Opinion
No. 869 C.D. 2011
06-19-2012
Joseph Fabrizzio, Petitioner v. Workers' Compensation Appeal Board (PA Turnpike Commission), Respondent
BEFORE: HONORABLE DAN PELLEGRINI, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
This case was assigned to the opinion writer before January 7, 2012, when Judge Pellegrini became President Judge.
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE LEAVITT
Joseph Fabrizzio (Claimant) petitions for review of an adjudication of the Workers' Compensation Appeal Board (Board) denying his request for an award of penalties and quantum meruit attorney's fees for an unreasonable contest. In doing so, the Board affirmed the Workers' Compensation Judge's (WCJ) determination. We conclude that the Pennsylvania Turnpike Commission's (Employer) contest of Claimant's legitimate request for compensation was unreasonable, given the diagnosis of Employer's own panel physician. This entitles Claimant to an award of attorney's fees under the Workers' Compensation Act (Act).
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1-1041.4, 2501-2708.
Claimant works for Employer as a toll taker. On June 19, 2008, a truck's side mirror hit Claimant's left hand as he reached out to collect a toll. Claimant immediately reported the incident to his supervisor. He also filled out a written report that described the incident and stated that he was experiencing "pain & discomfort in neck & arm." Certified Record Exhibit C-1 (C.R. Ex. ___). Claimant left work without finishing his shift and sought medical treatment at a hospital emergency room, which did x-rays and prescribed rest and medication. Claimant then treated with Employer's panel physician, who prescribed physical therapy. Claimant did not return to work at that point.
Many of Claimant's exhibits are not in the reproduced record; therefore, we refer to the certified record where necessary.
On July 1, 2008, Employer denied liability by issuing a Notice of Compensation Denial (NCD). Under the NCD's heading "Body Part(s) affected," Employer listed "left hand," but then stated that Claimant had "no know[n] physical injury." Reproduced Record at 25a (R.R. ___). Employer also placed a checkmark next to the pre-printed form language that states, "[t]he employee did not suffer a work-related injury." Id. The NCD included the following comment:
[Claimant] is currently treating for cervical, shoulder, upper arm and thoracic problems that extend beyond the injury reported to have occurred as a result of the incident on 6-19-08.Id.
On July 7, 2008, Claimant responded with a claim petition, alleging his left shoulder, neck and mid-back were injured in the June 19, 2008, incident. Claimant sought ongoing total disability benefits as of that date. Employer denied Claimant's allegations in its answer.
On August 2, 2008, Claimant returned to his pre-injury job with no loss of wages. Upon Claimant's return to work, Employer issued a notification of suspension. Claimant responded by filing a challenge petition and a penalty petition because there were no benefits to suspend in light of Employer's denial of his claim.
Claimant's petitions were consolidated and a hearing was held on September 5, 2008. At the inception of the hearing, Employer acknowledged that its suspension notice had been issued in error; the Bureau of Workers' Compensation did not accept it for filing. The WCJ granted Claimant's challenge petition, declaring Employer's suspension notification to be null and void. This ruling left the claim and penalty petitions.
Claimant then explained that he sought total disability benefits from June 19th through August 1st, to be suspended thereafter. Counsel orally amended the claim petition to assert injuries to his left hand and arm as part of the work injury. Employer responded that it did not believe that Claimant had been "hurt" in the June 19, 2008, incident.
The following exchange took place at hearing:
WCJ: Now on the Answer, there's a little bit of a problem with some of the language that's used denying [C]laimant sustained a compensable injury which, arguably, is a conclusion of law. [Is Employer] denying that he got hurt?R.R. 35a.
Employer's Counsel: At this point, I believe so.
In support of his claim petition, Claimant testified. He explained that when he extended his left arm to take the toll, the truck had not yet come to a full stop. The truck's mirror struck his left hand, which jammed his arm into his neck and caused immediate pain in his arm, shoulder, neck and upper back. He was treated in the Pennsylvania Hospital emergency room with ice and medication. Claimant then went to Employer's panel medical provider, Concentra, which prescribed physical therapy. The doctors at Concentra never released him to full-duty work, and Employer did not offer him light-duty work. After Employer denied his claim and refused to pay for treatment, Claimant stopped going to Concentra. Although his left hand grip strength had improved, he continued to have problems with shoulder and neck mobility and pain. Claimant then began treating with his own doctor. Claimant returned to his regular job on August 2, 2008.
Claimant submitted his medical records into evidence. Records from Pennsylvania Hospital showed that Claimant was diagnosed with a muscle strain, and strained muscles and ligaments in his neck. Medical records from Concentra showed that Claimant was first seen by Jeffrey A. Jacobs, M.D. on June 23, 2008, who diagnosed Claimant with left shoulder, cervical and thoracic strains. Dr. Jacobs placed Claimant on modified activity status and recommended physical therapy. On June 25, 2008, Claimant reported that the physical therapy had aggravated his neck pain.
Claimant also submitted into evidence a July 1, 2008, letter from Patricia Raskauskas, Employer's workers' compensation manager. It states that Employer had decided to deny payment for Claimant's June 25, 2008, medical examination and physical therapy because
[a]fter a review of [Claimant's] report, it has been determined that treatment Concentra is providing for neck sprain, shoulder/upper arm strain & thoracic strains are beyond the injury reported to have occurred on 6-19-08.C.R. Ex. C-4.
On November 7, 2008, a second hearing was held before the WCJ. The parties discussed the fact that Employer had scheduled Claimant for an independent medical examination (IME) with Joseph Abboud, M.D. to be performed on November 12, 2008. Dr. Abboud's IME report never became part of the record because the parties settled the claim petition in February 2009.
Claimant and Employer settled by a stipulation that provided, inter alia, that Claimant sought benefits for a June 19, 2008, injury and that Employer had "disputed the occurrence, nature and extent of the alleged injury." R.R. 26a. Claimant returned to work without restrictions on August 2, 2008. After the IME, Dr. Abboud opined that Claimant had injured his left hand, left arm, left shoulder, neck and mid-back in the accident and continued to experience symptoms, albeit not disabling symptoms. The parties agreed to an award of total disability benefits from June 20, 2008, through August 1, 2008, followed by a suspension. In addition, Employer agreed to pay Claimant litigation costs and statutory interest. The parties agreed that the WCJ would decide whether Employer must also pay penalties or unreasonable contest attorney's fees for any of Claimant's petitions.
The WCJ denied the request for penalties and attorney's fees, finding that Employer had not violated the Act because it had issued a timely NCD. When issued, Employer believed Claimant was not disabled, based on his medical records. In support, the WCJ explained that records from the Pennsylvania Hospital "state that [C]laimant was not disabled" and that they released Claimant to modified duty that was consistent with his job as a toll taker. WCJ Decision, October 7, 2009, at 1; Finding of Fact 2. The WCJ also found that Claimant himself testified that he was feeling better one week after the incident. The WCJ further found as follows:
When [Employer] received new medical information in its own IME report from Dr. Abboud, it thereafter entered into a Stipulation with [C]laimant acknowledging [C]laimant's work injury and agreeing to pay him total disability benefits for the time he was out of work.Id.; Finding of Fact 3. Based on these findings, the WCJ saw "no basis whatsoever" for an award of penalties or unreasonable contest attorney's fees. Id.; Finding of Fact 4. The WCJ found that Claimant's requested attorney's fee of $5,175 was an "outrageous amount," considering that Claimant was paid only $2,825.58 in disability benefits for his injury. Id. at 2; Finding of Fact 6. Claimant appealed, and the Board affirmed. Claimant then petitioned for this Court's review.
The WCJ devoted much of his decision to discussing the apparent animosity between Claimant's and Employer's counsel and what the WCJ viewed as their breach of Pennsylvania's Code of Civility, 204 Pa. Code §§99.1-99.3.
This Court's review is limited to determining whether the necessary findings of fact are supported by substantial evidence, whether Board procedures were violated, whether constitutional rights were violated or an error of law was committed. City of Philadelphia v. Workers' Compensation Appeal Board (Brown), 830 A.2d 649, 653 n.2 (Pa. Cmwlth. 2003).
On appeal, Claimant raises three main issues for our consideration. First, Claimant argues that Employer should pay a penalty for having issued an NCD instead of a medical-only notice of compensation payable (NCP). Second, Claimant argues that he is entitled to attorney's fees because Employer's contest was unreasonable. Third, Claimant disputes the WCJ's finding that the amount of his requested attorney's fee is "outrageous." We address these issues seriatim.
Claimant lists seven separate arguments in his brief. For organizational purposes, we have rearranged the order and combined the arguments into the three main issues.
Section 406.1 of the Act was added by the Act of February 8, 1972, P.L. 25. It states, in relevant part, as follows:
(a) The employer and insurer shall promptly investigate each injury reported or known to the employer and shall proceed promptly to commence the payment of compensation due either pursuant to an agreement...or a notice of compensation payable...or pursuant to a notice of temporary compensation payable.... The first installment of compensation shall be paid not later than the twenty-first day after the employer has notice or knowledge of the employe's disability.77 P.S. §717.1 (emphasis added).
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(c) If the insurer controverts the right to compensation it shall promptly notify the employe or his dependent, on a form prescribed by the department, stating the grounds upon which the right to compensation is controverted and shall forthwith furnish a copy or copies to the department.
In his first issue, Claimant contends that Employer violated Section 406.1 of the Act, 77 P.S. §717.1, by issuing an NCD. Claimant argues that the NCD was unfounded in light of Claimant's immediate written report of his work injury. Where an employer violates the Act, the WCJ may award penalties under Section 435(d) of the Act, 77 P.S. §991.
Section 435(d) was added by the Act of February 8, 1972, P.L. 25. It states, in relevant part, as follows:
(d) The department, the board, or any court which may hear any proceedings brought under this act shall have the power to impose penalties as provided herein for violations of the provisions of this act or such rules and regulations or rules of procedure[.]77 P.S. §991.
Section 406.1 of the Act requires an employer either to accept liability or to deny liability within 21 days of receiving notice of an injury. Orenich v. Workers' Compensation Appeal Board (Geisinger Wyoming Valley Medical Center), 863 A.2d 165, 170 (Pa. Cmwlth. 2004). An employer violates Section 406.1 of the Act if there is no dispute that a claimant sustained a work injury but the employer does not issue a document acknowledging that work injury. Jordan v. Workers' Compensation Appeal Board (Philadelphia Newspapers, Inc.), 921 A.2d 27, 41 (Pa. Cmwlth. 2007).
Claimant reported his injury on June 19, 2008, the day of its occurrence. On July 1, 2008, well within the 21-day deadline, Employer issued the NCD. Employer was not barred from issuing an NCD simply because Claimant had reported an injury. The NCD acknowledged the "incident" of June 19, 2008, but apparently Employer believed that Claimant's injury was mild and transient. Further, Employer believed that the treatment Claimant was receiving had nothing to do with the reported hand injury. Employer was later proved wrong. Nevertheless, Employer satisfied Section 406.1 of the Act by promptly issuing an NCD to notify Claimant of its position within the 21-day deadline.
We turn next to Claimant's argument that he is entitled to an award of attorney's fees because Employer's contest of his challenge and claim petitions was unreasonable, thereby requiring him to engage an attorney. Section 440(a) of the Act provides that a claimant who is successful, in whole or in part, in a litigated claim is entitled to a "reasonable sum" for attorney's fees, unless the employer had a "reasonable basis for the contest." 77 P.S. §996(a). The employer has the burden of proving that its contest was reasonable. Essroc Materials v. Workers' Compensation Appeal Board (Braho), 741 A.2d 820, 826 (Pa. Cmwlth. 1999). The employer must show that it had reasonable grounds to contest a claim when it originally decided to do so; an offer to settle partway through the litigation does not transform the contest into a reasonable one. Pruitt v. Workers' Compensation Appeal Board (Lighthouse Rehabilitation), 730 A.2d 1025, 1029 (Pa. Cmwlth. 1999). Whether a contest was reasonable is a conclusion of law based on the facts found by the WCJ and is fully reviewable by this Court. Essroc Materials, 741 A.2d at 826.
Section 440 was added by the Act of February 8, 1972, P.L. 25. Section 440(a) states, in relevant part, as follows:
In any contested case where the insurer has contested liability in whole or in part...the employe...in whose favor the matter at issue has been finally determined in whole or in part shall be awarded, in addition to the award for compensation, a reasonable sum for costs incurred for attorney's fee, witnesses, necessary medical examination, and the value of unreimbursed lost time to attend the proceedings: Provided, That cost for attorney fees may be excluded when a reasonable basis for the contest has been established by the employer or the insurer.77 P.S. §996(a) (emphasis added).
Claimant argues that Employer's contest was unreasonable in two respects. First, Employer issued a suspension notification, which was improper because Claimant was not on compensation. Second, Employer had immediate notice of the work injury from Claimant and the medical records confirmed the injury. By not accepting liability, Employer forced Claimant to litigate for approximately four months.
Employer responds that the WCJ found, as fact, that Employer issued the NCD because the hospital records stated Claimant was not disabled. Employer also points out that it accepted the claim as soon as it "received new medical information by virtue of its own IME report from Dr. Abboud." Employer's Brief at 8.
It is conceded by Employer that its suspension notification was improper. This mistake caused Claimant to be compelled to file a challenge petition to protect his rights. More importantly, Employer did not have a reasonable basis to contest the claim petition.
The evidence does not support the WCJ's finding of fact that the medical records state that Claimant was not disabled. Rather, they show that Claimant was instructed to rest for a few days and not to drive because of the medication that had been prescribed. C.R. Ex. C-7. The NCD states that Employer denied that Claimant had sustained any work-related injury; it was not limited in scope to his ability to work. Claimant came to the hearing on September 5, 2008, and stipulated that he was back to work and no longer disabled as of August 2, 2008. Nevertheless, Employer continued its contest, telling the WCJ it did not believe Claimant had ever been hurt.
The evidence does not support Employer's contest. Claimant immediately reported the injury and sought treatment at the hospital. Employer's own panel provider, Concentra, diagnosed shoulder, neck and thoracic strains. Employer's evidence did not explain why it disputed the occurrence of any work injury.
When Employer received the IME report in November it accepted the claim, but this does not support the conclusion that its contest from July to November was reasonable. Employer forced Claimant to litigate to have his medical bills paid and to have his wage loss benefits paid for the six weeks he missed from work. Employer appears to have believed that Claimant was not hurt on June 19, 2008, and was seeking treatment for injuries sustained elsewhere. However, its evidence did not support this belief.
As an aside, if Employer legitimately had been contesting disability, as it claims, then Claimant is correct that Employer should have at least issued a medical only NCP. Employer cannot issue an NCD denying that there was an injury and then say it was actually defending on the issue of disability. If disability were the issue, Employer was required by the Act to at least acknowledge Claimant's injury and pay his medical bills, which it did not do. Therefore, if we were to find a reasonable contest because of disability, we would have to remand for an award of penalties for misuse of an NCD.
Finally, Claimant takes issue with the WCJ's characterization of the amount of his requested attorney's fee as "outrageous." Claimant asserts that his counsel did, in fact, perform the work necessitated by Employer's refusal to acknowledge Claimant's injury and points out that Employer did not object to the amount of the requested fee.
Where there has been an unreasonable contest, Section 440(b) of the Act gives the WCJ authority to determine what is a "reasonable sum" for attorney's fees. City of Philadelphia v. Workers' Compensation Appeal Board (Andrews), 948 A.2d 221, 231 (Pa. Cmwlth. 2008). Under Section 440(b), the WCJ must make an award based on findings of
the complexity of the factual and legal issues involved, the skill required, the duration of the proceedings and the time and effort required and actually expended.77 P.S. §996(b).
Because Employer's contest of the challenge and claim petitions was unreasonable, Claimant is entitled to an award of attorney's fees related to litigation of those petitions. Because the WCJ denied Claimant's request for attorney's fees, he did not make any specific findings about the requested quantum meruit attorney's fee, except to announce that it was "outrageous." Accordingly, the matter must be remanded for the WCJ to set the "reasonable sum" to be awarded. The WCJ may reopen the record for submission of a quantum meruit exhibit from Claimant's counsel listing fees attributable only to the challenge and claim petitions, which Employer's counsel may challenge. The WCJ shall then award a "reasonable sum" for attorney's fees.
Because Claimant did not prevail on his penalty petition, he is not entitled to any attorney's fees for litigating that petition. --------
For these reasons, the portion of the Board's order upholding the reasonableness of Employer's contest of the challenge and claim petitions is reversed and the matter is remanded for the WCJ to award a reasonable sum for attorney's fees. The remainder of the Board's order is affirmed.
/s/_________
MARY HANNAH LEAVITT, Judge
ORDER
AND NOW, this 19th day of June, 2012, the order of the Workers' Compensation Appeal Board dated April 19, 2011, in the above captioned matter is hereby REVERSED as to its holding that the contest of the challenge and claim petitions was reasonable. The matter is REMANDED to the Board with instructions to remand to the WCJ for an award of a reasonable sum for attorney's fees. The order is AFFIRMED in all other respects.
Jurisdiction relinquished.
/s/_________
MARY HANNAH LEAVITT, Judge