RODNEY DEAN BJORNSON, Employee/Respondent, v. MCNEILUS COS., INC. and TRAVELERS INDEM. CO. OF AM., PROP. & CAS. INS. CO. OF HARTFORD, WITH CLAIMS ADMIN. BY GALLAGHER BASSETT SERVS., INC., Employer-Insurers/Appellants.

The employer and insurers appeal the award of attorney fees alleging that the employee’s attorney did not establish the necessary recovery under Minn. Stat. § 176.081.  We affirm, in part, reverse, in part, and remand, in part.

Rodney Bjornson, the employee, suffered two injuries while working for McNeilus Companies, Inc., the employer.  The first injury on May 29, 2019, to the lower extremities, low back, and right hip, occurred during Travelers Indemnity Company of America’s (Travelers) coverage and was an admitted injury for which benefits were paid.  The second injury on June 24, 2021, to the low back and right hip, occurred during Property & Casualty Insurance Company of Hartford’s (Hartford) coverage and was not an admitted injury.  The employer and Hartford denied primary liability.  The employee underwent surgery on July 9, 2021, at Mayo Clinic Health Systems (MCHS), suffered complications, and required extensive medical treatment.

The employee retained the legal services of attorney David Wulff who filed a claim petition on behalf of the employee on March 28, 2022, claiming medical expense benefits in the amount of at least $317,063.47 and other benefits against both dates of injury.  (Ex. D.)  An intervention notice was sent to the employee’s health insurer, Optum on behalf of UnitedHealthcare Services, but they did not intervene in the matter.  (Ex. E.)  No evidence was offered as to the specific amount paid or whether UnitedHealthcare Services had in fact paid any benefits.  Attached to the claim petition was an exhibit listing the medical expenses, but no bills or treatment notes were attached establishing the causal connection to the dates of injury, the billed amounts, whether the bills were paid, and if so, the amount paid.^[1]

The employer, Travelers, and Hartford reached a to-date settlement with the employee on February 3, 2023, for both dates of injury.  The parties agreed in part:

The employer and insurers paid $15,000 to settle all indemnity, vocational rehabilitation, and medical expenses up to the date of the award on stipulation and of that amount paid Attorney Wulff $3,000 for attorney fees.

On February 15, 2023, Attorney Wulff filed a statement of attorney fees claiming 20 percent of the alleged MCHS bill of $327,257.37.  (Ex. J.)  Attorney Wulff claimed that because he recovered for the employee a lump sum to-date settlement for wage loss benefits including permanent partial disability benefits, medical out-of-pocket payments, medical mileage, and recovery of medical expenses, he was entitled to the maximum compensation rate of $26,000 for each injury, or a total of $52,000 less the $3,000 paid pursuant to the stipulation for settlement, under Minn. Stat. § 176.081, subd. 1(a)(1).  Also attached to the Attorney Fee Statement was Attorney Wulff’s itemization of professional services rendered in the amount of approximately $28,000.  The employer and insurers objected to the fee petition arguing that there was no recovery of medical benefits which would give rise to the award of attorney fees, and that the fees sought were unreasonable and excessive.

On June 5, 2023, the attorney fee issue was heard before a compensation judge. Two issues were presented: 1) whether the contingent fee paid per the stipulation for settlement was inadequate to reasonably compensate Attorney Wulff in a medical dispute, and 2) if not, whether the disputed medical benefits were recovered and paid.  The compensation judge found that the intervention interest of United Healthcare was “recovered” within the meaning of Minn. Stat. § 176.081, subd. 1(a)(1), and ordered that Attorney Wulff be paid $49,000 in attorney fees.  (Finding 11, Order 1.)  The employer and insurers 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).

On appeal, the employer and insurers argue that the compensation judge erred in finding that Attorney Wulff “recovered” medical benefits when the evidence does not support that any medical expenses were incurred or paid.  They argue that there were no disputed ascertainable medical benefits awarded or paid as a result of the stipulation of settlement.  Because there is no evidence in the record to support the alleged $327,257.37 intervention interest of United Healthcare, they argue that the judge erred in awarding fees to Attorney Wulff.  Finally, they argue that they did not admit in the stipulation for settlement that the treatment received was reasonable and necessary, and therefore, did not admit that they were obligated to pay medical treatment under the Workers’ Compensation Act.

We disagree that the compensation judge erred in finding that Attorney Wulff recovered a benefit for his client.  The judge correctly found that Attorney Wulff recovered a benefit for the employee when the employer and Hartford admitted that the treatment rendered was causally related to cure the effects of the June 24, 2021, injury, and agreed to defend, indemnify, and save and hold harmless the employee from any claim made by MCHS or United Healthcare.  The compensation judge defined the term “recovery” as “getting back something lost or spent.”  (Mem. at 5.)  The employer and Hartford denied primary liability and therefore the admission of liability was a recovery within the meaning of Minn. Stat. § 176.081 subd. 1(a) and we affirm that determination. 

However, the amount of Roraff^[2] fees awarded was not based on substantial evidence and failed to comply with the language of Minn. Stat. § 176.081.  This section provides a method by which a fee is paid to an attorney representing an employee in a medical dispute.  Minn. Stat. § 176.081.  Generally, contingent attorney fees for monetary benefits are presumed to adequately compensate an attorney who recovers concurrent disputed medical or rehabilitation benefits.  Minn. Stat. § 176.081, subd. 1(a)(1).  If the employee’s attorney establishes that the contingent fee is inadequate to reasonably compensate him, “attorney fees for recovery of medical benefits in a medical dispute shall be assessed against the employer or insurer.”  Id.  “In those cases, the employer or insurer is liable for attorney fees based on the formula in subdivision 1 or in clause (2).”  Id.  For purposes of applying the formula where employers or insurers are liable for attorney fees, the amount of compensation awarded for obtaining disputed medical benefits shall be the dollar value of the medical benefits awarded, where ascertainable.  Id.  The fees for obtaining disputed medical benefits are included in a $26,000 limit per injury.  Minn. Stat. § 176.081, subd. 1(a)(3).  The statute uses a different method for cases in which the dollar value of the medical benefits is not reasonably ascertainable.  The maximum attorney fee for obtaining disputed medical benefits for which a dollar value is not reasonably ascertainable is the amount charged in hourly fees for the representation subject to a maximum fee of $500.  Minn. Stat. § 176.081, subd. 1(a)(2).

Recently, the Minnesota Supreme Court held that there is no requirement under the statute that an attorney must “procure a benefit on behalf of the employee to be entitled to a contingency fee,” but rather, there must be a genuine dispute.^[3]  Lagasse v. Horton, 982 N.W.2d 189, 199 (Minn. 2022).  Lagasse involved a permanent partial disability claim and not a medical benefit claim which distinguishes Lagasse from the case before us. The statutory provision for attorney fees for recovery of medical and rehabilitation benefits does not use the same language as a dispute over wage loss and permanent partial disability benefits.  When the dispute is for medical benefits awarded, the statute provides a formula for attorney fees after successfully obtaining disputed medical benefits on behalf of the employee.  Attorney fees for “recovery” of medical benefits are assessed against the employer and insurer.  Minn. Stat. § 176.081, subd. 1(a)(1).  Where the employer or insurer is liable for attorney fees, the amount of compensation awarded for obtaining disputed medical benefits shall be the dollar value of the medical benefits awarded where ascertainable. Id.  Contingent fees based on medical benefits awarded are based on the actual amount awarded pursuant to the medical fee schedule.  Irwin v. Surdyk’s Liquor, 599 N.W.2d 132, 59 W.C.D. 319 (Minn. 1999).

Here, we cannot conclude that the medical benefits were ascertainable because of the paucity of evidence in the record which fails to establish that the bills exist, that payment was made, the actual fee scheduled amounts, and whether the treatment was reasonable and necessary.  If the dollar value of medical benefits is not reasonably ascertainable, as in this case, the statute directs the employee’s attorney to use another method for obtaining attorney fees.  The employee’s attorney is paid by the employer and insurers the amount charged in hourly fees for the representation, or $500, whichever is less.  Minn. Stat. § 176.081, subd. 1(a)(2).  If that amount is not reasonable, the employee’s attorney is afforded the opportunity to petition for excess fees.  See Irwin, 599 N.W.2d at 142, 59 W.C.D. at 335-36 (Minn. 1999).  

Although Attorney Wulff recovered a benefit for his client by procuring the relinquishment of the employer’s denial of primary liability and admission that the employee’s treatment at MCHS was causally related to cure the effects of their injury, he did not meet the burden of proving the dollar value of the medical benefits.  Based on the record before us which contains no evidence that medical benefits were incurred or paid, the dollar value of the medical benefits is not reasonably ascertainable.

As substantial evidence does not support the judge’s findings that Attorney Wulff recovered medical benefits on behalf of his client totaling $327,257.37, we reverse that part of Finding 8 that indicates the identifiable intervention interest in the amount of $327,257.37, and Order 1, that awarded attorney fees in the amount of $49,000.  See Yennie v. Benchmark Elecs., Inc. 72 W.C.D. 465 (W.C.C.A. 2012) (where there was no evidence as to the medical benefits recovered, there is no basis to award a Roraff fee).

Because this court maintains authority to raise the issue of attorney fees at any time and has continuing jurisdiction over attorney fees under Minn. Stat. § 176.081, subd. 3, we therefore award $500 in attorney fees to Attorney Wulff for medical benefits which are not ascertainable.  We note that the employee’s attorney did not previously claim excess attorney fees under Irwin and may raise that issue in accordance with the statute.

Finally, the compensation judge ordered “the employer and insurer” to pay Attorney Wulff for attorney fees pursuant to Minn. Stat. § 176.081, subd. 1(a)(1).  (Order 1.)  However, there are two insurers identified in this matter: Travelers and Hartford.  Under Minn. Stat. § 176.081, subd. 1(b), “[i]f multiple injuries are the subject of a dispute, the . . . compensation judge. . . shall specify the attorney fee attributable to each injury.”  Because this case involves two separate insurers, we remand this matter to the compensation judge for an apportionment determination between them, specifying how much, if any, each insurer will pay in attorney fees.