ROBERT SEPPO, Employee, v. KOLAR BUICK and WESTERN NAT=L INS. GROUP, Employer-Insurer/Appellants.

 

WORKERS= COMPENSATION COURT OF APPEALS

MARCH 4, 2003

 

HEADNOTES

 

ATTORNEY FEES; PRACTICE & PROCEDURE.  Where the record was unclear as to the amount of the contingent fees that had been charged against the employee and had been paid or were due to be paid to the employee=s attorney, and where the amount of those fees was a threshold issue in determining and reviewing the amount of any Gruber fees to which the employee=s attorney might be entitled, remand was required for a determination of the total contingent fee payable to the employee=s attorney.

 

ATTORNEY FEES - KOPISH FEES; ATTORNEY FEES - RORAFF FEES.  Where there is no evidence that a dispute over medical benefits was even a part of the litigation, the compensation judge=s award of AGruber / Roraff / Kopish fees@ was reversed to the extent that it might have been based on any recoupment of medical expenses.

 

ATTORNEY FEES - GRUBER FEES.  Where the employee=s attorney had requested both AGruber fees@ and ARoraff / Kopish / Irwin fees@ and the compensation judge had ultimately combined those requests in issuing a single award of AGruber / Roraff / Kopish fees,@ where the court had already reversed any award of fees based on medical benefits and the employee=s attorney had not even requested Gruber fees for some of the hours for which fees were awarded, and where some of the hours for which Gruber fees had apparently been awarded were evidently not spent on the bad faith issue, the case was reversed and remanded for reconsideration and possible issuance of an award of strictly Gruber fees, after recalculation and consideration also of the total contingent fee payable to the employee=s attorney.

 

ATTORNEY FEES - SUBD. 7 FEES; ATTORNEY FEES - GRUBER FEES.  Where neither the statute itself nor the supreme court=s analysis of the statute in Irwin v. Surdyk=s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999), extended the applicability of Minn. Stat. ' 176.081, subd. 7, to attorney fees payable under Gruber v. Independent Sch. Dist. #625, 57 W.C.D. 284 (W.C.C.A. 1997), for an attorney=s work in defending against an allegation of bad faith brought pursuant to Minn. Stat. ' 176.179, and where the judge had already issued a subdivision 7 award on contingent fees in a previous Findings and Order, the compensation judge=s award to the employee under Minn. Stat. ' 176.081, subd. 7, was erroneous to the extent that it was based on a Gruber fees award and was redundant and so also erroneous to the extent that it was based on an award of contingent fees.

 

Reversed in part and remanded in part.

 

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

Compensation Judge:  Donald C. Erickson

 

OPINION

 

WILLIAM R. PEDERSON, Judge

 

The employer and insurer appeal from the compensation judge's award of Gruber/Roraff/Kopish attorney fees^[1] and from the judge=s award to the employee under Minn. Stat. ' 176.081, subd. 7.  We remand to the compensation judge for a determination of the appropriate contingent fee payable to the employee=s attorney and for a redetermination of the Gruber fee award. We reverse the judge=s award of attorney fees to the extent that it might have been based on the obtainment of medical benefits, and we reverse the judge=s award to the employee under Minn. Stat. ' 176.081, subd. 7.

 

BACKGROUND

 

The procedural history surrounding the current appeal is lengthy and complicated.^[2]  Robert Seppo [the employee] was a long-time employee of Kolar Buick [the employer], with whom he sustained several injuries arising out of and in the course of his employment.  The claims at issue stem from a low back injury on September 5, 1990, a mid back injury on May 19, 1993, and bilateral shoulder injuries on March 8, 1994.  The employee has not returned to work with the employer since March 8, 1994.^[3]

 

On February 14, 1997, the employee, through his attorney, Friedrich A. Reeker, filed a claim petition seeking permanent partial disability benefits for a 10.5% whole-body impairment related to the 1990 low back injury and for a 6% whole-body impairment related to each shoulder due to the 1994 injury.  On March 17, 1997, the employer and insurer asserted that the low back injury was merely temporary in nature, admitted having paid benefits for a 2.5% whole-body impairment related to a May 19, 1993, back injury,^[4] and contended that permanency for the shoulders was not disputed and would be paid.^[5]  The employee subsequently amended his petition to claim economic recovery compensation [ERC] rather than impairment compensation [IC] for the permanent partial disability to his shoulders.

 

On October 1, 1997, the employer and insurer arranged for the employee to be examined by neurologist Dr. Richard Galbraith.  Following the examination, the employer and insurer denied primary liability for the right shoulder injury and claimed that permanency had been paid for the right shoulder and thoracic spine by mistake.

 

On February 4, 1998, the employer and insurer served a Notice of Intention to Discontinue Benefits [NOID], seeking discontinuance of temporary partial disability benefits after January 17, 1998, asserting that the employee had reduced his hours of work for nonwork-related reasons.  An administrative conference under Minn. Stat. ' 176.239 was held on March 16, 1998, at which Mr. Reeker represented the employee.  In an Order on Discontinuance filed March 20, 1998, a settlement judge allowed the employer and insurer to reduce the employee=s temporary partial disability benefits based on an imputed forty-hour-a-week wage.^[6]  The employee filed an Objection to Discontinuance on March 26, 1998.  The matters were consolidated and were heard by Compensation Judge Gregory A. Bonovetz on July 28, 1998.  Near the end of the hearing, counsel for the employer and insurer asserted that there appeared to be a conflict of interest between the employer and the insurer, and he requested a continuance to permit those two parties to obtain separate counsel.  Judge Bonovetz denied the request, and, on September 22, 1998, he issued a fifteen-page decision awarding various benefits to the employee.  The insurer, through separate counsel, appealed.  In a decision served and filed April 7, 1999, this court vacated the September 22, 1998, Findings and Order and remanded the case for further development and redetermination of the issues presented.

 

On November 1, 1999, the employer and insurer filed another NOID, contending that the employee had unreasonably refused a job with the employer and had voluntarily withdrawn from the relevant labor market by refusing or failing to seek jobs within the automotive field.  It was agreed by the parties that the insurer=s NOID would be treated as a petition to discontinue benefits and would be consolidated with the remanded claims for hearing.  Judge Bonovetz had recused himself from the case, and, on November 11 and 23, 1999, the case was heard by Compensation Judge Donald C. Erickson.

 

Issues at hearing before Judge Erickson were many and complex and included Awhether the insurer is entitled to reimbursement from the employee for any benefits previously paid for the claimed dates of injury of September 5, 1990, July 22, 1991, and May 19, 1993,@ together with Mr. Reeker=s entitlement to hourly fees pursuant to the Gruber decision.^[7]  The judge adopted most of Judge Bonovetz=s findings from the previous Findings and Order.^[8]  At Finding 68 of his findings and order, filed May 16, 2000, Judge Erickson determined that, A[a]s the fraud issue was of primary importance in this hearing and since the employee prevailed, his attorney is entitled to attorney fees pursuant to Gruber,@ and at Order 6 he awarded such fees, in an amount to be determined later, A[t]o the extent employee=s attorney . . . is not adequately compensated by the award of contingen[t fees].@ 

 

On May 26, 2000, Mr. Reeker filed a petition for Gruber fees for a total of what he calculated to be 201 hours of services rendered from May 22, 1997, through May 17, 2000.  On June 5, 2000, the employer and insurer objected to that petition on several grounds, including that Athe hours requested are not properly attributable to a question of bad-faith receipt of benefits.@  In a reply to the judge the following day, Mr. Reeker indicated that he considered only his work after the July 28, 1998, trial before Judge Bonovetz to be attributable to Gruber bad-faith concerns, that nothing before and up through that trial was so attributable.  On June 13, 2000, the employer and insurer appealed from multiple findings of Judge Erickson=s May 16, 2000, decision, including the provisional award of Gruber fees, contesting the latter Abecause the primary issue is one of primary liability.@

 

On April 11, 2001, this court affirmed Judge Erickson=s decision of May 16, 2000, in its entirety, expressly affirming the judge=s conclusion that the employee was a credible witness but making no express reference to Finding 68 or to Order 6, by which the judge had awarded as yet undetermined Gruber fees to Mr. Reeker.^[9]  As of May 11, 2001, the insurer was evidently withholding contingent fees of $11,338.07 on the 1994 injury, $618.75 on the 1993 injury, and $1,575.00 on the 1990 injury.^[10]

 

On May 14, 2001, Mr. Reeker wrote to the compensation judge asking to renew the petition for Gruber fees that he had filed on May 26, 2000.  His request contained an amendment of his petition Ato request fees on the Gruber amount pursuant to M. S. 176.081, Subd. 7, as interpreted by Irwin.@^[11]  On May 16, 2001, the employer and insurer renewed their objection to Mr. Reeker=s petition.  By letter to the judge dated May 25, 2001, Mr. Reeker again amended his request for attorney fees, to seek identical fees pursuant to the Roraff, Kopish, and Irwin decisions.^[12]  Mr. Reeker explained,

 

The medical bills and prescriptions associated with [the employee=s] low back were not paid during the course of the litigation because of the primary denial.  So while the basis upon which the fees are sought under Kopish is completely different from the basis under Gruber, I believe the amount sought would be the same.

 

On June 25, 2001, Mr. Reeker filed a petition for an award of Gruber fees in the amount of $24,862.50 for work beginning August 10, 1998, the first date after the July 28, 1998, trial before Judge Bonovetz.  Mr. Reeker=s petition is based on an itemization of 32.5 hours of work in 2000 at $205.00 an hour and of 104 hours of work in 1999 and post August 10, 1998, at $175.00 an hour.  On June 28, 2001, the employer and insurer filed an objection to Mr. Reeker=s petition.

 

The matter came on for hearing before Compensation Judge Erickson on August 20, 2001.  Issues at hearing, as identified by the judge in his Interim Findings and Order, included the amount of Gruber attorney fees to which Mr. Reeker was entitled and the amount of ARoraff/Kopish/ Irwin fees@ to which Mr. Reeker was entitled pursuant to his May 25, 2001, amendment of his request for Gruber fees.  The record was left open post hearing, pending the judge=s receipt of materials from the employer and insurer as to benefits paid to the employee and attorney fees paid to Mr. Reeker.  The following day, on August 21, 2001, the employer and insurer served on the employee and Mr. Reeker an NOBP on the 1994 claim reflecting that benefits paid to the employee to date totaled $114,181.62, that medical expenses paid by the employer and insurer to date totaled $58,873.31, and that attorney fees paid to date under Minn. Stat. ' 176.081, subds. 1 and 3, now totaled $14,072.19.  Questions remained after substantial ensuing correspondence, and on December 13, 2001, having closed the record October 26, 2001, Judge Erickson issued interim findings and order requiring the employer to provide Aa complete accounting by date of each check paid in this case for all dates of injury, the specific benefits or fee paid by said check, and the specific period covered by said benefits.@  The judge also required each attorney to submit proposed findings and order.

 

The employer and insurer=s attorney, James A. Wade, responded to the request for an accounting by letter dated January 9, 2002, and on January 16, 2002, Mr. Reeker apparently submitted proposed findings and order based on his original petition=s itemization of hours worked in representation of the employee.^[13]  On January 31, 2002, Mr. Wade filed proposed findings and order denying all of Mr. Reeker=s claims for attorney fees beyond contingent fees and fees paid to him for prevailing on appeal before this court.

 

By Findings and Order eventually filed June 18, 2002, the compensation judge implicitly concluded that the contingent fee awarded to Mr. Reeker was not adequate to reasonably compensate him for the effort he had expended on the bad faith issue.  The judge then analyzed the fee request in light of the factors set forth by the supreme court in Irwin.  He made separate subfindings on each of the seven Irwin factors.  Notably, with regard to the amount involved, the judge stated in part at Finding 4a that, although the amount of money involved was moderate, Afrom a Gruber perspective, this Court finds that the stakes are raised when the compensation carrier tries to recover from an employee benefits that have been paid based on an alleged fraud.  The potential damage to the reputation of the employee is difficult to gauge, but substantial.@  Also notably, with regard to the difficulty of the issues, the judge stated as follows:

This was not the typical workers= compensation claim.  The matter was tried twice and was highly contested.  There were more than 1,000 pages of exhibits submitted to the court.  Certainly the number of exhibits was in the dozens.  There were many witnesses and substantial examination and cross-examination by a multiplicity of lawyers.  The Court would regard the issues as very difficult.

 

After noting then, at uncontested Finding 6, that Mr. Reeker had himself conceded that his recent use of tenths of an hour instead of quarters of an hour in his billing had resulted in a 10% decrease in the amount he billed, the judge went on to conclude, at Finding 7, that Mr. Reeker was entitled to $20,909.53 in AGruber / Roraff / Kopish fees,@ expressly calculated as A$35,122.50 minus $11,889.69 times .9.@  The $35,122.50 figure embraces not only fees for work performed after the July 28, 1998, hearing before Judge Bonovetz, but also fees for work performed before and up through that hearing.  The $11,889.69 figure reflects the judge=s conclusion at Finding 4b that A[i]t appears that for this litigation, Mr. Reeker was paid $11,889.69 in Subd. 1 [contingent] attorney=s fees.@^[14]  In addition to finding Mr. Reeker entitled to these AGruber / Roraff / Kopish@ attorney fees, the judge, at Finding 8, concluded that the employee was entitled to Areimbursement@ of $8,137.30 pursuant to Minn. Stat. ' 176.081, subd. 7, Abased upon all attorney=s fees paid his attorney,@ which the judge evidently calculated to be $32,799.22--$20,909.53 in Gruber/Roraff/Kopish fees plus $11,889.69 in contingent fees.  The employer and insurer appeal.

 

STANDARD OF REVIEW

 

In reviewing cases on appeal, the Workers= Compensation Court of Appeals must determine whether Athe 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 (1992).  Substantial evidence supports the findings if, in the context of the entire record, Athey 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, A[f]actfindings are clearly erroneous only if the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed.@  Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).  Findings of fact should not be disturbed, even though the reviewing court might disagree with them, Aunless they are clearly erroneous in the sense that they are manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole.@  Id.

 

DECISION

 

This matter proceeds from Mr. Reeker=s petition for AGruber fees,@ originally filed May 26, 2000, as modified by Mr. Reeker=s May 25, 2001, amendment to that petition to allege entitlement also to fees Apursuant to the Roraff / Kopish / Irwin decisions.@  The compensation judge has responded with an award of AGruber / Roraff / Kopish fees.@  The employer and insurer contend on appeal as follows:  (1) that the judge=s award of Roraff/Kopish fees was not supported by the evidence of record Abecause payment of medical expenses was not a central issue in the case@ and because Mr. Reeker was Areasonably compensated@ by his contingent fee under the statute; (2) that the judge=s award of Gruber fees was not supported by the evidence of record Abecause the bad faith claim was not a central issue in the case@ and, again, because Mr. Reeker was Areasonably compensated@ by his contingent fee; and (3) that it was improper for the judge to make an award to the employee pursuant to Minn. Stat. ' 176.081, subd. 7, based on any Gruber portion of Mr. Reeker=s fees, because Gruber fees are awarded pursuant to Minn. Stat. ' 176.179, not Minn. Stat. ' 176.081.  We agree with contentions (1) and (3), and we remand the case for a determination of the contingent fee payable to Mr. Reeker on contested benefits and for redetermination of the Gruber fee due him for services related to the bad faith issue.

 

1.  Remand on Contingent Fees

 

Minn. Stat. ' 176.081, subd. 3, grants this court the authority to raise the issue of attorney fees at any time upon its own motion.  The specific claims before the compensation judge on which contingent attorney fees might have been awarded in this case are the employee=s claims for permanent partial and temporary partial disability benefits.  Because the record is unclear as to the amount of contingent fees actually charged against the employee, we remand the case to the compensation judge for further consideration of this issue.

 

With regard to permanent partial disability benefits, the employee=s net recovery from the current litigation^[15] was $13,018.08, for all three of his injuries.  In his Findings and Order of May 16, 2000, the judge ordered payment of this permanency and contingent attorney fees, together with an award to the employee pursuant to Minn. Stat. ' 176.081, subd. 7.  It is not apparent from the record, however, whether that portion of the awarded permanency that is related to the 1994 shoulder injury has already been paid or, if it has been, in what amount.  Nor can we determine what, if any, attorney fees have already been paid on this permanency recovery for this specific injury.  It is evident that the insurer has paid the employee all due permanency benefits related to his 1990 low back injury and some of the permanency benefits due related to his 1993 thoracic spine injury, but the insurer is apparently still withholding fees on those payments.

 

The facts surrounding the insurer=s payment of temporary partial disability benefits and accompanying attorney fees are also unclear.  At the first hearing before Judge Bonovetz, the disputed claim consisted of the claimed underpayment of temporary partial disability benefits subsequent to the insurer=s reduction of benefits based on an imputed wage beginning January 17, 1998.  In his subsequent Findings and Order, Judge Bonovetz ordered the insurer to recompute the employee=s temporary partial disability entitlement back to November 11, 1996.  Because of the appeal by the insurer and the subsequent vacation of Judge Bonovetz=s findings by this court, the insurer presumably continued paying temporary partial disability compensation to the employee based on an imputed wage.  If attorney fees were being withheld by the insurer after January 17, 1998, the record does not reflect either how they were calculated or their amount.^[16]

 

The character of the dispute may have changed on November 1, 1999, when the insurer filed its NOID, subsequently deemed a petition to discontinue the employee=s benefits.  At the hearing on attorney fees, it was evident that the parties were unable to explain to the judge the basis for payments made to the employee and his attorney.  Documentation submitted subsequently, at the judge=s request, has not clarified the issue.  The judge must determine what benefits were genuinely in dispute at the hearing on November 11 and 23, 1999.  The result of this inquiry will dictate whether Mr. Reeker is entitled to contingent fees on all benefits paid after November 1, 1999, or only on the underpayment attributable to the imputed wage.

 

On May 9, 2001, the insurer issued a check to the employee for $9,648.37, apparently representing the underpayment of temporary partial disability benefits from November 11, 1996, through March 2, 2001.  The insurer=s AGeneric Transaction Report@ does not reflect any payment of attorney fees corresponding to this lump sum payment.  It would appear that payment to Mr. Reeker of $11,889.69 on June 5, 2001, although characterized as APerm Partial,@ may reflect fees attributable to temporary partial compensation as well.

 

Because the compensation judge must determine the appropriate contingent fee and subdivision 7 award based solely on the benefits in dispute, we remand to the judge for additional findings.  The judge must determine the amount of the benefits that were in dispute after January 17, 1998.  In order to determine these benefits correctly, the insurer must provide the judge with its calculation of what the employee was entitled to receive on a weekly basis between January 17, 1998, and the end of the employee=s 225-week entitlement, based on his actual earnings at his post-injury job.  The insurer must then provide the judge with a weekly itemization of what was actually paid during this period, together with documentation of the amount, if any, withheld for attorney fees.  The judge may also accept whatever additional evidence he deems necessary in order to clarify the record.  Again, once the appropriate contingent fee has been calculated for the litigation before Judge Erickson, the employee is entitled to an award based on that fee pursuant to Minn. Stat. ' 176.081, subd. 7, as ordered by the judge on May 16, 2000.

2.  Roraff/Kopish Fees

 

In his Findings and Order filed June 18, 2002, the compensation judge listed two issues for determination.  First, what amount of Gruber attorney fees are payable to Mr. Reeker, and, second, what amount of Roraff/Kopish/Irwin fees are payable to Mr. Reeker.  In his original Findings and Order served May 16, 2000, the judge concluded that the fraud issue was of primary importance in the hearing and that the employee=s attorney is entitled to Gruber fees.  Nowhere in Judge Erickson=s May 16, 2000, Findings and Order is there any reference to issues of disputed medical benefits.

 

The employer and insurer contend that the compensation judge=s award of Roraff/Kopish fees is unsupported by substantial evidence, because Apayment of medical expenses was not a central issue@ in the case and because Mr. Reeker=s contingent fees Areasonably compensated@ him for his services.  We agree that a separate award under the Roraff/Kopish decisions is unsupported by the record in this case.

 

When Mr. Reeker amended his request for attorney fees to seek Aidentical benefits@ under the Roraff/Kopish/Irwin decisions, he asserted that medical bills and prescriptions associated with the employee=s low back were not paid during the course of the litigation because of the primary denial.  While we have no reason to doubt Mr. Reeker=s assertion, there is nothing in Judge Erickson=s lengthy decision of May 16, 2000, that would suggest that any medical benefits were in dispute, whether related to the employee=s low back injury or to any other injury.  The only assertion relating to medical benefits in this case was the insurer=s claim for reimbursement from the employee under Minn. Stat. ' 176.179.  Therefore, under the facts of this case, where there is no evidence that a dispute over medical benefits was even a part of the litigation, the judge=s decision on attorney fees is reversed to the extent that it might have been based on any recoupment of medical expenses.

 

3.  Gruber Fees

 

In Gruber v. Independent Sch. Dist. #625, 57 W.C.D. 284 (W.C.C.A. 1997), the employer and insurer sought reimbursement of temporary total disability compensation from the employee pursuant to Minn. Stat. ' 176.179, on grounds that the compensation had been mistakenly paid and Anot received in good faith.@  Discussing the issue of attorney fees in such cases, a panel of this court noted,

 

Where an employee prevails on the issue of bad faith receipt of benefits, and there are no disputed issues of entitlement to benefits, . . . no monetary benefits will be available from which to pay a contingent fee or hourly fee to the employee=s attorney.  In some cases, even if the employee=s attorney also obtains an award of disputed benefits, if the question of bad faith is of sufficient comparative importance, the amount of benefits awarded may be too small to permit a fee that would reasonably compensate the employee=s attorney for the effort expended on the bad faith issue.

 

Gruber, 57 W.C.D. 284, 289-90.  AThe critical consideration in this type of case is that without some possibility that the employee=s attorney will receive some payment for the attorney=s services, it will be difficult for employees accused of bad faith receipt of benefits to obtain the services of an attorney.@  Id. at 290.  For these reasons, the court held as follows:

 

[W]here 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.

 

Id.

 

The employer and insurer contend that the judge=s award of Gruber fees was not supported by the evidence of record Abecause the bad faith claim was not a central issue in the case@ and because Mr. Reeker was Areasonably compensated@ by his contingent fee.

 

In his Findings and Order of May 16, 2000, the compensation judge determined that the fraud issue was of Aprimary importance@ in this hearing.  That finding by the judge was affirmed by this court in our decision issued April 11, 2001.  The insurer=s allegations of bad faith were at the heart of its denial of primary liability.  Therefore, we reject the argument that bad faith was not a central issue in this case.  As to the sufficiency of the contingent fee, it is implicit in his award of Gruber fees that the judge viewed the contingent fee in this case as inadequate to reasonably compensate Mr. Reeker for his defense of the bad faith claim.  In that we have remanded for clarification the issue of the contingent fee in this case, we are compelled also to remand for reconsideration the judge=s conclusion as to the inadequacy of that fee to compensate Mr. Reeker for his work on the bad faith issue.  At issue on remand, therefore, will be not only the total contingent fee due Mr. Reeker for his work in this case but also whether that contingent fee is insufficient to reasonably compensate him for time expended in defending on the bad faith issue. 

 

In Gruber, this court indicated that, ultimately,

 

[t]he determination of what fee is appropriate for successful defense of the bad faith issue is one committed to the reasonable discretion of the compensation judge upon review of all the factors in the case, and, in some situations, it is not necessarily an abuse of discretion to deny such fees altogether. [Citation omitted.]  Among the factors to be considered in determining a reasonable fee are the amount of potential reimbursement exposure from which the employee was protected, the difficulty of the defense, the hours of effort required, and other factors similar to those set forth in Minn. Stat. ' 176.081, subd. 5 (1992).

 

Gruber, 57 W.C.D. at 291.  We caution, however, that a reasonable fee is not merely a matter of multiplying the attorney=s hourly rate times the amount of time spent on a case less the contingent fee awarded.  Cf. Borgan v. Bob Hegland, Inc., 62 W.C.D. 452, 462 (W.C.C.A. 2002) (the time reasonably necessary to present a case for medical expenses is but one of the seven factors articulated in Irwin for determining a reasonable Roraff fee).

 

Mr. Reeker originally requested both AGruber fees@ and ARoraff / Kopish / Irwin fees,@ and the compensation judge ultimately combined those requests in issuing a single award of AGruber / Roraff / Kopish fees.@  To the extent that we have already reversed any award of fees based on medical benefits, any award of hourly-based fees beyond strictly Gruber fees is no longer at issue.  Therefore, to the extent that Mr. Reeker did not even request Gruber fees for any work prior to the July 28, 1998, hearing before Judge Bonovetz, Judge Erickson=s award of any hourly based fees for work prior to July 28, 1998, was improper and is hereby reversed.  Moreover, not even all of the itemized time after the July 1998 hearing before Judge Bonovetz was time spent specifically on bad faith issues, in that at least some of that time was evidently spent responding to various non-bad faith issues in at least two NOIDs. Accordingly, we reverse the judge=s award of AGruber / Roraff / Kopish fees@ and remand the case for reconsideration and possible issuance of an award of strictly Gruber fees.  In his reconsideration on remand, the judge may take additional evidence as he deems necessary.  If, after recalculation of Mr. Reeker=s contingent fee pursuant to earlier requirements of this decision, the judge again determines that Mr. Reeker=s contingent fee is insufficient to reasonably compensate him in light of effort he has expended defending against the bad faith allegation, the judge may, in his discretion, award reasonable hourly fees payable by the employer and insurer.

 

4.  Subdivision 7 Fees

 

In addition to his award of fees to the employee=s attorney, the compensation judge issued to the employee an award pursuant to Minn. Stat. ' 176.081, subd. 7.  That subdivision provides that, if an employer and insurer have contested payments of benefits and the employee succeeds in obtaining benefits through the assistance of an attorney, the court

 

shall award to the employee against the insurer or self-insured employer or uninsured employer, in addition to the compensation benefits paid or awarded to the employee, an amount equal to 25 percent of that portion of the attorney=s fee which has been awarded pursuant to this section that is in excess of $250.

 

Minn. Stat. ' 176.081, subd. 7 (1992) (emphasis added).  The judge calculated his subdivision 7 award of $8,137.30 based in part on the sum of the fees assessed against the employer and insurer and the contingency fee ($20,909.53 + $11,889.69 - $250.00 x .25 = $8,137.30).

 

The employer and insurer contend that A[a] compensation judge cannot award Minn. Stat. ' 176.081(7) fees in part on a Gruber fee award pursuant to Minn. Stat. ' 176.179.@  They acknowledge that the supreme court in Irwin held that an employee was entitled under subdivision 7 to an award based on all attorney fees paid under Minn. Stat. ' 176.081, including hourly-based employer/insurer-paid fees such as Roraff and Heaton fees, as well as contingent fees.  They argue, however, that Gruber fees are not subject to subdivision 7 awards because Gruber fees are awarded under section 176.179, not under section 176.081.  We agree that there is no legal basis for a subdivision 7 award based on Gruber fees.

 

In Irwin, the supreme court considered the employer and insurer=s contention that subdivision 7 awards were not to be based on Roraff fees, in that Roraff fees were paid entirely by the employer and insurer and subdivision 7 awards were intended only as Areimbursement@ for contingent fees deducted from the employee=s ultimate benefit entitlement.  The supreme court acknowledged that the Workers= Compensation Court of Appeals had previously treated subdivision 7 awards in that manner, but, reversing a decision by this court, it held that subdivision 7 awards were now payable also on Roraff fees as well as contingent fees.  The court noted that the 1995 amendments to Minn. Stat. ' 176.081 had codified attorneys= rights to Roraff fees under that section, which already provided at subdivision 7 for the additional award to the employee based on attorney fees awarded Apursuant to this section.@  Minn. Stat. ' 176.081, subd. 7 (1998), quoted in Irwin, 599 N.W.2d at 144, 59 W.C.D. at 339 (emphasis added in Irwin).  Throughout its discussion, the court continued to emphasize the language Apursuant to this section,@Aunder section 176.081,@ or Apursuant to Minn. Stat. ' 176.081.@

 

We conclude that neither the statute itself nor the Irwin court=s analysis of the statute extends the applicability of Minn. Stat. ' 176.081, subd. 7, to attorney fees payable under the Gruber decision for an attorney=s work in defending against an allegation of bad faith brought pursuant to Minn. Stat. ' 176.179.  Therefore, we reverse the judge=s award under subdivision 7 to the extent that it is based on any award of Gruber fees.  Moreover, because the judge has already issued a subdivision 7 award on contingent fees in his May 16, 2000, Findings and Order, the additional award on these same fees in his June 18, 2002, decision is redundant, and we reverse the balance of the award as well.