March 21, 2014
LARRY D. ASHLOCK APPELLANT
COMMONWEALTH OF KENTUCKY, DEPARTMENT OF JUVENILE JUSTICE; CYNTHIA SIPES; HON. JEANIE OWEN MILLER, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES
PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD ACTION NO. 2010-WC-96674
BRIEF FOR APPELLANT: Larry D. Ashlock Elizabethtown, Kentucky
BRIEF FOR APPELLEE DEPARTMENT OF JUVENILE JUSTICE K. Lance Lucas Sarah C. Rogers Florence, Kentucky
BEFORE: ACREE, CHIEF JUDGE; CAPERTON AND VANMETER, JUDGES.
Larry D. Ashlock petitions for review of an opinion of the Workers' Compensation Board which vacated an opinion and order of the Administrative Law Judge (ALJ) and the Chief Administrative Law Judge (ALJ). The Board held that Ashlock, an attorney, did not have standing to file a motion to reopen under Kentucky Revised Statutes (KRS) 342.125 in order to recover attorney fees because he was never a party to the underlying claim. We affirm.
Cynthia Sipes injured her shoulder during the course of her employment as a youth worker for the Kentucky Department of Juvenile Justice. On February 28, 2011, she hired Ashlock to represent her in a claim for workers' compensation benefits. Sipes and Ashlock entered into a contingency fee agreement which provided that he would be paid for his services pursuant to KRS 342.320(2). That statute provides in relevant part that, in workers' compensation cases, attorney's fees shall be subject to the approval of an administrative law judge, shall be subject to certain maximum limits, and shall be paid by the employee from the proceeds of the award or settlement.
The contract between Sipes and Ashlock also stated that
In the event the client discontinues the services of the attorney prior to the conclusion of the claim, the parties agree that attorney will have a valid lien against any proceeds of the claim for reasonable attorney fees for time incurred working on the claim as well as reimbursement for expenses.
Ashlock properly notified Cannon Cochran Management Services, the third party administrator for the Department of Juvenile Justice, of his representation of Sipes, and requested Sipes's records from the Department of Workers' claims.
At the time Sipes retained Ashlock, she was already receiving temporary total disability (TTD) benefits. On May 16, 2011, Kara Smith, a senior adjuster with Cannon Cochran, sent Sipes a letter informing her that her TTD benefits had been terminated. According to Sipes, she contacted Ashlock for help but he did nothing. Sipes then contacted Smith herself. Smith reinstated the TTD benefits. As a result of his lack of assistance in reinstating her TTD benefits, Sipes claims that she discharged Ashlock by means of a telephone call on May 20, 2011, and a follow-up letter on May 23, 2011.
On July 28, 2011, Ashlock received an offer from Smith to settle Sipes's claim for a complete buyout in the amount of $32, 742.30. He did not contact Sipes, who on the next day contacted Smith to inquire about her TTD benefits, which had stopped again. Smith told her about the settlement proposal that had been sent to Ashlock. When Sipes informed Smith that she had discharged Ashlock as her attorney, Smith told her to forward written documentation of the termination. Sipes immediately sent an email to Ashlock, stating that she had sent him a letter on May 23, 2011, terminating his services. She asked him to fax a letter to Smith to let her know that the representation had ended. Ashlock acknowledged that he received the email, yet on August 3, 2011, he sent a letter to Sipes that stated in part as follows:
Please allow this letter to serve as a follow-up to our recent telephone conversation concerning your claim. As I stated to you, I do not have any letter from you in my file from May 23, 2011 nor was I ever contacted by the insurance carrier until receiving this letter of July 28, 2011 that I have enclosed herewith for your review. I have also enclosed herewith the impairment rating report from Dr. Bonnarens. I am attempting to contact the insurance adjustor, Ms. Kara D. Smith, in an attempt to understand the status of your claim. As soon as I receive that information you and I can discuss any further representation of you in this matter.
On August 4, 2011, Sipes faxed a note to Smith advising her that she was no longer represented by an attorney, and that settlement options could be discussed directly with her. Sipes thereafter entered into a settlement agreement for a lump sum of $32, 742.30.
Even though his services had apparently been terminated by July 29, 2011, Ashlock continued to write to Sipes, inquiring as to the status of her claim, in letters dated February 1, 2012, March 7, 2012, and July 10, 2012. In the final letter, he stated, "Please allow this letter to serve as a follow-up in this claim. I would ask that upon receipt of this letter that you contact our office so we can discuss moving this claim towards a resolution."
Ashlock never filed a lien for his attorney's fees with the Department of Workers' Claims, nor is there any evidence that he notified Sipes or Smith of his intent to assert such a lien.
On July 27, 2012, almost a year after his representation was terminated, Ashlock filed a motion to reopen Sipes's claim. The motion was made pursuant to provisions (a) and (c) of KRS 342.125(1), which allow for a reopening if there has been fraud or mistake in the entry of the Form 110 Settlement Agreement. The motion sought sanctions against the insurance carrier and the employer for improperly settling the matter with Sipes. Ashlock also filed a motion for attorney's fees in the amount of $6, 161.35 for the twenty hours of work he had performed in representing Sipes. He later amended that amount to $7, 521.32.
The ALJ entered an order finding that Ashlock had set forth a prima facie case for reopening, and assigned the claim to an ALJ for further adjudication. The ALJ found that it was undisputed that Sipes emailed Ashlock on July 29, 2011, indicating that she had terminated the representation on May 23, 2011, and that she had requested that he inform Smith, the adjuster, of the termination. The ALJ further determined that Ashlock's termination was without good cause, and that he was entitled to a fee of $3, 000 to be paid by Sipes for the twenty hours of service he had performed on her behalf. The ALJ issued an opinion and order on the fee dispute, and an order on petition for reconsideration and final order on attorney fee.
Ashlock sought review before the Board, arguing that the ALJ abused her discretion in reducing the amount of the fee he had requested, or in the alternative, that the ALJ was required to award fees based upon a rate of $400 per hour for the twenty hours he had expended. He further argued that the ALJ erred in requiring the fee to be paid by Sipes. He contended that the third party administrator should be sanctioned and ordered to pay the fee.
The Board held that Ashlock lacked standing to file the motion to reopen. It vacated the ALJ's order reopening the claim, and the ALJ's subsequent opinion, and orders, and dismissed Ashlock's appeal in its entirety without addressing the merits. This appeal by Ashlock followed.
The function of further review of the WCB [Workers' Compensation Board] in the Court of Appeals is to correct the Board only where the Court perceives the Board has overlooked or misconstrued controlling statutes or precedent, or committed an error in assessing the evidence so flagrant as to cause gross injustice.
Western Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992).
The reopening statute provides as follows:
(1)Upon motion by any party or upon an administrative law judge's own motion, an administrative law judge may reopen and review any award or order on any of the following grounds:
(b)Newly-discovered evidence which could not have been discovered with the exercise of due diligence;
(d)Change of disability as shown by objective medical evidence of worsening or improvement of impairment due to a condition caused by the injury since the date of the award or order.
(2)No claim which has been previously dismissed or denied on the merits shall be reopened except upon the grounds set forth in this section.
KRS 342.125 (emphasis supplied).
We agree with the Board that the language of the statute plainly requires a motion to reopen to be made by a party. When Ashlock filed the motion he was not a party, nor had he ever filed a motion to be joined as a party. "Workers' compensation is a statutory creation." James T. English Trucking v. Beeler, 375 S.W.3d 67, 71 (Ky. 2012). "[I]t is neither the duty nor the prerogative of the judiciary to breathe into the [workers' compensation] statute that which the Legislature has not put there." Gateway Const. Co. v. Wallbaum, 356 S.W.2d 247, 248-49 (Ky. 1962).
Ashlock argues that, because he was never notified of the settlement by Sipes, the employer, the employer's insurance carrier or the Department of Workers' Claims, the attorney fee lien he had on the claim remained outstanding, and that he filed his motion to reopen and motion for attorney's fees immediately after he became aware that the claim had been settled without his knowledge. But Ashlock was aware by July 29, 2011, that his representation of Sipes was terminated, yet he made no effort to investigate the status of the claim. Ashlock did not attempt to file a motion for approval of attorney's fees as required under KRS 342.320(4), nor did he ever move to intervene in order to protect his interest. Instead, he waited a full year before filing a motion to reopen.
The triggering event which activates the process of Board approval of attorney's fees is the attorney's motion for an attorney fee award. The Board has no obligation to approve an attorney's fee of its own motion if the attorney fails to move for a fee award. A lien cannot arise until the attorney is entitled to a fee. In a workman's compensation case an attorney is not legally entitled to a fee until that fee has been approved by the Board.
Land v. Newsome, 614 S.W.2d 948, 949 (Ky. 1981).
Ashlock argues, in reliance on Commonwealth, Dept. of Highways v. Combs, 357 S.W.2d 316 (Ky. 1962), that an attorney is automatically a party when the issue concerns an attorney's fee pursuant to KRS 342.320. In Combs, the Board had ordered fees to be paid to an attorney who had successfully represented a workers' compensation claimant. The fees were to be deducted from the claimant's total award. The claimant did not object to the amount or the method of payment, but the employer objected to the amount of the fee and appealed. The appellate court held that the claimant and the attorney were the only parties who could object to the amount of the fee fixed by the Board, and that the employer had no standing to question it. The important distinction between Combs and the case before us is that the attorney in Combs followed the statutory procedure in place at that time for obtaining his fees; he did not wait for a year after being discharged by his client and then attempt to obtain his fees by means of a motion to reopen the claim.
The opinion of the Board vacating and dismissing Ashlock's appeal is affirmed.