Under Section 440 of the Act, an unreasonable contest will always result in an award of attorney’s fees and a reasonable contest may result in an attorney’s fee award.

In this case, a workers’ compensation judge granted a Claim Petition and ordered payment of benefits for a September 17, 2020, work injury, but only through June 24, 2021, at which time, the judge found that the claimant had fully recovered from the injury. The judge also awarded Section 440 attorney’s fees on the basis that the employer did not present a reasonable contest until the time of the June 24, 2021, IME. The judge, therefore, limited the attorney’s fee award through June 24, 2021. 

The employer appealed to the Workers’ Compensation Appeal Board, arguing that the award of Section 440 fees was improper because its contest throughout the litigation was entirely reasonable. The Board agreed with the judge’s limitation of counsel fees, but modified the amount. The claimant appealed to the Commonwealth Court.

The Commonwealth Court noted that in the case of Lorino v. WCAB, 266 A.3d 487 (Pa. 2021), the Supreme court held that under Section 440 of the Act, when a contested case is resolved in favor of an employee, a reasonable sum for attorney’s fees shall be awarded to the claimant and such an award is mandatory. However, where the employer has established a reasonable basis for the contest, the judge is permitted, but not required, to exclude an award of attorney’s fees.

According to the Commonwealth Court, Section 440 of the Act gives a judge discretion to either award or exclude attorney’s fees. The court held that an unreasonable contest will always result in an award of Section 440 attorney’s fees and a reasonable contest may result in such an award. The court reversed the Board’s order to the extent that it automatically foreclosed the imposition of attorney’s fees against the employer after its contest became reasonable, contrary to the plain language of Section 440(a) of the Act and the Supreme court’s decision in Lorino. 

The court remanded the matter with instructions for the judge to grant attorney’s fees for the period during which the employer’s contest was unreasonable and then to determine, in his or her discretion, whether to also award attorney’s fees for the period after the employer’s contest became reasonable. The court emphasized that, even if the judge had determined that the employer’s contest was reasonable throughout the pendency of litigation, still under these circumstances, Section 440 attorney’s fees could have been awarded. 

_{What’s Hot in Workers’ Comp, Vol. 28, No. 5, May 2024, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}