Kelly v. District of Columbia Department of Employment Services

         Argued January 16, 2019

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          On Petition for Review of an Order of the Compensation Review Board (CRB-110-17)

         Benjamin E. Douglas, Washington, for petitioner.

         Karl A. Racine, Attorney General for the District of Columbia, Loren L. AliKhan, Solicitor General, and Stacy L. Anderson, Acting Deputy Solicitor General, filed a statement in lieu of brief in support of respondent.

         William H. Schladt for intervenor.

         Before Fisher and Easterly, Associate Judges, and Washington, Senior Judge.

         Dissenting opinion by Associate Judge Easterly at page 1013-14.

         OPINION

         Washington, Senior Judge:

         Workers’ compensation claimant Darryl Kelly petitions for review of a decision holding that he cannot recover attorney’s fees from his former employer, the Potomac Electric Power Company ("Pepco"), because the conditions precedent to an award of attorney’s fees under D.C. Code § 32-1530 were not satisfied. For the reasons discussed below, we affirm.

          I. Factual Background & Procedural Posture

          Kelly was employed by Pepco as an underground linesman helper. He was injured on the job on December 14, 2015, and his injury was aggravated on the job on May 20, 2016. Kelly filed a workers’ compensation claim, and Pepco accepted the claim and began paying him compensation.

          On December 27, 2016, Kelly, represented by counsel, applied for an informal conference with the Officer of Workers’ Compensation ("OWC") of the District of Columbia Department of Employment Services ("DOES"), in order to resolve a controversy that had developed over the amount of compensation to which Kelly was entitled. OWC scheduled the informal conference for February 9, 2017. On January 26, Pepco and its insurer, represented by counsel, applied for a formal hearing before the Administrative Hearings Division ("AHD") of DOES. Following this request, Kelly wrote a letter to the chief administrative law judge ("ALJ") of DOES, dated February 3, in which he asserted that Pepco should not be able to circumvent the informal conference mechanism by applying for a formal hearing after an informal conference had already been scheduled. Pepco responded the same day with its own letter to the chief ALJ, arguing that it was not obligated to participate in the informal conference and was well within its rights to request a formal hearing. On February 16, the chief ALJ issued a letter to Kelly stating that, while he "agree[d]" with Kelly that "the statute favors the informal conference mechanism as a way to avoid litigation costs," under the applicable regulations, "participation in the informal conference ‘shall be voluntary’ " and " ‘all informal procedures shall terminate when an application for formal hearing is filed,’ which [he] consider[ed] controlling in this situation."

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He concluded that, because Pepco had applied for a formal hearing, AHD now had jurisdiction over the matter and would schedule a formal hearing. Thus, no informal conference occurred.

         The formal hearing was held before an ALJ on May 15, 2017. On July 14, the ALJ issued an order awarding additional compensation to Kelly. Neither party petitioned the Compensation Review Board ("CRB") of DOES for review of the compensation order, and Pepco paid Kelly pursuant to the compensation order. However, Kelly then applied for attorney’s fees from Pepco, pursuant to D.C. Code § 32-1530, and the ALJ issued a summary order denying the application on August 28. On review of the attorney’s fees order, the CRB vacated and remanded, stating that, because the order contained no substantive content, it could not determine whether the order was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.

         On remand, the ALJ issued an October 20, 2017 order concluding that Kelly was not entitled to attorney’s fees because: (1) the arguments raised by Kelly in support of his attorney’s fees application had been considered and rejected by the chief ALJ, and were thus barred by the doctrine of res judicata; and (2) the conditions precedent to obtaining attorney’s fees from the employer under § 32-1530(b) were not met in this case - specifically, the employer did not reject a Memorandum of Informal Conference from OWC, as no informal conference was held.

         In a decision and order issued on December 15, 2017, the CRB affirmed the ALJ’s order, rejecting the res judicata rationale, but finding that the ALJ’s interpretation of D.C. Code § 32-1530 was correct under this court’s jurisprudence and the CRB’s past holdings. Kelly then petitioned this court for review of the CRB’s decision and order.

          II. Standard of Review

          "Our review of administrative agency decisions is limited." Providence Hosp. v. District of Columbia Dep’t of Emp’t Servs., 855 A.2d 1108, 1111 (D.C. 2004). In general, we "will not disturb an agency ruling as long as the decision flows rationally from the facts, and the facts are supported by substantial evidence in the record," Id. at 1111, and will "affirm an agency’s decision unless it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Travelers Indem. Co. of Ill. v. District of Columbia Dep’t of Emp’t Servs., 975 A.2d 823, 826 (D.C. 2009). While our review of the CRB’s legal rulings is de novo, Fluellyn v. District of Columbia Dep’t of Emp’t Servs., 54 A.3d 1156, 1160 (D.C. 2012); Providence Hosp., 855 A.2d at 1111, we accord deference to its reasonable interpretation of the statute it administers where there is an ambiguity to be resolved. Pannell-Pringle v. District of Columbia Dep’t of Emp’t Servs., 806 A.2d 209, 211 (D.C. 2002); Johnson v. District of Columbia Dep’t of Emp’t Servs., 111 A.3d 9, 11 (D.C. 2015). Indeed, we will "defer to an agency’s interpretation of a statute or regulation it is charged with implementing if it is reasonable in light of the language of the statute (or rule), the legislative history, and judicial precedent." Travelers, 975 A.2d at 826. Thus, "[u]nless the agency’s interpretation is plainly wrong or inconsistent with the statute, we will sustain it even if there are other constructions which may be equally reasonable." National Geographic Soc’y v. District of Columbia Dep’t of Emp’t Servs., 721 A.2d 618, 620 (D.C. 1998). "However, the natural corollary of the agency deference proposition is that we are not obliged to stand aside and affirm an administrative determination which reflects a misconception of the relevant law or a faulty application of

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the law," Id. (citation, internal quotation marks, and emphasis omitted), as "this court is the final authority on issues of statutory construction." Fluellyn, 54 A.3d at 1160 (citation and internal quotation marks omitted).

          III. The Legal Framework

         The D.C. Workers’ Compensation Act ("the Act"), D.C. Code § § 32-1501-1545, creates a comprehensive scheme for workers to recover wage loss and medical benefits from their employers for injuries sustained on the job. It is an exclusive and mandatory regime - one that includes a "statutory presumption of compensability" - because "[e]mployees and employers were both thought to gain by a system in which common law tort remedies were discarded for assured compensation regardless of negligence or fault." Ferreira v. District of Columbia Dep’t of Emp’t Servs., 531 A.2d 651, 654-55 (D.C. 1987); see also D.C. Code § § 32-1503 ("Coverage"), -1504 ("Exclusiveness of liability and remedy"), -1521 ("Presumptions"), -1538 ("Insurance policies"), -1539 ("Failure to secure payment of compensation"), -1542.04 ("Compliance") (2019 Repl.).

          A. Claim Procedures

         D.C. Code § 32-1520 outlines the procedures an employee must follow to file a claim of injury, as well as the obligations of the Mayor (through DOES) to provide notice of the claim to the employer, investigate the claim, and provide an opportunity for a hearing on the claim. D.C. Code § 32-1520 (2019 Repl.).^[1] The regulations promulgated pursuant to the Act elaborate upon various aspects of the claims process, 7 DCMR § § 203-212 (2019), and state that OWC "may utilize ... non-adjudicative fact finding procedures including informal conferences under § 219 of this chapter to narrow issues, encourage voluntary payment of claims, and encourage agreement between interested parties." 7 DCMR § 211.2.

         Regulation 219, entitled "informal procedures," outlines the process by which OWC conducts informal conferences. If an agreement is reached at an informal conference, OWC must prepare a final order embodying the agreement. 7 DCMR § 219.16 (2019). If an agreement is not reached at an informal conference, OWC must prepare a Memorandum of Informal Conference containing recommendations, and the parties have fourteen working days to indicate in writing whether they accept or reject its terms. 7 DCMR § 219.18-.20. Once the Memorandum is issued, if the parties submit a joint statement to OWC within fourteen working days accepting its terms and indicating their intent to be bound by it, and if neither party applies for a formal hearing within thirty-four working days, the Memorandum becomes final and OWC must

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issue a final order to that effect. 7 DCMR § 219.21-.22; see Travelers, 975 A.2d at 829 ("[T]he Memorandum’s legal force derives from its acceptance by the parties."). Participation in the conference is voluntary, 7 DCMR § 219.2, and, if either party applies for a formal hearing, informal procedures must terminate. 7 DCMR § 219.23; see National Geographic Soc’y, 721 A.2d at 622 ("Once an application for a formal hearing is filed ... all informal procedures must be terminated." (citing 7 DCMR § 219.23)); Travelers, 975 A.2d at 829 ("[T]he initial filing of an application for a formal hearing [is] the point when the informal procedures ‘terminate.’ " (citing 7 DCMR § 219.23)). The regulations also outline the process by which AHD conducts formal hearings, 7 DCMR § § 220-223 (2019), and state that the Memorandum cannot be admitted as evidence at a hearing. 7 DCMR § 223.3.

          B. Attorney’s Fees

         Under the Act, a workers’ compensation claimant is presumed to be entitled to compensation paid by the employer, but is only allowed to recover attorney’s fees from the employer in the two scenarios described in the Act’s attorney’s fees provision, D.C. Code § 32-1530 (2019 Repl.):

First, [under subsection (a) ], a claimant may recover attorney’s fees if the employer disputes liability for the disability and the claimant thereafter uses an attorney’s services to successfully obtain compensation.

...

[Second, under subsection (b) ], a claimant may recover attorney’s fees if the employer tenders compensation initially without an award, but later refuses to pay additional compensation recommended by the agency after an informal conference, and the claimant uses an attorney to recover a greater amount via an award of compensation.

Fluellyn, 54 A.3d at 1160 (discussing D.C. Code § 32-1530).^[2] Subsection (c) further states: "In all cases, fees for attorneys

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representing the claimant shall be approved in the manner herein provided." D.C. Code § 32-1530(c). The regulations, in turn, set forth the content, contours, and logistical requirements of applications for attorney’s fees. 7 DCMR § § 224, 269 (2019).

         This court has interpreted § 32-1530 strictly, and has denied applications for attorney’s fees where the criteria set forth in the provision are not satisfied. In C & P Telephone Co. v. District of Columbia Department of Employment Services,638 A.2d 690 (D.C. 1994), we noted that, under the Act, "a person claiming compensation may be entitled to recover attorney’s fees in only two situations," id. at 693, and held that the claimant could not recover attorney’s fees from the employer because neither situation obtained in that case: the employer initially paid medical benefits and thus did not "decline to pay any compensation," making subsection (a) inapplicable, Id. at 691, 696, and the ...