WHITE (JOYCE G.), ET AL. VS. COMPENSATIO CUMBERLAND VALLEY MANOR , ET AL. N
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RENDERED: SEPTEMBER 26, 2008; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-000442-WC
JOYCE WHITE;
DR. BRENT BABAT;
AND THOMAS W. DAVIS
v.
APPELLANTS
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS’ COMPENSATION BOARD
WC-84-12701 & WC-84-12700
CUMBERLAND VALLEY MANOR;
HON. JOHN B. COLEMAN,
ADMINISTRATIVE LAW JUDGE;
AND WORKERS’ COMPENSATION BOARD
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CAPERTON AND STUMBO, JUDGES; BUCKINGHAM,1 SENIOR
JUDGE.
STUMBO, JUDGE: This is an appeal from a Workers’ Compensation Board order
entered on January 31, 2008, affirming an order denying a motion to approve
attorney fees entered by Administrative Law Judge John Coleman (hereinafter
Senior Judge David C. Buckingham sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
(KRS) 21.580.
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ALJ) on September 21, 2007, and an order on reconsideration entered October 23,
2007. The motion for attorney fees was filed by Thomas Davis (hereinafter Mr.
Davis), who was trial counsel for Joyce White (hereinafter Mrs. White). The order
on reconsideration awarded Mr. Davis attorney fees in the amount of $6,493.75,
pursuant to KRS 342.320, which were to be paid by Mrs. White. The order
specifically held that attorney fees should not be paid pursuant to KRS 342.310.
This appeal challenges that ruling. KRS 342.310 is a sanction statute and would
permit an award of attorneys’ fees payable by Appellee, Cumberland Valley
Manor, if the underlying case is found to have been brought in bad faith. The ALJ
and Workers’ Compensation Board (hereinafter Board) both found that the issue of
recovery of attorney fees under KRS 342.310 had not been preserved, but went on
to note that even if the issue was viable, they would still have denied recovery
under that statute. Upon review, we believe that the issue was preserved, but hold
that the reasons set forth below to deny the award were reasonable and not an
abuse of discretion.
Mrs. White is a 63 year-old woman who sustained work injuries in
1983 and 1984, while an employee of Cumberland Valley Manor. In the original
workers’ compensation action, Cumberland Valley Manor was ordered to pay her
present and future medical expenses relating to the injury. Mrs. White continues to
require treatment for her work-related injuries. In 2006, she was referred to Dr.
Brent Babat (hereinafter Dr. Babat) for evaluation of low back and leg pain. Dr.
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Babat recommended surgery because physical therapy had not helped ease Mrs.
White’s pain. The surgery was performed on September 18, 2006.
Prior to the surgery, Dr. Babat received some past medical
information from Cumberland Valley Manor’s insurer. On August 2, 2006, Dr.
Babat noted in his records that with the limited information provided to him from
the insurer, he was unable to link her current pain to the work-related injury. Dr.
Babat later received further medical records and revised his conclusion. He
concluded that the current pain was related to the work-related injury and that
Cumberland Valley Manor’s insurance should pay for the surgery.
Nevertheless, on December 15, 2006, Cumberland Valley Manor filed
a motion to reopen the workers’ compensation claim to contest payment for the
September 18, 2006, surgery. As the basis for the dispute, Cumberland Valley
Manor used Dr. Babat’s August 2, 2006, note that the current pain was not related
to the injury.
In January, 2007, Cumberland Valley Manor obtained an independent
medical examination by Dr. Thomas O’Brien. Dr. O’Brien also indicated that Mrs.
White’s current medical condition was not due to the work-related injuries.
On July 26, 2007, the ALJ found Dr. Babat’s opinion most persuasive
and held that Mrs. White’s current injuries stemmed from the work-related injuries.
Mr. Davis then filed a motion for attorney fees pursuant to KRS 342.310 and KRS
342.320. Initially, the ALJ denied the motion for attorney fees. The ALJ held that
Mr. Davis failed to preserve the issue of the right to KRS 342.310 fees. Although
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the ALJ did not note this in his order, it appears as though he found the issue had
not been preserved because it was not raised at the Benefit Review Conference
(BRC). According to 803 KAR 25:010, Section 13, only issues raised at this
conference are subject to further proceedings. Additionally, the ALJ found that
had the issue been preserved, he would have denied it because the dispute was
brought with reasonable grounds. The ALJ did not address the issue of attorneys’
fees pursuant to KRS 342.320.
Mrs. White, through counsel, filed a motion to reconsider, asking the
ALJ to rule upon the request for fees pursuant to KRS 342.320 and to reconsider
his holding as to the KRS 342.310 fees. The ALJ again denied fees pursuant to
KRS 342.310 stating that the medical fee dispute was brought upon reasonable
grounds. However, the ALJ did find that Mr. Davis was entitled to fees pursuant
to KRS 342.320 and ordered that the money be paid by Mrs. White rather than
Cumberland Valley Manor.
The Appellants appealed to the Board. They continued to argue Mr.
Thomas should be granted attorney fees pursuant to KRS 342.310. The Board
affirmed the holding of the ALJ that the issue should have been preserved at the
BRC. The Board held that 803 KAR 25:010, section 13(14) requires issues to be
preserved at the BRC, but that the issue of KRS 342.310 attorney fees was not. It
also went on to state that it found the KRS 342.310 sanctions of attorney fees
would not be appropriate in this case because the medical fee dispute was brought
in good faith and with reasonable grounds. This appeal followed.
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KRS 342.310(1) reads:
If any administrative law judge, the board, or any court
before whom any proceedings are brought under this
chapter determines that such proceedings have
been brought, prosecuted, or defended without
reasonable ground, he or it may assess the whole cost of
the proceedings which shall include actual expenses but
not be limited to the following: court costs, travel
expenses, deposition costs, physician expenses for
attendance fees at depositions, attorney fees, and all other
out-of pocket expenses upon the party who has so
brought, prosecuted, or defended them. (Emphasis
added).
The Appellants argue that the ALJ and Board erred in finding that the issue of KRS
342.310 attorney fees had not been preserved. As stated above, the ALJ and Board
held that since the issue of KRS 342.310 attorney fees was not raised during the
BRC, it was not preserved and cannot be raised later. We disagree. While we
acknowledge 803 KAR 20:010, section 13(14) states that “[o]nly contested issues
shall be the subject of further proceedings,” it is illogical to require preservation of
the attorney fee issue at the BRC level.
As KRS 342.310 states, any ALJ, Board, or any other court may
assess costs. Thus costs, including attorney fees, may be assessed at any time
during litigation. In fact, these sanctions may be assessed by the court sua sponte.
See Woolum v. Woolum, 684 S.W.2d 20 (Ky. App. 1984). If they may be assessed
at any time, or by the court without prompting by counsel, why would one need to
preserve it during the BRC? As the Appellants note, when an administrative
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regulation is in conflict with a statute, the statutory provision prevails. See Wathal
v. Harrod, 229 S.W.3d 599 (Ky. App. 2007).
According to KRS 342.320(7) and Duff Truck Lines, Inc. v. Vezolles,
999 S.W.2d 224 (Ky. App. 1999), the legislative purpose in awarding attorney fees
when workers’ compensation cases are reopened is to “encourage attorneys to
undertake such representation and to ensure an opportunity for injured workers to
exercise their rights.” Id. at 226. While Duff and KRS 342.320(7) deal with the
attorney fee awards in other situations, we believe that the legislative intent of
KRS 342.310 is similar. When you consider that KRS 342.310 attorney fees may
be assessed at any level of the proceedings, by the court sua sponte, and that the
legislative intent is to encourage attorneys to take these cases, we see no reason to
so strictly apply the preservation standard. As such, we reverse the holding of the
ALJ and Board as to the preservation issue.
However, we will not grant attorney fees under KRS 342.310 in this
case. The ALJ and Board found that the Appellee had reasonable grounds to bring
this action and, therefore, did not assess attorney fees under the above statute.
Since KRS 342.310(1) states that costs “may” be assessed, it is permissive. As
such, the decision whether or not to grant the attorney fees must be reviewed for
abuse of discretion. Peabody Coal Co. v. Goforth, 857 S.W.2d 167, 170 (Ky.
1993). The standard for reviewing an exercise of discretion is whether the decision
was “arbitrary, unreasonable, unfair, or unsupported by sound legal principles.”
Sexton v. Sexton, 125 S.W.3d 258, 272 (Ky. 2004).
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When considering a motion for attorney fees, the ALJ must decide
whether the employer acted without reasonable grounds in bringing the medical fee
dispute. Here, the dispute was initiated based on the August 2, 2006, note from Dr.
Babat stating he could not link the current medical condition with the work-related
injury. Later, Cumberland Valley Manor also had an independent medical
examination of Mrs. White’s medical records. Dr. O’Brien performed the
examination and determined the current medical condition did not stem from the
work-related injury.
Based upon this evidence, which included conflicting reports from the
treating physician, the ALJ found, and the Board agreed, that there were reasonable
grounds to prosecute a medical fee dispute. We cannot see this as an abuse of
discretion since there was reasonable evidence to suggest Mrs. White’s current
medical condition was not related to the work injury. As such, we affirm the
denial of attorney fees pursuant to KRS 342.310.
Alternatively, the Appellants argue that Mrs. White’s legal fees
should be paid by Cumberland Valley Manor as an “integral portion of the cost of
the reasonable and necessary medical treatment for Mrs. White.” Mr. Davis was
granted attorney fees pursuant to KRS 342.320, which provides that the attorney
fees are to be paid by the employee. This is plainly set forth in the statute and we
cannot rule otherwise.
For the forgoing reasons, we affirm the denial of attorney fees
pursuant to KRS 342.310.
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ALL CONCUR.
APPELLANTS’ PETITION FOR
REVIEW AND ORAL ARGUMENT
BY:
APPELLEE, CUMBERLAND
VALLEY MANOR’S, RESPONSE
TO PETITION FOR REVIEW BY:
Thomas W. Davis
Glasgow, Kentucky
R. Christion Hutson
Sharlott K. Thompson
Paducah, Kentucky
ORAL ARGUMENT FOR
APPELLEE, CUMBERLAND
VALLEY MANOR, BY:
R. Christion Hutson
Paducah, Kentucky
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