BRIAN DILLEY, Employee/Appellant, v. CARVER CNTY. SHERIFF and MN COUNTIES INTERGOVERNMENTAL TRUST, SELF-INSURED, Employer-Insurer/Respondents.

The employee appeals the judge’s finding which denied Heaton^[1] attorney fees where the QRC had filed both the rehabilitation request and request for formal hearing, the sole issue at hearing was payment of past vocational rehabilitation bills, the employee and his attorney were served with notice of the hearing, and the employee’s attorney attended both the underlying administrative conference and formal hearing. Because there was a dispute over the payment of rehabilitation benefits, the employee’s attorney is entitled to Heaton attorney fees. We, therefore, reverse and remand.

Brian Dilley, the employee, worked as a Deputy Sheriff for Carver County, the self-insured employer, between 2001 and 2016. On July 14, 2005, he injured his low back at work and underwent two surgeries. On September 27, 2015, the employee injured his back again and underwent a third low back surgery in 2016. He was released to return to work with permanent restrictions. In a Findings and Order of January 27, 2017, the employer was ordered to provide the employee with vocational rehabilitation services. A qualified rehabilitation consultant (QRC), Angela Hunter, initiated rehabilitation services for which she billed the employer. However, the employer paid only part of the services billed, claiming Minn. Stat. § 176.102, subd. 5(b), restricted the QRC to 20 hours of job development per month, and that the QRC had exceeded the limit. The QRC filed a rehabilitation request seeking payment in full. She subsequently filed three more rehabilitation requests for additional unpaid bills. The employer filed rehabilitation responses objecting to payment.

A September 27, 2017, administrative conference addressed the four consolidated rehabilitation requests. The employee and his attorney were served notice of the conference. In a decision and order pursuant to Minn. Stat. § 176.106, filed on October 12, 2017, a Department of Labor and Industry mediator adopted the employer’s position and denied full payment of the QRC’s bills. The employee appealed the decision by filing a request for formal hearing before a compensation judge at the Office of Administrative Hearings. The employer objected to the employee’s request, claiming that the employee had no standing to raise the issue. The compensation judge agreed and ultimately dismissed the employee’s request for formal hearing. However, the QRC also filed a request for formal hearing on November 5, 2017, and the matter went to hearing on January 9, 2018.^[2]

At the hearing, the QRC claimed entitlement to the unpaid balance of her bills, in the amount of $1,513.70. She appeared pro se. The employee’s attorney attended the hearing and asserted that the employee had “no direct claim.” (T. 7.)

The QRC disagreed with the employer’s interpretation of Minn. Stat. § 176.102, subd. 5(b), which limits job development to 20 hours per month and to 26 consecutive or intermittent weeks. The QRC explained that there was a difference between QRC services for “job development” and QRC services for “job placement.” She argued that while the statute limited “job development” services, there was no such limit on “job placement” services. Both services, she noted, are defined in Minn. R. 5220.0100, subps. 16 and 18. Because the employer denied payment of job placement services which have no time or durational limits, the QRC argued that the employer should be ordered to pay. The employee’s attorney made a similar legal argument in support of payment to the QRC, adding that as the employee had met or exceeded the 26-week limitation of job development, the issue would affect the employee’s rights and access to rehabilitation services. The employer acknowledged that it continued to pay for rehabilitation benefits well beyond the 26 weeks because it wanted to return the employee back to work. The employer reiterated its previous position and further argued that the QRC billings were coded in such a way that the services overlapped between job development and job placement. Because the service code was vague, the employer argued it was unable to determine whether the charges billed were reasonable or necessary.

In an unappealed Findings and Order of February 6, 2018, the compensation judge rejected the employer’s argument and awarded full payment of the QRC’s bills. A month later, the employee’s attorney filed a statement of attorney fees claiming 16.3 hours of time billed at $500.00 an hour for a total of $7,162.00 as and for Heaton fees. In the statement, the employee’s attorney noted previous receipt of attorney fees in the amount of $15,000.00. The employer objected and the matter was set for an attorney fee hearing on June 25, 2018.

At the attorney fee hearing, the employee’s attorney argued that his client’s rights were affected by the rehabilitation requests filed by the QRC. Because the dispute may have placed caps on job placement and job development, he argued that the outcome could have adversely affected the employee’s ability to return to work and entitlement to future rehabilitation services.

The employer argued that the employee’s attorney had already been paid for prior disputes, and admitted that a dispute arose between the employer and the QRC, but the employee was not affected as the sole issue was whether the QRC’s past bills should be paid based on the 20-hour limitation. It further argued that no issue was presented which affected the employee’s future vocational rehabilitation benefits. Claiming that the QRC is a neutral party working for both the employee and the employer, the employer maintained that there was no dispute with the employee and therefore no attorney fees were warranted.

In a Findings and Order filed August 1, 2018, the compensation judge found that the employee’s attorney was not entitled to attorney fees. The judge explained that the QRC represented herself in a dispute involving past bills for unpaid rehabilitation services from May to October 2017. The judge noted that the dispute was limited to the statutory interpretation and application of rules relating to categorization of services as job development versus job placement provided to the employee by QRC Hunter. Because the employee’s entitlement to additional or ongoing rehabilitation benefits was not at issue, nor was there a dispute as to a change in the rehabilitation plan or whether the employee was qualified for rehabilitation services, the judge denied the employee’s attorney’s claim for fees. The employee’s attorney appealed.

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), summarily aff’d (Minn. June 3, 1993).

On appeal, the employee’s attorney argues that he was entitled to Heaton fees because there was a dispute over vocational rehabilitation bills and services, the outcome of which could have affected the employee’s entitlement to future rehabilitation benefits. He notes that he prepared for and attended both the administrative conference and the hearing on the issue, and contends that he is entitled to Heaton fees for the time expended for the work involved. The employer disputes the attorney’s claim, arguing that the rehabilitation dispute did not involve the employee, as it was only a dispute on past rehabilitation bills. The employer also argues that the results obtained were not due to the efforts of the employee's attorney, as the QRC represented herself at the hearing. Finally, the employer argues that the employee’s attorney was adequately compensated by contingent fees.

Because this decision rests upon the application of law to essentially undisputed facts, we consider the issue de novo.

In Heaton v. J. E. Fryer & Co., 36 W.C.D. 316 (W.C.C.A. 1983), this court recognized that an attorney who assists an employee in obtaining rehabilitation benefits is entitled to a reasonable attorney fee. Also in 1983, the Workers’ Compensation Act was amended to recognize a right to attorney fees where a contingent fee was inadequate to reasonably compensate the attorney representing the employee in a rehabilitation dispute. Minn. Stat. § 176.081, subd. 1(a)(1).^[3] Such fees are limited to genuinely disputed claims. Minn. Stat. § 176.081, subd. 1(c). Under this provision, a genuinely disputed claim includes “disputes related to the payment of rehabilitation benefits.”^[4]

In this case, there was a dispute related to the payment of rehabilitation benefits, as the employer disputed whether the QRC was entitled to full payment of her bills for rehabilitation services provided to the employee.

In denying attorney fees, the judge concluded that the dispute over the rehabilitation bills was not between the employer and the employee. (Finding 2.) We note, however, that Minn. Stat. § 176.081 makes no distinction based on whether a rehabilitation dispute is between the QRC and the employer, or between the employer and the employee. The statute requires only that there be a dispute related to the payment of rehabilitation benefits.

The compensation judge also reasoned that the issue of payment for past rehabilitation bills did not affect the employee’s right to receive rehabilitation benefits, such that no Heaton fees were due. We disagree. The statute makes no distinction between disputes regarding past, present or future entitlement to rehabilitation benefits. The statute provides only that if there is a dispute related to the payment of rehabilitation benefits, and contingent fees do not adequately compensate the employee’s attorney, the employee’s attorney is entitled to a reasonable attorney fee under Minn. Stat. § 176.081, subd. 1. It is well-established that an employee need not be a direct party to the dispute for attorney fees to be awarded to the employee’s attorney.^[5]

We remand this matter to the compensation judge for a determination of a reasonable attorney fee. In determining such a fee, the judge should be mindful of the extent of any contingency fees from the employee’s ongoing stream of benefits, and the language of Minn. Stat. § 176.081, subd. 1, and Heaton.