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In Neves v. WCAB (American Airlines), the Commonwealth Court held that a counsel fee applies to both wage loss and medical benefits awarded given it is established that this was the intention of claimant and counsel, without the need for a determination that the fee is reasonable.
In Neves, the claimant petitioned the Commonwealth Court to review the WCAB’s opinion, which affirmed the WCJ’s findings, that claimant failed to prove that the 20% fee on medical benefits was reasonable given the legal work provided. Upon appeal to the Commonwealth Court, claimant argued that Section 422 of the Workers’ Compensation Act does not provide the WCJ discretion to evaluate the reasonableness of a 20% counsel fee on any compensation benefits. The fee agreement approved by the WCJ included a provision that claimant understood that the 20% fee applies to past due medical expenses as well as wage loss benefits. The matter initially entered litigation on Penalty and Review Petitions as a result of employer’s withholding payment of counsel fees on medical benefits awarded for work-related treatment claimant received from Mercy Fitzgerald Hospital.
The court reviewed the history of Section 422 of the Act and case law and concluded that the counsel fee should be calculated against the entire award, including medical benefits; and that the fee agreement must establish that the parties intended the counsel fee to apply to the entire award, which the fee agreement between claimant and counsel did. The court dismissed the notion that claimant had to prove the reasonableness of the fee as pertaining solely to an award of unreasonable contest counsel fees. The court relied primarily on Righter v. WCAB (Righter Parking), 141 A.3d 628 (Pa. Cmwlth. 2016) in reaching this result.
The dissenting opinion in Neves provides further evaluation of the Act and case law surrounding fee arrangements and generally points out that the humanitarian purpose of the Act calls for a determination of reasonableness when approving counsel fee arrangements between a claimant and counsel, particularly when it applies to medical benefits, as there may be a question as to who is responsible for the 20% balance to the provider.
An insurer or third-party administrator may want to take precaution when a fee agreement involves medical benefits. Medical providers are generally not involved in litigation of, for example, Claim and Review Petitions, so they may not be aware that in addition to re-pricing, they will be taking a further reduction in treatment costs. It is also unclear whether the payment of a 20% counsel fee is applicable to future treatment.
It may be prudent for insurers or third-party administrators to question a claimant during the proceedings as to his or her understanding of the ramifications of agreeing to a 20% counsel fee on medical benefits and to obtain a stipulation that the claimant will not hold the insurer or third-party administrator responsible, should any of the providers attempt to obtain the 20% balance from the claimant. In instances where the providers are involved, e, g, utilization reviews, it may be prudent to obtain a stipulation from the specific provider(s) that these providers agree to accept 80% of the balance charged in addition to reductions from re-pricing. Of course, fee arrangements between claimant and counsel can be more specific about these possible results and address them more explicitly.
