BRENDA J. KELLEY, Employee, v. INTER FAITH CARE CTR. and STATE FUND MUT. INS. CO., Employer-Insurer/Appellants.

 

WORKERS= COMPENSATION COURT OF APPEALS

DECEMBER 16, 2003

 

HEADNOTES

 

ATTORNEY FEES - HEATON FEES.  The existence of a pending claim petition for wage loss benefits, and the resulting potential for future contingent attorney fees, is irrelevant to the issue of whether an employee=s attorney is entitled to Heaton fees for services already performed solely in connection with rehabilitation issues.

 

Affirmed.

 

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

Compensation Judge:  Jerome G. Arnold.

 

Attorneys:  Andrew W. Lynn, Lynn, Scharfenberg & Associates, Minneapolis, MN, for Appellants.  Russell J. LaCourse, LaCourse Law Office, Duluth, MN, for Respondent.

 

OPINION

 

DEBRA A. WILSON, Judge

 

The employer and insurer appeal from the compensation judge=s award of Heaton fees.[1]  We affirm.

 

BACKGROUND

 

The employee sustained an admitted injury on March 23, 2002, while working for Inter Faith Health Care Center [the employer],[2] and the employer and insurer commenced payment of temporary total disability benefits.  On August 12, 2002, the employer and insurer filed a Notice of Intention to Discontinue Benefits, alleging that the employee=s entitlement to temporary total disability benefits ceased on August 8, 2002, as the employee had declined a job offer within her restrictions.  By letter dated January 17, 2003, a  proposed rehabilitation plan amendment of the QRC was rejected by the employer and insurer=s claims representative.  That rejection letter and the plan amendment proposing to extend rehabilitation services for the employee were filed on January 27, 2003.  The basis for the employer and insurer=s rejection of the plan amendment was that the employee had refused a suitable job offer from the employer.  On January 21, 2003, the employee filed a claim petition seeking temporary partial disability benefits from May 3, 2002, and continuing, and retraining.  The employer and insurer answered denying the employee=s claims.

 

On February 3, 2003, a request for rehabilitation assistance was filed by the employee=s attorney, seeking the continuation of services by QRC John Witzke.  The employer and insurer filed a rehabilitation request on February 24, 2003, seeking to have rehabilitation services terminated.  At a rehabilitation conference held on March 7, 2003, the parties agreed to continue rehabilitation services through April 24, 2003.  Another rehabilitation conference was held on May 6, 2003, resulting in a Decision and Order filed May 8, 2003, awarding the employee continued rehabilitation services.  No appeal was taken, and, on June 20, 2003, the employee=s attorney filed a statement of attorney fees, which was later amended to claim a total of $1,014.50 in Heaton fees.

 

When the petition for attorney fees came on for hearing on July 30, 2003, the parties stipulated that the requested $1,014.50 represented a reasonable fee.  The sole issue was whether a Heaton fee award was premature in that the employee had a pending claim petition that might ultimately produce a stream of benefits from which reasonable attorney fees could be paid.  The parties agreed that the matter would be submitted by written record and arguments and that no record of the proceeding would be made.

 

In an Order Determining Attorney Fees filed on August 26, 2003, the compensation judge found that an award of Heaton fees was appropriate at that time, and the employee=s attorney was awarded $1,014.50.  The employer and insurer appeal.

 

DECISION

 

In Heaton, this court construed Minn. Stat. '176.011(8) and Minn. Stat. '176.081 to allow for an award of a reasonable attorney fee, payable by an employer and insurer, for representation of an employee on an issue concerning entitlement to rehabilitation.  For injuries occurring on or after October 1, 1995, Minn. Stat. '176.081, subd. 1(a)(1), provides in part: 

 

The contingent 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.

 

The employer and insurer contend that the pending claim petition and the rehabilitation issues were Aconcurrently in dispute@ and that the contingent fee from any recovery on the claim petition must first be established before a determination can be made as to whether Heaton fees[3] are payable.  We are not persuaded.

 

Archibald v. Metropolitan Mechanical Contractors/Minn. Wild, slip op. (W.C.C.A. Aug. 27, 2002), involved a defense similar to that raised by the employer and insurer in the instant case.  In Archibald, an arbitrator had awarded fees for recovery of medical benefits under Minn. Stat. '176.081, subd. 1(a)(1), finding that the employee was receiving no ongoing benefits from which contingent fees could be recovered.  The employer and insurer contended that such an award was premature as the employee had a pending claim petition for 40% permanent partial disability and an underpayment.  Under these circumstances, the employer and insurer argued, the adequacy of the contingent fee could not be determined until the stream of benefits had ended, and an award of fees for recovery of medical expenses should not be made.  This court disagreed, holding that it was inappropriate to characterize a pending claim as part of an ongoing stream of benefits and that it was not premature for the arbitrator to consider the fee issue.

 

Clearly, if the issues of rehabilitation and temporary partial disability benefits in the present case had been combined and heard simultaneously, and if temporary partial disability benefits had been awarded, there would have been a stream of benefits from which contingent attorney fees could be withheld.  The compensation judge would then have had to determine whether the fees generated by the wage loss benefit award were adequate to compensate the employee=s attorney.  But such is not the case here.  The employee=s attorney has already attended two rehabilitation conferences on rehabilitation issues alone.  He has claimed fees of $1,014.50, related to that work, which the employer and insurer agree are reasonable.  There is no guarantee that the employee will prevail on the claim petition, and the claim for temporary partial disability benefits was not heard concurrently with the claim for rehabilitation benefits.  Accordingly, the compensation judge did not err in awarding Heaton fees to the employee=s attorney, and we affirm that award.

 

 

 

 


[1] See Heaton v. J.E. Fryer & Co., 36 W.C.D. 316 (W.C.C.A. 1983).

[2] All facts were taken from the Order Determining Attorney Fees, filed August 26, 2003.

[3] Attorney fees for recovery of rehabilitation benefits are still referred to as Heaton fees.