Pennsylvania Supreme Court Changes Workers’ Compensation Law Regarding Claimants’ Entitlement to Attorneys’ Fees Under Section 440 Of The Act- Lorino Case
On December 22, 2021, the Supreme Court of Pennsylvania, in Lorino vs. WCAB, reversed the Commonwealth Court and held that in cases where claimant is victorious, a Work Comp Judge may, at his or her discretion, award attorneys’ fees to be paid by the work comp carrier. Prior to this case, fees would be awarded only where a reasonable contest wasn’t provided by the employer/insurer. (a reasonable contest would be a case where there is conflicting medical evidence by the two medical experts- one says a claimant is fully recovered and the other says they aren’t)
Why does this matter? In cases where wage loss is being paid, it’s easy for an injured worker to obtain counsel as the attorney has a clear way to get paid with victory- 20% of the wage loss benefits in most cases. But when an injured worker has a “medical only” case whereby no wage loss is being paid, it’s much more difficult for the worker to get counsel as the attorney would have to charge an hourly rate and many injured workers are struggling and cannot afford that- or the attorney had to have hoped for an award of attorney’s fees which Work Comp Judges don’t often award. This case will make it easier for injured workers to get counsel and level the playing field. However, the ruling isn’t just applicable to “medical only” cases. In this case- Lorino– it was a medical only claim.
The Court began its analysis, noting that due to the matter involving statutory interpretation, the standard of review was de novo, and the scope of review was plenary. Of course, the Court looked at the plain language of the relevant part of the Act at issue:
Section 440(a) provides:
In any contested case where the insurer has contested liability in whole or in part, including contested cases involving petitions to terminate . . ., the employe . . . 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. (emphasis added)
The Court went on to reason:
“The term “shall” establishes a mandatory duty, whereas the term “may” connotates an act that is permissive, but not mandated or required. Indeed, in Ramich, we specifically addressed the term “shall” in the context of Section 440(a) when we considered whether a claimant must request attorney’s fees on the record in order to receive such an award. In holding there was no such requirement, we observed: “[t]he language of Section 440(a) is plain and unambiguous. The legislature used ‘shall’ to describe the duty of the WCJ in awarding fees for an unreasonable contest and it is clear that this provision is a mandatory directive.” 770 A.2d at 322.
As the WCJ determined that the employer’s contest was unreasonable in Ramich, we did not address the last sentence of Section 440(a) at issue herein.
Furthermore, we have explained that, when the legislature uses the terms “shall” and “may” in the same section of a statute, it is a clear indication that the legislature intends certain actions to be mandatory, and others discretionary. For example, our decision in Zimmerman is illustrative in that regard. Therein, despite the Attorney General’s determination that certain proposed agency regulations were without statutory authority, the agency published the regulations in the Pennsylvania Bulletin, rendering them immediately effective. The Attorney General sought to stay promulgation of the regulations pursuant to Section 204(b) of the Commonwealth Attorneys Act, 71 P.S. § 732-101 et seq. The Commonwealth Court denied the application for stay, and the Attorney General appealed.”
Based on the established meaning of the terms “shall” and “may,” under Section 440, when a contested case is resolved in favor of an employee, the Court found that a reasonable sum for attorney’s fees shall be awarded to the claimant. And, that such an award is mandatory. However, where the employer has established a reasonable basis for the contest, an award of attorney’s fees may be excluded. In other words, the WCJ is permitted, but not required, to exclude an award of attorney’s fees.
This is a groundbreaking and outstanding case for injured workers. There is little doubt, however, that this issue will be litigated for years to come, as the Court did not give guidance on the “discretion” given to Work Comp Judges, leaving room for litigants to argue for more parameters and guidance on the topic.
Here is a link to the Lorino vs WCAB Opinion
If you have any questions about this case, call us (215) 206-9068