PAMELA J. ENGREN, Employee/Respondent, v. MAJESTIC OAKS GOLF CLUB and MIGA/GALLAGHER BASSETT SERVS., INC., Employer-Insurer/Appellants.

The employer and insurer appeal from the compensation judge’s award of attorney fees to counsel for the employee.  We affirm in part and remand in part.

In June 2010, the employee settled her workers’ compensation claims against Majestic Oaks and MIGA (Majestic Oaks/MIGA) and McDonalds and American Family Insurance (McDonald’s/American Family) for two admitted work injuries.  Only medical benefits remained open under the stipulation for settlement.

In November 2014, the employee requested a certification of dispute for payment of injections and a certification was issued by the Department of Labor & Industry on December 3, 2014.  On December 18, 2014, the employee filed a medical request for follow up treatment at Medical Advanced Pain Specialists (MAPS) for the low back and neck, as well as injections for the low back and neck.  Both employers and insurers filed medical responses denying payment.  One month later, the employee amended the medical request by letter seeking approval of the medication “Savella.”  A few days later, she requested approval for orthotics.  The employers and insurers did not respond to the letter amendments.

The parties tried the matter before Compensation Judge Gary P. Mesna on May 5, 2015.  In a Findings and Order dated May 21, 2015, the compensation judge delineated the issues, in part, as “approval of Savella” and “approval of orthotics.”  The judge found that the Savella and orthotics were reasonable and necessary and ordered Majestic Oaks/MIGA to make payment.  The compensation judge denied the rest of the employee’s claims finding that the treatment parameters precluded payment and the treatment requested was not reasonable or necessary.  None of the parties appealed the decision.

On June 1, 2015, an attorney for Majestic Oaks/MIGA requested information from the employee’s attorney’s office in order to make payment for the awarded Savella and orthotics.  There were no outstanding bills for the medical items awarded.  As of September 14, 2015, there was no evidence that the employee sought the drug Savella or obtained the orthotics awarded.^[1]  Without the existence of a medical bill, Majestic Oaks/MIGA made no payment.

On June 1, 2015, the employee’s attorney petitioned the court for Roraff fees in the amount of $6,428.50, Minn. Stat. § 176.081, subd. 7, fees of $1,928.55, and taxable costs of $37.28.  Both Majestic Oaks/MIGA and McDonalds/American family objected to the fees and requested a hearing.

The attorney fee hearing occurred on September 14, 2015.  Compensation Judge Gary P. Mesna who had presided at the May 5, 2015, medical hearing presided at the attorney fee hearing.  Because no medical benefits were awarded against McDonald’s/American Family, the employee’s attorney released them and claimed attorney fees only against Majestic Oaks/MIGA.  The employee’s attorney reduced the Roraff fee request from $6,428.50 to $3,000.00 as a more reasonable fee in light of prevailing on only two lesser claims at the May 5, 2015, hearing.  Majestic Oaks/MIGA argued that the employee’s attorney was not entitled to fees pursuant to Minn. Stat. § 176.081, subd. 1(c), asserting there was no genuine dispute with respect to the Savella and orthotics.  They also argued that after an investigation post-hearing, there was no evidence that the employee actually obtained the Savella or the orthotics as there existed no medical bill.  Since no medical benefit was recovered, they argued, the employee’s attorney was not entitled to fees.

The compensation judge found that there was a genuine dispute over the claim for Savella and orthotics.  There were no bills for these items presented at the hearing because they had not yet been obtained as the employee was seeking approval of them.  These claims were specifically raised at the May 5, 2015, hearing and counsel for the employer and insurer did not indicate at the hearing that the insurer agreed to pay for these items.  To the contrary, it clearly disputed these claims.^[2]  The compensation judge ordered a Roraff fee of $3,000.00 to the employee’s attorney and subd. 7 fees in the amount of $825.00 to the employee.  He also awarded costs.  Majestic Oaks/MIGA appeals the award of attorney fees.

A determination of the amount of Roraff fees awarded in a particular case lies 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 will give deference to the compensation judge’s award or denial of attorney fees absent an abuse of discretion.  Id.; Lucking v. EPC Louden, slip op. (W.C.C.A. Sept. 26, 2001), (citing Domtar, Inc. v. Niagara Fire Ins. Co., 563 N.W.2d 724 (Minn. 1997); Kuller v. Kuller, 260 Minn. 256, 109 N.W. 2d 651 (1961)).  A compensation judge abuses his or her discretion only when the award of fees is based upon a clearly erroneous conclusion given the record.  Lucking (W.C.C.A. Sept. 26, 2001).

Minn. Stat. § 176.081, subd. 1(c), provides,

On appeal, Majestic Oaks/MIGA makes three arguments.  First they argue that there is no evidence of a dispute over the Savella and orthotics except the ipse dixit of the employee’s attorney.  They maintain that the order of May 21, 2015, itself makes no reference to a dispute regarding the issue of the approval of the drug Savella and orthotics.  They argue that the fact that an issue is raised at hearing does not mean that it was disputed; there was no evidence of a denial by the employers and insurers that the treatment was contested; and there was no unpaid medical bill or invoice.  Because they had paid for both the Savella and orthotics in the past, there was no suggestion that they would not pay for it in the future.  Second, Majestic Oaks/MIGA argue that attorney fees should not be awarded where there has been no actual recovery of the benefit by the employee.  The employee’s attorney neither resolved a dispute nor achieved a recovery, therefore, the award of Roraff fees was improper here.  And finally, Majestic Oaks/MIGA argues that the fees awarded are excessive and limited to $500.00 or less pursuant to Minn. Stat. § 176.081, subd. (1)(a).

In response to Majestic Oaks/MIGA’s first argument, the employee’s attorney argues that a dispute existed.  The existence of a dispute is dependent upon a disagreement after the employer and insurer have had adequate time and information to take a position on liability.  Majestic Oaks/MIGA had four months to review the request for Savella and orthotics before the hearing.  A four month delay is contrary to the legislative intent to assure a quick and efficient delivery of medical benefits.  The employee’s attorney did not specifically address the second argument regarding the need to recover the medical benefit before fees are awarded.  With respect to the third argument, the employee’s attorney responds that the $500.00 limit on fees for which a dollar value is not ascertainable as set forth in Minn. Stat. § 176.081, subd. 1(a)(2), was previously declared unconstitutional.  Mohamed v. The Turkey Store, 61 W.C.D. 410 (W.C.C.A. 2001); Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D 319 (1999).

First, we will consider whether a dispute existed giving rise to the claim for employee’s attorney’s fees.  Majestic Oaks/MIGA states that there is no record that a dispute existed with respect to the drug Savella and orthotics nor any evidence that Majestic Oaks/MIGA specifically denied approval.  There is, however, no dispute that there was a claim for approval of both.  There was no objection or approval by Majestic Oaks/MIGA over the course of four months between the claim and the hearing.  There was also a full evidentiary hearing on the issue of approval of the Savella and orthotics with an unappealed findings and order.^[3]

The issue of what is genuinely disputed in an employee’s claim is generally determined at the time of an award.  Crowley v. Plehal Blacktopping, Inc., 66 W.C.D. 11 (W.C.C.A. 2005).  Ultimately, the issue of whether there exists a genuinely disputed claim is a question of fact for the compensation judge.  Biederman v. Win Stephens Buick, 58 W.C.D. 497 (W.C.C.A. 1998).  On appeal, the question is whether the judge’s factual decision is supported by substantial evidence.  A compensation judge abuses his discretion only when the award of fees is based upon a clearly erroneous conclusion given the record.  Lucking (W.C.C.A. Sept. 26, 2001).

Here, the employee submitted the Findings and Order of May 21, 2015, into evidence.^[4]  In it, the compensation judge outlined the issues.  Both the approval of Savella and the approval of orthotics are listed as issues to be decided at the hearing.  Furthermore, in the Findings and Order of September 22, 2015, the compensation judge clearly recalls that there was a dispute.  He found these claims were specifically raised at the hearing and counsel for the employer and insurer did not indicate at the hearing that the insurer agreed to pay for these items.  To the contrary, it clearly disputed these claims.^[5]

The fact that Majestic Oak/MIGA failed to acknowledge the claim for four months, went to a hearing on the issue, tried the issue, lost the issue, and then did not appeal the issue is enough evidence to show that a genuine dispute existed.  The compensation judge who presided over the case had a unique vantage point from which to assess the complexity and amount of work necessary to resolve the medical benefits in dispute.  Janikowski v. Ryan Janikowski, 73 W.C.D. 135 (W.C.C.A. 2013).  As the trier of fact, the judge was in the best position to assess the issues at the time of trial.  Based on the facts of this case, the employee has met the criteria of a genuinely disputed issue.  We affirm finding 8.

Majestic Oaks/MIGA’s second argument is more persuasive.  Substantial evidence fails to support that there was a “recovery” of the benefits awarded as of the time of the attorney fee hearing.  At the time of the attorney fee hearing in September 2015, no medical benefit had been paid for the simple reason that there was no bill produced even after inquiry by Majestic Oaks/MIGA.  It was questionable if the employee had actually sought the Savella and orthotics which had been approved.  If an employee’s attorney files a medical request for medical treatment, and the employee does not obtain the medical treatment requested, this court has held that a Roraff fee award may be improper and premature.  Crowley v. Plehal Blacktopping, Inc., 66 W.C.D. 11 (W.C.C.A. 2005).  Like an approval of surgery in which attorney fees are not payable until the surgical expenses have been incurred, approval of treatment requires the same standard.  An employee’s attorney does not have any entitlement to a Roraff fee for obtaining approval for medical care or treatment that is not provided.  Id.  Where the record does not establish that medical benefits were recovered for the employee, the employee fails to establish entitlement to Roraff fees.  Yennie v. Benchmark Elecs., Inc., 72 W.C.D. 465 (W.C.C.A. 2012).  Because there is no evidence that there was a “recovery” of medical benefits, the employee’s attorney is not entitled to Roraff fees.  We remand the matter to the compensation judge for a determination regarding whether or not medical benefits were recovered by the employee thus justifying an award of attorney fees.^[6]

Finally, Majestic Oaks/MIGA argue that the Roraff fee awarded did not comply with the statutory guidelines, was unreasonable and excessive, and should be reduced.

In determining the amount of a reasonable attorney fee, the compensation judge must consider the statutory guidelines on fees provided in Minn. Stat. § 176.081, subd. 1(a).  Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999).  Minn. Stat. § 176.081, subd. 1(a)(2), states that the maximum attorney fee for obtaining a disputed medical benefit for which a dollar value is not reasonably ascertainable is the amount charged in hourly fees for the representation or $500.00, whichever is less.  (Emphasis added.)  Majestic Oaks/MIGA argue that the Savella and orthotics were small, ancillary issues and that none of the primary items that originally gave rise to the medical request were approved.  They argue the compensation judge disregarded the statutory provision for an award of $500.00 in such circumstances, instead granting a windfall of six times that amount in hourly Roraff fees.

In response, the employee’s attorney asserts the compensation judge’s finding that the dollar amount was not ascertainable is irrelevant in determining the amount of attorney fees in this case.  Legal fees were previously paid in the amount of $32,476.00 for representing the employee in her 2001 date of injury, which is beyond the $13,000.00 cap on attorney fees per date of injury.  As such, the employee’s attorney maintains the awarded fee is an excess fee under Irwin.  The contingent fee formula does not, accordingly, apply, and the compensation judge properly determined the fee utilizing the Irwin factors.  Jakubek v. Oneida Bldg. Servs., slip op. (W.C.C.A. June 24, 2013); Brown v. Omni Remanufacturing, 63 W.C.D. 519 (W.C.C.A. 2003) (where the statutory maximum attorney fee has been paid for work on an injury, all additional fees for legal services related to that same injury are excess fees and must be determined in light of the seven factors enumerated in Irwin).

The decision in Irwin concludes that the $500.00 limitation or cap on attorney’s fees in Minn. Stat. § 176.081, subd. 1(a)(2), is unconstitutional.  Thus, where the employee’s attorney seeks a fee in excess of $500.00, the compensation judge must determine what a reasonable fee is pursuant to the seven Irwin factors.  Mohamed v. The Turkey Store, 61 W.C.D. 410 (W.C.C.A. 2001).

The compensation judge reviewed the employee’s attorney’s fee claim in light of the Irwin factors as set forth in findings 2 to 7, and concluded that $3,000.00 was a reasonable fee for the services provided on behalf of the employee.  This court gives deference to the compensation judge’s finding of a reasonable fee amount as he was in the best position to assess the Irwin factors.  However, until the record establishes that the employee’s attorney’s representation resulted in an actual recovery of medical treatment, the employee’s attorney is not entitled to fees.  We, accordingly, remand for additional findings as discussed above.