Unreasonable Contest Attorney Fees in PA Workers’ Comp

Under the Pennsylvania Workers’ Compensation Act, a workers’ comp insurance carrier has 21 days to accept or deny a claim. During that period, the workers’ comp insurance carrier is to investigate the claim. This both fair and clear.

The award of attorney fees under the PA Workers’ Compensation Act is supposed to be the rule. Only when the workers’ comp insurance carrier demonstrates that the they had a reasonable basis to deny the claim is an award of fees to be denied. This is how the law sets forth the process. Again, this seems both fair and clear.

Unfortunately, the reality is that unreasonable contest attorney fees are rarely ordered against the workers’ compensation insurance carrier. Even though the PA Workers’ Compensation Act, and the cases from PA Courts, show the workers’ comp insurance carrier must have a basis to deny a claim at the time the decision is made to deny the claim, Workers’ Compensation Judges (WCJs) rarely apply the law this way.

On September 26, 2008, the Commonwealth Court of Pennsylvania decided Hansen v. Workers’ Compensation Appeal Board, in which unreasonable contest attorney fees were denied. In this case, at the time the decision was made to deny the claim, the workers’ comp insurance carrier had five progress notes from the injured worker’s doctor. One of these notes made mention of the injured worker’s occupation, in discussing her carpal tunnel syndrome. None of the notes specifically stated the carpal tunnel was work-related. The workers’ comp insurance carrier denied the claim. The WCJ granted the claim, but denied unreasonable contest attorney fees. The injured worker appealed the denial of attorney fees.

On appeal to the Commonwealth Court, the decision of the WCJ, denying the unreasonable contest attorney fees was affirmed. The Court reasoned that the workers’ comp insurance carrier had a factual basis to deny the claim since the progress notes were vague, and the injured worker had performed similar work for other employers in the past. The Court apparently had no problem with the fact that the workers’ comp insurance carrier did not request the injured worker attend an Independent Medical Examination (IME) until after a lawyer was retained and litigation was begun.

To us, as lawyers who regularly practice in the area of PA workers’ comp, the Court has now switched the burden to the injured worker to show clear evidence of a work injury to the workers’ comp insurance carrier. Previously, based on the actual language of the Pennsylvania Workers’ Compensation Act, we believed the workers’ comp insurance carrier had a duty to investigate an injury once report of the injury had been received (since this is what the Act specifically states in Section 406.1). It now appears the workers’ compensation insurance carrier has much less of a duty to investigate report of a work injury than is written in the Act.