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Employer can’t claw back mistaken payment to attorney: Court

Employer can’t claw back mistaken payment to attorney: Court

The Pennsylvania Supreme Court has ruled that an employer cannot recover attorneys fees erroneously paid to an injured worker’s lawyer.

Section 440 of the Pennsylvania Workers’ Compensation Act provides that an employee in a workers compensation case is entitled to attorneys fees when an insurer unreasonably contests its liability under the statute, according to the ruling released Thursday in County of Allegheny v. Workers’ Compensation Appeal Board.

The employer, Allegheny County, was ordered to pay $14,750 in attorneys fees under Section 440 after the Workers’ Compensation Appeal Board determined that the county unreasonably contested its liability. The county sought to stop enforcement of the order, which was denied, so the county paid the awarded fee to the employee’s counsel.

However, the Commonwealth Court reversed, concluding that the county not only had a reasonable basis for its contest, but a prevailing one, and that the employee was no longer entitled to workers compensation benefits. After that, the county filed a separate petition before a workers compensation judge in which it sought reimbursement of the erroneously awarded attorneys fees from the employee’s counsel, according to the ruling.

But the state Supreme Court found that the General Assembly, in enacting the Workers’ Compensation Act, did not provide any mechanism by which employers can recoup erroneously awarded counsel fees once paid. Rather, the General Assembly contemplated that when a merits appeal is undertaken, a court may suspend an order awarding attorneys fees, according to the ruling. Because such an order was requested and denied in this case, requiring the appellee to pay the awarded attorneys fees, and there is no statutory provision authorizing reimbursement if the award is reversed, the Supreme Court held that the county may not recoup the already paid attorneys fees from the employee’s counsel. The Supreme Court vacated the Commonwealth Court’s order and reinstated the order of the Workers’ Compensation Appeal Board, which affirmed the denial of the county’s reimbursement petition.

“Indeed, the absence of a statutory provision expressly providing for reimbursement of attorney’s fees is consistent with the General Assembly’s overall policy goals in enacting this statutory scheme,” the court said in its ruling.

“It is not the function of this court to add missing language to a statute in order to provide relief, particularly when doing so would undermine that statute’s goals of protecting workers and discouraging employers from unreasonably contesting their liability,” the court continued. “Consequently, we decline to engraft on to the act a means for reimbursement of previously paid counsel fees, where the General Assembly did not see fit to so provide.”

“The Supreme Court got it right,” said David Landay, a Pittsburgh-based attorney who represented the injured worker, Harold Parker. “This was a unanimous decision, which is unusual for this court, and the decision was rendered within three months of oral argument, which is really fast. They clearly knew the Commonwealth Court made an error. All the court was doing was returning us to status quo because the law has always been and should always be that lawyers do not have to return their unreasonable contest fees. If we had to give back those fees, there would be a chilling effect.”

The attorney for the county could not be immediately reached for comment. 




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