PHILLIP WHEELER JR KIRK LAW FIRM APPELLANTS v. DAVIS THOMAS PAULEY BUILDING CENTER INC HON LANDON OVERFIELD CHIEF ADMINISTRATIVE LAW JUDGE AND WORKERS COMPENSATION BOARD APPELLEES (2013)

NOT TO BE PUBLISHED

OPINIONAFFIRMING

C. Phillip Wheeler, Jr. petitions for review of an opinion of the Workers' Compensation Board.   Wheeler contends that he is entitled to recover attorney's fees for a lump sum payment that his client, Davis Thomas, received pursuant to a post-award settlement agreement.   Finding no error, we affirm.

Thomas filed a workers' compensation claim after he suffered a low back injury in the course of his employment at Pauley Building Center, Inc. He was represented in the ensuing litigation by Wheeler.   Thomas was assigned a 22% impairment rating and was awarded 425 weeks of permanent partial disability (PPD) benefits in an opinion, order and award rendered by an Administrative Law Judge (ALJ) on July 23, 2010.   The ALJ subsequently granted Wheeler's petition for attorney's fees in the amount of $9,238.43.   This amount was calculated in accordance with Kentucky Revised Statutes (KRS) 342.320(2)(a), which provides that

(2) In an original claim, attorney's fees for services under this chapter on behalf of an employee shall be subject to the following maximum limits:

(a) Twenty percent (20%) of the first twenty-five thousand dollars ($25,000) of the award, fifteen percent (15%) of the next ten thousand dollars ($10,000), and five percent (5%) of the remainder of the award, not to exceed a maximum fee of twelve thousand dollars ($12,000).   This fee shall be paid by the employee from the proceeds of the award or settlement[.]

Over a year later, Thomas was contacted by the employer's attorney who offered a settlement of his remaining rights under the Workers' Compensation Act. After discussing the proposal with Wheeler, Thomas decided that he wanted to settle his claim.   He entered into a new fee agreement with Wheeler;  under its terms Wheeler would charge Thomas fees of 5% on future PPD payments that Wheeler obtained in a lump sum and 20% on any additional funds that he obtained for waivers of Thomas's remaining rights under the Act.

Wheeler accordingly negotiated a post-award settlement agreement on Thomas's behalf for a total amount of $70,000, which was broken down as follows:

Of the $70,000 lump sum payment, $51,916.58 represents the remaining PPD benefits (302 weeks discounted to 284.1008) previously awarded to the plaintiff on 7/23/10 ․ $6,000 is being paid to the plaintiff in consideration of plaintiff's waiver of any and all future medical expenses associated with this injury (physical and psychiatric conditions);  $6,000 is being paid to plaintiff in consideration of his waiver of vocational rehabilitation expenses;  and $6,083.42 is being paid to plaintiff in consideration of his waiver to future right to reopen this claim in the future for addition PPD, PTD or TTD benefits.

The agreement was subsequently approved by the Chief Administrative Law Judge (CALJ).   Wheeler then filed another petition for additional attorney's fees in the amount of $6,212.15, calculated on the total lump sum settlement amount of $70,000.   This amount was in accordance with his agreement with Thomas.

The CALJ awarded reduced fees in the amount of $3,616.68, reasoning that the $51,916.58 in settlement of Thomas's remaining PPD benefits had already been subjected to attorney's fees, and that only $18,083.42 of the total settlement amount could be considered “new money” or additional money that had not already been subjected to an attorney's fee.

Wheeler filed a petition for reconsideration which was denied.   He then appealed to the Board, which affirmed the CALJ's order.   This petition for review followed.

Our standard of review requires us to show deference to the rulings of the Board.

The function of further review of the [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).

This appeal centers on an issue of law, specifically how KRS 342.320(7) applies to the calculation of attorney's fees on post-award settlements in which a periodic payment is converted to a lump sum.   Subsection (7) provides as follows:

In a claim that has been reopened pursuant to the provisions of this chapter, an attorney's fee may be awarded by the administrative law judge subject to the limits set forth in subsection (2) of this section.   In awarding the attorney's fee, the administrative law judge shall consider the factors set forth in subsection (3) of this section.   If no additional amount is recovered upon reopening, no attorney's fee shall be awarded.   No attorney's fee shall be allowed or approved exceeding the amounts provided in subsection (2)(a) of this section applicable to any additional amount recovered.

KRS 342.320(7) (emphasis supplied).

Wheeler argues that the term “additional amount” should be construed to include obtaining a lump sum in exchange for the entitlement to future weekly benefits, as occurred in this case.   He argues that “cash in hand” is a valuable consideration for giving up the right to receive weekly benefits, since a claimant could die or have those benefits reduced in the future.

In its opinion, the Board held that the language of the statute was unambiguous, and that allowing Wheeler to recover a fee for the lump sum would result in a total fee for the PPD benefits in excess of the statutory maximum set forth in KRS 342.320(2)(a).   We agree.   As the Board aptly stated, the settlement agreement “changed only the time of payment for the previously awarded future income benefits, but provided no increase in benefits.”

Wheeler argues that this interpretation of the statutory language is contrary to the intent of the Legislature and to the public policy enunciated by the courts and the Board, which is to encourage attorneys to undertake the representation of injured workers and to achieve a complete resolution of their cases.   He contends that the result is inconsistent with a prior opinion of the Board, Falkenstein v. West Breck Corp., Claim No.2009–96039 (Aug. 6, 2012).

In Falkenstein, the employer sought to reopen and reduce an award of PPD benefits.  Id. at 4. The claimant retained an attorney who negotiated a lump sum settlement of the remaining unpaid PPD benefits, which was less than the total originally awarded by the ALJ. Id. The Board held that the claimant's attorney was not entitled to additional attorney's fees on the negotiated lump sum settlement, since he had not obtained additional funds over and above those originally awarded.  Id. at 11–12.   The Board further held, however, that the attorney was entitled to fees for the services he rendered in representing the claimant during the reopening proceedings initiated by the employer.   Id. at 15.   The Board stated that “[t]o hold otherwise would place the employee in the position of being virtually unable to obtain legal representation in post-award proceedings initiated by the employer or a party similarly situated.”  Id. at 17.   The Board held that KRS 342.320(2) and (7) “do not relate to entitlement to an attorney fee for representing a claimant in a proceeding initiated by the employer or a party similarly situated.   The law is clear that in such situations, entitlement to an attorney fee is not based on the award of additional income benefits.”  Id. at 11.

In Wheeler's case, the employer did not move to reopen the case or seek to reduce the benefits awarded to Thomas;  hence, KRS 342.320(2) and (7) apply.   As a result, Wheeler is not entitled to additional attorney's fees on the amount of the lump sum previously considered in the original award.

Wheeler further argues that he should be entitled to petition for a pro-rata hourly fee for obtaining the future PPD benefits that were reduced to a lump sum.   We have reviewed the record and cannot find where such an argument was made before the ALJ or the Board.   The argument is therefore unpreserved and will not be considered here.   See Leslie County Fiscal Court v. Adams, 965 S.W.2d 152, 153–54 (Ky.1998) (holding that “the principles concerning the preservation of issues for further consideration appl[y] in workers' compensation proceedings[ ]”).

The opinion of the Workers' Compensation Board is affirmed.

ALL CONCUR.

VANMETER, JUDGE: