GERALD GRACE, Employee/Cross-Appellant, v. SMITH FOUNDRY CO., and TRIFAC WORKERS’ COMP. FUND/MACKINAW ADM’RS, LLC, (f/k/a MEADOWBROOK), Self-Insured Employer/Appellant.

The self-insured employer appeals from the compensation judge’s award of Roraff/Irwin^[1] fees, and the employee’s attorney cross-appeals from the compensation judge’s denial of a portion of his claimed taxable disbursements.  We affirm in part and reverse and remand in part.

The employee, Gerald Grace, suffered injuries to his left upper extremity as a result of a 2015 work incident.  He sought workers’ compensation benefits related to those injuries, and also claimed to have sustained an injury to his cervical spine as a result of the same incident.  The employee’s claim for benefits was heard by a compensation judge, who found that the employee did not sustain a cervical spine injury.  The compensation judge’s decision was affirmed by this court and by the Minnesota Supreme Court.^[2]

In 2019, the employee asserted a new claim for various benefits, alleging thoracic outlet syndrome as a result of the 2015 work incident.  The employee’s claims were considered by a compensation judge on December 24, 2019.  By Findings and Order dated February 18, 2020, the compensation judge found that the employee’s thoracic outlet syndrome was compensable.  Because the employee was working at a new job as a security guard for a casino at a lower rate of pay at the time of the hearing, he was awarded temporary partial disability (TPD) benefits.  The judge also awarded a period of temporary total disability benefits and a rehabilitation consultation, and she approved the requested change in physician.  The employee’s claim for permanent partial disability benefits was denied.  A portion of the claimed medical benefits and some intervention claims were awarded to the extent the treatment related to the thoracic outlet syndrome, and the remainder of the claims were denied.  No appeal was taken from the February 18, 2020, Findings and Order.

The record shows that the employee’s security guard position at the casino was furloughed following the casino’s required closure pursuant to an executive order issued to address the COVID-19 global pandemic.  The employee’s TPD benefits were discontinued.

Since his initial claims in 2018, the employee has been represented by the same attorney, James Hansing.  Mr. Hansing filed a statement of attorney fees on March 19, 2020.  Therein, Mr. Hansing claimed over $8,000.00 in contingency fees that had been withheld, $26,000.00 in Roraff/Heaton/Irwin fees, reimbursement to his client of over $2,000.00 in fees under Minn. Stat. § 176.081, subd. 7, and approximately $11,000.00 in taxable costs and disbursements.  The self-insured employer filed an objection and the fee claim was heard by a compensation judge on May 4, 2020.

By Findings and Order dated May 28, 2020, the compensation judge awarded to Mr. Hansing the withheld contingency fee of $8,786.11, a Roraff/Irwin fee of $17,213.89, for a total of $26,000.00, a portion of the claimed reimbursement of subd. 7 fees, and $8,094.70 of the claimed taxable costs and disbursements.  The self-insured employer appeals from the awarded Roraff/Irwin fee, and the employee’s attorney cross-appeals from the denied costs and disbursements related to expert opinions.

A determination of the amount of a Roraff fee awarded in a particular case lies within the discretion of the compensation judge.^[3]  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.^[4]   Similarly, it is within the compensation judge’s discretion whether to award reimbursement upon a determination that a claimed disbursement is necessary and directly related to the issues on which the party prevailed, and this court will not reverse such an award absent a clear abuse of discretion.^[5]  A compensation judge abuses his or her discretion only when the award of fees is based upon a clearly erroneous conclusion given the record.^[6]

The self-insured employer seeks reversal of the compensation judge’s award of Roraff/Irwin fees, arguing that the award was premature for two reasons.  First, the self-insured employer asserts that the judge erred in determining that the contingency fees were inadequate because the cessation of the employee’s wage loss benefits was only temporary due to restrictions related to the COVID-19 global pandemic.  Second, the self-insured employer argues that the award of excess fees was premature because it was based, in part, on benefits that were yet to be recovered by the employee.

Under Minn. Stat. § 176.081, an attorney earns a contingent fee based upon the amount of compensation awarded to the employee.  Fees beyond that contingent fee “shall be assessed against the employer and insurer only if the attorney establishes that the contingent fee is inadequate to reasonably compensate the attorney for representing the employee in the medical or rehabilitation dispute.”^[7]  The determination of whether a contingent fee is adequate cannot be made while indemnity benefits continue to be paid and while fees continue to be withheld.^[8]

The self-insured employer objected to Mr. Hansing’s fee claim on the basis that the claim was premature.  Both at hearing and on appeal, the self-insured employer insists that although the employee was furloughed and his TPD benefits had been discontinued, the cessation of benefits is only temporary.  The self-insured employer argues that the employee’s benefits were only paused, that it was presumed the casino would re-open soon, that it could reasonably be contemplated that the employee would soon return to work, and that his wage loss benefits would resume.  According to the self-insured employer, until the cessation of the employee’s wage loss benefits was definite and final, a determination regarding the adequacy of the contingency fees is premature.

The compensation judge rejected the self-insured employer’s prematurity argument.  As of the date of the hearing and upon closure of the record, the compensation judge was faced with the fact that the employee was not working and was not receiving wage loss benefits.  She noted that it was unknown whether the employee would be called back and in what capacity.  On appeal, the self-insured employer asks that this court consider the circumstances of the employee’s furlough to be unique in light of the COVID-19 global pandemic, and that we take judicial notice of changing circumstances and updated and renewed executive orders beyond the date of the hearing below.  We decline to do so.  As of the date of the hearing, there was no ongoing stream of benefits from which Mr. Hansing could collect fees and it was, therefore, not premature for the compensation judge to make a determination as to the adequacy of the contingency fee under Minn. Stat. § 176.081.

The self-insured employer also appeals the compensation judge’s award of excess fees.  Having concluded that the $8,786.11 contingent fee was inadequate, the compensation judge considered the Irwin factors^[9] and awarded an excess fee of $17,213.89, for a total fee of $26,000.00.  The self-insured employer argues that the award was based, in part, on benefits obtained on behalf of, but not actually recovered by, the employee.  These benefits include an approved change in physician and vocational rehabilitation consultation.  Based upon the record, the employee had not changed physicians and had not undergone a vocational rehabilitation consultation by the date of the hearing.  Further, in outlining her rationale for the Roraff/Irwin fee, the compensation judge listed as results obtained by counsel to include “the possibility of additional medical treatment and future wage loss” (Mem. at 5), and “the possibility of future wage loss and treatment for thoracic outlet syndrome.” (Mem. at 6).

An award of Roraff fees on medical treatment yet provided is premature.^[10]  Similarly, an award of fees for either a change of physician or a vocational rehabilitation consultation is premature until those services are rendered.^[11]  While Mr. Hansing did, in fact, secure payment of medical treatment for thoracic outlet syndrome undergone by the employee, whether and to what extent the compensation judge considered potential future benefits not yet recovered by the employee in awarding the fee in question cannot be ascertained.  As such, we vacate the Roraff/Irwin fee and remand the matter to the compensation judge for application of the Irwin factors but without consideration of benefits not yet recovered by the employee.

Finally, the employee’s attorney cross-appeals from the compensation judge’s denial of his claim for reimbursement for costs to obtain three expert reports under Minn. Stat. § 176.511, subd. 2.  These three expert reports were obtained to support the employee’s 2018 claim that he suffered a compensable injury to his cervical spine.  That claim was unsuccessful.^[12]

In the underlying 2020 litigation, the employee alleged thoracic outlet syndrome.  He relied upon the report and opinions of Dr. John Sandness, while the self-insured employer relied upon reports and opinions of Dr. Joel Gedan.  The compensation judge found the employee’s thoracic outlet syndrome claim to be compensable, determining that the opinions of Dr. Sandness were more persuasive than those of Dr. Gedan.^[13]  The compensation judge considered the opinions of both Dr. Sandness and Dr. Gedan to have been formed in part on the three prior expert reports.^[14]  She also found, however, that none of the three prior experts performed testing specifically directed toward thoracic outlet syndrome.^[15]  On appeal, the employee asserts that the costs of those three prior reports are taxable because those reports were “extensively relied upon” by Dr. Gedan in forming his opinions.  In contrast, the self-insured employer maintains that Dr. Sandness and Dr. Gedan only “referenced” those reports and the cost is not taxable because they were obtained to support a prior unsuccessful claim.  Neither the three prior expert reports, nor the reports of Dr. Sandness and Dr. Gedan, are in evidence for this court’s review.

Mr. Hansing’s claim for reimbursement of taxable disbursements included nearly $3,000.00 spent to obtain three expert reports to support the employee’s 2018 claim alleging an injury to his cervical spine, which was denied.  In considering Mr. Hansing’s claim, the compensation judge found that those reports were in evidence and “formed part of the basis for the opinions of experts in this litigation.”^[16]  She then denied the claim upon concluding that those reports were secured to support the employee’s previous, unsuccessful claim.  The compensation judge was in the best position to have considered the evidence at the underlying hearing, including the past and current expert medical opinions and reports.  She declined to find those reports necessary and directly related to the issues on which the employee prevailed, and on this record, there is no indication that the compensation judge abused her discretion in denying this portion of Mr. Hansing’s claim.