GWEN M. FREDRICKSON-ELLISON, Employee, v. METHODIST HOSP., SELF-INSURED/GALLAGHER BASSETT SERVS., INC., Employer/Appellant.
WORKERS' COMPENSATION COURT OF APPEALS
JULY 24, 2002
ATTORNEY FEES - RORAFF FEES. Although under certain circumstances it may be impossible to accurately compute a future contingent fee, and so to determine its adequacy with regard to a present claim for Roraff fees, in this case, under the law applicable to a 1992 injury, the judge's award of Roraff fees was not premature or otherwise erroneous, where the judge computed the reasonable hourly fee to be awarded in light of statutory factors, subtracted the contingent and excess fee, and assessed the balance against the employer.
Determined by Pederson, J., Wilson, J., and Stofferahn, J.
Compensation Judge: Kathleen Behounek.
WILLIAM R. PEDERSON, Judge
The self-insured employer appeals from the compensation judge's award of attorney fees under Roraff v. State of Minn., 288 N.W.2d 15, 32 W.C.D. 297 (Minn. 1980), and Kopish v. Sivertson Fisheries, 53 W.C.D. 107 (W.C.C.A. 1995). We affirm.
On September 14, 1992, Gwen Fredrickson-Ellison [the employee] sustained a herniated disc at L5-S1 in her lower back, in the course of her employment as a surgical technician with Methodist Hospital [the employer]. The employer accepted liability for the injury and commenced payment of various workers' compensation benefits, including the cost of a combined laminectomy/discectomy, with posterior transverse fusion on March 2, 1994. Subsequently, the employee was also diagnosed with a sciatic nerve injury and fibromyalgia, again causally related to the September 14, 1992, injury. The employer denied liability for these conditions and refused payment of medical expenses and rehabilitation benefits.
The employee's claims for various disability benefits and medical expenses were heard by Compensation Judge John Jansen on June 15, 1999. In his Findings and Order issued August 27, 1999, the compensation judge determined that the employee had sustained both a consequential injury to her sciatic nerve and a chronic pain syndrome with fibromyalgia, both caused or substantially contributed to by the injury of September 14, 1992. The judge determined the employee had not reached maximum medical improvement from all medical conditions related to the work injury, and he awarded temporary total and temporary partial disability benefits, as well as all medical expenses claimed.
The employer appealed from the judge's Findings and Order, and, on May 9, 2000, the Workers' Compensation Court of Appeals affirmed the judge's decision. On June 23, 2000, the employee's attorney, Darrel M. Hart, filed with this court a Statement of Attorneys' Fees, Petition for Taxation of Actual and Necessary Disbursements, and Affidavit, requesting attorney fees in excess of the amount authorized under Minn. Stat. ' 176.081, subd. 1 (1992), Roraff fees, and costs and disbursements. Mr. Hart claimed attorney fees of $54,395.00 and costs of $13,635.42. The employer filed no objection to the Statement of Attorneys' Fees or the Petition for Taxation. On July 13, 2000, this court ordered the employer to pay employee's counsel $13,635.42 for actual and necessary disbursements and remanded the claim for attorney fees to the Office of Administrative Hearings for a determination based on the criteria set forth in Minn. Stat. ' 176.081, subd. 5 (1990).
Mr. Hart's claim for attorney fees came on for hearing before Compensation Judge Kathleen Behounek on July 30, 2001. In a Findings and Order issued September 28, 2001, the compensation judge analyzed the entire claim for attorney fees, applied the factors set forth in Minn. Stat. ' 176.081, subd. 5(d) (1990), and ordered the employer to withhold and pay attorney fees from the employee's ongoing benefits, pursuant to Minn. Stat. ' 176.081, subd. 2 (1990), until such time as Mr. Hart has been paid contingent/excess fees totaling $26,000.00. Judge Behounek further ordered the employer to pay to Mr. Hart the sum of $27,645.00 as Roraff/Kopish fees, concluding that the contingent fee of $13,000.00 and the potential excess fee of $13,000 is inadequate to reasonably compensate the employee's attorney for representing the employee in this dispute. The self-insured employer appeals.
STANDARD OF REVIEW
In reviewing cases on appeal, the Workers' Compensation Court of Appeals must determine whether "the findings of fact and order [are] clearly erroneous and unsupported by substantial evidence in view of the entire record as submitted." Minn. Stat. ' 176.421, subd. 1 (1992). Substantial evidence supports the findings if, in the context of the entire record, "they are supported by evidence that a reasonable mind might accept as adequate." Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984). Where evidence conflicts or more than one inference may reasonably be drawn from the evidence, the findings are to be affirmed. Id. at 60, 37 W.C.D. at 240. Similarly, "[f]actfindings are clearly erroneous only if the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed." Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975). Findings of fact should not be disturbed, even though the reviewing court might disagree with them, "unless they are clearly erroneous in the sense that they are manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole." Id.
"[A] decision which rests upon the application of a statute or rule to essentially undisputed facts generally involves a question of law which [the Workers' Compensation Court of Appeals] may consider de novo." Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993).
On September 14, 1992, the employee's date of injury, Minn. Stat. ' 176.081 provided in part that,
All fees must be calculated according to the [25-20] formula under this subdivision, or earned in hourly fees for representation . . . on rehabilitation or medical issues under section 176.102, 176.135, or 176.136. Attorney fees for recovery of medical or rehabilitation benefits or services shall be assessed against the employer or insurer if these fees exceed the contingent fee under this section in connection with benefits currently in dispute. The amount of the fee that the employer or insurer is liable for is the amount determined under subdivision 5, minus the contingent fee.
Minn. Stat. ' 176.081, subd. 1(a) (1992). In proceedings brought solely to recover medical benefits, reasonable attorney fees may be assessed against the employer/insurer. Roraff, 288 N.W.2d 15, 32 W.C.D. 297; Minn. Stat. ' 176.135, subd. 1(d) (1992). In Kopish v. Sivertson Fisheries, 39 W.C.D. 627 (W.C.C.A. 1987), this court held that, in proceedings where a medical benefit dispute is resolved concurrently with a dispute over monetary benefits, Roraff fees are not allowable unless the disallowance would result in "a most unreasonable fee for the services rendered if only Minn. Stat. ' 176.081 fees were granted." Id. at 630
In the present case, Mr. Hart requested excess fees under Minn. Stat. ' 176.081, subd. 2, and Roraff fees. The applicable statutory scheme for approval of attorney fees in excess of the $13,000.00 maximum fee authorized under Minn. Stat. ' 176.081, subd. 1, and for approval of attorney fees assessed against the employer/insurer requires that the determination of the fee "be done with the same care as the determination of any other fact question in the matter."
On appeal, the employer does not challenge the hours or rates claimed by Mr. Hart. Nor does it challenge any of the judge's factual findings based on the criteria set forth in Minn. Stat. ' 176.081, subd. 5(d) (1992). The sole issue presented by the employer on appeal is whether the judge erred in finding that Mr. Hart is entitled to payment of fees by the employer despite the ongoing stream of benefits from which fees should come, as directed by Minn. Stat. ' 176.081, subd. 1(a)(1) (1995) - - that is, whether the judge's award in this case was premature. In discussing her findings, the judge determined in part that the issues were complex and numerous and included the reasonableness and necessity of medical care for the employee's consequential sciatic nerve injury, chronic pain, and fibromyalgia, all conditions for which the employer had denied primary liability. The judge also found that Mr. Hart and members of his firm had spent over 320 hours representing the employee since 1995 and that, even exclusive of the time spent, the expense of bringing the case to trial exceeded $13,000.00. In addition, the judge determined that proof of the nature and relationship of the employee's injuries was difficult and required testimony from multiple experts by deposition and at trial. Notwithstanding these complexities, the employer argues that, since the employee was awarded and may receive additional indemnity benefits, her attorney may be entitled to additional contingency fees beyond the agreed contingent rate recovery of $26,000.00. Establishing adequacy or inadequacy of a contingent fee, it asserts, is only possible after the entire contingent fee has been determined. The plain meaning and the clear and unambiguous language of the statute, it contends, prohibits the assessment of attorney fees to employers and insurers until it is clear that the ongoing stream of benefits is inadequate to cover the attorney fee. Moreover, it contends, Mr. Hart's retainer agreement with his client does not cap the payment of attorney fees, and it was improper for the compensation judge to sanction the proposal of the employee and her attorney to cap the contingent fee recovery at $26,000.00 and prematurely shift the cost of fees to the employer. We do not agree.
Contrary to the employer and insurer's assertion, the employee's attorney has not been awarded additional contingency fees in this case. Minn. Stat. ' 176.081, subd. 1(b) (1992), provides that fees may not exceed $13,000.00, except as provided by subdivision 2. The additional $13,000.00 awarded to Mr. Hart is an excess fee under subdivision 2, not a contingency fee. Although the excess fee is to be paid from additional indemnity benefits paid to the employee, this does not change an excess fee to a contingency fee. Further, there is no requirement that Mr. Hart again petition for excess fees at some unforeseen date in the future.
Even if we agreed that the statutory language of Minn. Stat. ' 176.081, subd. 1(a)(1) (1995), is applicable to the employee's 1992 date of injury, we find dispositive the fact that the compensation judge concluded that the contingent fee in this case, even with an excess fee, would be inadequate to reasonably compensate the attorney and that therefore Mr. Hart's claim was not premature. In this case, the compensation judge made the necessary factual findings under Minn. Stat. ' 176.081, subd. 5(d) (1992). She noted that the case involved complex issues of medical liability and causation, and she determined that payment of medical expenses was of primary importance to the employee. She also determined that Mr. Hart would obtain an unreasonable fee for the services rendered in this case if only fees under Minn. Stat. ' 176.081 were granted. The employer does not contest the factual findings of the judge. We acknowledge that the award of $26,000.00 in contingent/excess fees is substantial, but, given the duration and complexity of the litigation, the judge could still reasonably conclude that the fee is inadequate. Because the judge's determination of a reasonable fee was based on her unappealed factual analysis of the subdivision 5 factors, and because the contingent/excess fee was determinable, we affirm the compensation judge's finding that the contingent/excess fee in this case is inadequate to reasonably compensate Mr. Hart for representing the employee.
We agree with the employer that under certain circumstances it may be impossible to accurately compute the contingent fee, and so to determine its adequacy, at the time issues which give rise to the claim for fees are resolved. See Borgan v. Bob Hegland, Inc., slip op. (W.C.C.A. June 12, 2002). In the present case, however, the judge computed the reasonable fee to be awarded under the statutory factors, subtracted the contingent and excess fees, and assessed the balance against the employer. Absent a challenge to the judge's factual findings, and concluding that the determination of the contingent/excess fee was not premature, we affirm the judge's award of fees in this matter.
 Repealed by Laws 1995, ch. 231, art. 2, ' 110.
 Minn. Stat. ' 176.081, subd. 5(e) (1992).
 Minn. Stat. ' 176.081, subd. 5(d) (1992), provides:
In determining a reasonable attorney fee, important factors to be taken into account are: the amount involved, the time and expense necessary to prepare for trial, the responsibility assumed by counsel, the expertise of counsel in the workers' compensation field, the difficulties of the issues involved, the nature of proof needed to be adduced and the results obtained. The amount of money involved shall not be the controlling factor.
 Minn. Stat. ' 176.081, subd. 1(a)(1) (1995), provides in part as follows:
All fees, including fees for obtaining medical or rehabilitation benefits, must be calculated according to the [25-20] formula under this subdivision, except as otherwise provided in clause (1) or (2).
(1) The contingent attorney fee for recovery of monetary benefits according to the formula in this section is presumed to be adequate to cover recovery of medical and rehabilitation benefit or services concurrently in dispute. Attorney fees for recovery of medical or rehabilitation benefits or services shall be assessed against the employer or insurer only if the attorney establishes that the contingent fee is inadequate to reasonably compensate the attorney for representing the employee in the medical or rehabilitation dispute. In cases where the contingent fee is inadequate the employer or insurer is liable for attorney fees based on the formula in this subdivision or in clause (2).
 On appeal, employee's counsel asserts that the issue briefed by the employer, whether it was premature for the compensation judge to consider the adequacy of the contingent fee in light of ongoing payments to the employee, was not raised in the notice of appeal. As such, employee's counsel contends, this court has no jurisdiction to rule on the issue being argued. We have concluded that the issue raised by the employer was litigated and addressed by the compensation judge and was adequately raised in the notice of appeal.
 Minn. Stat. ' 176.081 was amended effective October 1, 1995, deleting subdivision 5 and making other changes regarding attorney fees, including Roraff fees. The 1995 amendments apply only to fee awards in cases where the employee's injury occurred on or after their effective date. Senjem v. Independent Sch. Dist. #625, 55 W.C.D. 656 (W.C.C.A. 1996).