petition, asserting Employer failed to pay litigation costs in violation of this Court's remand order.
On further remand, the WCJ found Claimant was capable of returning to work without impairment in earnings on May 9, 2006. As Employer paid Claimant through May 4, 2006, Claimant sustained a wage loss for only five days. Thus, the WCJ determined Claimant is entitled to only a five-day healing period, which Employer paid with interest. As a result, the WCJ concluded no additional payments are owed to him. WCJ's Op., 8/29/11, F.F. Nos. 10-12.
With regard to litigation costs and the second penalty petition, the WCJ observed there was no previous award of litigation costs. Thus, the WCJ determined, in the absence of a prior finding directing the payment of litigation costs, Claimant did not sustain his burden of proving Employer violated the terms of the Act by failing to pay those costs. Moreover, the WCJ noted, if litigation costs were owed, such costs were payable to Claimant's Former Counsel, not Current Counsel. WCJ's Op., 8/29/11, F.F. Nos. 13-15.
The WCJ again concluded Employer's contest was reasonable at all times. Additionally, the WCJ found Claimant's Current Counsel did not submit a proper quantum meruit fee exhibit evidencing his legal background to support his requested hourly rate, and he rejected Current Counsel's submitted exhibit. WCJ's Op., 8/29/11, F.F. Nos. 16-17.
Claimant again appealed to the Board. The Board modified the WCJ's decision regarding litigation costs by awarding costs attributable to the litigation of the claim petition to Former Counsel, but affirmed in all other respects. From this decision, Claimant filed the current petition for review.
II. Issues
On appeal, Claimant asserts the WCJ and the Board erred by failing to award unreasonable contest attorney fees, a six-week healing period, penalties, and litigation costs.
This Court's review is limited to determining whether an error of law was committed, whether necessary findings of fact are supported by substantial evidence, and whether constitutional rights were violated. Dep't of Transp. v. Workers' Comp. Appeal Bd. (Clippinger), 38 A.3d 1037 (Pa. Cmwlth. 2011).
III. Discussion
A. Unreasonable Contest Attorney Fees
First, Claimant contends the Board and WCJ erred by failing to award Claimant unreasonable contest attorney fees in contravention of this Court's remand order. Alternatively, Claimant argues, regardless of the remand order, the Board and WCJ violated the Act by failing to award attorney fees as Employer's contest was unreasonable. Claimant clearly acted within the scope of his duties when he suffered his work injury. Employer's defense that Claimant acted outside the scope of his duties because he violated a work order was based on an erroneous representation of case law and the Act and was, therefore, unreasonable. Thus, Claimant asserts, he is entitled to the award of attorney fees under the Act. Additionally, he contends, the WCJ erred by imposing an artificial burden of proof upon counsel to support the quantum meruit fee exhibit.
"Section 440(a) of the Act, 77 P.S. §996(a), provides that where a claimant succeeds in a litigated case reasonable counsel fees are awarded against the employer, as a cost, unless the employer meets its burden of establishing facts sufficient to prove a reasonable basis for the contest." U.S. Steel Corp. v. Workers' Comp. Appeal Bd. (Luczki), 887 A.2d 817, 820 (Pa. Cmwlth. 2006). This section "is intended to deter unreasonable contests of workers' claims and to ensure that successful claimants receive compensation undiminished by costs of litigation." Dep't of Transp. v. Workers' Comp. Appeal Bd. (Clippinger), 38 A.3d 1037, 1049 (Pa. Cmwlth. 2011) (citation omitted).
Section 440(a) was added by the Act of February 8, 1972, P.L. 25, as amended.
A reviewing court must look at the totality of the circumstances as the reasonableness of the contest may not necessarily depend on a conflict in the evidence in and of itself. Thompson v. Workers' Comp. Appeal Bd. (Cinema Ctr.), 981 A.2d 968 (Pa. Cmwlth. 2009). The reasonableness of an employer's contest depends on whether the contest was prompted to resolve a genuinely disputed issue, which can be a legal or factual issue or both, or merely to harass the claimant. Id. Further, the existence of an unresolved legal issue or uncertainty as to the application of law to facts may constitute a reasonable contest. See Rogele, Inc. v. Workers' Comp. Appeal Bd. (Mattson), 969 A.2d 634 (Pa. Cmwlth. 2009) (Simpson, J., dissenting) (citing Chichester Sch. Dist. v. Workmen's Comp. Appeal Bd. (Fox), 592 A.2d 774 (Pa. Cmwlth. 1991)); see also Prebish v. Workers' Comp. Appeal Bd. (DPW/W. Ctr.) (Pa. Cmwlth., Nos. 812 C.D. 2011 & 902 C.D. 2011, filed October 12, 2012), 2012 WL 8681505 (unreported).
Pursuant to Section 414 of this Court's Internal Operation Procedures, an unreported opinion of this Court, issued after January 15, 2008, may be cited for its persuasive value. 210 Pa. Code §69.414.
The employer bears the burden of proving a reasonable basis for contesting liability. Gumm v. Workers' Comp. Appeal Bd. (J. Allan Steel Co.), 942 A.2d 222 (Pa. Cmwlth. 2008). Whether to award unreasonable contest attorney fees is a question of law reviewable by the Board and this Court. Id. An issue of law is subject to our plenary review. Hough v. Workers' Comp. Appeal Bd. (AC&T Cos.), 928 A.2d 1173 (Pa. Cmwlth. 2007).
Here, this Court's remand order directed the WCJ to assess "costs, including counsel fees, if any ...." Scott I, 957 A.2d at 806 (emphasis added). Contrary to Claimant's assertions, this Court did not mandate the award of unreasonable contest attorney fees. In fact, we did not make any determination regarding the reasonableness or unreasonableness of Employer's contest. See id. Rather, we remanded for the WCJ to make this determination and assess such fees, if warranted.
On remand, the WCJ determined Employer's contest was reasonable; consequently, the WCJ did not award unreasonable contest attorney fees. The Board affirmed. In so doing, Claimant contends the Board and the WCJ once again erred as Employer's contest was unreasonable. Specifically, Claimant asserts Employer's contest is unreasonable because it relied on its own incorrect interpretation of unambiguous law.
Employer defended the claim petition based upon Nevin Trucking v. Workmen's Compensation Appeal Board (Murdock), 667 A.2d 262 (Pa. Cmwlth. 1995) and its progeny. Nevin Trucking provides an employee is not entitled to workers' compensation benefits when his injury is the result of a violation of a positive-work order. To that end, Employer argued Claimant did not act within the course of his employment when he attempted to unjam the equipment. Employer presented evidence that Claimant did not follow the proper procedures for unjamming the equipment. Consequently, Employer maintained, Claimant's injury was caused by a violation of a positive-work order.
Relying on Frank Bryan, Inc. v. Workers' Compensation Appeal Board (Bryan, Deceased), 921 A.2d 546 (Pa. Cmwlth. 2007), and Delarosa v. Workers' Compensation Appeal Board (Masonic Homes), 934 A.2d 165 (Pa. Cmwlth. 2007), Claimant contends Employer's defense and application of Nevin Trucking was erroneous, and, therefore, unreasonable.
In Frank Bryan, the employer relied on a statute that had not been previously interpreted by the courts. On this basis, the employer argued its contest was reasonable because the case was one of first impression. We disagreed. Although the employer's contest was one of first impression, it was nonetheless unreasonable because the statutory law was clear and unambiguous. Id. Additionally, in Delarosa, this Court determined an employer's contest was unreasonable where it relied on a defense not supported by case law.
However, neither Frank Bryan nor Delarosa compel the result Claimant seeks. Although Frank Bryan presented an issue of first impression, the Court based its ruling on the clear, unambiguous statutory language. In contrast to both Frank Bryan and Delarosa, the present matter involved a question of fact and application of complex case law to those facts.
Contrary to Claimant's assertions, a genuine dispute existed as to whether Claimant's violation of a work rule precluded benefits. Both the WCJ and the Board agreed with Employer's application of the positive-work-order exception to this case. The fact that this Court ultimately overruled the WCJ and the Board did not render Employer's contest unreasonable. On the contrary, the ruling of this Court demonstrates the complexity of the issue involved. See Scott I. Although Employer ultimately did not prevail, its contest was nevertheless reasonable in light of the facts of prior cases and nuances of applicable law. Thus, the WCJ and Board did not err by denying unreasonable contest attorney fees.
Additionally, Claimant maintains the WCJ erroneously placed an artificial burden of proof on Current Counsel to support his quantum meruit fee exhibit. Specifically, the WCJ found:
Claimant's counsel has failed to submit a proper quantum meruit fee exhibit. He has not submitted any evidence regarding his legal background, or that of his associate, to support the request or the hourly rate. Accordingly, this [WCJ] rejects the quantum meruit fee exhibit.WCJ's Op., 8/29/11, F.F. No. 16.
We decline to reverse on this issue. This is because neither the Board nor the WCJ based its decision not to award counsel fees on Current Counsel's quantum meruit fee exhibit. Rather, both tribunals denied counsel fees on the basis that Employer's contest was, at all times, reasonable. Having determined Claimant was not entitled to unreasonable contest attorney fees, we need not address the merits Claimant's challenge regarding the WCJ's rejection of the quantum meruit fee exhibit.
B. Healing Period
Next, Claimant contends the WCJ erred by awarding Claimant compensation for a five-day healing period rather than the six-week healing period authorized by Section 306(c)(25) of the Act, 77 P.S. §513(25). Claimant contends he did not return to work without impairment in earnings, and he was not medically released to return to unrestricted employment within six weeks of his injury. Therefore, Claimant asserts, he is entitled to compensation for the full six-week healing period as contemplated by the Act.
Section 306(c)(25) of the Act provides, in pertinent part:
(25) In addition to the payments hereinbefore provided for permanent injuries of the classes specified, any period of disability necessary and required as a healing period shall be compensated in accordance with the provisions of this subsection. The healing period shall end (i) when the claimant returns to employment without impairment in earnings, or (ii) on the last day of the period specified in the following table, whichever is the earlier:77 P.S. §513(25) (emphasis added).
* * *
For the loss of any other finger or any part thereof, six weeks.
Section 306(c)(25) of the Act does not require the claimant to show a loss of earnings to qualify for the healing period. Sun Oil Co. v. Workers' Comp. Appeal Bd. (Carroll), 811 A.2d 1131 (Pa. Cmwlth. 2002) (Sun Oil). Rather, the loss of earnings is presumed by the claimant's showing of a specific loss. Id. Therefore, a claimant does not have to show an actual impairment of earning capacity to qualify for the healing period of benefits provided under Section 306(c)(25) of the Act. Id.
However, entitlement to a healing period is not automatic. Id.; Sellari v. Workmen's Comp. Appeal Bd. (NGK Metals Corp.), 698 A.2d 1372 (Pa. Cmwlth. 1997). The presumption of loss of earnings is rebuttable. Sun Oil; Sellari. It is an employer's burden to present evidence to rebut this presumption. Sun Oil; Sellari.
Claimant, relying on Sun Oil Co. v. Workmen's Compensation Appeal Board (Davis), 600 A.2d 684 (Pa. Cmwlth. 1991) (Davis), argues an employer cannot overcome this presumption unless it shows the claimant actually returned to work. However, in Sellari, this Court clarified Davis and held Davis stands for the proposition that, while a claimant is entitled to a presumption of entitlement to the award of a healing period when a specific loss is awarded, that presumption is rebuttable. Sellari; see NGK Metals Corp. v. Workmen's Comp. Appeal Bd. (Bailey), 698 A.2d 1365 (Pa. Cmwlth. 1997) (recognizing the clarification).
Thereafter, in Sun Oil, we examined whether a claimant, who was retired when he sought benefits for his hearing loss, was entitled to benefits for a "healing period" when he did not intend to return to work. We held, because the claimant retired before his specific loss benefits began, he did not require a healing period to recover from his disability. Sun Oil. Thus, we concluded the employer successfully rebutted the presumption of the claimant's entitlement to a healing period and determined the claimant was not eligible for this additional benefit. Id.
Here, the specific loss of Claimant's finger created a rebuttable presumption regarding loss of earnings. For its part, Employer relied on Claimant's testimony and medical records that Claimant was medically cleared to return to light-duty work as of May 9, 2006, and full-duty work as of June 6, 2006. R.R. at 59a-60a, 74a, 188a. Additionally, Employer presented evidence that light-duty work would have been available on May 9, 2006. R.R. at 385a-86a. However, Claimant did not return to work because Employer terminated him for cause having violated its drug policy. Employer paid Claimant from the date of injury until May 4, 2006. Based on this evidence, the WCJ found Claimant was entitled to only five days of healing period.
Nevertheless, Claimant argues the express language of the statute mandates payment of the full six-week healing period unless he returns to employment without impairment in earnings. Because Claimant never "returned" to work, he claims he is entitled to the full six weeks. However, Claimant's position ignores the limitation that the healing period is "any period of disability necessary and required" for healing. 77 P.S. §513(25); see Sun Oil. Because Claimant was able to return to available light-duty work for Employer as of May 9, 2006, he did not require more time to heal. Moreover, like the claimant in Sun Oil, Claimant did not return to work for reasons unrelated to the injury or the healing period. Employer proved Claimant's loss of earnings after May 9, 2006, was based on termination for cause, not the work injury. We, therefore, conclude the WCJ did not err in awarding a five-day healing period.
C. Penalties
Next, Claimant asserts Employer's conduct merited the imposition of penalties. Claimant maintains Employer violated the Act by failing to timely tender payment to Claimant and Current Counsel within 30 days of this Court's September 29, 2008 order. Additionally, Claimant contends a penalty is warranted because Employer did not tender sufficient compensation for an appropriate healing period and litigation costs.
Section 435(d) of the Act authorizes the WCJ and Board to impose penalties for violations of the Act. Employers and insurers may be penalized up to 10 percent of the amount awarded, plus interest. Section 435(d)(i) of the Act, 77 P.S. §991(d)(i). Such penalty may be increased to 50 percent in cases of unreasonable or excessive delays. Id.
Section 435(d) of the Act was added by the Act of February 8, 1972, P.L. 25, as amended, 77 P.S. §991(d).
"[T]he power to assess a penalty is dependent upon [a] party violating the Act or pertinent rules and regulations." Snizaski v. Workers' Comp. Appeal Bd. (Rox Coal Co.), 586 Pa. 146, 161, 891 A.2d 1267, 1276 (2006). An employer violates the Act if it does not begin to make payments within 30 days of the date on which its obligation to pay arises. Section 428 of the Act; Snizaski. Only the grant of a supersedeas will obviate an employer's obligation to pay compensation. Snizaski.
Section 428 of the Act was added by the Act of June 26, 1919, P.L. 642, as amended, 77 P.S. §921.
A violation of the Act or its regulations must appear in the record for a penalty to be appropriate. Clippinger. A claimant who files a penalty petition bears the burden of proving a violation of the Act occurred. Id. If the claimant meets his initial burden of proving a violation, the burden shifts to the employer to prove it did not violate the Act. Id.
Nevertheless, a finding of a violation of the Act does not mandate the automatic imposition of a penalty. Id. Rather, the imposition of a penalty is left to the discretion of the WCJ and Board. Id. This Court will not overturn a penalty or the lack thereof absent an abuse of discretion. Id.
Here, on September 29, 2008, this Court ordered Employer to pay Claimant specific loss benefits. As Employer did not seek supersedeas, Employer had a legal duty to commence payment of benefits within 30 days of September 29, 2008. Employer did not make a payment until December 12, 2008, and, thus, it violated the Act.
Despite this violation, the WCJ declined to award a penalty because the delay was minimal and no real harm was shown. WCJ's Op., 8/29/2011, F.F. No. 4. The WCJ found Employer's payment was "made, at most, two days late." Id. The WCJ calculated the 30-day period from the date the Board approved Current Counsel's fee agreement on November 10, 2008. See R.R. at 576a.
We do not condone Employer's delay in making payment or the WCJ's calculation as to when Employer's duty arose. Nevertheless, we recognize that during the delay there was pending a request for approval of attorney fees which could be deducted from the amount to be paid directly to Claimant. Given the uncertainty regarding the proper amounts to be paid directly to Current Counsel and to the Claimant, we discern no abuse of discretion which would warrant reversal and another remand to the WCJ.
Additionally, Claimant alleges the WCJ erred by not awarding penalties based on Employer's failure to pay litigation costs and healing-period compensation.
With regard to litigation costs, our remand order merely directed the WCJ to assess costs; it did not impose costs. See Scott I. Because Claimant did not prevail before the WCJ or Board, neither tribunal made a finding regarding litigation costs. Bd. Op., 8/12/13, at 8 n.4. Furthermore, Employer's obligation to pay litigation costs did not arise until the Board directed Employer to pay litigation costs in its August 12, 2013, opinion. However, the Board directed Employer to pay such costs to Former Counsel, not Current Counsel because such costs were incurred under Claimant's fee agreement with Former Counsel, before Current Counsel's involvement in the case. Bd. Op., 8/12/13, at 8. Thus, Employer did not violate the Act by failing to pay Former Counsel's litigation costs to Current Counsel when there was no obligation to do so. Therefore, the WCJ did not err in refusing to award a penalty on this basis.
With regard to the healing-period compensation, as discussed above, the WCJ did not err by limiting the amount of the award to five days. As a result, Employer was under no obligation to pay Claimant for a six-week healing period. Therefore, we find no abuse of discretion by the WCJ's refusal to award penalties in this regard.
D. Litigation Costs
Finally, Claimant argues the WCJ and Board erred by failing to award litigation costs incurred by Current Counsel. Specifically, Current Counsel claims he is entitled to litigation costs in the amount of $142.65.
Section 440 of the Act, 77 P.S. §996, mandates the award of "a reasonable sum for costs incurred" to an employee who is successful, in whole or in part, in a litigated claim. In order for litigation costs to be considered reasonable, and thus reimbursable under the Act, they must relate to the matter at issue on which the claimant prevailed. O'Neill v. Workers' Comp. Appeal Bd. (News Corp. Ltd.), 29 A.3d 50 (Pa. Cmwlth. 2011). Conversely, a claimant is not entitled to costs related to an issue on which he did not prevail. See id. It is for the WCJ to determine the extent to which litigation costs related to the matter on which the claimant prevailed. Jones v. Workers' Comp. Appeal Bd. (Steris Corp.), 874 A.2d 717 (Pa. Cmwlth. 2005).
Current Counsel contends he is entitled to an award for litigation costs he incurred while representing Claimant in the amount of $142.65. See R.R. at 597a, 648a, 682a. According to Current Counsel, the invoices reflect the cost for copies of the transcripts for the hearings held on June 4, 2009, June 15, 2010, and April 5, 2011, which addressed the remand and Claimant's penalty petitions. See R.R. at v. However, Claimant did not succeed, in whole or in part, on the penalty petitions. Therefore, the Board and WCJ properly determined Claimant is not entitled to these litigation costs.
Additionally, it does not appear that Current Counsel submitted the June 4, 2009 invoice for $40.95 to the WCJ for consideration. See Decision of WCJ David R. Weyl, Circulated 8/29/2011 (listing exhibits for Claimant), R.R. at 686a. --------
IV. Conclusion
Based on the foregoing, we conclude the WCJ did not err or abuse his discretion by declining to award unreasonable contest counsel fees, a healing period greater than five days, penalties, and litigation costs. Accordingly, we affirm the order of the Board.
/s/_________
ROBERT SIMPSON, Judge ORDER
AND NOW, this 21st day of March, 2014, the order of the Workers' Compensation Appeal Board is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge