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Code Sec. 65.2-713 authorizes the commission to assess the costs of the proceedings, including a reasonable attorney's fee, against an employer who has defended any proceeding without reasonable grounds. "Attorney's fees may be awarded in a workers' compensation case only when it is defended 'without reasonable grounds.'" Volvo White Truck Corp. v. Hedge, 1 Va. App. 195, 201, 336 S.E.2d 903, 907 (1985). The commission has the authority to award attorney's fees against the employer if it determines that the employer defended the claim "without reasonable grounds." Code Sec. 65.2-713(A). "If an employer refuses to pay a claim, reasonably believing that it is not compensable, and in the course of its investigation the grounds for refusal are not so contradicted as to be shown unfounded, then the subsequent defense is reasonable, even if it is later proven misplaced or in error." Volvo White Truck Corp. v. Hedge,1 Va. App. 195, 201, 336 S.E.2d 903, 907 (1985) (citing Norfolk Dep't of Fire v. Lassiter, 228 Va. 603, 605, 324 S.E.2d 656,657-58 (1985))."Although [a court has] rejected employer's argument, the merits of that argument are an appropriate consideration in...review of the attorney's fees." Lynchburg Foundry Co. v. Goad, 15 Va. App. 710, 716, 427 S.E.2d 215, 219 (1993). Allen & Rocks, Inc. v. Perry Lee Briggs, Record No. 0768-98-3 (December 22, 1998)(employer had reasonable grounds to believe it had no responsibility to pay for claimant's medical treatment because the Court of Appeals had never addressed in a published opinion the issue of whether a cumulative trauma injury incurred after the primary injury falls within the doctrine of compensable consequences).
Code Sec. 65.2-714 provides that fees of attorneys shall be subject to the approval and award of the Commission. Hudock v. Industrial Comm'n, 1 Va. App. 474, 477, 340 S.E.2d 168, 171 (1986). Under this section, attorneys fees are awardable to claimant's attorney from a health care provider or insurance company after claimant prevails on a contested or disputed claim, and the health care provider has been reimbursed by the employer or employer's insurer. Pavlicek v. Jerabek, 21 Va. App. 50, 461 S.E.2d 424 (1995); Danville Radiologists, Inc. v. Perkins, 22 Va. App. 454, 470 S.E.2d 602 (1996). Code Sec. 65.2-714(B) requires payment by the health care provider of its pro rata share of an award of attorney's fees only after the provider has received reimbursement from the employer or its insurer. Danville Radiologists, Inc. v. Perkins, 22 Va. App. 454, 470 S.E.2d 602 (1996). See Commission Rule 6 regarding Sec. 714 fees.
In Bohle v. Henrico County Sch. Bd., 246 Va. 30, 431 S.E.2d 36 (1993), the Court considered the method to be used for apportioning attorney's fees and expenses under the Act when payment of compensation benefits to an injured employee had been suspended following a settlement between the employee and a third-party tortfeasor. The Court adopted the approach used by the Commission, that is, "once the employee's net third-party recovery is determined, the employee will be entitled to payment of no further compensation or medical expenses subsequent to the date fixed in the suspension order until the employee can establish that further benefit entitlements exceed the net amount received by the employee from the third-party recovery." Id. at 35, 431 S.E.2d at 39. The Court said, however, that "the Commission has not foreclosed the payment of attorney's fees in increments as medical expenses and compensation benefits accrue during the suspension period." Id.
In 1994, the General Assembly adopted Code Sec. 65.2-313. Acts 1994, ch. 586. As pertinent, the statute provides: "In any action or claim for damages by an employee . . . against any person other than the employer under Sec. 65.2-310, . . . if a recovery is effected, the employer shall pay to the employee a percentage of each further entitlement as it is submitted equal to the ratio the total attorney's fees and costs bear to the total third-party recovery until such time as the accrued post-recovery entitlement equals that sum which is the difference between the gross recovery and the employer's compensation lien. In ordering payments under this section, the Commission shall take into account any apportionment made pursuant to Sec. 65.2-311. For the purposes of this section, 'entitlement' means compensation and expenses for medical, surgical and hospital attention and funeral expenses to which the claimant is entitled under the provisions of this title, which entitlements are related to the injury for which the third-party recovery was effected."
A circuit court's jurisdiction extends only to the point where it determines the amount of compensation benefits, as opposed to attorney's fees and costs, actually paid by the employer. Sec. 65.2-313 permits the circuit court to apportion attorney's fees and costs based on the amount of benefits paid in the past, and benefits to be paid in the future until, in the language of Sec. 65.2-313, "the accrued post-recovery entitlement equals that sum which is the difference between the gross recovery and the employer's compensation lien." The employer is liable for payment "of each further entitlement as it is submitted" based upon a percentage "equal to the ratio the total attorney's fees and costs bear to the total third-party recovery" until the time when "the accrued post-recovery entitlement equals that sum which is the difference between the gross recovery and the employer's compensation lien." When the circuit court has fixed that percentage and has determined the amount of the lien for payment of past benefits, the Commission enters the picture and orders the appropriate payments to be made, taking into account the apportionment percentage fixed by the court. See Eghbal v. Boston Coach Corp., 23 Va. App. 634, 638-39, 478 S.E.2d 732, 734-35 (1996) (summary of Commission's manner of calculation of offset due employer under Sec. 65.2-313). Thelma E. Hawkins v. Commonwealth of Virginia/ Southside Virginia Training Center, Record No. 971154 (Va. S.Ct., February 27, 1998). WP Version.
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