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JOHN T. ALLUMS v. WORKMEN'S COMPENSATION APPEAL BOARD (WESTINGHOUSE ELECTRIC CORP.) (10/27/87)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: October 27, 1987.

JOHN T. ALLUMS, PETITIONER
v.
WORKMEN'S COMPENSATION APPEAL BOARD (WESTINGHOUSE ELECTRIC CORP.), RESPONDENTS

Appeal from the Order of the Workmen's Compensation Appeal Board, in case of John T. Allums v. Westinghouse Electric Corp., No. A-87701 and Misc. No. 4284.

COUNSEL

Paul Auerbach, for petitioner.

Michael T. Grimes, Deasey, Scanlan & Bender, Ltd., for respondent, Westinghouse Electric Corp.

Judges Craig and Doyle, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Doyle. Concurring Opinion by Senior Judge Kalish.

Author: Doyle

[ 110 Pa. Commw. Page 445]

This is an appeal by John T. Allums (Claimant) from an order of the Workmen's Compensation Appeal Board (Board) that denied his petition for reconsideration which petition sought additional counsel fees pursuant to Section 440 of The Pennsylvania Workmen's Compensation Act (Act),*fn1 77 P.S. § 996, for work done by Claimant's attorney in defending Claimant against an allegedly frivolous appeal by Westinghouse Electric Corp. (Employer).

Claimant suffered a compensable injury on January 14, 1977.*fn2 In 1982, Employer filed a petition to modify benefits alleging a decrease in Claimant's disability. Claimant hired an attorney to defend against this petition. A few days prior to the referee's hearing, Employer withdrew its modification petition. Claimant's attorney thereupon requested a hearing solely on the issue of attorney

[ 110 Pa. Commw. Page 446]

    fees under Section 440 of the Act.*fn3 The hearing resulted in a referee's determination that Claimant's attorney was entitled to legal fees of $1,000.00 "to be paid by [Employer] because of the filing of the Modification Petition and then withdrawing it."

Employer appealed this order to the Board. Claimant cross-appealed on the basis that the referee erred in inadvertently omitting from his award an eighteen dollar fee for the cost of transcribing the testimony from the hearing. On his appeal form, Claimant also requested that additional legal fees be assessed against Employer for the work Claimant's attorney was performing in defending Claimant's case against the Employer's "meritless appeal" from the award of counsel fees. The Board ordered a remand for purposes of correcting the eighteen dollar transcript bill omission (later paid upon stipulation without hearing) but denied Claimant's request for additional legal fees, although it did uphold the $1,000.00 fee assessment granted by the referee for the work done by Claimant's attorney in first preparing to defend the withdrawn modification petition.*fn4

[ 110 Pa. Commw. Page 447]

Claimant petitioned the Board for reconsideration of the issue of the denial of additional legal fees for the work done by his attorney in defending him on appeal, which petition the Board ultimately denied on January 17, 1986. Specifically, the Board held, "Claimant's counsel is entitled to have the defendant pay his fee under Section 440 of the Act which was ordered by this Board in our prior decision. We will not allow any additional counsel fees to be paid by the defendant in this case." Because there was no cross-appeal by Employer, we need only decide whether the Board committed error in refusing Claimant's request for additional legal fees. The $1,000 in counsel fees awarded to Claimant for an unreasonable contest under Section 440 of the Act is not an issue in this appeal.

Claimant, of course, asserts that the additional counsel fees are proper and should have been imposed. Employer disagrees and cites Weidner v. Workmen's Compensation Appeal Board, 497 Pa. 516, 442 A.2d 242 (1982) in support of its position.*fn5 In Weidner (Pa.), a referee failed to make an award for counsel fees in his initial decision, denying the employer's petition to terminate, but did order a suspension of benefits. The Claimant appealed specifically the issue of such fees and our Court in Weidner v. Workmen's Compensation Appeal Board, 16 Pa. Commonwealth Ct. 561, 332 A.2d 885 (1975) (Weidner I) remanded the matter, holding that the contest was unreasonable and that counsel fees

[ 110 Pa. Commw. Page 448]

    were proper.*fn6 Upon remand, the referee awarded counsel fees in the amount of $3,750.00. Then, Employer's insurance carrier appealed. A divided panel of our Court in Westinghouse Electric Corp. v. Workmen's Compensation Appeal Board, 41 Pa. Commonwealth Ct. 610, 399 A.2d 1178 (1979) (Weidner II) reversed the Board and disallowed the award of counsel fees. The basis for disallowing the fees was that Claimant Weidner had a contingent fee arrangement with his attorney whereby the attorney would receive twenty percent of any award, but if no award was made to Claimant, there would be no fee. Because the attorney merely resisted a suspension of benefits, Claimant actually received no additional award and therefore we held that the attorney was entitled to no fee under his contingent fee agreement with Claimant. In so doing, we specifically recognized

[ 110 Pa. Commw. Page 449]

    that under Section 442 of the Act, 77 P.S. § 998, a claimant and his attorney can enter into an arrangement where no fee will be due unless certain circumstances occur. When such an agreement exists, we reasoned, no award may be made under Section 440. We further explained in Weidner II that Section 440's purposes are to deter unreasonable contests of workmen's compensation claims and to ensure that claimants who are successful in their litigation receive compensation undiminished by litigation costs. Thus, we reasoned in Weidner II that the claimant's continuing receipt of benefits due to his resisting of the suspension petition did not, by the terms of his contract with his attorney, result in his compensation being diminished. Therefore, we held that an award of attorney fees was inappropriate.

The Supreme Court reversed this Court's Weidner II decision and held that counsel fees were proper, but only for the work the attorney did in securing the initial award, i.e., the $3,750 award for the work the attorney performed in representing the Claimant, not for the efforts the attorney expended in his attempt to obtain counsel fees. Thus, Weidner (Pa.) establishes that an attorney is only entitled to fees where the work he does is on behalf of the client's interests, not his own.*fn7

[ 110 Pa. Commw. Page 450]

What Weidner (Pa.) did not clearly decide was whether an employer's appeal from an award of counsel fees under Section 440 of the Act makes additional counsel fees proper. Keeping in mind that the relevant inquiry is whether the work done by the attorney is on behalf of the claimant's interests, it is our view that an award of counsel fees to an attorney defending against an employer's appeal of an award of attorney's fees is permissible under Weidner (Pa.) in certain circumstances. In the instant case, the Claimant's fee arrangement with his attorney was not upon a contingency basis. Therefore, if Claimant does not defend the award of fees on appeal and that award is reversed, the money to pay his attorney will come out of Claimant's own pocket. In contrast, Weidner (Pa.) involved a contingency fee arrangement, and while the termination petition which Claimant resisted at first did endanger his own benefits, the appeal over counsel fees did not. Therefore, in Weidner (Pa.) the pursuit of counsel fees on appeal was done solely for the benefit of counsel, since claimant qua claimant had nothing to lose if the award of counsel fees was ultimately reversed on appeal. Thus, Weidner (Pa.) is distinguishable from the case at bar. Accordingly, we hold that the attorney here is entitled to an award of attorney's fees under Section 440, and we will remand

[ 110 Pa. Commw. Page 451]

    for findings on the amount due and entry of an appropriate order by the Board.

Finally, Claimant asks that we direct the Board to grant him attorney's fees for appeal to this Court. This would entail an examination of the underlying factual arrangement and agreement as to counsel fees on appeal before this Court. Therefore, it should be addressed by the Board and the referee on remand in the same manner and to the same extent as is warranted in establishing attorney's fees for counsel's work in defending the appeal before the Board.

Based upon the foregoing discussion, the order of the Board is reversed and the case is remanded for computation of attorney's fees due Claimant.*fn8

Order

Now, October 27, 1987, the order of the Workmen's Compensation Appeal Board in the above captioned matter is hereby reversed and the case is remanded for computation of attorney fees due Claimant. Should additional evidence with respect to the amount of attorney's fees due be necessary the Board is authorized to conduct further hearings.

Jurisdiction relinquished.

Disposition

Reversed and remanded.

Concurring Opinion by Senior Judge Kalish:

I concur in the result only.

Section 440 of The Pennsylvania Workmen's Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 996, provides two methods of computation of costs, including attorney's fees: (1) where liability is unreasonably contested and decided favorably for the claimant, and (2) in contested cases involving petitions to modify compensation awards where the

[ 110 Pa. Commw. Page 452]

    contested issue is resolved in favor of the claimant, the claimant shall be awarded reasonable costs. It is to be noted that there is no provision in the second section of this provision that the modification petition be an unreasonable one, only that a contest of the original award be unreasonable.

In Weidner v. Workmen's Compensation Appeal Board, 497 Pa. 516, 442 A.2d 242 (1982), the referee had failed to award counsel fees in his initial decision, and the claimant specifically appealed this issue. Our court on appeal remanded, holding that the contest was unreasonable and counsel fees were proper. Upon remand, the referee awarded counsel fees, and it was the employer's insurance carrier which appealed. Upon reaching our Supreme Court, it was held that where there has been an unreasonable contest advanced by the employer, an award of attorney's fees is proper for the work the attorney did in securing the initial award, i.e., where the attorney was acting on the claimant's behalf. Weidner at 522, 442 A.2d at 245.

In Weidner, the court said that section 440 of the Act, 77 P.S. § 996, shows a "legislative intent of protecting claimant against unreasonable contests of a claimant's initial or continuing right to the benefits of the act " (emphasis added). Weidner at 521, 442 A.2d at 244. Thus, payment is not barred for all costs by those who incurred them on behalf of a claimant, including reasonable fees to claimant's counsel. To reach a different result would be to discourage lawyers from engaging in the modification proceedings in which the only benefit to the claimant may be a non-monetary award.

Petitioner had a right to engage counsel to pursue the modification issue on his behalf, even though such representation extended beyond the initial referee's hearing. As the Supreme Court indicated in Weidner, the intent of section 440 of the Act, 77 P.S. § 996, was to

[ 110 Pa. Commw. Page 453]

    protect a claimant against an unreasonable contest of a claimant's initial claim of liability and to protect the continuing right to the benefits of the Act, once such right is established and sought to be modified. If petitioner did not act, the attorney would still be entitled to his fee, and petitioner, rather than respondent, would have to pay it.

Once the contested right of liability is sought to be modified and is resolved in favor of a claimant, the claimant is entitled to an award of costs and attorney's fees. When respondent withdrew its petition to modify, that issue was terminated and since there was no change in the original award, the resolution was favorable to petitioner. Petitioner is therefore entitled to reasonable costs as set forth in section 440 of the Act, 77 P.S. § 996.


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