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Thomas Grady v. Workers‟ Compensation Appeal

IN THE COMMONWEALTH COURT OF PENNSYLVANIA


August 5, 2011

THOMAS GRADY, PETITIONER
v.
WORKERS‟ COMPENSATION APPEAL BOARD (LUTZ T/A TOP OF THE LINE ROOFING, UNINSURED EMPLOYERS GUARANTY FUND AND ACS CLAIMS SERVICE), RESPONDENTS

The opinion of the court was delivered by: President Judge Leadbetter

SUBMITTED: June 3, 2011

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge

HONORABLE P. KEVIN BROBSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION BY

Claimant Thomas Grady petitions for review from that portion of the December 20, 2010 order of the Workers‟ Compensation Appeal Board (Board) that reversed the Workers‟ Compensation Judge‟s (WCJ) award of attorney‟s fees against Employer Lutz t/a Top of the Line Roofing for an unreasonable contest under Section 440(a) of the Workers‟ Compensation Act (Act).*fn1 We affirm.

On July 12, 2007, Claimant suffered a T12 burst fracture resulting in paraplegia of both lower extremities and depression when he fell from a rooftop. On November 14, 2007, Claimant filed a claim petition naming Jerome Lutz t/a Top of the Line Roofing as his employer, alleging that he suffered his injuries in the course of employment with Employer and seeking payment for loss of wages (full disability from July 13, 2007 to November 14, 2007), medical bills and counsel fees. In its answer, Employer denied the allegations in the claim petition and averred that Claimant was an independent contractor. On November 15, 2007, Claimant filed a second claim petition with the same allegations, this time naming both Employer and the Uninsured Employers Guaranty Fund. In its answer, the Fund denied Claimant‟s allegations.*fn2

Once before the WCJ, the parties agreed to bifurcate the matter and permit her to first decide the threshold issue of whether Claimant was an employee or an independent contractor before proceeding with the remainder of the case. After considering testimony from both Claimant and Mr. Lutz, the WCJ in a July 9, 2008, interlocutory decision ultimately concluded that Claimant was an employee at the time of injury. In addition, the WCJ in a January 14, 2009 decision concluded that Employer did not present a reasonable contest after July 9, 2008, stating as follows:

The Employer had a reasonable basis to contest the matter until such time as the decision on the threshold issue of employer v. independent contractor was issued on July 9, 2008. At that time, there was no real issue of material fact left to be decided as the parties agreed to Claimant‟s medical condition. Accordingly, the Employer should have begun the payment of compensation benefits to the Claimant. Therefore, an unreasonable contest counsel fee will be awarded. This Judge finds the 20% attorney fee should be paid by the Employer and NOT deducted from Claimant‟s share of the award until the date of this decision. Thereafter the 20% attorney fee should be deducted from Claimant‟s share of the award.

WCJ‟s January 14, 2009 Decision, Finding of Fact No. 22.

On appeal, the Board affirmed that part of the WCJ‟s decision finding that Claimant was an employee, but reversed the award of attorney‟s fees and stated as follows:

After the Interlocutory Decision was issued by the WCJ, in which Claimant was found to be an employee, [Employer] did not put forth any evidence or take any action which would require Claimant to prove his case. In fact, both parties entered into an agreement that Claimant‟s medical condition was not at issue in this litigation and accordingly there would be no medical evidence submitted by either party. Therefore, because [Employer] did not actually contest this matter but simply did not pay compensation benefits, we believe that the WCJ erred in awarding Claimant unreasonable contest attorneys‟ [sic] fees.

Board‟s December 20, 2010 Decision at 8. Claimant‟s petition for review to this

Court followed.*fn3

Section 440(a) of the Act states, "where a claimant succeeds in a litigated case reasonable counsel fees are awarded against the employer, as a cost, unless the employer meets its burden of establishing facts sufficient to prove a reasonable basis for the contest." U.S. Steel Corp. v. Workers' Comp. Appeal Bd. (Luczki), 887 A.2d 817, 820 (Pa. Cmwlth. 2005). Indeed, the award of attorney‟s fees is mandatory under Section 440(a) unless the employer meets its burden. Yeagle v. Workmen's Comp. Appeal Bd. (Stone Container Corp.), 630 A.2d 558, 559 (Pa. Cmwlth. 1993). In determining whether a contest is reasonable, we must look to the totality of the circumstances. Eidell v. Workmen's Comp. Appeal Bd. (Dana Corp.), 624 A.2d 824 (Pa. Cmwlth. 1993). Generally, a contest is reasonable if it is prompted by a genuinely disputed issue rather than to harass a claimant. Id. When circumstances change, an employer‟s response to the change in circumstances must be reasonable. Id.

In the present case, Claimant argues that Employer‟s contest became unreasonable as of the date of the WCJ‟s July 9, 2008 decision because 1) there was undisputed evidence establishing that Claimant was an employee; 2) the WCJ had issued an interlocutory order confirming that he was an employee; 3) the parties had entered into a stipulation that Claimant‟s disability was not in dispute and that, in the event that the WCJ ruled that Claimant was an employee, no medical evidence would be presented; and 4) no other issues of material fact were in dispute. He maintains, therefore, that Employer, without any legal or factual basis, failed to pay wage losses from the date of the WCJ‟s July 9, 2008 interlocutory decision until her January 14, 2009 final decision.

In support of his position, Claimant contends that the Board‟s decision is inconsistent with the plain language of Section 440(a) of the Act and contrary to this Court‟s holdings in Yeagle, Lemansky v. Workers' Compensation Appeal Board (Hagan Ice Cream Company), 738 A.2d 498 (Pa. Cmwlth. 1999), and Boothman v. Workmen's Compensation Appeal Board (City of Philadelphia), 459 A.2d 1317 (Pa. Cmwlth. 1983), cases in which initially reasonable contests subsequently became unreasonable. In Yeagle, employer‟s contest became unreasonable when its examining physician advised it that claimant‟s injury was work-related and it nonetheless continued to contest the claim in hopes of finding a medical witness who could rebut claimant‟s proof. In Lemansky, an unreasonable contest existed where there was no dispute as to the compensability of a work-related injury but an insurer‟s claim management policy failed to acknowledge that fact so as to avoid maintaining two open claims thereby forcing claimant to file a claim petition. In Boothman, there was an unreasonable contest where employer admitted liability for medical expenses and failed to present rebuttal to the claim petition.

Further, Claimant asserts that the Board‟s decision is contrary to the humanitarian purposes of the Act in that the Board has sanctioned an employer‟s decision to await a final determination before paying benefits, without any basis in fact or law, when the content of a final decision was clear and inevitable. Claimant maintains that the Board‟s determination sub silentio reverses longstanding case law such as Yeagle, holding that an employer‟s contest can become unreasonable when the basis for the contest disappears. Claimant acknowledges that Employer‟s contest of the employment relationship was reasonable, but maintains that thereafter the contest became unreasonable such that its obligation to pay benefits should have accrued prior to a final order. We disagree. Rather, we agree with the Board that the WCJ erred in determining that Employer‟s contest became unreasonable as of the date of the July 9, 2008 interlocutory decision. In holding to the contrary, the WCJ conflated the concepts of failure to pay benefits when due -- a violation of the Act -- with forcing the claimant to prove things which are not legitimately disputed -- an unreasonable contest. Where an employer fails to pay benefits which are due, it is subject to the imposition of penalties; when it unnecessarily extends the litigation, it is subject to the payment of counsel fees. These are distinct sanctions provided by the Act for distinct types of improper behavior.

Moreover, the WCJ in her July 2008 interlocutory decision decided only the limited bifurcated issue of whether Claimant was an employee. Indeed, in that decision, she recited that the parties at the first hearing "agreed to bifurcate[] the matter and allow this Judge to decide the threshold issue of "Independent Contractor versus Employee‟ status prior to proceeding with the remainder of the case." WCJ‟s July 9, 2008 Decision, Finding of Fact No. 6 (emphasis added). She did not direct Employer to begin paying workers‟ compensation benefits in her July 2008 decision, as there were disputed issues remaining as to the calculation of Claimant‟s average weekly wage and corresponding workers‟ compensation rate.*fn4

Ultimately, she decided those issues in her January 2009 decision based on defense exhibits and Claimant‟s live testimony.*fn5 Thus, even if imposition of unreasonable contest fees were a proper remedy for failure to pay benefits, Employer had no obligation to pay benefits when the July 2008 interlocutory decision was entered.*fn6

In addition, there was no basis to find that Employer unnecessarily protracted the contest with a dispute that was not genuine or reasonable, nor did the WCJ make any such finding.

For the above reasons, therefore, we affirm.

BONNIE BRIGANCE LEADBETTER, President Judge

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Thomas Grady, : Petitioner : v. : : Workers‟ Compensation Appeal : Board (Lutz t/a Top of the Line : Roofing, Uninsured Employers : Guaranty Fund and ACS Claims : Service), : Respondents :

No. 16 C.D. 2011

ORDER

AND NOW, this 5th day of August, 2011, the order of the Workers‟ Compensation Appeal Board is hereby AFFIRMED.

BONNIE BRIGANCE LEADBETTER, President Judge


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