S. Magurczek v. Philadelphia Federal Credit Union (WCAB)

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Stanley Magurczek, :
Petitioner :
:
v. : No. 752 C.D. 2021
: Submitted: July 1, 2022
Philadelphia Federal Credit Union :
(Workers’ Compensation Appeal :
Board), :
Respondent :
BEFORE: HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE STACY WALLACE, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE WALLACE FILED: October 20, 2022
In this appeal from a decision of the Workers’ Compensation Appeal Board
(Board), Stanley Magurczek (Claimant) has filed for summary relief pursuant to Pa.
R.A.P. 1532(b). He contends the Pennsylvania Supreme Court’s recent decision in
Lorino v. Workers’ Compensation Appeal Board (Commonwealth of Pennsylvania),
266 A.3d 487 (Pa. 2021) completely resolves all issues raised in his Petition for
Review (Petition) and requires this Court to summarily reverse the Board’s decision.
While we agree with Claimant’s primary argument regarding the effect of Lorino,
we do not agree that Lorino resolves every issue raised in the Petition. Therefore,
we grant the Application for Summary Relief (Application) in part, reverse the
Board’s order, and remand this matter for further proceedings.
I.
In July of 1998, Claimant suffered an injury to his left knee while in the course
of his employment with Philadelphia Federal Credit Union (Employer). Pursuant to
a settlement agreement under the Workers’ Compensation Act (Act)1 reached in
2003, Employer remains responsible for reasonable medical expenses relating to the
injury. On August 6, 2019, Employer filed a request for utilization review (UR
Request) with the Bureau of Workers’ Compensation (Bureau).2 The Bureau denied
the UR Request. In response, Employer applied for review by a workers’
compensation judge (WCJ). The WCJ affirmed the Bureau’s determination but held
that Employer had a reasonable basis for filing the UR Request.3 The WCJ then
awarded $2,500 in attorney’s fees to Claimant’s counsel (Counsel) pursuant to
Section 440(a) of the Act, 77 P.S. § 996(a).4
Both Claimant and Employer appealed to the Board. Relying on past cases of
this Court holding that attorney’s fee awards are not available under Section 440
where the employer presents a “reasonable contest,” see, e.g., Wood v. Workers’
1
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4; 2501-2710.
2
Section 306(e) of the Act provides a process through which an employer can challenge the
“reasonableness or necessity” of any medical treatment received by an injured worker pursuant to
the Act. 77 P.S. § 531(6). Here, Employer challenged the necessity of a certain topical cream
used by Claimant to treat knee and low-back pain. See Certified Record (C.R.) Item No. 4 (WCJ
Decision) at 5-6.
3
Employer supported the UR Request with multiple reports from a physician who opined that
Claimant’s pain was adequately managed by oral medication and injections, rendering the topical
cream redundant. WCJ Decision at 6, Finding of Fact (FOF) 9(e).
4
Added by Act of Feb. 8, 1972, P.L. 25.
2
Compensation Appeal Board (Country Care Private Nursing), 915 A.2d 181, 186
(Pa. Cmwlth. 2007), Employer argued the WCJ could not award fees to Claimant
while simultaneously acknowledging it had a reasonable basis for filing the UR
Request. Importantly, Employer’s appeal did not challenge the WCJ’s denial of the
UR Request, only her award of attorney’s fees. Claimant, on the other hand,
contended the WCJ failed to adequately explain why the amount of fees awarded
was less than that reflected in Counsel’s billing records.
The Board reversed the WCJ’s award of attorney’s fees on the basis that
“[p]ast precedent has firmly interpreted Section 440 of the Act . . . as only allowing
an award of attorney’s fees where an employer has been determined to have engaged
in an unreasonable contest.” C.R. Item No. 9 (Board Decision) at 2 (citing, inter
alia, Thompson v. Workers’ Comp. Appeal Bd. (Cinema Ctr.), 981 A.2d 968 (Pa.
Cmwlth. 2009); Yeagle v. Workmen’s Comp. Appeal Bd. (Stone Container Corp.),
630 A.2d 558 (Pa. Cmwlth. 1993)). Claimant now appeals to this Court.
II.
Claimant seeks summary relief pursuant to Pa. R.A.P. 1532(b), which allows
for immediate disposition of an appeal where “the right of the applicant thereto is
clear.” This procedure is “similar to the type of relief envisioned by the
Pennsylvania Rules of Civil Procedure regarding judgment on the pleadings and
peremptory and summary judgment”—that is, summary relief may only be granted
where there are no material disputes of fact and the law clearly favors the applicant’s
position. Explanatory Note to Pa. R.A.P. 1532; see also T.L.P. v. Pa. State Police,
249 A.3d 1, 5 (Pa. Cmwlth. 2021).
3
III.
Claimant’s primary argument for summary relief is that Lorino repudiated the
reasoning relied upon by the Board to deny him an award of attorney’s fees. With
this, we largely agree. Lorino overturned this Court’s longstanding rule that Section
440 only allowed attorney’s fees if the employer unreasonably contested (or
unreasonably prosecuted, in the case of requests for utilization review like that
considered here) the claimant’s petition for benefits. In relevant part, Section 440(a)
provides as follows:
In any contested case where the insurer has contested liability in whole
or in part . . . the employe [sic] . . . in whose favor the matter at issue
has been finally determined in whole or in part shall be awarded, in
addition to the award for compensation, a reasonable sum for costs
incurred for attorney’s fee, witnesses, necessary medical
examination, and the value of unreimbursed lost time to attend the
proceedings: Provided, That cost for attorney fees may be excluded
when a reasonable basis for the contest has been established by the
employer or the insurer.
77 P.S. § 996(a) (emphasis added). In Lorino, the Supreme Court held this Court’s
previous understanding of this provision “disregarded the distinction between the
terms ‘shall’ and ‘may.’” 266 A.3d at 494. Thus, consistent with the permissive
definition of the word “may,” Lorino held that where “the employer has established
a reasonable basis for [its] contest . . . the WCJ is permitted, but not required, to
exclude an award of attorney’s fees.” Id. (emphasis in original).5
While the Board properly followed this Court’s past precedent, its decision
has been rendered erroneous by the Supreme Court’s intervening decision in Lorino.
See Board Decision at 4 (“Section 440 does not give WCJ’s [sic] discretion to award
5
Consistent with this Court’s prior caselaw and a straightforward reading of Section 440(a), Lorino
held that when an employer’s contest is not reasonable, “an award [of attorney’s fees] is
mandatory.” 266 A.3d at 494 (emphasis in original).
4
attorney’s fees where the employer has presented a reasonable contest.”). We
therefore grant the Application to the extent it seeks reversal of the Board’s holding
that attorney’s fees under Section 440 are automatically excluded based on the
WCJ’s finding that Employer had a reasonable basis for filing the UR Request.
Claimant, however, goes further than this in his briefing on the Application.
In addition to arguing for reversal of the Board, Claimant also contends he is entitled
to attorney’s fees for time spent appealing to the Board and this Court. See Br. in
Supp. of App. at 5. The legitimacy of this request depends on whether these
appellate proceedings protected Claimant’s interests, as opposed to furthering
Counsel’s pecuniary gain, alone.
In Weidner v. Workmen’s Compensation Appeal Board (Firestone Tire &
Rubber Co.), 442 A.2d 242, 245 (Pa. 1982), our Supreme Court held that an attorney
for a workers’ compensation claimant may only recover legal fees under Section 440
for work performed in the client’s interest, rather than his own. When the attorney
works to secure benefits for the claimant or defend against an employer’s attempt to
terminate or reduce benefits, his efforts are squarely in the claimant’s interest. This
contrasts with effort expended for the sole purpose of obtaining legal fees after the
claimant’s desired outcome has been achieved. Appeals focused solely on the issue
of attorney’s fees are often, but not always, in the attorney’s sole interest and thus
not reimbursable under Section 440. Id.If the claimant and his attorney have a contingency fee agreement,6 and the
relevant type of proceeding under the Act cannot result in an award of wage-loss
benefits from which the attorney would draw his fee, an appeal focused solely on
6
Under such an agreement, the attorney takes a percentage of the claimant’s overall monetary
recovery, but only if “the lawsuit is successful or is favorably settled out of court.” Black’s Law
Dictionary 399 (11th ed. 2019).
5
whether fees should be awarded to counsel does not involve the claimant’s interests.
See Allums v. Workmen’s Comp. Appeal Bd. (Westinghouse Elec. Corp.), 532 A.2d
549, 552 (Pa. Cmwlth. 1987) (observing that because the claimant in Weidner was
defending against a termination petition and had a contingency agreement with his
attorney, he “had nothing to lose if the award of counsel fees was ultimately reversed
on appeal”). By contrast, if an appeal over counsel fees will save the claimant from
paying those fees as a percentage of an award of wage-loss benefits, see Arnold v.
Workers’ Compensation Appeal Board (Baker Industries), 859 A.2d 866, 871-73
(Pa. Cmwlth. 2004), or if the claimant and his attorney have an hourly fee agreement
not tied to the outcome of the case, the appeal may be in the claimant’s interest.
Allums, 532 A.2d at 552. Under these circumstances, a successful fee appeal benefits
the claimant by forcing the employer to pay counsel fees for which the claimant
would otherwise be responsible.
Here, the record is ambiguous as to the nature of Claimant and Counsel’s fee
arrangement. The WCJ found that they have a contingency agreement providing
that Counsel will receive 20% of Claimant’s monetary recovery, if any. WCJ
Decision at 10, FOF 23. This finding, however, is not supported by substantial
evidence. Counsel7 did submit into the record a copy of a contingency fee
agreement. C.R. Item No. 15 (providing that Counsel will receive “twenty (20%)
percent of any recovery of benefits past, present and into the future which are
awarded . . . .”). But inexplicably, this agreement is between Claimant and another
law firm. Id. (indicating that “Mickey & Moran, P.C.” will represent Claimant in a
7
We note that the attorney who represented Claimant before the WCJ is different from the attorney
representing him on appeal, but also that both counsel are affiliated with the same law firm, Badey,
Sloan & DiGenova, P.C. For convenience, we refer to both as “Counsel” and employ male
pronouns for both attorneys.
6
suit against Employer). As such, it cannot support the WCJ’s finding that “Claimant
and his Counsel . . . have a fee agreement, which calls for the payment of a 20%
attorney fee for his representation in this matter.” WCJ Decision at 10, FOF 23.
Complicating matters further, Counsel indicates in his brief in support of the
Application that he and Claimant have an hourly agreement entitling him to $250
per hour. Br. in Supp. of App. at 5. This assertion is supported by testimony from
Claimant acknowledging he signed such an agreement with Counsel’s firm, Badey,
Sloan & DiGenova. See C.R. Item No. 12 (8/20/20 Hearing Transcript) at 15-16.
Claimant also verified a physical copy of this agreement during the same hearing,
but it appears Counsel neglected to enter the document into evidence. Id. at 16
(Counsel indicating the agreement “will be uploaded”).
In view of these circumstances, we will remand this matter to the Board with
instructions to further remand to the WCJ for additional fact-finding as to the true
nature of Claimant’s fee arrangement with Counsel. This remand is necessary
because whether the agreement is on an hourly or contingency basis is dispositive of
the attorney’s fees issue presented by this appeal. Cf. Robinson Twp. v.
Pennsylvania, 83 A.3d 901, 1000 (Pa. 2013) (clarifying applicable law but
remanding for further factual development and ultimate legal determination).
Both Claimant and Employer appealed from the WCJ’s decision awarding
fees for Counsel’s work defending against the UR Request. As noted above,
Employer’s appeal did not seek to overturn the WCJ’s denial of the UR Request—
it dealt solely with the issue of Section 440 attorney’s fees.8 Similarly, Claimant’s
8
In its brief to this Court, Employer argues there was no basis for an award of attorney’s fees
pursuant to Pa. R.A.P. 2744. True or not, this contention is beside the point. The WCJ awarded
fees to Counsel under Section 440 of the Act, not pursuant to Rule 2744. The latter rule provides
for fee awards where “an appeal is frivolous or taken solely for delay,” or where the appealing
7
appeal addressed only the amount of fees awarded. Claimant then appealed to this
Court after receiving an adverse decision from the Board. Because these
proceedings dealt solely with Section 440 attorney’s fees, and because the
underlying substantive petition was one for utilization review, the appellate
proceedings only implicate Claimant’s interest if he will be required to pay Counsel
out-of-pocket in the event the fee award is reversed.9 See Allums, 532 A.2d at 552.
Accordingly, the WCJ may only award counsel fees in this matter if she determines
Counsel and Claimant have an hourly fee agreement that entitles Counsel to payment
regardless of the outcome of the case.
IV.
Although we have resolved the Application, we must also address an
additional issue raised in the Petition that does not implicate the Supreme Court’s
recent decision in Lorino. In the Petition, Claimant argues the WCJ “failed to issue
a reasoned decision . . . explain[ing] why she . . . reduced the amount of hourly fees”
to $2,500 from the $6,925 reflected in Counsel’s billing records. Petition at 4, ¶ 18.
This is an invocation of Section 422(a) of the Act, 77 P.S. § 834, which requires
party engages in “dilatory, obdurate or vexatious” conduct. This standard differs starkly from an
award of counsel fees under Section 440, which requires only that the claimant prevail on “the
matter at issue” for which he seeks fees, and that the amount of fees be “reasonable.” 77 P.S. §
996(a). Therefore, because neither the Board nor the WCJ made any ruling pursuant to Rule 2744,
we reject Employer’s argument.
9
This situation differs from the facts of Thomas v. Workers’ Compensation Appeal Board
(Delaware County), 746 A.2d 1202 (Pa. Cmwlth. 2000), on which Claimant relies. There, the
claimant’s attorney pursued a penalty petition and multiple related appeals to force the employer’s
compliance with an order awarding wage-loss benefits and counsel fees. These proceedings were
clearly in the claimant’s interest because the employer withheld not just counsel’s fees, but also a
substantial portion of the wage-loss benefits due directly to the claimant. See id. at 1205. This is
unlike the situation at hand, where both Counsel’s and Employer’s appeals dealt solely with the
issue of Section 440 attorney’s fees.
8
workers’ compensation judges to issue a “reasoned decision” in every case that
“clearly and concisely states and explains the rationale” for the judges’ findings and
conclusions. A decision meets this requirement if it “allows for meaningful
appellate review without further elucidation,” or guesswork as to the judge’s
rationale. ICT Grp. v. Workers’ Comp. Appeal Bd. (Churchray-Woytunick), 995
A.2d 927, 932 (Pa. Cmwlth. 2010) (citation omitted). Additionally, Section 440(b)
requires specific findings on the following subjects whenever a workers’
compensation judge awards counsel fees:
[T]he amount and the length of time for which such counsel fee is
payable based upon the complexity of the factual and legal issues
involved, the skill required, the duration of the proceedings and the time
and effort required and actually expended.
77 P.S. § 996(b).
Counsel submitted into evidence an “Affidavit of Quantum Meruit Time”
(Affidavit) that indicated he spent 27.7 hours on this litigation. See C.R. Item No.
17. The Affidavit also provided that, based on Counsel’s expertise and experience
level, $250 per hour was a reasonable rate of compensation. In her findings of fact,
the WCJ acknowledged this document, but ultimately concluded “a fair and
reasonable valuation” of Counsel’s services would be $2,500, or $250 multiplied by
10 hours. WCJ Decision at 10, FOF 14, 26. The WCJ added only a brief outline of
the duration of the proceedings.10 She did not explain why 27.7 hours was an
excessive amount of time to expend on these proceedings or, conversely, why the
relative “complexity of the factual and legal issues involved” necessitated only 10
hours of work. 77 P.S. § 996(b). This is not a “reasoned decision” within the
10
The WCJ noted counsel’s efforts covered “preparation and appearance at nine (9) hearings,
obtaining medical records, the Claimant’s live testimony, the preparation of a Brief as well as
correspondence of [sic] telephone calls . . . .” WCJ Decision at 10, FOF 26.
9
meaning of Section 422: it necessarily leaves the reader to guess why the WCJ did
not consider the $6,925 indicated by the Affidavit reasonable compensation for
Counsel’s efforts. While a workers’ compensation judge may deviate from the hours
reflected in an attorney’s billing records to arrive at a “reasonable sum” within the
meaning of Section 440, she must always explain the basis for that decision in
accordance with Section 422.11 Furthermore, aside from briefly sketching the
“duration of the proceedings” before her, the WCJ did not address any of the matters
enumerated in Section 440(b). These omissions prevent us from conducting
“meaningful appellate review.” ICT Grp., 995 A.2d at 932. Accordingly, we will
remand the matter for the WCJ to clarify her rationale for reducing Counsel’s fee
award. If she deems it necessary, the WCJ may take additional evidence on this
issue.
______________________________
STACY WALLACE, Judge
11
To be absolutely clear, Lorino establishes that when a contested case is resolved in favor of an
employee, a workers’ compensation judge has discretion to award or deny attorney’s fees in the
face of an employer’s reasonable contest. 266 A.3d at 494. Independent of that holding, Section
422 imposes an obligation on the judge to adequately explain her decisions in this regard, including
whether to award a lesser amount of fees than is requested by the claimant’s attorney.
10
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Stanley Magurczek, :
Petitioner :
:
v. : No. 752 C.D. 2021
:
Philadelphia Federal Credit Union :
(Workers’ Compensation Appeal :
Board), :
Respondent :
ORDER
AND NOW, this 20th day of October 2022, the Application for Summary
Relief filed by Petitioner Stanley Magurczek is GRANTED IN PART and the June
10, 2021 order of the Workers’ Compensation Appeal Board is REVERSED.
Furthermore, this matter is REMANDED to the Board with instructions to further
remand to a Workers’ Compensation Judge for the following purposes:
1) Additional fact-finding as to the fee agreement between Petitioner and his
counsel, with the legal consequences of these findings to be determined in
accordance with this Court’s memorandum opinion; and
2) Issuance of a new decision clarifying the rationale behind the Workers’
Compensation Judge’s decision to deviate from the amount of fees reflected
in the Affidavit of Quantum Meruit submitted by Petitioner’s counsel, in
accordance with Sections 422(a) and 440(b) of the Workers’ Compensation
Act, 77 P.S. §§ 834, 996(b).
Jurisdiction relinquished.
______________________________
STACY WALLACE, Judge