The opinion of the court was delivered by: Senior Judge Flaherty
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE JIM FLAHERTY, Senior Judge.
Jefferson Young (Claimant) petitions for review from an order of the Workers' Compensation Appeal Board (Board) that affirmed the decision of Workers' Compensation Judge (WCJ) Seelig granting a Review Petition filed by LGB Mechanical and PMA Group (collectively "Employer") and determining that the percentage of benefits paid as attorney's fees to Claimant's former counsels constitutes part of Employer's accrued lien for the purposes of subrogation. We affirm the Board's order in part and reverse in part.
Claimant sustained an injury in the course and scope of his employment on November 11, 1999. On November 13, 2001, WCJ Lincicome granted a Claim Petition filed by Claimant and awarded ongoing total disability benefits of $294.00 per week. In reference to the contingency fee entered into by Claimant and prior counsel, WCJ Lincicome found:
6. Pursuant to Section 442 of the [Pennsylvania Workers' Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §998], Claimant's twenty percent (20%) fee agreement is hereby approved through and until August 9, 2001. After August 9, 2001, no attorney's fee shall be deducted from Claimant's compensation.*fn1
Defendant is ORDERED and DIRECTED to pay twenty percent (20%) of Claimant's benefits as a counsel fee. chargeable to Claimant's share through and until August 9, 2001. After August 9, 2001, no attorney's fee shall be deducted from Claimant's compensation.*fn2 (Bureau Exhibit No. 1).
Employer filed a Modification and Suspension Petition against Claimant in 2003. The parties entered into a Compromise and Release Agreement (C&R Agreement) in 2004 settling Claimant's workers' compensation claim for $90,000.00. Claimant's counsel at that time was to receive $10,000.00 of the $90,000.00 settlement. The C&R Agreement further indicated that Employer shall be responsible for $3,667.19 in litigation costs.
Claimant subsequently obtained a third-party recovery. Employer filed a Review Petition on July 27, 2006 seeking subrogation based on that recovery. Both parties agreed that Employer was entitled to subrogation. They disputed the amount to which Employer was entitled. The parties disputed whether attorney's fees paid to Claimant's former counsels should be considered as part of the accrued lien subject to Employer's subrogation rights.
In a decision circulated January 23, 2008, WCJ Seelig found that counsel fees payable to Claimant's prior counsels were "payable 'out of Claimant's compensation' and were not attorney's fees assessed against the Employer as unreasonable contest fees."*fn3 (Emphasis in original). He granted Employer's Review Petition and found the counsel fees in dispute constitute part of Employer's accrued lien subject to subrogation.*fn4
In an opinion dated December 4, 2008, the Board affirmed. Of particular relevance, the Board found:
The right to subrogation against the third party to the extent of the compensation payable by Employer is absolute. We believe that the costs for attorney's fees and litigation expenses incurred in the prior Workers' Compensation litigation should be included in that 'compensation' as they were incurred by Claimant as a result of the act or omission of the third party. In other words, if Claimant had not been injured as a result of a third ...