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noting that the employer gave the Board a settlement offer that was communicated to the claimant in a sealed envelope at the hearing
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C.A. No. 06A-01-006(CHT).
Submitted: September 2, 2006.
Decided: December 5, 2006.
On Claimant-Below/Appellant's Appeal From The Decision Of The Industrial Accident Board.
W. Christopher Componovo, Esquire, WEIK NITSCHE DOUGHERTY COMPONOVO, Wilmington, DE., Attorney for Claimant-Below/Appellant.
Anthony M. Frabizzio, Esquire and Stephen J. Milewski, Esquire, HECKLER FRABIZZIO, Wimington, DE., Attorneys for Employer-Below/Appellee.
OPINION AND ORDER
Before the Court is the appeal by Augustin Carrion challenging the December 28, 2005, decision by the Industrial Accident Board reducing the amount awarded as fees to his counsel pursuant to 19 Del. C. § 2320(10)based upon counsel's conduct in prosecuting Carrion's claim for worker's compensation benefits. That which follows is the Court's response to the issues so presented.
STATEMENT OF FACTS AND PROCEDURAL POSTURE
On May 14, 1998, Carrion sustained a neck injurywhile performing his duties as an employee of the City ofWilmington. The City conceded that the injury was acompensable work-related injury and Carrion has notreturned to work since it occurred. Worker'scompensation benefits in the form of total disabilitypayments were paid to Carrion pursuant to 19 Del. C. § 2324 at a weekly rate of $278.07 while he recovered.
On July 26, 2005, the City filed a petition toterminate the total disability benefits Carrion was receiving alleging that Carrion was capable of performingsedentary to light duty work on a full-time basis. Ahearing was held in response on December 15, 2005.During the course of that proceeding, Carrion agreed hewas no longer totally disabled and the City conceded thatCarrion was eligible for partial disability benefits via19 Del. C. § 2325. The only issue for the Board todecide, therefore, was what amount of partial disabilitypayments would fairly compensate Carrion for his loss ofearning capacity.
Carrion, through his attorney, argued that anyanalysis of partial disability benefit entitlement mustnecessarily include a consideration of the Maxey-Wade doctrine. The Maxey-Wade doctrine, in essence, requiresan adjustment to the wages identified in the labor marketsurvey at the present time to the date of the injury.
Maxey v. Major Mechanical Contractors, 330 A.2d 156 (Del.Super. 1974) and Greggo Ferrara, Inc. v. Wade, 1985 Del. Super.LEXIS 1407.
The City contended that Carrion could not raise the Maxey-Wade issue at the hearing without first listing theissue on the pre-trial memorandum. Carrion's retort was that not every legal argument was required to be disclosed and such a requirement would take the "lawyering" out of the litigation process.
The relevant portion of the Board's December 28, 2005 opinion provides:
The Board agrees with Claimant that, arguably, Maxey-Wade is not a "defense"that must be listed on the pre-trialmemorandum under IAB Rule No. 9(D)(3).For this reason, and because the Boarddoes not wish to punish Claimant for hiscounsel's questionable litigationtactics, the Board will consider theargument. The board is concerned, however, that the "lawyering" to whichClaimant's counsel refers likely servedto denigrate the efficiency and fairnessof the process in this case, andtherefore, the Board will considercounsel's failure to disclose its Maxey-Wade contention when determiningattorney's fees below. In any event, Ms. Wilkerson testified that loweringthe weekly wages from the labor marketsurvey by $15 would fairly represent thewages in effect for such positions in1998 and the Board accepts suchadjustment, under the Maxey-Wade doctrine.
IAB Decision on Petition for Termination of Benefits, December 25, 2006, at 7.
Partial Disability
Under 19 Del. C. § 2325, compensation to be paid forpartial disability shall be 66 2/3 percent of thedifference between the wages received by the injuredemployee before the injury and the earning power of theemployee thereafter. Carrion's pre-injury wage was$417.08. The only evidence of Carrion's earning powerafter the injury was the labor market survey introducedby the City, which identified eight positions believed tobe within his physical capabilities and vocationalqualifications. The salaries for those positions rangedfrom $403.44 to $422.65, for an average weekly wage of$414.04.
The Board opined that the low end of the range,$403.44 per week, most accurately reflected Carrion'searning capacity since he had not worked for a longperiod of time. The $15 Maxey-Wade adjustment was thensubtracted from the $403.44, resulting in an earningcapacity of $388.44 per week. Based on the foregoing, the Board calculated that Carrion was entitled to partialdisability benefits at a compensation rate of $19.09 per week, two-thirds of the difference between his pre-injuryweekly wage of $417.08 and his earning capacity of$388.44.
Attorney's Fees
Pursuant to 19 Del. C. § 2320(10)(a), a reasonable attorney fee "shall be allowed by the Board to any employee awarded compensation . . . ." However, 19 Del. C. § 2320(10)(b) instructs:
In the event an offer to settle anissue pending before the Industrial Accident Board is communicated to theclaimant or the claimant's attorney, inwriting, at least 30 days prior to the trial date established by the Board onsuch issue and the offer thuscommunicated is equal to or greater thanthe amount ultimately awarded by the Board at the trial on that issue, the provisions of paragraph a. of this subdivision shall not apply.
The record reflects that counsel for Carrion submitted an affidavit reciting that he spent twenty-two hours preparing for the hearing, which itself lasted approximately one and one quarter hours. According to counsel, the fee customarily charged in his locality was $250.00 per hour. The Board, as is required, proceededby applying the factors set forth in General Motors v. Cox and found that the fees requested were reasonable.The record further shows that the City submitted to theBoard, in a sealed envelope, a settlement offer itextended to Carrion on November 15, 2005. The Board didnot open the envelope until it arrived at a decision onthe merits. The settlement offer, which was based on anearning capacity of $403.44, was not "equal to orgreater" than the amount awarded by the Board.
304 A.2d 55 (Del. 1973).
The Board noted that the City's settlement offer wasnot "equal to or greater" than the amount awarded solelybecause of the $15 per week Maxey-Wade adjustment, whichthe City may well have included in its settlement offerhad Carrion's counsel disclosed his Maxey-Wade argumentat an earlier date. The Board concluded that the$1,718.10, the maximum attorney's fee permitted in thiscase , should be reduced by one-half due to counsel's decision to withhold the Maxey-Wade argument until thehearing, making the award $859.05.
The figure was arrived at by taking thirty percent of thetotal partial disability award.
DISCUSSION
The Delaware Supreme Court and this Court haverepeatedly emphasized the limited appellate review of thedecisions made by an administrative agency. In reviewingan appeal from a decision of the Industrial AccidentBoard, the Court is limited to a review of the record toascertain if the decision is free from legal error, issupported by substantial evidence, or whether it is inany way arbitrary, capricious or constitutes an abuse ofdiscretion. An arbitrary or capricious decision is onethat is "willful and unreasonable and withoutconsideration or in disregard of the facts." Where therecord clearly indicates that the Board's decision isbased upon improper or inadequate grounds, its discretion has been abused and reversal upon judicial review isrequired. Absent an abuse of discretion or error of law, and if it is supported by substantial evidence, the ruling below will not be disturbed.
Kreshtool v. Delmarva Power and Light Co., 310 A.2d 649 (Del.Super.Ct. 1973).
See Liborio, L.P. v. Sussex County Planning and Zoning Commission, 2004 Del. Super. LEXIS 245, at *7.
Kreshtool, 310 A.2d at 652.
Pitts v. White, 109 A.2d 786 (Del. (1954); and Digiacomo v. Board of Public Education in Wilmington, 507 A.2d 542 (Del. 1986).
In addressing the instant controversy, there areseveral principles that must be recognized. First, anaward of attorney's fees in not automatic; the Board isentitled to exercise discretion in that regard. Second, that discretion must be exercised in a manner consistentwith the purposes underlying the Worker's CompensationAct. Finally, as stated above, if the Board decides tomake such an award, it must apply the Cox factors indetermining whether the amount requested as attorney'sfees is reasonable. The Cox criteria are recognized asguidelines rather than rules that must be strictly applied and/or followed. The Board need only show that it considered each in reaching its decision. The issuethe Court must decide as a result, is whether the Boardabused that discretion when it reduced the fees in question by one-half.
Simmons v. Delaware State Hospital, 660 A.2d 284, 289 (del.1995).
Histed v. E.I. DuPont, 621 A.2d 342 (Del. 1993).
Cox, 304 A.2d at 57.
Carrion does not contend that the Board erred as a matter oflaw or complain that the decision lacked substantial evidentiarysupport in the record.
The Board noted that Maxey-Wade arguably was not a"defense" that needed to be listed in the pretrialmemorandum and proceeded to apply the doctrine incalculating Carrion's earning capacity. Nonetheless, theBoard decided to penalize Carrion by reducing theattorneys fee awarded via § 2320(10) because of thefailure to raise that issue before the hearing. TheBoard based its decision on alleged impact of counsel'sstrategy upon the process.
Handing down what might be better described as aneffort to sanction or engage in behavior modification, the Board did not tie, link or otherwise relate theconduct found to be objectionable to some negative resultflowing from the case. The Board did not mention whethercounsel's conduct brought about the need to have a hearing, increased the number of issues to be presented, or had a negative impact upon the amount of compensationCarrion actually recovered versus that sought. Nor didthe Board question the number of hours claimed byCarrion's attorneys to prepare for the hearing (twentytwo) as well as attendance at the hearing itself, whichapparently lasted less than two hours. Lastly, eventhough the Board complained about counsel's conduct, itaccepted without question the hourly rate sought withoutregard to counsel's experience and/or otherqualifications. In short, the Board did not attempt tospecifically relate counsel's conduct to any aspect ofthe litigation before it, or quantify any impact thatconduct might have had.
The Board instead stated that counsel's conductdenigrated the "efficiency and fairness of the process"and reduced the attorney's fees award by one-half.However, it did so without further definition, explanation or reference to any authority of any kind.The record before the Board is similarly devoid of anylegal precedent or policy which would shed light upon how and/or why the Board reacted the way it did. Theexplanation provided was at best speculative, no more.That is not enough to sustain the action taken.
Simply put, without more, the Board's decision canonly be viewed as an arbitrary and capricious rulingwithout any basis in law or the facts of the case. TheCourt has not been directed to any authority, and nonehas been put forth by either side, which would permitsuch a condemnation based upon conduct which was notprohibited at the time it occurred. Equally absent isany authority allowing an administrative body to imposea sanction without regard to the existence of anyspecific harm inflicted or goal to be achieved in thematter.
As noted above, a decision is defined as arbitraryand capricious where it is willful and/or unreasonableand without consideration or regard for the facts. Under the circumstances surrounding this case, the Courtmust conclude that there must be some nexus between theconduct found to be objectionable and the action taken in response. Common sense and notions of fundamentalfairness also require that the sanction bear somerational relationship to that aspect of the processaffected by the conduct in question. Otherwise, theCourt is compelled to void the transaction, order orjudgment in question, which is what it must do in theinstant situation given the failure of the Board in bothregards.
See Liborio, 2004 Del. Super. LEXIS 245, at *7.
By reaching this result, the Court is not suggestingthat the Board can not consider the conduct of anattorney in awarding attorneys fees. It clearly has theauthority to do so. However, the infraction must beclearly defined and the sanction must bear a rationalrelationship to the harm inflicted or wrong committed.And, the Board must specifically state the basis for itsdecision. Referencing a general distaste for the mannerin which the litigation was conducted or speculating upon what might have occurred in the absence of that conduct, will not sustain the action taken in this case.
Simmons, 660 A.2d at 389.
For example, the Board could find that the conduct being complained about resulted in an increase in the costs of the litigation or a needless expenditure of time, and reduce the amount of fees proportionately or on a dollar for dollar basis if it is warranted under the facts and circumstances of the case.
CONCLUSION
In light of the foregoing, the decision to reduce theamount of attorney's fees awarded to counsel for AugustinCarrion for services rendered in connection with thematters before the Industrial Accident Board below wasarbitrary and capricious. It must therefore be, andhereby is, reversed and vacated. The matter shall bereturned to the Board and the amount initially awarded,$1,718.10, paid in full pursuant to 19 Del. C. § 2320(10)(a). Payment shall be tendered within thirty (30) days of the date the case is returned to the Board.