BARBARA R. BERKE-PEAVEY, Employee/Appellant, v. METROPOLITAN COUNCIL TRANSIT OPERATIONS, SELF-INSURED, Employer.

WORKERS= COMPENSATION COURT OF APPEALS

MARCH 9, 2004

HEADNOTES

ATTORNEY FEES - CONTINGENT FEE; STATUTES CONSTRUED - Minn. Stat. ' 176.081, subds. 1(a), 1(d), and 5.  Where the employee had filed an objection to her attorney=s statement of attorney fees, pursuant to provisions of Minn. Stat. ' 176.081, subd. 1(d), the compensation judge did not err as a matter of law by considering the attorney=s claim for fees under the Areasonable fee@ provisions of Minn. Stat. ' 176.081, subd. 5, rather than under the straight contingent fee provisions of Minn. Stat. ' 176.081, subd. 1(a).

ATTORNEY FEES - SUBD. 7 FEES.  Where the judge=s conclusion that the employee=s attorney had been successful in obtaining permanent partial disability benefits for the employee had implied a conclusion that payment of those benefits had been resisted, the compensation judge=s denial of an additional award to the employee under Minn. Stat. ' 176.081, subd. 7, was reversed.

Affirmed in part and reversed in part.

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

Compensation Judge:  Gary P. Mesna

Attorneys:  Brian A. Thompson and Gary L. Manka, Katz, Manka, Teplinsky, Due & Sobol, Minneapolis, MN, for the Appellant.

OPINION

WILLIAM R. PEDERSON, Judge

The employee=s attorney appeals from the compensation judge=s award of reduced attorney fees under Minn. Stat. ' 176.081, subd. 5 (1992).  We affirm in part and reverse in part.

BACKGROUND

On May 4, 1993, Barbara Peavey, now Barbara Berke-Peavey [the employee], sustained an admitted injury to her lower back while working for Metropolitan Council Transit Operations [the employer], self-insured at the time against workers= compensation liability.  On August 4, 1993, the employee entered into a workers= compensation retainer agreement with attorney Gary L. Manka.

On April 25, 1994, the employee=s treating physician, Dr. John Dunne, expressed the opinion that the employee had sustained a 19% permanent partial disability to the body as a whole as a result of her work injury of May 4, 1993.^[1]  On May 3, 1994, the employer issued a Notice of Benefit Payment for the employee=s 19% permanent partial disability, having paid to the employee the sum of $10,600 in impairment compensation, withholding $3,650 pending a claim for attorney fees.  On July 7, 1994, Mr. Manka wrote to the employer, directing it to release $600 of the withheld fees to the employee, leaving a balance of $3,050.  The employee subsequently terminated her relationship with Mr. Manka, and on October 19, 1995, Mr. Manka transferred his file to the employee=s new attorney.  A formal Substitution of Attorney was filed with the Department of Labor and Industry on January 26, 1996.

On May 14, 2003, a claims representative from the employer wrote to Mr. Manka, inquiring as to his intentions regarding the $3,050 in attorney fees that had been withheld and continued to be withheld from the employee=s permanent partial disability benefits.  Following this inquiry, Mr. Manka filed a Statement of Attorneys Fees with the Department of Labor and Industry on May 27, 2003, seeking payment of $3,050 in contingent fees under Minn. Stat. ' 176.081, subd. 1, together with payment of attorney fees pursuant to Minn. Stat. ' 176.081, subd. 7.  The employee objected to the requested fees, and the matter proceeded to a hearing on September 2, 2003.  In a Findings and Order issued October 14, 2003, the compensation judge determined that Mr. Manka, pursuant to a valid retainer agreement, had represented the employee in a workers= compensation matter from 1993 to 1996.  He also determined that the attorney was successful in obtaining permanent partial disability benefits for the employee in the amount of $14,250.00, from which the employer had been withholding $3,650 in attorney fees.^[2]  Analyzing the claim for attorney fees under the factors set forth in Minn. Stat. ' 176.081, subd. 5 (1992), the judge concluded that a Areasonable fee@ for Mr. Manka=s services was $1,000.  The judge denied the claim for an award of fees under Minn. Stat. ' 176.081, subd. 7.  Mr. Manka appeals from the judge=s denial of fees in the full amount claimed in the Statement of Attorney Fees.

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.

A[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.@  Krovchuk v. Koch Oil Refinery, 48 W.C.D. 607, 608 (W.C.C.A. 1993).

DECISION

On appeal, Mr. Manka argues that the compensation judge erred as a matter of law by considering his claim for fees under the Areasonable fee@ provisions of Minn. Stat. ' 176.081, subd. 5, rather than under the straight contingent fee provisions of Minn. Stat. ' 176.081, subd. 1.  We disagree.

Minn. Stat. ' 176.081, subd. 1(a) (1992), provides in part that A[a] fee for legal services of 25 percent of the first $4,000 of compensation awarded to the employee and 20 percent of the next $60,000 of compensation awarded to the employee is permissible and does not require approval by the commissioner, compensation judge, or any other party except as provided in paragraph (d)@ (emphasis added).  Paragraph (d) provides in part that A[i]f a timely objection is filed, or the fee is determined on an hourly basis, the commissioner, compensation judge, or court of appeals shall review the matter and make a determination based on the criteria in subdivision 5.@

In the instant case, the employee filed a timely objection to Mr. Manka=s claim for attorney=s fees.  Accordingly, the compensation judge reviewed the claim and made his determination based on the criteria in Minn. Stat. ' 176.081, subd. 5.  Mr. Manka does not argue that the judge=s factual findings under subdivision 5 are unsupported by the evidence.  Rather, he contends that Minn. Stat. ' 176.081, subd. 5, is specifically limited to a Adetermination of an award of fees in excess of the amount authorized under subdivision 1.@  Because, he argues, his claim for fees was not in excess of the amount authorized under subdivision 1, the principles for reviewing an excess attorney fee are not applicable to this case.  We disagree.

Mr. Manka=s analysis fails to acknowledge the Aexcept as provided in paragraph (d)@ language of Minn. Stat. ' 176.081, subd. 1(a), the statute in effect on the employee=s date of injury.  As noted, because the employee filed a timely objection to Mr. Manka=s claim for fees, the compensation judge properly reviewed the matter and made his determination based on the criteria in subdivision 5.  Therefore, we affirm the determination of the compensation judge and direct the self-insured employer to pay to Mr. Manka the sum of $1,000 and to release to the employee the balance of fees withheld.

The compensation judge also determined that the elements required for an additional award to the employee under Minn. Stat. ' 176.081, subd. 7, have not been proven.  The judge does not explain the basis for this conclusion.  Subdivision 7 of the statute provides,

If the employer or insurer files a denial of liability . . . or otherwise unsuccessfully resists the payment of compensation . . . and the injured person has employed an attorney at law, who successfully procures payment on behalf of the employee . . . , the compensation judge, commissioner, or the workers= compensation court of appeals upon appeal, upon application, 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.

In this case, the judge concluded that Mr. Manka was successful in obtaining permanent partial disability benefits for the employee.  Implicit in this finding, and in his award of fees to Mr. Manka, is the conclusion that the attorney successfully procured payment of a resisted claim.  Accordingly, as Mr. Manka=s claim included application for fees under this section, the judge=s denial of an additional award to the employee pursuant to Minn. Stat. ' 176.081, subd. 7, is reversed, and the self-insured employer is ordered to pay the sum of $187.50 as and for attorney fees pursuant to this section.