Trial court authority derails interest on attorney's fees

If the California Workers' Compensation Appeals Board does not expressly order the payment of interest for attorney's fees awards, the trial court lacks jurisdiction for claims of unpaid interest.

Case name: Koszdin, et al. v. State Compensation Insurance Fund, No. B214481 (Cal. Ct. App. 07/06/10).

Ruling: The California Court of Appeal held that attorneys had standing to seek interest on attorney's fees awarded to them by the Workers' Compensation Appeals Board. The trial court does not have jurisdiction on claims for unpaid interest when the board did not expressly order interest for attorney's fees awards.

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What it means: If the California Workers' Compensation Appeals Board does not expressly order the payment of interest for attorney's fees awards, the trial court lacks jurisdiction for claims of unpaid interest. Claims should be brought before the board.

Summary: Attorneys who represented workers before the Workers' Compensation Appeals Board were awarded attorney's fees directly payable to them. The orders did not expressly provide for the payment of interest on the awards. The attorneys filed class action complaints alleging that employers and insurers failed to pay the interest on their attorney's fees awards. The employers and insurers asserted that the attorneys lacked jurisdiction because the claims were barred by the exclusive remedy provision of the Workers' Compensation Act. The California Court of Appeal held that the trial court lacked jurisdiction over the actions because adjudicating the claims would require the court to add interest on the awards, which is beyond the court's authority.

The court stated that the attorneys were not barred from seeking interest on their awards due to the board's failure to expressly order interest. The attorneys could pursue a claim for unpaid interest before the board.

The employers and insurers also argued that the attorneys lacked standing because California law states that all compensation must be paid directly to the injured worker unless otherwise ordered by the board. The court concluded that the attorneys had standing to pursue their claims because the board expressly ordered the attorney's fees awards to be paid directly to the attorneys and any post-award interest should also be paid directly to the attorneys.

Read more at the WorkersComp Forum homepage.

September 20, 2010

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