        IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Kirk Hall,                              :
                          Petitioner    :
                                        :
             v.                         :   No. 1916 C.D. 2015
                                        :   Submitted: January 29, 2016
Workers' Compensation Appeal            :
Board (Powell Electro Systems),         :
                        Respondent      :

BEFORE:      HONORABLE ROBERT SIMPSON, Judge
             HONORABLE MICHAEL H. WOJCIK, Judge
             HONORABLE DAN PELLEGRINI, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE SIMPSON                        FILED: June 14, 2016


             Kirk Hall (Claimant) petitions for review of an order of the Workers’
Compensation Appeal Board (Board), which, after remand, affirmed a Workers’
Compensation Judge’s (WCJ) decision that denied Claimant’s penalty petition and
awarded an unreasonable contest attorney fee to Claimant’s counsel of $3,500.
Upon review, we affirm.


                                  I. Background
             In March 2006, Claimant sustained a work-related lower back injury
while working for Powell Electro Systems (Employer). In July 2009, he filed a
claim petition.   In January 2011, the WCJ treated the claim petition as a
reinstatement petition and awarded workers’ compensation benefits. Both parties
appealed to the Board.
                  In the interim, after Claimant underwent surgery for his injury in May
2006, he returned to work for Employer with restrictions. In July 2009, Employer
eliminated Claimant’s job for economic reasons.                    Thereafter, Claimant began
working for Tri-Com, Inc., a new employer, performing “even lighter duty work
duties” at a wage of $900 per week. WCJ’s Dec., 1/28/11, Finding of Fact (F.F.)
No. 7.


                  While the parties’ appeals of the WCJ’s January 2011 decision were
pending before the Board, Claimant filed a penalty petition alleging Employer
violated the Workers' Compensation Act1 (Act) by failing to pay compensation
benefits in accordance with the WCJ’s decision.2

         1
             Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1–1041.4, 2501–2708.
         2
             The WCJ’s January 2011 Order states, in pertinent part:

                         NOW, January 28, 2011, the instant Claim Petition, treated as
                  Reinstatement Petition, is Granted, and [Employer] is ORDERED to pay
                  Claimant appropriate disability compensation commencing as of July 6,
                  2009, and continuing thereafter until liability is altered pursuant to law;
                  the weekly rate of compensation is to be calculated using all credits and
                  understandings as agreed and noted in Finding No. 8.

WCJ’s Dec., 1/28/11, at 4. In turn, Finding of Fact No. 8 of the WCJ’s January 2011 Decision
states, in pertinent part (with emphasis added):

                  8.      The record demonstrates an earning power on the part of
                  [Claimant] of $900.00 per week. [Employer] has not presented any
                  evidence to show a higher figure; no employment referral or labor market
                  survey has been presented. Within this context, and given Claimant’s
                  work related restrictions, which impacted on his ability to perform all the
                  physical functions of his pre-injury position, he is entitled to a
                  reinstatement of disability benefits, despite the economic reasons for his
                  termination of employment. [Employer], in turn, is entitled to credits as
                  agreed to by [Claimant] predicated on unemployment compensation
                  benefits, accrued vacations and earnings with Tri-Comm [sic]
(Footnote continued on next page…)

                                                   2
              In August 2012, the Board affirmed in part and reversed in part the
WCJ’s January 2011 decision.            Specifically, the Board determined the WCJ
correctly found Claimant was entitled to a reinstatement of benefits after he was
laid off from his job for economic reasons while still under medical restrictions as
a result of his work injury. The Board also held the WCJ erred by not calculating
Claimant’s average weekly wage (AWW) and by not making a finding as to
Claimant’s correct compensation rate and the amount of partial disability benefits.


              Finally, the Board determined Employer did not present a reasonable
contest, and it remanded the case to the WCJ to afford Claimant the opportunity to
present a quantum meruit fee bill for possible approval. Thus, the Board remanded
the case for the WCJ to:

              make a necessary finding regarding Claimant's pre-injury
              [AWW], provide Claimant with an opportunity to present a
              quantum meruit fee for approval and an award if the [WCJ]
              should find such fee to be reasonable, and make a determination
              as to the amount of partial disability benefits Claimant is due
              based on the difference between the wages he was receiving
              and his pre-injury [AWW] and an award based on that
              calculation. On remand, the parties may also present evidence
              regarding Claimant’s pre-injury [AWW].

Bd. Op., 8/12/12 at 9 (emphasis added).


(continued…)

              [(Claimant’s new employer)]. A Statement of Wages, properly calculating
              the average weekly wage has not been submitted as agreed, to confirm the
              $1900 per week figure offered on Claimant’s behalf (it is expected that the
              parties will agree on the AWW; See, Deposition of Claimant, NT 27-28).

WCJ’s Dec., 1/28/11, Finding of Fact (F.F.) No. 8 (emphasis added).



                                               3
              On remand, the WCJ made findings of fact and conclusions of law
determining Claimant’s AWW, the amount of partial disability benefits to which
Claimant was entitled, and assessed $3,500 in attorney fees against Employer. In
the same decision, the WCJ disposed of the penalty petition: the WCJ denied the
petition because the record did not reveal any improper intentional action on
Employer’s part. This remand/penalty decision is at the heart of the current appeal.


              On Claimant’s appeal of the WCJ’s remand/penalty decision, the
Board affirmed. It determined Claimant did not establish Employer violated the
Act by withholding compensation benefits. The Board also determined the WCJ
never received an appropriate quantum meruit request from Claimant’s counsel
listing the amount and length of time for which the fee was payable based on the
skill required, the duration of the proceedings and time and effort required and
actually expended. Thus, the Board found the WCJ did not err in determining
$3,500 was an appropriate award of attorney fees. Claimant now petitions for
review to this Court.


                                         II. Issues3
              Claimant first argues the Board erred in affirming the WCJ’s decision
not to award a penalty for Employer’s conduct where Employer withheld payment
of awarded       compensation       benefits    after the WCJ          granted    Claimant’s
claim/reinstatement petition. Additionally, Claimant asserts the Board erred in


       3
         Our review is limited to determining whether the WCJ's findings of fact were supported
by substantial evidence, whether an error of law was committed or whether constitutional rights
were violated. Watt v. Workers’ Comp. Appeal Bd. (Boyd Bros. Transp.), 123 A.3d 1155 (Pa.
Cmwlth. 2015).



                                               4
affirming the WCJ’s remand decision which only awarded $3,500 in unreasonable
contest attorney fees.


                                 III. Discussion
                               A. Penalty Petition
                                 1. Contentions
             Claimant first contends Employer violated the Act by unilaterally
withholding payment of his compensation checks after the WCJ directed Employer
to make payment. Claimant asserts that after the WCJ granted Claimant’s claim
petition and Employer appealed, Employer simply ceased paying benefits while the
appeal was pending.      Claimant argues Employer was required to obtain a
supersedeas which, if granted, would allow it to stop paying compensation
benefits. Thus, Claimant argues the Board erred by not awarding him a penalty for
Employer’s unilateral withholding of benefits.


             Employer counters that its insurance carrier was in contact with
Claimant’s counsel to obtain records regarding Claimant’s wages from his new
employer, Tri-Com, Inc. The insurance carrier did not provide any disability
benefits between March 2011 and August 2011 not because of an intentional
violation of the Act but due to Claimant’s failure to document his earnings from
his new employer. Employer further points out the WCJ acknowledged a long-
standing practice to require paystubs or similar evidence as proof of earnings.
WCJ’s Dec. 8/19/14, Finding of Fact (F.F.) No. 3(e).




                                        5
                                     2. Analysis
             Section 435 of the Act provides that penalties can be imposed on an
employer when it fails to follow the procedures set forth in the Act. 77 P.S. § 991.
Sections 435(b) and (d) of the Act state:

             (b) If it appears that there has not been compliance with this act
             or rules and regulations promulgated thereunder the department
             may, on its own motion give notice to any persons involved in
             such apparent noncompliance and schedule a hearing for the
             purpose of determining whether there has been compliance. The
             notice of hearing shall contain a statement of the matter to be
             considered.

                                            ****

             (d) The department, the board, or any court which may hear any
             proceedings brought under this act shall have the power to
             impose penalties as provided herein for violations of the
             provisions of this act or such rules and regulations or rules of
             procedure ….

77 P.S. §991(b), (d).     The imposition of penalties under the Act is an issue
independent from the merits of the claim. See, e.g., Winkelmann v. Workmen's
Comp. Appeal Bd. (Estate of O’Neill), 646 A.2d 58 (Pa. Cmwlth. 1994). When a
claimant files a penalty petition, the initial burden is on him to prove a violation of
the Act occurred. Shuster v. Workers’ Comp. Appeal Bd. (Pa. Human Relations
Comm’n), 745 A.2d 1282 (Pa. Cmwlth. 2000). Once the claimant meets this
burden, the burden shifts to the employer to prove it did not violate the Act. Id.


             No penalty may be imposed under Section 435(d) of the Act in the
absence of a violation of the Act or the rules or regulations of the Board or the



                                            6
Department of Labor and Industry. Glagola v. Workmen's Comp. Appeal Bd.
(Bethlehem Mines Corp.), 428 A.2d 1016 (Pa. Cmwlth. 1981).


            More important for our disposition, while there must be a finding as to
whether there was a violation of the Act, such a finding does not mandate the
imposition of a penalty. Dept. of Labor & Industry v. Workmen’s Comp. Appeal
Bd. (Taylor Lock Co.), 410 A.2d 1325 (Pa. Cmwlth. 1980) (no penalty awarded for
unintentional violation of Act). A WCJ’s refusal to award penalties for a technical
violation of the Act does not constitute an abuse of discretion.     Ostrawski v.
Workers’ Comp. Appeal Bd. (UPMC Braddock Hosp.), 969 A.2d 15 (Pa. Cmwlth.
2009).


            Here, the WCJ found that the Board’s remand order required “a
determination as to the amount of partial disability benefits Claimant is due based
on the difference between the wages he was receiving [from his new employer]
and his pre-injury [AWW] and an award based upon that calculation.” WCJ’s
Dec., 8/19/14, F.F. No. 2(c). The WCJ further found Employer’s insurance carrier
was entitled to the records of Claimant’s earnings from his new employer prior to
making payments to Claimant on his claim petition. In this regard, the WCJ found
that requiring proof of earnings was a long-standing practice in workers’
compensation matters, and James O’Hora, a senior case manager for Employer’s
workers’ compensation insurance carrier, acted properly in waiting for these proofs
from Claimant.




                                        7
            Ultimately, the WCJ determined Employer did not intentionally
violate the Act.   The WCJ found the record did not reveal any improper,
intentional action on the part of Employer as to the payment of benefits and the
taking of credits against those benefits.    WCJ’s Dec. 8/19/14, F.F. No. 3(a).
Specifically, the WCJ found:

            3.     As related to the Penalty Petition (with the above
            Findings being incorporated as relevant), the undersigned does
            not find [Employer] violated the Act as to its treatment of
            partial disability benefits or other benefits, and specifically, as
            already noted, the collection of data before paying partial
            disability benefits.

                   (a) This record does not demonstrate any improper
                   intentional action on the part of [Employer] as to the
                   payment of benefits and taking of credits …. Among
                   others matters, and by way of example that there was no
                   intention to impede payment to … Claimant, Mr. O’Hora
                   testified that the payment of some $2,980 for partial
                   disability for a limited period in February 2012 was made
                   within the week of receiving the appropriate wage
                   information. (O’Hora 8-9; See also, N.T. 9-13, as to
                   O’Hora’s efforts regarding a so-called ‘bounced’ check
                   in May 2012).

                   (b) The fact that in ‘hindsight’ Claimant was entitled to
                   the maximum payable for partial benefits despite his
                   $500 per week earnings, does not diminish the need to
                   calculate benefits on the same time-basis as wages are
                   paid (which could change -- even if they did change as in
                   this case).

                   (c) In this connection, Mr. O’Hora testified to being in
                   contact with Claimant’s Counsel to obtain proper
                   records, and sought to arrange for having paystubs
                   forwarded on some regular basis to properly calculate the
                   partial benefits. (See, O’Hora [Dep.], NT 17-18; the
                   efforts at that time do not appear to have been fruitful).



                                         8
                     (d) Here, it appears matters could have been handled
                     better - with perhaps better communication between the
                     parties. This is to be contrasted to a penalty situation. For
                     example, in this connection, it appears that all parties
                     originally believed Claimant’s $900.00 per week
                     earnings still allowed for him to receive the maximum
                     weekly benefit of $745.00 for 2006 work injuries - based
                     upon a sufficiently high AWW. However, even at a
                     $1,900 AWW (noted in Finding No. 8 of the original
                     Decision as ‘offered on Claimant’s behalf’ would not
                     justify a $745.00 per week benefit ($1,900 less $900
                     equals $1,000, times 2/3 equals $666.67 per week).

                     (e) Under all the circumstances … and given a long
                     standing practice to require pay-stubs or the like as proof
                     of earnings (which appears most reasonable), no penalty
                     will be assessed in the exercise of discretion, even if
                     some violation can be viewed as having occurred. The
                     Penalty Petition is appropriately denied and dismissed.

WCJ’s Dec. 8/19/14, F.F. Nos. 3(a)-(e) (emphasis added). The record adequately
supports the WCJ’s findings. O’Hora Dep. at 8-9, 13-18; see also Dep. of Kirk
Hall, 4/27/10, at 27-28. In turn, those findings support the WCJ’s determination
that no penalty was warranted here. WCJ’s 8/19/14, Concl. of Law No. 2; Taylor
Lock Co.; Ostrawski.


              Therefore, upon extensive review of the record as a whole, we
conclude the Board properly affirmed the WCJ’s decision denying Claimant’s
penalty petition.4

       4
         In denying Claimant’s penalty petition, the WCJ also relied, in part, on a purported
supersedeas order the Board issued in March 2011, which required that Claimant furnish his
wage records from his new employer. See WCJ’s Dec. 8/19/14, F.F. Nos. 2(c), 3(a), 3(e).
However, this supersedeas order is not included in the certified record; therefore, we do not
reference it. Nevertheless, for the reasons set forth above, we discern no error in the WCJ’s
denial of Claimant’s penalty petition where Claimant did not timely supply the wage records
(Footnote continued on next page…)

                                             9
                                   B. Attorney Fees
                                    1. Contentions
             Claimant next argues the WCJ erred by capping the unreasonable
contest attorney fee at $3,500 instead of awarding a 20% fee for the period up to
the circulation date of the WCJ’s remand/penalty decision. Claimant contends the
contest was unreasonable in the initial round of litigation, as the Board found, and
in the litigation on remand as well. In particular, the unreasonable nature of the
contest on remand continued during litigation over the penalty petition. Claimant
needed to file the penalty petition in order to receive benefits already awarded by
the WCJ. Also, Employer’s insurance carrier witness conceded that earnings from
Claimant’s new employment would not affect Claimant’s compensation rate.
Claimant argues the $3,500 award does not account for the time and effort
Claimant’s counsel spent litigating this matter over the course of two rounds of
litigation over four years.


             Employer asserts that during the remand proceedings, the WCJ gave
Claimant’s attorney ample time to provide the amount of the quantum meruit fees
he was seeking. Employer contends that, despite the WCJ’s grant of additional
time to provide the information, and noting that grant of time on the record, as well
as holding three additional hearings after noting the record, the WCJ never
received the information for the quantum meruit fee. WCJ’s Dec., 8/19/14, F.F.
Nos. 2(b), 3(c), (e); WCJ’s Hr’g, Notes of Testimony (N.T.), 7/10/13 at 5; see also


(continued…)

from his new employer, and Employer promptly began paying benefits after it received those
records.



                                           10
N.T., 10/9/13 at 5-6; N.T. 3/7/14 at 5; N.T. 5/12/14 at 5-6. Thus, Employer argues
the Board’s decision to affirm the WCJ clearly shows that the evidence supports
this decision.


                                    2. Analysis
            Section 440(b) of the Act provides:

             If counsel fees are awarded and assessed against the insurer or
             employer, then the [WCJ] 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. If the
             insurer has paid or tendered payment of compensation and the
             controversy relates to the amount of compensation due, costs
             for attorney’s fee shall be based only on the difference between
             the final award of compensation and the compensation paid or
             tendered by the insurer.

77 P.S. §996(b).


             First, for the reasons discussed above, we reject Claimant’s assertion
that any unreasonable contest continued into the second round of litigation on
remand and on the penalty petition. As detailed above, neither the WCJ nor the
Board erred in refusing to award penalties.       Also, there are no findings that
Employer’s contest during the remand/penalty phase was unreasonable. We agree
with the WCJ that: “[t]he fact that in ‘hindsight’ Claimant was entitled to the
maximum payable for partial benefits … does not diminish the need to calculate
benefits on the same time-basis as wages are paid ….” WCJ’s Dec., 8/19/14, F.F.
No. 3(b).




                                        11
               As to unreasonable contest attorney fees for the initial round of
litigation concerning the claim/reinstatement petition, the Board determined
Employer did not present a reasonable contest, and Claimant was entitled to the
opportunity to present a quantum meruit fee for approval. Bd. Op. at 3. As a
result, the Board remanded to the WCJ in part to “provide Claimant with an
opportunity to present a quantum meruit fee for approval and an award if the
[WCJ] should find such fee to be reasonable ….” Bd. Order, 8/12/12.


               On remand, the WCJ found Claimant’s counsel received “opportunity
upon opportunity” to submit a proper application for quantum meruit fee. WCJ’s
Dec., 8/19/14, F.F. No. 2(b). Further, as identified by the WCJ, Section 131.55 of
the Special Rules Before WCJs,5 as it pertains to a quantum meruit fee, details the
calculation by itemizing the services rendered, time expended and addresses
factors enumerated in Section 440 of the Act.                34 Pa. Code §131.55(c).         In
elaborating on this in his remand decision, the WCJ found:

               The remand was to ‘provide Claimant with an opportunity to
               present a quantum meruit fee for approval and an award if the
               [WCJ] should find such fee to be reasonable.’ (Order of
               [Board]; Emphasis Supplied). Following remand, Claimant’s
               Counsel was given ‘opportunity upon opportunity’ to submit a
               proper application for a quantum meruit fee - but Counsel has
      5
          34 Pa. Code §131.55(b) (Special Rules Before WCJs) provides:

               (b) Under section 440 of the act (77 P.S. § 996), in a disputed claim under
               the act when the employer or insurance carrier has contested liability in
               whole or in part, the employee or a dependent, in whose favor the
               proceeding has been finally decided, will be awarded attorney fees and
               costs against the employer or insurance carrier, unless the employer or
               insurer had a reasonable basis for contesting the petition.

Id.



                                               12
            not filed the application as authorized by Section 131.55 of the
            Judges’ Rules, relating to quantum meruit fees (detailing the
            calculation by itemizing the services rendered, the time
            expended, and addressing all factors enumerated in Section 440
            of the Act). The Rule would provide [Employer] with an
            opportunity to file a response. Rather, here, Claimant’s
            Counsel asked for a 20% fee from [Claimant’s termination of
            employment to the date of WCJ’s remand decision, which was
            July 6, 2009 – August 18, 2014], without any detail of any time
            expended, etc. A denial of any Section 440 fee may well be
            proper. However, given the finding of the [Board] as to an
            unreasonable contest, and considering the criteria of Section
            440 (although not detailed by Counsel), including that in the
            initial proceedings Claimant’s Counsel attended hearings,
            participated in three depositions (Claimant, Employer, and
            [Employer’s] Medical), prepared a brief and submitted
            proposed Findings/Summary of Evidence, and has a long
            experience in compensation practice, a fee of $3,500 will be
            assessed for an unreasonable contest; it will serve as a credit as
            against Claimant’s responsibility for attorney fees.

Id. (underlined emphasis added). Further, Section 131.55(e) of the Special Rules
Before WCJs states that a “decision on the fee award will be made based on the
record of the case and, if filed, the application and response” 34 Pa. Code
§131.55(e) (emphasis added).


            In short, in his remand decision, the WCJ granted Claimant’s counsel
additional time to provide the information, and noted that grant of time on the
record. N.T., 7/10/13, at 5. The WCJ also identified on the record that three
additional hearings were held, but the WCJ never received the information for the
quantum meruit fee. N.T., 7/10/13 at 5; see WCJ’s Dec. 8/19/14, F.F. No. 2(b);
see also N.T., 10/9/13 at 5-6; N.T. 3/7/14 at 5; N.T. 5/12/14 at 5-6. Thus, the WCJ
based his remand decision on the record, taken as a whole, which contained
substantial evidence to support his findings. The Board’s decision to affirm the


                                        13
WCJ’s remand decision awarding a $3,500 fee for the initial round of litigation
only, was clearly supported by substantial evidence.


            Based on the foregoing, we affirm.




                                      ROBERT SIMPSON, Judge




                                        14
        IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Kirk Hall,                             :
                        Petitioner     :
                                       :
             v.                        :   No. 1916 C.D. 2015
                                       :
Workers' Compensation Appeal           :
Board (Powell Electro Systems),        :
                        Respondent     :


                                     ORDER


             AND NOW, this 14th day of June, 2016, the order of the Workers’
Compensation Appeal Board is AFFIRMED.




                                      ROBERT SIMPSON, Judge
