Court: Court of Civil Appeals of Alabama; October 4, 2002; Alabama; State Appellate Court
Debra Killingsworth, an employee of Bruno's, Inc. d/b/a Food World No. 62, sought workers' compensation for injuries sustained while performing her job duties, claiming permanent disability. The trial court found that she suffered a permanent total disability and awarded benefits. The employer appealed, challenging the trial court's findings on the work-relatedness of her neck injury, the determination of permanent total disability, and the calculation of attorney fees.
The appellate court affirmed the trial court's findings, citing that substantial evidence supported the conclusion that Killingsworth's neck injury was work-related, as testified by Dr. Ryan, who linked it to her lower back injury from moving shopping carts. Furthermore, the court found substantial evidence for the permanent total disability claim, supported by testimony from a vocational rehabilitation expert indicating a 100% loss of earning capacity and Dr. Holt's assessment of her inability to maintain suitable employment post-injuries. The appellate court clarified that while it respects factual findings supported by substantial evidence, it reviews legal conclusions de novo.
The trial court assessed attorney fees based on a weekly benefit of $278.92, treating it as the "compensation awarded or paid" without deducting a $90.38 setoff from the employer's disability plan, as allowed under Ala. Code 1975, § 25-5-57(c)(1). The employer argues that the attorney fees should be calculated after applying this setoff, citing that the statute limits fees to 15% of the compensation awarded. The employee contends the full $278.92 should be used for the calculation. Previous case law, specifically Sanders v. Dunlop Tire Corp., indicated that setoffs should not be deducted for attorney fee calculations, although this issue was not directly contested on appeal. The employer referenced Bynum v. City of Huntsville, which required deductions for third-party recoveries, but the court found that this case did not apply since the employer remains liable for the full benefits owed to the employee. Additionally, the reasoning from Ford Motor Co. v. Stewart was adopted, emphasizing that allowing such a deduction could prevent employees from securing legal assistance. Ultimately, the court upheld the trial court’s calculation of attorney fees without the setoff.
Part of the benefit amount owed to the employee is provided through an employer-funded disability plan, with the compensation amount governed by the Workers' Compensation Act. Specifically, Section 25-5-57(c)(1) mandates that the employer must pay the disability plan for a setoff to be applicable. Attorney fees are limited to 15% of the "compensation awarded or paid," as stated in Section 25-5-90(a). The court interprets "compensation awarded or paid" to encompass both employer-provided disability benefits and workers' compensation benefits. This interpretation prevents a scenario where an attorney would receive no fees for successfully handling a workers' compensation case, which would be unreasonable.
The trial court determined the weekly compensation amount to be $278.92, establishing that this figure represents the "compensation awarded or paid." As such, attorney fees should be calculated before any deductions for the disability plan. The trial court's judgment is affirmed based on this reasoning. However, Judge Murdock partially dissents, agreeing that the trial court miscalculated the attorney fees but concurs with the majority opinion on other matters. Murdock emphasizes that the terms "awarded" and "paid" should be interpreted together within the context of the statute and clarifies that the employee should not receive compensation that duplicates the amount received from the disability plan. Ultimately, the employee is entitled only to the remaining balance owed of $188.54 from the weekly benefit.
The amount of $188.54 is identified as the "compensation awarded" in this case, derived from a court judgment rather than a settlement. According to Ala. Code 1975, § 25-5-90(a), the attorney fee must not exceed 15% of this compensation. The principles established in Bynum v. City of Huntsville, 779 So.2d 243 (Ala. Civ.App. 1999), support the employer's position, highlighting that a worker's compensation award must be adjusted by any third-party recovery, leading to a reduced compensation amount for which attorney fees must also be limited. This limitation prevents an attorney from receiving a double fee for funds secured for the client. In the current case, the worker's compensation was similarly reduced by a $90.38 recovery from an employer-funded disability plan, resulting in the $188.54 award.
The statute aims to fairly compensate attorneys for securing benefits that employees could not have obtained without legal action, emphasizing that fees should be based on actual benefits recovered rather than total recoveries, which could result in disproportionate attorney fees. For example, if an attorney sought a fee based on total recovery from both the disability plan and the compensation action, the attorney could collect a fee significantly higher than intended, potentially disincentivizing employees from pursuing additional compensation. The concerns raised indicate that such outcomes are not aligned with legislative intent regarding employer liability under the Workers' Compensation Act.
The case parallels instances where an employer voluntarily pays most of the compensation benefits owed to an injured employee. In Ex parte Shaw, the employer had paid all but $13 of the compensation before the lawsuit commenced, and the Supreme Court ruled that no attorney fee was owed, as compensation must come from what is awarded and the employee had already accepted $637 of the total due. The court determined that since the proceeding "produced nothing," the trial court's omission to award an attorney's fee was not an error. In Ex parte St. Regis Corp., the Supreme Court similarly held that an employee's lawyer is not entitled to a fee for benefits received prior to the trial. Consequently, an attorney cannot receive a fee for compensation that was not obtained through their efforts. The legislative intent of the Workers' Compensation Act is to benefit injured employees rather than attorneys, and the Act is structured without excess funds to cover legal fees. Awarding an attorney a percentage of funds they did not secure would contradict the Act's purpose. The possibility of excessive fee awards could deter employees from pursuing claims for remaining benefits, thus potentially limiting their rights.
