COURT OF APPEALS OF VIRGINIA

Present: Judges Elder, Humphreys and Kelsey Argued at Richmond, Virginia

DANIEL S. ROMAN OPINION BY v. Record No. 1690-05-2 JUDGE LARRY G. ELDER MARCH 28, 2006 ONDEO DEGREMONT, INC. AND AMERICAN AND FOREIG N INSURANCE COMPANY

FROM THE VIRGINIA WORKERS’ COMPENSATION COMMISSION Christopher C. Booberg for appellant. Lisa Frisina Clement (Tracey A lice Berry; Penn, Stuart & Eskridge, on brief), for appellees.

Daniel S. Roman (claimant) appeals a decision of the Workers’ Compensation Commission denying his request fo r a penalty award against O ndeo Degremont, Inc., and its insurer, American and Foreign Insurance Compa ny, (collectively employer) for the late payment of attorney’s fees. On appeal, he contends the Workers’ Compensati on Act’s provision requiring assessment of a penalty on late paid compensation --compensation not paid within a certain time period unless certain conditions are met--applie s to the late payment of attorney’s fees. 1 We hold that where the commission orders the attorney’s fee to be paid out of the claimant’s accrued compensation, the fee remains compensation within th e meaning of the penalty statute. Thus, we

1 Claimant contended before the deputy comm issioner that he was entitled to “a penalty assessment against the carrier for interest and atto rney’s fees not paid in a timely manner.” The deputy disagreed. Appellant failed to obtain a ruling from the commission on the issue of his entitlement to a penalty on late paid interest. Th us, he may not raise that issue on appeal to this Court. See Overhead Door Co. v. Lewis , 29 Va. App. 52, 62, 509 S.E.2d 535, 539-40 (1999).- 2 - reverse the decision of the commission denying th e request for imposition of a penalty under the

facts of this case and rema nd for further proceedings consistent with this opinion.

I.

BACKGROUND Claimant suffered an occupational diseas e for which the commission concluded he was entitled to temporary total disa bility benefits in the amount of $645 per week from August 6, 2001, and continuing. By opinion of July 23, 2003, the deputy entered an award for those

benefits and directed that atto rney’s fees of $12,000 be paid to claimant’s counsel from accrued compensation. Employer filed a request for revi ew, and the commission affirmed the award by opinion of May 4, 2004. Employer noted an appeal to this Court, which summarily affirmed the commission’s decision dated October 26, 2004. Th e carrier took no action to obtain additional review of the ruling, and by check dated N ovember 10, 2004, it paid claimant the accrued temporary total disability compensation due less the $12,000 the commission had ordered to be paid directly to claimant’s attorney as attorney’s fees. As of December 15, 2004, neither the attorney’s fees nor the interest on accrued compensation had been paid, and claimant aske d the commission to award a 20% penalty for their late payment. 2 The deputy denied the request, citi ng several recent commission decisions concluding that Code § 65.2-524’ s provisions regarding penaltie s for the late payment of compensation apply only to “actual disability be nefits due a claimant” and do not apply to the late payment of attorney’s fees or interest. He reasoned that “valid policy reasons . . . support providing a 20% penalty for late payments to an injured worker who depends upon such payments for week to week sustenance, but deny ing such a penalty to do ctors and lawyers with respect to the late payment of their charges.” Finally, he noted that “[ o]utside the realm of

2 The attorney’s fee payment was not made until after January 21, 2005.- 3 - injured workers, the law generally disfavors and disallows penalties, and provides other remedies such as interest and attorney’s fees,” but that claimant “ha[d] not sought any such alternative

remedies” here. Claimant filed a request for review by the commission, which affirmed the deputy’s decision by a vote of two to one. The majority noted the legal princi ple requiring the narrow construction of penalty provisions and the re asoning of the deputy, and it relied on a prior decision in which it concluded Code § 65.2-524 pr ovides for a penalty on unpaid compensation and that an attorney’s fee does not constitute compensation. Claimant noted his appeal to this Court.

II.

ANALYSIS Subject to certain tolling provisions, C ode § 65.2-524 provides in relevant part as

follows: If any payment is not paid with in two weeks after it becomes due, there shall be added to such unpaid compensation an amount equal to twenty percent thereof, unle ss the Commission finds that any required payment has been made as promptly as practicable and (i) there is good cause outside the control of the employer for the delay or (ii) in the case of a self-insured employer, the employer has issued the required payment to the employee as a part of the next regular payroll after the payment becomes due. (Emphasis added). Here, the commission awarded claimant the dis puted compensation benefits and directed that attorney’s fees of $12,000 be paid directly to claimant’s counsel from accrued temporary total disability compensation. See Va. Workers’ Comp. Comm’n Rule 9.2 (“When an award provides for an attorney fee, the employer shall pay the fee directly to the attorney unless there is alternative provision in the award.” ). It is undisputed that empl oyer paid to the claimant, in a timely fashion, his past due comp ensation less the $12,000 in attorney ’s fees that the commission- 4 - ordered withheld and paid direc tly to counsel. However, empl oyer did not pay the attorney’s fees within that same time frame. This appeal requires us to determine whether attorney’s fees ordered to be paid directly to counsel fr om accrued compensation are “payment[s]” of “compensation” within the meaning of Code § 65.2-524. 3 We hold that they are. The Workers’ Compensation Act is remedial in nature; its purpose is “the prompt payment of compensation to injured workers. The purpose of the pena lty provision of Code § [65.2-524] is to compel prompt payment . . . . [The statute’s] time limit is designed to discourage ‘slow and circuitous’ payment of be nefits due and to di scourage inaction or

inattention to a claim.” Weston v. B.J. Church Constr. Co. , 9 Va. App. 283, 286-87, 387 S.E.2d 96, 97-98 (1989). Although penalty statutes must be “‘strictly construed in favor of the party on whom the penalty is sought to be imposed,’” this requirement of “[n]arrow construction . . . does not empower a court to relieve a party from the operation of a statute, absent fraud or other legally compelling circumstances. Likewise, the mandate of strict construction does not

authorize courts to amend or modi fy clearly drafted statutes abse nt constitutional defect.” Id. at 286, 387 S.E.2d at 97 (quoting Audobon Tree Serv. v. Childress , 2 Va. App. 35, 41, 341 S.E.2d 211, 215 (1986)). We hold that the terms “payment” and “compensa tion” as used in the first sentence of Code § 65.2-524 are synonymous for purposes of our analysis. In the sentence’s main clause, the word “such” in the phrase “such unpaid compen sation” indicates that the term “any payment”

3 This appeal does not require us to consider whether medical benefits, cf. Uninsured Employer’s Fund v. Wilson , 46 Va. App. 500, 619 S.E.2d 476 (2005) (holding term “compensation,” as used in Code § 65.2-520, which “allows unapproved settlement payments to ‘be deducted from the amount to be paid as co mpensation,’” is limited to Chapter 5 indemnity payments made directly to claimant ), or attorney’s fees other than those ordered to be paid from accrued compensation, see, e.g. , Code § 65.2-713 (permitting assessment of attorney’s fees against employer under certain circumstances), ar e “payment[s]” of “compensation” for purposes of Code § 65.2-524’s penalty provisions. We expressly decline to reach such questions.- 5 - in the introductory dependent cl ause is co-extensive with the term “unpaid compensation.” See Strawberry Hill Land Corp. v. Starbuck , 124 Va. 71, 86, 97 S.E. 362, 367 (1918) (“‘Such’ is a descriptive and relative word, and refers to th e last antecedent, unle ss the meaning of the sentence would thereby be impaired. The word re fers to what has been specified, and means the

same as has been theretofore mentioned.” (citation omitted)), quoted with approval in Sharlin v. Neighborhood Theatre, Inc. , 209 Va. 718, 721, 167 S.E.2d 334, 337 (1969). We hold further that the plain meaning of the terms “payment” and “compensation” as used in Code § 65.2-524 includes, at the very least, accr ued temporary disability compen sation due pursuant to Chapter 5

of the Act. See Uninsured Employer’s Fund v. Wilson , 46 Va. App. 500, 503, 619 S.E.2d 476, 478 (2005) (holding that “the ‘c onventional meaning’ of compen sation includes only ‘wage loss compensation,’ also commonly known as ‘indemnity payments’”). Finally, contrary to the opinion of a majority of the commission in this case, we hold that

such funds do not lose their char acter as “payment[s]” of “compensation” for purposes of Code § 65.2-524 simply because the commission, pursuant to its authority to approve and award attorney’s fees under Code § 65.2-714, 4 orders that the employer pay a particular portion of those

4 Code § 65.2-714 provides that Fees of attorneys . . . under this t itle . . . shall be subject to the approval and award of the Comm ission. . . . [T]he Commission shall have exclusive jurisdiction over all disputes concerning such fees or charges and may order th e repayment of the amount of any fee which has already been paid th at it determines to be excessive

. . . . The purpose of this statute is to prevent attorney s from “overcharg[ing] for their services.” Bee Hive Mining Co. v. Ind. Comm’n , 144 Va. 240, 242, 132 S.E. 177, 177 (1926) (involving predecessor statute), quo ted with approval in Hudock v. Va. State Bar , 233 Va. 390, 393, 355 S.E.2d 601, 603 (1987) (involving predecessor statute). Although the statute “expressly makes all attorney’s fees in compensation cases su bject to Commission control,” the commission’s practice is to “exercis[e] contro l only over the attorney’s fees ch arged to claimants” so as to “promote[] the [Act’s] objective of ensuring adequate relief to the claimant and his family.” Hudock , 233 Va. at 394, 355 S.E.2d at 604.- 6 - funds directly to the claimant’s attorney as a reasonable fee. 5 Cf. Rose v. Bristol Compressors , No. 214-98-83, 2005 VA Wrk. Comp. LEXIS 130, at *3 (Feb. 15, 2005) (noting “there is no provision contained in the Virg inia Workers’ Compensation Act that addresses a lien for attorney’s fees” and that, alt hough the commission “has accepted a nd considered such ‘liens,’” “they are not true liens in the technical, legal se nse”). We also hold that neither the language of Code § 65.2-524 nor the statutory co ntext in which it appears--in a chapter of the Act involving payments of disability compensation to claimants or their statutory depend ents or trustees, see Code §§ 65.2-500 to -531--deprives such funds of their character as “payment[s]” of “compensation” for purposes of the twenty percent penalty provision. We recognize that “‘the construction given to the Act by the . . . comm ission is to be accorded great weight.’ Nevertheless, when the Commission’s interpreta tion of a statute runs counter to what we perceive to be the clear intent of the General Assembly . . . , th e former must yield.” Moore v. Va. Int’l Terms., Inc. , 254 Va. 46, 50, 486 S.E.2d 528, 530 (1997). We hold “[t]his is such a

case.” Id. Although we hold that attorney’s fees to be paid from accrued comp ensation retain their character as compensation and are subject to the penalty provisi ons of Code § 65.2-524, we need not decide whether all attorney’s fees paid under the Act are necessarily so classified. See, e.g. , Code § 65.2-713 (allowing commission, in its discre tion, to sanction an employer or insurer who has “brought, prosecuted, or defended [a pro ceeding] without reasonable grounds” or who has

5 Employer effectively conceded as much at oral argument, agreeing that if the commission made an award of attorney’s fees to be paid from accrued disability compensation but indicated the award was to be paid by a claimant from accrued compensation upon his receipt of same, the attorney’s fees would re main compensation for purposes of the penalty statute. Employer thus conceded the fees re mained “compensation” despite the commission’s entry of an award for such fees and focused on to whom the benefit was to be paid--a factor not referenced by Code § 65.2-524 and not requ ired by the statutory context, see discussion infra in the text--rather than how it was classified.- 7 - “delayed payment without reasonable grounds” by “assessing against th e [offending] employer or insurer” payment of “the whole cost of the proceeding, including attorney’s fees to be fixed by the Commission”). We also need not address whether medical benefits are “payment[s]” of “compensation” to which the penalty pr ovisions of Code § 65.2-524 apply. Cf. Wilson , 46 Va. App. 500, 619 S.E.2d 476 (holding term “compen sation,” as used in Code § 65.2-520, which “allows unapproved settlement payments to ‘be deducted from the amount to be paid as compensation,’” is limited to Chapter 5 indemnity pa yments made directly to claimant). Finally, we need not decide whether the penalty for la te payment should ordinarily be paid to the claimant or the claimant’s attorney because claimant ’s attorney in this case asks that the penalty be paid to the claimant.

III.

We hold that where the commission orders an attorney’s fee to be paid out of a claimant’s accrued compensation, the fee remains compensation w ithin the meaning of the penalty statute. Thus, we reverse the decision of the commission denying the request for imposition of a penalty

under the facts of this case and remand for furt her proceedings consiste nt with this opinion, including the assessment of a penalt y to be paid to the claimant.

Reversed and remanded.