PENNSYLVANIA APPELLATE COURT DIRECTS THAT
20% ATTORNEY’S FEES OUT OF MEDICAL BENEFITS RECOVERED ARE
PER SE REASONABLE, SEEMINGLY DEPRIVING JUDGES
OF DISCRETION IN ATTORNEY FEE AWARD CALCULATIONS
Case note by David B. Torrey
WCJ, Pittsburgh, PA*
Neves v. WCAB (American Airlines), filed May 14, 2020, 2020 WL 2501028 (Pa. Commw. 2020).
In some states, attorneys are unable to assess contingent fees out of medical benefits recovered. This inability has been the source of criticism in states like Texas and West Virginia, where workers with medical-only claims have a difficult time securing counsel.
Pennsylvania, with a May 14, 2020 decision, has now seemingly gone to the other extreme: Attorneys may assess a 20% contingent fee out of medical not only in medical-only cases, but in all cases, including where a fee is already being assessed out of the disability award. The WCJ seems to have no authority (as traditionally the case) to alter the fee arrangement that has been reached by attorney and injured worker. Still, informed consent by the worker as to such an extraordinary arrangement must be shown, and it is likely that many WCJs will inquire carefully into the existence of the worker’s understanding and consent.
The Pennsylvania Commonwealth Court, in a 5-2, en banc, decision, has held that 20% contingent attorney’s fees are per se reasonable not only with regard to indemnity payments, but with regard to medical payments as well.
The WCJ and Appeal Board, who were reversed, had cited precedents for the rule that 20% fees out of medical are only payable upon a showing of reasonableness. The leading case to this effect is likely Piergalski v. WCAB (Viviano Macaroni Co.), 621 A.2d 1069 (Pa. Commw. 1993).
The court did not overrule Piergalski and other like cases, but instead characterized them as fragmented and inconclusive. As far as the court was concerned, what these precedents did establish as the law was (1) “the counsel fee should be calculated against the entire award, without regard to whether the award is for medical or indemnity compensation”; and (2) “the terms of the fee agreement govern, and it is incumbent upon the claimant to establish that the parties intended that the counsel fee be applied to the entire award, including medical compensation.”
Here, claimant had signed a fee agreement that did not limit fees to deduction out of disability payments only, and he in fact had signed an affidavit stating that he knew that the provider in question, a hospital, might require that he make up the difference in its bill.
The WCJ, in disallowing fees out of medical, also conceived of claimant’s counsel impermissibly “bargaining away” the provider’s right to be fully reimbursed. The court did not join this concern, noting that the hospital in question had the right to seek medial fee review (a separate track of litigation) if it believed that it had not been properly paid, and “it did not do so.”
The court declared, “We hold that Section 442 [the attorney’s fee section] does not distinguish between the type of compensation awarded; does not require an inquiry into the reasonableness of a 20% fee agreement; and does not make the amount and degree of difficulty of the work performed by the attorney relevant. A 20% counsel fee is per se reasonable.”
* Opinions are strictly those of Judge Torrey and not of his agency.