A common question our workers compensation unit receives relates to the payment of workers' compensation claimant attorney fees by claims administrators. With the media reporting daily about excessive attorney fee awards in other areas, concern over this issue is understandable. However, in the context of West Virginia (WV) workers' compensation, the claims administrator rarely has to pay a claimant's attorney fees.
Attorney Fees in U.S. Lawsuits: The General Rule
A key feature in American jurisprudence is that the parties to a lawsuit are generally responsible for paying their own attorney fees and costs. This is known as the "American rule."
Where matters of state law are concerned, the state legislature has the power to pass laws allowing attorney fees and costs to be shifted to opposing parties. In fact, that's exactly what the West Virginia Legislature has done when it comes to workers' compensation attorney fees. Under state law and an applicable administrative rule, there are two narrow situations when a claim administrator may be required to pay a claimant's attorney fees.
Workers' Compensation Claimant Attorney Fees: Reversal of Medical Benefit Denials
The first and least significant situation is when a private carrier or self-insured employer denies medical benefits and the claimant obtains a judicial decision reversing the denial of such benefits. Under W. Va. Code § 23-5-16(c), a claims administrator can be charged up to $125 per hour-to a maximum of $500 per protest and $2,500 per claim-if a claimant prevails in a medical protest. So if one medical benefit is denied, the maximum fee is $500, and the claimant would be entitled to this $500 fee up to five separate times, for a total of $2,500.
A claimant is also entitled to reimbursement of costs actually incurred in obtaining each reversal. Costs include such things as postage, long-distance phone calls, travel reimbursement, and even expert fees, so the costs portion can be more than the attorney fees. These fees and costs are reimbursable without regard to whether there was "good cause" to deny benefits. If a claims administrator denies medical benefits and loses litigation challenging the denial, the claimant is automatically entitled to those benefits. But obviously, the amount of the attorney fee is significantly capped.
Workers' Compensation Claimant Attorney Fees in WV: Unreasonable Denials
The second and far more concerning instance when attorney fees may be payable is when a claims administrator is accused of "unreasonably" denying compensability, temporary total disability ("TTD"), and/or medical benefits. Under W. Va. Code § 23-2C-21(c), if a workers' compensation claimant obtains a reversal through litigation and asserts that the denial was unreasonable, a claims administrator must show that it had "evidence or a legal basis supported by legal authority at the time of the denial which is relevant and probative and supports the denial of the award or authorization."
It is difficult for a claimant to recover attorney fees under this law, and as long as the private carrier or self-insured employer has a good factual reason and/or legal basis for taking the action that it did, the denial is not unreasonable. For example, between January 1 and March 31, 2017, the Office of Judges only awarded attorney fees for unreasonable denial a mere three times. This suggests an average of about one award per month, statewide. Unreasonable denials are very rare.
The next question is how much may be charged for attorney fees and costs in the unlikely event of the unreasonable denial of a claim, TTD benefits, and/or medical benefits. Costs are the same as in a normal medical protest, i.e. the costs actually incurred in obtaining the reversal. However, fees are much different.
Attorney Fees after an Unreasonable Denial of Compensability or TTD
For compensability and TTD issues, the statute says that the amount payable is the same amount that attorneys can collect in any claim, i.e. 20% of periodic indemnity benefits up to a maximum of 208 weeks. The maximum TTD rate for Fiscal Year 2017, for example, was $787.06 per week. Therefore, the maximum possible award for that fiscal year was $32,741.70 ($787.06 x 208 x 20%).
A claimant's counsel, however, could only charge for the fees incurred beginning on the date of the decision denying benefits and ending on the date of the decision reversing the denial of benefits. This is usually significantly less than 208 weeks. If appeals are filed, a claimant's counsel could continue to charge fees through the appellate process to the date of the final decision.
Claimant Attorney Fees after an Unreasonable Denial of Medical Benefits
If a claimant successfully proves that the denial of medical benefits was unreasonable, the applicable administrative rule, which is W. Va. Code St. R. tit. 85, §4-4.3, allows a claimant's attorney to charge a fee of up to $110 per hour to a maximum of $1,500 through the final decision of the Office of Judges, plus an additional $110 per hour up to a maximum of $1,500 through any appeals.
A claimant is not entitled to the $500 fee under W. Va. Code § 23-5-16(c) plus the fee described in this paragraph. He or she would only get the fee for the unreasonable denial and, if he received a $500 fee under W. Va. Code § 23-5-16(c), it would be offset against the award for unreasonable denial. The bottom line is that the maximum award for unreasonable denial of medical benefits is $3,000, plus costs.
Again, as long as a claims administrator has a factual basis and/or legal theory for making the decision it did, it should not have to worry about the unreasonable denial attorney fees. The statistics confirm that it is an extremely rare award, and the legal standard facing a claimant to prove unreasonable denial is quite difficult.
Defending WV Employers in Workers' Compensation Matters
If you have questions about whether you can "reasonably" deny a claim, TTD benefits, and/or medical benefits, please do not hesitate to contact me, Steven K. Wellman, attorney at Jenkins Fenstermaker, PLLC. Our attorneys have extensive experience advising and representing West Virginia employers and carriers in workers' compensation claims, including handling issues about claimant attorney fees. Contact us today by calling (866) 617-4736 or by completing our Contact form.
This article should be considered advertising material, Steven K. Wellman, responsible attorney. This article is being provided for informational purposes only and should not be construed as legal advice pertaining to any particular situation or circumstance.