The attorneys who represent clients before the Workers’ Compensation Board are a very specialized and skilled group. Their practice requires them to be fluent in the Workers’ Compensation Law and Regulations as well as to have working knowledge of other areas of the law. To counsel their clients they need an understanding of certain relevant parts of the law such as the Domestic Relations Law, Tax Law, Criminal Law and the Civil Practice Laws and Rules, just to mention a few. This is so regardless of whether they are representing the claimant or the employer. Generally, counsel that represent employers do not represent claimants, nor do claimants’ counsel generally represent employers.

Employers can engage an attorney usually through their workers’ compensation insurance company if insured, or individually if self insured, and pay any agreed counsel fee. Fees to be paid for legal counsel and representation of the employer or the insurance carrier may be freely negotiated between the parties, and are not subject to approval by the Workers’ Compensation Board. Completely different rules govern the representation of a claimant. Legal fees paid to claimants’ counsel are subject to approval by the Workers’ Compensation Board. A claimant may represent him- or herself before the Board or may elect to hire an attorney or licensed representative to represent them. A licensed representative is a specialized type of professional license created by statute, which, in effect, permits non-lawyers to practice law before the Board to a limited extent. The justification for permitting non-lawyers to obtain a license to represent claimants before the Board is believed to have emanated from a perceived lack of availability of counsel in certain parts of the state. However, before practicing before the Board, the attorney or licensed representative must file a notice of retainer and appearance, and, when appropriate, a notice of substitution, on forms prescribed by the Board, immediately upon being retained. A copy of such notice must also be provided to the insurance carrier, selfinsured, or other representative of the employer at the time of filing. In fact, an attorney or licensed representative who fails to file a notice of retainer and appearance is precluded from collecting a legal fee. (12 NYCRR 300.17).

To protect the claimant’s award of benefits from being too heavily encumbered by a legal fee, the attorney or licensed representative is not permitted to enter into an agreement with the client (claimant) regarding such fee. Instead, the retainer is subject to a fee that is set by the Workers’ Compensation Board after an award of compensation has been successfully achieved. Subjecting a claimant’s counsel fee to the Board’s approval is intended to protect claimants from giving up a portion of their award without proper benefit from counsel and to provide sufficient economic care of the injured worker or his or her family (Krug v. Offerman, Fallon, Mahoney & Cassano, 214 A.D.2d 889, 624 N.Y.S.2d 683 (3d Dep’t 1995)). Indeed it is a misdemeanor for any person or firm to receive a fee for services rendered on behalf of a claimant except in an amount determined by the Workers’ Compensation Board (§ 24 WCL).
Challenges to the constitutionality of the law requiring the claimant’s counsel fee to be approved by the Board have been found to be without merit. In Crosby v. State Workers’ Compensation Bd., 57 N.Y.2d 305, 456 N.Y.S.2d 680, 442 N.E.2d 1191 (1982), it was argued that this requirement gives an advantage to the employer. However, the New York Court of Appeals opined that protection of the claimant by the restrictions imposed by WCL § 24 is reasonably related to the legislative objective of the WCL, and that the restrictions do not violate the freedom to contract, due process, or right of privacy of a claimant.

Procedures for Requesting (and Objecting to) the Fee of Claimant’s Counsel To obtain a fee for services rendered to a claimant, the attorney or licensed representative must formally request it. A written application on a prescribed form (WCB Form OC-400.1) must be filed for any fee more than $450. If the fee to be awarded is $450 or less, the judge may make the award of the fee without the claimant present upon an oral statement on the record (or, if requested by the Board, a written statement) by the attorney or licensed representative as to the services rendered and the time spent for the performance of such services. If the fee to be awarded is in excess of $450, the Workers’ Compensation Law judge makes the award for the fee in the presence of the claimant, which affords the claimant an opportunity to object to the fee. If the claimant is not present at the hearing and the fee to be awarded is in excess of $450, the claimant must be advised of the amount requested by the attorney or licensed representative ten days in advance of the awarding of a fee. In either event, the claimant may object to the amount of the fee that is being requested or appeal a decision that awarded a fee the claimant considers excessive. Fees awarded in a conciliation proceeding, administrative determination or agreement pursuant to WCL § 32, may be approved by a conciliator or designee of the Chair of the Workers’ Compensation Board. (12 NYCRR 300.17).

The Workers’ Compensation Board’s Discretion in Determining the Fee of Claimant’s Counsel Whenever a legal fee is requested, the Board has broad discretion to consider whether the amount requested is commensurate with the services rendered, having due regard for the financial status of the claimant and whether the attorney or licensed representative engaged in dilatory tactics or failed to comply in a timely manner with Board rules. However, in no case may the fee be based solely on the amount of the award.

If the Board, based on substantial evidence, has concluded that all of the conditions for awarding a fee have been met and makes the award, its decision is final and will not be disturbed on appeal unless it acted in an arbitrary, capricious or unreasonable manner, or otherwise abused its discretion (see, Pavone v. Ambassador Transport, et al., 26 A.D.3d 645, 809 N.Y.S.2d 640 (2006)). If a penalty is claimed for a late payment of a claimant award, it is considered additional compensation to the claimant. In such a case, if the efforts of the attorney or licensed representative contributed to obtaining the additional award, the attorney or a licensed representative may be entitled to receive a fee with respect to such added compensation. However, if the Board determines that an attorney or licensed representative’s efforts did not in any way benefit the claimant in the claim for compensation benefits, it may refuse to award a fee. The representation in and of itself is not a benefit unless the claimant receives or will receive some economic benefit from the services (see Matter of Marshall v Savannah Sausage Corp., 192 A.D.2d 954, lv denied 82 N.Y.2d 655 (1993)). Historic View: No Fee to Claimant’s Counsel for Obtaining Medical Benefits

Once awarded, the legal fee becomes a lien on all of the compensation encompassed by the award from which the fee will be paid, even taking precedence over a claim by an employer for reimbursement of an advance payment of compensation. (Dickman v. City of New York, 25 A.D.2d 931, 270 N.Y.S.2d 304 (3d Dep’t 1966), aff’d, 18 N.Y.2d 969, 278 N.Y.S.2d 208, 224 N.E.2d 717 (1966).

Because the claimants counsel’s fee becomes a lien against the award of compensation, and the applicable statute (WCL § 2(6)) defines the term “compensation” as the “money allowance” paid to the claimant, the general rule has been that if no money flowed to the claimant there was nothing for the lien to attach to. However, it was always a question as to whether an attorney could obtain a fee for successfully obtaining medical benefits for the claimant, because it was generally understood amongst the claimants’ bar that no fee would be awarded for such a representation, even when successful.
Consequently, it became difficult to engage counsel if the only benefit was medical, even if that benefit was very substantial. In fact, medical benefits have always been one of the largest costs in the workers’ compensation system.

In one case involving an authorization for future medical treatment where no money was passing, the court held that it was not an abuse of discretion for the Board to refuse to award counsel fees (Matter of Cummins v North Med. Family Physicians, 283 AD2d 861,861-863 (2001), lv denied 96 N.Y.2d 720 (2001)). Because no money passed in Cummins, the court found that an award would have essentially been equivalent to an “add-on” legal fee, which although authorized in some jurisdictions, was not permitted in New York under such circumstances.

Shea v. Icelandair: Rule is not Hard and Fast
The understanding that an attorney cannot receive a fee for obtaining medical benefits for a claimant has been a significant problem for workers’ compensation claimants in New York, although this has not universally been the case throughout the country. Recognizing the problem, the Appellate Division recently determined that this is not a hard and fast rule in New York (Shea v. Icelandair, N.Y. 876 N.Y.S.2d 225 (3rd Dep’t 2009).

The issue in Shea arose when a § 32 WCL settlement (which permits parties to enter into an agreement settling any or all issues in a claim for workers’ compensation benefits, subject to the Board’s approval) was made to reimburse the claimant for medical and travel expenses incurred, from which it was agreed that counsel would receive a counsel fee. The Board approved the § 32 settlement but rejected the counsel fee on the ground that an award of medical and travel expenses is not an award of “compensation” under the statute subject to a lien for counsel fees. On review, the Court concluded that the existing law permits the award of counsel fees even when no money passes to the claimant. The Court returned the matter to the Board to reconsider its determination, because the Board had incorrectly concluded that counsel fees were precluded by the germane statutes, and thus had not exercised its broad discretionary review of counsel’s requested fee. In Shea, the Appellate Division noted that the New York Court of Appeals often has stated that the Workers’ Compensation Law should be broadly construed to effectuate the humanitarian and economic purposes of the law. (See Neacosia v. New York Power Auth., 85 N.Y. 2d 471(1995); Smith v. Thompkins Co. Courthouse, 60 N.Y. 2d 939 (1983)). Citing the Court of Appeals decision in Neacosia, the Court concluded that “the term ‘compensation’ [as defined by the WCL] should be liberally construed to advance the interest of the injured employee” and thus should include awards of medical and travel expenses. (See Keser v. N.Y.S. Elmira Psych. Ctr., 92 N.Y. 2d 100 (1998)).
Applying this standard to claimants with “medical costs only” issues, the Appellate Division concluded that in the interest of making counsel available, fees can be awarded to claimant’s counsel even if no money is flowing to the claimant by the award. The court concluded that narrowly construing the term “compensation” to the exclusion of claims involving disputes about only medical benefits would essentially leave such claimants to find an attorney willing to undertake their cases on a pro bono basis.

The court pointed out that the majority of states, when afforded interpretive leeway by their statutes, have permitted counsel fees in medical only cases noting, among other reasons, that “enhancing the availability of representation is more in tune with the purposes undergirding the Workers’ Compensation Law.” (Shea at 226). The Court stated that permitting counsel fees to attach in medical only cases was in the best interest of the WCL, and that any potential abuse by counsel in requesting fees under such circumstances is minimized by the statutory requirement that all such requests are subject to the Board’s approval.

Conclusion
After Shea, it is clear that the Workers’ Compensation Board now has the discretion to make an award of counsel fees even if the representation was only to obtain medical benefits. Counsel will request a fee, which presumably will be paid either as an add-on cost to the employer, or its carrier, a charge to the claimant, or as a reduction of the benefit to be paid to the medical provider (which would leave a balance for the claimant to assume). The decision of the Shea Court in reinterpreting the lien of an attorney to allow lawyers to seek a fee for these substantive services rendered to a claimant is an important and long overdue significant benefit to claimants.