Back to News

Court Expands Fee Shifting in Workers’ Comp Cases

Published on

January 10, 2022

In a decision that upends a longstanding consensus within the workers’ compensation bar, the Pennsylvania Supreme Court has ruled that workers’ compensation judges have discretion to award attorneys’ fees to successful claimants in all cases. Previously, judges had generally awarded attorneys’ fees only when employers lacked a reasonable basis to contest the litigation.

Attorneys’ fee awards are governed by Section 440 of the Pennsylvania Workers’ Compensation Act, which provides:

“In any contested case where the insurer has contested liability in whole or in part, including contested cases involving petitions to terminate . . . the employer . . . in whose favor the matter at issue has been finally determined in whole or in part shall be awarded, in addition to the award for compensation, a reasonable sum for costs incurred for attorney’s fee, witnesses, necessary medical examination, and the value of unreimbursed lost time to attend the proceedings: Provided, That cost for attorney fees may be excluded when a reasonable basis for the contest has been established by the employer or the insurer.”

Essentially, the workers’ compensation act is a fee-shifting statute, but employers can avoid paying a claimant’s attorneys’ fees if they present evidence sufficient to support an employer-favored outcome. Courts have historically interpreted this language to mean that, if an employer establishes a reasonable contest to a petition, there will be no attorneys’ fee award. The state’s highest court has now changed that interpretation, relying on the word “may” in the last clause to give judges discretion to grant attorneys’ fees in any given case.

In Lorino v. Workers’ Compensation Appeal Board (Commonwealth of Pennsylvania), an employer filed a petition seeking to terminate benefits for an eight-month-old back and hip injury. The injured worker had returned to work, so now wage loss was being paid, but the employer and carrier desired to stop paying for medical treatment and close the file.

The employer supported the petition with a full recovery opinion from a physician which, if believed, would have been sufficient to grant the petition.

The workers’ compensation judge denied the termination petition, finding the claimant’s medical evidence more credible and persuasive than the employer’s evidence. The judge found that the employer established a reasonable contest but nonetheless ordered reimbursement of the claimant’s attorneys’ fees. On appeal, the Pennsylvania Commonwealth Court reversed, but the Pennsylvania Supreme Court reinstated the attorneys’ fee award, holding that judges always have discretion to issue attorneys’ fee awards if doing so supports the remedial purposes of the Pennsylvania Workers’ Compensation Act.

In light of this significant decision, employers and carriers should be prepared to see attorneys’ fee awards more often and should take that cost into consideration when assessing exposure risk. We are also likely to see additional litigation as the courts begin to figure out the limits of a judge’s discretion to issue attorney’s fees.

If you have any questions about the Lorino case or how it could affect your business, please reach out to meLindsey Cook or Michael C. Crocenzi.


Related News

View More News
News Alert
January 20, 2023

Court Restores More Union-Friendly Election Rules

In a decision issued earlier this week, the District of Columbia Circuit Co...

Learn More
News Alert
January 10, 2023

Attention Employers: Upcoming H-1B Registration Period

It’s that time of year again! Time to start preparing for the fiscal year...

Learn More
News Alert
January 9, 2023

The Federal Government Passes Two New Statutory Acts Further Protecting Pregnant and Nursing Mothers

Snuck into the federal government’s $1.7 billion government funding bill ...

Learn More

Other Upcoming Events

View All Upcoming Events
Mar
07
7:30 am
-
11:00 am
event
Location

2023 Transportation, Logistics & Trade Seminar

Learn More
Mar
23
12:00 pm
-
6:00 pm
event
Location

LendiCon 2023

Learn More
May
12
event
Location

40th Annual Employment Law Seminar

Learn More

Get in Touch

Our attorneys, paralegals and staff look forward to hearing from you. Please reach out to let us know how we can help.

Get In Touch
RECOGNIZED IN
Super Lawyers
Best Law Firms US News
Best Lawyers