NEIL DIETRICH, Employee/Appellant, v. U.S. AIRWAYS, INC., SELF-INSURED/SEDGWICK CMS, Employer.

WORKERS’ COMPENSATION COURT OF APPEALS
MAY 30, 2008

No. WC07-264

HEADNOTES

ATTORNEY FEES - HEATON FEES. The compensation judge properly concluded that the employee’s attorney should receive his fee from the temporary total disability benefits paid to the employee as a result of the attorney’s work in securing approval of retraining.

Affirmed.

Determined by: Wilson, J., Stofferahn, J., Johnson, C.J.
Compensation Judge: Bradley J. Behr

Attorneys: Raymond R. Peterson, McCoy, Peterson & Jorstad, Minneapolis, MN for the Appellant. Thomas L. Cummings, Jardine, Logan & O’Brien, Lake Elmo, MN, for the Respondent.

 

OPINION

DEBRA A. WILSON, Judge

The employee appeals from the compensation judge’s denial of his request for attorney fees pursuant to Heaton v. J.E. Fryer & Co., 36 W.C.D. 316 (W.C.C.A. 1983), for work performed by the employee’s attorney in connection with a retraining claim. We affirm.

BACKGROUND

On November 14, 2003, the employee sustained a work-related injury to his right shoulder while employed by U.S. Airways, which was self-insured for workers’ compensation purposes. The employer admitted liability and paid various benefits. The employee was ultimately unable to return to work for the employer due to his restrictions, and, in October of 2006, his QRC filed a rehabilitation request, seeking approval of a two-year retraining program that would qualify the employee to work as a laboratory technician. By this time, the employee was employed by another employer, earning $13.50 per hour, less than his pre-injury wage.

The employer objected to the proposed retraining, and the matter was heard at an administrative conference on November 20, 2006. According to the decision and order issued pursuant to Minn. Stat. § 176.106, the employer was contending at the time that retraining was premature and that any potential increase in earnings following retraining would not be significant enough to justify the cost of the proposed retraining program. The commissioner’s representative agreed and declined to approve the retraining plan. The employee then filed a request for formal hearing, and the matter came before a compensation judge on February 15 and May 16, 2007.

At hearing, the parties stipulated that the employee had sustained a work-related injury to his right shoulder on November 14, 2003, that the employee’s weekly wage on the date of injury was at least $750.61, and that the employer had no work for the employee consistent with his lifting restrictions. Issues included whether the employee had also injured his thoracic spine on November 14, 2003, whether the employee’s current restrictions were related to the November 14, 2003, injury, and whether the proposed retraining program was necessary to return the employee to economically suitable employment. By the time of this hearing, the employee’s wage had increased to $14.50 per hour.

In a decision issued on June 12, 2007, the compensation judge resolved all issues in the employee’s favor, concluding that the employee had sustained a work-related thoracic injury as claimed, that the employee’s need for restrictions was substantially related to the November 2003 work injury, and that the proposed retraining program was reasonably required to return the employee to economically suitable employment.

Neither party appealed from the compensation judge’s decision, and the employee apparently resigned from his job and began the retraining program in the fall of 2007. When he did so, the employer apparently discontinued temporary partial disability benefits and commenced payment of temporary total disability benefits.

The matter came on for hearing again on October 8, 2007, for resolution of the employee’s claim for $7,317.75 in Heaton fees,[1] plus costs and fees pursuant to Minn. Stat. § 176.081, subd. 7, for work performed by the employee’s attorney in connection with the retraining claim. The employer had no objection to the amount of the claimed fee but argued that the fee was payable on a contingent basis from the temporary total disability benefit payments resulting from the compensation judge’s approval of retraining. The employee, on the other hand, contended that contingent fees from temporary total disability benefits were not payable because there had never been any dispute over the employee’s entitlement to those benefits during retraining, only over the employee’s entitlement to the retraining itself.

In a decision issued on November 2, 2007, the compensation judge denied the employee’s claim for Heaton fees on grounds that his approval of retraining had generated a stream of benefits from which statutory contingent fees could be withheld and paid to the employee’s attorney. The employee appeals.

STANDARD OF REVIEW

“[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

As of the date of the May 2007 hearing on the employee’s retraining request, the employee had already received 104 weeks of temporary total disability benefits, and the employer was voluntarily paying the employee temporary partial disability benefits based on his then-current wage of $14.50 per hour in his job with another employer. When the employee left that job and began the approved retraining program, the employer began paying him temporary total disability benefits, pursuant to Minn. Stat. § 176.102, subd. 11.

The sole issue on appeal is how the employee’s attorney is to be paid for the work he performed in connection with obtaining approval of the retraining plan: through payment by the employer, a so-called Heaton fee, or through withholding from the temporary total disability benefits payable during the employee’s participation in retraining.

In his brief on appeal, the employee contends in part that the employer’s liability for temporary total disability benefits during the employee’s retraining was never disputed or raised as an issue in any pleading. Therefore, the employee asserts, payment of contingent fees from those benefits is prohibited by Minn. Stat. § 176.081, subd. 1(c), which specifies that “[i]n no case shall fees be calculated on the basis of any undisputed portion of compensation awards.” The compensation judge reasoned, however, that “the employer and insurer’s objection to the retraining plan was, by implication, an objection to the wage loss benefits which would necessarily be payable as part of the retraining plan.” We agree. Payment of wage loss benefits during approved retraining is virtually automatic, Minn. Stat. § 176.102, subd. 11(b), and the employee in the present case was entitled to temporary total disability benefits solely by virtue of the retraining award. Under these circumstances, the fact that the employer did not object, specifically, to payment of temporary total disability benefits is of little relevance to the fee issue here.

In a number of cases, beginning with Burger v. Coca Cola Bottling Co., 47 W.C.D. 263 (W.C.C.A. 1992), this court has held that attorney fees in retraining cases are payable on a contingent basis from the wage loss benefits payable during retraining,[2] because those wage loss benefits constitute a stream of benefits from which fees may be withheld. See Plumb v. Dodge of Burnsville, Inc., 64 W.C.D. 151 (W.C.C.A. 2004); Stewart v. 3M Co., slip op. (W.C.C.A. Nov. 4, 2003); Devitt v. Barrett Moving and Storage, slip op. (W.C.C.A. Sept. 15, 2003); Scott v. Greater Anoka Humane Soc’y, slip op. (W.C.C.A. July 22, 1999); Weber v. Crystal Farms Refrig., slip op. (W.C.C.A. Aug. 12, 1998). Heaton fees, payable by the employer, may be available in addition, but only if the contingent fee is inadequate to compensate the attorney for his work. See generally id. In his brief, the employee attempted to distinguish the present matter from the cases cited above, contending that this court should order payment of Heaton fees pursuant to the rationale contained in Turan v. Park Constr., slip op. (W.C.C.A. Sept. 17, 2001).[3] However, he acknowledged at oral argument that this court has already considered and rejected this theory for payment of Heaton fees.[4] We find no compelling reason to deviate from the proposition that attorney fees are payable from monetary benefits, if available.

At oral argument, the employee’s attorney offered a new theory for calculation and payment of fees in this case, asserting that, because the employer was voluntarily paying temporary partial disability benefits to the employee, based on his actual wage, until the employee resigned from his job to begin the retraining program, the contingent fee should be calculated and withheld only from the difference between the amount the employee had been receiving in temporary partial disability benefits prior to retraining and amount of the temporary total disability benefits paid to him during his participation in the retraining program. This difference is, according to the employee, the only wage loss benefit that was actually disputed and actually obtained as a result of the retraining award. Because, however, this alternative theory was not raised at the hearing level, we decline to address it. See, e.g., Moreno v. Advertising Unlimited, slip op (W.C.C.A. Jan. 3, 2001) (issues not raised at the hearing level may not be raised for the first time on appeal). See also Kulenkamp v. Timesavers, Inc., 420 N.W.2d 891, 40 W.C.D. 869 (Minn.1988). Accordingly, the judge’s decision is affirmed.



[1] See also Minn. Stat. § 176.081, subd. 1.

[2] In some cases these wage loss benefits have been referred to as “retraining benefits.” The principle is the same.

[3] In Turan, the employee’s attorney had sought and obtained approval for surgery. The employee underwent the surgery, and the employer and insurer continued payment of temporary total disability benefits thereafter. This court concluded that the employee’s eligibility for temporary total benefits had never been disputed and that the employee’s attorney was therefore entitled to Roraff fees, see Roraff v. State, Dep’t of Transp., 288 N.W.2d 15, 32 W.C.D. 297 (Minn. 1980), for his work obtaining approval for surgery, rather than contingent fees from the temporary total disability benefit payments following surgery.

[4] In Devitt v. Barrett Moving and Storage, slip op. (W.C.C.A. Sept. 15, 2003), this court held that the Turan rationale was inapplicable to retraining cases and that the Burger line of cases remained good law.