Penalty and Fee Award Reversed

Claimant fell off a ladder sustaining injuries to her head, shoulder, and back while in the course and scope of her employment.  Subsequently, questions arose as to who employed Claimant at the time of her injury, Deep South BH & R Enterprises, LLC (hereinafter “Deep South”) or DS & B Services, LLC (hereinafter “DSB”).  Claimant testified that on the date of the accident she worked for Jose Buezo, the owner and sole member of Deep South.  Deep South did not carry workers’ compensation insurance.  Additional evidence at trial included Claimant’s paychecks listing both “DS Services, LLC” and “DS & B Services, LLC” on them, as well as a W-2 form listing her employer as DS & B Services, LLC.  DSB shared an office with Deep South and the owners of DSB were Mr. Buezo’s wife and son-in-law.  While Mr. Buezo had no ownership interest in and was not an employee of DSB, he testified that he assisted DSB find and direct workers because he spoke Spanish and many of DSB’s employees were Spanish speakers.  Mr. Buezo admitted that Claimant was an employee of DSB on the date of her accident.  This fact was confirmed by the testimony of Mr. Buezo’s son-in-law and co-owner of DSB at trial.  The WCJ found that Claimant was an employee of DSB and ordered that DSB and its insurer, LCI Workers Comp (“LCI”), pay Claimant’s benefits.  Claimant was also awarded penalties and attorney’s fees due to DSB’s arbitrary and capricious conduct in failing to pay benefits.

DSB and LCI appealed, assigning error to the WCJ’s finding that: 1) Claimant was an employee of DSB, 2) Claimant was entitled to indemnity benefits, and 3) in awarding penalties and attorney’s fees.  As to the first two assignments, the Fifth Circuit Court of Appeal affirmed, finding that a reasonable factual basis existed in the record to support the WCJ’s findings.  With respect to the award of penalties and fees, the Fifth Circuit noted that an employer may be liable for penalties and attorney’s fees for the failure to authorize medical treatment except where the claim is reasonably controverted, such as the case where the employer/carrier is engaged in a non-frivolous legal dispute.  The Court found that the WCJ erred in concluding that employer/carrier had provided no valid reason for the denial of benefits, noting that DSB and LCI presented evidence that Claimant was employed by Mr. Buezo, not DSB at the time of her injury.  Accordingly, the Fifth Circuit found that DSB and LCI had reasonably controverted the claim and reversed the WCJ’s assessment of penalties and attorney’s fees.

Villatoro v. Deep South BH & R Enterprises, LLC, et al.