IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Kirk Hall, :
Petitioner :
:
v. : No. 1916 C.D. 2015
: Submitted: January 29, 2016
Workers' Compensation Appeal :
Board (Powell Electro Systems), :
Respondent :
BEFORE: HONORABLE ROBERT SIMPSON, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE DAN PELLEGRINI, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE SIMPSON FILED: June 14, 2016
Kirk Hall (Claimant) petitions for review of an order of the Workers’
Compensation Appeal Board (Board), which, after remand, affirmed a Workers’
Compensation Judge’s (WCJ) decision that denied Claimant’s penalty petition and
awarded an unreasonable contest attorney fee to Claimant’s counsel of $3,500.
Upon review, we affirm.
I. Background
In March 2006, Claimant sustained a work-related lower back injury
while working for Powell Electro Systems (Employer). In July 2009, he filed a
claim petition. In January 2011, the WCJ treated the claim petition as a
reinstatement petition and awarded workers’ compensation benefits. Both parties
appealed to the Board.
In the interim, after Claimant underwent surgery for his injury in May
2006, he returned to work for Employer with restrictions. In July 2009, Employer
eliminated Claimant’s job for economic reasons. Thereafter, Claimant began
working for Tri-Com, Inc., a new employer, performing “even lighter duty work
duties” at a wage of $900 per week. WCJ’s Dec., 1/28/11, Finding of Fact (F.F.)
No. 7.
While the parties’ appeals of the WCJ’s January 2011 decision were
pending before the Board, Claimant filed a penalty petition alleging Employer
violated the Workers' Compensation Act1 (Act) by failing to pay compensation
benefits in accordance with the WCJ’s decision.2
1
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1–1041.4, 2501–2708.
2
The WCJ’s January 2011 Order states, in pertinent part:
NOW, January 28, 2011, the instant Claim Petition, treated as
Reinstatement Petition, is Granted, and [Employer] is ORDERED to pay
Claimant appropriate disability compensation commencing as of July 6,
2009, and continuing thereafter until liability is altered pursuant to law;
the weekly rate of compensation is to be calculated using all credits and
understandings as agreed and noted in Finding No. 8.
WCJ’s Dec., 1/28/11, at 4. In turn, Finding of Fact No. 8 of the WCJ’s January 2011 Decision
states, in pertinent part (with emphasis added):
8. The record demonstrates an earning power on the part of
[Claimant] of $900.00 per week. [Employer] has not presented any
evidence to show a higher figure; no employment referral or labor market
survey has been presented. Within this context, and given Claimant’s
work related restrictions, which impacted on his ability to perform all the
physical functions of his pre-injury position, he is entitled to a
reinstatement of disability benefits, despite the economic reasons for his
termination of employment. [Employer], in turn, is entitled to credits as
agreed to by [Claimant] predicated on unemployment compensation
benefits, accrued vacations and earnings with Tri-Comm [sic]
(Footnote continued on next page…)
2
In August 2012, the Board affirmed in part and reversed in part the
WCJ’s January 2011 decision. Specifically, the Board determined the WCJ
correctly found Claimant was entitled to a reinstatement of benefits after he was
laid off from his job for economic reasons while still under medical restrictions as
a result of his work injury. The Board also held the WCJ erred by not calculating
Claimant’s average weekly wage (AWW) and by not making a finding as to
Claimant’s correct compensation rate and the amount of partial disability benefits.
Finally, the Board determined Employer did not present a reasonable
contest, and it remanded the case to the WCJ to afford Claimant the opportunity to
present a quantum meruit fee bill for possible approval. Thus, the Board remanded
the case for the WCJ to:
make a necessary finding regarding Claimant's pre-injury
[AWW], provide Claimant with an opportunity to present a
quantum meruit fee for approval and an award if the [WCJ]
should find such fee to be reasonable, and make a determination
as to the amount of partial disability benefits Claimant is due
based on the difference between the wages he was receiving
and his pre-injury [AWW] and an award based on that
calculation. On remand, the parties may also present evidence
regarding Claimant’s pre-injury [AWW].
Bd. Op., 8/12/12 at 9 (emphasis added).
(continued…)
[(Claimant’s new employer)]. A Statement of Wages, properly calculating
the average weekly wage has not been submitted as agreed, to confirm the
$1900 per week figure offered on Claimant’s behalf (it is expected that the
parties will agree on the AWW; See, Deposition of Claimant, NT 27-28).
WCJ’s Dec., 1/28/11, Finding of Fact (F.F.) No. 8 (emphasis added).
3
On remand, the WCJ made findings of fact and conclusions of law
determining Claimant’s AWW, the amount of partial disability benefits to which
Claimant was entitled, and assessed $3,500 in attorney fees against Employer. In
the same decision, the WCJ disposed of the penalty petition: the WCJ denied the
petition because the record did not reveal any improper intentional action on
Employer’s part. This remand/penalty decision is at the heart of the current appeal.
On Claimant’s appeal of the WCJ’s remand/penalty decision, the
Board affirmed. It determined Claimant did not establish Employer violated the
Act by withholding compensation benefits. The Board also determined the WCJ
never received an appropriate quantum meruit request from Claimant’s counsel
listing the amount and length of time for which the fee was payable based on the
skill required, the duration of the proceedings and time and effort required and
actually expended. Thus, the Board found the WCJ did not err in determining
$3,500 was an appropriate award of attorney fees. Claimant now petitions for
review to this Court.
II. Issues3
Claimant first argues the Board erred in affirming the WCJ’s decision
not to award a penalty for Employer’s conduct where Employer withheld payment
of awarded compensation benefits after the WCJ granted Claimant’s
claim/reinstatement petition. Additionally, Claimant asserts the Board erred in
3
Our review is limited to determining whether the WCJ's findings of fact were supported
by substantial evidence, whether an error of law was committed or whether constitutional rights
were violated. Watt v. Workers’ Comp. Appeal Bd. (Boyd Bros. Transp.), 123 A.3d 1155 (Pa.
Cmwlth. 2015).
4
affirming the WCJ’s remand decision which only awarded $3,500 in unreasonable
contest attorney fees.
III. Discussion
A. Penalty Petition
1. Contentions
Claimant first contends Employer violated the Act by unilaterally
withholding payment of his compensation checks after the WCJ directed Employer
to make payment. Claimant asserts that after the WCJ granted Claimant’s claim
petition and Employer appealed, Employer simply ceased paying benefits while the
appeal was pending. Claimant argues Employer was required to obtain a
supersedeas which, if granted, would allow it to stop paying compensation
benefits. Thus, Claimant argues the Board erred by not awarding him a penalty for
Employer’s unilateral withholding of benefits.
Employer counters that its insurance carrier was in contact with
Claimant’s counsel to obtain records regarding Claimant’s wages from his new
employer, Tri-Com, Inc. The insurance carrier did not provide any disability
benefits between March 2011 and August 2011 not because of an intentional
violation of the Act but due to Claimant’s failure to document his earnings from
his new employer. Employer further points out the WCJ acknowledged a long-
standing practice to require paystubs or similar evidence as proof of earnings.
WCJ’s Dec. 8/19/14, Finding of Fact (F.F.) No. 3(e).
5
2. Analysis
Section 435 of the Act provides that penalties can be imposed on an
employer when it fails to follow the procedures set forth in the Act. 77 P.S. § 991.
Sections 435(b) and (d) of the Act state:
(b) If it appears that there has not been compliance with this act
or rules and regulations promulgated thereunder the department
may, on its own motion give notice to any persons involved in
such apparent noncompliance and schedule a hearing for the
purpose of determining whether there has been compliance. The
notice of hearing shall contain a statement of the matter to be
considered.
****
(d) The department, the board, or any court which may hear any
proceedings brought under this act shall have the power to
impose penalties as provided herein for violations of the
provisions of this act or such rules and regulations or rules of
procedure ….
77 P.S. §991(b), (d). The imposition of penalties under the Act is an issue
independent from the merits of the claim. See, e.g., Winkelmann v. Workmen's
Comp. Appeal Bd. (Estate of O’Neill), 646 A.2d 58 (Pa. Cmwlth. 1994). When a
claimant files a penalty petition, the initial burden is on him to prove a violation of
the Act occurred. Shuster v. Workers’ Comp. Appeal Bd. (Pa. Human Relations
Comm’n), 745 A.2d 1282 (Pa. Cmwlth. 2000). Once the claimant meets this
burden, the burden shifts to the employer to prove it did not violate the Act. Id.
No penalty may be imposed under Section 435(d) of the Act in the
absence of a violation of the Act or the rules or regulations of the Board or the
6
Department of Labor and Industry. Glagola v. Workmen's Comp. Appeal Bd.
(Bethlehem Mines Corp.), 428 A.2d 1016 (Pa. Cmwlth. 1981).
More important for our disposition, while there must be a finding as to
whether there was a violation of the Act, such a finding does not mandate the
imposition of a penalty. Dept. of Labor & Industry v. Workmen’s Comp. Appeal
Bd. (Taylor Lock Co.), 410 A.2d 1325 (Pa. Cmwlth. 1980) (no penalty awarded for
unintentional violation of Act). A WCJ’s refusal to award penalties for a technical
violation of the Act does not constitute an abuse of discretion. Ostrawski v.
Workers’ Comp. Appeal Bd. (UPMC Braddock Hosp.), 969 A.2d 15 (Pa. Cmwlth.
2009).
Here, the WCJ found that the Board’s remand order required “a
determination as to the amount of partial disability benefits Claimant is due based
on the difference between the wages he was receiving [from his new employer]
and his pre-injury [AWW] and an award based upon that calculation.” WCJ’s
Dec., 8/19/14, F.F. No. 2(c). The WCJ further found Employer’s insurance carrier
was entitled to the records of Claimant’s earnings from his new employer prior to
making payments to Claimant on his claim petition. In this regard, the WCJ found
that requiring proof of earnings was a long-standing practice in workers’
compensation matters, and James O’Hora, a senior case manager for Employer’s
workers’ compensation insurance carrier, acted properly in waiting for these proofs
from Claimant.
7
Ultimately, the WCJ determined Employer did not intentionally
violate the Act. The WCJ found the record did not reveal any improper,
intentional action on the part of Employer as to the payment of benefits and the
taking of credits against those benefits. WCJ’s Dec. 8/19/14, F.F. No. 3(a).
Specifically, the WCJ found:
3. As related to the Penalty Petition (with the above
Findings being incorporated as relevant), the undersigned does
not find [Employer] violated the Act as to its treatment of
partial disability benefits or other benefits, and specifically, as
already noted, the collection of data before paying partial
disability benefits.
(a) This record does not demonstrate any improper
intentional action on the part of [Employer] as to the
payment of benefits and taking of credits …. Among
others matters, and by way of example that there was no
intention to impede payment to … Claimant, Mr. O’Hora
testified that the payment of some $2,980 for partial
disability for a limited period in February 2012 was made
within the week of receiving the appropriate wage
information. (O’Hora 8-9; See also, N.T. 9-13, as to
O’Hora’s efforts regarding a so-called ‘bounced’ check
in May 2012).
(b) The fact that in ‘hindsight’ Claimant was entitled to
the maximum payable for partial benefits despite his
$500 per week earnings, does not diminish the need to
calculate benefits on the same time-basis as wages are
paid (which could change -- even if they did change as in
this case).
(c) In this connection, Mr. O’Hora testified to being in
contact with Claimant’s Counsel to obtain proper
records, and sought to arrange for having paystubs
forwarded on some regular basis to properly calculate the
partial benefits. (See, O’Hora [Dep.], NT 17-18; the
efforts at that time do not appear to have been fruitful).
8
(d) Here, it appears matters could have been handled
better - with perhaps better communication between the
parties. This is to be contrasted to a penalty situation. For
example, in this connection, it appears that all parties
originally believed Claimant’s $900.00 per week
earnings still allowed for him to receive the maximum
weekly benefit of $745.00 for 2006 work injuries - based
upon a sufficiently high AWW. However, even at a
$1,900 AWW (noted in Finding No. 8 of the original
Decision as ‘offered on Claimant’s behalf’ would not
justify a $745.00 per week benefit ($1,900 less $900
equals $1,000, times 2/3 equals $666.67 per week).
(e) Under all the circumstances … and given a long
standing practice to require pay-stubs or the like as proof
of earnings (which appears most reasonable), no penalty
will be assessed in the exercise of discretion, even if
some violation can be viewed as having occurred. The
Penalty Petition is appropriately denied and dismissed.
WCJ’s Dec. 8/19/14, F.F. Nos. 3(a)-(e) (emphasis added). The record adequately
supports the WCJ’s findings. O’Hora Dep. at 8-9, 13-18; see also Dep. of Kirk
Hall, 4/27/10, at 27-28. In turn, those findings support the WCJ’s determination
that no penalty was warranted here. WCJ’s 8/19/14, Concl. of Law No. 2; Taylor
Lock Co.; Ostrawski.
Therefore, upon extensive review of the record as a whole, we
conclude the Board properly affirmed the WCJ’s decision denying Claimant’s
penalty petition.4
4
In denying Claimant’s penalty petition, the WCJ also relied, in part, on a purported
supersedeas order the Board issued in March 2011, which required that Claimant furnish his
wage records from his new employer. See WCJ’s Dec. 8/19/14, F.F. Nos. 2(c), 3(a), 3(e).
However, this supersedeas order is not included in the certified record; therefore, we do not
reference it. Nevertheless, for the reasons set forth above, we discern no error in the WCJ’s
denial of Claimant’s penalty petition where Claimant did not timely supply the wage records
(Footnote continued on next page…)
9
B. Attorney Fees
1. Contentions
Claimant next argues the WCJ erred by capping the unreasonable
contest attorney fee at $3,500 instead of awarding a 20% fee for the period up to
the circulation date of the WCJ’s remand/penalty decision. Claimant contends the
contest was unreasonable in the initial round of litigation, as the Board found, and
in the litigation on remand as well. In particular, the unreasonable nature of the
contest on remand continued during litigation over the penalty petition. Claimant
needed to file the penalty petition in order to receive benefits already awarded by
the WCJ. Also, Employer’s insurance carrier witness conceded that earnings from
Claimant’s new employment would not affect Claimant’s compensation rate.
Claimant argues the $3,500 award does not account for the time and effort
Claimant’s counsel spent litigating this matter over the course of two rounds of
litigation over four years.
Employer asserts that during the remand proceedings, the WCJ gave
Claimant’s attorney ample time to provide the amount of the quantum meruit fees
he was seeking. Employer contends that, despite the WCJ’s grant of additional
time to provide the information, and noting that grant of time on the record, as well
as holding three additional hearings after noting the record, the WCJ never
received the information for the quantum meruit fee. WCJ’s Dec., 8/19/14, F.F.
Nos. 2(b), 3(c), (e); WCJ’s Hr’g, Notes of Testimony (N.T.), 7/10/13 at 5; see also
(continued…)
from his new employer, and Employer promptly began paying benefits after it received those
records.
10
N.T., 10/9/13 at 5-6; N.T. 3/7/14 at 5; N.T. 5/12/14 at 5-6. Thus, Employer argues
the Board’s decision to affirm the WCJ clearly shows that the evidence supports
this decision.
2. Analysis
Section 440(b) of the Act provides:
If counsel fees are awarded and assessed against the insurer or
employer, then the [WCJ] must make a finding as to the amount
and the length of time for which such counsel fee is payable
based upon the complexity of the factual and legal issues
involved, the skill required, the duration of the proceedings and
the time and effort required and actually expended. If the
insurer has paid or tendered payment of compensation and the
controversy relates to the amount of compensation due, costs
for attorney’s fee shall be based only on the difference between
the final award of compensation and the compensation paid or
tendered by the insurer.
77 P.S. §996(b).
First, for the reasons discussed above, we reject Claimant’s assertion
that any unreasonable contest continued into the second round of litigation on
remand and on the penalty petition. As detailed above, neither the WCJ nor the
Board erred in refusing to award penalties. Also, there are no findings that
Employer’s contest during the remand/penalty phase was unreasonable. We agree
with the WCJ that: “[t]he fact that in ‘hindsight’ Claimant was entitled to the
maximum payable for partial benefits … does not diminish the need to calculate
benefits on the same time-basis as wages are paid ….” WCJ’s Dec., 8/19/14, F.F.
No. 3(b).
11
As to unreasonable contest attorney fees for the initial round of
litigation concerning the claim/reinstatement petition, the Board determined
Employer did not present a reasonable contest, and Claimant was entitled to the
opportunity to present a quantum meruit fee for approval. Bd. Op. at 3. As a
result, the Board remanded to the WCJ in part to “provide Claimant with an
opportunity to present a quantum meruit fee for approval and an award if the
[WCJ] should find such fee to be reasonable ….” Bd. Order, 8/12/12.
On remand, the WCJ found Claimant’s counsel received “opportunity
upon opportunity” to submit a proper application for quantum meruit fee. WCJ’s
Dec., 8/19/14, F.F. No. 2(b). Further, as identified by the WCJ, Section 131.55 of
the Special Rules Before WCJs,5 as it pertains to a quantum meruit fee, details the
calculation by itemizing the services rendered, time expended and addresses
factors enumerated in Section 440 of the Act. 34 Pa. Code §131.55(c). In
elaborating on this in his remand decision, the WCJ found:
The remand was to ‘provide Claimant with an opportunity to
present a quantum meruit fee for approval and an award if the
[WCJ] should find such fee to be reasonable.’ (Order of
[Board]; Emphasis Supplied). Following remand, Claimant’s
Counsel was given ‘opportunity upon opportunity’ to submit a
proper application for a quantum meruit fee - but Counsel has
5
34 Pa. Code §131.55(b) (Special Rules Before WCJs) provides:
(b) Under section 440 of the act (77 P.S. § 996), in a disputed claim under
the act when the employer or insurance carrier has contested liability in
whole or in part, the employee or a dependent, in whose favor the
proceeding has been finally decided, will be awarded attorney fees and
costs against the employer or insurance carrier, unless the employer or
insurer had a reasonable basis for contesting the petition.
Id.
12
not filed the application as authorized by Section 131.55 of the
Judges’ Rules, relating to quantum meruit fees (detailing the
calculation by itemizing the services rendered, the time
expended, and addressing all factors enumerated in Section 440
of the Act). The Rule would provide [Employer] with an
opportunity to file a response. Rather, here, Claimant’s
Counsel asked for a 20% fee from [Claimant’s termination of
employment to the date of WCJ’s remand decision, which was
July 6, 2009 – August 18, 2014], without any detail of any time
expended, etc. A denial of any Section 440 fee may well be
proper. However, given the finding of the [Board] as to an
unreasonable contest, and considering the criteria of Section
440 (although not detailed by Counsel), including that in the
initial proceedings Claimant’s Counsel attended hearings,
participated in three depositions (Claimant, Employer, and
[Employer’s] Medical), prepared a brief and submitted
proposed Findings/Summary of Evidence, and has a long
experience in compensation practice, a fee of $3,500 will be
assessed for an unreasonable contest; it will serve as a credit as
against Claimant’s responsibility for attorney fees.
Id. (underlined emphasis added). Further, Section 131.55(e) of the Special Rules
Before WCJs states that a “decision on the fee award will be made based on the
record of the case and, if filed, the application and response” 34 Pa. Code
§131.55(e) (emphasis added).
In short, in his remand decision, the WCJ granted Claimant’s counsel
additional time to provide the information, and noted that grant of time on the
record. N.T., 7/10/13, at 5. The WCJ also identified on the record that three
additional hearings were held, but the WCJ never received the information for the
quantum meruit fee. N.T., 7/10/13 at 5; see WCJ’s Dec. 8/19/14, F.F. No. 2(b);
see also N.T., 10/9/13 at 5-6; N.T. 3/7/14 at 5; N.T. 5/12/14 at 5-6. Thus, the WCJ
based his remand decision on the record, taken as a whole, which contained
substantial evidence to support his findings. The Board’s decision to affirm the
13
WCJ’s remand decision awarding a $3,500 fee for the initial round of litigation
only, was clearly supported by substantial evidence.
Based on the foregoing, we affirm.
ROBERT SIMPSON, Judge
14
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Kirk Hall, :
Petitioner :
:
v. : No. 1916 C.D. 2015
:
Workers' Compensation Appeal :
Board (Powell Electro Systems), :
Respondent :
ORDER
AND NOW, this 14th day of June, 2016, the order of the Workers’
Compensation Appeal Board is AFFIRMED.
ROBERT SIMPSON, Judge