The Pennsylvania Supreme Court has issued a ruling that could result in a significant increase in the frequency and amount of attorney fee awards to claimants’ attorneys. On December 22, 2021, the Pennsylvania Supreme Court issued its decision in the case of Lorino v. WCAB (Commonwealth of Pennsylvania). The Pennsylvania Supreme Court reinterpreted §440 of the Pennsylvania Workers’ Compensation Act, as amended, which governs the award of attorney fees. Section 440 provides as follows:
In any contested case where the insurer has contested liability in whole or in part, including contested cases involving petitions to terminate..., the employee... in whose favor the matter at issue has been finally determined in whole or in part shall be awarded, in addition to the award for compensation, a reasonable sum for costs incurred for attorney fees, witnesses, necessary examination, and the value of unreimbursed lost time to attend the proceedings: Provided, that cost for attorney fees may be excluded when a reasonable basis for the contest has been established by the employer or the insurer. (Emphases added.)
Prior to the Supreme Court’s decision in Lorino, attorney fees were awarded to a prevailing claimant only where the employer failed to establish a reasonable contest in the litigation. In Lorino, the Supreme Court held that in all cases where a claimant prevails, the employer is, at the discretion of the Workers’ Compensation Judge, responsible for claimant’s attorney fees. The change is that this is even where the Judge has found that the employer had maintained a reasonable contest. Despite announcing a dramatic change in Pennsylvania Workers’ Compensation law and practice, the Supreme Court’s decision gives no guidance as to when or how a judge is to exercise discretion to award fees, or how to determine the amount of fees to be awarded.
The claim in Lorino was a “medical only” claim. As a result, an award of contingency fees was not available to compensate claimant’s attorney. However, the Lorino decision is not limited to medical only claims. Attorney fees can be awarded in any contested case where claimant prevails, whether or not a reasonable contest was established by employer and even where counsel for the claimant can be compensated through a contingency fee arrangement.
The Supreme Court’s decision will have an immediate impact on the litigation of Workers’ Compensation claims. Due to the lack of guidance from the Court, appeals from judge’s decisions to the Appeal Board challenging the judge’s exercise of discretion to award or not award attorney fees can be expected. Further, the increased potential for an award of attorney fees in any case will likely have an impact on settlement demands.
Although it is impossible to predict how Workers’ Compensation Judges will apply the Lorino decision, it is likely that it will applied most frequently in “medical only” cases where claimant’s counsel can only be compensated by award of attorney fees, but less frequently in “wage loss” cases where the employer has established a reasonable contest.
The impact of the Lorino case will have to be analyzed on a case-by-case basis. Please feel free to contact our Workers’ Compensation attorneys to discuss this issue at 1-888-488-2638 or Contact@c-wlaw.com