P. Munoz v. Jermacans Style, Inc. (WCAB) ( 2023 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Pablo Munoz, :
:
Petitioner :
:
v. : No. 58 C.D. 2022
: Submitted: July 15, 2022
Jermacans Style, Inc. (Workers’ :
Compensation Appeal Board), :
:
Respondent :
BEFORE: HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE STACY WALLACE, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE WOJCIK FILED: May 19, 2023
Pablo Munoz (Claimant) petitions for review of the order of the
Workers’ Compensation Appeal Board (Board) affirming the decision of a workers’
compensation judge (WCJ), which denied and dismissed Claimant’s Petition to
Reinstate Compensation Benefits (Reinstatement Petition) and a Petition for
Penalties (Penalty Petition) (collectively, Instant Petitions) filed against Jermacans
Style, Inc. (Employer). Claimant argues that the WCJ erred in dismissing the Instant
Petitions on the basis of res judicata where Employer’s underlying Petition to
Terminate Compensation Benefits (Termination Petition) was improperly granted.
Employer asks this Court not only to affirm the Board’s order, but also to award it
counsel fees based on Claimant’s advancement of what Employer believes is a
frivolous appeal. For the reasons that follow, we affirm the Board’s order, but
decline to award counsel fees to Employer.
I. Background
The facts are not in dispute, and this appeal only involves a question of
law. On September 12, 2018, Claimant sustained a work-related injury in the nature
of a left shoulder rotator cuff strain, which Employer accepted. Employer filed a
Termination Petition seeking to terminate benefits following an independent medical
examination (IME) of Claimant. WCJ James Stapleton (WCJ Stapleton) held a
hearing on the Termination Petition. WCJ Stapleton noted that, although Claimant
was served with both the Termination Petition and the hearing notice, Claimant did
not file an answer in opposition and did not appear either in person or via counsel to
the hearing or otherwise defend against the allegations. At the hearing, WCJ
Stapleton accepted Employer’s medical report of the IME doctor, which reflected
the doctor’s opinion that Claimant was fully recovered from his work injury as of
March 20, 2019, without objection. Based on this evidence alone, WCJ Stapleton
determined that Claimant had fully recovered from his work injury effective March
20, 2019. Thus, by decision dated May 17, 2019, the WCJ granted the Termination
Petition. Claimant did not file an appeal.
Thereafter, on November 14, 2019, Claimant filed a counseled
reinstatement petition and a penalty petition (Prior Petitions) alleging that his
benefits should be reinstated on the grounds that the Termination Petition was
improperly granted and that the finding of termination was not supported by
substantial, competent evidence. Claimant further averred that Employer violated
2
the Pennsylvania Workers’ Compensation Act (Act)1 based on the stoppage of
benefits. The Prior Petitions were assigned to WCJ Terry Knox (WCJ Knox) for
consideration. By decision dated January 17, 2020, WCJ Knox denied the Prior
Petitions upon concluding that WCJ Stapleton’s order terminating Claimant’s
benefits was final and binding on Claimant because it was not appealed.2 WCJ Knox
concluded that Claimant was barred by res judicata from asserting that the
Termination Petition was improperly granted based on the evidence presented.3
Claimant appealed to the Board, which affirmed. On further appeal to this Court,
we quashed the appeal as untimely filed. See Munoz v. Jermacans Style, Inc.
(Workers’ Compensation Appeal Board) (Pa. Cmwlth., No. 35 C.D. 2021, filed
March 1, 2021) (Munoz I).
Thereafter, on March 2, 2021, Claimant filed the Instant Petitions,
alleging:
On May 17, 2019, [] [C]laimant’s workers’ compensation
benefits were terminated by order of the [WCJ]. The
termination order was not supported by substantial
evidence and is void ab initio on the basis of hearsay. The
attorney for [Employer] never took the deposition of the
IME doctor . . ., and instead just submitted a report. A
decision to terminate benefits cannot be based on hearsay
evidence alone. . . . Claimant requests that the order
terminating his benefits be considered void ab initio and
his benefits be reinstated as of May 17, 2019, along with
1
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1-1041.4, 2501-2710.
2
WCJ Knox advised Claimant that he could file an appeal nunc pro tunc with the Board.
See WCJ Knox Opinion, 1/17/2020, Finding of Fact (F.F.) No. 6. There is no indication in the
record that Claimant ever filed a nunc pro tunc appeal.
3
WCJ Knox further advised Claimant that he could file a reinstatement petition based on
worsening of his condition subsequent to the termination. See WCJ Knox Opinion, 1/17/2020,
F.F. No. 6.
3
penalties of fifty percent (50%), statutory interest[,] and
attorney fees.
Though [] [C]laimant filed a prior petition seeking
reinstatement of his workers’ compensation benefits with
penalties raising the issue of uncorroborated hearsay as
insufficient to support a termination, both the [WCJ] and
the [Board] ignored the issue raised. Therefore, there is no
res judicata as the issue raised was never addressed by the
Court. The [WCJ] lacked jurisdiction to terminate []
[C]laimant’s benefits. Issues of jurisdiction can be raised
at any time.
Certified Record (C.R.) at 6-7.4
WCJ Jeffrey Mills (WCJ Mills) held a hearing on the Instant Petitions
on March 23, 2021, wherein Employer interposed a motion to dismiss the Instant
Petitions asserting res judicata. C.R. at 59. By order circulated on April 12, 2021,
WCJ Mills denied and dismissed the Instant Petitions based on res judicata. WCJ
Mills explained that WCJ Stapleton’s order was a final judgment, which was not
appealed, and that the principles of technical res judicata precluded Claimant from
attempting to relitigate the termination of his benefits. Claimant appealed to the
Board, which affirmed. Claimant now petitions this Court for review.5
II. Issues
Claimant contends that the WCJ erred by dismissing the Instant
Petitions based on technical res judicata because the underlying Termination Petition
4
Because the Certified Record was filed electronically and was not paginated, the page
numbers referenced in this opinion reflect electronic pagination.
5
Our review is limited to determining whether the WCJ’s findings of fact were supported
by substantial evidence, whether an error of law was committed, or whether constitutional rights
were violated. Department of Transportation v. Workers’ Compensation Appeal Board
(Clippinger), 38 A.3d 1037, 1042 n.3 (Pa. Cmwlth. 2011).
4
was improperly granted. Employer counters that res judicata precludes Claimant’s
attempt to relitigate matters finally adjudicated. Employer seeks counsel fees
pursuant to Pennsylvania Rule of Appellate Procedure 2744, Pa. R.A.P. 2744 (Rule
2744).
III. Discussion
A. Res Judicata
First, Claimant contends that the Instant Petitions are not barred by res
judicata. Claimant maintains that the underlying Termination Petition was
improperly granted because it was based solely on hearsay evidence and was not
supported by competent medical testimony. Claimant argues that WCJ Stapleton’s
order granting the Termination Petition is not final or unassailable because it
implicates the issue of whether the WCJ had jurisdiction to terminate benefits in the
first place absent competent medical testimony.
In Weney v. Workers’ Compensation Appeal Board (Mac Sprinkler
Systems, Inc.), 960 A.2d 949, 954 (Pa. Cmwlth. 2008), this Court recounted the
criteria necessary to establish res judicata and collateral estoppel. We opined:
Initially, we note that technical res judicata and collateral
estoppel are both encompassed within the parent doctrine
of res judicata, which prevents the relitigation of claims
and issues in subsequent proceedings.
Under the doctrine of technical res judicata, often referred
to as claim preclusion, when a final judgment on the merits
exists, a future suit between the parties on the same cause
of action is precluded. In order for technical res judicata
to apply, there must be: (1) identity of the thing sued upon
or for; (2) identity of the cause of action; (3) identity of the
persons and parties to the action; and (4) identity of the
quality or capacity of the parties suing or sued. Technical
res judicata may be applied to bar claims that were actually
litigated as well as those matters that should have been
5
litigated. Generally, causes of action are identical when
the subject matter and the ultimate issues are the same in
both the old and the new proceedings.
The doctrine of collateral estoppel, often referred to as
issue preclusion, is designed to prevent litigation of an
issue in a later action, despite the fact that the later action
is based on a cause of action different from the one
previously litigated. Collateral estoppel applies where:
(1) the issue decided in the prior case is
identical to the one presented in the later case;
(2) there was a final judgment on the merits;
(3) the party against whom the doctrine is
asserted was a party or in privity with the
party in the prior case and had a full and fair
opportunity to litigate the issue; and (4) the
determination in the prior proceeding was
essential to the judgment.
Id. at 954. (internal citations and quotations omitted; emphasis in original).
Here, the reinstatement of Claimant’s benefits was addressed on two
prior occasions by the WCJ and Board. Claimant filed the Prior Petitions seeking
reinstatement of benefits and penalties on the basis that WCJ Stapleton’s order
terminating his benefits was not supported by substantial competent evidence. WCJ
Knox denied the Prior Petitions, and the Board affirmed. Although Claimant
appealed to this Court, the appeal was quashed as untimely. See Munoz I. Claimant
then filed the Instant Petitions seeking the same relief on the same exact grounds.
WCJ Mills denied the Instant Petitions based on technical res judicata and the Board
affirmed.
Claimant argues that the doctrine of res judicata does not apply because
he did not have a full and fair opportunity to actually litigate termination of benefits
or challenge the hearsay nature of the medical report in the Termination Petition
proceeding. Contrary to Claimant’s assertions, Claimant had the opportunity to
6
litigate these issues. However, by failing to answer the Termination Petition, appear
at the hearing on the Termination Petition, or appeal WCJ Stapleton’s order,
Claimant did not avail himself of this opportunity. Res judicata applies not only to
claims that have already been litigated but also to claims that “should have been
litigated.” Weney, 960 A.2d at 954 (emphasis added). Claimant also fails to
recognize that the Instant Petitions seek the same relief on the same grounds as the
Prior Petitions, which were fully and finally adjudicated. Upon review, WCJ Mills
did not err by dismissing the appeal based on the doctrine of res judicata.
B. Counsel Fees
Turning to Employer’s request for counsel fees, Employer asserts it is
entitled to such fees because Claimant’s appeal is wholly frivolous and Claimant’s
continued pursuit to challenge the termination of benefits despite final adjudications
is vexatious. In support, Employer relies solely on Patel v. Workmen’s
Compensation Appeal Board (Saquoit Fibers Company), 520 A.2d 525 (Pa.
Cmwlth. 1987).
Rule 2744 provides that an appellate court may award attorneys’ fees
“if it determines that an appeal is frivolous or taken solely for delay or that the
conduct of the participant against whom costs are to be imposed is dilatory, obdurate
or vexatious.” Pa. R.A.P. 2744.
In Patel, the claimant filed three separate claim petitions on the same
claim and appealed each one to this Court. This Court opined that “[t]his appeal, the
third dealing with [the c]laimant’s [] injury and the second to be dismissed due to
collateral estoppel and res judicata, is clearly wholly frivolous and constitutes patent
abuse of Claimant’s constitutional right to avail himself of the courts of this
7
Commonwealth.” Patel, 520 A.2d at 526 (emphasis added). Accordingly, we
awarded the employer costs under Pa. R.A.P. 2741. Patel, 520 A.2d at 526. In dicta,
we referenced Rule 2744 and suggested that an award of counsel fees to the
employer would also be appropriate based on the claimant’s “abuse of this Court’s
appeals process,” but the Court declined to award such fees sua sponte. Patel,
520 A.2d at 526.
Later, in Callahan v. Workmen’s Compensation Appeal Board
(Bethlehem Steel Corp.), 571 A.2d 1108 (Pa. Cmwlth. 1990), we revisited Patel and
limited its application. In Callahan, the employer sought reimbursement of
attorneys’ fees pursuant to Rule 2744 and Patel on the basis that the appeal was
frivolous. 571 A.2d at 1111 n.10. We emphasized that the discussion of Rule 2744
in Patel was premised upon a “patent abuse of the appellate process and not simply
on the basis of one frivolous petition for review.” Id. We opined that “[t]he holding
in Patel is an extremely narrow one and is limited to the particular facts of that case.”
Id. Noting the Act’s remedial nature and humanitarian objectives, as well as the rule
of liberal construction, we declined to award counsel fees to the employer. Id. at
1111-12.
In Phillips v. Workmen’s Compensation Appeal Board (Century Steel),
721 A.2d 1091 (Pa. 1999), the employer therein invoked Section 440 of the Act6 and
Rule 2744 for reimbursement of counsel fees. A divided Supreme Court foreclosed
the ability to assess counsel fees against the claimant under the Act.7 It also declined
6
Added by the act of February 8, 1972, P.L. 25, as amended, 77 P.S. §996.
7
Section 440 of the Act provides for an award of counsel fees to a claimant where an
employer contests its liability without “a reasonable basis for the contest.” 77 P.S. §996. The
Supreme Court held that Section 440 of the Act does not allow the award of counsel fees to an
employer upon a finding that a claimant’s appeal was frivolous. Phillips, 721 A.2d at 1093.
(Footnote continued on next page…)
8
to assess any counsel fees against the claimant under Rule 2744, but it discussed the
possibility of such an award under Rule 2744 by comparing Callahan and Patel.
Phillips, 721 A.2d at 1094. Although the Court signaled its preference for Callahan
over Patel, it did not foreclose the possibility of sanctions under Rule 2744. Id.; see
Smith v. Workers’ Compensation Appeal Board (Consolidated Freightways, Inc.),
111 A.3d 235, 238 (Pa. Cmwlth. 2015).
Thereafter, this Court interpreted Phillips as leaving the door open for
appellate courts to impose sanctions under Rule 2744 in appropriate cases. Smith,
111 A.3d at 238. In Smith, the claimant had filed over 15 claim petitions regarding
the same injury, and again attempted to litigate the same claim that had been rejected
repeatedly for over a decade, and already had been deemed barred by res judicata
and collateral estoppel. Id. at 236. The case had been before this Court five times.
Id. Quoting from our earlier rejection of the claimant’s same frivolous appeal, this
Court noted that “[p]ublic funds have been extensively expended as [the] [c]laimant
repeatedly attempts to re-litigate a case that was decided many years ago. Moreover,
[the] [c]laimant’s actions are, at the very least, unfair and unduly burdensome to
[the] [e]mployer, [which] has been forced to defend against each of these
unreasonable petitions.” Id. In short, Claimant’s actions amounted to a flagrant
abuse of process. Id. Thus, we awarded costs and counsel fees incurred by employer
to defend against the “obdurate and vexatious prosecution of a frivolous appeal.” Id.
at 238. Without such a sanction, there would be “no way for our courts to curb the
sort of flagrant abuse of the system engaged in here.” Id.Rather, the “clear intent of Section 440 of the Act is to protect claimants from the costs of litigation,
but not to provide comparable protection for employers.” Phillips, 721 A.2d at 1094. Thus, the
Supreme Court found no basis upon which to award counsel fees to an employer. Id.
9
Here, Claimant’s conduct does not rise to the patent abuse of appellate
process involved in Smith or even Patel. Although Claimant filed two sets of
reinstatement and penalty petitions in which he impermissibly attacked the
underlying grant of the Termination Petition, this appeal is the first time in which
this Court has addressed the merits of Claimant’s case. See Munoz I. Although we
agree that Claimant’s petition for review is frivolous, it falls short of a patent abuse
of process to warrant sanctions under Rule 2744. See Phillips; Smith. Thus, we
decline to assess counsel fees against Claimant.
IV. Conclusion
Accordingly, we affirm the Board’s order affirming the WCJ’s order
denying Claimant’s Instant Petitions8 but deny Employer’s request for counsel fees.
MICHAEL H. WOJCIK, Judge
Judge Wallace concurs in result only.
8
As the Board aptly noted in its opinion, res judicata does not preclude Claimant from
filing a reinstatement petition that alleges a change in condition since the Termination Petition was
granted. See National Fiberstock Corp. (Greater New York Mutual Insurance Co. v. Workers’
Compensation Appeal Board (Grahl), 955 A.2d 1057, 1062 (Pa. Cmwlth. 2008) (holding that a
claimant may be entitled to reinstatement of benefits after a termination if the claimant proves that
his disability has increased or recurred since the prior decision and that his physical condition has
changed in some manner). Claimant made no such allegation nor submitted any evidence
regarding a change in condition. Rather, Claimant merely sought to relitigate the underlying
termination of benefits.
10
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Pablo Munoz, :
:
Petitioner :
:
v. : No. 58 C.D. 2022
:
Jermacans Style, Inc. (Workers’ :
Compensation Appeal Board), :
:
Respondent :
ORDER
AND NOW, this 19th day of May, 2023, the order of the Workers’
Compensation Appeal Board, dated December 22, 2021, is AFFIRMED, and
Respondent Jermacans Style, Inc.’s request for counsel fees pursuant to
Pennsylvania Rule of Appellate Procedure 2744, Pa. R.A.P. 2744, is DENIED.
__________________________________
MICHAEL H. WOJCIK, Judge