ATTORNEY FEES – GENUINE DISPUTE. An award of fees from a benefit of the employee that is not yet due and not yet payable is premature. Not until the benefit is payable to the employee can it be determined what role an attorney played in obtaining that benefit for purposes of awarding attorney fees.
Compensation Judge: Kirsten M. Tate
Attorneys: Kirk C. Thompson, Kirk C. Thompson Law Office, P.A., Minneapolis, Minnesota, for the Appellant. James S. Pikala, Eric S. Schwab, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis Minnesota, C. Jeremy Lagasse, Aaron Ferguson Law, Roseville, Minnesota, for the Respondents.
DAVID A. STOFFERAHN, Judge
The employee appeals from an award of attorney fees to be paid from his permanent partial disability benefits. There is no evidence that permanent partial disability benefits were payable and it was an error to award an attorney fee from those benefits. We vacate the award.
Larry Horton, the employee, sustained a serious work injury on June 22, 2017, which resulted in significant disability affecting his cervical spine, thoracic spine, and right arm. The employer admitted liability and commenced payment of temporary total disability (TTD) benefits and medical expenses.
On the employer’s behalf, the insurance adjuster wrote to the employee’s treating doctor, Dr. Daniel Sipple, on June 22, 2018, seeking a report addressing maximum medical improvement (MMI) and permanent partial disability (PPD) ratings. Dr. Sipple stated in his response of July 10, 2018, that the employee had 10 percent disability for the injury to the cervical spine and 60 percent for the nerve injury involving the right arm. The adjuster wrote back to Dr. Sipple on August 8, 2018, asking for clarification of the rating for the right arm. The employee retained an attorney, Jeremy Lagasse, on August 16, 2018, and signed a retainer agreeing to pay Mr. Lagasse a contingent fee from benefits obtained on his behalf.
Mr. Lagasse filed a claim petition on November 12, 2018, seeking payment of 64.2 percent PPD as rated by Dr. Sipple. The employer and insurer filed a timely answer denying the extent of the PPD ratings. The employer and insurer also arranged for the employee to be evaluated by Dr. Michael Smith on January 11, 2019. In his report, Dr. Smith concluded that the employee had not yet reached MMI. Dr. Smith also considered PPD and believed an additional 7 percent for the thoracic spine beyond the rating from Dr. Sipple, was appropriate.
The attorney for the employer and insurer wrote to Mr. Lagasse on February 26, 2019, advising that the insurer would pay PPD benefits once the employee was no longer receiving TTD benefits. The letter also asked for dismissal of the claim petition. A copy of Dr. Smith’s report was sent to the employee on March 1, 2019, and the employee was told he would be paid benefits for a 68.66 percent PPD rating once TTD benefits were no longer being paid. The employee terminated the services of Mr. Lagasse on April 22, 2019.
Mr. Lagasse filed a Statement of Attorney Fees on December 20, 2019, requesting an award of $26,000.00 in contingent fees, $20,000.00 in excess fees and approximately $1,870.00 in costs. The employee objected to the requested fee and a hearing was held before a compensation judge on April 1, 2020. In her Findings and Order, issued May 15, 2020, the compensation judge awarded Mr. Lagasse his requested contingency fee to be paid from the employee’s PPD benefits, denied the excess fee claim, and awarded some of the claimed costs. The employee has appealed.
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).
Contingent attorney fees for the recovery of benefits for an employee are awarded pursuant to Minn. Stat. § 176.081, subd. 1. The criteria for an award of fees is set out in Minn. R. 1415.3200, subp. 7, which is titled “genuinely disputed portions of claims.” If the claimed benefit was not in dispute and was timely paid, no fee is to be awarded. Minn. R. 1415.3200, subp. 7(B). If there was a dispute on a portion of the claim, only the disputed portion of the claim may be used for the fee. Id. at subp. 7(C). The difference between the amount of compensation eventually paid or awarded, and the amount admitted and timely paid, is used to compute the fee. Id. at subp. 7(I).
At issue in this case were PPD benefits. PPD benefits are not payable while an employee is receiving TTD benefits and not until the employee has reached MMI. Minn. Stat. § 176.101, subd. 2a. Until a benefit is payable, whether there is a dispute as to the extent of disability or any other dispute concerning payment of PPD benefits cannot be ascertained.
It is the obligation of the petitioner, in this case Mr. Lagasse, to establish that this condition precedent has been met. That obligation was not met here. There was no evidence that the employee was at MMI and no evidence as to whether the employee continued to receive TTD benefits.
An award of fees from a benefit of the employee that is not yet due and not yet payable is premature. Not until the benefit is payable to the employee can it be determined what role an attorney played in obtaining that benefit. As such, we vacate the compensation judge’s award of fees.