The U.S. Ninth Circuit Court of Appeals refused to disturb a ruling by the Benefits Review Board that attorneys' fees were not owed when a claimant settled his Longshore claim for no money.
In a March 5, 2018, unpublished decision in Castro and Dupree v. SSA Terminals, LLC, 16-73170 (9th Cir. 2018), the Ninth Circuit denied the petition for review of the claimant's former attorney of the dismissal of his fee petition. Earlier, the Board had affirmed the administrative law judge's denial of the claimant's attorney's fee petition. The dispute arose after the attorney withdrew from representation of the claimant. The claimant then settled his claim for Longshore benefits and his companion claim for California state workers' compensation benefits. The claimant settled his state claim for $4,000. After further negotiations, the claimant agreed to settle the Longshore claim for no additional funds, with the employer claiming credit under Section 3(e) for the $4,000 paid in the state claim. Additionally, the settlement specified that the claimant "will receive a lump sum payment of $0.00" to settle his Longshore claim. After these settlements, the claimant's attorney filed a fee petition
The ALJ concluded that no attorney fee was owed under Section 28(a) because there was no successful prosecution of the claim. The Board affirmed, noting that a "successful prosecution" of a claim, as required by Section 28(a), requires the claimant's attorney to obtain "some actual relief that 'materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff.'" Because the settlement agreement recited that the claimant received no additional money to settle his Longshore claim, the ALJ ruled that the employer had no liability to the claimant and the employer's behavior to the claimant was not modified in any way. Because the ALJ interpreted the settlement as proving that the employer had no liability to the claimant, the ALJ found that the claimed Section 3(e) credit was moot.
The Ninth Circuit confirmed the ruling by the ALJ and the Board by denying the attorney's petition for review. The court accepted that substantial evidence supported the conclusion that the parties did not intend for the $4,000 payment to serve as consideration for the release of the claimant's Longshore claim. Moreover, recognizing the likelihood that the "parties structured the agreement to avoid fees under the Act," the court ruled that such an agreement was permissible.
An Employer faces payment of an attorney’s fee if it pays some, but not all, benefits sought by a claimant.
The Benefits Review Board reached this conclusion in Taylor v. SSA Cooper, LLC, BRB No. 16-0174 (6/30/17). At issue in this case was the meaning of the phrase “any compensation” in Section 28(a), which provides, in part, “[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 … on the ground that there is no liability for compensation … 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.”
The employer paid the claimant medical benefits, but not the one-week of compensation benefits the administrative law judge ultimately awarded the claimant. The claimant’s attorney sought a fee of $11,136.28 for successfully prosecuting the claim by obtaining the week of benefits. The employer refused to pay the attorney’s fee, relying on precedent that an employer is not liable for an attorney’s fee under Section 28(a) if, within 30 days of notice of the claim, it “admits liability for the claim by paying some compensation to the claimant.” (Emphasis added.) The employer further argued that, for purposes of Section 28(a), “compensation” has been held to include medical benefits. Therefore, the employer maintained it was not liable for an attorney’s fee because it paid “some compensation,” in this case, medical benefits. The ALJ agreed and denied an attorney’s fee.
The Board ruled in favor of the claimant, awarding attorney’s fees. The Board determined that the term “compensation” in Section 28(a) must be interpreted as “disability and/or medical benefits.” As the Board further explained, “a claim may be made up of parts, i.e., disability benefits, death benefits, medical benefits. If any type of benefit is denied and legal services are necessary to obtain the denied benefit, the claimant is entitled to an employer-paid fee because the employer’s denial caused the need for attorney involvement. Specifically, if both medical and disability benefits are claimed, and the employer pays one but not the other type of benefit, the employer is liable for an attorney’s fee if the claimant is later successful in obtaining the denied benefit. To hold otherwise is to reduce the claimant’s successfully-obtained benefits, which the employer had denied, by the amount of his attorney’s fee.” (Citations omitted.)
Taylor v. SSA Cooper, LLC, BRB No. 16-0174 (6/30/17)
An employer is liable for a reasonable fee incurred by the claimant’s attorney in defending a fee petition, the Board recently re-affirmed. This rule had been established in a number of Board and Circuit court decisions. However, in Clisso v. Elro Coal Co., the employer argued that the U.S. Supreme Court’s recent decision in Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. _____, 135 S. Ct. 2158 (2015), required a change in the existing rule. Baker Botts held that a certain provision of the bankruptcy code does not permit a bankruptcy court to award attorney’s fees for defending a fee petition in court. The Board rejected the application of Baker Botts to the Longshore Act, noting that the Baker Botts holding has been limited solely to the bankruptcy context. As a result, the Board maintained the existing rule allowing an attorney’s fee award to include time defending the fee petition in court.
Clisso v. Elro Coal Co., BRB No. 15-0470 (6/20/16)
The Board rules that when the “claimant successfully defends his award of benefits against employer’s modification request, his counsel is entitled to an employer-paid fee.” The claimant was receiving temporary total disability benefits before the modification request. The ALJ denied the modification request and awarded continuing temporary total disability benefits. Because the ALJ believed that no additional benefits were obtained, he denied an attorney’s fee. Comparing this situation to when a claimant’s counsel successfully defends an appeal of benefits, the Board held that an employer-paid attorney’s fee was proper.
Grabbert v. Electric Boat Corp., BRB No. 13-0560 (6/4/14)
© 2018 Ira J. Rosenzweig