Opinion
Argued March 11, 1986
May 8, 1986.
Workmen's compensation — Counsel fees — Failure to raise issue — The Pennsylvania Workmen's Compensation Act, Act of June 2, 1915, P.L. 736 — Remand.
1. The Pennsylvania Workmen's Compensation Act, Act of June 2, 1915, P.L. 736, permits claimant to request payment of attorney fees by the employer when there was no reasonable basis for the contest wherein claimant prevailed, but counsel fees cannot be assessed by a referee sua sponte when not requested by the claimant. [144-5]
2. When the Workmen's Compensation Appeal Board reverses an award of counsel fees against an employer and orders the claimant to pay his counsel fees, remand is proper to permit the referee to fix the amount of fees to be paid. [145]
Argued March 11, 1986, before Judges MacPHAIL, DOYLE and BARRY, sitting as a panel of three.
Appeal, No. 2996 C.D. 1983, from the Order of the Workmen's Compensation Appeal Board, in case of Joseph W. Daugherty v. Jones Laughlin Steel Corp., No. A-83842.
Petition with the Department of Labor and Industry for reinstatement of workmen's compensation benefits. Benefits awarded with counsel fees. Employer appealed to the Workmen's Compensation Appeal Board. Case remanded. Award affirmed. Counsel fees to be paid by claimant. Claimant appealed to the Commonwealth Court of Pennsylvania. Held: Affirmed.
Amiel B. Caramanna, Jr., with him, Alexander J. Pentecost, for petitioner.
Michael D. Sherman, with him, Leonard Kane and Roy F. Walters, Jr., Fried, Kane, Walters Zuschlag, for respondent, Jones and Laughlin Steel Corporation.
Joseph W. Daugherty (Claimant) appeals an order of the Workmen's Compensation Appeal Board (Board) which affirmed a referee's decision ordering him to pay his attorney fees. We affirm.
Claimant was employed by Jones Laughlin Steel Corporation (Employer). On August 3, 1976, Claimant suffered an injury to his back for which he received total disability payments pursuant to a notice of compensation payable. Claimant returned to work on January 3, 1977 and was then paid partial disability payments until August 1, 1977. Claimant's back condition became progressively more severe; consequently, on September 1, 1977, Claimant was forced to terminate his work. Shortly thereafter, Claimant filed a review petition alleging that he was totally disabled as a result of his injury of August 3, 1976.
Hearings were held before a referee who ruled that Claimant had become totally disabled as of September 1, 1977 and was entitled to a reinstatement of benefits. The referee also concluded that Employer's contest had been without merit and sua sponte ordered Employer to pay Claimant's attorney fees. Employer appealed to the Board raising only the issue of the award of counsel fees. The Board held that the referee erred in awarding counsel fees sua sponte and remanded the case to the referee for further findings as to the amount Claimant should pay his attorney. The referee issued a second decision omitting his original finding of fact that there was no reasonable basis for contesting liability and ordering Claimant to pay his own counsel fees in an amount of 20% of the award, a figure agreed upon by Claimant and his attorney. The Board affirmed the referee's decision and the instant appeal followed.
In his discussion of the history of the case, however, the referee, in referring to his previous decision, said "it would have been a travesty of justice" to direct payment of counsel fees by the Claimant.
Section 440 of The Pennsylvania Workmen's Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P. S. § 996, added by Section 3 of the Act of February 8, 1972, P.L. 25 provides:
In any contested case where the insurer has contested liability in whole or in part, the employe . . . in whose favor the matter at issue has been finally determined shall be awarded, in addition to the award for compensation, a reasonable sum for costs incurred for attorney's fee . . .: Provided, That cost for attorney fees may be excluded when a reasonable basis for the contest has been established. . . .
This Court has held that where a claimant has failed to request counsel fees, the referee is precluded from assessing such fees sua sponte. Cooper-Jarrett, Inc. v. Workmen's Compensation Appeal Board, 61 Pa. Commw. 12, 432 A.2d 1128 (1981). Because we believe that Cooper-Jarrett is based on sound principles of law, we decline to reconsider our decision in that case as urged by the Claimant. Where the issue of counsel fees is not raised before the referee, the Employer or its insured has no opportunity to present a defense by way of legal argument or countervailing evidence.
Claimant's other argument that the Board erred when it remanded the case to the referee to have him fix the amount of counsel fees to be paid, likewise must be rejected inasmuch as the referee initially failed to make a finding on that matter. The Board, of course, is authorized by Section 419 of the Act, 77 P. S. § 852, to remand any case involving any question of fact arising under any appeal to a referee. Here, the referee originally ordered the payment of counsel fees in the amount of 20% of compensation awarded without any evidence in the record to support that figure or any other figure. The remand was not only proper but necessary.
ORDER
The Workmen's Compensation Appeal Order No. A-83842, dated October 6, 1983, is affirmed.