PENNSYLVANIA SUPREME COURT, OVERTHROWING CUSTOM AND PRACTICE, HOLDS THAT, IN ALL CASES WHERE CLAIMANT PREVAILS, EMPLOYER IS, AT WCJ’S DISCRETION, RESPONSIBLE FOR CLAIMANT’S ATTORNEY’S FEES
by David B. Torrey
Workers’ Compensation Judge
Pennsylvania Department of Labor & Industry
Lorino v. W.C.A.B. (Commonwealth of PA/Penn DOT), 266 A.3d 487, 2021 WL 6058030, filed 12.22.2021 (Pa. 2021).
Pennsylvania Supreme Court, in a holding at odds with custom and practice, held, in December 2021, that, in all cases where a claimant prevails, the employer is, at the WCJ’s discretion, responsible for claimant’s attorney’s fees. This is so even when the employer has maintained a reasonable contest. This type of fee imposition has, by Larson, been called an “add-on” fee. See Arthur Larson, The Wage-Loss Principle in Workers’ Compensation, 6 William Mitchell Law Review 501, 528 (1980).
The decision was unanimous; the court discerned no ambiguity attending the key statutory language.
The holding, arguably addressing a sleeper issue, is based upon a reading of Section 440(a), 77 P.S. § 996(a) of the Pennsylvania Act. That statute provides, in pertinent part, that in “any contested case … the employee … in whose favor the matter has been finally determined in whole or in part shall be awarded … a reasonable sum for costs incurred for attorney’s fee …[.] Provided that cost for attorney fees may be excluded when a reasonable basis for the contest has been established by the employer ….” (Emphasis added.)
The Supreme Court held that the term “shall” means that an award of fees is mandatory. Meanwhile, the term “may” indicates that an award of fees is not “automatic” – the determination is for the WCJ, in his or her discretion, on a case-by-case basis. The court, notably, was confident that WCJs were equipped for the task, despite employer’s anxiety that “no standards are provided.” The court, on this point, responded, “We are confident [that] judges will apply their discretion based on the humanitarian and remedial purposes which underlie the WCA.”
An award of fees on top of compensation where a reasonable contest has been found (add-on fees) is foreign to Pennsylvania sensibilities. Still, in some states this is the rule, and employers, presumably, simply insure for the same as part of their premiums. Florida (with limited cases) is (I believe) an example; there, such fees were at one time, as noted above, called “add-on” fees. New Hampshire, meanwhile, is another. In the latter state, the agency (I believe) establishes the hourly fee to be assessed by the judge.
The Pennsylvania WCJ has, with this new case, been supplied with significant authority. Indeed, an abuse of discretion “occurs where the WCJ’s judgment is manifestly unreasonable, where the law is not applied or where the record shows that the action is a result of partiality, prejudice, bias or ill will.” Allegis Group v. W.C.A.B. (Coughenaur), 7 A.3d 325, 327 n.3 (Pa. Commw. 2010).
However, this discretion is not without limits. It is submitted that the WCJ will be held required to abide by the Section 422(a) “reasoned decision” requirement and set forth a reason or reasons for the exercise of such discretion. The law excepts no category of determination from the admonition that decisional reasons shall appear “so that all can determine why and how a particular result was reached.”
And we know from experience with appellate review of the discretionary imposition of penalties that a failure to explain such imposition (or lack of the same) may indeed be grounds for reversal or remand. This writer has cataloged these cases for many years. Torrey-Greenberg Treatise, § 15:73, § 15:75 (Thomson Reuters 4th ed. 2021).
In any event, the lack of any brightline as to when to exercise discretion on fees, and how much to award, will likely be a concern among WCJs. Appeals over abuse of discretion, meanwhile, may be a headache. The best practice, in any event, is for lawyers, in their proposed findings or briefs, to supply reasons to the WCJ as to why add-on fees should or should not be imposed.