Sharbono v. Steve Lang & Son Loggers

696 So. 2d 1382, 79 A.L.R. 5th 733, 1997 La. LEXIS 1773, 1997 WL 362833
Supreme Court of Louisiana·Decided July 1, 1997·No. 97-C-0110·Published·Cited by 125 cases

Opinion

696 So.2d 1382 (1997)

James E. SHARBONO
v.
STEVE LANG & SON LOGGERS.

No. 97-C-0110.

Supreme Court of Louisiana.

July 1, 1997.

*1383 Walter O. Hunter, Jr., Shreveport, for applicant.

George Arthur Flournoy, Philip G. Hunter, Alexandria, for respondent.

CALOGERO, Chief Justice.

The sole issue presented for our consideration in this case is whether interest on an award of attorney's fee and penalties in a worker's compensation case is to be calculated from the date of judicial demand or from the date of the hearing officer's award. The hearing officer granted claimant Sharbono legal interest on the award of penalties and attorney's fees only from the date of the judgment, November 28, 1995. The court of appeal amended the judgment to grant plaintiff interest on penalties and attorney's fees from the date of claimant's judicial demand, that is, from the date that claimant lodged his claim with the Office of Worker's Compensation, and affirmed the judgment as amended.

For the reasons which follow we reverse the court of appeal on this discrete point of law.

I. Background

James E. Sharbono (Sharbono) sustained injuries in an accident on September 15, 1994, while in the course and scope of his employment with defendant, Steve Lang & Son Loggers (Lang). Sharbono was measuring a log while atop a pile of logs, approximately seven to eight feet from the ground. He slipped and fell onto his buttocks on a log below, then pitched to his knees on the ground. The fall caused Sharbono to sustain low back trauma. He filed a worker's compensation claim with the Office of Worker's Compensation, seeking to recover benefits, medical expenses, attorney's fees, and penalties. Trial of the matter was held on September 29, 1995. The hearing officer rendered judgment in favor of Sharbono in open court on all issues except Sharbono's claim *1384 for attorney's fees and penalties, which issue she took under advisement. Sharbono had argued that Lang was arbitrary and capricious in refusing to pay necessary medical expenses and in refusing timely to seek additional, updated medical opinions on claimant's condition. Thereafter, the hearing officer agreed with Sharbono that defendant Lang was arbitrary and capricious in handling his claim. The court awarded a penalty in the amount of $2,000, and attorney's fees in the amount of $4,750. Costs were assessed against defendant Lang, and "interest [was] awarded in accordance with law." The later signed judgment issued by the hearing officer on November 28, 1996 provided that legal interest on the award of benefits was "awarded from the due date of each benefit, until paid, subject to credit for all benefits previously paid." The judgment further provided that legal interest on the $2,000 in penalties and on the $4,750 in attorney's fees would be assessed "from the date of this judgment until paid." Sharbono appealed, urging that the hearing officer was wrong in assessing interest on the attorney's fees and penalties only from the date of their award.

On appeal, Sharbono pointed out that the Third Circuit Court of Appeal in prior cases had consistently awarded legal interest on penalties and fees from the date of judicial demand, rather than from the date of judgment. In contrast, defendant Lang argued that interest on attorney's fees and penalties in a worker's compensation case may be awarded only from the date of judgment. For that proposition, defendant cited La.R.S. 23:1201.3(A), which was amended effective January 1, 1990. The last sentence of subsection (A) of R.S. 23:1201.3 reads, "Any compensation awarded and all payments thereof directed to be made by order of the hearing officer shall bear judicial interest from the date ordered paid by the hearing officer until the date of satisfaction."

The court of appeal found R.S. 23:1201.3 inapplicable because "[p]enalties and attorney's fees are neither benefits nor compensation... [but] are penal in nature and meant to punish recalcitrant employers or insurers for failing to honor statutorily imposed obligations." [1] The court went on to award interest on these fees and penalties from the date of judicial demand, citing the "jurisprudential rule that interest on penalties and attorney's fees runs from the date of judicial demand." One judge on the five-judge panel dissented. While agreeing with the majority that R.S. 23:1202.3(A) applies only to compensation benefits and not to penalties and attorney's fees, he would have awarded interest on attorney's fees and penalties only from the date of judgment, in line with the reasoning of the Second Circuit Court of Appeal, Louisiana, as expressed in the insurance context in Williams v. Louisiana Indem. Co., 26-887 (La.App.2d Cir. 6/21/95), 658 So.2d 739. The dissenting judge acknowledged that "a number of cases award interest from date of judicial demand," but he found no *1385 statutory basis exists for their having done so. Finally, the dissenting judge noted that the question regarding when interest on fees and penalties is due was not squarely presented in those cases.

II. Discussion

Before deciding what, if any, jurisprudential rule should govern the date upon which to commence the running of legal interest on awards of attorney's fees and penalties in a worker's compensation case, we must first address whether R.S. 23:1201.3, granting interest on "compensation awarded and all payments thereof" from the date ordered by the hearing officer, applies to interest stemming from penalties and attorney's fees. We hold that it does not.

R.S. 23:1201.3 was enacted as part of Acts 1988, No. 938, a sweeping bill aimed at reforming worker's compensation law, in particular, the administration of claims. Prior to Act 938, since 1983 and the passage of Acts 1983, 1st Ex.Sess., No. 1, § 1, worker's compensation disputes were resolved by nonbinding arbitration, conducted by administrative officers in the office of worker's compensation administration. The officer's recommendation for resolution was appealable to the district court, which then had original jurisdiction over the claim.[2]

According to the minutes of the House Committee on Labor and Industrial Relations, Senate Bill No. 943 (later to become Act 938, Louisiana Acts 1988) was a legislative attempt to reduce the costs of worker's compensation in Louisiana, primarily by creating a system of regional hearing officers with quasi-judicial authority. Pursuant to R.S. 23:1310.3(E), nine regional hearing officers are now "vested with original, exclusive jurisdiction over all claims or disputes arising out of this Chapter." An officer's decision is final "unless an appeal is made to the appropriate circuit court of appeal," R.S. 23:1310.5, thus taking the district courts out of the process.[3] The portion of Act 938 under scrutiny here is § 1201.3A, which provides:

A. If payment of compensation or an installment payment of compensation due under the terms of an award, except in case of appeals from an award, is not made within ten days after the same is due by the employer or insurance carrier liable therefor, the hearing officer may order a certified copy of the award to be filed in the office of the clerk of court of any parish, which award whether accumulative or lump sum, when recorded in the mortgage records, shall be a judicial mortgage as provided in Civil Code Article 3321.

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Sharbono v. Steve Lang & Son Loggers, 696 So. 2d 1382, 79 A.L.R. 5th 733, 1997 La. LEXIS 1773, 1997 WL 362833 (La. 1997).

696 So. 2d 1382 (Sharbono v. Steve Lang & Son Loggers) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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