Annotated Bibliography

Workers* Compensation

FEE DISPUTES IN WORKERS' COMPENSATION CASES:THE HENDRICKSIWEIDNER HEADACHE

I. INTRODUCTION

Whether a client is required to pay, or is released from paying attorney's fees after the client terminates his or her counsel to retain new counsel is always a touchy subject amongst attorneys and generally in the legal field. However, unlike in personal injury cases and other areas of law, the Workers' Compensation Act requires that fee agreements be approved by a Workers' Compensation Judge ("WCJ").' These fees are deducted from the claimant's ongoing weekly indemnity benefit. Thus, where a WCJ approves a fee agreement and then the client, at some later date, terminates his or her attorney, the issue arises as to whether the attorney with the approved fee agreement can continue to collect the fees and what, if any, rights or limitations the new attorney has in submitting and receiving approval of a new fee agreement. More importantly, the issue of which court can hear the dispute between the attorneys has been a contentious one, especially if the previous attorney is no longer informed of the status of the case by the court. In Hendricks v. Workers' Compensation Appeal Board (Phoenix Pipe & Tube), the Commonwealth Court of Pennsylvania set out to clarify the law on fee disputes in workers' compensation cases, as well as to establish the proper jurisdictional forum to hear such disputes.^ While the court successfully expressed the proper jurisdiction for fee disputes, it failed to give WCJs much guidance on resolving them.

Part II provides a discussion of the cases and issues that led to the Hendricks decision. An analysis of the court's holding in Hendricks is presented in Part III, which is followed by a critique

' 77 PA. STAT. ANN. § 998 (West 2002). ' Hendricks v. Workers' Comp. Appeal Bd. (Phoenix Pipe & Tube), 909

A.2d 445,446-47 (Pa. Commw. Ct. 2006).

797

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of the decision in Part IV, focusing on the absence of any guidance to WCJs in determining equitable resolutions of fee disputes. Lastly, Part V provides a brief summary of the issues discussed with some projection of the likely consequences.

11. BACKGROUND

In Hendricks, the Commonwealth Court of Pennsylvania dealt with the overarching issue of "whether a Workers' Compensation Judge (WCJ) and the Workers' Compensation Appeal Board (Board) have the authority to determine attorney's fees for successive counsel in a workers' compensation proceeding under Section 442 of the Workers' Compensation Act (Act)."^ As the court noted, the precedent of whether the Board has authority to decide a fee dispute between successive counsels is "characterized by some ambiguity."'* To fully understand this ambiguity, one must first analyze the statutory law and prior precedent.

A. Statutory Law

The Workers' Compensation Act ("Act") is codified in title 77 of the Pennsylvania Statutes.^ With regard to the issue of attorney's fees, section 998 provides:

All counsel fees, agreed upon by claimant and his attorneys, for services performed in matters before any workers' compensation judge or the board, whether or not allowed as part of a judgment, shall be approved by the workers' compensation judge or board as the case may be, providing the counsel fees do not exceed twenty per centum of the amount awarded.^ In cases where the efforts of

^ Hendricks, 909 A.2d at 446-47. " M a t 449.

* Id. § 998. It must be noted that at the time of this decision, the statutory language of section 998 included, "The official conducting any hearing, upon cause shown, may allow a reasonable attomey fee exceeding twenty per centum of the amount awarded at the discretion of the hearing official." This language was removed by Act of November 6, 2006, No. 147, 2006 Pa. Laws 147. The removal of this language leaves portions of this decision in question since, as will be shown later, the court seems to allude to the possibility of awarding attomey fees in excess of twenty percent to resolve fee disputes.

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claimant's counsel produce a result favorable to the claimant but where no immediate award of compensation is made, such as in cases of termination or suspension, the hearing official shall allow or award reasonable counsel fees, as agreed upon by claimant and his attomeys, without regard to any per centum. In the case of compromise and release settlement agreements, no counsel fees shall exceed twenty per centum of the workers' compensation settlement amount.'

However, section 996 authorizes a WCJ to determine an equitable fee for a claimant's attomey when the insurer contests liability and the decision rendered is in the claimant's favor.̂ Section 996 grants expansive power to WCJs, enabling them to determine an appropriate fee, by stating:

If counsel fees are awarded and assessed against the insurer or employer, then the workers' compensation judge must make a finding as to the 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.

B. Jurisdiction for Workers' Compensation Fee Disputes

The issue of the proper jurisdictional forum for fee disputes in workers' compensation cases has plagued Pennsylvania courts for years. In Pitt v. Workmen's Compensation Appeal Board (McEachin), the commonwealth court, sitting en bane, decided the question of "[w]here a claimant fires one attomey and hires

' § 998. ' Id § 996. In any contested case where the insurer has contested liability in whole or in part, including contested cases involving petitions to terminate, reinstate, increase, reduce or otherwise modify compensation awards, agreements or other payment arrangements or to set aside fmal receipts, the employe[e] or his dependent, as the case may be, in whose favor the matter at issue has been fmally 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.

Id § 996(a). ' M § 9 9 6 ( b ) .

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another and the referee, in addition to granting the claimant's petition for benefits, awards counsel fees, does the referee also have jurisdiction to decide a fee dispute between the lawyers and may he apportion the counsel fees?"'° In McEachin, the claimant signed a twenty percent fee agreement with attomey Pitt for representation in a claim petition.'^ After representing claimant for eighteen months, but prior to submitting the fee agreement to the WCJ, attomey Pitt was discharged by the claimant; the claimant hired attomey Witlin, who was successful on claimant's claim petition, and which resulted in the WCJ approving Witlin's fee agreement.'^ Attomey Pitt then filed both a nunc pro tune appeal of the WCJ's decision and a petition for approval of his fee agreement, and the commonwealth court, in quashing both petitions, held that neither the WCJ nor the Board was "vested with the authority to adjudicate" a fee dispute issue, nor did they have the expertise in this area of the law, which the court likened to a breach of contract or a quantum meruit claim.'^ However, the court suggested that the issue of counsel fees be submitted to the local bar association committee or court of common pleas.''*

Nevertheless, the leamed Judge Friedman dissented, stating that she "believe[d] that Workmen's Compensation referees have both the authority and the expertise to settle fee disputes between two attomeys who have represented a claimant in the same matter."'^ She proffered that the Act "is unique in that it directly involves itself in fee dispute resolution," because it contains provisions that give WCJs authority to assess the reasonableness of fees in various circumstances.'^ She articulated that since "Workmen's Compensation referees are vested by statute with the authority to settle fee disputes between claimant and employer and between claimant and attomey, [she saw] no reason why the referee would lack the power to settle fee disputes between

'" Pitt V. Workmen's Comp. Appeal Bd. (McEachin), 636 A.2d 235, 236 (Pa. Commw. Ct. 1993) (en bane).

"Id 'Ud '̂ M at 236-37. ' ' ' M a t 237. '^ Id. at 238 (Friedman, J., dissenting). " Pitt, 636 A.2d at 239 (Friedman, J., dissenting).

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multiple attomeys representing the same claimant in an action."'^ Furthermore, since WCJs have an "intimate awareness of the attomey's efforts on a client's behalf," they "are better able than any other body to apply the principles of quantum memit and adjudicate an equitable claim of damages under a theory of unjust enrichment or a legal claim of damages under a theory of breach of contract."'^ Lastly, she concluded that judicial economy favors resolution of fee disputes by WCJs because "to submit this claim to any fomm other than the Workmen's Compensation referee requires that evidence be presented anew and, therefore, is a waste of judicial resources."'^

Less than a year later, in White v. Workmen's Compensation Appeal Board (Denny), the commonwealth court faced a similar case but concluded that the WCJ and the Board did have jurisdiction to determine an appropriate fee for first counsel's services in a situation where first counsel voluntarily withdrew from representation, second counsel agreed that first counsel should be paid first, and claimant agreed.^" In White, claimant's first attomey. White, submitted a petition for payment of attomey's fees, which was approved by the WCJ and was based on an hourly rate, instead of a contingent fee.^' White then withdrew his representation of claimant and claimant retained attomey Senker.̂ ^ The court decided that the WCJ or the Board had jurisdiction to hear the claim, rejecting that McEachin applied, because "[t]his is not a situation involving a fee dispute between two attomeys over the same fee."^^ Since attomey White's fee was for representation regarding the petition to terminate. White voluntarily withdrew, and attomey Senker "stated, on the record, that he was only to be paid after Attomey White was paid in ftill," the court concluded

" Pitt, 636 A.2d at 239 (Friedman, J., dissenting).

"Id °̂ White V. Workmen's Comp. Appeal Bd. (Denny), 648 A.2d 361, 362-65

(Pa. Commw. Ct. 1994). '̂ Id at 362, 365.

^^ Id at 362. ^' Id. at 364 (emphasis added).

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that "unlike [McEachin] there was no fee dispute" for the WCJ to decide.'̂ '*

Several years later, the commonwealth court would further refine the McEachin holding. In Larry Pitt & Associates v. Long, the court declared that "(1) a common pleas court is the appropriate forum for determining fee disputes involving an attomey who is discharged prior to submitting a fee petition to the Board; and (2) the Board is the appropriate forum when the attomey filed a fee petition before the claimant discharged him."^^ In Long, claimant signed a contingent fee agreement with his attomey, the attomey successfully negotiated a settlement with the employer, and two days before the claimant was to sign the settlement, he discharged his attomey and appeared pro se before the WCJ.̂ ^ In coming to the above decision, the court noted, "The tme distinction for the purpose of determining the proper forum is whether or not the fee agreement was ever filed with the [Board]."^^ The court continued, "The WCJ and Board's authority over fees is limited to those fees submitted to it and approved by it, while an attomey-client relationship still exists." ̂

In Tokish v. Workers' Compensation Appeal Board, the commonwealth court held that the WCJ and the Board lacked jurisdiction to decide a fee dispute between two attomeys, even when each had filed a fee agreement that had been approved.^^ In Tokish, the claimant signed a twenty percent fee agreement with attomey Weinstock, which was approved by the WCJ.^° A year later, claimant discharged Weinstock and retained attomey Tomasko, where Tomasko was to receive twenty percent of the claimant's benefits.^ ̂ After Tomasko successfully defended a

" White, 648 A.2d at 365. '^ Hendricks v. Workers' Comp. Appeal Bd. (Phoenix Pipe & Tube), 909

A.2d 445, 452-53 (Pa. Commw. Ct. 2006) (emphasis omitted) (citing Larry Pitt & Assocs. V. Long, 716 A.2d 695, 699 (Pa. Commw. Ct. 1998)).

" Larry Pitt & Assocs., 716 A.2d at 697. " Id at 699. "Id " Tokish V. Workers' Comp. Appeal Bd., 774 A.2d 1271, 1273 (Pa.

Commw. Ct. 2001). '°IddX\212. "Id

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challenge by the employer that claimant was not entitled to benefits, he filed a petition for approval of attorney's fees with the Board, to which attomey Weinstock objected.^^ The WCJ apportioned attomey's fees between Weinstock and Tomasko and approved the twenty percent fee agreement submitted by Tomasko." On appeal, the commonwealth court concluded that a dispute between two attomeys over a fee is not within the ambit of the WCJ because the first attomey is not representing the client's interest, but is solely representing his own interests.'''*

C. Fee Disputes

The court in Hendricks only mentioned two cases regarding workers' compensation fee disputes outside of the jurisdictional issue; with this meager survey, the court displayed a true lack of interest or zeal in providing guidance to WCJs on how to equitably determine fee disputes.^ More importantly, while the court discussed two cases, the Anderson v. Workmen's Compensation Appeal Board (Watkins Motor Linesf^ case is inapplicable to the issue, since it is based on section 440." In Anderson, the commonwealth court held that under section 996, the WCJ must

^̂ Tokish, 714 A.2d at 1272-73. " M a t 1273. 'Ud " See Woodman v. Renewal Ctrs. Inc., Pa. Workers' Compensation Office

of Adjudication, No. 2572389, para. 57 (Dec. 28, 2007) (on file with the author and the Widener Law Journal). WCJ Barbieri, in reviewing Hendricks, declared:

The Court referenced the provisions of section [996] of the Act, which permits calculation of quantum meruit counsel fees to be assessed against Employers who have failed to establish a reasonable contest in a case based upon time expended by Claimant's counsel in the course of the litigation. Otherwise, the Court provided no further guidelines on apportionment of counsel fees under such circumstances.

Id. (emphasis added). *̂ Anderson v. Workmen's Comp. Appeal Bd. (Watkins Motor Lines), 671

A.2d 299 (Pa. Commw. Ct. 1996). " In Hendricks, the court specified the issue as being "whether a Workers'

Compensation Judge (WCJ) and the Workers' Compensation Appeal Board (Board) have the authority to determine attomey's fees for successive counsel in a workers' compensation proceeding under Section [998] of the Workers' Compensation Act (Act)." Hendricks v. Workers' Comp. Appeal Bd. (Phoenix Pipe & Tube), 909 A.2d 445,446-47 (Pa. Commw. Ct. 2006).

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evaluate work performed by an attomey and may award attomey's fees on the basis of quantum memit even if the attomey has signed a twenty percent contingent fee agreement with his or her client.^^ In Anderson, the attomey and claimant entered into a twenty percent contingent fee agreement, which was approved and deemed reasonable by the WCJ pursuant to section QQS.'̂ ^ After the employer unreasonably contested claimant's benefits, the WCJ awarded attomey's fees pursuant to section 996, negating the twenty percent contingency fee agreement and determining that the attomey's fee should be calculated on the basis of quantum meruit.'*'̂ The calculation of the attomey's hourly rate multiplied by the hours worked resulted in an amount less than the twenty percent contingent fee.'*̂ The court concluded that the WCJ did not err by assessing attomey's fees on the basis of quantum meruit. It reasoned:

WCJ McManus did not fmd that a twenty percent fee is unreasonable under Section 440 of the Act as a matter of law. He found that, under the circumstances presented in this case, an award of counsel fees based on the actual time and energy expended by counsel was reasonable. WCJ McManus made the appropriate analysis required by section [996]. His finding is supported by substantial evidence of record. ^

In 2003, the commonwealth court, in Gingerich v. Workers' Compensation Appeal Board (US Filter), dealt with whether a claimant could repudiate a previously-approved fee agreement.'*'̂ In Gingerich, the court held that a WCJ's approval of a compromise and release agreement involving a settlement of a subrogation lien could not "extinguish" claimant's original attomey's rights to a twenty percent fee for future benefits."*^ The court rationalized that

^'Anderson, 671 A.2d at 301. ^ ' M at 300-01.

'^^ Id at 302. ''Id "" Gingerich v. Workers' Comp. Appeal Bd. (US Filter), 825 A.2d 788,

790-91 (Pa. Commw. Ct. 2003).

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the claimant could not unilaterally cease her obligation to her counsel and, since counsel had not agreed to relieve claimant of her liability to pay for counsel's services, that liability remained."*^

Quite notably, the court failed to mention Weidner v. Workmen's Compensation Appeal Board,^^ where the Supreme Court of Pennsylvania reversed the commonwealth court's decision in essence to blend sections 996 and 998."*̂ In Weidner, the claimant's employer sought to terminate his benefits.''^ Following a hearing, the WCJ dismissed the petition but failed to award attomey's fees.^° The Board affirmed the decision, but the commonwealth court reversed and remanded the case on the basis that the employer had failed to show reasonable contest, under section 996.^' On remand, the WCJ determined that claimant's counsel should be awarded $3750, which the Board affirmed." A divided panel of the commonwealth court reversed the decision, disallowing claimant's counsel any fee, based on section 998.̂ ^ The Supreme Court of Pennsylvania reversed, holding:

The Commonwealth Court erred in limiting Section [996] of the Aet solely to recoupment as provided in Section [998]. Our examination of these two separate statutory sections leads us to believe they serve different purposes. Section [998] evidences a legislative intent of protecting claimants against unreasonable fees charged and imposed on them by their attomeys under their own improvident fee agreements. As such, it is properly limited to recoupment. Section [996], on the other hand, shows a legislative intent of protecting claimants against unreasonable contests of a claimant's initial or continuing right to the benefits of the act.

"̂ Gingerich, 825 A.2d at 791. "̂ Weidner v. Workmen's Comp. Appeal Bd., 442 A.2d 242 (Pa. 1982). It

must be noted that the leamed Judge Barbieri, in her decision in Woodman v. Rental Centers Inc., acknowledged the absence of this pivotal case. Woodman v. Renewal Ctrs. Inc., Pa. Workers' Compensation Office of Adjudication, No. 2572389, para. 58 (Dec. 28, 2007) (on file with the author and the Widener Law Journal).

"̂ Weidner, 442 A.2d at 243. "Id

"Id d

Id at 244. 'Ud

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including the benefit of a suspension, where a monetary award is not possible. To limit Section [996] to the same policy of recoupment as Section [998] would frustrate the legislative purpose of protecting claimants against unreasonable contests of their right to suspension since claimants dependent upon compensation for themselves and their families are not often in a position to incur a fixed obligation to their attomeys where there is no hope of that attomey's creating a fund out of which it can be

III. HENDRICKS V. WORKERS' COMPENSATION APPEAL BOARD

(PHOENIX PIPE & TUBE)

In Hendricks, the commonwealth court reaffirmed that if a "fee agreement or petition is not filed before claimant discharges his attomey, any subsequent filing of a fee agreement or petition is outside the workers' compensation system and must be resolved by a court of common pleas or arbitration."^^ However, "if the fee agreement or petition was filed before claimant discharges the attomey, it is within the workers' compensation system and remains there."^^

Kevin Hendricks was employed by Phoenix Pipe & Tube ("PPT") and, in the course and scope of his employment, he was injured." PPT issued a notice of compensation payable in relation to the injuries that Mr. Hendricks sustained.^* After three years, PPT's insurer, believing Mr. Hendricks to have fully recovered, filed a petition to terminate his benefits.^^ Mr. Hendricks, agreeing to a twenty percent contingency fee, retained attomey Sager to defend against the termination petition; the WCJ approved the contingent fee agreement and attomey Sager was successful in defending against the termination petition, but over three years

^' Weidner, 442 A.2d at 244 (emphasis added). " Hendricks v. Workers' Comp. Appeal Bd. (Phoenix Pipe & Tube), 909

A.2d 445,455 (Pa. Commw. Ct. 2006).

" M a t 447. ''Id "Id

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later, Mr. Hendricks terminated Attomey Sager as his representative.^"

Mr. Hendricks sought to hire attomey Silver, who submitted a fifteen-percent contingency fee agreement; the Board rejected the agreement because attomey Sager was receiving his approved twenty percent contingency fee for "past services rendered."^' The Board held that "it was without authority to discharge 'previously approved counsel fees and approve fees for a subsequent counsel, particularly where the need for new counsel has not been established.' "̂ ^ Over a year later, Mr. Hendricks, represented by attomey Silver, filed a penalty petition alleging that PPT's insurer failed to pay Mr. Hendricks' medical bills.^^ While several hearings were held before a WCJ, with no record being produced, the parties requested a continuance to discuss settlement options.̂ '* Pending resolution of the matter, attomey Silver then requested approval of his fifteen-percent contingent fee agreement.^^ The WCJ approved Silver's fee agreement, via interlocutory order, resulting in PPT's insurer discontinuing payment to attomey S ^ ^

In response, attomey Sager filed a penalty petition against PPT for failure to pay the approved contingent fee and requested that the Silver contingent fee agreement be vacated and his petition be reinstated.^^ Silver contended that Sager lacked standing because of the earlier termination and that the Sager penalty petition should be dismissed.^^ Before the WCJ ruled on this issue. Silver successfiiUy negotiated a settlement for Mr. Hendricks, whereby Silver withdrew his penalty petition and the WCJ approved his contingent fee agreement.^^ The WCJ also dismissed

*° Hendricks, 909 A.2d at 447. ' ' Id " Id. (quoting the Board's order). "Id "Id

Hendricks, 909 A.2d at 447. Id at 448.

"Id

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Sager's petition, holding that the jurisdiction for fee disputes is the appropriate court of common pleas pursuant to McEachin.

Attomey Sager filed a "Petition for Appeal Nunc Pro Tune for Reinstatement of Counsel Fees" with the Board, resulting in attomey Silver filing a petition to quash the appeal.̂ ^ The Board, in reversing the WCJ's decision on attomey's fees, dismissed Silver's petition and ordered PPT to pay the twenty percent contingency fee to attomey Sager.̂ ^ In holding that the approved Sager contingent fee agreement could not be "extinguished simply by Claimant's retention of new counsel," the Board reasoned:

Section [442], 77 P.S. § 998, provides that all counsel fees agreed on by a claimant and an attomey for services performed in matters before a WCJ shall be approved by the WCJ. In [Gingerich], the Court held that a claimant may not simply repudiate previously- approved attomey fees. In Gingerich, the Court held that a WCJ's approval of a compromise and release agreement involving a settlement of a subrogation lien could not extinguish claimant's original attomey's right to 20% fees for future benefits.^''

Attomey Silver appealed the decision to the commonwealth court,''* which articulated the overarching issue as "whether a Workers' Compensation Judge (WCJ) and the Workers' Compensation Appeal Board (Board) have the authority to determine attomey's fees for successive counsel in a workers' compensation proceeding under Section 998 of the Workers' Compensation Act (Act)."'^ It must be noted that the court's articulation of the issue is based on section 998 and not on section 996; thus, Anderson is inapplicable'^ and would seem to suggest that the proper resolution of a fee dispute is under section 998,

™ Hendricks, 909 A.2d at 448; see also Pitt v. Workmen's Comp. Appeal Bd. (McEachin), 636 A.2d 235, 236-37 (Pa. Commw. Ct. 1993) (en bane).

'̂ Hendricks, 909 A.2d at 448. ''Id '^ Id. (citing the Board's order). 'Ud '^ M at 446-47. ^̂ See supra notes 36-43 and accompanying text.

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which does not include quantum meruit but should be based on Ginger ich.^^

The court broke the overarching issue into three sub-issues: "(1) whether the Board exceeded its authority by deciding a fee dispute; (2) whether the Board improperly considered evidence in the appeal that was never made part of the record before the WCJ; and, (3) whether Silver's fee agreement superceded Sager's fee agreement."^^ The court quickly dispensed of the latter two issues by holding that attomey Silver was correct that the Board improperly considered evidence that was not part of the record, and the evidence of Silver's fee agreement superseding Sager's fee agreement was not sufficient.^^ Both required remand to the

The court focused on the issue of the Board's authority to decide fee disputes by starting with McEachin and then proceeding through its progeny.^' Attomey Silver argued that under McEachin, consideration of fee disputes between successive counsel in workers' compensation proceedings is only proper before the appropriate court of common pleas under a legal claim of contract or quantum meruit.̂ ^ Attomey Sager, relying on the Board's determination, argued that under Gingerich, section 998 disallowed a claimant from simply repudiating a previously- approved fee agreement.^''

The court first tumed to section 998 which, prior to being amended, directed

[a]ll counsel fees, agreed upon by claimant and his attomeys, for services performed in matters before any workers' compensation judge or the board, whether or not allowed as part of a judgment, shall be approved by the workers' compensation judge or board as the case may be, providing the counsel fees do not exceed twenty per centum of the amount awarded. The official conducting any hearing, upon cause shown, may allow a reasonable attomey fee

See supra notes 7,42 and accompanying text. '" Hendricks, 909 A.2d at 448-49 (citations omitted). '^ Id. at 459-60. '^ Id. at 460. *' Id. at 449; see supra Part Il.B. *̂ Hendricks, 909 A.2d at 449. '^ Id.; see supra notes 41-43 and accompanying text.

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exceeding twenty per centum of the amount awarded at the discretion of the hearing official. "*

Then, in turning to McEachin and its progeny,^^ the court held that the proper jurisdiction for fee disputes depends on the filing, or ahsence thereof, of the fee agreement or petition at the time the attomey is discharged.^^ Specifically, under McEachin,^^ "if the fee agreement or petition is not filed hefore claimant discharges his attomey—any subsequent filing of a fee agreement or petition is outside the workers' compensation system and must he resolved by a court of common pleas or arbitration."^^ However, under Long^^ and White^^ "if the fee agreement or petition was filed before claimant discharges the attomey, it is within the workers' compensation system and remains there."^'

In finding that WCJs have authority to determine fee disputes in workers' compensation cases, the court relied on: (1) section 996 of the Act, which grants WCJs the power and authority to award attomey's fees on the basis of quantum memit;^^ (2) that, per the changes to the workers' compensation system by Act 57 of 1996, a referee is now a judge, who must " '[b]e an attomey in good standing before the Supreme Court' and '[h]ave five years of workers' compensation practice before administrative agencies or equivalent experience' "-^ and (3) that the Supreme Court of Pennsylvania authorized WCJs to determine patemity.̂ "*

In applying the above rules, the court noted that attomey Sager filed the contingent fee agreement prior to discharge; thus, "it is within the workers' compensation system and remains there."^^ The

*" 77 PA. STAT. ANN. § 998 (West 2002); Hendricks, 909 A.2d at 449 (discussing section 998).

^' See supra Part II.B. ^' See Hendricks, 909 A.2d at 450-51. *' See supra notes 9-13 and accompanying text. ** Hendricks, 909 A.2d at 455. ^' See supra notes 26-28 and accompanying text. '*' See supra notes 20-24 and accompanying text. " Hendricks, 909 A.2d at 455. '^ Id at 457. '^ Id at 458 (quoting 77 PA. STAT. ANN. § 2503 (West 2002)). ' " M a t 458-59. '^ M at 455.

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court concluded, "Under Section [998] of the Act, the Board was correct that the issue was properly before the WCJ and the Board."^^ The court further declared, "While Claimant has the absolute right to change counsel, that right does not allow him to unilaterally negate his liabilities toward his fonner counsel."^^ It is also worth noting that the court, in a footnote as dictum, mentions Tokish^^ seemingly proposing that even in light of a submitted or approved fee agreement, but where the client was not affected because the contingent fee agreement was identical in percentage, the dispute between the attomeys would be more like "a separate cause of action from the initial workers' compensation claim. "̂ ^ However, despite the frustration that attomeys would incur by a Tokish exemption to the rule, the court cites the Board's decision with approval:

Section [998] was intended to create an environment in which an injured employee can obtain legal services in his effort to enforce his right to workers' compensation benefits from an employer. Section [998] fosters the humanitarian purposes of the Act by insuring that the attomey for an injured worker receives a reasonable legal fee for his efforts to obtain benefits for his client. Permitting a WCJ to unilaterally order an employer to stop paying previously approved legal fees would frustrate the humanitarian purposes of the Act by allowing a claimant to avoid paying legal fees, otherwise due, by simply discharging his attomey. "

In a concurring opinion. Senior Judge McCloskey declared that the General Assembly did not intend to confer power on WCJs

'^ Hendricks, 909 A.2d at 455. "Id go

See supra notes 29-34 and accompanying text. " Hendricks, 909 A.2d at 455-56 n.8. This comment is extremely

disconcerting in that it awards an attomey who is willing to undercut another attomey, who is currently representing a claimant, by forcing prior counsel to resort to the appropriate court of common pleas, incurring excessive costs to litigate the claim, and to go before a court that lacks an "intimate awareness of the attomey's efforts on a client's behalf" Pitt v. Workmen's Comp. Appeal Bd. (McEachin), 636 A.2d 235, 239 (Pa. Commw. Ct. 1993) (en bane) (Friedman, J., dissenting). Moreover, by requiring all evidence to be produced anew, it "is a waste of judicial resources." Id.

""' Hendricks, 909 A.2d at 456 (quoting the Board's opinion).

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to decide fee disputes between successive counsel, but he was bound by the expansion of section 998 through precedent.'"'

IV. W E KNOW THE PROPER FORUM, BUT W C J S ARE LEFT IN THE

DARK REGARDING EQUITABLE RESOLUTIONS OF FEE DISPUTES

The court, in the absence of a Tokish exception to the mle, clearly dictated the proper fomms for fee disputes between successive counsel in workers' compensation cases, dependent on the filing, or absence thereof, of a fee agreement. However, the court failed to provide any meaningful guidance to WCJs on how to determine equitable resolutions of fee disputes. The dicta section 996 guidance that the court provided conflicts with section 998 because quantum memit is noticeably absent from section 998 and conflicts with the Supreme Court of Pennsylvania's decision in Weidner.^^^ Since the court limited the issue and decision to section 998, WCJs and the Board should assess equitable resolutions of fee disputes based on the language of section 998, not section 996.

Section 998 was modified by Act 147 of 2006, several months after the court's decision in Hendricks.^^^ The language "[t]he official conducting any hearing, upon cause shown, may allow a reasonable attomey fee exceeding twenty per centum of the amount awarded at the discretion of the hearing official" was struck from section 998.'°"* While one can infer from the Hendricks decision that the court was at least alluding to the possibility of WCJs and the Board assessing attomey's fees in excess of twenty percent in order to resolve fee disputes, the General Assembly has eradicated such a resolution. While the limiting of attomey's fees in workers' compensation cases serves a legitimate social purpose, the result may be anything but desired.

To understand the possible dire consequences, one must start with the Workers' Compensation Act. While claimant attomey's fees are capped at twenty percent, defense attomey's fees are

"" Hendricks, 909 A.2d at 461 (McCloskey, J., concurring). '"^ See supra notes 45-50 and accompanying text. '"^ Act of Nov. 6, 2006, No. 147, 2006 PA. LAWS 147, § 6 (amending

section 442 of the Workers' Compensation Act). " " ' § 6 .

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not. In fact, defense attomey's fees are noticeably absent from the entire Act. While this, in and of itself, would not place a nail in the coffin of claimant-oriented attomeys or firms, in conjunction with skyrocketing overhead costs, the limited hourly rate, and now the cost to litigate fee disputes which would seemingly be limited to less than twenty percent, the claimant-oriented attomey may be a dying breed.

The Altman Weil Survey of Law Firm Economics looked at "Median Partner/Shareholder Hourly Rates, by Specialty— Litigation Areas" and found that workers' compensation attorneys received the least hourly compensation in the industry.'"^ Moreover, Altman Weil found that law firm overhead expense increases almost double the Consumer Price Index increases.'"^ While claimant attomeys have known these statistics for years, it has not dissuaded them in promoting the humanitarian purposes of the Act. However, when claimant attomeys start with the lowest hourly rates in the industry, are faced with capped fees, the possibility of litigation costs in fee disputes, and by-the-cuff reductions in their signed and approved fee agreements by courts resolving fee disputes, how can the humanitarian attomey afford to eat?

Clearly, the Supreme Court of Pennsylvania in Weidner quashed the notion of blending section 996 and 998.'"^ By doing so, the Court effectively instructed WCJs and the Board that quantum meruit is not appropriate in the absence of reasonable contest by an employer. Rather, the Court declared, "To limit Section [996] to the same policy of recoupment as Section [998] would fmstrate the legislative purpose of protecting claimants . . . [who] are not often in a position to incur a fixed obligation to their

'°^ See 11 PA. STAT. ANN. § 998 (West 2002). Ward Bower, Mining the Surveys: Which Specialties Command the

Highest Rates? (2003), http://www.altmanweil.com/dir_docs/resource/d52e4b92-la27-4c49-9226- cef4b228608e_document.pdf.

'"' Altman Weil, Graph, Trend Comparison of Overhead Expenses (2003), http://www.altmanweil.com/dir_docs/resource/b4a94748-9bf4-487a-9f42- 686fDf7500da_document.pdf.

'°* See supra notes 45-50 and accompanying text.

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attomeys," denying the attomey compensation for his or her time and ability.'"^

This issue of fee disputes in light of the Hendricks decision arose in Woodman v. Renewal Centers Inc.^^^ In Woodman, the attomey representing the claimant left the law firm after the WCJ approved a fee agreement between the firm and the claimant, and the client chose to follow the attomey.'" The attomey then filed a new fee agreement between himself and the client.'' The leamed WCJ Barbieri was now among the first WCJs to become embroiled in the Hendricks/Weidner headache. Unfortunately, while her jurisdiction was unquestioned following Hendricks, she was left by the court without a logistical plan to resolve the conflict.

After having held several hearings to determine credibility of witnesses and expert testimony,"'' WCJ Barbieri found that the original firm should receive the twenty percent fee agreement up to the date of her decision and eighty percent of the twenty percent fee for the following year "or until a further petition challenging Claimant's entitlement to ongoing total disability benefits is filed by Employer, whichever comes first.""''

What remains to be seen is how the remaining eighty-nine WCJs in the commonwealth will rule when presented with this issue. The court's lack of leadership has given rise to a potential for ninety inconsistent solutions.

While WCJ Barbieri's decision may conflict with Gingerich, the absence of any guidance from the commonwealth court has perpetuated this issue. Moreover, since workers' compensation attomeys, guided by the Act, only had to consider quantum memit in section 440 issues, they may be at a loss to retrospectively account for the time spent on non-section 440 issues. While our legal system has a long history of allowing clients to terminate

'"' Weidner v. Workmen's Comp. Appeal Bd., 442 A.2d 242, 244 (Pa. 1982).

'"* Woodman v. Renewal Ctrs. Inc., Pa. Workers' Compensation Office of Adjudication, No. 2572389, paras. 29-31 (Dec. 28, 2007) (on file with the author and the Widener Law Journal).

^^^Id "Vi/. at para. 31. "^M at paras. 32-44. " " M a t para. 64.

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their legal representation, one must wonder if the validity of a contract is now moot. When a workers' compensation client can jump from attomey to attomey, leaving the attomeys to fight the fee dispute and forcing WCJs and the Board to find equitable resolutions, the outcome is judicial wastefulness and the extinction of the claimant-oriented workers' compensation attomey. Defense counsel is ringing the bell because they have won; they can charge any fee, and the Act will not limit them. Moreover, in the absence of the humanitarian claimant attomey, the employers/insurers will contest everything, leaving the claimant unable to find representation. Where is the legislative intent in that?

V. CONCLUSION

Pursuant to Hendricks, fee disputes between counsel where the original attomey has filed a fee agreement with the WCJ may now be heard by the WCJ. In the absence ofthat agreement having been filed, the proper fomm is the court of common pleas. Unfortunately, the Hendricks Court failed to provide any guidance on how to resolve those disputes. While Weidner clarifies a distinction between sections 996 and 998 of the Act, the WCJs are left to use their imaginations in their search for an equitable solution.

The humanitarian nature of the Act and of the claimant- oriented attomey may be lost if Pennsylvania's legislature or courts do not take immediate action to address this issue. With workers' compensation attomeys receiving the least compensation in the industry, high overhead costs, and clients who may terminate representation on a whim without reason, there is little reason for any attomey to enter practice as a workers' compensation claimant attomey. With the absence of such limitations on defense counsel, it is clear that the workers' compensation system is broken. Maybe the answer rests in the problem. If Pennsylvania were to change the Act, such that all claimant attomey's fees were to be bome by the employer (or insurer), employers would think twice before contesting workers' compensation claims. Moreover, by such an enactment, the claimant would not be harmed by a reduction in his or her benefits as a result of a contingent fee agreement. Then, and only then, might employers end the practice of purposely

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frustrating and denying claimants their legitimate medical expenses.

Joshua Prince