Appeal from the Order of the Workmen's Compensation Appeal Board in case of Joseph Maas v. Rollins Outdoor Advertising, No. A-80574.
Roger B. Wood, with him David L. Pennington, Harvey, Pennington, Herting and Renneisen, Ltd., for petitioners.
Thomas F. McDevitt, Thomas F. McDevitt, P.C., for respondent, Joseph Maas.
President Judge Crumlish, Jr., and Judges Williams, Jr., and Barbieri, sitting as a panel of three. Opinion by President Judge Crumlish, Jr. Judge Williams, Jr. dissents.
[ 78 Pa. Commw. Page 438]
Rollins Outdoor Advertising appeals a Workmen's Compensation Appeal Board order affirming a referee's decision to dismiss its termination petition and awarding attorneys' fees to Joseph Maas' compensation attorney. We reverse and remand.
In 1967, Maas was injured in a work-related accident which left him totally disabled. Compensation payments were to be paid at the weekly rate of $52.50. Rollins filed a termination petition, alleging that Maas was no longer totally disabled as of January 29, 1974, and that he had received a substantial third-party settlement of which Rollins' insurance carrier had subrogation rights to $27,000. A referee dismissed the petition on July 29, 1977, and directed Rollins to restore Maas' workmen's compensation benefits subject to "subrogation credits" to be taken by the defendant. Rollins appealed to the Board, alleging Rollins' insurance carrier and Maas executed an agreement whereby the carrier settled its right to $27,000 subrogation for $10,000 in consideration for Maas' waiver of all past and future compensation. On May 25, 1978, the Board remanded the case to the referee for clarification of Rollins' subrogation rights. On January 7, 1981, the referee issued a new decision restoring Maas' workmen's compensation benefits, awarding attorneys' fees, dismissing the petition to terminate and finding that the subrogation lien was settled for $10,000.
[ 78 Pa. Commw. Page 439]
Rollins appealed to the Board. The Board stated that the appeal was limited to two issues: "The credit to be given the Defendant as it relates to attorney's fees (both incurred as a result of the third party settlement and in defending the instant petition), and whether interest is due because the Defendant alleges attorney fees the claimant pays are not 'compensation.'" On March 25, 1982, the Board modified the referee's decision to give Rollins credit for the third-party settlement, concluding that the maximum period Rollins is entitled to credit is 590 weeks.*fn1 However, the Board decided, out of $52.50 per week compensation, $10.50 would be sent to Maas' attorney and $17.50 would be sent to Maas as reimbursement for the fee paid to the third-party attorney. The balance of $24.50 would be retained by Rollins as available credit toward future compensation. The Board ordered that Maas' compensation benefits would be restored after 590 weeks, with $42.00 going directly to Maas and $10.50 to Maas' compensation attorney.
This case presents us with a question of first impression: Did the Board legally err when it formulated the compensation attorney's fees? We hold*fn2 that
[ 78 Pa. Commw. Page 440]
the compensation attorney's fees in this workmen's compensation suit, during the 590-week credit period, should be based upon the actual compensation awarded ($17.50).*fn3 Section 442 of the Act, 77 P.S. § 998, provides:
All counsel fees, agreed upon by claimant and his attorneys, for services performed in matters before any referee or the board, whether or not allowed as part of a judgment, shall be approved by the referee or board as the case may be, providing the counsel fees do ...