Friday, May 23, 2008

Unresonable Contest Attorneys Fees in Pennsylvania Workers' Compensation Cases

Most (if not all) Pennsylvania Workers' Compensation attorneys charge their clients 20% of the benefits that are won as payment for their services. The Workers' Compensation Act limits the fees to 20%, so an attorney cannot charge the client more than that; however, in some instances I have charged LESS than 20%.

There are cases when the employer/insurance company must pay the attorney an hourly fee. These are called Unreasonable Contest Attorneys Fees. This does not happen very often, but in some cases, the insurance company's defense is so lame and lacks any basis in fact or law, that the judge declares that the carrier is unreasonably contesting the claim.

If this happens, the attorney usually submits a fee exhibit detailing the amount of hours spent in the case and charging their normal hourly rate. My hourly billable rate for my experience and geographic area is $250/hour. Once I get paid from the carrier, then the claimant receives a credit for the hourly fees I've received on the 20% that they will be paying me as the weekly checks roll in. This means that if the employer/insurance company has acted so bad in denying a claim or benefit, then they are punished by having to pay more and also the claimant receives more money in his/her pocket.

Here is the statute and case law that addresses this issue:

77 P.S. §996(a), which states in pertinent part:

In any contested case where the insurer has contested liability in whole or in part, … the employee … 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 …: 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.

The awarding of attorney’s fees in workers’ compensation cases is the rule not the exception. Section 440(a) of the Workers’ Compensation Act (Act); General Carbide Corporation v. Workmen’s Compensation Appeal Board (Daum), 671 A.2d 268 (Pa. Cmwlth. 1996). Thus, the employer has the burden of presenting sufficient evidence to establish a reasonable basis for contesting a claim petition in order for the employer not to have to pay the claimant attorney’s fees. Lemon v. Workers’ Compensation Appeal Board (Mercy Nursing Connections), 742 A.2d 223 (Pa. Cmwlth. 1999), appeal denied, 562 Pa. 676, 753 A.2d 822 (2000). The existence of a reasonable contest is a question of law, based on the WCJ’s findings of fact, and is fully reviewable by the appellate courts. Id.

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