Attorney’s fees – usually paired with requests for litigation costs, it is often thrown into a hearing request whether justified or not.
Attorney’s fees – usually paired with requests for litigation costs, it is often thrown into a hearing request whether justified or not. Unfortunately, once it is on the table, it has to be dealt with, lest it become the unseen bullet, leaving a hole for money to leak through.
While some attorneys are amenable to negotiating attorney’s fees outside of a hearing request, many times, it comes down the decision of the ALJ in whether to award them, and how much to award. There are several grounds on which to base a request for attorney’s fees, and several factors that help determine how much is owned, but this article will only focus on the “unreasonable defense” and the “good faith effort.”
How to defend against an “Unreasonable Defense”: The Worker’s Compensation Act allows for assessed attorney’s fees to be awarded when a claim has been prosecuted or defended on unreasonable grounds. §34-9-108(b)(1). Additionally, whether there are reasonable grounds is a question of fact for the Board, but attorney’s fees may not be awarded where a matter is closely contested on reasonable grounds. See Pet, Inc. v. Ward, 219 App. 525, 526; 466 S.E.2d 46, (1995). We have all had to deal with this – because what constitutes a reasonable defense to one party is often completely irrational to the other.
However, recent case law shows that if there is “any evidence” to support a reasonable defense, then attorney’s fees may not be awarded.
Specifically, in a decision still hot off the press, the Court of Appeals upheld the principle that attorney’s fees may not be awarded when the Employer/Insurer’s defense of the case is reasonable, and that the Appellate Division’s decision should be upheld when there is “any evidence” to support it. L & S Construction, et al. v Lopez, A07A1890 (2007).
In Lopez, the Claimant, worked on a framing job for L & S, Construction (“L & S”), who received the contract for the job from Bob St. John Construction (“”). at 1-2. However, L & S had reason to believe that Mr. Lopez did not work directly for their company, but instead, worked for Jim Lawhorne, Sr., who was also working for . at 4. L & S sought to show that since Mr. Lawhorne did not have workers’ compensation insurance, that may be the statutory employer. This argument was ultimately unsuccessful, and the ALJ awarded Mr. Lopez with all requested benefits as well as attorney’s fees and the costs of litigation. at 2. The Appellate Division upheld the Award on the merits, but reversed as to attorney’s fees, stating that since there was some testimony showing that Mr. Lopez was not an employee of L & S, there was some evidence to constitute a reasonable defense, and attorney’s fees were improperly awarded. The Superior Court reversed the Appellate Division as it disagreed with the findings of any reasonable grounds for defense. However, the Court of Appeals reversed the Superior Court because the Superior Court did not use the proper standard of review. at 4. Instead of making its own factual finding, the Superior Court should have examined the Appellate Division’s decision and whether there was “any evidence” to support it. The Court of Appeals in reviewing the case, found that since there was testimony that supported the contention that Mr. Lopez was not an employee of L & S (although it was ultimately an unsuccessful theory), the Appellate Division clearly had some evidence to make their finding that the claim was not defended unreasonably.
This decision underscores the importance of presenting solid evidence that justifies the reasons behind an Employer/Insurer’s defense. Even if that defense is ultimately unsuccessful, making the effort to present documentation or testimony to show why the Employer/Insurer reasonably believed the defense was necessary makes it harder for the ALJ to award attorney’s fees to Claimant’s counsel.
If we can show that the factual dispute is was material enough to warrant trying the case, chances are, we can head off the penalty of assessed attorney’s fees.
How to Request Fees: Utilize the Good Faith Effort: Perhaps the most simple, and often overlooked precursor to requesting attorney’s fees is the good faith effort. Attorneys will often skip over this step on their road to recovering attorney’s fees only to discover that they may have cut their own journey short. The good faith requirement is somewhat nebulous because while it is sometimes explicitly laid out, other times, it is merely inferred.
For example, a Claimant seeks instatement of income benefits (which are properly due), and retains an attorney for that purpose. Claimant’s counsel makes several telephone calls to the claims adjuster, but does not receive a favorable answer as to whether income benefits will be commenced. Thus, Claimant’s counsel files a request for a hearing on the issue of income benefits, and also seeks assessed attorney’s fees and litigation costs under O.C.G.A. 34-9-108 (b)(1) (unreasonable defense) and (b)(2) (failure to pay, requiring claimant to engage services of an attorney).
In the meantime, the Employer/Insurer retains a defense attorney, and the defense attorney attempts to communicate with Claimant’s counsel to resolve the issues. Interestingly, Claimant’s counsel repeatedly ignores the telephone calls, letters, and emails of the defense counsel (who naturally documents every attempt). Meanwhile, without any notice to defense counsel, Claimant’s counsel files a Motion for Interlocutory Relief, seeking, among other things, attorney’s fees for having to file the Motion. Claimant’s attorney did not attach a WC-102D to his Motion.
The Claimant’s attorney asked for attorney’s fees in two scenarios: when he filed the initial hearing request, and again, when he filed the Motion for Interlocutory Relief. In the first scenario, if the claim is found compensable, he will most likely be awarded the reasonable quantum meruit fee for his services. The Claimant, did after all, have to hire an attorney to enforce his entitlement to benefits. Further, if the Claimant’s attorney can show, through documentation, that he made several attempts to contact the Insurer prior to filing a hearing request, he will most certainly have exercised good faith.
However, in the second scenario, Claimant’s counsel should not be awarded attorney’s fees. Board Rule 102(D)(2) specifically requires that a good faith effort to resolve the issues must be made prior to filing the Motion. To this end, the WC-102D Board form contains a section where the moving party must mark off a statement, attesting that he or she made a good faith effort. In our scenario, not only did Claimant’s counselnot attempt to work with defense counsel to resolve the issues (by ignoring the many phone calls by defense counsel), but Claimant’s counsel also omitted to file a WC-102D along with his Motion. Thus, he never presented to the Board that he even attempted the good faith effort.
While this move may not ultimately affect the merits of the Motion, it should go toward the issue of whether Claimant’s counsel is due any attorney’s fees. This same principle holds for the defense – making a good faith effort not only saves you time and money in the long run, but if the other party does not respond (as frequently happens), you have now laid your groundwork for requesting those fees.
Recently, Judge Vicki Snow addressed Motions practices at the 2007 Workers’ Compensation Institute Seminar. While her lecture did not specifically mention attorney’s fees, her first and second points, respectively, were the importance of the good faith effort, and the importance of using the proper Board forms. Judge Snow cited to Board Rule 102(D)(2) as evidence of the requirement of good faith, and suggested that attorneys document their efforts, and save them to attach to their Motion as evidence of their satisfaction of this requirement. The Judge hinted that while the ultimate issue (interlocutory benefits, in our example), might not be affected, it is difficult for an attorney to make a strong argument that he is entitled to attorney’s fees for filing a Motion, when he blatantly ignored the Rule requiring him to attempt to resolve the issue outside of a Motion.
Simple and sage enough advice; and a reminder to all of us to heed the old saying: a little really can go a long way.