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Attorney’s Fees for a Frivolous Appeal: An Old Cloak Gets a New Owner

June 1, 2015

Key Points:

  • Section 440 of the Pennsylvania Worker’s Compensation Act gives the claimant the right to attorney’s fees if the employer contests their petition unreasonably.
  • That right does not extend to employers at the trial level.
  • The Commonwealth Court’s decision expresses a willingness to impose counsel fees against the claimant for filing unreasonable appeals.

 

Are you tired of claimant’s attorneys filing frivolous appeals? It seems the Commonwealth Court may well be, too, recently holding in the case of Steven Smith v. WCAB (Consolidated Freightways, Inc.), 2015 Pa. Commw. LEXIS 91 (Pa.Commw.Ct. Mar. 9, 2015), that employers can recover attorney’s fees and costs stemming from frivolous appeals. At the trial level, Section 440 of the Pennsylvania Worker’s Compensation Act gives the claimant an opportunity to recover attorney’s fees from employers, not the other way around. Section 440 of the Act cloaks claimants in legislative protection that allows them to file frivolous petitions against employers without “chilling” their opportunity to avail themselves of the protection of the Act. At the appellate level, however, the idea that attorney’s fees and costs can be recovered from the claimant is not new. As early as 1987, the Commonwealth Court awarded costs against the claimant and warned that attorney’s fees could be awarded.

In 1987, the Commonwealth Court issued that warning in the case of Patel v. WCAB (Sauquoit Fibers Co.), 520 A.2d 525 (Pa.Commw.Ct. 1987). The claimant, Patel, had filed a claim petition contending he was injured in 1975. The original claim petition was denied, as was a second claim petition. A third claim petition, filed in 1984, was denied by the Workers’ Compensation Judge in 1985. When rendering its decision on appeal in 1987, the Commonwealth Court stated that the claimant’s appeal was “wholly frivolous and constitutes patent abuse of Claimant’s constitutional right to avail himself of the courts of this Commonwealth as guaranteed by…the Pennsylvania Constitution.” The court awarded costs against the claimant, but not attorney’s fees. The court did say that the appeal was so wholly frivolous as to warrant the imposition of reasonable counsel fees as a sanction. However, the court was hesitant to award those fees in the absence of a request from the employer, even though doing so on its own was clearly authorized under the appellate rules.

Employers paid attention to the 1987 decision and began running with the issue. However, the Commonwealth Court was not eager to follow them. The court’s initial decisions did not expand this remedy for the employer. In 1990, the court took a step back in the case of Callahan v. WCAB (Bethlehem Steel Corp.), 571 A.2d 1108 (Pa.Commw.Ct. 1990). In Callahan, the court denied the employer’s request for attorney’s fees, characterizing its own decision in Patel as an extremely narrow one and limited to the particular facts of that case. After all, the court reasoned, only one frivolous review petition was pending in Callahan.

By 1996, however, the court was not feeling as constrained. In the case of Marvin Phillips v. WCAB (Century Steel), 680 A.2d 45 (Pa.Commw.Ct. 1996), the court awarded attorney’s fees against the claimant’s attorney. The employer’s request for attorney’s fees was specifically made against the attorney, recognizing that claimants still wore the cloak of protection, known as Section 440 of the Act. Unfortunately, in 1999, a divided Supreme Court of Pennsylvania overturned the Commonwealth Court’s decision on appeal. Phillips v. WCAB (Century Steel), 721 A.2d 1091 (Pa. 1999). In doing so, the Supreme Court pointed out that, under Section 440 of the Act, attorney’s fees for unreasonable contest were the sole purview of the claimant, not the employer or insurance carrier. Apparently, the claimant’s cloak had not yet worn thin. The dissent pointed out that, while claimants could file baseless petitions at the trial level, the protections of the Workers’ Compensation Act did not extend to or supersede the appellate rules which allow the appellate courts to impose sanctions, even upon the cases arising from workers’ compensation injuries. The dissent pointed out that the appellate rules allow the appellate courts to impose sanctions as a means to control and supervise their dockets. In 2015, the Commonwealth Court felt it was necessary to do exactly that.

In the case of Steven Smith v. WCAB (Consolidated Freightways, Inc.), supra, the claimant was allegedly injured in 1996. His claim petition was denied and dismissed by the Workers’ Compensation Judge, who found no injury and no disability. For the next 19 years, the claimant, with the help of counsel, attempted to re-litigate that original decision through approximately 17 petitions and appeals. His most recent attempt may be the last. The court characterized the claimant’s and his attorney’s conduct in bringing their appeal as “obdurate and vexatious.” The court, on its own motion, awarded the employer the costs and counsel fees necessary to defend the appeal against both the claimant and his attorney. The court felt it was necessary to curb the sort of flagrant abuse of the system in which Smith and his counsel engaged. In doing so, the court noted the “public funds” extensively expended due to the claimant’s repeated attempts to re-litigate a case decided many years ago. The court even acknowledged the employer’s financial burden, characterizing Smith’s actions as unfair and unduly burdensome to the employer, who has been forced to defend the unreasonable petitions.

It remains to be seen if the Pennsylvania Supreme Court will hear an appeal from this decision. If so, it will be interesting to see if they are still willing to allow the claimant to wear the cloak of protection that is Section 440 of the Act. Similarly, will they limit this protection to clogging up the trial level with frivolous petitions, as opposed to clogging up the courts at the appellate level? Perhaps the Commonwealth Court’s suggestion that “public funds” are effected, in addition to the private burden of the employer, will be enough to carry the argument in the Supreme Court. No one knows for sure, but certainly, after 19 years and 17 petitions, it may be time for a new cloak.

*Rob, a shareholder in our Philadelphia, Pennsylvania office, can be reached at 215.575.2645 or rpschenk@mdwcg.com.

 

Defense Digest, Vol. 21, No. 2, June 2015

Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2015 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.

Affiliated Attorney

Robert P. Schenk
Shareholder
(215) 575-2645
rpschenk@mdwcg.com

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