JOANNE L. HITCHINS, Employee/Appellant, v. FED. EXPRESS CORP., Self-Insured Employer/Respondent, admin. by SEDGWICK CMS.

The pro se employee appeals the compensation judge’s award of attorney fees to her former attorney.  We affirm.

The employee, Joanne Hitchins, sustained an admitted injury to her left hip on November 28, 2018, when she fell on ice in a parking lot while working for the self-insured employer, Federal Express.  She was able to continue working as scheduled over the next several days but with increasing left leg and hip pain.  On November 28, 2018, she sought treatment at an urgent care clinic at Allina Health.  X-rays of the left hip, ankle, and foot were taken but reportedly were negative.  She was taken off work for one week and then returned to work without formal restrictions.  The self-insured employer accepted liability for this injury and paid wage loss benefits and medical expenses.  The employee did not have additional time off work due to her hip condition or seek additional medical treatment for the hip injury during the next four years.

On December 28, 2021, the employee sustained another admitted work injury to her right shoulder when she fell on ice while delivering a package.  She was seen that same day in urgent care and taken off work.  The employee was treated conservatively with physical therapy without success.  On August 30, 2022, she underwent a right shoulder arthroscopy with intraarticular debridement and rotator cuff repair of the supraspinatus tendon, subacromial decompression, and an open biceps tenodesis.  The employee remained off work and was paid temporary total disability benefits throughout 2023.  The self-insured employer also paid her medical treatment expenses for the right shoulder injury during this time.

On January 9, 2023, the employee hired attorney Thomas Atkinson to represent her in her workers’ compensation claims and signed a retainer agreement.  The retainer agreement provided for attorney’s fees in the amount of 20 percent of benefits awarded up to a maximum of $26,000 in fees pursuant to Minn. Stat. § 176.081.^[1]  The attorney and his paralegal began work on the case by conferring with the employee, reviewing wage records, and corresponding with the employer’s administrator and with the employee’s QRC.

On March 8, 2023, the employee was seen by Dr. Michael Nemanich of Twin Cities Orthopedics for a return of pain in her left hip and buttock.  An x-ray of the left hip appeared normal but there was some degree of pain and inflammation over the greater trochanter.  Dr. Nemanich recommended an MRI scan of the left hip.

The self-insured employer denied payment for the MRI scan or any further medical treatment of the left hip as unrelated to the 2018 work injury.  The employee’s personal medical insurer paid for the MRI scan and her attorney filed a medical request for approval of the MRI scan^[2] on March 10, 2023.  An administrative conference was scheduled for May 17, 2023.

The employee was seen by Dr. Adam Johannsen in a follow up to her right shoulder surgery on April 17, 2023.  A recent MRI scan of the right shoulder was noted to show a partial retear of the previous shoulder repair.  Dr. Johannsen offered a choice between revision surgery or conservative approach with possibly another MRI scan six months later.  The employee decided to defer the decision of whether to proceed with further shoulder surgery.

In early May 2023, the parties started working on scheduling a mediation session.  The administrative conference scheduled for May 17, 2023, was rescheduled to July 18, 2023.

On June 8, 2023, the employee updated her attorney about recent doctor visits with Dr. Nicholas Meyer for an opinion on revision shoulder surgery and with Dr. Nemanich, who recommended a lumbar MRI scan to be reviewed by a spine specialist.  The employee had scheduled the MRI scan for June 14, 2023, and was planning to see Dr. Stefano Sinicropi for the review.  She had submitted the bills for the hip and spine issues to her personal medical insurance, and wondered if she should seek approval from the workers’ compensation administrator.  Her attorney responded that she was not required to get approval from the workers’ compensation administrator for the hip or back condition, which had been denied, but that a second surgical opinion could be required for the revision shoulder surgery.

On June 21, 2023, the employee was seen by Dr. Eric Deal for review of the lumbar MRI scan.  The records of Dr. Deal are not in evidence but the employee states in her brief that he did not recommend surgery.

At a mediation session on July 20, 2023, a tentative settlement was reached to pay the employee an additional $135,000 for a full, final, and complete close out of benefits, including future medical expenses, for both dates of injury.  As part of the settlement, the employee would also be required to execute an employment separation agreement.  After the tentative settlement was reached, the administrative conference scheduled for July 31, 2023, was canceled.

On July 25, 2023, the employee told her attorney that she wanted to put the settlement on hold over concerns of her ability to receive benefits under a long term disability plan.  She suggested a counteroffer of $166,000 with future medical benefits open, or $190,000 if the settlement closed out future medical benefits.  If there was no agreement to these terms, she was planning to have the revision shoulder surgery recommended by Dr. Johannsen.  Her attorney advised the employee that she had the right to refuse the settlement proposal and proceed with surgery.  The employee agreed.

A few days later, the attorney informed the employee that the self-insured employer had declined her counteroffer for an increased settlement amount and asked about the revision surgery schedule.  Almost two weeks later, the employee advised her attorney that she had seen Dr. Sinicropi on August 10, 2023, that she was considering applying for social security disability benefits (SSDI), that the workers’ compensation administrator had approved her revision shoulder surgery, and that he should file a request for an administrative conference for payment for her hip or spine condition and treatment.  Her attorney responded that he was surprised she had decided to see Dr. Sinicropi, that the self-insured employer would not accept a claim for the alleged spine condition, and that a claim would require a decision by a compensation judge which would take several months.  As for SSDI, he reminded the employee that filing before a settlement could have significant impacts on the tax-free status of the workers’ compensation benefits she had received. The attorney expressed frustration that she had ignored his advice and kept him in the dark about other actions and suggested that she could consider getting a second legal opinion about her plans.  In response, the employee complained of various past issues, suggested that he let her know if he did not want to represent her and, for a second opinion, that her nephew in law school could debate the issue in a classroom discussion, and stated that she did not need his approval before seeing a particular doctor.

On August 23, 2023, the attorney’s legal assistant requested the employee sign a medical authorization form that had been sent to her on July 5 and August 16, 2023, as soon as possible.  The employee replied that she had signed the form earlier, but was resending it.  She disputed the need for additional records because the 2018 injury was not initially denied.

On August 24, 2023, the employee told the attorney that she was planning on having surgery and filing for SSDI by the next week.  Her attorney responded that the self-insured employer would revoke the current settlement offer if she applied for SSDI and while the payment could increase if she had the proposed surgery, her counteroffer had been rejected.  The employee submitted an SSDI application on August 30, 2023, and was scheduled for revision shoulder surgery.  The attorney advised that the self-insured employer continued to decline her counterproposal for settlement and a conference was set in November 2023.

A few months later, the employee contacted her attorney, stating that she opposed listing Midwest Brain & Spine, Dr. Sinicropi’s clinic, as an intervenor because she had seen him at North Memorial and that Midwest Brain & Spine did not have records of her treatment.  The attorney and his paralegal both responded, stating that the self-insured employer was entitled to the authorization for any records at Midwest Brain & Spine as a matter of discovery and that the signed authorization was needed.  The attorney asked the employee to please sign the form to avoid delay.  The employee did not sign or return the authorization and asserted that the attorney had not answered her questions about intervenors.  The attorney then told the employee to pick up her file and that he was “done with [her] games.”  (Ee. Ex. A.)  He filed an attorney’s lien on November 28, 2023, and the employee filed an objection to the lien on December 8, 2023.

After the employer and insurer filed a motion to compel, the employee, now pro se, signed the medical authorization for Midwest Spine & Brain on January 17, 2024, and signed a stipulation for settlement on March 8, 2024.  The terms were similar to those previously offered with a settlement amount of $135,000, but instead of an employment release, the employee agreed to execute a voluntary resignation.  The stipulation stated that $26,000 in attorney fees would be held in escrow until the employee and her former attorney resolved their dispute over distribution of that amount.  An award on stipulation was filed on March 20, 2024.

A hearing was held on the employee’s objection to the attorney lien on June 28, 2024.  Following the hearing, the compensation judge found that the attorney had shown good cause for his withdrawal from representing the employee and, after considering the factors for excess fees set forth in Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999), found that the escrowed amount of $26,000 was a reasonable fee for his efforts.  The compensation judge therefore ordered the self-insured employer to disburse the escrowed sum to the attorney.  The pro se employee 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).

The sole issue on appeal is the compensation judge’s award of $26,000 in attorney fees to the employee’s former attorney, which had been held in escrow pursuant to the terms of the stipulation for settlement, due to the dispute between the employee and her former attorney.

The jurisdiction of workers’ compensation courts is limited to “questions of law and fact arising under the workers’ compensation laws of [Minnesota].”  Minn. Stat. § 175A.01, subd. 5; Martin v. Morrison Trucking, Inc., 803 N.W.2d 365, 369-70, 71 W.C.D. 361, 368 (Minn. 2011). Minn. Stat. § 176.081, subd. 1(a) (2022) provides in pertinent part that a “fee for legal services of 20 percent of the first $130,000 of compensation awarded to the employee is the maximum permissible fee and does not require approval by the commissioner, compensation judge, or any other party.”  Subdivision 1(c) of this statute provides that an award of contingency fees must be based upon genuinely disputed claims and that the employer or insurer must have had adequate time and information to take a position on liability.^[3]  In Lagasse v. Horton, 982 N.W.2d 189 (Minn. 2022), where an employee dismissed his attorney after the employer and insurer had agreed to pay disputed benefits but before payment was made, the supreme court analyzed whether a genuine dispute existed by determining whether there was an actual conflict between the parties as to any claim or portion of a claim, and whether the employer and insurer had sufficient time and information to take a position on liability.  If so, the attorney was entitled to a contingency fee.

In this case, the compensation judge found that the parties were litigating the nature and extent of the employee’s admitted November 28, 2018, injury and the reasonableness, necessity, and causal relationship of medical treatment for that injury (Finding 21(a)), establishing a genuine dispute.

Moreover, the stipulation for settlement underscores an agreement to settle the parties’ disputes outlining their respective claims and contentions.  The employee’s claims and contentions include that both work injuries were permanent in nature, that she was entitled to permanent partial disability, ongoing wage loss benefits, and vocational rehabilitation, and that she may become permanent and totally disabled.  In response, the self-insured employer claimed that the injury of November 21, 2018, to the left hip was minor and temporary, that the employee failed to make a reasonable and diligent effort to find work within her restrictions and removed herself from the labor market, and that she was not entitled to vocational rehabilitation, permanent partial disability benefits, or ongoing medical treatment.  They specifically denied that the employee would become permanent and totally disabled due to the alleged work injuries.  The plain language of the stipulation for settlement leads this court to conclude that in the context of attorney fees the parties genuinely disputed the nature and extent of the employee’s workers’ compensation claims.

During his representation of the employee, the former attorney negotiated and obtained a settlement offer that was ultimately accepted by the employee, even though not executed and paid until after the cessation of the attorney’s representation.  The stipulation for settlement that the employee ultimately signed contained, in all material respects, the same settlement terms outlined by the mediator at the July 20, 2023, mediation, even though the text of the settlement terms was not fully set out in a formal settlement document at the time.  Given the notes and testimony of the former attorney, the written settlement summary of the mediator, and the testimony of the self-insured employer’s attorney and the employee, substantial evidence supports the compensation judge’s finding that “[t]he results obtained by the employee’s attorney included the settlement offer of $135,000.00, which the employee ultimately accepted.”  (Finding 21(e).)  We conclude that the employee’s former attorney is entitled to the statutory contingency fee calculated on the settlement he obtained for the employee.

We acknowledge that the compensation judge here used a different analysis in awarding attorney fees.  Specifically, he adopted a method endorsed by our supreme court in non-workers’ compensation cases where an attorney retained under a contingency fee agreement is either discharged by the client or ethically withdraws from the representation and later claims fees based on services rendered prior to withdrawal.^[4]  The supreme court has not applied the quantum meruit method set out in these cases to an attorney fee dispute arising under the Workers’ Compensation Act.  Following this method, the compensation judge first considered whether the attorney had good cause to withdraw from the representation.  Then, having found good cause, the judge sought to ascertain the value of the services provided prior to withdrawal in quantum meruit.  In so doing, the judge applied factors the supreme court has identified as appropriate for determining the reasonable value of an attorney’s services in workers’ compensation cases where the fees claimed exceed the maximum contingency amount.   Irwin, 599 N.W.2d at 142, 59 W.C.D. at 336.^[5] 

The obligations of the Workers’ Compensation Act are statutory in nature, and we read the applicable fee statute as providing that the employee’s former attorney, under the facts and findings of this case, is entitled to a contingency fee calculated on the settlement obtained for the employee.  The statute also provides that the contingency fee here is presumed to be reasonable and “. . . does not require approval by the commissioner, compensation judge, or any other party.”  Minn. Stat. § 176.081, subd. 1(a).  While we conclude that the compensation judge was not required to determine whether the attorney had good cause to withdraw or the value of his services in quantum meruit, substantial evidence supports the judge’s finding of good cause for withdrawal and the results of the factor analysis the judge employed in establishing the reasonable value of the attorney’s services.

Regardless of the analysis employed, the judge reached the same figure for the award of fees that is required by the statutory contingency fee approach, and we therefore affirm the attorney fee award of $26,000.