ATTORNEY FEES – HEATON FEES. Where the employee had stopped attending a retraining program with no intention of returning to the program and no longer received retraining wage loss benefits, the award of Heaton fees to the employee’s attorney was not premature and was not barred by collateral estoppel or law of the case based on an earlier denial of fees before the employee stopped attending the program.
ATTORNEY FEES – HEATON FEES. Substantial evidence supports the compensation judge’s application of the Irwin factors and the amount of Heaton fees awarded.
Compensation Judge: Miriam P. Rykken
Attorneys: Charles A. Bird, Bird, Jacobsen & Stevens, P.C., Rochester, Minnesota, for the Respondent. Thomas V. Maguire, Brown & Carlson, P.A., Minneapolis, Minnesota, for the Appellants.
Affirmed.
DEBORAH K. SUNDQUIST, Judge
The employer and insurer appeal the judge’s award of excess Heaton[1] fees for a retraining program which was not completed by the employee. Because the employee’s attorney successfully procured retraining benefits, contingent fees did not adequately compensate him, and the judge applied the Irwin[2] factors in determining the attorney fee, we affirm the judge’s award of Heaton fees.
In April 2012, Richard Peterson, the employee, injured his low back in the scope and course of his employment with Viracon, the employer. Due to the injury, the employee became physically unable to return to his job. With the help of his QRC, the employee proposed a six-semester retraining program in accounting. The employer and its insurer disputed the employee’s retraining proposal, and the matter went to hearing. The compensation judge awarded the claimed accounting program in a Findings and Order served and filed August 20, 2015.
On September 22, 2015, the employee’s attorney petitioned for excess Heaton fees, contingent fees, and Minn. Stat. § 176.081, subd. 7, fees. The employer and insurer objected to payment of the fees as unreasonable and premature. Following a hearing on attorney fees, the judge ordered the release of withheld attorney fees, payment of ongoing contingent fees from weekly retraining wage loss benefits,[3] and payment of subd. 7 fees in a Findings and Order served and filed January 29, 2016. The judge did not award the claimed excess Heaton fees, noting in the memorandum that it was premature as long as the employee continued to receive a stream of retraining wage loss benefits from which contingent attorney fees were withheld. Furthermore, because it was not possible to fully evaluate the amount involved or the result obtained, pursuant to Irwin, the judge explained that it was also premature to determine whether the employee’s contingent attorney fees were adequate. The judge reasoned that once the retraining plan was completed the employee’s attorney could petition for excess fees if he believed that the contingent fees had not provided adequate compensation.
The employee enrolled at Rochester Community and Technical College in January 2016 and maintained good grades. After about two years into the program, however, the employee dropped out to care for his wife who had developed a chronic debilitating illness. The employee has no present plans to return to school. The employer and insurer filed a notice of intention to discontinue benefits on March 6, 2018, and the parties agreed to suspend rehabilitation and retraining.
On June 29, 2018, the employee’s attorney filed a statement of attorney fees claiming entitlement to $55,637.50 for his work and that of his legal assistant. Previously paid fees and withheld fees in the amount of $22,321.10 were subtracted from the amount claimed, leaving a balance of $33,316.40. The attorney claimed that his representation resulted in recovery of benefits for the employee equaling $196,938.12. An itemization of billed time attached to the fee petition outlined work performed during four and half years from January 27, 2014, to June 22, 2018. Most of the itemized time was spent performing work on issues of return to work, vocational rehabilitation, and retraining. The employee also claimed partial reimbursement of fees under Minn. Stat. § 176.081, subd. 7, in the amount of $16,616.25.
The employer and insurer objected to the claim for attorney fees as excessive, unreasonable, and premature. At the attorney fee hearing on October 25, 2018, they argued that as long as the employee could receive ongoing retraining wage loss benefits from which attorney fees are withheld, it was premature to address excess Heaton fees. Because the employee has stopped going to school, they argue that an award of Heaton fees would result in a windfall should he resume classes in the future.
In a Findings and Order served and filed December 18, 2018, the judge ordered payment of $25,000.00 in excess Heaton fees. The employer and insurer appeal.
On appeal, the Workers’ Compensation Court of Appeals must determine whether “the 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(3). Substantial evidence supports the findings if, in the context of the entire record, “they 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, findings of fact should not be disturbed, even though the reviewing court might disagree with them, “unless they are clearly erroneous in the sense that they are manifestly contrary to the weight of evidence or not reasonably supported by the evidence as a whole.” Northern States Power Co. v. Lyon Food Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).
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).
The compensation judge awarded $25,000.00 in excess Heaton fees under Irwin. Due to the cessation of retraining benefits and ongoing retraining wage loss benefits, she determined it was possible to ascertain whether contingent fees were adequate to compensate the attorney for his work.
On appeal, the employer and insurer argue that the judge erred as a matter of law in awarding Heaton attorney fees because the claim is barred by the doctrines of collateral estoppel and the law of the case due to her previous denial of excess Heaton fees. They argue that the judge erred in finding that awarding Heaton fees was not premature because the employee could re-enroll in the retraining program. They also argue that the judge abused her discretion in determining that the contingent fee was inadequate and in awarding more than $47,000.00 in total attorney fees. Using the factors outlined by Irwin, they argue that the amount awarded was excessive.
In her 2016 Findings and Order on the attorney fee issue, the judge stated in the memorandum,
This decision addresses the claim for attorney fees at this point. The employee’s attorney should be paid contingency fees from the temporary total disability benefits paid to the employee during his retraining program. When that program is completed and attorney fees are no longer being paid, the employee’s attorney may petition for Heaton fees if the attorney believes that the contingence [sic] fees have not provided adequate compensation.
(Findings and Order, January 29, 2016, memorandum at 5 (emphasis added).)
The employer and insurer argue that this comment compels an analysis under the doctrine of collateral estoppel and law of the case. The doctrine of collateral estoppel, also called issue preclusion, applies to specific issues that have previously been adjudicated. Mach v. Wells Concrete Prods. Co., 866 N.W.2d 921, 927, 75 W.C.D. 279, 286 (Minn. 2015) (citing Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn. 2004). Collateral estoppel applies when: “(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue.” Nelson v. Am. Fam. Ins. Group, 651 N.W.2d 499, 511 (Minn. 2002) (quoting Willems v. Comm’r of Pub. Safety, 333 N.W.2d 619, 621 (Minn. 1983)). Collateral estoppel does not apply to bar a claim for a condition that has changed. Mach, 866 N.W. 2d at 928, 75 W.C.D. at 288.
Here, neither collateral estoppel nor the law of the case bars the employee’s attorney from making a claim for excess Heaton fees. While the issue is similar to the issue in the earlier claim for fees in the prior adjudication, there was no final judgement on the merits of the claim for excess Heaton fees. In the prior findings, the judge expressly stated that Heaton fees would be assessed at a later date because the amount of excess fees could change over the course of the employee’s retraining. She noted in her memorandum that this assessment would take place when the retraining plan was completed, and attorney fees were no longer being paid. The judge made no explicit finding on the merits of the claim for excess Heaton fees, nor did she make a finding that the employee’s attorney was not entitled to the claimed fees. Rather, she emphasized that the decision addressed only the claim for attorney fees at that point. Because the judge anticipated that there could be a change which could justify excess Heaton fees, the employee’s claim for excess Heaton fees is not barred.
The employer and insurer also argue that it was premature to award excess Heaton fees because the employee could resume retraining at any given point and complete the program. We disagree. While it is true that the employee could resume retraining, it was reasonable for the judge to find that the employee credibly testified that his family circumstances had changed and that he does not plan to resume attending the retraining course. See Even v. Kraft, Inc., 445 N.W.2d 831, 42 W.C.D. 220 (Minn. 1989).
Citing Crowley v. Plehal Blacktopping, Inc., 66 W.C.D. 11 (W.C.C.A. 2005), the employer and insurer contend that similar to an award of Roraff attorney fees, which requires actual treatment for the contested medical issue, an award of Heaton fees requires a completion of the retraining sought. An employee’s attorney who successfully prevails on the issue of a pending surgery has no claim for Roraff fees until the employee undergoes the surgery and the cost of the surgery is incurred. Crowley, 66 W.C.D. at 15. However, that is not the case here. The employee’s attorney procured the retraining program in accounting and the employee attended classes for two years before an unforeseen circumstance prevented him from completing the program. It was reasonable for the judge to find that the change in circumstance, the cessation of the retraining program, had rendered it possible to determine whether contingent fees were adequate to compensate the attorney for his representation of the employee. Where the retraining program was adjudicated as reasonable, attended by the employee for two years, and the dollar value was ascertainable once the employee stopped attending school, the circumstances justify an attorney fee under Heaton.
Finally, the employer and insurer argue that the judge erred in awarding total fees of over $47,000.00, questioning the judge’s application of the Irwin factors. Those factors include consideration of the statutory contingency fee, the amount involved, the time and expense necessary to prepare for trial, the responsibility assumed by counsel, the experience of counsel, the difficulties of the issues, the nature of the proof involved, and the results obtained. See Irwin, 599 N.W.2d at 142, 59 W.C.D. at 336.
The trier of fact has discretion in determining the amount of Roraff and Heaton fees. See Neumann v. Graceville Health Ctr., 52 W.C.D. 194, 198 (W.C.C.A. 1995). When fees exceed the statutory limit, the judge may award excess fees under Irwin. Here, the judge found that the employee’s claim for retraining was contested and involved review of information in preparation of an evidentiary hearing, that the employee’s attorney assumed full responsibility for the employee’s claims and achieved a favorable result for the employee, that the attorney is a competent and experienced trial attorney in Minnesota workers’ compensation laws, that the hourly rates and time were reasonable, and that the benefits recovered by the efforts of the attorney, of which $142,127.56 was for retraining and rehabilitation, are ascertainable. Finally, the judge oversaw two days of hearing on a contested retraining plan and was aware of the difficulties of the issues. Because the contingent fees withheld and paid from the ongoing weekly retraining wage loss benefits, in the amount of $22,321.10, did not reasonably compensate the attorney for his time over four and a half years spent preparing and succeeding in procuring retraining benefits for the employee, the judge awarded $25,000.00 in addition to the fees previously paid. As it was within her discretion to do so, and because her decision is not clearly erroneous or manifestly contrary to the evidence, we affirm.
[2] Irwin v. Surdyk’s Liquors, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999).
[3] Minn. Stat. § 176.102, subd. 11, provides for ongoing wage loss benefits during an employee’s retraining program. These benefits may be described as temporary total wage loss benefits, but for the purpose of this case, we are using the term “retraining wage loss benefits” to distinguish from temporary total disability benefits.