IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Transcription

1 IN THE COMMONWEALTH COURT OF PENNSYLVANIA John Galizia, : Petitioner : : v. : No C.D : SUBMITTED: January 30, 2015 Workers Compensation Appeal : Board (Woodloch Pines, Inc.), : Respondent : BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE ANNE E. COVEY, Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE LEADBETTER FILED: June 12, 2015 Claimant John Galizia petitions for review of an order of the Workers Compensation Appeal Board that affirmed the decision of the Workers Compensation Judge (WCJ) denying his petition to reinstate compensation benefits. We affirm. In November 2002, Claimant sustained a work-related right-knee contusion. Pursuant to a notice of compensation payable, he received weekly compensation in the amount of $331, based on an average weekly wage of $396. In March 2008, Employer Woodloch Pines, Inc., filed a petition to review compensation benefit offset, alleging that Claimant had recovered $100,000

2 following third-party litigation related to his workers compensation injury and that Employer s subrogation lien was in excess of that third-party recovery. In October 2008, the WCJ granted Employer s petition and directed Claimant to make a lump-sum payment of $100,000 to Employer in order to satisfy the lien. Further, the WCJ determined that, if Claimant failed to make the lumpsum payment, then Employer was entitled to a complete suspension of his temporary total disability benefits until the $100,000 was satisfied in full. Finally, mindful of the requirement that an employer and an employee share pro rata attorney s fees and costs involved in obtaining recovery in a third-party action, the WCJ nonetheless ordered Claimant to make the payment without considering Employer s pro rata share. The WCJ reasoned that, Claimant obviously had the opportunity to present [those figures] herein but none have ever been presented by the Claimant with regard to the within Review Petition. WCJ s January 22, 2013 Decision, Finding of Fact (F.F.) No. 4 (quoting WCJ s October 15, 2008 Decision, F.F. No. 9). Claimant did not appeal from the WCJ s October 2008 decision. Four years later, Claimant filed the September 2012 reinstatement petition at issue, alleging that the insurance carrier s $100,000 lien had been fully reimbursed because, after the deduction of attorney s fees of $33, and litigation costs of $ , the $331 weekly reimbursement amount now exceeded the $100,000 third-party recovery, thereby rendering the lien satisfied as of July 18, Accordingly, he sought reinstatement of temporary total disability benefits of $ per week as of that date, statutory interest, litigation costs and attorney s fees. September 27, 2012 Reinstatement Petition; Reproduced Record (R.R.) at 35a. The WCJ denied Claimant s petition, concluding that it sought to improperly revisit the issue of Employer s subrogation lien and that 2

3 Claimant should have presented his attorney s fees and litigation costs during the 2008 litigation. In addition, the WCJ concluded that, although Employer had been receiving reimbursement for its $100,000 lien on a weekly basis due to Claimant s failure to make the lump-sum payment, his petition was premature in that the lien was not fully satisfied. WCJ s January 22, 2013 Decision, F.F. No. 7. The Board affirmed and Claimant s timely petition for review to this Court followed. In rendering our decision in this appeal, we consider the application of paragraph one of Section 319 of the Workers Compensation Act (Act), 1 which governs the subrogation of an employer to the rights of an employee against a third party and provides, in pertinent part, as follows: 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 this article 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. [Emphasis added.] On appeal, Claimant maintains that the WCJ erroneously applied procedural waiver principles to substantive subrogation rights, contrary to Bell v. Koppers Company, 392 A.2d 1380, 1382 (Pa. 1978), holding that the question of whether an employer has an underlying right to subrogation is one of substantive law. Further, Claimant maintains that the WCJ exceeded his authority by granting 1 Act of June 2, 1915, P.L. 736, as amended, 77 P.S

4 Employer a greater substantive property right than Claimant thereby causing a windfall to Employer. See Pennsylvania Mfrs. Ass n Ins. Co. v. Wolfe, 626 A.2d 522, 526 (Pa. 1993) (holding that, [s]ubrogation is an equitable principle and the subrogee carrier can have no greater rights than the subrogor employee ). Contrary to Claimant s suggestion, the present case is not about subrogation rights, per se, but instead, about his failure to present evidence of Employer s pro rata share of attorney s fees and litigation costs in a timely manner, consequently, waiving his right to do so in a subsequent proceeding. Even though the WCJ s 2008 decision is not before us for review, we begin our discussion there in light of its effect on Claimant s ability in the present case to pursue the issue of Employer s pro rata share. In 2008, Claimant s counsel failed to present evidence to allow calculation of Employer s pro rata share. The WCJ, therefore, could neither approve the amounts nor direct Employer to pay its share. Where an attorney who represents a claimant in a workers compensation matter fails to comply with the statutory requirements for establishing the validity and amount of attorney s fees, a WCJ cannot award such fees against a subrogee. See Workmen s Comp. Appeal Bd. v. Leuschen, 342 A.2d 810, (Pa. Cmwth. 1975); Richman v. Workmen s Comp. Appeal Bd., 329 A.2d 920, (Pa. Cmwlth. 1975). As we held in those cases, the Act requires counsel to present such claims for approval and, when he fails to do so, such claims are properly denied. 2 Accordingly, we reject Claimant s suggestion that the substantive nature of subrogation law somehow insulates him from timely compliance with the Act s requirements regarding attorney s fees and costs. 2 Pursuant to Section 319 of the Act, such approval would encompass whether the attorney s fees were reasonable and whether the other disbursements were proper. 4

5 Moreover, we agree that Claimant is precluded from revisiting Employer s liability for its pro rata share of attorney s fees and costs in In March 2008, Employer filed a review petition, alleging that Claimant had recovered $100,000 following third-party litigation related to the work injury and that its subrogation lien was in excess of that recovery. In September 2012, Claimant filed the reinstatement petition at issue, submitting in support a distribution printout from his third-party legal counsel with dates ranging from June 2004 to August The printout reflects that Claimant s legal counsel received $100,000 from USAA in August 2007 and made a disbursement to the Galizias soon thereafter for $61, Accordingly, the data pertinent to attorney s fees and costs clearly would have been available at the May 2008 hearing where only Employer presented evidence. 5 Moreover, Section 319 of the Act, in pertinent part, provides that [t]he 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. (Emphasis added.) Our Supreme Court held that, [t]he plain meaning of this language is that when the employee s recovery in a third-party action provides the employer with repayment of its accrued lien, the employer must at the same time reimburse the 3 On page 7 of his brief to this Court, counsel for Claimant asserts that the printout reflects distributions made in August In fact, the printout reflects activity only for August November 7, 2012 Hearing, Claimant s Exhibit 2; R.R. at 36a. 4 [$100,000 - ($33,333.33/attorney s fees + $ /costs) = $61,065.46]. 5 Although Claimant s counsel maintains that he did not receive the printout until after the WCJ s October 2008 decision, he concedes that the WCJ in 2008 acknowledged Employer s $100,000 lien and that Claimant took no appeal from that decision. November 7, 2012 Hearing, Notes of Testimony at

6 employee for the proportionate share of the legal expenses expended to recover that amount. P&R Welding & Fabricating v. Workmen s Comp. Appeal Bd. (Pergola), 701 A.2d 560, 564 (Pa. 1997) (emphasis added). As noted above, the distribution printout indicates that Claimant s legal counsel received $100,000 in August 2007 and made a disbursement to the Galizias soon thereafter. It also indicates attorney s fees in the amount of $33, In light of the failure of Claimant s counsel to submit into evidence attorney s fees and litigation costs related to that third-party recovery during the course of the 2008 workers compensation litigation, the WCJ in his 2008 decision 1) referenced the above-quoted language from Section 319 regarding Employer s pro rata share; 2) noted that Claimant failed to produce the relevant evidence; and 3) directed Claimant to make the lump-sum payment of $100,000 to Employer without consideration of its share. Accordingly, the issue of Employer s liability for its pro rata share was fully litigated in 2008 and Claimant is precluded from revisiting that issue in the form of his current reinstatement petition. See Huynh v. Workers Comp. Appeal Bd. (Hatfield Quality Meats), 924 A.2d 717, 722 (Pa. Cmwlth. 2007) (doctrine of res judicata/collateral estoppel precluded claimant from revisiting an issue in his current reinstatement petition that was fully and finally adjudicated in employer s favor in a prior decision). In conclusion, the WCJ put Claimant on notice in the October 2008 decision that Employer was liable to pay certain amounts, but that those amounts were not of record. Claimant, however, failed to appeal from that decision 6 and 6 As Employer observed regarding the 2008 litigation: Although we do not have the hearing transcript, it does not appear from reviewing the WCJ s order that the Claimant s attorney requested a continuance or indicated he needed additional time to obtain evidence. Employer s Brief at 3 n.2. 6

7 waited until November 2012 to present evidence that would have been available in Where a claimant fails to file a timely appeal from a WCJ s decision, the WCJ s findings and conclusions become final and unassailable. Id. at 722. Accordingly, we affirm. BONNIE BRIGANCE LEADBETTER, Judge 7

8 IN THE COMMONWEALTH COURT OF PENNSYLVANIA John Galizia, : Petitioner : : v. : No C.D : Workers Compensation Appeal : Board (Woodloch Pines, Inc.), : Respondent : O R D E R AND NOW, this 12th day of June, 2015, the order of the Workers Compensation Appeal Board is hereby AFFIRMED. BONNIE BRIGANCE LEADBETTER, Judge