DARYL F. CLARK, Employee/Appellant, v. LAKE SUPERIOR PAPER INDUS., and ST. PAUL TRAVELERS, Employer-Insurer.
WORKERS= COMPENSATION COURT OF APPEALS
SEPTEMBER 18, 2007
ATTORNEY FEES - SUBSTANTIAL EVIDENCE. Substantial evidence supports the compensation judge=s finding that permanent partial disability voluntarily paid by the employer and insurer was not a disputed benefit, and that a fee award based on it was not appropriate.
Detrmined by: Stofferahn, J., Pederson, J., and Wilson, J.
Compensation Judge: Gregory A. Bonovetz
Attorneys: David R. Vail, Soderberg & Vail, Minneapolis, MN, for the Appellant. Barbara L. Heck, St. Paul, MN, for the Respondents.
DAVID A. STOFFERAHN, Judge
The compensation judge denied a petition for contingency attorney fees, finding that permanent partial disability benefits from which fees were sought were not disputed benefits as required by Minn. Stat. '176.081. We affirm.
Daryl Clark, the employee, sustained a work injury to the right knee on November 15, 1986, while employed as an electrician for Lake Superior Paper/ M.J. Electric. In August 1987, the employee had surgery and was off work until early December of that year. The employer and its insurer paid him temporary total disability benefits and in 1988, paid him 5 percent permanent partial disability as impairment compensation. The employee had additional surgery in March 2001which included total knee arthroplasty. On recovering from this surgery, the employee was placed under permanent medical restrictions essentially limiting him to sedentary employment.
The employee filed a claim petition in March 2001 seeking temporary total disability compensation and filed a rehabilitation request in July 2001 asking for a rehabilitation consultation. The employer and insurer denied the employee=s eligibility for further benefits from the 1986 injury. At an administrative conference in October 2001, the employer and insurer agreed to the rehabilitation consultation. The QRC conducting the consultation concluded that the employee was not eligible for rehabilitation services because he was no longer competitively employable. The employee=s attorney was awarded $857.50 in fees for assisting the employee in obtaining the rehabilitation consultation.
A hearing on the employee=s claim petition was held in October 2002. In Findings and Order of March 6, 2003, the compensation judge awarded the employee temporary total disability compensation from and after March 24, 2001, and the employee=s attorney was awarded contingency fees on the benefits awarded.
Another hearing was held in June 2003, addressing a petition to discontinue temporary total disability compensation filed by the employer and insurer that contended the employee had instead been permanently totally disabled from and after his March 2001 surgery. On June 24, 2003, Compensation Judge Bonovetz issued his Findings and Order determining that the employee had been permanently totally disabled since March 24, 2001, allowing the employer and insurer an offset against Social Security disability benefits being received by the employee, and awarding a credit for overpayment.
In October 2004, the employee filed a claim petition alleging a consequential injury to his left knee and an eight percent permanent partial disability rating for an unscheduled condition. The employer and insurer denied the left knee condition was related to the 1986 injury. A hearing was held on August 25, 2005, and a Findings and Order was issued on October 27, 2005. The compensation judge found that the employee=s left knee condition was caused by the 1986 work injury and determined that the employee had a permanent partial disability of 2 percent because of his left knee. The employee=s attorney was awarded contingency fees on the 2 percent permanency awarded.
Subsequently, the employee=s condition worsened and his physician recommended a left knee total arthroplasty. The employee filed a request to certify a medical dispute but the employer and insurer did not object to the proposed surgery, which was performed on March 9, 2006. In June 2006, without notice to the employee=s attorney, the insurer=s claims adjuster sent the employee=s physician a health care provider report form requesting a disability rating for the employee=s left knee following the surgery. The doctor rated the employee as having an 8 percent disability for the left knee. Based on the information provided, the employer and insurer concluded that a proper application of the disability schedules would entitle the employee to 13 percent permanent partial disability, rather than 8 percent. On August 6, 2006, the employee was paid a lump sum representing this permanent partial disability compensation, withholding amounts for the previously ordered overpayment and for potential attorney fees. The employer and insurer did not at that time serve or file a notice of benefit payment.
In October 2006, the employee=s attorney first learned from his client that a substantial benefit payment had been made. He contacted counsel for the employer and insurer to inquire what payments had been made and whether a notice of benefit payment had been issued. The employer and insurer responded in late October explaining the nature and calculation of the permanent partial disability payment. In early November, the required notice of benefit payment was filed.
On February 1, 2007, the employee=s attorney filed a Statement of Attorney Fees seeking attorney fees of $1,396.50, the amount withheld from the payment of permanent partial disability in August 2006. The fee petition noted that $14,741.83 had been paid as fees to date. The employee=s attorney attached to his request an Excess Fee Exhibit. The employer and insurer objected to the requested fees claiming that the benefits on which they were sought had not been disputed. An amended fee statement was filed on March 16, 2007, adding an exhibit itemizing the attorney=s time on the case.
Following a hearing on the fee request on March 26, 2007, the compensation judge found that no genuine dispute existed as to the employee=s eligibility for the permanent partial disability paid and denied the fee request. The employee appeals.
The compensation judge denied the requested fee on the basis of Minn. Stat. '176.081, subp. 1(a)(3)(c), which provides, in pertinent part, that
. . . [i]n 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 employee argues on appeal that the compensation judge erred in determining that the permanent partial disability paid was not a disputed claim. He contends that, because the underlying issue of primary liability for the left knee condition had been in dispute in 2005, the permanency later paid on that condition should also be deemed to have been in dispute. The employee=s brief asserts that Ahaving overcome a denial of primary liability on the left knee condition, the employee=s attorney has a claim for attorney=s fees for all benefits arising out of that disputed injury.@
This court has considered similar arguments and has held that a dispute over primary liability does not entitle an attorney to fees from any and all future benefits not at issue at the time primary liability is determined. See, e.g., Crowley v. Plehal Blacktopping, 66 W.C.D. 11 (W.C.C.A. 2005); Kohn v. A&M Advanced Bus. 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); cf. also Irwin, supra, 599 N.W.2d at 143-44, 59 W.C.D. at 338. There must be a present dispute involving the particular claim from which fees are sought.
The employee points out that a claim was made for permanent partial disability at the
same time that the issue of liability for the left knee condition was heard in August 2005. He contends that this distinguishes the present case from Kohn and other similar cases, and contends that the compensation judge erred in relying on that case. We disagree. The permanent partial disability claimed in 2005 was based on a theory that the employee was entitled to a Weber rating. The compensation judge rejected that theory. Payment of the permanent partial disability by the employer and insurer in 2006 was based on application of the pertinent schedule.
Whether a benefit was genuinely in dispute is an issue of fact for the compensation judge. See, e.g., Biederman v. Win Stephens Buick, 58 W.C.D. 497 (W.C.C.A. 1998); Ludescher v. University of Minn., slip op. (W.C.C.A., May 24, 2007). We do not find the circumstances of this case to be such that we can conclude that the compensation judge erred in finding a lack of dispute in the present case. We note that there is no record of any action by the employee=s attorney to seek payment of the permanent partial disability payment made voluntarily by the employer and insurer, that the employer and insurer not only did not dispute the rating offered by the employee=s physician, but recalculated and increased the rating before payment, and that the employee has never disputed the correctness of the actual amounts paid. Under the facts shown, we cannot conclude that the compensation judge clearly erred in finding that the benefit paid was not a disputed claim.
The compensation judge=s decision is affirmed.
 It is incorrect to refer to the 2005 litigation as having anything to do with primary liability. Primary liability is established for a personal injury, in this case, the personal injury of November 15, 1986. The issue in the 2005 litigation was whether the admitted 1986 work injury was a substantial contributing factor in the employee=s left knee condition.
 In Irwin, the supreme court considered the claim by employee=s attorney that he was entitled to attorney fees based on future medical benefits because he had established primary liability. In holding that an award of fees based on future benefits would be inappropriate because the benefits were speculative, the court further noted that A[s]hould a dispute arise with respect to future medical benefits, [Attorney] Wulff may at that time seek reimbursement for services related to that dispute.@ Inferentially, the supreme court thus viewed the a later fee award for obtaining such future benefits as predicated on the existence of a subsequent dispute beyond the issue of primary liability.