Fourth Circuit Denies LHWCA Attorney’s Fees Because Compensation Was Paid Within 30 Days

In a new, important Longshore and Harbor Workers’ Compensation Act (“LHWCA”) decision, the Fourth Circuit addressed Section 928(a) attorney’s fees and the meaning of “compensation” for that statute.

In Lincoln v. Dir., OWCP, the employee filed a hearing loss claim on May 24, 2011.  Two days later, the employer filed a notice of controversion explaining that it accepted the fact that the employee’s hearing loss was noise-induced, but that it need additional information to determine the correct disability payment.  The OWCP did not formally serve notice of the claim on the employer until June 14, 2011.  Then, on July 7, 2011, the employer voluntarily paid the employee $1,256.84, amounting to compensation for “0.5% [binaural] hearing loss” and the equivalent of one week of PPD pay under the maximum compensation rate.  Ultimately the claim settled for the value of a 10% binaural hearing loss.

The issue in this case arose when the employee’s attorney filed an attorney fee petition against the employer.  The employer opposed the petition saying that it paid disability benefits within 30 days of receiving official notice of the claim.  The district director agreed.  So did the BRB and the U.S. Court of Appeals for the Fourth Circuit.

The LHWCA’s attorney fee provision, 33 U.S.C. § 928, states in pertinent part:

(a) 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

(b) If the employer of carrier pays or tenders payment of compensation without an award pursuant to section 14(a) and (b) of this Act, and thereafter a controversy develops over the amount of additional compensation, if any, to which the employee may be entitled, the deputy commissioner or Board shall set the matter for an informal conference and following such conference the deputy commissioner or Board shall recommend in writing a disposition of the controversy.  If the employer or carrier refuse to accept such written recommendation, within fourteen days after its receipt by them, they shall pay or tender to the employee in writing the additional compensation, if any, to which they believe the employee is entitled.  If the employee refuses to accept such paymeent or tender of compensation, and thereafter utilizes the services of an attorney at law, and if the compensation thereafter awarded is greater than the amount paid or tendered by the employer or carrier, a reasonable attorney’s fee based solely upon the difference between the amount awarded and the amount tendered or paid shall be awarded in addition to the amount of compensation.

For Section 928(a), the term “any compensation” is unambiguous.  If the employer pays claimant some compensation, the employer is not liable for Section 928(a) fees.  Here, the Fourth Circuit recognized that “the medical evidence establishing the extent of the claimant’s injury, and thus the amount of his benefits, is often in flux and cannot be ascertained with any degree of certainty within 30 days.  Section 928 provides an employer a safe harbor: if it admits liability for the claim by paying some compensation to the claimant for a work-related injury and only contests the total amount of the benefits, it is sheltered from fee liability under § 928(a).”

Section 928(b) applies when the parties disagree as to the total amount of compensation.  The Fourth Circuit strictly construes Section 928(b) as requiring: “(1) an informal conference, (2) a written recommendation from the deputy or Board, (3) the employer’s refusal to adopt the written recommendation, and (4) the employee’s procuring of the services of a lawyer to achieve a greater award than what the employer was willing to pay after the written recommendation.”  Here, the employee failed to request an informal conference—thus, his claim failed to qualify for Section 928(b) attorney’s fees.

When read together, Sections 928(a) and 928(b) plainly do not provide fees for every case where the claimant is successful.  Instead, “the structure of § 928 establishes that, until the claimant has exhausted the non-adversarial avenues for resolving his claim, he cannot avail himself of the fee-shifting provisions.”  In Lincoln, the payment of one week’s compensation within 30 days of having received official written notice of the claim prevented the assessment of Section 928(a) fees.  The employee’s attorney can still recover fees, but he can only recover Section 928(c) fees paid by his client.

The court also addressed whether the employer’s one-week payment was true “compensation.”  There was a case not too long ago (Green v. Ceres Marine Terminals) where the employer paid $1 in compensation and it was held that this was not a “true” compensation payment.  The Lincoln court distinguished Green, finding that the $1 payment in Green was “untethered to the underlying claim,” but that the $1,256.84 payment in Lincoln was “directly tied to Lincoln’s alleged injury.”

Considering the foregoing, the Fourth Circuit affirmed the denial of employer-paid attorney’s fees.

Lincoln v. Dir., OWCP, — F.3d —- (4th Cir. 2014).