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10/17/97 GEORGE LUCEY v. WORKMEN'S COMPENSATION

October 17, 1997

GEORGE LUCEY, PETITIONER
v.
WORKMEN'S COMPENSATION APPEAL BOARD (VY-CAL PLASTICS & PMA GROUP), RESPONDENTS; VY-CAL PLASTICS CORPORATION, PETITIONER V. WORKMEN'S COMPENSATION APPEAL BOARD (LUCEY), RESPONDENT



Appealed From No. A94-0030. State Agency Workmen's Compensation Appeal Board.

Before: Honorable James Gardner Colins, President Judge, Honorable Joseph T. Doyle, Judge, Honorable Bernard L. McGINLEY, Judge, Honorable Doris A. Smith, Judge, Honorable Dan Pellegrini, Judge, Honorable Rochelle S. Friedman, Judge, Honorable Jim Flaherty, Judge. Concurring And Dissenting Opinion BY Judge Doyle. Judge Leadbetter did not participate in the decision in this case. Judge McGinley joins this Concurring and Dissenting opinion.

The opinion of the court was delivered by: Smith

OPINION BY JUDGE SMITH

FILED: October 17, 1997

The questions stated in this appeal are whether the Workmen's Compensation Appeal Board erred in affirming the referee's original award of benefits and his award of interest on past-due medical bills and whether the Board erred in its remand to the referee for a recalculation of counsel fees payable to counsel for George Lucey (Claimant). The remaining question is whether the Board erred in affirming a $30,000 recoupment award against Claimant's future weekly indemnity and medical benefits.

Claimant filed his claim petition on August 13, 1984 for compensation resulting from injuries caused by his exposure to chemicals during the course of his employment with VY-CAL Plastics Corporation (Employer). The referee found that Claimant was totally disabled due to occupational injury and disease and awarded him compensation, payment of medical costs and counsel fees. The counsel fees were awarded on all past-due compensation, including weekly indemnity benefits and outstanding, unreimbursed medical bills. On appeal, the Board issued its decision in April 1989 affirming the award of compensation but modifying the referee's decision to allow Employer a credit for sick and accident benefits paid. The Board, however, remanded the case to the referee to recalculate the counsel fees, concluding that it was unconscionable to award counsel fees on medical bills.

In September 1990, while the remand was pending before the referee, Employer filed a petition for suspension or modification of compensation and to enforce subrogation rights, claiming a $30,000 credit and/or subrogation against Claimant's future benefits because he obtained funds that were payable to Suburban General Hospital. Claimant filed a penalty petition averring that Employer failed to pay interest on Claimant's award of medical bills. After hearings on the petitions, the referee issued a decision in December 1993 reaffirming the original award of compensation and granting counsel fees limited to 20 percent of the indemnity benefits.

The referee granted a $30,000 credit against Claimant's future indemnity and medical benefits; required a reimbursement to Employer of $35,109.27 for improperly awarded counsel fees on all medical expenses; found Claimant to be entitled to 10 percent interest on three medical bills; granted Claimant a 20 percent penalty on all past-due interest; and denied counsel fees on the penalty petition. On cross-appeals, the Board reversed the referee's denial of counsel fees on the penalty petition and otherwise affirmed his decision. *fn1

I.

First, Employer argues that the Board erred in affirming the original award of benefits because it was based on equivocal medical testimony, where Claimant's medical experts relied upon assumed facts and information not supported by the record. Employer contends that without the opinions of his medical witnesses, Drs. Nicholson and Raphael, Claimant failed to meet all of the elements necessary to prove his claim in accordance with Inglis House v. Workmen's Compensation Appeal Board (Reedy), 535 Pa. 135, 634 A.2d 592 (1993). However, a review of the testimony indicates that the referee's original decision on the claim petition is supported by substantial, competent evidence and that the Board did not err in affirming the referee's decision to grant the claim petition.

Both parties argue, for different reasons, that the Board erred in its interest award. Claimant argues that the Board erred by limiting the award of interest on the medical bills. Claimant cites Section 406.1(a) of the Workers' Compensation Act (Act) *fn2 for the proposition that interest shall accrue on all due or unpaid compensation, and he argues that interest is calculated from the date when the sums are due. Interest on medical bills accrues, however, from the date the bills are presented for payment. See Frymiare v. Workmen's Compensation Appeal Board (D. Pileggi & Sons), 105 Pa. Commw. 325, 524 A.2d 1016 (Pa. Commw. 1987), appeal denied, 518 Pa. 644, 542 A.2d 1372 (1988). Thus the referee correctly assessed interest from the dates that the bills were presented for payment (one on May 28, 1986, and two on February 4, 1988) until they were paid on February 21, 1989.

Employer argues that the Board erred in affirming the award of interest on past-due medical bills, where the referee failed to recognize a credit owed to Employer because, as of May 1986, all of Claimant's bills were covered by Blue Cross/Blue Shield and had been paid through Employer's plan. Employer concedes that interest may be payable from February 1988 to February 1989 when payment was made on the two bills presented in February 1988. The Court recognizes that an employer is entitled to a credit for sick and accident benefits paid against its workers' compensation liability. Arbogast & Bastian, Inc. v. Workmen's Compensation Appeal Board (Bauer), 79 Pa. Commw. 364, 468 A.2d 1220 (Pa. Commw. 1984). However, Employer acknowledges that Blue Cross/Blue Shield had withdrawn its payment of Claimant's bills, leaving them unpaid. Therefore, Employer is not entitled to a credit in this regard.

The Board sua sponte remanded the 20 percent counsel fee award on past-due medical bills to the referee for a recalculation of those fees. Claimant argues that the Board erred in ordering this initial remand and that, on remand, the referee erroneously concluded that there was an agreement by Claimant's counsel that the fee arrangement did not include medical bills. The Court concludes that the Board erred in its remand of this matter to the referee because under Section 442 of the Act, 77 P.S. § 998, counsel fees may be approved by the referee provided that they do not exceed 20 percent of the compensation awarded. Furthermore, under Section 442 a referee has the authority to determine what constitutes a reasonable fee. Pittsburgh Greentree Marriott v. Workmen's Compensation Appeal Board (McVay), 657 A.2d 1327 (Pa. Commw.), appeal denied, 543 Pa. 699, 670 A.2d 145 (1995).

On appeal to the Board, neither Claimant nor Employer contested the reasonableness of the counsel fees awarded by the referee, and the Court has discerned no statutory authority entitling the Board to sua sponte reverse the referee's counsel fee award, finding the fees unconscionable, after the fees have been found to be reasonable by the referee. As a result, the Court holds that the Board abused its discretion in ...


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