Smith v. Workers' Compensation Appeals Board
(2007) ___ Cal.App.4th ___, 07 C.D.O.S.

Attorneys' Fees Are Available to Counsel Who Oppose Formal and Informal Denials of Medical Care

The California Court of Appeal, Second Appellate District, held that, where counsel is required to take action to enforce a workers' compensation award, attorneys' fees should be awarded pursuant to California Labor Code section 4607 ("Section 4607"), regardless of whether the insurer filed a formal petition to terminate care. Accordingly, the appellate court annulled and remanded two decisions of the Workers' Compensation Appeals Board (the "Board") denying counsel's request for attorneys' fees incurred in challenging the insurer's informal denials of medical care to their clients.

The Court of Appeal consolidated two cases, Smith v. Workers' Compensation Appeals Board, No. B190054, and Amar v. Workers' Compensation Appeals Board, No. B190655. In Smith, Smith sustained industrial injuries from cumulative trauma to his shoulder, neck and psyche while working for the California Youth Academy ("CYA"). He was awarded partial permanent disability, including future medical treatment. Several years later, the CYA's workers' compensation insurer refused to authorize epidural injections to Smith's back. Smith's attorney sought utilization review which resulted in the insurer authorizing the injections.

In Amar, the parties stipulated to an award of future medical care following an industrial injury, which included treatment for non-industrial diabetes and a weight loss plan. Subsequently, the workers' compensation insurer unilaterally denied these two aspects of Amar's medical care without petitioning for termination of that care. Amar's attorney challenged the insurer's decision. The Board concluded the weight loss program was medically necessary to relieve the effects of the industrial injury, but the continued treatment for diabetes was not.

In both Smith and Amar, the employees requested attorneys' fees pursuant to Section 4607, which provides in pertinent part: "[w]here a party to a proceeding institutes proceedings to terminate an award made by the appeals board to an applicant for continuing medical treatment and is unsuccessful in such proceedings, the appeals board may determine the amount of attorney's fees reasonably incurred by the applicant in resisting the proceeding … and may assess … reasonable attorney's fees as a cost …"

The Board, however, declined to award attorneys' fees in either case on the ground that neither case involved a formal proceeding to terminate an award. Rather, the insurer in both cases simply declined some of the treatment previously authorized.

The California Court of Appeal annulled the Board's decisions and remanded for a determination of reasonable attorneys' fees as costs. The court examined section 4607 in light of the legislative intent and the requirement that it must "liberally construe" workers' compensation statutes for the purpose of "extending their benefits for the protection of persons injured in the course of their employment." The appellate court then concluded it would be "absurd" to deny attorneys' fees to industrially injured workers simply because the insurer withdrew care without bothering to file a formal petition to do so. "If attorney fees are available to counsel who oppose formal petitions, they should be available to counsel who must initiate proceedings to challenge the informal denial of medical care."

This opinion is not final. It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority.

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