PA Commonwealth Court Reverses ALJ's Decision Awarding Unreasonable Contest Fees

In a decision that discusses the complex give and take between an injured Pennsylvania employee and an employer who contends that the employee no longer is entitled to a payment of benefits, the Commonwealth Court held that a workers’ compensation judge erred by awarding unreasonable contest fees where the claimant sought a reinstatement of benefits, but had never actually proved that he suffered any disability prior to the filing of his reinstatement petition, and where the WCJ ultimately determined that the claimant had not sustained any disability beyond a laceration over his eye [Communication Test Design v. Workers’ Comp. Appeal Bd. (Simpson), 2020 Pa. Commw. LEXIS 275 (Apr. 22, 2020)]. The Court stressed that the employer not only contested the reinstatement petition, it prevailed in proving that claimant did not suffer any disability. Its contest of the petition could, therefore, hardly be considered unreasonable.

Background

On December 5, 2016, Claimant allegedly sustained work injuries while working for the employer. On December 20, 2016, the employer issued a Medical Only Notice of Temporary Compensation Payable (NTCP), accepting liability for medical bills for the alleged work injury, described as an eye laceration. On January 4, 2017, the employer issued an amended NTCP, under which it began paying Claimant temporary disability benefits. On February 7, 2017, the employer issued a Notice Stopping Temporary Compensation Payable (NSTC), indicating that it ceased paying compensation as of January 19, 2017. Attached to the NSTC was a Notice of Compensation Denial (NCD), denying that Claimant sustained a work injury.

In February 2017, Claimant filed a Claim Petition, alleged he sustained work injuries in the nature of a concussion, post-concussion syndrome, right eye laceration, right shoulder sprain/strain and internal derangement of the right shoulder on December 5, 2016. Claimant sought TTD from the date of injury and ongoing, reimbursement for associated medical services, litigation costs, and unreasonable contest attorney’s fees. In April 2017, Claimant filed Reinstatement and Penalty Petitions, claiming that the employer violated the Pennsylvania Act. Specifically, Claimant asserted that the employer failed to issue an NSTC within five days after the last payment of temporary compensation. Claimant requested penalties at the rate of 50 percent on all past due compensation. Claimant also sought assessment of unreasonable contest attorney’s fees pursuant to Section 440 of the Act, 77 P.S. § 996.

WCJ’s Decision

Subsequently, the WCJ denied Claimant’s Claim Petition, but the WCJ granted Claimant’s Reinstatement Petition, finding that Claimant was entitled to reinstatement based on the conversion of the amended NTCP to a Notice of Compensation Payable (NCP) by operation of law, because the employer failed to timely file an NSTC and NCD. The WCJ also awarded a 10 percent penalty because Employer violated the Act by failing to timely file the NSTC and NCD and in unilaterally ceasing payment. The WCJ further determined that the employer’s contest as to the Reinstatement Petition was unreasonable and awarded $8,140.00 in unreasonable contest fees. Finally, the WCJ held that Claimant failed to establish any injury other than an eye laceration and terminated Claimant’s WC benefits as of the date of decision. The Board approved in relevant part.

Commonwealth Court Reverses

The Court noted that in most instances in which a claimant sought reinstatement of suspended benefits, he or she need not “re-prove” that the disability resulted from a work-related injury. Here, however, Claimant had never established disability prior to the filing of the Reinstatement Petition. It was, therefore, Claimant’s burden to establish his entitlement to a reinstatement of benefits.

Further, indicated the Court, although the employer’s NSTC stated that payment of compensation was being stopped as of 1-19-2017, there was no actual testimony as to what period that payment covered, nor was the last date of payment actually identified in the record. Thus, there was no evidence upon which the WCJ could base the determination that the NTSC was not filed within five days of the last payment. Because substantial evidence did not support the WCJ’s conclusion that the employer violated the Act by failing to file the NSTC within five days of the last payment, the WCJ erred by granting the Penalty Petition.

Next, and more importantly, said the Court, Section 406.1 of the Act did not sanction conversion of an NTCP to an NCP for failure to file an NSTC within five days of stopping payment. Because the NSTC was filed within 90 days of the NTCP [see Section 406.1(d)(6) of the Act], the NTCP could not convert to an NCP by operation of law. Thus, the WCJ and the Board erred by concluding otherwise.

Burden on Claimant

The Court stressed that Claimant did not present any evidence that the employer violated the Act. Thus, the burden never shifted to the employer to prove it did not violate the Act. Further, because Claimant never established a disability prior to the filing of the Reinstatement Petition, he had the burden to establish his entitlement to a reinstatement of benefits.

According to the Court, the employer not only contested the Reinstatement Petition, it prevailed in proving that Claimant did not suffer a disability. Accordingly, the WCJ erred by awarding unreasonable contest fees.