Defense Digest

Attorneys Fees Means Attorneys Fees Plus

In the case of Vitac Corporation v. W.C.A.B. (Rozanc); Appeal of : Sheila Rozanc, 854 A.2d. 481 (2004), the Pennsylvania Supreme Court was asked to decide whether a Workers' Compensation Judge, in an appropriate case, could award paraprofessional (paralegal and law clerks) fees within an award of attorney's fees pursuant to §440(a) of the Pennsylvania Workers' Compensation Act. The Commonwealth Court had denied the inclusion of paraprofessional fees based on the plain language of the Act, which spoke only in terms of attorney's fees but was silent regarding paralegal and law clerk fees.

The Commonwealth Court's position adopted by the defendant/employer before the Supreme Court reasoned that the statute on its face listed specific types of costs for which reimbursement was allowed but made no mention of fees for the work of paraprofessionals, such as paralegals and law clerks, and since §440(a) abrogated the common law rule that parties bear their own costs, such a cost shifting statute must be strictly construed.

In rejecting the argument adopted by the Commonwealth Court and advanced by the employer, the Supreme Court focused on general rules of statutory interpretation, noting that the Court's ultimate objective is to "ascertain and effectuate the intention of the General Assembly." The Supreme Court also noted that it must presume that the General Assembly intended to favor the public interest as against any private interest and that the Assembly would not intend an unreasonable result. The Vitac Court stated that, in its view, these factors weighed in favor of interpreting the phrase "attorney's fees" to include reasonable charges by an attorney for legal work performed by paraprofessionals. The Court noted that this construction was consistent with the "clear intent" of the fee provision of the Act, which was to protect the claimant from the cost of defending against bad faith filings challenging legitimate compensation for injuries sustained. The Court reasoned that if paraprofessional fees were excluded from the fee shifting provision, a claimant might have to bear a substantial portion of such litigation costs, thus eroding the benefits that the General Assembly has elected to confer upon employees in exchange for the elimination of a latter's common law negligence remedies against the employer.

The Supreme Court noted that allowing the recovery of paraprofessional fees as a component of statutory attorney's fees is likely to promote the public's interest in efficient lawyering by helping to ensure that some tasks will be assigned to lower cost personnel. The Court specifically rejected the idea that its analysis must end with a strict construction of the term "attorney's fees" without consideration of what the Court deemed to be the intent behind the Legislature's enactment of this specific provision in the Act.

The Court concluded that reimbursement of paraprofessional services was not precluded as a matter of law under §440 in instances where the attorney effectively passed such costs onto clients as a component of overhead reflected in a higher hourly rate for the attorney's own time. Having reached this conclusion, the Court went on to state that it did not believe the General Assembly intended to foreclose reimbursement of these fees if the expenses were instead passed on via separate line items on the attorney's bill. The Court stated that it found nothing in the Act to suggest a Legislative intent to discourage application of a more exact method of charging for attorney work product. The Court stated that to allow for reimbursement of paraprofessional fees when those fees were included in the lawyer's hourly rate, but to disallow them when these were set forth as a separate line item on a bill, would mean that the portion of the fees subject to reimbursement would depend upon the attorney's billing method and/or the billing custom in the specific market in which the attorney works. Finally, the Court noted that it did not believe its ruling would lead to an abuse of this provision as all requests for attorney's fees were subject to an overarching requirement of reasonableness pursuant to §996(a) of the Act; therefore, any concerns regarding potential unfair billing practices, such as attempts to achieve a double recovery for paralegal time, could be addressed by objection to a bill in a specific case.

Although at first glance the Court's decision in this case may lead to the conclusion that employers and their carriers may be subject to increased fee awards, the practical effect of the decision may actually have the opposite result. First, the decision will encourage practitioners to delegate appropriate work to paraprofessionals, which will result in a lower hourly rate for those tasks performed. Also, the Court's decision should have the effect of re-emphasizing the necessity to closely scrutinize bills submitted for reimbursement by defense counsel, employers, and insurers to make sure that those charges are, in fact, reasonable and, where appropriate, to challenge those bills that appear to not be reasonable based on the work performed.

*David, an associate in our Williamsport, Pennsylvania office and a member of the firm's Workers' Compensation Department, can be reached at (570) 326-6909 or dwilk@mdwcg.com.