Opinion ID: 1771824
Heading Depth: 1
Heading Rank: 2

Heading: Penalties and Attorney's Fees in Workers' Compensation Actions

Text: This court in Brown v. Texas-LA Cartage, Inc., 98-1063 (La.12/1/98), 721 So.2d 885, traced the statutory and jurisprudential history of awards of penalties and attorney's fees in workers' compensation actions. The Brown case, however, involved awards of penalties and attorney's fees for the employer's and insurer's failure to commence payment of compensation benefits timely, while the present case (in which the employer is self-insured) involves the employer's discontinuance of benefits that were commenced timely. Accordingly, at the outset of the analysis in this case, we again review the legislative changes that led up to the distinction, as to penalties and attorney's fees, between timely commencement of payment of compensation benefits and timely payment of continuing benefits, on the one hand, and discontinuance of such payments, on the other hand. Prior to 1983, awards of penalties and attorney's fees against employers in workers' compensation cases were governed by La.Rev.Stat. 23:1201.2, while such awards against insurers were governed by La.Rev. Stat. 22:658. In the extensive revisions of the Workers' Compensation Act in 1983, provisions for awarding penalties and attorney's fees against both employers and insurers were incorporated into the Act. See 14 H. Alston Johnson III, Louisiana Civil Law Treatise-Workers' Compensation § 389 (3d ed.1994). La.Rev.Stat. 23:1201, as amended in 1983, fixed the deadline for commencing payment of installment benefits for various categories of disabilities or for death. [4] Section 1201 further provided penalties, against either the employer or insurer who was at fault in causing the delay, for failure to commence payment of installments within the time period provided, unless the non-payment resulted from conditions over which the employer or insurer had no control or unless the employer or insurer reasonably controverted the employer's right to such benefits. The 1983 revisions also amended La. Rev.Stat. 23:1201.2 to require an employer or insurer to pay the amount of any claim due under the Act within sixty days of written notice and to pay all reasonable attorney's fees for the prosecution and collection of such claim if the employer's or insurer's failure to pay timely was arbitrary, capricious or without probable cause. Section 1201.2, as amended in 1983, further provided that an employer or insurer who discontinues payment of claims due and arising under the Act shall be subject to payment of all reasonable attorney's fees for the prosecution and collection of such claims if the discontinuance was arbitrary, capricious or without probable cause. Thus, as of 1983, Section 1201 set out several time periods within which an employer must commence payment of installment benefits or timely pay continuing benefits, but Section 1201.2 set a period of sixty days from the receipt of written notice for the employer to pay the amount of any claim due. Moreover, Section 1201 provided only for penalties in the event of a failure to timely commence or timely pay benefits, while Section 1201.2 provided only for attorney's fees in the event of a failure to timely pay any claim due or a discontinuance of payments. [5] Additionally, the standard for excusing penalties under Section 1201 when the employer or insurer failed to pay installment benefits within the applicable time period was the employer's or insurer's reasonably controverting the employee's right to such benefits (or a condition over which the employer or insurer had no control), while the standard for awarding attorney's fees under Section 1201.2 was the employer's or insurer's arbitrary or capricious failure to timely pay a claim due or an arbitrary or capricious discontinuance of payment of claims due. [6] There were apparent inconsistencies between Section 1201 and 1201.2 in that Section 1201 addressed the timely commencement of payment and timely continued payment of installment benefits, while Section 1201.2 addressed both timely commencement of payment and discontinuance of payment of claims due; Sections 1201 and 1201.2 provided different time periods for commencing payment of benefits; and Section 1201 provided for penalties under one standard, while Section 1201.2 provided for attorney's fees under a differently worded standard. A 1995 amendment to both statutes eliminated some of the inconsistencies. La. Acts 1995, No. 1137. The amendment deleted from Section 1201.2 the requirement of payment of the amount of any claim due within sixty days of written notice and the provision authorizing an award of attorney's fees for arbitrary or capricious failure to make such payment. Since this 1995 amendment, Section 1201.2 now addresses solely the discontinuance of payment of claims, while Section 1201 now addresses solely the timeliness of commencement of benefit payments and timeliness of continued payments. The 1995 amendment also added to Section 1201 the authorization, in addition to specified penalties, of reasonable attorney's fees for each disputed claim under this Section, which sets the time periods for commencement or continuation of benefits. [7] Since the 1995 amendment, Section 1201 now generally governs the time period for commencing payment of compensation benefits and the timeliness of payment of continued benefits, as well as the time period for paying medical benefits; Section 1201 now also authorizes the award of both penalties and attorney's fees if payment of compensation benefits is not commenced timely, if continued benefits are not paid timely, or if medical benefits are not paid timely, unless the claim is reasonably controverted (or the nonpayment results from conditions over which the employer and insurer have no control); and Section 1201.2 now governs the discontinuance of payment of claims due and arising under the Act, [8] with an award of attorney's fees authorized when the discontinuance is arbitrary, capricious or without probable cause, as well as penalties only against the insurer in limited situations. In summary, both penalties and attorney's fees are now recoverable under Section 1201 F if the employer or insurer fails to commence payments of benefits timely or to pay continued installments timely (or to pay medical benefits timely) unless the claim is reasonably controverted. However, only attorney's fees generally are now recoverable under Section 1201.2 if the employer or insurer arbitrarily discontinues payment of benefits due.