County of Allegheny v. WCAB: Attorneys’ Fees Awarded cannot be refunded after successful appeal

In a unanimous decision, the Supreme Court of Pennsylvania ruled in County of Allegheny v. Workers Compensation Appeal Board that an award of attorneys’ fees against an employer for an “unreasonable contest” cannot be disgorged, even after a successful appeal by the employer.

The Workers Compensation statute provides for attorneys’ fees to be awarded to an employee unless the employer can show that the contest of liability had “a reasonable basis.” In this case, the Workers Compensation Appeal Board assessed $14,750 in attorneys’ fees against Allegheny County for unreasonably contesting an award. Allegheny County asked for a supersedeas of this amount pending appeal, which was denied. The County paid the amount, and appealed the case, ultimately winning before the Commonwealth Court. But the County’s request to be repaid its attorneys’ fees was denied.

Baer: Workers Comp statute provides no repayment for attorneys’ fees

Writing for a unanimous Court, Justice Baer explains that the courts are without authority from the legislature to order the repayment of attorneys’ fees in Workers Compensation cases after the payments have been made. While the Workers Compensation statute explicitly allows employers to seek repayment from a state-created fund for amounts paid out to a worker which are later overturned on appeal, there is no such fund or provision for the repayment of attorneys fees.

A supersedeas should have been granted by the courts below for this very reason, as government units are supposed to be granted supersedeas on appeal pursuant to Pa.R.A.P. 1781. Having been denied this right, however, Allegheny County was left without a remedy. This conclusion was bolstered by the plain language of the statute, and also by the underlying policy considerations the legislature embraced. Liability contests by employers are meant to be discouraged, and if a few employers end up losing out on some attorneys’ fees, this is better for the Commonwealth’s workers in the long run.

“It is not the function of this Court to add missing language to a statute in order to provide relief,” the Court concluded.

Conclusion: “Unreasonable” is in the eyes of the beholder

The Court properly concludes that the statute does not contemplate the disgorgement of attorneys’ fees paid out before the appeal. This case reveals what appears to be a hole in the statute. An employer can make a challenge to liability that is so reasonable that it’s actually the winning argument on appeal, but can still end up paying out the attorneys’ fees attendant on an “unreasonable challenge.”

This case will hit self-insured private employers hardest. Because private employers are not entitled to the supersedeas of Pa.R.A.P. 1781, those who self-insure will be left in a tight spot if their contest to liability is deemed “unreasonable.” An appeal will leave them without remedy, and may ultimately force them to settle sooner.

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