SEVERO CANTU, Employee/Appellant, v. AMERIPRIDE LINEN & APPAREL SERV. and CNA/RISK ENTERPRISE MGMT., Employer-Insurer.
WORKERS= COMPENSATION COURT OF APPEALS
APRIL 1, 2005
ATTORNEY FEES - RORAFF FEES; ATTORNEY FEES - IRWIN FEES; STATUTES CONSTRUED - MINN. STAT. ' 176.081, SUBD. 1. Where the judge reasonably denied the employee=s attorney=s request for $6,107.00 in hourly-based attorney fees but, in awarding instead a flat fee of $3,000.00, failed to apply the statutory formula to the medical and rehabilitation benefits awarded, the compensation judge=s award of attorney fees was modified to $4,412.39, to reflect calculation contemplating the awarded medical and rehabilitation benefits, pursuant to statutory guidelines.
Affirmed in part, and reversed and modified in part.
Determined by: Pederson, J., Stofferahn, J., and Wilson, J.
Compensation Judge: William R. Johnson
Attorneys: Thomas C. Hannon, Burnsville, MN, for Appellant. Gregg A. Johnson and Jeremiah W. Sisk, Heacox, Hartman, Koshmrl, Cosgriff & Johnson, St. Paul, MN, for Respondents.
WILLIAM R. PEDERSON, Judge
The employee=s attorney appeals from the compensation judge=s award of $3,000.00 in attorney fees rather than the requested amount of $6,170.00. We affirm in part, reverse in part, and modify the judge=s order to award a fee of $4,412.29, pursuant to Minn. Stat. 176.081, subd. 1.
Severo Cantu [the employee] filed a claim petition, seeking temporary partial disability and medical benefits, including payment for a proposed hernia surgery, arising out of his work for AmeriPride Linen and Apparel Service [the employer] in February 2003. The self-insured employer denied liability for the injury.
The case proceeded to hearing on October 2, 2003, before Compensation Judge William R. Johnson. The primary issue before the compensation judge was whether the employee=s hernia arose out of and in the course of his employment with the employer. The employer conceded that the employee=s medical care was reasonable and necessary and that, if the employee=s injury were found compensable, it would be liable for the payment of the medical expenses associated with that medical care. In a findings and order issued November 26, 2003, the judge found liability against the employer and awarded to the employee temporary partial disability benefits continuing from April 18, 2003, reasonable and necessary medical expenses, and entitlement to a rehabilitation consultation. The judge ordered payment of contingent attorney fees pursuant to Minn. Stat. ' 176.081, subd. 1, ordering also that A[i]f the employee=s attorney wishes to make further application for attorney fees he shall file a Petition for Award of Attorney Fees within 30 days of the service and filing of this Finding and Order setting for[th] the exact fees claimed and the appropriate statutory authority.@ No appeal was taken from the judge=s findings and order.
On February 3, 2004, Thomas C. Hannon, attorney for the employee, filed a statement of attorney fees, seeking a total of $6,170.00, for 30.85 hours of service at $200.00 per hour, together with fees pursuant to Minn. Stat. ' 176.081, subd. 7. The employer filed an objection to the petition for fees, contending that Athe stream of benefits paid off of any indemnity benefits to the employee more than adequately compensate[s] employee=s counsel for his efforts@ and that the statement of attorney fees was not filed within thirty days of the hearing, as was required by the November 26, 2003, findings and order.
On April 26, 2004, Mr. Hannon filed an amended statement of attorney fees together with an itemized billing statement reflecting the 30.85 hours expended on behalf of the employee. At that time, Mr. Hannon understood that the total amount recovered for the employee was $17,735.04 and that the employer was withholding the sum of $1,394.17 in attorney fees. On April 30, 2004, the employer served a Notice of Intention to Discontinue [NOID] the employee=s temporary total disability benefits. According to the NOID, the employee was paid temporary total and temporary partial disability benefits through May 1, 2004, in the sum of $7,984.15, and medical expenses totaling $12,823.15. Contingent fees were being withheld in the sum of $1,796.82.
A hearing on the claim for attorney fees was held before Compensation Judge Johnson on May 3, 2004. Attorney Hannon argued at trial that he was entitled to a fee, based on the Irwin, Roraff, and Heaton line of cases, that would reimburse him for the time he had spent on the case. His hourly-based claim was for $6,170.00. Counsel for the employer objected to the timeliness of the Roraff fee claim in light of Judge Johnson=s previous findings and order and, in the alternative, asserted that fees awardable in this case should not exceed $4,361.45, a figure arrived at by applying the 25/20 formula to the total payments reflected in the April 30, 2004, NOID.
In a findings and order issued July 2, 2004, the compensation judge determined that the contingent fee for recovery of monetary benefits was not adequate to reasonably compensate the employee=s attorney. He then determined that a reasonable attorney fee for the work performed by Mr. Hannon was $3,000.00. The so-called Irwin/Roraff/Heaton fee was determined to be the difference between $3,000.00 and the amount of the contingent fee for recovery of monetary benefits. Mr. Hannon appeals
Contingent attorney fees in workers= compensation cases are governed by Minn. Stat. ' 176.081, subd. 1, which provides in pertinent part as follows:
Subdivision 1. Limitation of fees. (a) A fee for legal services of 25 percent of the first $4,000 of compensation awarded to the employee and 20 percent of the next $60,000 of compensation awarded to the employee is the maximum permissible fee and does not require approval by the commissioner, compensation judge, or any other party. All fees, including fees for obtaining medical or rehabilitation benefits, must be calculated according to the 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 benefits 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).
For the purposes of applying the formula where the employer or insurer is liable for attorney fees, the amount of compensation awarded for obtaining disputed medical and rehabilitation benefits under sections 176.102, 176.135, and 176.136 shall be the dollar value of the medical or rehabilitation benefit awarded, where ascertainable.
Mr. Hannon first contends that the judge erred in calculating his fee under the statute. We agree. At the hearing on appeal, the parties agreed that Mr. Hannon was instrumental in recovering $21,061.50 in genuinely disputed benefits on behalf of the employee. The compensation judge determined that the contingent fee for recovery of monetary benefits - here, $1,796.82 - was not adequate to reasonably compensate the attorney. Rather than applying the statutory formula to the ascertainable dollar value of the medical and rehabilitation benefits awarded, the judge proceeded to an Irwin analysis and concluded that a reasonable fee in this case was $3,000.00. However, applying the statutory formula to the medical and rehabilitation benefits recovered results in an additional fee of $2,615.47 ($13,077.35 x 20%). Because the judge failed to apply the statutory formula to the medical and rehabilitation benefits awarded, we reverse the judge=s finding that $3,000.00 is a reasonable fee. Based upon the parties= ultimate agreement as to the payments made in this case, and pursuant to this court=s continuing jurisdiction over attorney fees under Minn. Stat. ' 176.081, subd. 3, we conclude that Mr. Hannon is entitled under the statutory guidelines to a fee of $4,412.39.
Mr. Hannon also contends that the judge failed to adequately address the Irwin factors and abused his discretion in failing to award contingent and Roraff/Heaton fees in the sum of $6,170.00. We are not persuaded.
First of all, we would note that the burden of proof is on the employee to establish entitlement to Roraff fees. At the hearing before the compensation judge, Mr. Hannon offered only his statement of attorney fees and attached billing record as evidence of the reasonableness of his claimed fee. In Irwin v. Surdyk=s Liquor, the Minnesota supreme court held that, in determining what constitutes a reasonable attorney fee, the judge Ashould not only consider the statutory guidelines, but also the amount involved, the time and expense necessary to prepare for trial, the responsibility assumed by counsel, the experience of counsel, the difficulties of the issues, the nature of the proof involved, and the results obtained.@ Irwin v. Surdyk=s Liquor, 599 N.W.2d 132, 142, 59 W.C.D. 319, 336 (Minn. 1999).
In this case, the compensation judge referred to the Irwin factors in both his findings and his memorandum. The judge presided over the employee=s claim for benefits and was clearly aware of the details of the employee=s claim. The essential issue in dispute was primary liability for the employee=s hernia. The judge could reasonably conclude that this was not a difficult claim, especially when coupled with the employer=s concession at trial that, if the employee established liability, the employer would concede liability for payment of medical and rehabilitation benefits. In addition, the judge specifically determined that the nature of this claim did not require the expenditure of thirty hours of work. He concluded that payment for fifteen hours of work would fairly compensate the employee=s attorney.
Based on the record as a whole, we conclude that the judge properly applied the Irwin factors to this case and did not abuse his discretion in failing to award the claimed fee of $6,170.00. We reverse, however, the judge=s award of a flat fee of $3,000.00, and we modify the judge=s decision to award a fee of $4,412.39 to the employee=s attorney.
 At the time the statement of attorney fees was filed, the employer continued to pay weekly indemnity and medical benefits. A determination as to whether the contingent attorney fee was adequate to reasonably compensate the employee=s attorney could not have been made in February 2004.
 See Irwin v. Surdyk=s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999); Roraff v. State, Dep=t. of Transp., 288 N.W.2d 15, 32 W.C.D. 297 (Minn. 1980); Heaton v. J.E. Fryer & Co., 36 W.C.D. 316 (W.C.C.A. 1983).
 This figure was taken from a Notice of Benefit Payment [NOBP] filed by the employer on July 15, 2004. According to the NOBP, the employee was paid $7,984.75 in wage loss monetary benefits and $13,077.35 in medical and rehabilitation benefits..
 This is essentially the calculation that had been argued for by the employer at the attorney=s fee hearing.