Opinion ID: 1704682
Heading Depth: 1
Heading Rank: 3

Heading: Attorney Fees in the Present Case

Text: The Legislature intended both the penalties and the attorney fees authorized by La.Rev.Stat. 23:1201F as a means of deterring arbitrary conduct by the employer or the employer's insurer. When the workers' compensation judge awards statutory attorney fees, the question arises whether the attorney is entitled to these fees in addition to the contractual fees. The determination of whether the attorney is entitled to all or part of the statutory fee, in addition to the contractual fee, depends upon the legislative intent behind the penalties and attorney fees allowed under the conditions outlined in Section 1201F. There are two reasonable views of the legislative intent of Section 1201F. Under the view favorable to the attorney, the contractual compensation for the legal services (which is the sole compensation in most cases) is at a very low rate for a contingency fee. The Legislature purposefully limited the rate of contractual contingency fees in workers' compensation cases because the injured employee receives at most only two-thirds of his or her wages lost on account of the compensable injury. [5] Because the attorney can only recover a contractual fee based on a relatively low rate for contingency contracts, the legislative authorization in Section 1201F of an award of reasonable attorney fees in some cases may be viewed as an incentive for lawyers to accept more workers' compensation cases because of the possibility of greater attorney fees in some cases when the employer or insurer has refused to pay benefits. On the other hand, an injured employee relegated to workers' compensation under the exclusive remedy provision of the Act not only recovers less than the full amount of wages he would have earned but for the occupational injury, but that reduced recovery is further reduced by the fact that the employee generally must hire an attorney when the employer and the insurer refuse to pay benefits. Because the contractual fee is not assessed against the recalcitrant employer or insurer, but is taken directly from the employee's recovery of his or her partial wage loss, the statutory fee could be viewed as intended to relieve the employee from having to pay attorney fees out of his or her own recovery and to transfer the burden of paying all or part of the contractual fee to the recalcitrant employer or insurer. Under this view, the employee would be entitled to retain, out of any award of statutory attorney fees, all or part of the amount the employee would otherwise be required to pay to his or her attorney as a contractual fee. This court discussed the issue in dicta in Cain v. Employers Cas. Co., 236 La. 1085, 110 So.2d 108 (1959). The issue before the court in Cain was whether the amount of the statutory attorney fees assessable against the employer's insurer under La. Rev.Stat. 22:658 was restricted by the limitation on contractual attorney fees. This court held that the restriction on contractual fees is not applicable and that the statutory fees are limited only by the requirement that the fees must be reasonable. Pointing out that the limitation on contractual attorney fees is to protect the employee who generally must pay the fee out of the award of moderate benefits, this court reasoned that the purpose behind the monetary limitation disappears, and thus should be ignored, when the fee is an assessment payable by the employer's insurer. Despite the limited legal issue before this court in Cain, the decision ventured an opinion on an issue not before the court, [6] stating: [T]he fee is fixed and determined upon the basis of the attorney's skill and the amount of work performed by him in the prosecution and collection of the total claim. Therefore, inasmuch as the fee is so predicated, its fixing and determination is in lieu of any fee as may have been contracted [between the parties within the statutory limitation]. The intent of the penalty provisions of the Insurance Code is primarily designed to benefit an unjustly treated employee, who would benefit by having his attorneys' fees paid from penalties assessed against the insurance carrier instead of out of his compensation award.  (emphasis added). 110 So.2d at 111. This court again addressed the issue with unnecessary language in Lucas v. Insurance Co. of North America, 342 So.2d 591 (La.1977). In Lucas, the primary issue presented was medical causation of the claimant's physical disability. After holding that medical causation was established and finding arbitrariness on the insurer's part in failing to pay compensation, the conclusion of the opinion stated that: Under the statute [La.Rev.Stat. 22:658], the plaintiff is entitled to a 12% penalty on that portion of the compensation deposit more than sixty days in arrears and a reasonable attorney's fee for this litigation. In our opinion, an attorney's fee of $1,500.00 is reasonable for recovery of such compensation benefits. ( The plaintiff's counsel is of course also entitled to recover attorney's fees provided by his contract and as governed by statute for recovery of the additional benefits herein awarded.) (emphasis added). 342 So.2d at 598-99. The Lucas opinion did not mention the Cain decision. Moreover, there was no contest in Cain or in Lucas between the employee and his attorney over distribution of the two types of attorney fees. Additionally, both Cain (a 1959 case) and Lucas (a 1977 case) involved the application of La.Rev.Stat. 22:658, which was part of the Insurance Code and provided penalties and attorney fees for arbitrary conduct, assessable against the insurer only. Neither Cain nor Lucas was decided under the present statutory scheme, which has undergone revisions beginning in 1983 and through the 1995 amendment that rewrote former Section 1201E and redesignated it as Section 1201F. [7] The question of the distribution of the attorney fees under Section 1201F is squarely before the court in the present litigation between the employee and his attorney. [8] In our determination of the respective rights of the employee and the attorney to the statutory attorney fees, a persuasive factor is the methodology used to calculate the amount of the statutory attorney fees. The only limitation on the amount is the reasonableness of the fee awarded by the judge. Cain, supra . The amount awarded rests within the discretion of the workers' compensation judge, as long as that amount is supported by the record. Some of the factors taken into account by the judge in fixing the amount of the fee are the degree of skill and ability exercised by the attorney, the amount of the claim, the amount recovered for the employee, and the amount of time the attorney devoted to the case. [9] H. Alston Johnson, III, supra § 389. The amount awarded is intended to provide full recovery, without statutory limitation, for attorney's services and expenses in connection with the litigation. If the attorney were allowed to collect the contractual attorney fees in addition to the full compensation awarded in the statutory attorney fees, the attorney would get double recovery (to the extent of the limited contractual fee) for his services, at the expense of his client. We therefore conclude that the statutory attorney fees, awarded to the employee in cases of arbitrary behavior of the employer or the insurer, were intended to benefit the employee, who would otherwise have to pay the contractual attorney fees out of his or her benefits recovered in the litigation, and were not intended to provide additional fees to the employee's attorney, who received the amount of the statutory attorney fees as full compensation for legal services in the litigation. In the present case, the workers' compensation judge awarded $15,000 in statutory attorney fees under Section 1201F as a reasonable fee for the services rendered, and that judgment is now final. (Accordingly, the amount of the award is not before this court.) The employee is entitled to retain $4,923 [10] out of the insurer's payment of the statutory attorney fees, and the attorney is entitled to recover from the employee the remaining $11,077 of the insurer's payment of the statutory attorney fees, as well as the contractual attorney fees of $4,923 (or a total of $15,000). [11] The workers' compensation judge correctly denied the attorney recovery from the employee of both the $15,000 statutory fee and the $4,923 contractual fee (a total of $19,923) for legal services valued by the judge at $15,000.