One of the most contentious issues under the Longshore and Harbor Workers' Compensation Act (33 U.S.C.S. § 901 et seq.) in the last few years concerns the denial of an employer paid attorney fee to a successful claimant's attorney when the case fails to meet the strict guidelines for a fee under 33 U.S.C.S. § 928(b).That issue was addressed head on by the Fifth Circuit Court of Appeals in the recent decision of Andrepont v. Murphy Exploration & Production Co., 566 F.3d 415, 43 BRBS 27(CRT) (5th Cir. 2009). (Due to its importance, an order was entered on April 28, 2009, designating this case for publication.) In order to understand this decision and its impact, one must begin at the beginning.Under the American Rule, "the prevailing litigant is ordinarily not entitled to collect a reasonable attorney's fee from the loser."Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247, 44 L. Ed. 2d 141, 147, 95 S. Ct. 1612, 1616 (1975); see Hauenstein v. Lynham, 100 U.S. 483, 490-491, 25 L. Ed. 628, 631 (1880).In other words, each party, including the prevailing party, must bear its own fees.Buckhannon Bd. & Care Home, Inc. v. W. Va. Dept. of Health & Human Resources, 532 U.S. 598, 602, 149 L. Ed. 2d 855, 861, 121 S. Ct. 1835, 1839 (2001).One exception to the American Rule occurs where "explicit statutory authority" provides for a prevailing party to recover its fees.Id. [quoting Key Tronic Corp. v. United States, 511 U.S. 809, 819, 128 L. Ed. 2d 797, 807, 114 S. Ct. 1960, 1967 (1994)]. In such a case, however, the party seeking its attorney's fees must demonstrate that through the statutory provision relied upon, Congress "clearly intended to allow … recovery" of the fees sought.Lewis v. Federal Prison Indus., Inc., 953 F.2d 1277, 1281 (11th Cir. 1992) [citing Fitzgerald v. U.S. Civil Serv. Commission, 554 F.2d 1186, 1189 (D.C. Cir. 1977)].
The LHWCA provides such statutory authority for assessing fees against the employer under the provisions of 33 U.S.C.S. § 928(a) and (b).However, consistent with the American Rule, the Act also notes that "[i]n all other cases any claim for legal services shall not be assessed against the employer or carrier."33 U.S.C.S. § 928(b).
Section 928(a) applies "[i]f 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 … 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…."This section plainly reflects that where the employer denies benefits and the claimant's attorney prevails in obtaining benefits, his reasonable fee will be paid by the employer in addition to the claimant's award.SeePool Company v. Cooper, 274 F.3d 173, 186, 35 BRBS 109(CRT) (5th Cir. 2001).
However, the majority of Longshore cases involve situations where the employer has admitted the compensability of the claim and paid some benefits within 30 days of receiving written notice of the claim for compensation from the District Director, OWCP (the typical "how much" case involving a dispute over the nature and extent of disability).These cases will fall under Section 928(b), which wordily provides as follows:
If the employer or carrier pays or tenders payment of compensation without an award pursuant to section 14(a) and (b) of this Act [33 U.S.C.S. § 914(a) and (b)], 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 payment 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.
33 U.S.C.S. § 928(b) (Emphasis added).
Despite the long and rambling text of Section 928(b), the Ninth Circuit had concluded that it basically meant the same as Section 928(a) and therefore if the claimant's attorney was successful, then in addition to payments to the claimant, the employer would be responsible for the payment of the claimant's attorney's fee.SeeNational Steel & Shipbuilding Co. v. U.S. Dept. of Labor/OWCP, 606 F.2d 875, 881-883, 11 BRBS 68(CRT) (9th Cir. 1979); Matulic v. Director, OWCP, 154 F.3d 1052, 1060, 32 BRBS 148(CRT) (9th Cir. 1998).Accordingly, for 30 years, it was not seriously contested that the employer would be responsible for the fee if the claimant's attorney merely wins under Section 928(a) or (b).
However, in 1997, the Fifth Circuit had occasion to sift through Section 928(b) and uncovered four "shalls" in the statute which left little room for interpretation.SeeFMC Corp. v. Perez, 128 F.3d 908, 909-910, 31 BRBS 162(CRT) (5th Cir. 1997).Accordingly, they deciphered Section 928(b) to specifically require an informal conference before a fee could be assessed against the employer under Section 928(b).
Other panels of the Fifth Circuit found the "shalls," too, and agreed with FMC Corp. v. Perez that there were other prerequisites for the award of an employer paid attorney fee than merely winning.SeeStaftex Staffing v. Director, OWCP, 237 F.3d 404, 409, 34 BRBS 44(CRT) (5th Cir. 2000); Pool Co. v. Cooper, supra (5th Cir. 2001).They determined that an employer paid fee under Section 928(b) required all of the following:
1.An informal conference on the disputed issue;
2.A written recommendation on that issue;
3.The employer refuses to accept the recommendation.
Staftex, 237 F.3d at 409.
Before long, other circuits followed the Fifth Circuit map and also found the "shalls" and agreed that the plain wording of the statute required a successful claimant's attorney to prove certain prerequisites before he or she could obtain an employer paid fee.SeeVirginia International Terminals, Inc. v. Edwards, 398 F.3d 313, 318, 39 BRBS 1(CRT) (4th Cir. 2005), cert. denied, 546 U.S. 960, 163 L. Ed. 2d 362, 126 S. Ct. 478 (2005); Pittsburgh & Conneaut Dock Co. v. Director, OWCP, 456 F.3d 616, 627 (6th Cir. 2006), amended at 473 F.3d 253, 40 BRBS 33(CRT) (6th Cir. 2007).The Circuit Court of Appeals decisions were so overwhelming that even the Benefits Review Board was finally able to see the "shalls" through the haze and had no alternative but to require strict compliance with Section 928(b) in all jurisdictions other than the Ninth Circuit.Davisv. Eller & Co., 41 BRBS 58 (2007).
Needless to say, many claimants' attorneys were aghast at the trend and sought a case to directly confront the wave of decisions which was attacking their way of life.It was not long before such a case presented itself.Robert Andrepont had injured his knee.The employer voluntarily paid a scheduled award, but the claimant filed a claim seeking additional benefits.An informal conference was held in the case, but the claims examiner agreed with the employer that the claimant was not entitled to any benefits beyond the scheduled award.The employer quickly accepted the recommendation.The claimant subsequently pursued the case to the Administrative Law Judge, where he was awarded an additional period of permanent and total disability.Notwithstanding claimant's attorney's success, the Benefits Review Board denied an employer paid fee since the employer had accepted rather than rejected the claims examiner's recommendation.Andrepont v. Murphy Exploration & Production Co., 41 BRBS 1 (2007).See alsoWilson v. Virginia International Terminals, 40 BRBS 46 (2006).The decision was appealed to the Fifth Circuit and the battle lines were drawn.
In advance of the Fifth Circuit's opinion, the defense bar argued for strict interpretation of the plain reading of the statute.See "Trickle Turns Into Torrent of Attorney fee Denials" by this author in the February 2009 BRBS Commentary.On the other hand, the plaintiffs' bar argued that the purpose of the Act is to insure that a claimant receives a full recovery without it being diminished by attorney fees.See the April 2009 BRBS Commentary by Joshua T. Gillelan, II, who also argued the Andrepont case on behalf of the claimant to the Fifth Circuit.
On March 17, 2009, the Fifth Circuit rendered its long awaited decision in Andrepont v. Murphy Exploration & Production Co., supra, (2009).The court reaffirmed that an employer paid attorney fee under Section 928(b) for the successful prosecution of a claim is only permissible where:
1.There has been an informal conference on the disputed issue;
2.A written recommendation was rendered on that issue; and
3.The employer refuses to accept the recommendation.
Id., at 419.
In demanding strict compliance with the statute, the court summarily rejected the arguments of the plaintiffs' bar.First, the court noted that decisions to the contrary from the Ninth Circuit were inconsistent with the plain reading of the statute.Second, the court noted that under the basic tenets of statutory construction, the court cannot look to the purpose of the statute where the statute speaks with clarity on its face.Third, the court noted that if any inequity is created by the plain wording of the statute, it must be addressed to Congress and not the courts.Id., at 421.
Accordingly, since the employer in Andrepont accepted the claims examiner's recommendation rather than rejecting it, the claimant did not meet the third prerequisite for the award of an employer paid attorney fee.
When the smoke cleared, the disaster to the plaintiffs' bar seemed complete.But was it really?The successful claimant's attorney is still entitled to a fee.Andrepont v. Murphy Exploration & Production Co., supra, (2007).The only difference is that it is assessed as a lien on the claimant's compensation.33 U.S.C.S. § 928(c).There is no shame in accepting a fee from the claimant.You are entitled to be paid for your work and the claimant would not be required to pay unless you got something more for him or her than he or she would have gotten otherwise.Additionally, an injured shipyard worker is no more entitled to keep the full recovery in his or her claim than a quadriplegic in an automobile accident who pays his or her attorney a contingency fee out of his or her award.So let's forget about the guilt of taking part of a claimant's recovery and figure out how to do it in a humane fashion.
Where the fee is a lien on the claimant's compensation, the District Director or administrative law judge will establish the manner of payment.33 U.S.C.S. § 928(c).The payment may either be out of continuing compensation payments being made to the claimant or out of a lump sum of past benefits which the claimant receives.If continuing benefits are awarded to the claimant, the District Director or administrative law judge may award the full fee to be paid by the employer and that claimant's compensation be reasonably reduced over time until the attorney fee payment is absorbed.Alternatively, the District Director or administrative law judge may order that the fee be paid incrementally out of claimant's bi-weekly payments until it is paid in full.
If there is no continuing liability for additional compensation and only a lump sum payment of past accrued benefits, there are ways to see that the claimant's attorney gets paid.First, to preserve any lump sum of back benefits awarded, an attorney fee contract with the claimant could probably be devised which would require any lump sums be paid to the claimant's attorney's office so that enough could be placed in trust to potentially cover attorney fees, so long as enough was available to allow the claimant to live.Alternatively, an order could be devised to allow some of the funds to be deposited into the registry of the court until such time as the claimant's attorney's fees could be ruled upon.A claimant could also be ordered to place a portion of his or her recovery in a separate interest bearing account, monitored by the administrative law judge, to cover the cost of attorney fees, similar to a claimant's funding of a Medicare set-aside account.Finally, there is no doubt that an ingenious attorney could think of other ways to insure that he or she gets paid.
The bottom line is that, despite Andrepont, a successful claimant's attorney is still entitled to get paid, and methods can be devised to insure that payment so that it results in the least harm to the claimant.