SC Commission is Immune From Suit After Apparent Stumbling With Attorney’s Fee Lien
A South Carolina appellate court affirmed a decision by a state trial court that dismissed the civil action filed against the S.C. Workers’ Compensation Commission by a law firm who (a) negotiated a $120,000 settlement for an injured worker, (b) filed as many as four fee petitions claiming a lien on the settlement proceeds, and (c) received no notice of the hearing at which the Commission approved the settlement agreement four years later [Kelaher, Connell & Conner, P.C. v. S.C. Workers’ Comp. Comm’n, 2021 S.C. App. LEXIS 107 (Sept. 8, 2021)].
Background
In July 2007, Nadolny retained the plaintiff law firm to represent him in a workers’ compensation claim against Nadolny’s employer and its carrier. The law firm, on behalf of Nadolny, entered into mediation on his claim. From that mediation, Nadolny agreed to a $120,000 settlement. The day after mediation, Nadolny informed the law firm that he no longer needed its representation, and the firm was relieved as counsel. The law firm informed Nadolny that it had expended multiple hours and expenses working on his case and would file a claim for attorney’s fees.
In the complaint filed in the instant action against the South Carolina Workers’ Compensation Commission, the law firm asserted that it filed a Form 61 fee petition on August 29, 2012, which it alleged the Commission denied receiving. The firm alleged it filed additional fee petitions on September 11, 2012, and September 18, 2012. On November 9, 2012, the firm requested the Commission place a lien on the settlement. On December 13, 2012, the Commission informed the law firm that it would need to file yet another Form 61 to put a lien on the case. The law firm filed an alleged fourth Form 61 on December 28, 2012. In 2016, Nadolny died. On November 3, 2016, the Commission approved the settlement to Nadolny’s widow without notifying the law firm of the hearing. The firm alleged Nadolny’s widow moved out of South Carolina after receiving the settlement.
Firm Files Civil Action Against Commission
The law firm filed a civil complaint against the Commission, contending that it had been negligent, reckless, and willful in, inter alia, failing to notify the law firm of the hearing, in mishandling documents forwarded to it on four occasions, and in failing to recognize and protect the law firm’s lien. The Commission moved to dismiss, asserting that it was immune from suit. The circuit court ruled it had jurisdiction to hear the action but that the Commission was immune from suit based on the exception found in S.C. Code § 15-78-60(2). The circuit court stated that, because a government entity was not liable for administrative actions or inactions of quasi-judicial nature, the Commission was immune from suit for the alleged acts of negligence regarding the fee petition. The law firm appealed.
Appellate Court’s Decision: No Error
The appellate court acknowledged that the law firm had asserted that the Commission’s failure to notify it of the hearing was a ministerial act and therefore neither the Act nor judicial immunity immunized the Commission. The appellate court found, however, that the issue had not been preserved for appellate review. The court said the law firm had not raised the issue of whether the Commission’s act was a ministerial act—and thus an exception to the Act’s immunity—until its Rule 59(e), SCRCP, motion. Because the firm failed to raise the issue at the hearing or in its response to the Commission’s motion to dismiss, the appellate court found the issue was unpreserved for appellate review.
Nor was the law firm saved by its allegations of gross negligence, indicated the appellate court. The Commission’s failure to document the firm’s fee petition four times was not actionable under a gross negligence theory since the particular section at issue, S.C. Code § 15-78-60(12) was inapplicable.
Finally, while the law firm argued that constitutional law required that the Commission allow it to be heard and that by failing to provide notice of the hearing, the Commission failed to provide sufficient due process, the appellate court again disagreed. The court indicated that here, the law firm did not allege a violation of its constitutional due process rights in its complaint. While the complaint did mention the failure to provide notice, it only raised the failure as a claim of the tort of negligence. The law firm did not argue a constitutional deprivation in its complaint. Accordingly, the circuit court did not err in dismissing the complaint.
Commentary
As I have stated on numerous other occasions, one often doesn’t get the full picture of a case or dispute by reading an appellate decision. I suspect that is true here as well. Initially, the decision of the injured worker to fire the attorneys the day after the settlement was procured seems to have been too smart by one-half. That is to say, that without the advocacy of the law firm, the matter languished for almost four years without approval by the Commission. Not many injured workers will sit on a matter that means $120,000 for that long. Indeed, the matter appears only to have moved forward after the worker’s death.
There is probably a nuance of South Carolina procedure about which I’m unaware, but I wonder here if the law firm might have sought a hearing on the fee petition on its own during the apparent four-year delay in getting the negotiated settlement approved. One final thought: in all candor, how could the Commission approve a settlement agreement with four fee petitions in the file and a failure to notify the firm of the hearing?