Win Some, Lose Some

Workers' compensation judges often order that all of a claimant's litigation expenses be reimbursed by the defendant where a claimant wins on any one of the issues or petitions without analyzing whether the expenses are actually attributable to the issues or petitions upon which the claimant prevailed. Pennsylvania's Commonwealth Court has now made clear that litigation expenses should be reimbursed to a claimant only to the extent that they relate to the "matter at issue" on which the claimant prevailed.

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The typical workers’ compensation litigation spawns a number of petitions before the case is decided by the workers’ compensation judge. It is not uncommon for a party to file two or more petitions, and frequently each party will have one or more petitions pending at the time the WCJ disposes of the case. Some issues are decided in favor of the employer, while the claimant may win on others. Some petitions may be dismissed as moot. WCJs, however, often order that all of a claimant’s litigation expenses be reimbursed by the defendant where the claimant wins on any one of the issues or petitions, without analyzing whether the expenses are actually attributable to the issues or petitions upon which the claimant prevailed. The Commonwealth Court has now made clear, in Jones v. WCAB (Steris Corp.), that litigation expenses should be reimbursed to a claimant only to the extent that they relate to the “matter at issue” on which the claimant prevailed. In Jones, the issue of calculating the award of litigation expenses arose in the context of the employer’s motion to quash the claimant’s petition to review to the Commonwealth Court. The claimant had litigated a claim petition before a WCJ who decided that while the claimant proved that he sustained a work-related injury entitling him to medical benefits, he failed to show that he sustained a loss of earnings because of the injury. Thus, the judge granted the claim petition in part but awarded no wage loss benefits to the claimant, and the claimant appealed. The Workers’ Compensation Appeal Board affirmed the decision of the WCJ on the merits, but it ordered a remand so that the WCJ could calculate litigation costs owed to claimant in light of his partial success. The claimant immediately appealed to the Commonwealth Court, arguing that he should be permitted an interlocutory appeal as of right under Pa. R.A.P. 311(f), since the remand did not require the exercise of administrative discretion. The Commonwealth Court has previously held in SKF USA Inc. v. WCAB (Smalls) that pursuant to Rule 311(f), a remand from the board to the WCJ for computation of benefits did not involve administrative discretion and did not, therefore, preclude an immediate appeal to the court of a board decision. The employer in Jones argued that the claimant’s appeal to the Commonwealth Court had to be quashed because the remand to the WCJ for computation for an award of “reasonable” litigation costs inherently required the exercise of discretion. Therefore, the board’s interlocutory order was not appealable under Rule 311(f). The court agreed with the employer. On remand, the court held, the WCJ will need to determine what part of claimant’s $1,567.45 in litigation expenses were incurred on the issue upon which claimant prevailed, i.e., establishing that he sustained a work-related injury. Only that portion of the litigation expenses is “reasonable” and reimbursable under Section 440(a) of the Workers’ Compensation Act. That section provides that an 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 or costs incurred for attorney’s fees, witnesses, necessary medical examination, and the value of unreimbursed lost time to attend the proceedings.” In reviewing this section, the court admitted that its precedent on the appropriate application of Section 440(a) “is not entirely consistent.” In Braun Baking Company v. WCAB (Stevens), the court affirmed the award of the claimant’s entire amount of requested litigation costs where the claimant successfully defended a termination petition, but the employer prevailed on a suspension petition. The court contrasted the facts in Braun with those in Jones, noting that it gave deference to the WCJ’s discretionary award of costs in Braun, where the judge in Jones did not award costs to claimant. Several years prior to Braun, the Commonwealth Court held in Holmes v. WCAB (Pisani Brothers Inc.), that the claimant was not entitled to a reimbursement of litigation expenses in modification petition litigation, where the WCJ found that one job was available for the claimant and the other (higher paying) job was not. In that case, the court held that the contested issue — the availability of suitable work — was not resolved in the claimant’s favor as to entitle him to costs. Using the rationale from Holmes, the court held that Jones did not prevail, in part or in whole, on the contested issue of whether he was entitled to disability benefits. Had he succeeded in demonstrating a right to weekly compensation benefits, in addition to the medical benefits that were awarded, the court reasoned that Jones’ eligibility for litigation costs would be unquestioned. Here, in contrast, there were many questions. On remand, the WCJ could find that all costs incurred should be awarded because they related to the claimant’s establishment of a work-related injury, the “matter at issue” upon which the claimant prevailed. Alternatively, the judge could decide that the costs were attributed to both issues and allocate the costs to determine “a reasonable sum” under Section 440(a). Thus concluding, the Commonwealth Court quashed the claimant’s petition for review, finding it premature under Rule 311(f). Because litigated workers’ compensation cases so frequently involve multiple petitions and multiple issues, attorneys representing employers should address this issue both in the brief to the WCJ and on appeal when the circumstances warrant. Sometimes it is obvious that a certain litigation expense is related only to an issue upon which the claimant did not prevail. For example, an employer may file a termination petition, alleging that a claimant fully recovered from the only acknowledged injury, a low back strain. In the course of that litigation, the claimant may file a review petition, seeking to have the description of the injury amended to include a psychological injury. If the defendant loses on the termination petition, but the claimant fails to prevail on the review petition, an apportionment of the litigation expenses is obviously warranted, and the costs of the psychiatrist’s witness fee should not be awarded. But in the Jones case, only one medical witness was presented by the claimant, and the court hinted that the judge would be within his discretion to award a portion of the expert witness fee to the claimant as a reimbursable cost. By analogy to Jones, an award of unreasonable contest attorneys fees under Section 440 also should be apportioned so that fees are awarded only for that portion of the litigation that was unreasonably contested by the defendant. Although the Commonwealth Court did not address this specific issues in Jones, the court’s reasoning should apply to all of the costs enumerated in Section 440(a). That list includes unreasonable contest attorneys fees, witness fees and other, more traditional “litigation costs.” Many times, WCJs allow claimants’ counsel to submit their proof of costs with their briefs. Where the employer is the moving party, the claimant’s brief is generally filed second, so the employer does not have the opportunity to review the proposed litigation expenses in its initial brief, necessitating a reply brief. While some judges take longer than others to decide a case after both briefs are received, defense counsel are cautioned to submit the reply brief promptly after receiving claimant’s brief, or at least to advise the judge that a reply brief is forthcoming, so as not to miss the opportunity to address the appropriate allocation of the costs to the various issues or petitions involved in the litigation. Matthew S. Wynn is a shareholder at Littler Mendelson’s Philadelphia office and heads the firm’s Pennsylvania workers’ compensation practice group. He is the defense co-chairman of the workers’ compensation section of the Philadelphia Bar Association and has represented employers, insurers and third-party administrators in workers’ compensation litigation since 1991. He can be contacted via e-mail at [email protected] or via telephone at 267-402-3015.

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