MARQUITTA L. BRIDGEMON, Employee/Respondent, v. MAYO CLINIC, Self-Insured Employer/Appellant, and LAW OFF. OF JOSHUA BORKEN, Cross-Appellant.

The self-insured employer appeals the compensation judge’s order releasing withheld attorney fees to the employee’s attorney, awarding Minn. Stat. § 176.081, subd. 7, fees, and awarding costs.  In addition, the employee’s former attorney cross-appeals, asserting that the compensation judge erred by not awarding statutory interest.  Because the compensation judge did not err in the application of Minn. Stat. § 176.081, and because substantial evidence and case law support the findings, we affirm.

On January 24, 2017, Marquitta Bridgemon, the employee, injured her right lower extremity while working for the Mayo Clinic, the self-insured employer.  She had prior right lower extremity pain and treatment, but the work injury increased her symptoms.  Subsequently, the employee was diagnosed with complex regional pain syndrome (CRPS).  The employer admitted liability and paid benefits.

On March 10, 2017, the employee retained attorney Joshua Borken.  Six months later, on October 31, 2017, Mr. Borken filed a medical request for a psychological evaluation that was disputed.  The parties appeared for an administrative conference, where the hearing specialist agreed with the employee and awarded medical benefits.  The employer appealed the decision and also filed a notice of intention to discontinue (NOID) the employee’s workers’ compensation benefits.  After an administrative conference on the NOID, a compensation judge denied the employer’s request to discontinue benefits on March 16, 2018.  Because Mr. Borken represented the employee in recovery of workers’ compensation benefits, on March 22, 2018, he emailed the employer’s attorney asking that attorney fees be withheld from the employee’s ongoing benefits.  The employer withheld attorney fees from the employee’s ongoing temporary total disability (TTD) benefits, but in the interim disputed the award of benefits to the employee, filed a petition to discontinue benefits, and requested a formal hearing.

The appealed medical issue and the petition to discontinue were consolidated for a formal hearing.  However, the formal hearing did not occur.  Instead, the employer filed a second NOID, and this time was successful in discontinuing benefits effective February 12, 2019.^[1]  The employee filed an objection to the discontinuance, but the matter was stricken from the active trial calendar in January 2020 and dismissed on March 4, 2021.  The compensation judge stayed the dismissal for 30 days to allow for any party to file a motion to reinstate, which no party filed.  On May 11, 2022, the employer moved for an order to allow for the distribution of the withheld attorney fees.^[2]

On May 17, 2022, Mr. Borken filed a statement of attorney fees requesting that the withheld attorney fees be released to him.^[3]  The second NOID documented that the employer paid TTD benefits from January 23, 2017, to February 12, 2019, in the amount of $51,946.67, paid medical expenses in the amount of $32,750.45, and had also withheld attorney fees totaling $4,852.43.^[4]  The employer objected to Mr. Borken’s petition that the withheld fees be released, claiming that Mr. Borken was not successful in procuring benefits.  The employer also argued that the employee’s claim was not yet resolved, and it was possible that benefits may continue to be paid.  To address the attorney fee petition, the matter was heard on September 19, 2022.

At the hearing, Mr. Borken testified that he had represented the employee in two conferences and prevailed at both.  He stated that, but for his efforts, the employee would not have had her wage loss benefits reinstated.  He further argued that because there is a final order in this case, an order dismissing the pleadings, the matter was ripe to determine who would get the fees. The employer argued that the order of dismissal was not a final determination even though the employee had taken no further action to pursue her workers’ compensation claim.  The compensation judge agreed with Mr. Borken and awarded the withheld attorney fees, taxable costs, and ordered payment to the employee under Minn. Stat. § 176.081, subd. 7.  The employer appeals and Mr. Borken cross-appeals.

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).

On appeal, the employer argues that the compensation judge erred in awarding fees and costs because no underlying benefits were awarded, the case was not yet resolved, the interim decision has no force and effect when the employer filed the request for discontinuance, and the dismissal was not definitive.  It argues that the compensation judge failed to recognize that once a party seeks a de novo hearing, the interim administrative decision is without any force or effect, and that an award of attorney fees is premature when there has not yet been an award of the underlying benefits.  We are not persuaded.

In Lagasse v. Horton, 982 N.W.2d 189 (Minn. 2022), the Minnesota Supreme Court outlined a process in awarding contingency fees under Minn. Stat. § 176.081, subd. 1(c), to analyze whether a genuine dispute exists.  The Lagasse court concluded that the existence of a genuine dispute hinges on two factors: (1) there is an actual conflict between the parties as to any claim or portion of a claim, and (2) the employer or insurer have sufficient time and information to take a position on liability.  Id. at 198-99 (citing Minn. Stat. § 176.081, subd. 1(c)).  The court emphasized that there is no statutory requirement that an attorney must “procure a benefit on behalf of the employee to be entitled to a contingency fee.”  Id. at 199.

Here, it was reasonable for the judge to conclude that an actual conflict existed.  The employee was receiving wage loss benefits following a work injury and the employer sought to discontinue those benefits by filing a NOID with the Department of Labor and Industry.  With the filing of the NOID and with the appearance at the administrative conference by the employer representative, and by the employee and her former attorney, Mr. Borken, factor one of the Lagasse analysis was satisfied.  In this case, the employee prevailed and the employer reinstated ongoing benefits.

Factor two in determining whether a genuine dispute exists was also satisfied because the employer had adequate time and information to take a position on liability.  The employer argued in 2017 that the employee was not entitled to requested psychological treatment.  This resulted in the first administrative decision at which the employee prevailed through her former attorney, Mr. Borken.  Soon after, the employer filed a NOID in February 2018 which was denied by a compensation judge.  The employer continued to dispute the ongoing benefits by filing appeals of the decisions and petitions to discontinue benefits over the course of the next year.  In Lagasse, the court pointed out that the insurer in that case took three days to respond to the claim petition and questioned why the insurer made no attempt to get more information or claim that the time and information it had was insufficient.  Here, the employer had years between the first pleading filed and the final order to dismiss the case, had the employee undergo an independent medical exam and sit for a deposition, giving the employer information to take a position on liability.  We conclude that under Lagasse, both factors are satisfied in determining that a genuine dispute existed.

Although the Lagasse court made clear that an award of benefits to the employee is not needed in awarding attorney fees, the statute guides us to how fees may be calculated.  Minn. Stat. § 176.081, subd. 1(c), limits the amount of fees to $26,000, subject to 20 percent of the first $130,000 of periodic compensation awarded to the employee which may be withheld for fees. Mr. Borken was able to achieve a successful result in March 2018.  The compensation judge found that “in light of Attorney Borken’s recovery of disputed TTD benefits at the March 9, 2018, administrative conference, and the current procedural posture of the case, an award of fees . . . is appropriate.” Finding 23 (emphasis added).  We conclude that it was reasonable for the judge to determine that the withheld fees awarded were derived from the benefits recovered.

The employer argues that fees are not due because there was no resolution or final determination of the merits of the case.  This position is not dispositive in light of the language in Lagasse, yet the statute guides us as to when fees are payable.  Minn. Stat. § 176.081, subd. 11, provides that fees and other disbursement for a proceeding under the chapter shall not be due or paid until the issue for which the fee or disbursement was incurred has been resolved. 

Here, the employer argues that the issues were not resolved.  While there were several pleadings and petitions filed between 2017 and 2019, the employer notes that these disputes did not get resolved by a finding on the merits in a formal hearing.  The matter was struck from the trial calendar in January 2020, without objection by any party, and on March 4, 2021, the compensation judge dismissed the pending pleadings for failure to prosecute, without objection by any party.  Furthermore, the judge stayed the order to dismiss for 30 days to allow any party to file a motion to reinstate.  No party filed a motion to reinstate or sought further resolution of their respective claims.

We are reminded that the Minnesota Rules of Civil Procedure provide that a dismissal is a final determination and operates as an adjudication upon the merits.  Minn. R. Civ. App. P. 41.02. Here, the compensation judge reasoned that the order dismissing the matter effectively served as a final order.  He concluded that there were no pending pleadings, and the award of fees was appropriate.  It was reasonable for the judge to conclude that the issues had been resolved when the pending pleadings were dismissed, and we affirm.

The employer also argues that the award of fees under Minn. Stat. § 176.081, subd. 7, and costs violates the employer’s due process rights under the Minnesota and U.S. Constitutions.  It argues that at no time was it afforded an opportunity to be heard on the merits of the case. We are not persuaded.

The statutory function of this court is to resolve those questions of law and facts arising under the Minnesota Workers’ Compensation Act.  Minn. Stat. § 175A.01, subd. 5.  In that context, we note that the employer did receive the process that was prescribed by the workers’ compensation statute and rules.  The employer was given opportunity and notice of the impending dismissal but did not act by objecting or filing a motion to reinstate.  See Powell v. Stein Indus., Inc., 70 W.C.D. 261 (W.C.C.A. 2010) (basic fairness requires notice and a reasonable opportunity to be heard) (citing Kulenkamp v. TimesSavers, Inc., 420 N.W.2d 891, 40 W.C.D. 869 (Minn. 1988)).  The issues regarding subd. 7 fees and costs were identified at the beginning of the fee hearing, without objection from the employer.^[5]  We affirm the compensation judge’s award of subd. 7 fees and costs.  We defer to the Minnesota supreme court any question whether these statutes and rules did not afford the employer due process under the Minnesota and United States constitutions.

Finally, in his cross-appeal, Mr. Borken argues that the judge erred in failing to order statutory interest on the attorney fees claimed.  This court has previously held that payment of interest in compensation is mandatory under the statute regardless of whether entitlement to such fees has been pleaded or ordered.  Hanegmon v. Nat’l Steel Pellet, No. WC04-140 (W.C.C.A. Oct. 6, 2004).  Attorney fees shall not be due or paid until the issue for which the fee or disbursement was incurred has been resolved.  Minn. Stat. § 176.081, subd. 11.  Here, the underlying issue had been resolved upon the execution of the order dismissing the matter.  Interest accrued pursuant to Minn. Stat. § 176.221, subds. 7 and 8, and the employer is obligated to pay interest accordingly.