Court Opinion

ID: 4549818
Source: CourtListenerOpinion
Date Created: 2020-07-21 14:11:22.50335+00
Date Added: 2024-06-11T13:01:51.513648
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Angela Phillips,                              :
                     Petitioner               :
                                              :
              v.                              :
                                              :
Workers’ Compensation Appeal                  :
Board (TTech Holdings, Inc., Old              :
Republic Insurance Company, and               :
Gallagher Bassett Services),                  :    No. 27 C.D. 2020
                   Respondents                :    Submitted: June 19, 2020

BEFORE:       HONORABLE MARY HANNAH LEAVITT, President Judge
              HONORABLE ANNE E. COVEY, Judge
              HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY
JUDGE COVEY                                        FILED: July 21, 2020

              Angela Phillips (Claimant) petitions this Court for review of the portion
of the Workers’ Compensation (WC) Appeal Board’s (Board) December 11, 2019
order affirming the Workers’ Compensation Judge’s (WCJ) decision granting TTech
Holdings, Inc.’s (Employer) Petition to Review Compensation Benefit Offset
(Review Offset Petition).1        Claimant presents one issue for this Court’s review:
whether Employer should be excused from paying pro rata attorney’s fees and costs,
as required by Section 319 of the WC Act (Act),2 without explicit language
permitting the same in the parties’ Compromise and Release Agreement (C&R
Agreement). After review, we affirm.

       1
          The Board also vacated the portion of the WCJ’s decision directing the distribution of a
third-party recovery and any payment of counsel fees between Claimant and her attorney. Claimant
is not appealing that portion of the Board’s decision.
        2
          Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 671.
              On March 4, 2016, the WCJ approved the C&R Agreement resolving
Claimant’s entitlement to wage loss and medical benefits for a work injury described
as a right rotator cuff tear, as well as any other work injuries Claimant sustained or
may have sustained on February 22, 2014. Claimant received a one-time payment of
$4,500.00, less counsel fees of $900.00. Employer accepted responsibility for all of
Claimant’s reasonable, necessary and causally related medical treatment incurred
through the date of the hearing and for payment of a UPMC for You3 lien. The C&R
Agreement further provided that a third-party action was contemplated. Employer
did not waive its subrogation rights, but agreed to accept, in satisfaction of its lien,
one-third of any gross settlement or award Claimant receives from any third-party
action related to her WC claim.
              On June 12, 2018, Employer filed the Review Offset Petition seeking to
enforce the C&R Agreement for payment of one-third of a third-party recovery. The
WCJ held hearings on July 17 and September 18, 2018. On October 30, 2018, the
WCJ granted the Review Offset Petition and directed Claimant’s counsel to issue a
check for $6,666.67 to Employer’s third-party administrator, Gallagher Bassett
Services, Inc., and an additional check for $592.89 to Claimant, thereby achieving a
distribution of one-third of the third-party settlement each to Claimant, Employer and
Claimant’s counsel. Claimant appealed to the Board. On December 11, 2019, the
Board vacated the portion of the WCJ’s decision directing the distribution of a third-
party recovery and any payment of counsel fees between Claimant and her attorney,
and affirmed the WCJ’s decision in all other respects. Claimant appealed to this
Court.4

       3
        UPMC for You is a Medicaid/medical assistance insurance plan.
       4
        “On review[,] this Court must determine whether constitutional rights were violated, errors
of law were committed, or necessary findings of fact were supported by substantial competent
evidence.” Stepp v. Workers’ Comp. Appeal Bd. (FairPoint Commc’ns, Inc.), 99 A.3d 598, 601 n.6
(Pa. Cmwlth. 2014).
                                                2
               Claimant argues that Employer should not be excused from paying pro
rata attorney’s fees and costs, as required by Section 319 of the Act, without explicit
language permitting the same in the C&R Agreement.
               Section 319 of the Act provides, in relevant part:

               Where the compensable injury is caused in whole or in part
               by the act or omission of a third party, the employer shall be
               subrogated to the right of the employe . . . against such third
               party to the extent of the compensation payable under
               [Chapter 5 of the Act] by the employer; reasonable
               attorney’s fees and other proper disbursements incurred in
               obtaining a recovery or in effecting a compromise
               settlement shall be prorated between the employer and
               employe . . . . The employer shall pay that proportion of
               the attorney’s fees and other proper disbursements that
               the amount of compensation paid or payable at the time
               of recovery or settlement bears to the total recovery or
               settlement. Any recovery against such third person in
               excess of the compensation theretofore paid by the
               employer shall be paid forthwith to the employe . . . and
               shall be treated as an advance payment by the employer on
               account of any future instalments of compensation.

77 P.S. § 671 (emphasis added).
               However, Section 449 of the Act5 specifies, in pertinent part:

               (a) Nothing in this [A]ct shall impair the right of the
               parties interested to compromise and release, subject to
               the provisions herein contained, any and all liability which
               is claimed to exist under this [A]ct on account of injury
               or death.
               (b) Upon or after filing a petition, the employer or insurer
               may submit the proposed compromise and release by
               stipulation signed by both parties to the [WCJ] for approval.
               The [WCJ] shall consider the petition and the proposed
               agreement in open hearing and shall render a decision. The
               [WCJ] shall not approve any compromise and release
               agreement unless he first determines that the claimant
               understands the full legal significance of the agreement.

      5
          Added by Section 22 of the Act of June 24, 1996, P.L. 350.
                                                 3
            The agreement must be explicit with regard to the payment,
            if any, of reasonable, necessary and related medical
            expenses. . . .
            (c) Every compromise and release by stipulation shall be in
            writing and duly executed, and the signature of the employe
            . . . shall be attested by two witnesses or acknowledged
            before a notary public. The document shall specify:
            (1) the date of the injury . . . ;
            (2) the average weekly wage of the employe as calculated
            under [S]ection 309 [of the Act, 77 P.S. § 582];
            (3) the injury, the nature of the injury and the nature of
            disability, whether total or partial;
            (4) the weekly compensation rate paid or payable;
            (5) the amount paid or due and unpaid to the employe . . .
            up to the date of the stipulation or agreement or death and
            the amount of the payment of disability benefits then or
            thereafter to be made;
            (6) the length of time such payment of benefits is to
            continue;
            (7) in the event of a lien for subrogation under [S]ection
            319 [of the Act], the total amount of compensation paid
            or payable which should be allowed to the employer or
            insurer;
            ....
            (9) a listing of all benefits received or available to the
            claimant;
            (10) a disclosure of the issues of the case and the reasons
            why the parties are agreeing to the agreement; and
            (11) the fact that the claimant is represented by an attorney
            of his or her own choosing or that the claimant has been
            specifically informed of the right to representation by an
            attorney of his or her own choosing and has declined such
            representation.

77 P.S. § 1000.5 (emphasis added).

                                                 4
            “Once approved, a valid compromise and release is final, conclusive and
binding upon the parties.” N. Penn Sanitation, Inc. v. Workers’ Comp. Appeal Bd.
(Dillard), 850 A.2d 795, 798 (Pa. Cmwlth. 2004). Further, “a compromise and
release agreement can be set aside upon a clear showing of fraud, deception, duress or
mutual mistake.” Id. at 799. “Compared to fraud, deception or duress, the test to set
aside a compromise and release on the basis of mistake is more stringent.
Pennsylvania courts have long held that underestimating damages or entering into a
settlement before damages are adequately assessed is not a mutual mistake of fact.”
Id.
            Here, Claimant and Employer entered into a C&R Agreement, which
stated in Paragraph 11 thereof:

            Claimant is contemplating a third-party claim. As per an
            agreement between the parties, [Employer is] not waiving
            [its] subrogation rights, however, [Employer] agree[s] to
            accept one-third (1/3) of any gross settlement or award []
            Claimant receives from any third-party action related to her
            [WC] claim as satisfaction of their [sic] subrogation lien.

Reproduced Record (R.R.) at 39a (emphasis added). On March 4, 2016, the WCJ
concluded “[C]laimant has a full knowledge and understanding of the [C&R]
Agreement[,]” and approved the C&R Agreement. R.R. at 36a.
            Moreover, Claimant testified at the July 17, 2018 WCJ hearing:

            Q. . . . [A] moment ago, [Employer’s Attorney] asked . . .
            what your understanding of the subrogation lien was[,]
            [a]nd . . . you testified that you believe[d] that they were
            entitled to one-third of the gross settlement from a personal
            injury action.
            A. Uh-huh (yes).
            [WCJ]: Is that a yes?
            [Claimant]: Yes.

                                          5
             BY [Claimant’s Attorney]:
             Q. Correct?
             A. Yes.
             Q. Now when you read [P]aragraph 11 [of the C&R
             Agreement], did you see any mention of the attorney’s fees
             in the personal injury action?
             A. No.
             Q. So . . . why did you believe you weren’t entitled to 66.7 -
             or 66.7 percent of the result of the personal injury action?
             A. Because what I read that indicated a third of the
             settlement led me to believe that each party involved would
             receive a third.
             Q. And . . . is that reflected in the language?
             A. It’s my understanding of the language . . . . I don’t have
             a law degree. So, I did my best to understand, and that’s
             what I thought the language was reflecting.

Certified Record, Item 10, Notes of Testimony, July 18, 2018 at 30-31.
             Claimant contends that Employer is required to pay attorney’s fees
consistent with Section 319 of the Act. However, pursuant to Section 449(a) of the
Act, nothing in the Act shall impair the parties’ rights to compromise and release any
and all liability claimed to exist under the Act, see 77 P.S. § 1000.5(a), as long as the
claimant understands the agreement’s full legal significance. See 77 P.S. § 1000.5(b).
             Here, Paragraph 11 of the C&R Agreement clearly specifies that
Employer is entitled to one-third of the gross third-party award, not one-third less
attorney’s fees, as Claimant now suggests. Because Claimant has not argued, let
alone shown, that the C&R Agreement should be set aside based on fraud, deception,
duress or mutual mistake, Employer is not required to pay attorney’s fees and costs in
relation to the third-party award.

                                            6
             Employer asks this Court to impose sanctions in the form of counsel fees
and costs against both Claimant and Claimant’s counsel within its discretion under
these circumstances. Specifically, Employer asserts:

             [T]he Decision of [the] WCJ [] directing Claimant’s counsel
             to pay [] Claimant $6,666.67 was the best possible outcome
             for [] Claimant in this case, which calls into question why []
             Claimant would have even authorized [her] counsel to file
             an appeal to the [Board] and [] a further appeal to this []
             Court. Furthermore, as referenced above, Claimant’s
             counsel has failed to set forth a valid legal reason or basis in
             his brief for why the [C&R] Agreement and the plain
             language agreed to in the same by the parties should be set
             aside.
Employer Br. at 9-10.
             Pennsylvania Rule of Appellate Procedure 2744 provides:
             In addition to other costs allowable by general rule or Act
             of Assembly, an appellate court may award as further costs
             damages as may be just, including
             (1) a reasonable counsel fee and
             (2) damages for delay at the rate of 6% per annum in
             addition to legal interest,
             if it determines that an appeal is frivolous or taken solely
             for delay or that the conduct of the participant against
             whom costs are to be imposed is dilatory, obdurate or
             vexatious. The appellate court may remand the case to the
             trial court to determine the amount of damages authorized
             by this rule.

Pa.R.A.P. 2744. See also Smith v. Workers’ Comp. Appeal Bd. (Consol. Freightways,
Inc.), 111 A.3d 235 (Pa. Cmwlth. 2015) (wherein this Court awarded counsel fees
and costs incurred by the respondent to defend an appeal against the petitioner and his
appellate counsel for obdurate and vexatious prosecution of a frivolous appeal).
Because this Court does not deem Claimant’s counsel’s actions to be obdurate and
vexatious, Employer’s request for attorney’s fees and costs is denied.
                                            7
            For all of the above reasons, the Board’s order affirming the portion of
the WCJ’s decision granting Employer’s Review Offset Petition is affirmed, and
Employer’s request for attorney’s fees and costs is denied.

                                      ___________________________
                                      ANNE E. COVEY, Judge

                                          8
              IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Angela Phillips,                      :
                   Petitioner         :
                                      :
            v.                        :
                                      :
Workers’ Compensation Appeal          :
Board (TTech Holdings, Inc., Old      :
Republic Insurance Company, and       :
Gallagher Bassett Services),          :   No. 27 C.D. 2020
                   Respondents        :

                                   ORDER

            AND NOW, this 21st day of July, 2020, the portion of the Workers’
Compensation Appeal Board’s December 11, 2019 order affirming the Workers’
Compensation Judge’s decision granting TTech Holdings, Inc.’s Petition to Review
Compensation Benefit Offset is AFFIRMED.

                                   ___________________________
                                   ANNE E. COVEY, Judge