GORDON T. RAGER, ET AL. V. CRAWFORD & COMPANY, ET AL.
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RENDERED : JUNE 19, 2008
TO BE PUBLISHED
GORDON T. RAGER AND
DEATHERAGE, MYERS, SELF & LACKEY,
ACTING BY AND THROUGH
W . DOUGLAS MYERS, PARTNER
V.
APPELLANTS
ON APPEAL FROM COURT OF APPEALS
2006-CA-002184-WC
WORKERS' COMPENSATION BOARD NO. 00-80609
CRAWFORD & COMPANY;
HON . DONNA H. TERRY,
ADMINISTRATIVE LAW JUDGE ; AND
WORKERS' COMPENSATION BOARD
APPELANTS
OPINION OF THE COURT
AFFIRMING
An Administrative Law Judge (ALJ) awarded the claimant's attorney a fee for
successfully defending a post-award medical dispute . Finding that the employer had
reasonable grounds to bring the dispute, the ALJ refused to impose liability for the fee
on the employer. The Workers' Compensation Board (Board) affirmed the decision,
and the Court of Appeals affirmed the Board . We also affirm. KRS 342 .320(7) permits
an ALJ to award an attorney's fee in a medical reopening, but KRS 342.310 provides
the only statutory basis to impose the fee on the employer. The appellants have not
challenged the denial of sanctions under KRS 342.310.
The claimant and his employer agreed to settle the claim for a 1998 injury under
terms that required the employer to pay future medical expenses. An AU approved the
agreement, after which the claimant incurred expenses for medical treatment and
sought approval for an additional back surgery. The employer moved to reopen to
contest the reasonableness and necessity of the proposed surgery ; whereupon, the
claimant raised certain other unpaid medical bills . He also asserted that the reopening
was unreasonable and requested sanctions in the form of attorney's fees .
The AU determined ultimately that the medical expenses and surgery were
reasonable and ordered the employer for pay for them. Finding that the employer had
a reasonable basis to contest the expenses, the AU denied the claimant's request for
sanctions . Subsequent orders awarded a fee to the claimant's attorney and directed
the claimant to pay it personally . The claimant and his attorney appealed .
The appellants argue that the AU erred by failing to order the employer to pay
the attorney's fee in addition to the disputed medical expenses. They cite no statutory
authority but argue that the employer failed to pay the claimant's reasonable and
necessary medical expenses without litigation ; therefore, it should be required to pay for
the legal services incurred in defending the reopening . They argue as a matter of
public policy that to do otherwise would discourage attorneys from representing workers
in medical fee disputes and also argue that the claimant will be unable to pay for the
surgery if he must also pay his attorney .
KRS 342 .320 provides, in pertinent part, as follows:
(2) In an original claim, attorney's fees for services under
this chapter on behalf of an employee shall be subject to the
following maximum limits:
(a) Twenty percent (20%) of the first twenty-five
thousand dollars ($25,000) of the award, fifteen
percent (15%) of the next ten thousand dollars
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($10,000), and five percent (5%) of the remainder of
the award, not to exceed a maximum fee of twelve
thousand dollars ($12,000). This fee shall be paid by
the employee from the proceeds of the award or
settlement . (emphasis added) .
(4) No attorney's fee in any case involving benefits under
this chapter shall be paid until the fee is approved by the
administrative law judge, and any contract for the payment
of attorney's fees otherwise than as provided in this section
shall be void. The motion for approval of an attorney's fee
shall be submitted within thirty (30) days following finality of
the claim. Except when the attorney's fee is to be paid by the
employer or carrier, the attorney's fee shall be paid in one
(1) of the following ways:
(a) The employee may pay the attorney's fee out of
his personal funds or from theproceeds of a lumpsum settlement; or
(b) The administrative law iudg e, upon request of the
employee, may order the payment of the attorney's
fee in a lump sum directly to the attorney of record
and deduct the attorney's fee from the weekly
benefits payable to the employee in equal
installments over the duration of the award or until the
attorney's fee has been paid, commuting sufficient
sums to pay the fee. (emphasis added) .
(5) At the commencement of the attorney-client relationship,
the attorney shall explain to the employee the methods by
which this section provides for the payment of the attorney's
fee, and the employee shall select the method in which his
attorney's fee is to be paid .
(7) In a claim that has been reopened pursuant to the
provisions of this chapter, an attorney's fee may be awarded
by the administrative law judge subject to the limits set forth
in subsection (2) of this section . In awarding the attorney's
fee, the administrative law judge shall consider the factors
set forth in subsection (3) of this section . If no additional
amount is recovered upon reopening, no attorney's fee shall
be awarded . No attorney's fee shall be allowed or approved
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exceeding the amounts provided in subsection (2)(a) of this
section applicable to any additional amount recovered .
Chapter 342 holds an injured worker responsible for his or her own attorney's
fee. KRS 342 .320(2)(x) authorizes a fee for legal services performed in an initial claim
and states that the fee "shall be paid by the employee from the proceeds of the award
or settlement." KRS 342.320(7) authorizes an attorney's fee for obtaining an additional
recovery at reopening. The court explained In Duff Truck Lines. Inc . v. Vezolles , 999
S.W.2d 224 (Ky. App. 1999), that the provision encourages attorneys to represent
workers in reopening proceedings and applies whether a reopening is for income
benefits, medical benefits, or both . KRS 342.320(5) requires a worker to select a
method for paying the attorney's fee at the commencement of the attorney-client
relationship. "Except when the attorney's fee is to be paid by the employer or carrier,"
KRS 342.320(4) offers two methods for payment . KRS 342.320(4)(x) permits the
worker to pay the fee from personal funds. KRS 342 .320(4)(b) permits the worker to
request an order requiring the employer to pay the fee and then deduct it from weekly
benefits .
KRS 342 .310 provides the only statutory basis to require an employer or
insurance carrier to pay the worker's attorney's fee from its own funds rather than the
worker's benefits . It permits an AL to assess "the whole cost of the proceedings,"
including attorney's fees, on a party who "brought, prosecuted, or defended [the claim]
without reasonable ground ." The claimant and his attorney present policy reasons to
impose the worker's attorney's fee on the employer when only medical expenses are at
issue, but workers' compensation is a statutory creation . Thus, the proper forum for the
argument is the legislature . The AL found "reasonable grounds" for the employer's
challenge in this case; therefore, the requirements of KRS 342 .310 were not met.
The decision of the Court of Appeals is affirmed .
All sifting . All concur.
COUNSEL FOR APPELLANTS,
GORDON T. RAGER, ET AL.:
W. DOUGLAS MYERS
DEATHERAGE, MYERS & HAGGARD
701 SOUTH MAIN STREET
P.O. BOX 1065
HOPKINSVILLE, KY 42241
COUNSEL FOR APPELLEE,
CRAWFORD & COMPANY :
JAMES GORDON FOGLE
CURTIS SCOTT SUTTON
FERRERI & FOGLE
203 SPEED BUILDING
333 GUTHRIE GREEN
LOUISVILLE, KY 40202
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