WALTER E. FAHEY, Employee, v. R & L SHARED SERVS., LLC, and ZURICH INS., Employer-Insurer/Appellants.
WORKERS’ COMPENSATION COURT OF APPEALS
AUGUST 28, 2009
ATTORNEY FEES - RORAFF FEES. Where the employee filed a claim petition requesting approval of fusion surgery for an admitted work injury, and the employer and insurer paid the employee temporary total disability benefits related to the employee’s disability after surgery, once they conceded liability for the surgery, the compensation judge did not err in concluding that the employee’s attorney was entitled to Roraff fees, rather than contingent fees calculated on temporary total disability benefits.
Determined by: Wilson, J., Pederson, J., and Rykken, J.
Compensation Judge: Jane Gordon Ertl
Attorneys: Michael F. Scully, Sieben, Grose, Von Holtum & Carey, Minneapolis, MN, for the Respondent. Richard W. Schmidt and Whitney L. Teel, Cousineau McGuire, Minneapolis, MN, for the Appellants.
DEBRA A. WILSON, Judge
The employer and insurer appeal from the judge’s award of attorney fees. We affirm.
On January 12, 2006, the employee sustained an admitted injury arising out of and in the course of his employment with R & L Shared Services, LLC [the employer]. He subsequently filed a claim petition, on August 12, 2007, seeking payment of chiropractic bills and approval for fusion surgery recommended by Dr. Phudhiphorn Thienprasit. Dr. Thienprasit took the employee off work on August 14, 2007, and performed the recommended surgery the following day. About two weeks later, on August 27, 2007, the employer and insurer filed an answer to the employee’s claim petition, contesting the reasonableness and necessity of the claimed chiropractic treatment and surgery.
The employer and insurer subsequently had the employee evaluated by Dr. Mark Larkins. In a report issued on November 27, 2007, Dr. Larkins indicated that the fusion surgery was reasonable, necessary, and causally related to the employee’s work injury.
Hearing on the employee’s claim petition was set for December 7, 2007. However, prior to hearing, the employer and insurer agreed to pay for the disputed surgery, and they negotiated payment of the chiropractic expense bill. The employer and insurer also paid the employee temporary total disability benefits retroactive to August 14, 2007, and withheld attorney fees from those payments. According to counsel for the employer and insurer, the employee’s attorney had asked, in a telephone conversation on December 5, 2007, that those benefits be paid and that fees be withheld. The employer and insurer’s counsel further contends that the employee’s attorney reiterated his request for the withholding of contingent fees in early January of 2008.
On June 20, 2008, the employee filed a statement of attorney fees, seeking Roraff fees based on the cost of the employee’s fusion surgery. The employer and insurer objected, and the matter came on for hearing on December 8, 2008. The parties stipulated that the employer and insurer had paid $65,485.31 in medical bills, and the employee claimed entitlement to $13,000 in Roraff fees for work performed by his attorney in connection with obtaining payment of those expenses. The employer and insurer contended that attorney fees were payable, instead, on a contingent basis from the temporary total disability benefits paid retroactive to August 14, 2007, and ongoing.
In a decision issued on February 13, 2009, the compensation judge concluded that, for purposes of the employee’s attorney fee claim, only medical expenses had been disputed. Accordingly, the judge ordered the employer and insurer to pay the employee’s attorney $13,000 in Roraff fees, together with fees pursuant to Minn. Stat. § 176.081, subd. 7. The employer and insurer appeal.
STANDARD OF REVIEW
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 (2008). 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, 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 evidence or not reasonably supported by the evidence as a whole.” Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).
“[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).
Pursuant to Minn. Stat. § 176.081, subd. 1,
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 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).
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(3) The fees for obtaining disputed medical or rehabilitation benefits are included in the $13,000 limit in paragraph (b). An attorney must concurrently file all outstanding disputed issues. An attorney is not entitled to attorney fees for representation in any issue which could reasonably have been addressed during the pendency of other issues for the same injury.
(Emphasis added). With regard to which benefits may be used to calculate an attorney fee, the statute provides as follows:
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, including disputes related to the payment of rehabilitation benefits or to other aspects of a rehabilitation plan. 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. Neither the holding of a hearing nor the filing of an application for a hearing alone may determine the existence of a dispute.
Id., subd. 1(c).
In the present case, the compensation judge concluded that, because only medical expense benefits had been disputed, the employee’s attorney was entitled to Roraff fees, payable by the employer and insurer, rather than a contingent fee from temporary total disability benefits. The employer and insurer contend that the judge erred in this regard, in that temporary total disability benefits were not paid until about four months after the employee became totally disabled due to his surgery. As such, they assert, contingent attorney fees are payable from that stream of disputed wage loss benefits, rather than pursuant to Roraff, unless the employee establishes that the contingent fee from wage loss benefits is inadequate to compensate his attorney for his work.
This court has issued several decisions relevant to the questions presented here, but we find nothing directly on point. It is relatively well established that, in cases in which an employee seeks approval of surgery and has not undergone the requested procedure as of the hearing date on that issue, Roraff fees are payable, on the theory that an employee’s attorney has no right to fees from undisputed prospective benefits - - that is, the wage loss benefits potentially payable if and when the employee subsequently undergoes the approved procedure. See, e.g., Turan v. Park Constr. Co., 61 W.C.D. 602 (W.C.C.A. 2001); Moore v. Cal Spas of Minn., No. WC08-193 (W.C.C.A. Nov. 13, 2008); Crowley v. Plehal Blacktopping, Inc., No. WC05-197 (W.C.C.A. Nov. 13. 2005); Kohn v. A & M Bus. Interiors, No. WC04-254 (W.C.C.A. Jan. 27, 2005). Here, however, the employee underwent the requested procedure and became totally disabled prior to the parties’ resolution of the dispute over surgery, making these cases distinguishable. It is also relatively well established that an insurer’s late payment of admittedly owed wage loss benefits may be enough to establish the existence of a dispute, allowing those benefits to be used to calculate a contingent fee award. See, e.g., Cole v. Krueger Constr., slip op. (W.C.C.A. Nov. 16, 1999). Applying this analysis, the temporary total disability benefits owed to the employee beginning in August 2007 but not paid until December 2007 would qualify as genuinely disputed, giving rise to a contingent fee award, despite the fact that the employee never claimed those benefits on his claim petition. However, while we concede that there is some merit to the employer and insurer’s position in this appeal, we nevertheless conclude that the compensation judge did not err in awarding the employee Roraff fees.
Our decision on this issue is based primarily on our reluctance to make the timing of an employee’s surgery the sole basis for determining what kind of attorney fees are payable for work performed in connection with obtaining approval for that surgery. Under the employer and insurer’s theory, Roraff fees would be payable if the injured employee waits for approval, while contingent fees from wage loss benefits would be payable if the employee proceeds with the procedure prior to approval. On the surface, this proposal is straightforward and appears consistent with the language in Minn. Stat. § 176.081, subd. 1, limiting Roraff fees to cases in which sufficient contingent fees are not available. The problem in practice, however, is that tying fee liability to the timing of surgery creates financial incentives, for both parties, to delay otherwise reasonable and necessary medical care. That is, an employee would have incentive to forego surgery pending approval, in order to avoid paying contingent fees, while insurers would have a similar incentive to delay that approval, hoping that employees will proceed with surgery without it, thereby eliminating or reducing the insurer’s liability for Roraff fees. In either case, the legislature’s express intent to “assure the quick and efficient delivery of . . . medical benefits to injured workers” would be undermined. Minn. Stat. § 176.001. Moreover, unnecessary postponement of appropriate medical treatment would in many cases unnecessarily delay return to work and other vocational rehabilitation efforts, again inconsistent with the intent of the workers’ compensation act. Id., see also Minn. R. 5220.0100, subps. 22 and 34 (an employee may be qualified for rehabilitation services if, among other things, such services will assist the employee is securing suitable gainful employment, which is employment that offers the employee an opportunity to restore the employee “as soon as possible” and as nearly as possible to the employee’s pre-injury economic status).
When the employee filed his claim petition requesting approval of surgery, he had not yet been taken off work. Shortly thereafter, he underwent the recommended surgery, and the employer and insurer paid the employee temporary total disability benefits soon after receiving their examiner’s opinion that the surgery had been reasonable, necessary, and causally related to the employee’s work injury. The injury itself was admitted; the only issue was whether the employee was entitled to the recommended procedure. The employer and insurer had no other basis on which to deny liability for total disability benefits. Under these circumstances, the compensation judge properly concluded that the employee’s attorney was entitled to Roraff fees, rather than contingent fees from wage loss benefits, and we affirm.
 Roraff v. State, Dep’t of Transp., 288 N.W.2d 15, 32 W.C.D. 297 (Minn. 1980). Attorney fees for work performed in connection with recovery of medical expenses are commonly called Roraff fees. See Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999). Roraff fees are payable by the employer and insurer.