Opinion ID: 1771824
Heading Depth: 1
Heading Rank: 3

Heading: Penalties and Attorney's Fees in this Case

Text: In the present case, the self-insured employer commenced paying compensation and medical benefits, apparently in good faith, [9] soon after plaintiff notified the employer he had injured his back on the job. Thus benefits were commenced timely as required by La.Rev.Stat. 23:1201 B, and the only statute at issue in this case is La.Rev.Stat. 23:1201.2, [10] which has no provision for penalties against a self-insured employer. Accordingly, the only inquiry is whether the employer acted arbitrarily, capriciously and without probable cause in discontinuing the payment of compensation and medical benefits so as to warrant imposition of attorney's fees under Section 1201.2. Arbitrary and capricious behavior consists of willful and unreasoning action, without consideration and regard for facts and circumstances presented, or of seemingly unfounded motivation. Brown, 98-1063 at 8-9, 721 So.2d at 890, referring to Black's Law Dictionary 104, 211 (6th ed.1990). Awards of penalties and attorney's fees in workers' compensation are essentially penal in nature, being imposed to discourage indifference and undesirable conduct by employers and insurers. Sharbono v. Steve Lang & Son Loggers, 97-0110 (La.7/1/97), 696 So.2d 1382. Although the Workers' Compensation Act is to be liberally construed in regard to benefits, penal statutes are to be strictly construed. See International Harvester Credit v. Seale, 518 So.2d 1039, 1041 (La. 1988). The fact that an employer is subjectively motivated to avoid paying compensation is not determinative. Neither is the fact that an employer loses a disputed claim. Sharbono, 97-0110 at 11, 696 So.2d at 1389 (penalties and fees are never assessed automatically against the losing party); Winters v. City of Shreveport, 257 La. 245, 242 So.2d 236 (1970); Eaves v. Louisiana Cypress Lumber Co., 253 La. 741, 219 So.2d 771 (1969). On the other hand, the fact that no witnesses saw the alleged accident or that there was no immediate report of an accident by the plaintiff does not necessarily justify the denial of benefits. The employer must adequately investigate the claim, and the crucial inquiry is whether the employer had an articulable and objective reason for denying or discontinuing benefits at the time it took that action. In the present case, the employer disputed whether plaintiff's injury was jobrelated. Though there was significant medical testimony as to the extent of his injury, the only support for plaintiff's claim that he sustained an injury on the job was his own testimony. The investigator for the employer stated the following reasons for terminating benefits: (1) plaintiff did not report an accident when he initially reported backache, although the foreman suggested excessive cold drinks as a possible cause; (2) plaintiff's foreman and his supervisor gave statements, shortly after plaintiff notified his employer of an on-the-job accident, that the foreman moved the angle iron that day and that plaintiff did not lift any angle iron that day; and (3) plaintiff told the doctor that the angle iron weighed eighty pounds, while the foreman official averred that the iron weighed about twelve to fifteen pounds. The investigator, relying principally on statements of the two coemployees who saidemphatically, in the words of the workers' compensation judgethat plaintiff had no occasion to lift any angle iron on the morning of the incident and that they had not seen him lift any angle iron, decided to contest whether the back problem was work-related. The workers' compensation judge decided the merits of the compensation claim on the basis of her assessment of the credibility and accuracy of the defense witnesses. The judge observed that the defense witnesses did not exclude the possibility that plaintiff might have lifted angle iron while his supervisors were not looking, noting that the witnesses disagreed about plaintiff's location when the angle iron was moved. Further commenting that it would have been consistent with plaintiff's favorable work history for him to have done a task without being instructed to do it, the judge found that plaintiff had injured himself on the job, either by lifting angle iron or in some other manner. The worker's compensation judge also found, despite the emphatic statements by plaintiff's foreman and supervisor shortly after the incident, that the employer's reasons for terminating benefits were implausible, and she accordingly awarded penalties and attorney's fees. Louisiana workers' compensation decisions have historically and properly declined to award attorney's fees in cases in which there are closely disputed factual questions. See 1 Denis P. Juge, Louisiana Workers' Compensation § 5.5 (2d ed.1999); Johnson, supra at § 389. This is such a case. Plaintiff's foreman testified, without contradiction, that he and plaintiff discussed excessive consumption of cold drinks as a possible cause of backache, and plaintiff never mentioned that the cause was lifting angle iron. Moreover, there were several workers in the area, and no one (insofar as this record shows) saw plaintiff lift any angle iron or heard plaintiff complain that he hurt his back while lifting those materials. The employer's witnesses articulated a clear and objective defense to plaintiffs claim. On the basis of the witnesses' statements of the facts and circumstances after adequate investigation, the employer concluded that there was a reasonably objective basis for doubting whether plaintiffs injury had occurred on the job. The employer therefore did not act in an arbitrary or capricious manner by discontinuing benefits in reliance on the reasonable statements of its employees who emphatically denied that this accident occurred as plaintiff described. Significantly, the workers' compensation judge apparently rested her decision to award attorney's fees, at least in part, on the fact that the investigator had the statements of the two co-employees before commencing payment of benefits and later stopped the payments. The judge apparently viewed the payment of benefits as somehow estopping the employer from reconsidering the causation issue. Such a view would prevent an employer from giving the employee the benefit of the doubt, pending a thorough assessment of plaintiffs claim of an accident which was reported sometime after the initial report of backache. To punish an employer for initially paying benefits in the employee's best interest is to provide a counterproductive incentive for employers to refuse to start benefits or to hastily terminate them. Payment of initial benefits does not stop the employer from discontinuing benefits upon completion of investigation or upon reconsideration of the causation evidence, as long as there is a reasonable basis for such action. In summary, the record establishes that the employer was not arbitrary or capricious or without probable cause in discontinuing compensation and medical benefits. The employer should not be penalized for contesting the close factual issue of the disputed occurrence of a workrelated accident.