*/
Workers’
Compensation Board
OPINION
ENTERED: June 9, 2017
CLAIM NO. 201565255
HON. JAMES D. HOWES PETITIONER
VS. APPEAL FROM HON. TANYA PULLIN,
ADMINISTRATIVE LAW JUDGE
APOLLO OIL
ROSCOE LOHR and
HON. TANYA PULLIN,
ADMINISTRATIVE LAW JUDGE RESPONDENTS
OPINION
AFFIRMING
*
* * * * *
BEFORE: ALVEY, Chairman, STIVERS and RECHTER, Members.
STIVERS,
Member.
Hon. James D. Howes (“Howes”), attorney for Roscoe Lohr (“Lohr”), the claimant
in the above-styled claim, seeks review of the March 22, 2017, Order of Hon.
Tanya Pullin, Administrative Law Judge (“ALJ”) awarding Howes an attorney fee
but declining to include an additional award of reimbursement of the litigation
costs he expended in the amount of $1,870.70.[1]
On appeal, Howes argues the ALJ had the authority to award
costs pursuant to KRS 342.325 and erred in failing to do so. We affirm.
Lohr filed a Form 101 on January 4,
2016, against Apollo Oil (“Apollo”) alleging a back injury occurring on October
20, 2015. The parties introduced medical
proof and Apollo introduced Lohr’s April 1, 2016, deposition which reveals Lohr
had substantial legal problems due to his failure to pay child support for two
children.
The June 23, 2016, Benefit Review
Conference Order reflects the contested issues were: “benefits per KRS 342.730;
injury as defined by the ACT; and TTD.” The final hearing was ultimately scheduled
for January 26, 2017.
On January 26, 2017, an agreed order
was executed and signed by Lohr, Howes, Apollo’s attorney, and the ALJ, which
reads as follows:
The Formal Hearing in this
claim was cancelled as the parties came to an agreed settlement for $17,500.00
in lump sum for a full and final settlement including all waivers. The executed
Form 110 will be sent to the ALJ in due course.
On March 2, 2017, Howes filed a
Motion for Attorney Fee seeking an award of an attorney’s fee in the amount of
$3,500.00 pursuant to KRS 342.320 plus costs advanced pursuant to the
Employment Agreement.
On March 8, 2017, the ALJ approved a
Form 110, Agreement as to Compensation, executed by the parties. The agreement reflects Dr. Daniel Primm
assessed a 0% impairment rating and Dr. Anthony McEldowney assessed a 12%
impairment rating. The agreement further
reflects a diagnosis of right paracentral disc protrusion at L5-S1 with mild
right lateral recess and neural foraminal narrowing. Lohr settled for a lump sum of
$17,500.00. The agreement states medical
bills in the amount of $11,459.73 were to be paid and any other bill not paid
was denied. The lump sum settlement is broken
down as follows:
247.23 * .08 * .85 * 1 =
$16.81 * 408.1034 = $6,860.22
Waiver or buyout of past
medical benefits $389.78
Waiver or buyout of future
medical benefits $6,500.00
Waiver of vocational
rehabilitation
$250.00
Waiver of right to reopen $3,500.00
The agreement concluded with the
following language:
Based upon the
aforementioned promises and consideration, the Claimant hereby waives all
rights pursuant to the terms outlined in this agreement and this claim is
dismissed against the Defendant/Employer. Any right to further reopening of the
claim upon any ground is hereby released and waived.
On March 17, 2017, Howes filed
Amended Motion for Attorney Fee seeking to have the ALJ award $1,870.70 in
addition to the previously requested attorney fee of $3,500.00. Noting he obtained a successful resolution of
the claim, Howes maintained that absent an order awarding reimbursement of the
costs he advanced, the settlement proceeds aside from his attorney fee will be
paid in satisfaction of a child support lien, all to his detriment. Howes also asserted advancement of the
litigation costs was necessary in order to successfully prosecute the claim
without which the child support arrearage would not have been paid.
On March 22, 2017, the ALJ rendered an
Order approving an attorney fee of $3,500.00 to be paid from the lump sum
settlement. Regarding Howes’ request for
an order awarding costs from the settlement proceeds, the ALJ ruled as follows:
As to the issue of counsel’s request for
an order approving costs in this claim, the Administrative Law Judge does not
have jurisdiction to award costs. The Administrative Law Judge is limited to
approving attorney fees only therefore Plaintiff’s motion for costs is hereby OVERRULED.
On appeal, Howes contends
“contractual matters between the claimant and his attorney are not totally
independent of the compensability of the employee.” As support for this argument, Howes cites to
KRS 342.325 which reads as follows:
All questions arising under
this chapter, if not settled by agreement of the parties interested therein,
with the approval of the administrative law judge, shall be determined by the
administrative law judge except as otherwise provided in this chapter.
Howes contends the Board has
jurisdiction to consider any such question arising from an agreement. Howes asserts the costs incurred directly
impact the compensation the claimant receives.
As such, “costs are part of the entire package of compensation, and the
amount and manner in which these costs are paid form an integral part of the
compensatory process.” Howes argues to
deny a claimant’s legal representative the right to reimbursement of his or her
costs, justifiably and reasonably incurred, is to deny a claimant access to a
lawyer and to the compensation process. Howes
further argues that every legal service agreement in the compensation process
contains a provision regarding the reimbursement of costs. Thus, the ALJ has jurisdiction over the
provision related to costs as well as other provisions contained within the
document. Howes concludes as follows:
Advanced costs are automatically recovered by Plaintiff’s
lawyers who successfully recover damages in civil claims. In such cases, the
Plaintiff’s lawyer is in full control of the funds that are paid to him on
behalf of his client by agreement or by judgment. This is not the case,
however, in the Workers’ Compensation arena. All funds recovered in a workers’
compensation claim are disbursed at the pleasure of the carrier. If the carrier
chooses to repay a Medicaid lien, a tax levy or a child support lien, prior to
making any disbursement of funds to the Plaintiff’s attorney, there is little
presently that the attorney can do about it. Consequently, the attorney in such
cases ends up being a slave to his client’s creditors without even so much as a
guarantee that he will break even when the claim is concluded. It is enough to
expect the attorney to earn his fee on a contingency basis, the carrier is no
guarantee of payment, without also expecting him to forfeit costs that he
invested in order to achieve a favorable result. If the ALJ’s Order is affirmed
the undersigned has no choice but to pursue his own client for reimbursement of
costs that should have been rightly reimbursed to him out of the proceeds of
settlement. This yields an absurd result because ultimately it is the Claimant
who will suffer the loss by expending resources he doesn’t have to achieve a
result that inures only to the benefit of a 3rd party.
Finally, KRS 342.180 cannot be used to deprive an attorney of
his costs on the basis that he is a creditor for which no assignment of
compensation under Chapter 342 is effective. The undersigned submits that if
the argument could be made that this statute bars the collection of costs
necessarily incurred to prosecute the claim, then it also bars collection of
the attorney’s fee. In other words, there is only one exception to the
prohibition on assignment of benefits, and that is court ordered or
administratively ordered child support. However, if the attorney fee is not
also an exception, the statute would yield an unworkable result because the
Plaintiff’s attorney would have no lien on the proceeds. The same philosophy
can be applied to the recoupment by the attorney of costs advanced.
We know of no statutory provision permitting
the ALJ to order reimbursement to an attorney of the costs expended in
representing a claimant in a workers’ compensation claim.
KRS 342.310(1) reads as follows:
(1) If any administrative law judge, the board, or any court
before whom any proceedings are brought under this chapter determines that such
proceedings have been brought, prosecuted, or defended without reasonable
ground, he or it may assess the whole cost of the proceedings which shall
include actual expenses but not be limited to the following: court costs,
travel expenses, deposition costs, physician expenses for attendance fees at
depositions, attorney fees, and all other out-of-pocket expenses upon the party
who has so brought, prosecuted, or defended them.
The above-cited statute is the only
statute allowing the ALJ to assess the costs incurred during the
proceedings. However, Howes does not
seek reimbursement pursuant to this section.
KRS 342.320 directs the ALJ shall
approve all attorney fees and sets out the manner in which the attorney fee is
to be calculated and the methods by which the attorney fee may be paid. There is no provision within this section permitting
the ALJ to award reimbursement of litigation costs.
In
the case sub judice, KRS 342.180 supersedes
any provision in a settlement agreement and/or order directing reimbursement of
Lohr’s litigation costs be paid from the settlement proceeds.
KRS 342.180 reads as follows:
No claim for compensation under this chapter shall be assignable,
except court or administratively-ordered child support pursuant to KRS 403.212.
All compensation and claims therefor, except child support obligations, shall
be exempt from all claims of creditors.
In his Amended Motion for Attorney Fee
and in his brief, Howes did not dispute the existence of a valid child support
lien, including the amount of the lien, against the settlement proceeds. Assuming, arguendo,
the settlement agreement called for reimbursement of the litigation costs out of
the proceeds, the ALJ could not have enforced that agreement since KRS 342.180
directs a claim for court or administratively ordered child support per KRS
403.212 is the only claim which may be paid from workers’ compensation
benefits. Thus, Apollo was required to
dispense all of the funds, less the attorney fee due Howes, pursuant to KRS
342.180. Aside from an attorney’s fee lien, KRS 342 et. seq. does not create a
lien in favor of the claimant’s attorney for reimbursement of expended
litigation costs. As a result, Apollo
properly dispensed all settlement proceeds and cannot be required to pay any
amount more than $17,500.00.
Moreover, this Board nor the ALJ has
the authority to direct $1,870.70 of the funds paid pursuant to a valid child
support lien be paid to Howes as reimbursement of litigation costs. Such an order would be in violation of KRS
342.180.
Finally, we note there is nothing in
the record signed by Lohr permitting Howes to prosecute this appeal in an
attempt to secure reimbursement of his litigation costs from the settlement
proceeds thereby reducing the payment of Lohr’s delinquent child support
obligation.
The responsibility of procuring
reimbursement of an attorney’s litigation costs rests with the claimant’s
attorney and not the ALJ and/or this Board.
Accordingly, for the reasons stated herein,
the March 22, 2017, Order of the Administrative Law Judge approving Howes’
attorney fee and declining to award costs out of the lump sum settlement is AFFIRMED.
ALL CONCUR.
COUNSEL
FOR PETITIONER:
HON JAMES D HOWES
5438 NEW CUT RD STE 201
LOUISVILLE KY 40214
COUNSEL
FOR RESPONDENT:
|
HON WHITNEY LUCAS 325 MAIN ST STE
240 |
ADMINISTRATIVE
LAW JUDGE:
HON TANYA PULLIN
657 CHAMBERLIN AVE
FRANKFORT KY 40601
