On December 22, 2021, the Pennsylvania Supreme Court issued a decision in Lorino v. WCAB (Commonwealth of Pennsylvania), 266 A.3d 487 (Pa. 2021), which generally held that attorney’s fees shall be awarded when an injured worker “prevails” in litigation. We are now approximately six months into the “P.L. era” (post-Lorino era) so let’s look at how we got here, where we are now, and some possible issues still to be decided.
For a brief background of the Lorino decision, the claimant sustained a work injury; the employer accepted the same. The claimant was appropriately treated and returned to work without any loss of wages. Meanwhile, an IME doctor had found the claimant fully recovered, a termination petition was filed, and Mr. Lorino retained an attorney. The matter was fully litigated, and the workers’ compensation judge denied the termination petition. Further, because Mr. Lorino was not receiving wage loss benefits, his counsel requested fees pursuant to Section 440 of the Workers’ Compensation Act, which the WCJ awarded, albeit at a lesser rate than what counsel had requested. The decision was appealed by both parties to the WCAB, who reversed the attorney’s fees award. Unsurprisingly, an appeal was made to the Commonwealth Court, which in an unpublished opinion found counsel was not entitled to attorney’s fees because the employer had a reasonable basis for pursuing the termination petition.
The claimant appealed to the Pennsylvania Supreme Court and was asked to interpret Section 440(a) of the Act, which states as follows:
In any contested case where the insurer has contested liability in whole or in part, including contested cases involving petitions to termination, reinstate, increase, reduce or otherwise modify compensation…., the employe[e] or his dependent, as the case may be, 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[s]….Provided, [t]hat costs for attorney fees may be excluded when a reasonable basis for the contest has been established by the employer or the insurer.
The Supreme Court agreed with Mr. Lorino that the “shall” language in Section 440(a) makes it the rule that when a claimant prevails in a contested claim that the award of attorney’s fees is mandatory. However, in matters where an employer has proven they have engaged in a reasonable contest, a workers’ compensation judge will have the discretion to exclude an award for attorney’s fees.
Initially, this decision “rocked” the workers’ compensation world, leading to hundreds of posts from law firms across the Commonwealth, blog entries, and detailed analyses on various legal websites. The majority of the entries analyzing Lorino concluded the decision was “troublesome” and “unfortunate.”
In reality, six months post-Lorino, its impact has been relatively small, and its implementation has been fairly rare. Where we have seen the “Lorino Fee” requests have been in cases where: 1) the injured worker is not receiving wage loss benefits, or 2) the indemnity portion of the injured worker’s claim has already been resolved. Generally speaking, when wage loss benefits are not part of a claim, the subsequent litigation of a petition is moderately rare. This aligns with what we have been hearing from our clients, judges, and other attorneys around the state: for now, they are not being inundated with “Lorino Fee” requests.
Timing needs to be considered when resolving the indemnity/wage loss portions of claims. One scenario is when the parties resolve the wage loss portion of a claim in the middle of litigation but continue to pursue the other petitions. If the injured “prevails” on the other petitions, is an award for attorney’s fees mandatory?
Another issue the courts will have to address is what it means to “prevail?” Assume an injured worker, working without any wage loss, files a review petition seeking to amend the description of the injury. In the course of litigating the review petition, the employer files a termination petition. After fully litigating the matter, the judge determines that the injured worker did not sustain their burden of proof on the review petition and that the employer did not sustain their burden of proof on the termination petition. Would the injured worker be deemed to have “prevailed,” or would they not have prevailed because they filed their petition first? Now flip the actions of the parties, and the employer files the termination petition first, followed by the claimant filing the review petition. If a judge denies the termination and the review petition, did the claimant prevail? Does the timing matter?
Further, when handling a workers’ compensation claim, if one of the two criteria listed above is satisfied, then you must account for this type of an award being issued when setting your budget and reserves. While attorneys’ rates vary across the state, our experience in handling these claims allows us to properly assess and account for any additional exposure that may come from these decisions.