Opinion
CLAIM NO. E412583
ORDER FILED AUGUST 5, 1999
Upon review before the FULL COMMISSION in Little Rock, Pulaski County, Arkansas.
Claimant represented by the HONORABLE FREDERICK S. "RICK" SPENCER, Attorney at Law, Mountain Home, Arkansas.
Respondent represented by the HONORABLE BETTY DEMORY, Attorney at Law, Little Rock, Arkansas.
Decision of the Administrative Law Judge: Reversed.
OPINION AND ORDER
[2] The claimant appeals an opinion and order filed by the administrative law judge on January 28, 1999. In that opinion and order, the administrative law judge found that the claimant's attorney is not entitled to an attorney's fee based on the amount of permanent physical impairment compensation accepted by the respondents and paid to the claimant. After conducting a de novo review of the entire record, we find that the decision of the administrative law judge must be reversed.The relevant facts in this case are not in dispute, and this claim presents primarily an issue of law. The parties previously litigated the compensability of the claimant's back injury at a hearing held before an administrative law judge on August 2, 1995. At that hearing, the respondents asserted that the claimant's injury did not arise out of and in the course of his employment. The respondents denied any liability for workers' compensation benefits to the claimant in excess of three days of compensation for temporary total disability already accepted and paid.
In a decision dated March 18, 1996, the administrative law judge found that the claimant sustained a compensable injury, and the administrative law judge found that the respondents have controverted this claim in its entirety. The administrative law judge ordered the respondents to pay the cost of all reasonable and necessary medical treatment, to pay a specified period of temporary total disability compensation, to pay a specified period of temporary partial disability compensation, and to "pay to the claimant's attorney the maximum statutory attorney's fee on the benefits awarded herein."
The respondents appealed the administrative law judge's decision, and the Full Commission affirmed and adopted the administrative law judge's decision in an opinion and order filed on January 9, 1997. The respondents appealed the Full Commission's opinion and order, and the Court of Appeals affirmed the Full Commission in a decision delivered on November 12, 1997.
In a report dated April 27, 1998, Dr. Foster assigned the claimant a 7% permanent impairment rated to the whole body. The respondents received a copy of Dr. Foster's report by letter dated May 26, 1998, and the respondents paid the claimant benefits for the 7% impairment rating.
The claimant's attorney asserts in the present claim that he is entitled to an attorney's fee on the benefits for a 7% permanent impairment paid by the respondents because the compensability of the claimant's injury was controverted in its entirety in the prior hearing. The respondents deny their liability for the attorney's fee at issue on the following grounds:
The respondents respectfully submit to this Honorable Commission that the claimant is not entitled to an attorney's fee on the benefits paid by the respondents for the seven percent impairment rating. The issue of permanent disability benefits was not an issue in the August 2, 1995 hearing nor was it a part of the award by the Arkansas Court of Appeals. The permanent partial impairment rating was not controverted nor was it awarded. Therefore, pursuant to applicable law, the respondents are not liable for payment of an attorney's fee on the permanent disability benefits for impairment rating. The administrative law judge correctly found that the claimant's request for an attorney's fee on the permanent partial disability rating should be denied and dismissed.
The administrative law judge, relying on decisions of the Court of Appeals in Cleek v. Great Southern Metals, 62 Ark. App. 177(1998) and in Lambert v. Baldor Electric, 44 Ark. App. 117, 868 S.W.2d 513(1993), reasoned:
In the present claim, although the respondents may have controverted the claimant's entitlement to any benefits, the claimant is entitled to an award of attorney's fees only on the amount of benefits that were actually awarded. Since no benefits for a permanent physical impairment were awarded [in the prior litigation], the claimant simply is not entitled to an attorney's fee based on those benefits.
Initially, we point out that this same line of reasoning has been rejected by the Arkansas Supreme Court in Cleek v. Great Southern Metals, 335 Ark. 342, 981 S.W.2d 529 (1998). In fact, this Commission has recently unanimously affirmed an administrative law judge's award of additional attorney's fees under circumstances similar to the present case, reasoning in part in Linda Sanders v. K-Mart Corporation, Full Workers' Compensation Commission, Opinion filed May 11, 1999(W.C.C. No. B412583) that:
Neither do we find persuasive the argument by Respondent No. 1 that once the compensability of claimant's injury had finally been determined, it did not controvert claimant's entitlement to benefits for permanent and total disability. Respondent No. 1 controverted this claim from the very beginning. If it had prevailed on this initial liability issue, claimant would have been barred from seeking any disability benefits. Further, if claimant had not hired an attorney to assist her to fully try this case, her present and future claims for benefits would not have been properly presented and protected. See, Cleek v. Great S. Metals, 335 Ark. 342, ___S.W.2d ___ (1998).
In Cleek, supra, the Supreme Court reversed the Commission's interpretation of Ark. Code Ann. § 11-9-715 and reversed the Commission's finding that an attorney's fee in the case was limited to $35.00 in medical benefits controverted and awarded by the administrative law judge, with no fee owed on $2,339.25 of medical benefits accepted and paid prior to the respondent's controversion of the claimant's injury in its entirety. In reaching its decision, the Supreme Court reasoned:
The Commission's attorney's fees award was given pursuant to Ark. Code Ann. § 11-9-715(a)(2)(B)(ii) (Repl. 1996), which provides that fees shall be allowed only on the amount of compensation controverted and awarded. The Commission's and the Court of Appeals' prevailing opinion accepted Great Southern's argument that the only amount controverted and awarded in this case was the $35.00 amount that Cleek had paid and Great Southern had refused to pay. In other words, Great Southern claimed that the Commission could not award the $2,339.25 in medical expenses because Great Southern had previously paid them and did not seek their reimbursement.
While it is true that Great Southern did not request reimbursement of its payments totaling $2,339.25, it did ask the Commission to allow Great Southern "credit" for such payments, if the Commission determined Great Southern owed the medical expenses it had already paid. In fact, the Commission found Great Southern had controverted Cleek's entire claim, determined the medical expenses were reasonably necessary, and gave Great Southern the credit it requested. Having done so, we agree with the dissenting judges in the Court of Appeals' Cleek decision that the Commission effectively confirmed and awarded Cleek all of her medical expenses.
In conclusion, this court has long recognized that making an employer liable for attorney's fees serves legitimate social purposes such as discouraging oppressive delay in recognition of liability, deterring arbitrary or capricious denial of claims, and ensuring the ability of necessitous claimants to obtain adequate and competent legal representation. Aluminum Co. of America v. Henning, 260 Ark. 699, 543 S.W.2d 480 (1976). In the instant case, while Great Southern paid all but $35.00 of Cleek's medical expenses, it never recognized liability for her injury, and if Cleek had not prevailed on the liability issue of her claim, she would have been barred from seeking any future medical expenses or disability benefits. Great Southern's undisputed controversion of Cleek's injury claim forced Cleek to try this case fully on the merits. If Cleek had not employed counsel to assist her in this matter, it is reasonable to conclude both her present and future claims for medical expenses and benefits would not have been properly presented and protected. 260 Ark. at 706-708; 543 S.W.2d at 485. If the fundamental purposes of attorney's fees statutes such as § 11-9-715 are to be achieved, it must be considered that their real object is to place the burden of litigation expenses upon the party which made it necessary.
Since the Supreme Court has determined that the statutory language "controverted and awarded" did not act as a bar to an attorney's fee award under the circumstances in Cleek, we fail to see how that same statutory language could possibly act as a bar to an attorney's fee award under the circumstances presented in the present case. In Cleek, the Supreme Court determined that a respondent's controversion of an injury in its entirety entitled the claimant's attorney to a fee on benefits already accepted and paid. If controversion in its entirety renders the respondents liable for an attorney's fee on any benefits already accepted and paid before litigation, then it seems clear that the Supreme Court's rationale in Cleek would apply with even greater conviction to hold the respondents liable for an attorney's fee on any future benefits which might accrue after litigation caused by the respondents controverting a claim in its entirety and requiring the claimant to engage an attorney to litigate the claimant's entitlement to any future benefits. We see no rational basis for denying the claimant's attorney in the present case a fee on benefits which accrued after the respondents controverted a claim in its entirety now that the Supreme Court has held a respondent liable for an attorney's fee on benefits which were already accepted and paid before the respondents controverted a claim in its entirety.
Therefore, for the reasons discussed herein, we find that the decision of the administrative law judge must be, and hereby is, reversed. We find that the claimant's attorney is entitled to the maximum attorney's fee on the additional 7% permanent anatomical impairment paid to the claimant.
IT IS SO ORDERED.
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Commissioner Wilson concurs.