Source: http://masscases.com/cases/app/81/81massappct437.html
Timestamp: 2019-04-20 00:19:44+00:00

Document:
Workers' Compensation Act, Insurer, Amount of compensation, Attorney's fees, Settlement agreement.
Kimberly Davis Crear for the insurer.
WOLOHOJIAN, J. At issue is whether the AIM Mutual Insurance Company (AIM) was entitled to use the payment-reduction provision of G. L. c. 152, § 13A(10), which (in certain circumstances) permits a workers' compensation insurer who makes prompt payment of benefits to an injured employee to reduce the amount payable by the amount it statutorily owes to the employee's attorney. Relying on this provision, AIM applied the reduction to the amount it owed to an injured employee under a settlement agreement. Because the settlement did not fall within the scope of the payment-reduction provision, we conclude that AIM was not entitled to the reduction.
loss of function under G. L. c. 152, § 36. Instead of pursuing the hearing, however, the employee and AIM settled their differences and entered into a written settlement agreement that day.
"THE PARTIES AGREE TO COMPENSATION IN ACCORDANCE TO THE FOLLOWING SCHEDULE: . . .
"G. SPECIFIC PERMANENT INJURIES/SECTION 36. . . .
"3 x S[tate] A[verage] W[eekly] W[age] (884.46) = $2,653.38 For limp.
"Attorney fee $2,500, and reasonable costs."
The agreement was signed by the insurer, the employee, and the employee's attorney. The agreement was also approved and signed by a representative of the DIA, as required by statute. See G. L. c. 152, § 19(1).
Both the amount of § 36 compensation to be paid to the employee under the settlement agreement as well as the amount to be paid to the attorney for fees and costs were negotiated figures; in other words, they were less than what the employee originally sought or could potentially recover under the statute. [Note 2] See G. L. c. 152, § 13A(5) ($3,500 attorney's fee to be paid in cases resolved within five days of hearing).
"In any instance in which an attorney's fee under subsection (1) to (6), inclusive, is due as a result of a cash award[ [Note 3]] being made to the employee either voluntarily, or pursuant to an order or decision, the insurer may reduce the amount payable to the employee within the first month from the date of the voluntary payment order or decision,[ [Note 4]] by the amount owed the claimant's attorney; provided, however, that the amount paid to the employee shall not be reduced to a sum less than seventy-eight percent of what the employee would have received within that month if no attorney's fee were payable."
Relying on this payment reduction provision, AIM sent the employee a check for $5,930.16, rather than for the $7,602.77 specified under the settlement agreement. It arrived at this sum by applying a twenty-two percent reduction to the total § 36 compensation amount ($7,602.77). In other words, $7,602.77 - ($7,602.77 x .22 [i.e., $1,672.61]) = $5,930.16.
amount. The reviewing board of the DIA reversed, relying on two unpublished memoranda and orders of this court issued pursuant to our rule 1:28, see Vazquez's Case, 78 Mass. App. Ct. 1112 (2010), and Grogan's Case, 76 Mass. App. Ct. 1132 (2010). This appeal followed.
Discussion. Section 13A of the workers' compensation statute, G. L. c. 152, governs the award of attorney's fees for injured employees. In broad and general terms, the section can be read to reflect two legislative goals: to ensure adequate legal representation of the injured worker or his dependents, and to discourage protracted litigation. See Green's Case, 52 Mass. App. Ct. 141 , 144 (2001); Nason et al., Workers' Compensation § 24.1, at 266 (3d ed. 2003).
"The fee structure is linked to the various stages through which a claim or complaint passes as it goes from conciliation to conference, hearing and review in the division of dispute resolution. When the claimant prevails or the insurer accepts a claim or withdraws a complaint, the insurer has to pay a set fee for each step, generally increasing as the case moves forward in the process."
In order to qualify for the § 13A(10) reduction, the insurer must show that there is (a) an attorney's fee under § 13A(1)-(6); (b) due as a result of a cash award; (c) being made to the employee either voluntarily, or pursuant to an order or decision; and (d) which the insurer pays within one month. All four conditions must be met in order to qualify for the reduction. We need look no further than the first condition in this case.
three thousand five hundred dollars plus necessary expenses."
G. L. c. 152, § 13A(5).
We are not here concerned with (ii) because no hearing ever occurred, let alone a hearing at which the employee prevailed. Nor are we concerned with that portion of (i) dealing with an insurer who withdraws its complaint; AIM never filed a complaint in this case. Moreover, AIM did not "accept" the employee's claim for benefits; the § 36 compensation amount agreed upon in the settlement was negotiated down from the amount of the employee's claim. [Note 7] The settlement amounts were the product of compromise; AIM did not accept the employee's claim. We note further (and perhaps most fundamentally) that the settlement agreement reflects a negotiated attorney's fee rather than that set by § 13A(5) or any other of the subsections (1)-(6). In short, apart from the fact that the settlement was reached within five days of the scheduled hearing, the terms of, and circumstances surrounding, the settlement agreement do not satisfy any of the requirements of § 13A(5).
and costs and, in light of our disposition, is entitled to them pursuant to G. L. c. 152, § 12A. See Daly's Case, 405 Mass. 33 , 42 (1989). Within two weeks of the date of this opinion, the employee's estate is to submit to the clerk of this court an application for fees and costs that comports with Fabre v. Walton, 441 Mass. 9 , 10-11 (2004). AIM shall file any response within two weeks thereafter.
[Note 1] The employee is deceased. On appeal, his interests are represented by the executor of his estate.
[Note 2] The record does not clearly disclose the full amount of § 36 benefits originally sought by the employee, but the parties both acknowledged at oral argument that it was more than what he accepted in the settlement.
[Note 3] "Cash Award as used in [G. L.] c. 152, § 13A(10), shall mean any specific compensation benefits payable under [G. L.] c. 152, § 36 or § 36A and any weekly benefits payable under [G. L.] c. 152 of an amount that exceeds the weekly amount being paid the employee for the week immediately prior to the date of the voluntary payment, order or decision." 452 Code Mass. Regs. § 1.02 (2008). In light of our disposition of this appeal, we need not address, and express no opinion on, the questions whether the payment in this case was a "cash award" within the meaning of § 13A(10) or whether the definition of "cash award" in this regulation is consistent with the statute.
[Note 4] "Amount Payable to the Employee Within the First Month from the Date of the Voluntary Payment, Order or Decision as used in [G. L.] c. 152, § 13A(10), shall mean any compensation due the employee under the terms of the voluntary payment, order or decision pursuant to [G. L.] c. 152, § 36 or § 36A and any future weekly benefits pursuant to [G. L.] c. 152 due the employee for the first 30 days subsequent to the date of the execution of a voluntary payment or the issuance of an order or decision." 452 Code Mass. Regs. § 1.02 (2008).
[Note 5] We note that for convenience we use the $700 and $3,500 figures that were the original attorney's fee amounts set by the statute as amended in 1991. Section 13A(10) specifies that the amounts in § 13A(1)-(6) are to be adjusted annually on October 1. Apparently the practice has been to publish these amounts by circular letter or other public means. See Nason et al., Workers' Compensation § 24.1, at 267. See also http://www.mass.gov/lwd/workers-compensation/wc-pubs/cls/2011/attorneys-fees-2011-table-ii.html (last visited March 14, 2012) (official Web site of the Executive Office of Labor and Workforce Development showing current § 13A and  fee amounts as $1,062.34 and $5,311.62, respectively).
[Note 6] "In any instance in which an attorney's fee under subsection (1) to (6), inclusive, is due as a result of a cash award being made to the employee either voluntarily, or pursuant to an order or decision, the insurer may reduce the amount payable to the employee within the first month from the date of the voluntary payment order or decision, by the amount owed the claimant's attorney; provided, however, that the amount paid to the employee shall not be reduced to a sum less than seventy-eight percent of what the employee would have received within that month if no attorney's fee were payable." G. L. c. 152, § 13A(10).
[Note 7] To its credit, AIM frankly acknowledged during oral argument that it did not "accept" the employee's claim.
[Note 8] We note that in addition to the employee's settlement underpayment claim, he also sought penalties under G. L. c. 152, §§ 8, 14. The administrative judge declined to award penalties, and the reviewing board noted that the employee was not challenging that aspect of the administrative judge's decision. Nor did the employee's executor raise the question in this appeal. The issue of penalties is therefore waived, and the board need not consider it on remand except insofar as the outcome of the penalties claim may bear on prevailing party status for purposes of the potential attorney's fee under § 13A(5).

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