The Full Board, at its meeting held on April 17, 2012, considered the above captioned case for Mandatory Full Board Review of the Board Panel Memorandum of Decision (MOD) filed on August 3, 2011.
The issues presented for Mandatory Full Board Review are:
In a notice of decision (NOD) filed on April 5, 2011, the Workers' Compensation Law Judge (WCLJ) found that a balance of $850.00 of the previously awarded $1,000.00 attorney's fee was due, and should be paid in a manner to be determined by the Board if the claimant received future awards, and marked the case for no further action.
The Board Panel majority found that the SIE reasonably paid the claimant's attorney's fee in increments out of ongoing awards because no retroactive monies were due after the modification of awards in the December 6, 2010, MOD. The Board Panel declined to impose a penalty on the SIE, but modified the WCLJ's decision to find that the amount owed to the claimant's attorney would be a lien against future awards.
The dissenting Board Panel member found that the SIE failed to pay the claimant's attorney's fee within ten days of the filing of the December 6, 2010, MOD, and therefore should be subject to a penalty of $200 payable to the claimant, and a $50 assessment payable to the State treasury, pursuant to WCL § 25(3)(f). The dissenting Board Panel member also found that the SIE should be directed to make full payment of the balance of the attorney's fee immediately, and take a credit for the fee against future awards.
In his application for Mandatory Full Board Review, claimant's attorney argues that the SIE failed to comply with the December 6, 2010, MOD, because "[h]istorically, the Board['s] order to pay a sum of money required it be paid within one lump sum within 10 days." The claimant's attorney further argues that the majority's finding encourages disobedience of Board decisions.
In rebuttal, the SIE argues that the majority opinion should be affirmed.
Upon review, the Full Board votes to adopt the following findings and conclusions.
The claimant suffered work-related injuries to his low back and left leg on June 30, 2009. The SIE commenced temporary payments without prejudice.
The claim was established, and the claimant's average weekly wage was set at $654.35 without prejudice pursuant to a NOD filed January 14, 2010. The claimant was awarded benefits from July 1, 2009, to July 16, 2009, at the rate of $218.12 per week; from July 16, 2009, to August 22, 2009, and from August 27, 2009, to November 24, 2009, at the rate of $436.23 per week; and from November 24, 2009, to January 12, 2010, at the tentative rate of $163.58 per week, and the SIE was directed to continue payments at the tentative rate of $163.58. The claimant's attorney was awarded a fee of $400.00. The case was continued for the testimony of the claimant's medical providers regarding the claimant's degree of disability.
Depositions were subsequently taken of four health care providers and memoranda of law submitted by both parties on the issues of degree of disability and awards from November 24, 2009, forward.
In a reserved decision filed May 17, 2010, the WCLJ found that the claimant did not voluntarily withdraw from the labor market, resolved Form C-8.1 issues, made awards for the period from November 24, 2009, to May 13, 2009, at the temporary total disability rate of $436.23, and directed the SIE to continue payments at the total rate. The WCLJ awarded the claimant's attorney a fee of $2,000.00, which constituted a lien upon the claimant's awards, and directed the SIE to pay the fee by separate check.
The SIE requested administrative review and in an MOD filed December 6, 2010, the Board Panel modified the WCLJ's May 17, 2010, reserved decision to reduce the claimant's award for the period from November 24, 2009, to May 13, 2010, to the rate of $163.58 per week, directed continuing payments at $163.58 per week, reduced the attorney's fee to $1,000.00, and returned the matter to the WCLJ for further evidence regarding whether the claimant demonstrated attachment to the labor market. The SIE filed a Form C-8/8.6 on December 6, 2010, indicating that no balance was due to the claimant.
The WCLJ, in an NOD filed January 13, 2011, found that the claimant had voluntarily withdrawn from the labor market, awarded benefits at the rate of $163.58 from May 13, 2009, to January 11, 2011, and suspended benefits thereafter.
On January 22, 2011, the claimant's attorney sent an electronic mail message to the Board, requesting a hearing to assess a penalty against the SIE pursuant to WCL § 25(3)(f) and WCL § 114-a(3), because the SIE did not pay the $1,000 attorney's fee directed in the MOD filed December 6, 2010, in a lump sum, but instead paid the fee to claimant's attorney in weekly increments of $50.
At a hearing on March 31, 2011, the WCLJ noted that the SIE continued payments to the claimant at the rate of $163.58 per week during the pendency of its request for review from the May 17, 2010, reserved decision, and no retroactive payments were due to the claimant as a result of the December 6, 2010, MOD. The SIE thereafter began deducting $25.00 per week for the claimant's attorney's fee from the claimant's wage benefits, until the WCLJ suspended payments as of July 11, 2011. The claimant's attorney received a total of $150.00. The WCLJ found that the balance of the fee due to the claimant's attorney should be paid in a manner to be determined by the Board if the claimant received future awards and declined to assess a penalty. The claimant's attorney took exception to the WCLJ's denial of his request to penalize the SIE.
Timeliness of Payment and Imposition of Penalties
WCL § 24 provides that "[c]laims of attorneys … for legal services in connection with any claim arising under this chapter, shall not be enforceable until approved by the board [and] [i]f so approved, such claim…shall become a lien upon the compensation awarded…"
"Workers' Compensation Law 2 (6) defines 'compensation' as money allowances 'payable to an employee' (emphasis added) not monies to be paid to an employee. The Legislature in choosing the word 'payable' rather than 'paid' must have intended for the term 'compensation' to have a broader meaning than merely monies received by or paid to an employee. Courts accordingly have generally construed 'compensation' broadly to encompass more than payments directly to employees, including benefits paid to others due to liens, without changing the nature of the award as 'compensation'" (Matter of Keser v New York State Elmira Psychiatric Ctr., 92 NY2d 100  [citations omitted]).
An attorney fee, as one of the "benefits paid to others due to liens," is included among the forms of claimant compensation. Thus, untimely payment of an attorney fee by an employer or its insurance carrier is subject to the penalty provisions of WCL § 25. If an attorney fee is not paid "according to the terms of the award within ten days … there shall be imposed a penalty equal to [20%] of the unpaid compensation which shall be paid to the injured worker" (WCL § 25[f]). If the Board has directed that the attorney fee be paid in installments and the employer or carrier fails "to pay any installments of compensation within twenty-five days after the same become due, there shall be paid … an additional amount of twenty percent of the compensation then due which shall accrue to the benefit of the injured worker" (WCL § 23[e]).
In the present case, the May 17, 2010, reserved decision, in which the WCLJ awarded the claimant's counsel a fee of $2,000.00, increased the rate of compensation benefits for a period previously awarded in the January 14, 2010, NOD, but this modification was rescinded by the December 6, 2010, MOD. Because the SIE had already paid claimant the awards directed in the December 6, 2010, MOD, no additional payments were immediately due as a result of that decision, other than continuing benefits at the rate of $163.58 per week. In such instances, the Board usually directs that the carrier withhold a portion of the claimant's continuing wage benefits to pay the attorney's fee.
However, the December 6, 2010, MOD, which reduced the attorney's fee to $1,000, failed to direct when the fee must be paid. If the SIE had, as the claimant's attorney argues it should have, paid his fee in a lump sum and taken credit against the claimant's future benefits, the claimant would not have received any compensation benefits for a period of approximately six weeks. The Board generally orders attorneys' fees to be paid in increments to avoid this very situation. Thus, the SIE acted reasonably in paying the claimant's attorney's fees in increments out of the claimant's ongoing benefits, rather than in a lump sum. Accordingly, imposition of a penalty would not be appropriate.
Therefore, the Full Board finds that the SIE should not be subject to a penalty for failing to pay the claimant's attorney's fee in a lump sum.
Amount of Attorney's Fee
Pursuant to WCL § 24, all attorney fee requests must be approved by the Board. Before approving a fee request, the Board must consider the extent of the services rendered and the financial status of the claimant. Factors relevant in determining the value of the legal services rendered include "the nature and extent of the services, the actual time spent, the necessity therefore, the nature of the issues involved, the professional standing of counsel, and the results achieved" (Jordan v Freeman, 40 AD2d 656 ). In addition, the fee must not be based solely upon the amount of compensation awarded (see 12 NYCRR 300.17[f]). If the Board determines that the attorney's efforts did not in any way benefit the claimant in the claim for compensation benefits, it may refuse to approve a fee request (see Matter of Lopez v City of New York, 42 AD2d 654 ). The representation in and of itself is not a benefit unless the claimant receives or will receive some economic benefit from the services (Matter of Marshall v Savannah Sausage Corp., 192 AD2d 954 , lv denied, 82 NY2d 655 ).
In the present case, the awards granted in the January 14, 2010, NOD, which provided for the $2,000.00 attorney's fee, were rescinded. Therefore, the attorney's fee of $1,000.00 is not justified and should be reduced to $100.00, which compensates claimant's attorney for the work performed which led to the WCLJ's reserved decision filed May 17, 2010, and the MOD filed December 6, 2010, which ultimately resulted in benefits being awarded to the claimant from November 24, 2009, to May 13, 2010, and continuing at the rate of $163.58 per week. Insofar as claimant's attorney has already received a fee of $150 based on that work, the attorney is herby directed to reimburse the claimant the $50.
Accordingly, the WCLJ decision filed on April 5, 2011, is AMENDED to reduce the attorney's fee to $100.00, and the claimant's attorney is directed to reimburse the claimant the $50.00 overpayment received from the SIE.