MERY PARALES-RODRIGUEZ, Employee, v. ERMC and AIG INS./HERITAGE CLAIMS SERVS., INC., Employer-Insurer/Appellants, and HENNEPIN FACULTY ASSOCS., LAKE ST. CHIROPRACTIC CLINIC, INJURED WORKERS’ PHARM., and PAR, INC., Intervenors.
WORKERS’ COMPENSATION COURT OF APPEALS
APRIL 1, 2011
ATTORNEY FEES - CONTINGENT FEES; ATTORNEY FEES - HEATON FEES; ATTORNEY FEES - RORAFF FEES. Where ongoing wage loss benefits were still producing contingent fees, the compensation judge erred in concluding that it was not premature to determine the adequacy of contingent fees to reasonably compensate the employee’s attorney and, concluding that they would be inadequate, in awarding a specific Roraff or Heaton fee.
Affirmed in part and vacated in part.
Determined by: Pederson, J., Johnson, C.J., and Rykken, J.
Compensation Judge: Catherine A. Dallner
Attorneys: Kristina B. Lund Alcantara, Robichaud, Anderson & Alcantara, Minneapolis, MN, for the Respondent. Richard L. Plagens, Lommen, Abdo, Cole, King & Stageberg, Minneapolis, MN, for the Appellants.
WILLIAM R. PEDERSON, Judge
The employer and insurer appeal from the compensation judge’s award of Roraff and Heaton attorney fees. We vacate that award and vacate the judge’s findings but affirm Orders 2, 3, 4, 5, and 6 pertaining to payment of ongoing contingent fees and reimbursement of actual and necessary costs.
On November 7, 2008, Mery Parales-Rodriguez sustained a work-related injury to her right wrist in the course of her work as a janitor with ERMC-Ridgedale Center. Ms. Parales-Rodriguez [the employee] was forty-two years old on that date and was earning a weekly wage of $546.50. ERMC-Ridgedale Center [the employer] and its insurer acknowledged liability but ultimately contested the nature, extent, and duration of the injury, disputing the employee’s contention that it included not only her right wrist but also her right shoulder and the right side of her neck. In December of 2008, the employee retained Kristina Lund Alcantara as her attorney.
The matter eventually came to hearing on January 12 and 22, 2010, where issues included the nature and extent of the employee’s work injury, her entitlement to temporary total disability benefits, her entitlement to temporary partial disability benefits, her restrictions, the availability of work at the employer for the employee, her loss of earning capacity, her job search, maximum medical improvement, the employee’s entitlement to rehabilitation benefits, and her entitlement to medical expense benefits. By findings and order filed April 14, 2010, the employee was found to have sustained an injury to her right shoulder and neck, in addition to her right wrist, and she was awarded the following: temporary total disability benefits from September 5, 2009, through October 9, 2009; temporary partial disability benefits from November 8, 2008, through September 4, 2009, and continuing as the disability warrants from October 10, 2009; rehabilitation benefits; and medical expense benefits related to treatment of the employee’s right wrist, right shoulder, and neck.
On May 13, 2010, Attorney Alcantara filed a statement of attorney fees, claiming entitlement to fees in a total amount of $23,406.00, less $2,067.83 in contingent fees already received, for her representation of the employee in obtaining the monetary, medical, and rehabilitation benefits that had been awarded her. The employer and insurer objected to the request on May 17, 2010, and the matter came on for hearing on July 12, 2010. Issues at hearing included the following: (1) whether statutory contingent fees on monetary benefits were adequate to compensate the employee’s attorney; (2) whether it was premature to make a determination of the adequacy of those fees while the employee was still receiving benefits from which such fees would be withheld; (3) and to what amount of fees, if any, was the employee’s attorney entitled for work on medical and rehabilitation issues - - i.e., “Roraff fees” and “Heaton fees.” The parties stipulated at hearing that the employee’s attorney had already been paid $2,117.62 in contingent attorney fees, which had been withheld from the employee’s temporary disability benefits pursuant to the statute, and that the employer and insurer were currently withholding another $690.46 in contingent fees from the employee’s ongoing temporary partial disability benefits. The parties stipulated also that the employer and insurer had paid medical expenses and rehabilitation benefits on behalf of the employee in the amount of $21,786.81 and were currently paying ongoing temporary partial disability, medical, and rehabilitation benefits.
By findings and order filed September 10, 2010, the compensation judge concluded in part that statutory contingent attorney fees payable from the employee’s monetary benefits were inadequate to compensate Attorney Alcantara for her representation of the employee and that it was not premature to make that determination. The judge concluded that a reasonable total fee for the attorney’s work would be $18,000.00 - - $13,000.00 payable in contingent fees withheld from monetary benefits payable to the employee and $5,000.00 payable by the employer and insurer as Roraff and Heaton fees, pursuant to Minn. Stats. §§ 176.135, 176.102, and 176.081 and Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999). Based on that conclusion, the judge ordered withholding and payment of additional contingent fees until a maximum total of $13,000.00 has been paid, together with payment of the $5,000 in Roraff and/or Heaton fees and reimbursement to the attorney of $424.87 in actual and necessary costs and partial reimbursement to the employee of attorney fees paid, pursuant to Minn. Stat. § 176.081, subd. 7, as previously set forth in the judge’s April 14, 2010, findings and order. The employer and insurer appeal from the judge’s conclusion that a decision on the adequacy of contingent fees was not premature and from the judge’s award of Roraff or Heaton fees in the amount of $5,000.00.
Under Minn. Stat. § 176.081, subd. 1(a), a claimant’s attorney is entitled to a contingent fee of 25% of the first $4,000.00 and 20% of the next $60,000.00 of compensation awarded to the employee, and this contingent fee for recovery of monetary benefits “is presumed to be adequate to cover recovery of medical and rehabilitation benefit or services concurrently in dispute.” Minn. Stat. § 176.081, subd. 1(a)(1). If the employee’s attorney establishes that the contingent fee is inadequate to reasonably compensate the attorney in the concurrent medical or rehabilitation dispute, an additional fee shall be assessed against the employer and insurer, calculated by applying the 25/20 formula to the dollar value of the medical or rehabilitation benefits awarded. Id. If the combined total of the two fees is still inadequate, additional fees must be awarded to reasonably compensate the attorney for his or her work. See Irwin, 599 N.W.2d 132, 59 W.C.D. 319.
Claims for Roraff and Heaton fees, based on the adequacy of the statutory contingent fee on monetary benefits obtained, are analyzed in light of the factors set forth in the supreme court’s decision in Irwin. Those factors include “the amount involved, the experience of counsel, the responsibility assumed by counsel, the time and expense necessary to prepare for trial, the difficulty of the issues, the nature of the proof involved, and the results obtained.” Irwin, 599 N.W.2d at 142, 59 W.C.D. at 336.
The issue in the present case pertains to the timing of an application for Roraffand Heaton fees when there is an ongoing stream of wage loss benefits from which 25/20 contingent fees are being withheld. The compensation judge apparently based her award of fees on the conclusion that, even if the employee’s attorney should eventually be paid the maximum $13,000 in contingent fees, that contingent fee would not be adequate to reasonably compensate the attorney. The employer and insurer argue that it was premature for the judge to make a determination about the adequacy of the contingent fee when the total amount of that fee remains unknown. They point out that the judge’s decision fails to address what is to be paid if the contingent fee does not reach $13,000. Nor, they argue, does the judge’s decision indicate whether the contingent fee includes fees based on the standard 25/20 formula applied to the dollar value of the medical and rehabilitation benefits awarded. We agree that the judge’s decision is premature.
This court has long held that, where ongoing wage loss benefits are currently producing contingent fees, it is premature to determine whether contingent fees will be adequate to compensate the employee’s attorney. Borgan v. Bob Hegland, Inc., 62 W.C.D. 452, 462-63 (W.C.C.A. 2002); Moran v. United Parcel Serv., 63 W.C.D. 430, 432 (W.C.C.A. 2003); Plumb v. Dodge of Burnsville, Inc., 64 W.C.D. 151, 153 (W.C.C.A. 2004). At the hearing on attorney fees below, it was agreed that approximately $2,800 in contingent fees had thus far been either paid or withheld from the employee’s wage loss benefits for eventual payment and that fees continued to be withheld from ongoing benefits. While the judge apparently premised her decision on a potential contingent fee payment of $13,000, no one knew at the time of the hearing either the amount of benefits ultimately to be recovered for the employee or the exact amount of any contingent fee to which her attorney would ultimately be entitled based on those benefits. An Irwin analysis requires the judge to weigh all of the enumerated Irwin factors, and, at the time of hearing, neither the amount involved, nor the results obtained, nor the amount of the contingent fee could be fully known.
Because the employee continues to receive a stream of wage loss benefits from which contingent attorney fees are being withheld, and because it is not yet possible to fully evaluate either the amount involved or the result obtained, pursuant to Irwin, it was premature to determine whether the employee’s contingent attorney fee was inadequate to reasonably compensate the attorney for her work. The findings and order of the judge are therefore vacated except as previously specified.
 See 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).