CAMPBELL v. SCHOOL ADMINISTRATIVE DIST. NO. 59
5/30/1995
School Administrative District No. 59 (S.A.D. 59) appeals from a decision of the Workers' Compensation Board granting David Campbell's motion for attorney fees. S.A.D. 59 contends that it is entitled to a lien against a third-party settlement for the attorney fees it was required to pay to the employee's attorney. 39 M.R.S.A. § 68, 110 (1989). Because we disagree, we affirm the decision of the Board.
David Campbell was injured in a work-related car accident while in the employ of S.A.D. 59. Campbell filed a petition for award of compensation. He also brought a personal injury action against the driver responsible for the accident in which he was injured and recovered a settlement of $40,000. After hearings and discovery, S.A.D. 59 accepted liability for the injury and filed a memorandum of payment. The parties agreed that S.A.D. 59 is entitled to a continuing lien of $14,500 after deduction of costs. Campbell filed a motion for attorney fees incurred in prosecuting his petition for award of compensation. The Board granted the motion, ruling that S.A.D. 59 was not entitled to a lien for the fees. We granted the employer's petition for appellate review pursuant to 39-A M.R.S.A. § 322 (Supp. 1994).
As section 110 was originally enacted in 1965, the employer was required to pay the employee's attorney fees in any workers' compensation proceeding brought by the employee in good faith. P.L. 1965, ch. 408 § 11. The legislative purpose for shifting fees in workers' compensation proceedings was to prevent the employee's compensation from being diminished by counsel fees. Lucas v. E.A. Buschmann, Inc., 656 A.2d 1193, 1195 (Me. 1995); Gordon v. Maine Reduction Co., 358 A.2d 544, 551 (Me. 1976). Consistent with this purpose, the Act expressly prohibited attorneys from billing employees directly for services. 39 M.R.S.A. § 88(4), 110 (1989). In 1985 the Legislature enacted subsection 110(2), that provides the employee must prevail in the proceeding in order to receive an award of counsel fees. P.L. 1985, ch. 372, § A, 43. One of the purposes of the 1985 amendment was to encourage the parties to screen cases and litigate only those proceedings that have a strong likelihood of success, or involve a genuine controversy, thereby reducing burdensome and unnecessary litigation. 2 Legis.Rec. 1197-98 (1985).
The lien statute, 39 M.R.S.A. § 68, provides, in pertinent part:
When an injury or death for which compensation or medical
benefits are payable under this Act shall have been sustained
under circumstances creating in some person other than the
employer a legal liability to pay damages in respect thereto,
the injured employee may, at his option, either claim such
compensation and benefits or obtain damages from or proceed at
law against such other person to recover damages.
If the injured employee elects to claim compensation under
this Act, any employer having paid such compensation or
benefits or having become liable therefor under any
compensation payment scheme shall have a lien for the value of
compensation paid on any damages subsequently recovered against
the third person liable for the injury . . . .
If the employee or compensation beneficiary recovers damages
from a third person, he shall repay to the employer or
compensation insurer, out of the recovery against the third
person, the benefits paid to him by the employer or
compensation insurer under this Act, less said employer's or
compensation insurer's proportionate share of cost of
collection, including reasonable attorney's fees.
39 M.R.S.A. § 68 (1989) (emphasis added). See also 39-A M.R.S.A. § 107 (Supp. 1994-95).
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