Supreme Court of Pennsylvania Reverses Commonwealth Court of Pennsylvania; Allows Fees Charged to Workers’ Compensation Insurance Carrier

One of the most unfair aspects of Pennsylvania Workers’ Compensation has always been how injured workers must defend petitions which address only medical benefits.   While injured workers receiving total disability benefits can easily retain an attorney (paying a portion, usually 20%, of such benefits as the fee), injured workers who continue to work, and lose no wages, must decide whether to pay an attorney from their pocket or risk losing access to medical benefits for the work injury.  However, this situation has now changed, thanks to a decision by the Supreme Court of Pennsylvania.

The PA Workers’ Compensation Act (“Act”) has typically been interpreted to allow attorney fees to only be assessed against the workers’ comp insurance carrier if there is a showing that the petition at issue was “unreasonable.”  Thus, the award of attorney fees, chargeable to the insurance company, was the exception to the rule.  This despite the fact that Section 440 of the Act says:

“In any contested case where the insurer has contested liability in whole or in part, including contested cases involving petitions to terminate, reinstate, increase, reduce or otherwise modify compensation awards, agreements or other payment arrangements or to set aside final receipts, the employe or his dependent, as the case may be, 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.” [Emphasis added]

In Lorino v. Workers’ Compensation Appeal Board (Commonwealth of Pennsylvania), the Supreme Court of Pennsylvania reversed a decision of the Commonwealth Court of Pennsylvania, which held that attorney fees could only be assessed against the workers’ compensation insurance carrier if there was a finding that such contest was “unreasonable.”  The Supreme Court found that the clear wording of the Act cannot allow such a reading.  When an injured worker is successful in a petition (the one at issue was a Petition for Termination in a case where only medical benefits were being paid), the Workers’ Compensation Judge (“WCJ”) MUST award attorney fees charged to the carrier.  This is mandatory by the very language of the Act.  However, the WCJ MAY exclude such an award if a reasonable contest is found.  This is discretionary.

Now, as a practical matter, depending on how this decision is interpreted by the WCJs throughout Pennsylvania (and the attitudes of such WCJs), this could result in little change.  But, at least now the WCJ has discretion to award attorney fees regardless of whether a reasonable contest is found.  This decision is critical to injured workers across PA, but especially those who receive only medical benefits, and now may not have to decide whether to abandon their rights to medical benefits under the Act or be forced to pay an attorney’s hourly rate from their own pocket.