IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
JASON WEBB, ) ) Claimant-Below, Appellant, ) C.A. No. N23A-09-009 CEB ) ) v. ) ) STATE OF DELAWARE, ) ) Employer-Below, Appellee. )
ORDER
Submitted: February 29, 2024 Decided: May 9, 2024
Upon Consideration of Appellant’s Appeal of a Decision of the Industrial Accident Board AFFIRMED.
Joel H. Fredricks, Esquire, Nitsche and Fredericks, LLC, Wilmington, Delaware. Attorney for Claimant Below,Appellant.
Gregory P. Skolnik, Esquire, Heckler & Frabizzio, Wilmington, Delaware. Attorney for Employer-Below, Appellee.
BUTLER, R.J. This controversy is not really between the appellant, James Webb, and the
State of Delaware, but rather involves Webb’s attorney’s fees and who is/was
supposed to pay them. The Court finds that Webb’s attorney waived his claim to
attorney fees by settling the dispute without reservation of the issue and therefore
rules against the Appellant.
FACTS
Mr. Webb was an employee of the State of Delaware, working as a mechanic
for the Delaware State Police. He claimed a work-related injury and was out of work
for two separate periods, including spinal surgery and related medical expenses.
As a state employee, Webb received Short Term Disability (“STD”) benefits
while disengaged from his work. STD benefits are an employee benefit under the
State’s Disability Insurance Program, organized by the legislature and codified in
Chapter 52A of Title 29 of the Delaware Code. It is administered by the State
Employee Benefits Committee through the “Insurance Coverage Office” (“ICO”).1
This employee benefit is available at no cost to state employees who become
disabled, regardless of whether the disability is “work related.”
Webb also retained counsel to pursue a Worker’s Compensation claim which
is available to any employee who suffers a work-related injury. That program is
1 29 Del. C. § 5254. 1 administered through the Industrial Accident Board (“IAB”) and includes
administrative hearings and appeals, all codified in Chapter 23 of Title 19 of the
Delaware Code. Counsel and Webb agreed in a fee agreement that counsel would
receive a fee of 33 1/3% of the “total recovery from my employer or its insurance
carrier.”2
Appellant’s counsel duly filed a claim with the IAB, seeking Temporary Total
Disability (“TTD”). 3 The employer/State of Delaware/DSP retained counsel to
represent it and discovery proceeded as it does. Eventually, the Employer offered to
settle the dispute. The offer was 1) payment of $15,557 in back wages, 2) payment
of all medical expenses, and 3) “no separate and/or additional attorney fee.” 4 The
offer specifically noted that during this period Webb had received STD benefits for
his absences from work and that those wages were paid out of the State benefits plan.
“Per the usual procedure on such files,” the worker’s comp carrier agreed to pay out
the worker’s comp wage claim of $15,000, but it was to be escrowed in the
Appellant’s attorney’s escrow account until the ICO asserted its right to recoupment
of the STD benefits that had been paid to Webb. 5
2 Appellant’s App. to Opening Br. on Appeal Ex. A5, Trans. ID 71812893 (Jan. 16, 2024). All references to Appellant’s Appendix to Opening Brief on Appeal are referred to as “A ”. 3 While not entirely clear from the record, apparently Mr. Webb was back to work by this time. 4 A42. 5 A41. 2 Webb’s counsel confirmed acceptance of the terms via email.6 The funds were
duly deposited in Webb’s attorney’s escrow account. Along with the check came the
specific caveat noted in the original offer letter, this time in bold print and
underlined, that the funds were subject to an offset by the STD benefits that had been
paid by the State benefits office and was being tendered to counsel “pending
verification of the short term disability recoupment amount” and should not be
disbursed until the state benefits office was paid its recoupment from the settlement.
The claimant would be “permitted to keep any total disability amount left over after
satisfying the short term disability recoupment.” 7
Then came the bad news. The short-term disability payments to Mr. Webb
had totaled $15,486, virtually the entire amount recovered from the worker’s
compensation claim settlement. Instead of writing a check to the ICO as per the
settlement agreement, Appellant’s counsel sent the settlement check back to the
worker’s compensation carrier. According to counsel, “The insurance coverage
office took the position that it will not accommodate the attorney fee for the recovery
my office obtained.” He further asserted what he termed an attorney’s lien on the
$15,000 paid by the worker’s comp carrier to his client, saying “The attorney’s lien
6 Appendix to Employer-Below Appellee’s Answering Brief Ex. B1-2, Trans. ID 71953901 (Feb. 5, 2024). 7 A45. 3 is for one third of the total recovery. If this is distributed (by the compensation
carrier) to the Insurance Coverage Office for reimbursement of the total disability
payments without payment of the lien, I will file suit.”8
PROCEDURAL HISTORY
So, although the underlying dispute was settled, the attorney fee issue
remained contested. The worker’s compensation insurer filed a motion before the
IAB to enforce the settlement agreement as per the agreement with Appellant’s
counsel. In opposition, Appellant’s counsel took the position that he had achieved a
result benefitting the ICO (by return of the STD payments to the ICO) and he had
not been compensated for his efforts. And counsel said he knew that if the claimant
refused to make the recoupment to the ICO, the ICO would garnish the employee’s
wages to offset for the recovery of the worker’s compensation payments.9
The IAB held that:
[T]he settlement contract is clear. Claimant was to be paid a sum certain for total disability to be held in escrow, and once the short term disability recoupment amount was provided, claimant’s attorney was to repay same from the total disability payment, with claimant being entitled to the
8 A54. Read in context, the Court believes counsel meant to say, “short term disability payments, not total disability payment.” 9 A61-62. 4 remainder. No separate and/or additional medical witness or attorney fee was included in the agreement.10
Therefore, the Board ordered Appellant’s counsel to void the tendered
returned payment to the worker’s comp carrier and instead issue a check to the ICO
for the amount of recoupment as per the settlement agreement. Attorney fees were
not awarded.
Appellant’s counsel filed an appeal of the IAB’s Order to this Court,
complaining that the worker’s comp carrier had no standing, and the Board had no
jurisdiction to enforce the settlement agreement. The second argument is that the
worker’s comp carrier did not have a right to negotiate the STD recoupment.
ANALYSIS
A. The Board Acted Within Its Jurisdiction
Appellant argues first that the IAB “committed legal error” by granting the
employer’s request for declaratory relief because the employer lacked standing to
enforce the right of the ICO to a set off. While it is true that the employer sought a
declaratory judgment, it also moved to enforce of the settlement agreement—
accomplishing the same thing. What the employer got was an order of enforcement
of the settlement agreement. Whether the employer had standing to enforce the
10 A57.
Free access — add to your briefcase to read the full text and ask questions with AI
IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
JASON WEBB, ) ) Claimant-Below, Appellant, ) C.A. No. N23A-09-009 CEB ) ) v. ) ) STATE OF DELAWARE, ) ) Employer-Below, Appellee. )
ORDER
Submitted: February 29, 2024 Decided: May 9, 2024
Upon Consideration of Appellant’s Appeal of a Decision of the Industrial Accident Board AFFIRMED.
Joel H. Fredricks, Esquire, Nitsche and Fredericks, LLC, Wilmington, Delaware. Attorney for Claimant Below,Appellant.
Gregory P. Skolnik, Esquire, Heckler & Frabizzio, Wilmington, Delaware. Attorney for Employer-Below, Appellee.
BUTLER, R.J. This controversy is not really between the appellant, James Webb, and the
State of Delaware, but rather involves Webb’s attorney’s fees and who is/was
supposed to pay them. The Court finds that Webb’s attorney waived his claim to
attorney fees by settling the dispute without reservation of the issue and therefore
rules against the Appellant.
FACTS
Mr. Webb was an employee of the State of Delaware, working as a mechanic
for the Delaware State Police. He claimed a work-related injury and was out of work
for two separate periods, including spinal surgery and related medical expenses.
As a state employee, Webb received Short Term Disability (“STD”) benefits
while disengaged from his work. STD benefits are an employee benefit under the
State’s Disability Insurance Program, organized by the legislature and codified in
Chapter 52A of Title 29 of the Delaware Code. It is administered by the State
Employee Benefits Committee through the “Insurance Coverage Office” (“ICO”).1
This employee benefit is available at no cost to state employees who become
disabled, regardless of whether the disability is “work related.”
Webb also retained counsel to pursue a Worker’s Compensation claim which
is available to any employee who suffers a work-related injury. That program is
1 29 Del. C. § 5254. 1 administered through the Industrial Accident Board (“IAB”) and includes
administrative hearings and appeals, all codified in Chapter 23 of Title 19 of the
Delaware Code. Counsel and Webb agreed in a fee agreement that counsel would
receive a fee of 33 1/3% of the “total recovery from my employer or its insurance
carrier.”2
Appellant’s counsel duly filed a claim with the IAB, seeking Temporary Total
Disability (“TTD”). 3 The employer/State of Delaware/DSP retained counsel to
represent it and discovery proceeded as it does. Eventually, the Employer offered to
settle the dispute. The offer was 1) payment of $15,557 in back wages, 2) payment
of all medical expenses, and 3) “no separate and/or additional attorney fee.” 4 The
offer specifically noted that during this period Webb had received STD benefits for
his absences from work and that those wages were paid out of the State benefits plan.
“Per the usual procedure on such files,” the worker’s comp carrier agreed to pay out
the worker’s comp wage claim of $15,000, but it was to be escrowed in the
Appellant’s attorney’s escrow account until the ICO asserted its right to recoupment
of the STD benefits that had been paid to Webb. 5
2 Appellant’s App. to Opening Br. on Appeal Ex. A5, Trans. ID 71812893 (Jan. 16, 2024). All references to Appellant’s Appendix to Opening Brief on Appeal are referred to as “A ”. 3 While not entirely clear from the record, apparently Mr. Webb was back to work by this time. 4 A42. 5 A41. 2 Webb’s counsel confirmed acceptance of the terms via email.6 The funds were
duly deposited in Webb’s attorney’s escrow account. Along with the check came the
specific caveat noted in the original offer letter, this time in bold print and
underlined, that the funds were subject to an offset by the STD benefits that had been
paid by the State benefits office and was being tendered to counsel “pending
verification of the short term disability recoupment amount” and should not be
disbursed until the state benefits office was paid its recoupment from the settlement.
The claimant would be “permitted to keep any total disability amount left over after
satisfying the short term disability recoupment.” 7
Then came the bad news. The short-term disability payments to Mr. Webb
had totaled $15,486, virtually the entire amount recovered from the worker’s
compensation claim settlement. Instead of writing a check to the ICO as per the
settlement agreement, Appellant’s counsel sent the settlement check back to the
worker’s compensation carrier. According to counsel, “The insurance coverage
office took the position that it will not accommodate the attorney fee for the recovery
my office obtained.” He further asserted what he termed an attorney’s lien on the
$15,000 paid by the worker’s comp carrier to his client, saying “The attorney’s lien
6 Appendix to Employer-Below Appellee’s Answering Brief Ex. B1-2, Trans. ID 71953901 (Feb. 5, 2024). 7 A45. 3 is for one third of the total recovery. If this is distributed (by the compensation
carrier) to the Insurance Coverage Office for reimbursement of the total disability
payments without payment of the lien, I will file suit.”8
PROCEDURAL HISTORY
So, although the underlying dispute was settled, the attorney fee issue
remained contested. The worker’s compensation insurer filed a motion before the
IAB to enforce the settlement agreement as per the agreement with Appellant’s
counsel. In opposition, Appellant’s counsel took the position that he had achieved a
result benefitting the ICO (by return of the STD payments to the ICO) and he had
not been compensated for his efforts. And counsel said he knew that if the claimant
refused to make the recoupment to the ICO, the ICO would garnish the employee’s
wages to offset for the recovery of the worker’s compensation payments.9
The IAB held that:
[T]he settlement contract is clear. Claimant was to be paid a sum certain for total disability to be held in escrow, and once the short term disability recoupment amount was provided, claimant’s attorney was to repay same from the total disability payment, with claimant being entitled to the
8 A54. Read in context, the Court believes counsel meant to say, “short term disability payments, not total disability payment.” 9 A61-62. 4 remainder. No separate and/or additional medical witness or attorney fee was included in the agreement.10
Therefore, the Board ordered Appellant’s counsel to void the tendered
returned payment to the worker’s comp carrier and instead issue a check to the ICO
for the amount of recoupment as per the settlement agreement. Attorney fees were
not awarded.
Appellant’s counsel filed an appeal of the IAB’s Order to this Court,
complaining that the worker’s comp carrier had no standing, and the Board had no
jurisdiction to enforce the settlement agreement. The second argument is that the
worker’s comp carrier did not have a right to negotiate the STD recoupment.
ANALYSIS
A. The Board Acted Within Its Jurisdiction
Appellant argues first that the IAB “committed legal error” by granting the
employer’s request for declaratory relief because the employer lacked standing to
enforce the right of the ICO to a set off. While it is true that the employer sought a
declaratory judgment, it also moved to enforce of the settlement agreement—
accomplishing the same thing. What the employer got was an order of enforcement
of the settlement agreement. Whether the employer had standing to enforce the
10 A57. 5 rights of the ICO is irrelevant. The IAB clearly has authority to enter orders
enforcing settlement agreements. 11
Appellant’s corollary argument that the Board was without jurisdiction to
adjudicate the attorney’s “charging lien” is equally without merit. The Board clearly
had authority to adjudicate the ICO’s right to set off its payments against payments
awarded by the worker’s compensation carrier. That is what it did. That counsel
had a contingent fee agreement with his client was not relevant to the Board’s
decision to enforce the settlement agreement.
B. Appellant’s Acceptance of the Settlement Agreement Waived Any Claim to a Contingent Attorney Fee
Appellant’s counsel filed a claim with the IAB and then signed a deal with the
worker’s comp carrier to resolve a worker’s comp claim that was then pending
before the IAB. The deal called for payment of about $15,000 in lost wages, all
medical expenses paid, recoupment to the ICO of the STD benefits and no additional
fees for attorneys.
The Court understands Appellant’s counsel’s argument to be that he put effort
into the worker’s comp claim, developing evidence and witnesses and achieved a
benefit, to wit: the settlement fund at issue paid by the worker’s comp carrier. But
the object of that effort from counsel’s perspective—his contingent fee—vanished
11 19 Del. C. § 2344. 6 when the fund was wiped out by the ICO’s claim to virtually the entire amount. In
counsel’s view, the ICO should be required to pay him the contingent fee since his
labors benefitted the ICO, which would not have otherwise received any recoupment
of the STD payments.
Appellant’s counsel finds support for his position in Doroshow, Pasquale,
Krawitz & Bhaya v. Nanticoke Memorial Hospital, a 2012 decision from the
Delaware Supreme Court.12 In that case, the Doroshow firm recovered a settlement
of about $20,000 from the insurer of a tortfeasor in an auto accident. Nanticoke
Hospital, however, had over $160,000 in unpaid hospital bills from the plaintiff.
Nanticoke filed a lien against the settlement proceeds in Doroshow’s hands.
Although the decision ultimately relied upon an interpretation of the hospital lien
statute—a statute not before us here—the Court did announce that “[b]ecause
Delaware courts have chosen to follow the attorney's charging lien established in
English common law, we reaffirm the existence of an attorney's right to assert a
charging lien in Delaware.” 13
But worker’s compensation statutes are distinctly not creatures of English
common law—they are anything but. Demonstrating this point is Decembre v.
12 36 A.3d 336 (Del. 2012) 13 Id. at 342. 7 Perdue Farms, LLC, 14 a case in which the worker’s compensation claimant’s
attorney attempted to secure his contingent fee agreement on monies paid to a
hospital by Perdue Farms on behalf of the claimant. The Court ruled that there could
be no charging lien because there never were monies owed to the claimant—they
were owed to the hospital. The Court said, “The charging lien is dealt with in the
courts, not by statutorily-created boards. In fact, the Workers' Compensation Act has,
in effect, created an attorney's charging lien by statutorily providing for attorney's
fees under specific circumstances.”15
The IAB’s authority to award attorney fees appears limited by statute.16
Indeed, Appellant’s counsel seeks his attorney fee not through the authority of the
Board, but through the authority of his private contingent fee agreement with the
Appellant. Obviously, that is a matter between counsel and his client, not any of the
other parties before the Court. The Court in Decembre above held that the charging
lien is intended “to prevent Decembre from profiting by the result of litigation
without satisfying the demand of her attorney,” and therefore, she had no standing
to seek payment from others. 17
14 2017 WL 3188419, at *1 (Del. Super. July 25, 2017). 15 Id. at *4. 16 19 Del. C. § 2320(10). 17 Decembre, 2017 WL 3188419 at *4. 8 The settlement agreement here did not have to include a provision excluding
attorney fees. The settlement agreement did not have to include a provision agreeing
to allow the ICO to recoup the short-term disability payments. But it did both.
Counsel now wants the Court to void the agreement, rewrite it, and rule that counsel
can keep the STD money in his trust account and negotiate his fee with the ICO.
There is no disagreement that there was an agreement, and no disagreement
as to the terms of the agreement. The Board has statutory authority to give effect to
agreements between the parties. 18 And the Supreme Court has held that agreements
settling worker’s compensation claims may include provisions not directly related
to the compensation itself. 19 This is so, according to the Court, because of the IAB’s
authority to give effect to agreements in litigation before it. 20
It is clear to the Court that Appellant’s counsel is not entitled to relief, at least
not as presented in this appeal. Counsel made a settlement agreement with the
compensation attorney that he would not seek attorney fees and that funds paid in
STD benefits would be a credit against worker’s compensation due to Appellant.
18 See 19 Del. C. § 2344 (“Agreements on compensation or benefits; filing and approval; conclusiveness”). 19 See Anchor Motor Freight v. Ciabattoni, 716 A.2d 154, 158 (Del. 1998) (“Where, as here, the parties entered into an agreement that provides for payments after the employee's death, there is no reason to limit the Board's authority to consider that agreement.”). 20 19 Del. C. § 2344. 9 The employer’s attorney did everything called for under the agreement. Appellant’s
counsel was properly ordered to comply with his end of the bargain.
Finding no error in the analysis of the Board, the Board’s Order enforcing the
settlement agreement is AFFIRMED.
IT IS SO ORDERED.
/s/ Charles E. Butler Charles E. Butler, Resident Judge