KATHLEEN SHAMP, Employee, v. DAYBREAK FOODS and HARTFORD INS. GROUP, Employer-Insurer/Appellants.

 

WORKERS= COMPENSATION COURT OF APPEALS

DECEMBER 12, 2002

 

HEADNOTES

 

ATTORNEY FEES - RORAFF FEES; APPEALS - RECORD.  Where the compensation judge made no findings as to whether a dispute existed for purposes of the employee=s attorney=s entitlement to Roraff fees, and where no record was made of the telephone hearing on the fee claim, remand was required for rehearing and new findings.

 

Reversed and remanded.

 

Determined by Wilson, J., Rykken, J., and Johnson, C.J.

Compensation Judge:  James R. Otto.

 

OPINION

 

DEBRA A. WILSON, Judge

 

The employer and insurer appeal from the compensation judge=s award of Roraff fees.^[1]  We reverse and remand for proceedings consistent with this decision.

 

BACKGROUND^[2]

 

On January 30, 2001, the employee=s physican issued a letter recommending surgery for Areexploration of the brachial plexus to excise the scar tissue and muscle remnants@ apparently left by an earlier surgery to treat a work-related injury.  A few weeks later, on February 20, 2001, the employee, through her attorney, filed a request for certification of a dispute regarding the proposed surgery.  Two days after that, on February 22, 2001, a specialist with the Department of Labor and Industry issued a ACertification of Dispute@ after having apparently contacted a representative of the insurer regarding the treating doctor=s proposal for surgery.^[3]  Subsequently, on March 6, 2001, the employee filed a medical request for authorization of the procedure.  By letter dated March 19, 2001, the employer and insurer notified the Department that they had agreed to pay for the surgery and asked that the medical request be dismissed.  After a telephone conference held on March 27, 2001, an AOrder on Agreement on Medical Request@ was issued, ordering the insurer to pay for the surgery and dismissing the medical request.  The surgery was evidently performed the following month, in April of 2001.

 

The employee=s attorney filed a statement of attorney fees on December 13, 2001, requesting contingent fees calculated on the value of the medical expenses related to the surgery.  The employer and insurer objected and requested a hearing, alleging initially that the employee=s attorney should only be compensated for time spent on the matter, 4.6 hours of work.  Subsequently, by letter filed on January 9, 2002, the employer and insurer alleged in part that they had paid for the surgery voluntarily after exercising their right to a Asecond opinion.@  In that letter, the employer and insurer asked for Aa telephone settlement conference . . . to attempt to resolve this matter and clarify the issues.@^[4]

 

A telephone hearing was held on August 5, 2002, before Judge James Otto.  In a AFindings and Order@ issued on August 8, 2002, Judge Otto concluded that the employee=s attorney was entitled to a contingent Roraff fee, payable by the employer and insurer, in the amount of $1,644.16, for work performed in connection with the medical request.  The employer and insurer appeal.

 

DECISION

 

The employer and insurer argue initially that the Department erroneously certified a dispute regarding the proposed shoulder surgery.  Contending that the statute allows an employer and insurer Aadequate time@ to obtain information before taking a position, the employer and insurer in this case maintain that they exercised due diligence by completing their independent medical examination and agreeing to pay for the proposed procedure by March 19, 2002 -- a date less than two months after the treatment doctor=s recommendation for surgery.  The employer and insurer also contend that the judge erred by failing to determine whether a genuine dispute over medical treatment existed, a prerequisite to an award of Roraff fees under Minn. Stat. ' 176.081, subd. 1.  We agree that the matter must be remanded for hearing and new findings.

 

Minn. Stat. ' 176.081, subd. 1(c), reads in relevant part 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.  Except where the employee is represented by an attorney in other litigation pending at the department or at the office of administrative hearings, a fee may not be charged after June 1, 1996, for services with respect to a medical or rehabilitation issue arising under section 176.102, 176.135, or 176.136 performed before the employee has consulted with the department and the department certifies that there is a dispute and that it has tried to resolve the dispute.

 

In the present case, the Department certified a dispute, but the Department=s certification is not determinative as to the actual existence of a dispute for purposes of an attorney=s entitlement to fees; rather, whether a dispute exists is a factual issue for the compensation judge. As such, whether the Department certified a dispute erroneously is essentially irrelevant to the attorney fee claim.  Certification is merely a condition precedent to payment of Roraff fees and does not by itself establish entitlement.  See Freeman v. Tri County Hosp., slip op. (W.C.C.A. July 10, 2002); Biederman v. Win Stevens Buick, 58 W.C.D. 497 (W.C.C.A. 1998).  Because the compensation judge in the present case made no finding as to whether a dispute existed, remand is required for a factual finding, with explanation as to his rationale, on this issue.  We would observe in this regard that the fact that the employer and insurer had the employee undergo an independent medical examination, standing alone, does not necessarily establish the existence of a dispute for Roraff fee purposes.  See, e.g., Abernathy v. Asplundh Tree Expert, slip op. (W.C.C.A. Mar. 15, 2000).  Similarly, the fact that the employee was represented by counsel is not automatically indicative of a dispute over the proposed surgery, in that the employee=s case had been the subject of other litigation.  See Grashorn v. Boise Cascade Corp., slip op. (W.C.C.A. Mar. 6, 2002).

 

Even if the judge had made a factual determination as to the existence of a dispute, a remand would nevertheless be required, because there is no record of the proceedings.  The Ahearing@ was held by telephone; no transcript is available, and there is no Aevidence@ for review or even any record as to the arguments of the parties.  As we noted in Winquist v. Hansen Gravel, Inc., slip op. (W.C.C.A. Apr. 30, 2001), when a party requests a hearing on a claim for attorney fees,

 

The hearing may be conducted in person, by telephone conference or in any other manner reasonably preserving the rights of the parties to present evidence and argument, but it must be recorded or transcribed and a record must be maintained regarding the evidence offered and considered by the compensation judge, so that this court has the capacity to review any appeal that may be taken from the judge=s decision.

 

(Emphasis added.)  See also Curtis v. Virginia Regional Medical Ctr., slip op. (W.C.C.A. July 2, 2002) (reiterating that telephone hearings should be recorded for later transcription in the event of an appeal).  Contested attorney fee claims involving fact issues merit the same procedures, and procedural safeguards, as other disputed claims.  The judge=s award of fees is therefore reversed and the matter remanded for hearing on the record, including testimony and submission of evidence, if appropriate, and factual findings as to the existence of a dispute as required by Minn. Stat. ' 176.081, subd. 1.