LHWCA Attorney Fee Shifting After Lincoln v. Director, OWCP (Everywhere but the 9th Circuit)

By Monica Fekete Markovich and Alexandra Wood, Brown Sims, P.C., Houston, Texas

At the outset of a Longshore and Harbor Workers’ Compensation Act (“LHWCA,” 33 U.S.C.S. § 901 et seq.) claim, only the claimant may bear any responsibility for the payment of his attorney’s fees. The LHWCA includes a fee-shifting arrangement which allows for the payment of a claimant’s attorney’s fees by the employer or carrier under specific circumstances, all of which require that the claimant’s attorney meet statutory requirements, including successfully prosecuting the disputed issues. 33 U.S.C.S. § 928(a), (b). If the specific requirements of the statute are not met, the claimant’s attorney’s fees remain only the responsibility of the claimant and may not be transferred to the employer or carrier. These concepts are in line with the American Rule that each party is responsible for the payment of its own attorney’s fees unless there is a specific statute or agreement otherwise. The Fourth Circuit recently addressed the parameters for fee shifting under Section 928(a); the Fourth Circuit provided employers and carriers with additional guidance as to what qualifies as the payment of “any compensation” for application of Section 928(a). Lincoln v. Director, OWCP, 744 F.3d 911, 48 BRBS 17(CRT) (4th Cir. 2014), cert. denied, __ U.S. __, 190 L. Ed. 250, 135 S. Ct. 356 (2014). This article focuses on the current interpretation and application of Section 928(a) after Lincoln in all courts except for those in the Ninth Circuit, as the Ninth Circuit interprets Section 928(a) differently than the courts in the rest of the country.[fn1]

Section 928(a) of the LHWCA (also referred to as Section 28(a)) is a fee shifting provision that moves to the employer or carrier responsibility for the payment of a claimant’s attorney’s fees if, and only if, specific criteria are met. In order to effectively shift attorney’s fees to the employer and carrier under Section 928(a), two events must occur: first, the employer and carrier must decline to pay the claimant “any compensation” by the thirtieth day after receiving notice that a claim has been filed; and second, the claimant’s attorney must successfully prosecute his or her case against the employer and carrier.[fn2]

In practice, Section 928(a) initially becomes an issue once a claim has been published by the U.S. Department of Labor Office of Workers Compensation Programs (“OWCP”) to the employer. This typically occurs after the OWCP receives the claimant’s Form LS-203, “Employee’s Claim for Compensation.” After OWCP receives the Form LS-203, the OWCP will usually issue a Form LS-215a, “Notice to Employer and Insurance Carrier that a Claim Has Been Filed.” The issuance of this notice starts the clock on the thirty days by which the employer and carrier must pay a claimant “any compensation.”

Disputes have arisen as to what constitutes “any compensation” for the application of, or avoidance of, the fee shifting in Section 928(a). The LHWCA does not specifically set forth a minimum amount of compensation that must be remitted in order for an employer or carrier to avoid the shift in responsibility for attorney’s fees. The LHWCA also does not specifically require the payment of “all” compensation under Section 928(a).

A nominal payment, without a basis in disability, is likely inadequate to prohibit fee shifting under Section 928(a). For example, the payment of $1.00 as “any compensation,” based on a reference to Section 928 attorney’s fees rather than to Section 908 disability, was insufficient to stop fee shifting in Green v. Ceres Marine Terminals, Inc. 43 BRBS 173 (2010) (the employer had controverted the claim prior to notice from the OWCP of the claim, then paid claimant $1.00 in compensation benefits within 30 days of the notice from the OWCP of the claim). In Green, the Benefits Review Board ultimately affirmed the Administrative Law Judge’s determination that “the employer’s payment of $1 does not preclude the applicability of Section 928(a), as the administrative law judge rationally found that employer’s payment of $1 was merely an attempt to avoid fee liability rather than the payment of compensation for claimant’s injury.” Id. at 177.

Full payment of all compensation is not necessary for avoiding fees under Section 928(a). In Andrepont v. Murphy Exploration & Production Co., the Fifth Circuit confirmed that the payment of partial compensation rendered Section 928(a) inapplicable. 566 F.3d 415, at 419, 43 BRBS 27(CRT) (5th Cir. 2009). In Andrepont, the employer voluntarily initiated temporary total and permanent partial disability benefits for the claimant’s leg injury. Id. at 416. After a formal hearing, the claimant was awarded compensation for permanent total disability beyond the compensation benefits previously paid by the employer. Id. at 417. The claimant’s attorney filed an application for attorney’s fees under Section 928(a).[fn3] Id. The court held that Section 928 (a) was inapplicable to this case, noting that “if the employer pays some partial compensation during those thirty days, thereby admitting to liability for the injury, section 928 (a) does not apply.” Id. at 419, citing Pool Co. v. Cooper, 274 F.3d 173, 186-187, 35 BRBS 109(CRT) (5th Cir. 2001). Payment in full of the claim was not required to avoid the shifting of fees under Section 928(a).

In Lincoln, supra, the Fourth Circuit addressed the parameters for determining whether a payment by the employer or carrier to the claimant satisfies the payment of “any compensation” under Section 928(a). In Lincoln, the claimant sustained binaural hearing loss as a result of his work as a longshoreman. Id. at 913. After receiving notice of the claim from the claimant, the employer filed a notice of controversion explaining that even though the employer accepted that the claimant’s hearing loss was noise-induced, more information was needed to determine the correct amount of disability payment. Id. The OWCP formally served notice of Lincoln’s claim on the employer; within thirty days of that notice the employer paid the claimant $1,256.84 “amounting to compensation for ‘0.5% [binaural] hearing loss’ and the equivalent of one week of permanent partial disability pay under the maximum compensation rate.” Id.

Lincoln’s (claimant’s) attorney argued that as any compensation meant all compensation, the employer had to pay the claim in full in order to avoid fees under Section 928(a). Id. at 914. The Fourth Circuit rejected that argument as being inconsistent with the plain language of the statute. Id. The Fourth Circuit determined that the term “‘any compensation’ is unambiguous and plainly encompasses an employer’s partial payment of compensation.” Id. The court further noted that construing any compensation as all compensation would force employers to pay a claim in full when a claimant’s benefits often cannot be determined with any degree of certainty within thirty days. Id. at 915. Accordingly, Section 928 provides an employer with a “safe harbor” against shifting fees where the employer has shown its admittance to some liability through at least a partial payment to the claimant. Id.

Lincoln’s attorney also argued that payment of one week of compensation was a “farce to avoid paying attorney’s fees”, comparing it to the employer’s payment of $1.00 in Green. The Fourth Circuit disagreed; the court contrasted Lincoln’s $1,259.84 payment for .5% impairment to Green’s $1.00 that was “clearly untethered to the underlying claim and therefore was not ‘compensation’ at all” Id. at 916 citing Andrepont, 566 F.3d at 419. The Fourth Circuit determined that Lincoln’s employer’s payment of one week of benefits at the maximum compensation rate for .5% impairment was “directly tied” to the claimant’s injury and therefore qualified as “compensation” within the meaning of Section 928(a). Id.

The Fourth Circuit also refused claimant’s argument that the controversion of a claim acts as an irrevocable trigger for Section 928(a). Id. at 916-917. After noting that the BRB had not been given an opportunity to address that contention, the Fourth Circuit considered then dismissed this theory as “Section 928(a) nowhere incorporates Section 914(d) or its 14 day time limit specifically, or references notices of controversion generally.” Id. at 917. Instead, Section 928(a) only includes the “explicit trigger” of whether “any compensation” has been paid within the appropriate thirty day time frame. Id. Section 928(a) does not turn on whether the employer and carrier have unequivocally accepted the claim; instead, Section 928(a) is not affected by whether the employer or carrier have voiced continuing questions or disputes about the claim as long as the payment requirement has been met.

With its opinion in Lincoln, the Fourth Circuit provides guidance on the criteria for judging a payment of compensation in the context of the 928(a) fee shifting statute. Section 928(a) allows for the shifting of the claimant’s attorney fee responsibility to the employer and carrier unless there is a payment of at least partial compensation to the claimant within thirty days of notice of the claim from the OWCP. That partial payment must be tethered in some way to the claimant’s injury or claimed disability. A nominal amount of money without a reasonable connection to the claimant’s claim for compensation will not suffice. However, payment of the claim in total is not necessary to avoid the shift in responsibility for a claimant’s attorney’s fees from the claimant to the employer and carrier. While the Lincoln opinion does not contain absolute standards for the definition of “any compensation,” the Lincoln opinion guides attorneys and the courts to look for some meaningful connection between the injury that the claimant has sustained and the amount of compensation paid when considering whether to shift responsibility for the claimant’s attorney’s fees from the claimant to the employer and carrier under Section 928(a).

Footnotes:

1. For additional background see Monica F. Markovich, Claimants’ Attorneys’ Fees and Expenses in LHWCA and Extension Act Cases: Understanding the Current Interpretation of 33 USC § 928(a) and (b) Everywhere but the 9th Circuit, published January 14, 2010 at http://www.lexisnexis.com/legalnewsroom/workers-compensation/b/workers-compensation-law-blog/archive/2010/01/14/claimants_2700_-attorneys_2700_-fees-and-expenses-in-lhwca-and-extension-act-cases_3a00_--understanding-the-current-interpretation-of-33-u.s.c.s.-.aspx, and at Benefits Review Board Service Commentaries (BRBS, release 715, Feb. 2010).

2. “If the employer or carrier declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim for compensation having been filed from the deputy commissioner, on the ground that there is no liability for compensation within the provisions of this Act, and the person seeking benefits shall thereafter have utilized the services of an attorney at law in the successful prosecution of his claim, there shall be awarded, in addition to the award of compensation, in a compensation order, a reasonable attorney’s fee against the employer or carrier in an amount approved by the deputy commissioner...which shall be paid directly by the employer or carrier to the attorney for the claimant in a lump sum after the compensation order becomes final.” 33 U.S.C.S. § 928(a).

3. Claimant also pursued attorney’s fees under Section 928(b). The Fifth Circuit rejected the request on the basis that the specific requirements for the application of Section 928(b) were not met. Andrepont, 566 F. 3d at 419-422.

© Copyright 2015 Brown Sims, P.C. All rights reserved. Reprinted by permission. This article appeared in the Benefits Review Board Service Longshore Reporter (LexisNexis).