Unreasonable Contest of a Workers’ Compensation Claim

Date: January 11, 2011
Posted In: DLP Law

Tony injured his back at work and immediately reported the injury to his boss. The Workers\’ Compensation insurance carrier for Tony\’s employer advised Tony that he was to visit Dr. Smith for treatment. Tony obliged and went to Dr. Smith, who wrote an excuse for Tony not to return to work until Tony\’s back condition had improved.

In the meantime, Tony kept on waiting for payment of his compensation benefit checks. Despite numerous calls to the insurance carrier, the payments were not made. Tony was forced to retain a lawyer to intercede on his behalf and institute litigation.

Normally an attorney charges a 20% fee against compensation that is due and owing to an individual upon the successful completion of the compensation case. The attorney cannot charge a fee before the Administrative judge approves the same. There are situations where the compensation carrier, as in Tony’s case, has no reasonable basis to deny the claim. This is referred to as an unreasonable contest. In those situations the Workers’ Compensation Judge can order the Workers\’ Compensation carrier to pay Tony\’s legal fees in addition to paying Tony his workers compensation checks. In essence, the 20% will not come out of Tony\’s past compensation, but rather will be paid by the compensation carrier.

In addition the Administrative Judge, if he finds there has been an unreasonable delay in the payment of Tony\’s compensation, can order up to a 50% penalty against the compensation carrier of all amounts that are owed in the past.

When one adds up the assessment of a 20% attorney fee and the 50% penalty and then tax on an additional 10% for interest on all outstanding compensation, the Workers\’ Compensation carrier can end up paying an extra 80% more than they would have paid had they abided by the Workers\’ Compensation Act.

Disclaimer: The above article is for instructive purposes only and each case is fact sensitive. Consultation with an attorney should be obtained instead of reliance upon the legal issues discussed in this column.

Tom Cummings
Thomas P. Cummings has been a Partner with Dougherty Leventhal & Price, LLP since 1996 and has been with the firm since 1991. He focuses his practice on workers’ compensation, Social Security Disability and personal injury cases.