Opinion ID: 2611910
Heading Depth: 3
Heading Rank: 1

Heading: AWARD OF ATTORNEY'S FEES UNDER AS 23.30.145(a).

Text: The central question before this court is whether the Board had the authority under section 145(a) of the Act to award statutory attorney's fees. Because this determination requires statutory interpretation involving no administrative expertise, the substitution-of-judgment standard is appropriate. Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903 (Alaska 1987). We give no deference to the intermediate appellate decisions of the superior court. Id. Alaska Statute 23.30.145(a) provides in part: When the board advises that a claim has been controverted, in whole or in part, the board may direct that the fees for legal services be paid by the employer or carrier in addition to compensation awarded; the fees may be allowed only on the amount of compensation controverted and awarded... . The parties dispute the effect of Industrial Indemnity's delay in changing Shirley's status from TTD to PTD. Industrial Indemnity argues that it never controverted any amount of compensation owed to Shirley and therefore the Board did not have authority to grant attorney's fees. It notes that it has paid Shirley $449.37 in weekly TTD benefits since his injury  the same amount for which he would be eligible if granted PTD status. Shirley responds that Industrial Indemnity controverted his claim by never unqualifiedly accept[ing] Shirley's claim for permanent total disability compensation. Because Industrial Indemnity satisfied the controversion requirement, the award of attorney's fees was appropriate. We agree. Shirley's physician, Dr. Hadley, indicated in her July and August 1990 reports that Shirley was medically stable and that he would not be able to pursue gainful employment. Given these conclusions, Shirley was entitled to have his status changed at that time from TTD to PTD. [1] Accordingly, Industrial Indemnity's refusal to change Shirley's status constituted a controversion of Shirley's claim in whole or in part under AS 23.30.145(a). Nonetheless, section 145(a) limits the Board's authority to award attorney's fees to the amount of compensation controverted and awarded. AS 23.130.145(a); see Bignell v. Wise Mechanical Contractors, 651 P.2d 1163, 1169 (Alaska 1982) (The statute unambiguously restricts the award of attorney's fees to amounts which are controverted.); J.B. Warrack Co. v. Roan, 418 P.2d 986, 990 (Alaska 1966) (holding that where although carrier did not controvert amount of employee's claim, no attorney's fees could be awarded). Industrial Indemnity argues that because the payment amount under TTD was exactly the same as it would have been under PTD, no amount of compensation was controverted. We disagree. Industrial Indemnity controverted the permanent status of Shirley's disability, thus affecting the total amount he could collect during his lifetime. As the superior court noted, [t]he distinction between TTD and PTD can be very important to an employee since TTD payments end with medical stability while PTD benefits do not. Shirley claimed $449.37 per week PTD. Regardless of TTD benefits being paid, Industrial Indemnity's action paid zero dollars PTD. Furthermore, Industrial Indemnity's suggestion that a status change would have no effect on the amount that Shirley receives is somewhat disingenuous. If indeed there had been no amount of compensation at stake, there would not have been any reason for Industrial Indemnity to controvert Shirley's claim. By controverting Shirley's entitlement to PTD benefits, Industrial Indemnity retained the option to claim that its liability ended as of the point at which Shirley achieved medical stability. Amounts payable  and not voluntarily paid  after that point were thus controverted. The policies underlying the attorney's fees statute further support our conclusion. Alaska Statute 23.30.145(a) provides for attorney's fees in order to ensure that injured workers are able to obtain effective representation. Wien Air Alaska v. Arant, 592 P.2d 352, 365-66 (Alaska 1979), overruled on other grounds, Fairbanks N. Star Sch. Dist. v. Crider, 736 P.2d 770 (Alaska 1989). Where an employer resists payment of benefits, the injured worker must retain an attorney to protect his interests. The employer is required to pay the attorneys' fees relating to the unsuccessfully controverted portion of the claim because he created the employee's need for legal assistance. Haile v. Pan American World Airways, Inc., 505 P.2d 838, 842 (Alaska 1973) (Rabinowitz, J., dissenting in part, concurring in part). In this case, Industrial Indemnity's dispute regarding the classification of Shirley's benefits required him to obtain representation. As the Board noted, Industrial Indemnity should have changed [Shirley's] status to PTD and then pursued medical confirmation of [Shirley's] condition. Based on the foregoing, we conclude that the Board was correct in awarding attorney's fees to Shirley. However, we disagree with the Board's specific formulation of the fee award. The Board awarded statutory minimum attorney's fees on all compensation benefits paid after August 21, 1990, the date of Dr. Hadley's final report. However, this award improperly includes Industrial Indemnity's payments made prior to the Board's decision. In Bignell, we affirmed the Board's decision that attorney's fees could not attach to the employer's voluntary payment of $6000, since that amount was not controverted. 651 P.2d at 1169. In this case, attorney's fees cannot attach to the payment tendered by Industrial Indemnity until the Board's award, since this amount was not controverted. [2] Accordingly, we modify the Board's award to apply to all compensation benefits paid after the date of the Board award. If the fees awarded under section 145(a) are disproportionately high, that fact should be taken into account by the superior court. Wien Air Alaska, 592 P.2d at 356.