CARRIE COSTELLO, Employee/Appellant, v. DURA SUPREME, INC., SELF-INSURED/ MEADOWBROOK CLAIMS SERVS., Employer.
WORKERS’ COMPENSATION COURT OF APPEALS
DECEMBER 23, 2008
No. WC08-211
HEADNOTES
ATTORNEY FEES - HEATON FEES; ATTORNEY FEES - CONTINGENT FEES. The compensation judge properly considered all seven factors set forth in Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999) in determining the adequacy of the contingent fee paid on monetary benefits and a reasonable amount of attorney fees, and the judge’s award of Heaton attorney fees is supported by the record as a whole. The award is modified to reflect a 25/20 contingent fee on the rehabilitation benefits paid to the employee’s qualified rehabilitation consultant.
Affirmed as modified.
Determined by: Johnson, C.J., Rykken, J., and Pederson, J.
Compensation Judge: Cheryl LeClair-Sommer
Attorneys: Larry N. Jensen, Thomton, Sperry, Jensen & Keithahn, Litchfield, MN, for the Appellant. Thomas F. Coleman, Cousineau McGuire, Minneapolis, MN, for the Respondent.
OPINION
THOMAS L. JOHNSON, Judge
The employee appeals the compensation judge’s award of Heaton[1] attorney fees. We affirm, as modified.
BACKGROUND
Carrie Costello, the employee, sustained a personal injury on July 21, 2006, arising out of her employment with Dura Supreme, Inc., the employer. The self-insured employer admitted liability for the employee’s personal injury, but contended the injury was temporary only.
In March 2007, Linda Glendenning, a qualified rehabilitation consultant [QRC], met with the employee for a rehabilitation consultation. By a report dated March 20, 2007, Ms. Glendenning determined the employee was eligible for and would benefit from statutory rehabilitation services to assist her with medical management and return to work issues. On April 10, 2007, the employee retained Larry N. Jensen to represent her and signed a Retainer Agreement with Mr. Jensen’s law firm. On April 19, 2007, the employer filed a Rehabilitation Request denying that the employee was a qualified employee under the statute. Thereafter, Mr. Jensen, on behalf of the employee, filed a claim petition seeking temporary total disability benefits from April 18, 2007, permanent partial disability benefits, and rehabilitation services. Mr. Jensen also filed a Rehabilitation Request seeking rehabilitation services and a functional capacity evaluation. In its answer, the employer denied liability for the claimed benefits and asserted the employee was not qualified to receive rehabilitation services and was not entitled to a functional capacity evaluation.
In July 2007, the self-insured employer’s Rehabilitation Request denying the employee was qualified for rehabilitation services was the subject of an Administrative Conference. In a Decision and Order filed July 25, 2007, a Mediator/Arbitrator for the workers’ compensation division of the Department of Labor and Industry determined the employee was qualified for rehabilitation services and eligible for a functional capacity evaluation. The self-insured employer requested a formal hearing which was scheduled for October 4, 2007. On the date of hearing, the parties entered into a full, final, and complete settlement. In exchange for a payment of $8,400.00, the employee settled on a full, final, and complete basis all of her claims including her claim for temporary total disability, permanent partial disability, and rehabilitation benefits. In addition, the self-insured employer paid Glendenning Rehabilitation Services $1,912.95 to settle an outstanding vocational rehabilitation bill of $2,492.00. The employee’s attorney was paid $1,880.00 in contingent attorney fees from the lump sum settlement. An Award on Stipulation was filed on December 19, 2007.
In February 2008, Mr. Jensen filed a Statement of Attorney Fees seeking Heaton attorney fees in the sum of $5,703.75 for his efforts in resolving the employee’s claims for rehabilitation benefits. The self-insured employer objected to the employee’s claim and the case was heard before a compensation judge. Following a hearing, the judge ordered the self-insured employer to pay attorney fees to the employee’s attorney of $2,250.00. The employee appeals.
DECISION
The parties stipulated Mr. Jensen received a contingent fee of $1,880.00 based upon the $8,400.00 paid to the employee pursuant to the award on stipulation. The parties further stipulated the self-insured employer paid $1,912.95 to Glendenning Rehabilitation Services. The compensation judge found the contingent fee of $1,880.00 along with an “expected contingent fee of $382.59” - - apparently based upon the $1,912.95 payment to Glendenning - - was inadequate to fully compensate the employee’s attorney for his legal services, and awarded the employee’s attorney an additional Heaton fee of $2,250.00. The employee appeals contending this fee is inadequate to fully compensate her attorney.
Under Minn. Stat. § 176.081, subd. 1(a), a claimant’s attorney is entitled to a contingent fee of 25 percent of the first $4,000 and 20 percent of the next $60,000 for the recovery of monetary benefits awarded to the employee. This contigent fee “is presumed to be adequate to cover recovery of . . . rehabilitation benefits or services concurrently in dispute.” Minn. Stat. § 176.081, subd. 1(a)(1). If the employee’s attorney establishes the contingent fee is inadequate to reasonably compensate the attorney for representing the employee in the rehabilitation dispute, an additional contingent fee may be awarded applying the 25/20 formula to the dollar value of the rehabilitation benefit awarded. Minn. Stat. § 176.081, subd. 1(a)(1).
The compensation judge clearly found the contingent fee of $1,880.00 was inadequate to reasonably compensate the employee’s attorney for his representation of the employee. The compensation judge made no finding regarding application of the 25/20 formula to the rehabilitation benefits paid, but did find the contingent fee on the amount awarded to the employee plus “an expected contingent fee of $382.59 based upon the value of the rehabilitation benefits” was inadequate to fully compensate the employee’s attorney for his legal services. While no specific finding or order was made, it is clear the compensation judge concluded the employee was entitled to an additional contingent fee based on the value of the rehabilitation benefits paid pursuant to the settlement. We accordingly, modify the award of attorney fees to include a fee of 20 percent of the payment to Glendenning Rehabilitation Services ($1,912.95 x .20 = $382.59).
In Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999), the supreme court held that where a contingent fee is inadequate to reasonably compensate the employee’s attorney in a dispute involving medical - - or, in this case, rehabilitation - - benefits, an additional hourly fee may be assessed. In determining both whether the contingent fee is or is not adequate to compensate the employee’s attorney, and the amount of a reasonable attorney fee, the compensation judge must consider the amount involved, the time and expense necessary to prepare for trial, the responsibility assumed by counsel, the experience of counsel, the difficulty of the issues, the nature of the proof involved, and the results obtained.
The employee contends the rehabilitation issues in controversy were extensive and more complex than simply the issue of the reasonableness of the charges of Ms. Glendenning, the employee’s QRC. Although the self-insured employer admitted liability for the employee’s personal injury, the employer contended the injury was temporary and resolved without restrictions. To establish the employee’s entitlement to her rehabilitation benefits, Mr. Jensen contends he needed to prove the employee had permanent restrictions and was entitled to a functional capacity evaluation as recommended by the employee’s treating physician. Mr. Jensen asserts he expended 29.25 hours in preparation for and resolution of the employee’s claim for rehabilitation benefits. At his regular hourly fee of $195.00 per hour, Mr. Jensen claims entitlement to a Heaton fee of $5,703.75. In view of the time reasonably expended to establish the employee’s claim, Mr. Jensen contends the compensation judge’s award of attorney fees is clearly erroneous and unsupported by substantial evidence.
We are not persuaded. A reasonable attorney fee is not based solely on a simple mathematical calculation of the time expended times the hourly rate. The time necessary to prepare for trial is but one of the Irwin factors. Rather, determination of a reasonable fee must be based on all seven of the Irwin factors. McCarthy v. Al Baker’s, 61 W.C.D. 805 (W.C.C.A. 2001).
The compensation judge made specific findings with respect to each of the Irwin factors, finding that
Attorney Jensen has moderate experience in workers’ compensation based upon his 28 years as an attorney with his legal practice not solely limited to workers’ compensation litigation. The amount involved was relatively small; the self-insured employer made payment of the sum of $1,912.95 to Glendenning Rehabilitation Services. The time and expense necessary to prepare for hearing were relatively small. The responsibility assumed by Attorney Jensen was average considering the simple issues relating to the extent of disability and the amount in controversy. Attorney Jensen provided a history to the treating physician and obtained medical opinions and reports. The medical evidence was expected to be submitted by written documents with no depositions of medical experts. The proof expected to be introduced at hearing consisted of medical records and reports, rehabilitation records, testimony of the employee and her spouse, and the testimony of the Qualified Rehabilitation Consultant, Linda Glendenning. The time spent by Attorney Jensen for legal services as documented on the Time Itemization is uneconomical, at times. The two-hour travel time to attend the hearing from Litchfield to St. Paul (and 2 hours for return travel) is not extraordinary; this travel time is not compensable. (Footnotes omitted.)
(Findings and Order, finding 4.)
A determination of the amount of an hourly Heaton fee lies generally within the discretion of the compensation judge. Neuman v. Graceville Health Ctr., 52 W.C.D. 194 (W.C.C.A. 1994). Because each case is factually unique, this court must give deference to the compensation judge’s judgment and discretion in determining a reasonable fee. Dimon v. Metz Baking, 64 W.C.D. 143 (W.C.C.A. 2003). A compensation judge abuses his or her discretion only when the award of fees is based upon a clearly erroneous conclusion given the record as a whole.
The compensation judge made specific findings regarding each of the Irwin factors. We have carefully reviewed the record and cannot conclude that the compensation judge’s award of attorney fees is so unreasonable as to constitute an abuse of discretion. We, therefore affirm as previously modified. Counsel for the employee is awarded attorney fees of $2,632.59 ($382.59 + $2,250.00).
[1] See Heaton v. J.E. Fryer & Co., 36 W.C.D. 316 (W.C.C.A. 1983). Attorney fees for work performed in connection with rehabilitation benefits are now governed by Minn. Stat. § 176.081, subd. 1, but the use of the term Heaton fees has survived the codification.