DORIS J. JOHNSON, Employee/Appellant, v. APPLE VALLEY HEALTH CARE CTR. and LUMBERMEN=S UNDERWRITING ALLIANCE, Employer-Insurer.
WORKERS= COMPENSATION COURT OF APPEALS
APRIL 17, 2003
ATTORNEY FEES - GRUBER FEES. Where the employee continues to receive wage loss benefits, and there is a stream of benefits from which the employee=s attorney may be paid a fee, the compensation judge properly denied the employee=s attorney=s petition for fees pursuant to Gruber v. Independent Sch. Dist. #625, 57 W.C.D. 284 (W.C.C.A. 1997), for his representation of the employee in an action brought by the employer and insurer to discontinue permanent total disability benefits.
PENALTIES. The court declines to impose a penalty under Minn. Stat. ' 176.225, subd. 1(a), sought initially by the employee on appeal, where the case involved an appeal from a decision of the Office of Administrative Hearing rather than an original petition to discontinue to this court. Whether a penalty is appropriate, in this case, is a factual determination best left to a compensation judge.
Affirmed as modified.
Determined by Johnson, C.J., Wilson, J., and Pederson, J.
Compensation Judge: Rolf G. Hagen
THOMAS L. JOHNSON, Judge
The employee appeals the compensation judge=s denial of attorney fees pursuant to Gruber v. Independent Sch. Dist. #625, 57 W.C.D. 284 (W.C.C.A. 1997). We affirm, as modified.
On January 5, 1990, Doris J. Johnson, the employee, sustained injuries to her left and right wrists while working for Apple Valley Health Care Center. The employee earned a weekly wage of $431.39. The employer and its insurer accepted liability for the employee=s personal injury and paid wage loss benefits, permanent partial disability benefits, rehabilitation benefits and medical expenses to and on behalf of the employee.
In February 1992, the employee filed a claim petition seeking payment of intermittent temporary total and temporary partial disability benefits. In its answer, the employer and insurer alleged the employee had reached maximum medical improvement and denied liability for any further benefits. In November 1992, the parties entered into a stipulation for settlement in which they agreed the employee was permanently and totally disabled as of May 4, 1992. The employer and insurer agreed they had commenced and would continue ongoing payment of permanent total disability benefits to the employee. The parties further agreed that after receipt of $25,000 in permanent total disability benefits, the payment of such benefits would be subject to the offset for simultaneous receipt of social security disability benefits as set forth in Minn. Stat. ' 176.101, subd. 4. An Award on Stipulation was filed on December 10, 1992. The employee=s attorney, Raymond R. Peterson, received a contingent attorney fee of $6,500.00.
In 1993, the employee filed a second claim petition seeking permanent partial disability benefits for the left and right hands. The case was then settled, and an Award on Stipulation was filed on May 3, 1994. Mr. Peterson was paid $6,500.00 in contingent attorney fees.
In February 2001, the insurer, believing the employee was capable of gainful employment, scheduled an independent medical examination (IME) of the employee with Dr. William Call. The employee refused to voluntarily attend the examination. On February 27, 2001, the employer and insurer filed a motion seeking to compel the employee=s attendance at the IME. The employee objected to the motion and the matter was heard before a compensation judge. By order filed June 4, 2001, the employee was ordered to attend an IME. Dr. William Call examined the employee on June 19, 2001. On December 10, 2001, the employer and insurer filed a petition to discontinue benefits contending the employee was not permanently and totally disabled, was capable of working and failed to cooperate with rehabilitation services. The attorney for the employer and insurer later advised the court the petition to discontinue would be withdrawn, and, by order dated February 14, 2002, the petition to discontinue was dismissed by a compensation judge. Raymond R. Peterson, the employee=s attorney, then filed a statement of attorney=s fees seeking hourly fees, under the Gruber decision, of $1,856.25. The employer and insurer objected to the claimed fees and the case was heard by Compensation Judge Rolf G. Hagen. In a findings and order filed July 16, 2002, the compensation judge found that Gruber fees were not appropriate in this case and concluded the fees due, if any, were contingency fees from the employee=s ongoing stream of benefits. The employee appeals the denial of Gruber fees.
1. Contingent Attorney Fees
The compensation judge found Mr. Peterson was not entitled to attorney fees for the period February 26, 2001 through December 10, 2001 because the sole issue during that period was whether the employee was required to attend an independent medical examination. The judge stated there was no allegation of bad faith or fraud during that period of time. The compensation judge, however, found Mr. Peterson was entitled to an award of contingent attorney fees computed on an hourly basis for his representation of the employee from December 12, 2001 through January 23, 2002. The judge made specific and detailed findings with respect to each of the Irwin factors and awarded an attorney fee of $900.00, to be withheld from the employee=s permanent total disability benefits.
In his Statement of Attorney=s Fee, Mr. Peterson did not request a contingent fee under Minn. Stat. ' 176.081, subd. 1, but requested only Gruber fees. On appeal, Mr. Peterson asks this court to vacate that portion of the compensation judge=s order awarding $900.00 in contingency fees to be withheld from the employee=s benefits. We agree the judge improperly ordered fees not at issue. Order 3 of the Findings and Order filed July 16, 2002, is hereby vacated. The insurer is directed to release to the employee any benefits withheld pursuant to Judge Hagen=s Order.
2. Gruber Fees
In Gruber v. Independent Sch. Dist. #625, 57 W.C.D. 284 (W.C.C.A. 1997), the self-insured employer sought to discontinue temporary total disability benefits on the ground that the employee had fully recovered from his work injuries. The self-insured employer further sought reimbursement of wage loss benefits paid, alleging the employee had received those benefits in bad faith. The employee prevailed on the reimbursement claim. In holding the employee=s attorney was entitled to an hourly fee for representation of the employee on the bad faith issue, this court held,
as a matter of policy, we conclude that where an employee successfully defends against an allegation of bad faith receipt of benefits but contingency fees available, if any, are insufficient to reasonably compensate the employee=s attorney for time expended in defending that issue, the employee=s attorney may be awarded reasonable hourly fees from the employer and insurer sufficient to compensate the employee=s attorney for successful defense of the bad faith issue.
In their petition to discontinue, the respondents did not seek reimbursement of benefits under Minn. Stat. ' 176.179 or contend the employee received benefits in bad faith. Rather, they contended the employee was not permanently and totally disabled, was capable of working and failed to cooperate with rehabilitation services. The employee argues, however, a finding by a compensation judge that the employee received permanent total disability benefits during a period of time she was working or capable of working is the equivalent of, and forms the basis for, a later claim for reimbursement based upon bad faith receipt of benefits. Accordingly, the employee contends her attorney should receive Gruber fees. We are not persuaded.
The employee is receiving permanent total disability benefits. Thus, there is a stream of benefits from which the employee=s attorney may receive an attorney fee. See Moe v. Didd, Inc., slip op. (W.C.C.A. Mar. 14, 2001). In Gruber, this court specifically limited its application to those cases where the contingency fee available, if any, is insufficient to reasonably compensate the employee=s attorney for the time expended in defending the bad faith issue. There is no claim here the contingency fee available is insufficient to reasonably compensate Mr. Peterson. The fact the employee=s attorney has chosen to waive the contingent fee awarded by the compensation judge does not change the analysis. On this limited basis, we deny the employee=s request for Gruber fees.
At oral argument, the employee requested this court impose a penalty on the employer under Minn. Stat. ' 176.225. In this case, the employer and insurer filed their petition to discontinue permanent total disability benefits with the Office of Administrative Hearings. The employee contends only the Workers= Compensation Court of Appeals has jurisdiction over a petition to discontinue permanent total disability benefits where there is an outstanding award on stipulation. See Behrens v. City of Fairmont, 533 N.W.2d 854, 53 W.C.D. 41 (Minn. 1995); Campbell v. Independent Sch. Dist. #191, slip op. (W.C.C.A. Mar. 15, 2001). Although the employee concedes she did not seek penalties before the compensation judge, she now asks this court to award penalties.
Under Minn. Stat. ' 176.225, subd. 1(a), this court shall award a penalty where an employer and insurer Ainstitute a proceeding or interpose a defense which does not present a real controversy but which is frivolous or for the purposes of delay.@ In Griffiths v. Duluth Transit Auth., 60 W.C.D. 472 (W.C.C.A. 2000), this court imposed a penalty on the employer and insurer for a frivolous petition to vacate an award on stipulation. We decline to do so in this case, however. The Griffiths case involved a petition to vacate brought before this court. The present case is an appeal to this court from a decision of the Office of Administrative Hearings. Whether a penalty is appropriate is, in this case, a factual determination best left to a compensation judge. Accordingly, we decline to impose a penalty and take no position on the merits of such a claim should the employee later choose to assert a penalty claim.
 Irwin v. Surdyk=s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999).