EDWARD P. CROWLEY, Employee, v. PLEHAL BLACKTOPPING, INC., and STATE FUND MUT. INS. CO., Employer-Insurer/Appellants.
WORKERS= COMPENSATION COURT OF APPEALS
OCTOBER 13, 2005
ATTORNEY FEES - RORAFF FEES. In cases involving medical or rehabilitation benefits only, Minn. Stat. ' 176.081, subp. 1(a)(1), provides for contingent attorney fees of 25/20 percent of the dollar value of the medical or rehabilitation benefits awarded. The dollar value is the fee schedule amount for the medical expenses awarded. The fee schedule amount for a fusion surgery, for which approval is obtained, is clearly ascertainable whether the expense was incurred prior to the hearing or will be incurred after the hearing. An award of contingent attorney fees on the as yet prospective costs of the employee=s surgery is premature and the award of attorney fees is vacated.
ATTORNEY FEES - RORAFF FEES. Where the employer and insurer voluntarily paid permanency and temporary partial disability benefits subsequent to the hearing on the employee=s claim for medical and rehabilitation benefits, the fact the employee=s attorney established primary liability in the prior hearing is irrelevant to entitlement to attorney fees for future benefits not in dispute at the time of the hearing. Since there was no dispute over these benefits, there is no attorney fee due, and the benefits may not be considered in assessing whether contingent fees on wage loss benefits are inadequate to reasonably compensate counsel for the medical/rehabilitation dispute.
APPEALS - LAW OF THE CASE. Where, at the time of the January 6, 2005, hearing, no fee petition had been submitted, entitlement to Roraff fees was not at issue, and no determination as to the amount of attorney fees or the adequacy of any contingent fees was possible, the compensation judge=s Aaward@ of Roraff and Heaton fees, although unappealed, is not the law of the case nor does it have any collateral estoppel effect.
ATTORNEY FEES - RORAFF FEES. Where the sole dispute is ascertainable medical or rehabilitation expenses, the employee=s attorney is entitled to contingent fees under the 25/20 formula in Minn. Stat. ' 176.081, subd. 1(a). The only Aelection@ available under the statute is the option of seeking additional Irwin fees if the attorney believes that the contingent fee on the dollar value of the medical or rehabilitation benefits awarded is inadequate to reasonably compensate the attorney for his or her services.
Determined by: Johnson, C.J., Pederson, J., and Stofferahn, J.
Compensation Judge: Gary P. Mesna
Attorneys: Richard C. Lund, Law Offices of Donald F. Noack, Jr., Mound, MN, for the Respondent. Steven T. Scharfenberg, Lynn, Scharfenberg & Associates, Minneapolis, MN, for the Appellants.
THOMAS L. JOHNSON, Judge
The employer and insurer appeal from the compensation judge=s award of Roraff-type attorney fees to the employee=s attorneys. We vacate the judge=s order as premature at the present time.
On July 13, 1999, Edward P. Crowley, the employee, sustained an injury to his low back arising out of his employment with Plehal Blacktopping, Inc., the employer, then insured by State Fund Mutual Insurance Company. The employer and insurer admitted liability for the employee=s personal injury.
In December 2003, the employee filed a claim petition seeking payment of medical expenses and a rehabilitation consultation. At the hearing on January 6, 2005, the employee also sought approval for a two-level fusion surgery recommended by Dr. Richard Salib. The employer and the insurer maintained the employee=s 1999 work injury was temporary in nature, denied the need for medical treatment was causally related to the work injury, and denied the proposed surgery was reasonable and necessary. In a Findings and Order, served and filed February 8, 2005, Compensation Judge Gary P. Mesna found the employee=s July 13, 1999, work injury was permanent and was a substantial contributing cause of the employee=s need for medical care. The judge further found the employee was entitled to a rehabilitation consultation and that the surgery recommended by Dr. Salib was reasonable and necessary to cure or relieve the employee from the effects of the personal injury. The judge ordered the employer and insurer to pay for the medical care and treatment provided to the employee, to reimburse an intervenor, Medica Health Plan/Ingenix, for the medical expenses it had paid, to pay for a rehabilitation consultation and to pay for the surgery recommended by Dr. Salib. The compensation judge also ordered the employer and insurer to pay Roraff and Heaton attorney fees. There was no appeal from this Findings and Order.
In February 2005, the employee=s attorneys, Law Offices of Donald F. Noack, Jr., filed a statement of attorney fees seeking $13,000 in Roraff-type attorney fees. The employer and insurer objected to the request and the matter was heard by Judge Mesna. In a Findings and Order filed May 13, 2005, the compensation judge found the amount of monetary benefits awarded in the January 6, 2005, hearing was not ascertainable because the employee=s claim was for approval of surgery and a rehabilitation consultation. The judge further found that since no contingent attorney fees were available, contingent fees were inadequate to reasonably compensate the attorneys for their work in the case. Applying the Irwin factors to the claim for attorney fees, the judge found the employee=s attorneys spent considerably less than the 36.4 hours they contended they spent on the case, found they billed for a pre-trial statement that was never served or filed with the court, billed for attending a settlement conference that was not held and billed for excessive amounts of time to review documents. The court further found that all of the claimed time was billed at the rate of an attorney even though Ait is likely that some of the services were performed by legal assistants or secretaries.@ (Finding 4.) The judge concluded, however, the employee=s attorneys obtained a valuable benefit: approval for a future surgery. Considering all of the Irwin factors, the judge found a reasonable fee for the legal services performed by the employee=s attorneys was $4,500.00. The employer and insurer appeal.
1. Attorney Fees for Approval of Surgery and Medical Expenses
At the attorney fees hearing and on appeal, the appellants argue no attorney fees may be allowed for the surgery issue because, although initially awarded by the compensation judge, Dr. Salib later reversed his opinion and decided the employee was not a surgical candidate. The compensation judge rejected this argument stating there was no medical evidence that Dr. Salib had changed his mind. The compensation judge noted the employee testified surgery was still being considered but that Dr. Salib wanted to try other options first. The compensation judge further concluded that whether or not the employee ultimately had surgery, a valuable benefit was recovered at the hearing because the cost of surgery will be paid if Dr. Salib decides to proceed. In applying the Irwin factors to this case, the compensation judge then considered the attorneys= efforts in obtaining the surgical award. On appeal, the appellants contend the compensation judge=s decision was legally erroneous. We agree for somewhat different reasons.
In cases such as this, involving medical or rehabilitation benefits only, Minn. Stat. ' 176.081, subp. 1(a)(1), provides for contingent attorney fees of 25/20 percent of the dollar value of the medical or rehabilitation benefits awarded, where ascertainable. Cahow v. Brookdale Motors, 61 W.C.D. 427 (W.C.C.A. 2001). The dollar value is the fee schedule amount for the medical expenses awarded. Irwin v. Surdyk=s Liquor, 599 N.W.2d 132, 142-43, 59W.C.D. 319, 336 (Minn.1999). The fee schedule amount for a fusion surgery and related costs is clearly ascertainable. This holds true whether the expense was incurred prior to the hearing or will be incurred after the hearing. See, e.g., Cahow, id.; Turan v. Park Constr. Co., 61 W.C.D. 602 (W.C.C.A. 2001). Thus, attorney fees for obtaining approval for a surgery are not payable until expenses for the surgery have been incurred. Nor does an employee=s attorney have any entitlement to a Roraff fee for obtaining approval for medical care or treatment that is not provided. An award of attorney fees on the as yet prospective costs of the employee=s surgery is premature and inappropriate at this time.
As contingent fees for the surgery cannot be calculated until after the costs of the surgery have been ascertained, no determination can be made as to whether the resulting contingent fee award would be inadequate to reasonably compensate the employee=s attorney. Accordingly, the compensation judge improperly considered the award of a prospective medical benefit in applying the Irwin factors and awarding attorney fees at this time.
We note, however, that in the February 8, 2005, Findings and Order, the compensation judge awarded payment or reimbursement of certain medical expenses. Under Minn. Stat. ' 176.081, subp. 1(a)(1), the employees= attorneys are entitled to an award of contingent attorney fees based upon application of the 25/20 percent formula to the medical expenses paid pursuant to the order. The amount of the medical bills awarded was not specified in the Findings and Order.
2. Contingent Attorney Fees on Wage Loss Benefits
In the February 8, 2005, Findings and Order, the compensation judge found the employee=s injury was permanent and a substantial contributing cause of his current disability and that the surgery recommended by Dr. Salib was reasonable and necessary. Implicit in these findings, the appellants contend, is the conclusion that wage loss benefits will be due when the employee undergoes the surgery. In addition, the insurer paid a 10 percent permanent partial disability and commenced payment of temporary total disability benefits in April 2005, and has withheld attorney fees on these benefits. The appellants contend these fees were properly withheld because the employee=s attorney was successful in establishing primary liability at the January 6, 2005, hearing. Accordingly, the appellants assert it is premature to determine that contingent attorney fees on wage loss benefits are inadequate to reasonably compensate counsel for representing the employee. We disagree.
This court has addressed the same argument in a number of cases. See, e.g., Turan, slip op at 4; Kohn v. A & M Business Interiors, slip op. (W.C.C.A. Jan. 27, 2005); Kelley v. Inter Faith Care Ctr., slip op. (W.C.C.A. Dec. 16, 2003). In each instance, this court has held the employee=s attorney has no claim for contingent attorney fees on undisputed prospective benefits. Minn. Stat. ' 176.081, subp. 1(a)(3)(c), provides:
In no case shall fees be calculated on the basis of any undisputed portion of compensation awards. Allowable fees under this chapter shall be based solely upon genuinely disputed claims or portions of claims . . . . The existence of a dispute is dependent upon a disagreement after the employer or insurer has had adequate time and information to take a position on liability.
The issue of what is genuinely in dispute in an employee=s claim is generally determined at the time of an award. In this case, the only issues in dispute at the January 6, 2005, hearing were medical and rehabilitation benefits. Neither temporary total nor permanency benefits were raised in the context of the litigation before Judge Mesna, nor is there any evidence that the insurer disputed the employee=s entitlement to these benefits subsequent to the hearing.
The fact that an attorney is instrumental in establishing primary liability for an employee=s claim does not necessarily give rise to a claim for contingent fees on all workers= compensation benefits thereafter paid. See Irwin, 599 N.W.2d at 143-44, 59 W.C.D. at 338.
Similarly, any entitlement to wage loss benefits following the recommended surgery is entirely speculative at this point in time, as is the possibility or potential for a dispute over the payment of any benefits that may be claimed following the surgery. The appellants voluntarily paid permanent partial disability and commenced payment of temporary total disability benefits to the employee in April 2005. Since there was no dispute over these benefits, there is no attorney fee due. The withheld fees from these benefits should be released to the employee.
3. Law of the Case
The compensation judge ordered the employer and insurer to pay Roraff and Heaton fees in the February 8, 2005, Findings and Order. Since this award was not appealed, the employee contends it is the law of the case and is not subject to a collateral attack in this appeal. We disagree.
Entitlement to Roraff and/or Heaton fees was not litigated or at issue before the compensation judge at the January 6, 2005 hearing. Moreover, A[w]hile Roraff and Heaton fees may ultimately be appropriate and payable, resolution of entitlement to such fees is clearly premature pending submission of a fee petition.@ Wilson v. Tousley Ford, 58 W.C.D. 274 (1998). No determination as to the amount of attorney fees due or the adequacy or reasonableness of any contingent fees could have been made at the time of the previous hearing. The judge=s previous Aaward@ of Roraff and Heaton fees is neither the law of the case nor barred by collateral estoppel.
4. Election of Contingent or Hourly Fees
At oral argument, the employee=s counsel contended he was entitled to elect whether to take a Roraff fee as a contingent fee or in hourly fees. Although the appellant cited no case in support of this argument, we can only conclude the argument is based upon a misreading of prior case law. To the extent these decisions may have created any confusion, we restate our holding regarding Minn. Stat. ' 176.081, subd. 1(a). In Cahow and subsequent cases, this court has held that where the sole dispute is ascertainable medical expenses, the employee=s attorney is entitled to contingent fees under the 25/20 formula in Minn. Stat. ' 176.081, subd. 1(a). If, however, the contingent fee is inadequate to reasonably compensate the employee=s attorney, the attorney may be entitled to an additional fee, applying the Irwin factors. Thus, the only election available under the statute is the option of seeking additional fees if the employee=s attorney believes the contingent fee on the dollar value of the medical benefits awarded is inadequate.
In the May 13, 2005, Findings and Order, the compensation judge noted the employee=s testimony that surgery was still under consideration. It was, therefore, premature for the compensation judge to determine the amount of Roraff attorney fees due for obtaining approval for the surgery, including whether contingent attorney fees are inadequate to reasonably compensate the employee=s attorneys. The compensation judge=s Findings and Order of May 13, 2005, is, therefore, vacated.
 See Roraff v. State, Dep=t of Transp., 288 N.W.2d l5, 32 W.C.D.297 (Minn.1980); Heaton v. J.E. Fryer & Co., 36 W.C.D. 6 (W.C.C.A. 1983).
 See Irwin v. Surdyk=s Liquor, 599 N.W.2d 132, 59W.C.D. 319 (Minn.1999). The terms ARoraff fees@ and AHeaton fees@ were commonly used to refer to fees awarded to an employee=s attorney for obtaining medical and rehabilitation benefits, prior to the 1995 amendments to Minn. Stat. ' 176.081. These terms continue to be used, although the manner in which attorney fees are to be determined and paid has been significantly altered.
 In Cahow, the employee filed a medical request seeking approval of, and payment for, a fusion surgery that was performed prior to the hearing. In Turan, the employee sought approval for a knee replacement surgery. The surgery was approved by a compensation judge in July 2000, and the surgical procedure was performed in September or October 2000. In both cases, the compensation judge awarded contingent attorney fees of 25/20 percent of the cost of the employee=s surgery, and this court affirmed the award.
 In Irwin, the Minnesota Supreme Court held it was unconstitutional to prohibit deviation from the statutory formula where the resulting fee award would be inadequate to reasonably compensate the employee=s attorney. Thus, the Irwin factors may be applicable in medical benefits only cases if the statutory contingent fee is inadequate to reasonably compensate the attorney for his or her services. See Hayes v. Peter L. Kormanik, slip op. (W.C.C.A. May 23, 2005); compare Wilson v. Tousley Ford, 58 W.C.D. 274 (1998).
 In Brown v. Omni Remanufacturing, 63 W.C.D. 519 (W.C.C.A. 2003), the court, in a footnote, stated, A[W]here the only matter in dispute was a medical treatment expense, the employee=s attorney was permitted, at the employee=s option to claim a Roraff fee or to request a review of the claimed fee in light of the factors outlined by the supreme court in Irwin.@ Similarly, in Turan, this court stated that Ain cases where the only matter in dispute was a medical treatment expense, the employee=s attorney was permitted to claim a Roraff fee in the amount of 25/20 percent of the cost of the surgical or medical procedures which had been in controversy or request a review of the request for attorney fees in light of the factors outlined by the supreme court in Irwin v. Surdyk=s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999) at the option of the employee=s attorney.@
 See, e.g., Hayes v. Kormanik, slip op. (W.C.C.A. May 23, 2005).
 A new claim for attorney fees may be submitted following the surgery or when it is reasonably ascertainable that the surgery will likely not be performed.