A fee agreement between a claimant and an attorney that says claimant’s counsel is entitled to a 20% fee from any benefits awarded includes an award of medical expenses.

In his claim petition, the claimant alleged that he suffered a work-related heart attack. The workers’ compensation judge granted the petition and specifically found that the claimant’s counsel was entitled to “20 percent of any benefits awarded to be paid as counsel fees” under the fee agreement. The judge’s decision was then appealed by the employer and the claimant. Subsequently, the claimant filed review and penalty petitions, alleging the employer refused to pay for medical treatment related to his work injury and withheld payment of counsel fees on benefits awarded from a hospital. In support of the claim for counsel fees, counsel submitted the fee agreement which stated that the claimant agreed to pay his attorney a sum equal to 20% of whatever may be recovered from said claim. The claimant also submitted into evidence an affidavit which said he understood that the fee agreement applied to past due medical expenses as well as any wage loss benefits. The affidavit further said that the claimant understood that providers may seek the balance of the 20% of the bill from him should they be dissatisfied with the 80% they will receive.

The parties entered into a Compromise and Release Agreement, which settled the penalty petition but allowed the review petition to proceed. The workers’ compensation judge denied the review petition, holding that counsel was not entitled to an attorney fee of 20% of the claimant’s medical compensation. In doing so, the judge held that the petition was barred by the doctrine of res judicata since the claimant did not preserve that issue when filing the original appeal of the workers’ compensation judge’s decision granting the claim petition. Additionally, the judge held that the claimant failed to establish the counsel fee was reasonable. The claimant appealed to the Appeal Board, which affirmed.

The Commonwealth Court, however, reversed the underlying decisions. According to the court, under § 442 of the Act, the counsel fee should be calculated against the entire award, without regard for whether the award was for medical or indemnity compensation. Secondly, the terms of the fee agreement govern, and the claimant must establish that the parties intended that the counsel fee be applied to the entire award, including medical compensation. The court additionally held that § 442 of the Act does not require that a 20% counsel fee on a medical compensation award be shown as reasonable as the section lacks the quantum meruit analysis that is set forth in § 440 (b).

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