Attorney’s Fees Owed Despite Prepayment of Benefits

The Benefits Review Board (“BRB”) issued a new unpublished attorney fee decision that addresses the operation of Section 28(a) in the Fifth Circuit.  Section 28(a) of the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) states:

If the employer or carrier declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim for compensation having been filed from the deputy commissioner, on the ground that there is no liability for compensation within the provisions of this Act, and the person seeking benefits shall thereafter have utilized the services of an attorney at law in the successful prosecution of his claim, there shall be awarded, in addition to the award of compensation, in a compensation order, a reasonable attorney’s fee against the employer or carrier in an amount approved by the deputy commissioner, Board, or court, as the case may be, which shall be paid directly by the employer or carrier to the attorney for the claimant in a lump sum after the compensation order becomes final.

In the BRB’s new decision, Claimant was injured on October 20, 2003.  Employer voluntarily paid temporary total disability benefits to Claimant from December 9, 2003 to June 16, 2009.  Thereafter, Employer paid out Claimant’s scheduled loss on a weekly basis until all permanent partial disability (“PPD”) benefits were paid in full.

Now here’s the interesting part.  Employer last issued a disability benefits check to Claimant on December 2, 2010.  The check covered the disability period ending on December 12, 2010, meaning the Employer prepaid the final ten days of Claimant’s PPD benefits.  During that ten day period, Claimant filed a claim for additional compensation.  The claim was filed on December 8, 2010.  Employer received the new claim on December 10, 2010–two days before the PPD prepayment period ended.

The issue presented was whether Claimant was entitled to shift attorney’s fees to Employer pursuant to Section 28(a).  The BRB held that Claimant could shift fees and that Employer was liable for the payment.  The BRB reasoned (with internal citations omitted):

In this case, employer voluntarily paid claimant benefits prior to the filing of his claim.  Employer made its last payment on December 2, 2010, for a period of disability ending on December 12, 2010.  Employer concedes that notice of claimant’s claim for compensation was served on it on December 8, 2010, and received on December 10, 2010.  Employer’s payment of benefits prior to its receipt of claimant’s claim is irrelevant to employer’s liability for an attorney’s fee pursuant to Section 28(a).  The United States Court of Appeals for the Fifth Circuit, within whose jurisdiction this case arises, has held that, regardless of whether any benefits were paid prior to the filing of the claim, fee liability shifts to the employer pursuant to Section 28(a) once the 30-day period following employer’s receipt of the claim has expired without the payment of any benefits to the claimant.  Thus, employer’s voluntary payment of benefits to claimant for his work injury prior to the filing of his claim is irrelevant for purposes of determining its liability for an attorney’s fee under Section 28(a).  Moreover, we cannot accept employer’s assertion that Section 28(a) is not applicable because its payment on December 2, 2010 included a period of disability after the claim was filed.  Employer did not pay those benefits in response to the claimant’s claim.  In Andrepont v. Murphy Exploration & Prod. Co., 566 F.3d 415, 43 BRBS 27 (CRT) (5th Cir. 2009), the Fifth Circuit held that if employer admits liability by paying any benefits in response to the claim, employer cannot be held liable for a fee pursuant to Section 28(a).  In this case, employer did not pay any benefits in the 30 days after its receipt of the claim in response thereto, and in fact, controverted the claim on December 16, 2010.

Prudhomme v. Leevac Indus., LLC, BRB No. 13-0170 (Sep. 25, 2013)

Opinion: These are the type of facts that lead to interesting caselaw.  Here, Employer voluntarily paid seven years of benefits.  The claim was filed days after Employer’s last payment of benefits, with the payment covering a period of time extending beyond the claim filing date.  There was an obvious intention on Employer’s part to provide Claimant with LHWCA benefits, but that intention does not matter–per Prudhomme–because the intention did not exist after the written claim was filed–literally, over seven years after Employer admitted liability for the injury.

Just to play devil’s advocate, Andrepont does focus the relevant inquiry on the thirty day period after filing a written claim; but the overriding  purpose for LHWCA fee shifting is because the employer denied liability for the injury.  As stated in Andrepont (with internal citations omitted):

We have consistently construed 33 U.S.C. 928(a) to incorporate a condition precedent, namely that the employer must contest liability before section 928(a) authorizes fee-shifting.  In other words, we award attorneys’ fees under section 928(a) only if the employer believes it is not liable for any compensation or “no compensation is owing” regardless of the specific type of compensation requested.  Therefore, if the employer admits to liability for the injury and tenders any compensation, it is not liable for attorneys’ fees under section 928(a).

As stated plainly in the statute, the relevant period for determining if the employer has tendered some compensation is the thirty days after the filing of the written claim.  Accordingly, if the employer pays some partial compensation during those thirty days, thereby admitting to liability for the injury, section 928(a) does not apply.

Perhaps the Employer in Prudhomme walked the line between the last two sentences quoted from the Andrepont decision.  Did Employer tender “some compensation” in the thirty days after the filing of the written claim?  The BRB said, “No,” because Employer’s prepayment did not include the intent to pay the claim.  But, did Employer admit to liability for Claimant’s 2003 injury?  Absolutely.  And it paid benefits for seven years.

Unfortunately, the voluntary payment of benefits does not matter.  The Fifth Circuit’s decision in Pool Co. v. Cooper, 274 F.3d 173 (5th Cir. 2001) will likely decide the issue.  Cooper stated:

Although initially Pool voluntarily paid disability benefits to Cooper, it ceased making all such payments on April 25, 1994.  Cooper filed his claim for additional benefits on February 25, 1995, and Pool received written notice thereof on March 15, 1995.  Pool disclaimed further liability and declined to pay any further benefits within thirty days after receiving written notice of Cooper’s claim, and is thus liable for attorney’s fees under the plain language of the statute.  See 33 U.S.C. § 928(a) (awarding attorney’s fees where “the employer or carrier declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim for compensation having been filed from the deputy commissioner, on the ground that there is no liability for compensation”).  We find no basis in any statute, regulation, or case law for the BRB’s holding that Pool’s prior voluntary payment of benefits precluded liability under § 28(a).  Such payments preceded their receipt of written notice of Cooper’s claim, and are thus irrelevant to the question of an award under § 28(a).  We likewise attach no credence to Pool’s argument that an award of fees under § 28(a) is improper because Cooper’s claim was protective.  As discussed supra, that assertion is incorrect as a matter of fact and of law.

Considering the foregoing passage, it looks like the Fifth Circuit already stung the BRB in a similar case in the past.  Accordingly, the outcome in Prudhomme is not surprising.