Workers' Compensation

Key Points:

• A 20% Fee Agreement applicable to all workers’ compensation benefits, indemnity and medical, is per se reasonable and enforceable, regardless of whether the medical expenses have been incurred or will be incurred in the future. 
• A health care provider is prohibited from billing an injured worker to recoup the 20% fee on medical bills paid to claimant’s counsel. 
• Pennsylvania jurisprudence is silent on whether a health care provider may file a fee review against the employer or insurer, seeking to recoup the 20% fee reduction on its medical bills.

In Patrice Williams v. City of Philadelphia (WCAB), 312 A.3d 976 (Pa. Cmwlth. 2024), the Pennsylvania Commonwealth Court further expanded opportunities for claimants’ attorneys to obtain fees in workers’ compensation matters. Expanding upon its jurisprudence permitting attorney’s fees as a percentage of past due medical benefits in Neves v. WCAB (American Airlines), 232 A.3d 996 (Pa. Cmlwth. 2020) (en banc), the court’s latest decision also permits attorney’s fees as a percentage of future medical benefits.

The claimant, Patrice Williams, sustained a work injury on March 4, 2021, within the course of her employment as a correctional officer. She entered into a 20% fee agreement with her counsel, permitting a 20% fee to be taken from all workers’ compensation benefits paid to her—indemnity and medical. The workers’ compensation judge approved the fee agreement pursuant to wage loss, but denied it with respect to the medical benefits. The Workers’ Compensation Appeal Board affirmed the workers’ compensation judge’s decision, noting that, because the claimant’s future medical bills are unknown and speculative, she did not have sufficient understanding of the actual amount she could potentially be required to reimburse to her medical providers. As such, they could not affirm an attorney’s fee request that included 20% of future, unknown medical expenses. The claimant appealed the Board’s decision to the Commonwealth Court.

The Commonwealth Court reversed and remanded the Board’s decision with instructions to approve the entirety of the fee agreement, including the fee on prospective medicals. The court noted that its decision in Neves and its rule regarding fee agreements on medical benefits is broad and not limited to only those medical expenses that have been actually incurred or billed. The court emphasized that very few claimants (if any) would be able to have a complete understanding of their future medical treatment at the time they retain counsel and that to restrict the fee agreement to merely indemnity because of this is untenable. Furthermore, the court emphasized that Ms. Williams, similar to the claimant in Neves, testified as to her understanding of the fee agreement and its potential risks.

However, the court minimized the potential risks claimants could face by entering into a medical fee agreement and dismissed concerns that Ms. Williams would be responsible for payment to providers for the 20% taken by counsel. The court cited to Section 306(f.1)(7) of the Pennsylvania Workers’ Compensation Act, which prohibits “balance billing,” or health care providers billing a claimant for any costs related to care provided under the Act and any difference between the provider’s charge and the amount paid. 

Notably, in less explicit language than the court used to discuss the claimant’s rights pertaining to “balance billing,” the court appeared to imply that, while a provider can file a fee review to seek an additional amount on the gross amount billed, a fee review is not an appropriate vehicle to seek the 20% difference paid to claimant’s counsel. However, given the court’s less than unequivocal language, this issue remains unresolved and a subject for courts to address in the future.

What is unequivocal is the court’s conclusion that “[a] 20% counsel fee agreement applicable to all workers’ compensation benefits received by a claimant is per se reasonable.”

The court’s decision has practical implications. If the claimant’s bar were to take advantage of this decision and revise its typical counsel fee agreements to include a fee on medical benefits, providers will face a 20% decrease in their reimbursement rate. If health care providers are then unable to recoup the 20% difference from the injured workers, or even employers and insurers (though that remains to be seen), this decision could result in increased fee review litigation as health care providers seek to make up for the 20% loss by increasing reimbursements on the gross amount billed. Furthermore, this decrease in providers’ reimbursement rates will not prove to serve the quality or quantity of care for injured workers.

This decision could also affect the procedural posture of workers’ compensation claims. It may no longer be in claimant’s counsel’s interest to settle a claim quickly or close to the onset of litigation if they have a financial interest in the medical billing associated with the claim. And while this case permits claimant’s counsel the opportunity to obtain a fee on indemnity only cases, it does not resolve the issue as to how the providers will recoup that fee. As such, employers and insurers, and their counsel, should prepare to face additional fee review litigation until the court specifically addresses a provider’s vehicle (if any) to recoup the payment, as well as increased medical bill costs should the court not permit recoupment. 

*Alana works in our Pittsburgh, Pennsylvania, office. 

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_{Defense Digest, Vol. 30, No. 2, June 2024, is prepared by Marshall Dennehey 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. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2024 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}