MINH NGUYEN, Employee/Appellant, v. AUDIO COMMC’NS and SFM MUT. INS. CO., Employer-Insurer/Cross-Appellants.
WORKERS’ COMPENSATION COURT OF APPEALS
SEPTEMBER 12, 2011
ATTORNEY FEES - GRUBER FEES. The compensation judge did not err by denying attorney fees payable by the employer and insurer pursuant to Gruber v. Independent Sch. Dist. #625, 57 W.C.D. 284 (W.C.C.A. 1997), summarily aff’d (Minn. Nov. 29, 1997), where there has been a stream of benefits paid to the employee and the employee’s attorney may file a claim for excess fees.
ATTORNEY FEES - CONTINGENT FEES. An employee may be considered a prevailing party when less than the claimed overpayment was awarded. Success in reducing the claim for an overpayment is a positive result that preserved the employee’s benefits and minimized liability for reimbursement.
Determined by: Milun, C.J., Johnson, J., and Pederson, J.
Compensation Judge: Peggy A. Brenden
Attorneys: DeAnna M. McCashin, Schoep & McCashin, Alexandria, MN, for the Appellant. Danielle T. Bird, Lynn, Scharfenberg & Assocs., Minneapolis, MN, for the Cross-Appellants.
PATRICIA J. MILUN, Chief Judge
The employee appeals the compensation judge’s denial of the request by the employee’s attorney for Gruber-type fees. The employer and insurer cross-appeal the compensation judge’s finding that the employee prevailed at the August 27, 2010, hearing. We affirm.
On December 13, 2005, Minh Nguyen, the employee, sustained work-related injuries to his left shoulder and cervical spine while working for Audio Communications, the employer, which was insured for workers’ compensation liability by SFM Mutual Insurance Company, the insurer.
On October 3, 2008, the employee filed an amended claim petition for permanent total disability benefits from and after February 26, 2008. The employer and insurer denied that the employee was permanently and totally disabled as causally related to his work injury and that his claim for permanent total disability was not ripe since additional surgery was recommended. A hearing was held on February 18, 2009, on the issues of whether the employee had been permanently totally disabled since March 4, 2008, and whether the employee was entitled to additional permanent partial disability for his shoulder and his cervical spine. In Findings and Order dated March 25, 2009, the compensation judge found that the employee was permanently totally disabled from March 4, 2008, through the date of the hearing. The judge also made a finding that the employee had been unable to work since March 2007 when the employee was taken off work by a doctor, but made no finding regarding the onset date of permanent total disability. The employer and insurer wrote to the compensation judge after receiving the Findings and Order, asking for clarification of the date when permanent total disability benefits were payable. There was no response from the compensation judge in the record.
The employer and insurer appealed the finding that the employee was permanently totally disabled from March 4, 2008, through the date of the hearing, arguing that the employee had reached permanent total disability status on an earlier date. The Workers’ Compensation Court of Appeals (WCCA) held in its decision that it would not address the employer and insurer’s appeal “since the issue of an alternate date was not before the compensation judge.” There were no other issues raised on appeal, and therefore, the appeal was dismissed.
On February 25, 2010, the employer and insurer filed a petition for a determination of the employee’s permanent and total disability onset date as either March 15, 2006, or January 23, 2007. The employee objected, and a hearing was held on August 27, 2010. At the hearing, the employer and insurer argued that the onset date should either be October 9, 2006, or January 23, 2007, the date the employee’s physician removed him from the labor market. The employee argued that March 4, 2008, was the appropriate onset date, and further asserted that the timeliness of the employer alleging a different onset date at a subsequent hearing was not appropriate. The compensation judge found that March 1, 2007, was the onset date of permanent total disability, thus triggering the offset provisions and allowing the employer and insurer to collect an overpayment of benefits. Neither party appealed this decision.
On November 12, 2010, the employee’s attorney filed with the Office of Administrative Hearings a petition for attorney fees of $4,018.10 payable by the employer and insurer pursuant to Gruber v. Independent Sch. District #625. The statement to the compensation judge also included the cost of the transcript of the February 18, 2009, hearing. The employer and insurer objected to the fees and cost, arguing that the employee did not prevail at the hearing and Gruber fees were inappropriate in this case. A hearing on these issues was held by telephone on December 13, 2010. The compensation judge found that the employee prevailed at the August 27, 2010, hearing since some of the benefits at issue were preserved and his liability for overpayment was minimized. The compensation judge denied the claim for attorney fees, but did not address the employee’s claim for the cost of the transcript. The employee appeals the denial of fees; the employer and insurer cross-appeal the finding that the employee prevailed at the August 27, 2010, hearing. Neither party addressed the compensation judge’s omission of the transcript cost from the February 18, 2009, hearing.
STANDARD OF REVIEW
In reviewing cases 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.” 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.” 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.
Counsel for the employee asserts that the denial of Gruber-type fees in this case violates the established purpose of the attorney fee statute and related case law, and thus raises two important public policy concerns. One public policy concern is the protection of injured workers; another concern is reasonable compensation to attorneys. Counsel further asserts that the attorney fee statute provides a basis for a compensation judge to award Gruber-type fees against the employer. Counsel states that the legislature created attorney fee exceptions to the contingency fee formula, making it possible for the employee who prevails to recover attorney fees against the employer. To that end, counsel argues an award of Gruber-type fees is reasonable and should be applied to unsuccessful claims of overpayment of benefits received in good faith.
The employer and insurer contend Gruber fees are only awarded when the employee successfully defends against an allegation of bad faith receipt of benefits and any contingency fees available are insufficient to reasonably compensate the employee’s attorney for time expended in defending that issue. The employer and insurer conclude neither of these elements exists in the present case, and thus, the compensation judge properly denied the attorney fee under Gruber.
Contingency fees are fees for legal services provided where the fee is only payable if there is a positive result, and are calculated by percentages of the compensation awarded to the employee as permitted in Minn. Stat. § 176.081. As a general rule, the contingent fee formula in the statute requires the employee to absorb her own fee for legal representation out of the benefits paid. The legislature has determined that the employee is in most cases responsible for paying her own attorney fees where the contingency fee available is sufficient to reasonably compensate the employee’s attorney. Where no contingency fees are available to the employee’s attorney from the benefits paid, or the contingency fees available are insufficient, the court shall consider factors set forth in statutes and case law to determine whether attorney fees are permitted on an hourly fee that may be assessed against the employer.
A proceeding initiated by a claim for reimbursement as made in Gruber is similar to the proceedings initiated here. The issues presented were separate and distinct from the question of future entitlement to wage loss benefits. Claims seeking reimbursement based on bad faith receipt of benefits or claims seeking reimbursement based on the offset of permanent total disability benefits from social security disability benefits are both litigation claims seeking repayment of a benefit from the employee. Like Gruber, the employee in the present case prevailed because he successfully challenged the onset date and thereby minimized the overpayment claim. Unlike Gruber, however, the employee has an ongoing stream of benefits available from which attorney fees can be deducted.
In Kaufman v. Eveleth Mines, this court reversed a compensation judge’s award of attorney fees payable by the employer and insurer pursuant to Gruber. The court’s rationale was based on two distinct factors. First, there was no successful defense against the allegation of bad faith receipt of benefits. Second, the contingency fee was available and sufficient to reasonably compensate the attorney for time expended in defending the issue. Likewise, this court faced a similar request for hourly fees in Barry v. Northern States Power Co. Like the present case, the dispute in Barry was the onset date of permanent total disability to trigger the offset provision and allow the employer to collect an overpayment of benefits. A petition for an hourly attorney fee against the employer was denied by the compensation judge and affirmed by this court. This court distinguished Barry from Gruberon the stream of benefit analysis and declined to broaden Gruber fees to the facts in the Barry case.
The employee argues the petition for attorney fees against the employer is calculated under the contingency fee formula rather than an hourly basis to further distinguish the present case from Kaufman and Barry. This distinction, however, goes to the issue of calculating a “reasonable” attorney fee which is a separate issue from determining which party is responsible for the payment of the fee. Regardless of the calculation of a reasonable attorney fee, the employee here has an ongoing stream of benefits available from which attorney fees can be deducted.
The employee’s attorney asserts the attorney fee statute provides a basis for awarding the requested fees against the employer and insurer:
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.
Based on this statute, the employee claims that the onset date to determine permanent total disability benefits was ripe at the first hearing when the compensation judge determined that the employee was entitled to permanent and total disability benefits as of March 4, 2008. The employee claims that the employer and insurer’s failure to timely raise the issue of an onset date resulted in additional legal time after the employer and insurer sought to remedy the error by requesting clarification, and that the compensation judge did not file an amended order. The employee argues that the failure to timely raise the issue of an onset date further delayed the claim and resulted in a second hearing after an appellate dismissal. Given these facts and the attorney time expended, the employee argues that Minn. Stat. § 176.081, subd.1(3), should be construed evenly to all responsible parties. To that end, the employee concludes that the employer and insurer’s actions provide the basis upon which the analysis can be made to shift the fee from the employee and assess the fee against the employer and insurer.
The employer and insurer assert that any argument on the failure of a party to raise the issue of alternative onset dates at the first hearing is irrelevant to the dispute on Gruber fees. The employer and insurer further assert that the relevant fact is that the employee failed to plead an onset date in his initial claim petition. Likewise, the employee presented no onset date at the first hearing. Thus, the employer and insurer argue that the finding by the judge that the employee was permanently and totally disabled as of March 4, 2008, without finding an onset date, is not a reasonable basis upon which an analysis can be made to shift the payment of a contingency fee and assess attorney fees against the employer and insurer.
As noted by the compensation judge, neither the employee nor the employer and insurer explicitly raised the issue of an onset date at the first hearing on permanent total disability. In addition, either party had the opportunity to submit an onset date at the first hearing. No reason is given to explain this omission, and more than one inference can be drawn from this omission. The compensation judge made no finding as to the reasonableness of addressing the alternate onset dates at the initial hearing. This court is reluctant to do so under the circumstances of the case.
Finally, the employee seeks Gruber-type fees under the analysis that Gruber fees should be applied for unsuccessful claims of overpayment of benefits received in good faith. The employee argues that to seek fees by a contingency formula would require the employee to reduce his compensation from his ongoing benefits and concurrently pay the insurer through the statutory reduction of twenty percent, and thus, his overall compensation would be reduced by forty percent. This court recognizes that the employee believes a forty percent reduction is a harsh result. Nevertheless, what the employee requests here is beyond the scope of this court. The determination that a reasonable attorney fee should be awarded under a contingency fee statute and that the fee should be shifted so that it is assessed against the employer and insurer to protect the prevailing party’s rights is not a determination that can be made under the current statutory framework or current case law, including Gruber. We therefore affirm the compensation judge’s denial of the employee’s claim for attorney fees.
The employer and insurer in their cross-appeal assert that the compensation judge incorrectly found the employee prevailed in the August 27, 2010, hearing because the employer and insurer were successful in identifying a $19,090.50 overpayment and taking a twenty percent reduction in ongoing weekly payments of $53.94 for the next 353 weeks. The employer and insurer further assert that the effect on changing the onset date from the employer and insurer’s alternative dates minimized the employee’s liability for the overpayment at best by $7,000.00 which is less than the existing overpayment. The employer and insurer argue that the effect is a minimal recovery, not success. The employer and insurer define success “as showing the client does not need to return any monies to the employer and insurer,” and thus the employee was unsuccessful and did not prevail at the hearing. We disagree.
The employer and insurer filed the petition to determine the onset date of permanent total disability benefits. The onset date of permanent total disability benefits was a question of fact. The petition alleged alternative onset dates of March 15, 2006, or January 23, 2007. The employee argued against both dates. The compensation judge determined the onset date of permanent total disability benefits was March 1, 2007. The employee was successful in defending against the employer and insurer’s alternative onset dates. The effect of this success minimized the employee’s liability for the overpayment and the employer and insurer’s claim to reimbursement was reduced. Reducing the employee’s obligation on an overpayment is a positive result. The compensation judge’s finding that the employee prevailed at the August 27, 2010, hearing is therefore affirmed.
The Workers’ Compensation Court of Appeals is a court of limited jurisdiction and the fundamental function of this court is one of appellate review. In the absence of a fee-shifting statute, each party is responsible for paying its own attorney fees. We therefore affirm the compensation judge’s findings and order.
 Gruber v. Independent Sch. District #625, 57 W.C.D. 284 (W.C.C.A. 1997), summarily aff’d (Minn. Nov. 20, 1997).
 Additional case information may be found in this court’s decision, Nguyen v. Audio Commc’ns, No. WC09-162 (W.C.C.A. Nov. 20, 2009).
 At the hearing, the employee’s attorney clarified that the permanent total disability claim began March 4, 2008, not February 26, 2008.
 Nguyen v. Audio Commc’ns, No. WC09-162 (W.C.C.A. Nov. 20, 2009).
 57 W.C.D. 284 (W.C.C.A. 1997), summarily aff’d (Minn. Nov. 20, 1997).
 Neither party raised the transcript cost in their respective notices of appeal. A party’s brief may address only those issues raised in that party’s notice of appeal. Minn. R. 9800.0900, subp. 1. Since the issue was not raised in a notice of appeal, we decline to consider it.
 Minn. Stat. § 176.421, subd. 1.
 Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).
 Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993), summarily aff’d (Minn. June 3, 1993).
 In Gruber, this court held that
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.
Gruber v. Independent Sch. District #625, 57 W.C.D. 284, 290 (W.C.C.A. 1997), summarily aff’d (Minn. Nov. 20, 1997).
 See Id.
 66 W.C.D. 212 (W.C.C.A. 2006).
 Slip op. (W.C.C.A. May 8, 2000).
 Minn. Stat. § 176.081, subd. 1(3).
 The inference to be drawn for such an omission from either party could be one of legal strategy or one of uncertainty given the unstable medical condition of the employee. Nevertheless we cannot form an opinion by conjecture to arrive at a conclusion.
 Brief of Cross-Appellant, p. 6.
 Counsel did not file a petition for contingency fees and likewise, no finding that the contingency fees available are insufficient to reasonably compensate the employee’s attorney for time expended in defending that issue was made by the compensation judge.