Is it unconstitutional for Pennsylvania to cap workers’ compensation attorney fees at 20 percent of a client’s recovery?

Wilbur Seitzinger, as well as his law firm, Seitzinger & Randazzo, in Bala Cynwyd, Montgomery County, are arguing that a 2006 amendment to the state’s workers’ compensation law violates the Supreme Court’s “exclusive right” to regulate the legal profession. They also are arguing that the amended statute is impermissibly vague and in violation of the due process clause of the U.S. Constitution.

The Commonwealth Court ruled last year that the General Assembly could limit attorney fees in all workers’ compensation cases at 20 percent without any right to judicial review. The amendment ended the authority of workers’ compensation hearing officials to award fees above 20 percent in cases involving monetary awards and when attorneys and claimants agreed upon higher fees.

The intermediate appellate court rejected Seitzinger & Randazzo’s request for declaratory and injunctive relief.

Now the Supreme Court has taken up the issue.

During oral argument last month in Philadelphia, Pennsylvania Chief Justice Ronald D. Castille asked if the Supreme Court has sought to occupy the entire field regarding attorney fees, and Samuel C. Stretton, the attorney for the plaintiffs, said the court has never said either way.

Castille also pointed out that capping attorney fees in workers’ compensation cases fulfills the public policy of making sure workers are compensated for their injuries.

While Castille asked more than one question about whether the 20 percent cap was unreasonable, Stretton appealed to the court’s potential interest in protecting its governance of the legal profession.

“This court has to, and in the past has, zealously guarded the regulation of the legal profession,” Stretton said.

Seitzinger & Randazzo’s complaint said the plaintiffs “cannot charge reasonable fees because of the 20 percent limitation,” according to the plaintiffs’ brief.

Stretton said in oral argument that “I get very nervous when that power goes elsewhere.”

Justice Max Baer commented that Stretton had brought a facial challenge but was arguing the case as an as-applied challenge.

Baer also commented that Stretton’s argument hinged on discomfort with delegating authority to the legislature about attorney fees, but he said it seemed to him that a limit on attorney fees was fairly encompassed by the statute.

Claudia M. Tesoro, senior deputy attorney general with the Attorney General’s Office, said on behalf of the state defendants that the perceived conflict between the amendment to the workers’ compensation statute to limit attorney fees and the Supreme Court’s constitutional authority to regulate the legal profession is “illusory.”

Rule of Professional Conduct 1.5 leaves room for the legislature to set policy regarding attorney fees, Tesoro said.

The rule bans contingency fees for representing defendants in criminal cases and for representing clients in domestic relations matters “contingent upon the securing of a divorce or upon the amount of alimony or support.”

“There is some play at the joints, if you will,” Tesoro said.

A unanimous three-judge panel of the Commonwealth Court granted the state’s preliminary objections to Seitzinger & Randazzo’s petition for review, saying the firm “does not and cannot explain how the provisions it is challenging, as applied, operate in a manner that necessarily precludes an award of reasonable attorney fees when the contingency fee ceiling is applied.”

Judge P. Kevin Brobson wrote the opinion for his colleagues Judges Rochelle S. Friedman and Bernard L. McGinley.

“Our Supreme Court has indicated in Rule 1.5 that laws by the General Assembly may impose limitations on the percentage of an award an attorney may claim for fees,” Brobson said, adding that “on its face” the law does not conflict with Rule 1.5.

The case is Seitzinger v. Commonwealth of Pennsylvania.

Stretton is a columnist for the Law Weekly.

Amaris Elliott-Engel can be contacted at 215-557-2354 or aelliott-engel@alm.com. Follow her on Twitter 
@AmarisTLI.