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An appellate court in Georgia has issued a decision setting forth the standard a trial court should use when reviewing a decision of the state's workers' compensation board relating to attorney's fees. The ruling is likely to make it more difficult to challenge board decisions awarding or denying attorney's fees in these cases.

The case

Matthew Kerkela, a restaurant manager, submitted a claim for workers' compensation benefits, asserting that he had been injured on the job. One week before a scheduled hearing before an administrative law judge (ALJ), Amguard Insurance Company, Kerkela's employer's workers' compensation insurance carrier, accepted Kerkela's claim as compensable.

Amguard authorized Kerkela's continued medical treatment and payment of past medical bills; paid Kerkela a lump sum of past-due temporary total disability (TTD) income benefits from the date he had stopped working to the date his claim had been accepted; paid a 15% late-payment penalty of the lump sum; and agreed to pay attorney's fees equal to 25% of the income benefits already paid.

Although Amguard agreed to provide some workers' comp benefits, the ALJ held a hearing on the issue of whether Kerkela was entitled to additional assessed attorney's fees equal to 25% of future TTD income benefits.

After reviewing the evidence on the issue, the ALJ denied Kerkela's request for continued assessed attorney's fees. The ALJ concluded that Amguard's payment of 25% of back income benefits as attorney's fees and the late-payment penalty had been “more than sufficient.” The ALJ also concluded that Amguard's defense of Kerkela's claim had been reasonable, finding that Amguard had conducted discovery expeditiously, had made its decision to accept the claim in a brief period of time, and had paid a lump-sum amount of attorney's fees as a good faith attempt to compromise the demand for attorney's fees.

The ALJ explained that, during discovery, a second adjuster who had taken over the claim had learned detailed facts about the mechanism and place of injury, and additional information about Kerkela's medical status and its relationship to his injury. The ALJ found that Amguard had accepted the claim as compensable shortly after Kerkela had been deposed and had received an independent medical evaluation.

The state's workers' compensation board adopted the ALJ's decision. The board accepted the ALJ's findings of fact, stating that they were supported by a preponderance of competent and credible evidence, and that the ALJ was in the best position to determine the credibility and weight of the evidence.

Trial court disagrees

The dispute reached the courts.

A trial court determined that the board had misinterpreted evidence when it had concluded that Amguard had acted reasonably in its defense of Kerkela's claim, and it listed numerous instances of Amguard's failure to comply with its statutory obligations. The trial court further determined that the “only evidence at trial was that 25%” of back and future benefits was a reasonable fee. The court reversed the board's decision and remanded the case to the board for actions consistent with its order.

In reaching its decision, the court applied a de novo standard of review, that is, reviewing the evidence without regard to the ALJ or board's decision. The court found that the de novo standard was appropriate given that it was “clear that evidence ha[d] been misconstrued and misinterpreted[.]”

Amguard appealed, contending, among other things, that the trial court had applied an incorrect standard of review.

The appellate court's decision

The appellate court vacated the trial court's judgment, explaining that a trial court may not disturb the factual findings of the board if there was “any evidence” to support them. The appellate court added that “[e]rroneous applications of law to undisputed facts, as well as decisions based on erroneous theories of law” were subject to the de novo standard of review.

According to the appellate court, whether an employer had unreasonably defended against a claim was a “factual determination, subject to the any evidence standard of review.”

In this case, the appellate court said, the trial court had deemed the board's conclusion that Amguard's defense had been reasonable a “misinterpretation” of the evidence. That conclusion, according to the appellate court, appeared to be a “disagreement” with the board's “factual findings” and was subject to the “any evidence standard of review,” which the trial court had failed to apply.

The appellate court vacated the trial court's judgment and remanded the case for application of the correct standard of review.

The case is Amguard Ins. Co. v. Kerkela, No. A17A1498 (Ga. Ct.App. March 13, 2018).

Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at smeyerowitz@meyerowitzcommunications.com.

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Georgia Appeals Court makes it harder to fight about attorney's fees in workers' comp cases

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