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- P

- 402 Appeals Court
JAMES ELLIS 1 vs . COMMISSIONER OF THE DEPARTMENT OF INDUSTRIAL ACCIDENTS & another. 2

No. 13

- P

- 402. Suffolk. October 10, 2013.

- September 18 , 2015.

Present: Berry, Green, & Trainor, JJ.
Workers' Compensation Act , Lump

- sum settlement, Attorney's fees. Administrative Law , Judicial review. Practice, Civil , Frivolous act ion.

C ivil action commenced in the Superior Court Department on May 28, 2008. The case was heard by Geraldine S. Hines , J. , on a motion for summary judgment.

Teresa Brooks Benoit for the plaintiff. Timothy J. Casey , Assistant Attorney General, for Commissioner of the Department of Industrial Accidents. Michael K. Landman , for Landman, Akashian & White, P.C. , was present but did not argue.

1 Doing business as Ellis & Associates.

2 Landman , A kashian & W hite , P.C. , as a reach and apply defendant.2

B ERRY , J. Reduced to essentials, in this latest appellate foray, the plaintiff, James Ellis , contends that, in considering whether to approve a lump sum agreement under § 48 of G. L.

c. 152, the Workers' Compensation Act (act) , for injuries to a worker, an administrative judge of the Department of Industrial Accidents ( department) or a law judge on the department's reviewing board ( reviewing board) (hereinafter collectively
referred to as administrative judge) is absolutely foreclosed from reviewing the authenticity of the l egal expenses and from adjusting those expenses downward, leaving more money for the injured worker under the lump sum settlement payment. We reject Ellis' s contentions regarding total unreviewability of the claimed legal expenses . Ellis offers no precedent , i.e. , no caselaw or statutory authority , for this proposition. See note 8 , infra . We conclude that an administrative judge

-- in review of a proposed lump sum awarded and to be paid in settlement to an injured worker

-- do es have the authority to review and adjust downward unsubstantiated or

u nreasonably excessive attorney's fees and expenses. Put another way, it is within the purview of an administrative judge to modify the amount allocated in the lump sum settlement to an employee's attorney for attorney's fees and necessary expenses where t he fees and expenses, upon review, are insufficiently supported or deemed not necessary, and the administrative judge,3

by such a n adjustment, neither increases the burden on the insurer nor decreases the net sum to be paid to the employee. In the past fiv e years alone, Ellis or his legal assistants (collectively , Ellis) have filed over one hundred and fifty
workers ' compensation appeals in this court . I n a substantial
number of the s e appeal s , Ellis also sought further appellate review in the Supreme Judicial Court where this court de cided the appeals adversely to the contentions advanced
. Ellis' s

a ttor ney's fee s and expenses frequently have been the main subject in the se appeal s . 3 In a series of these cases, E llis has

3 S ee , e.g. , Ellis v. OneBeacon Ins. Group , 76 Mass. App. Ct. 1115 (2010) (taking frivolous position that Ellis's attorney lien supersedes Division of Medical Assistance lien); Cordeiro's Case , 76 Mass. App. Ct. 1117 (2010) (challenging entitlement of predecessor attorney to fee s even though Ellis had segregated fee for counsel in settlement); Ryder's Case , 80 Mass. App. Ct. 1102 (2011) (affirming de nial of attorney 's fee s where Ellis's motion to recuse was denied and thereafter Ellis refused to submit evidence to support his claim for portion of fee s allocated in lump sum settlement); Derosiers's Case , 81 Mass. App. 1130 (2012) (sole issue is denial of attorney 's fee s ); Stepien's Case , 81 Mass. App. Ct. 1132 (2012) (challenging reduction of attorney's fees that was done in accordance with s tatutory factors); Perry's Case , 82 Mass. App. Ct. 1102 (2012) (arguing attorney 's fee s and costs due even though insurer made settlement offer upon receipt of impartial medical examiner's report but Ellis did not accept it until day before rescheduled § 36 hearing). In addition, Ellis has filed a spate of appeals in which he refused insurers' offers of full paym ent in the apparent hopes of getting attorney 's fee s and then pursu ed the fee issue on appeal even when the insurer was ordered to pay only the amount offered. See , e.g. , Packard's Case , 76 Mass. App. Ct. 1115 (2010); Txicanji's Case , 76 Mass. App. Ct. 1123 (2010); Wong's Case , 76 Mass. App. Ct. 1126 (2010); Derosier s 's Case , supra ;4

been sanctioned for filing frivolous ap pe al s and , similarly , for presenting frivolous claims involving fees and expenses before
t he department
. 4 , 5 Against this backdrop, this appeal from a Superior Court judgment

-- again rejecting Ellis ' s makeshift c ontentions

Mahoney's Case ( No. 1 ) , 81 Mass. App. Ct. 1135 (2012); Perry's Case , supra .

4 See , e.g. , S antelli's Case , 78 Mass. App. Ct. 1119 (2011) ( Ellis sanctione d for filing baseless claim against another attorney in division of attorney's fee dispute between them); Neal's Case , 80 Mass. App. Ct. 1108 (2011) ( affirming department's assess ment of cos ts against Ellis for advancing frivolous claim where Ellis unreasonably refused offer of full payment because insurer would not send check directly to Ellis without authorization from employee); AIM Mut. Ins. Co . v. Okraska , 81 Mass. App . Ct. 1106 (2011) (frivolous appeal of denial of a ttorney 's fee s resulted in claimant Ellis being ordered to pay insurer's appellate attorney's fees); McCarty's Case , 81 Mass. App. Ct. 1114 (2012) (awarding double costs of appeal for frivolous appeal by Ellis where claims had already been adjudicated and were barred by res judicata); Vasilenko's Case , 83 Mass. App. Ct. 1124 (2013) (insurer's award of appellate attorney' s fees taxed on Ellis where there could be no reasonable expectation of reversal on appeal ).

5 In Ellis v. Travelers Indem
. Co ., 77 Mass. App. Ct. 1104 (2010), a decision issued pursuant to our rule 1:28, we observed that a Sup erior Court judge noted twenty

- seven cases filed in Superior Court in 2008 in which Ellis failed to exhaust his administrative remedies and brought actions in an effo rt to recover costs, demonstrating "a w ilful design to circumvent the [department] primary jurisdiction, to procure payment for unsubstantiated expenses (which usually exceed the attorney's fee ordered), and to obtain begrudging capitalization fr om the ins urers, who are apt to settle the vexatious cases rather than incur additional attorney's fees." We affirmed the judgment award ing the insurer attorney's fees and costs pursuant to G. L. c. 231, § 6F, and awarded appellate attorney's fees and costs. In ad dition, we referred the matter to the Board of Bar Overseers where disciplinary proceedings are now pending
.5

regarding "necessary expenses "

-- presents yet another unsustainable effort by Ellis to manipulate the workers ' compensation system to Ellis ' s financial advantage vis

- à

- vis legal expenses . Ellis' s contention that attorney's fees an d expenses are nonreviewable

-- even if unnecessary or unsubstantiated

-- is contrary to best interests of injured employees , and is at odds to the very purposes served by the act . "It has long been recognized that the [a] ct 'was enacted as a " humanitarian

measure " in response to strong public sentiment that the remedies afforded by actions of tort at common law did not provide adequate protection to workers. ' " Spaniol's Case , 466 Mass. 102, 106 (2013) , quoting from Neff v. Commissioner of the Dept. of Indust rial Accs ., 421 Mass. 70, 73 (1995)
. We are mindfu l that legal representation of injured employees i s an important part of the worker s ' compensation statutory and regulatory scheme , and that payment of attorney ' s fees and expenses are spe cifically provided for at various stages of proceedings before the department and th e court s . 6 However, fees and expenses for a ppropri ate legal representation is not a cart e blanche to an open credit line for an attorney to draw upon without validity
. Particularly is this so w h ere , as

6 As to the framework for review of a lump sum settlement and necessary attorney 's fees and expenses, see part 2 , infra
.6

here, the attorney

- related expenses have not be en shown to be
reasonable o r actually incurred. In deed, in this case, Ellis failed to provide to the department and the lower court appropriate documentation for these expens es , certain of which
were deemed un reasonabl e and excessive. 7
O versight of the allocation to an attorney o f attorney's fees and necessary expenses i s an important part of the task of

an administrative judge in approving a lump sum settlement agreement. Particularly is this so because t he fees and
expenses in a lump sum settlement differ in allocation from other, necessary fees and expenses awardable in other contexts , which under the a ct may be payable to an attorney directly by the insurer . See G. L. c . 152, § 13A(1)

- (7)
. In contrast, in a lump sum settlement agreement , attorney 's fees and expenses are paid from the very lump sum settlement deemed due t o the injured
worker
. It is illustrative t o view the legal setting of a lump sum settlement ar rang em ent. O nce the insurer agrees to payment of a sum certain lump sum settlement , the insurer has little incentive to scrutinize the attorney's fees and expenses submitted by the employee 's attorney
. Further , t he injured employee would be placed in an awkward position , if called upon

7 Ellis does not contend on appeal that he submitted documentation sufficient to support the amount of "necessary expenses" allocated to him in the Michael X. Smith and Brian Tape settlements. The record is devoid of any such documentation
.7

to contest the fees and expenses of the attorney who ha s represented that employee through the settlement process. Thus, i t is the impartial administrative judge who stands as the overseer to the fairness and propr ie ty of the lump sum settlement and the fees and expenses incorporated therein
. See G. L. c. 152, § 48. 1. Procedural b ackground
. The appeal involves prior proceeding s in two workers' compensation cases litigated during 2008 , in which Ellis represented employee s seeking workers ' compensation for injuries sustained at work. The first case involves Michael X. Smith . Smith and the insurance company reached agreement as to a lump sum of $50,000
after Smith had reached maximum medical improvement to
compe nsate him for lingering effects of a tibia

- fibula fracture, including persistent pain and limitation . The agreement provided for attorney 's fee s of $7,500, and expenses of $3,574.31. The agreement was submitted to an administrative judge for approval pur suant to G. L. c. 152, § 48
. T he administrative judge approved the agreement but modified it by withholding payment of the expenses pending documentation , and ultimately approved only $1844.31 in expenses and awarded the balance of $1730 to the employee. The administrative judge denied expenses that were related to pursuing a psychological injury t h at was not part of the settlement. The record does not8

contain the documentation or other evidence provi ded to the administrative judge related to the expense s incurred. The second case involves Brian Tape , who had injured his right ankle at work . T he parties entered an agreement for a lump sum of $15,000 and future medical expenses, from which attorney 's fee s of $3,000 and expenses of $3,484.73 were to be
pa id
. The administrative judge approved the settlement pursuant to § 48 , but modified the expenses arrangement by releasing the full amount of the expenses to the employee to disburse "to his counsel as he deems app ropriate." Of note i n both cases, n either the injured employees nor the compensation insurers filed appeals concerning the lump sum
settlement with the adjusted fees
. " O nce the department gives its approval of the parties' l ump sum agreement pursuant to § 48, 'further inquiry' of the merit s of the controversy must be had in Superior Court
. " Opare's Case , 77 Mass. App. Ct. 539, 541 (2010) , quoting from Perkins's Case , 278 Mass. 294, 299 (1932). Ellis did not seek any such " further inquir y" or direct appellate review in either case
. In stea d , acting solely on his
own behalf and in his interests

-- and without joining either the insurer or injured employee

-- Ellis filed an independent declaratory judgment lawsuit in the Superior Court. Specifically, Ellis , acting in his own name and doing b usiness9

a s Ellis & Associates, commenced in the Superior Court a G. L.

c. 231A declaratory judgment c o mplaint coupled with a claim in equity to reach and apply against insurer's counsel
. The declaration sought in the Superior Court

-- tracking the position Ellis continues to advance in this appeal

-- is that an administrative judge i s prohibited from consider ing attorney 's fees and expenses embedded in a lump sum settlement ; and that
under G. L. c. 152, § 19 , the administrative judge's only

reco urse in the event that he finds that a lump sum agreement is not in the best interests of the employee is to reject th e settlement as a whole.
A Superior Court judge rejected Ellis 's con te n tion s . The judge correctly reasoned

-- a rationale which we adopt in this appeal

-- that administrative judges "have the power to adjust Lump Sum Agreements in favor of claimants pursuant to their responsibility under G. L. c. 152, § 48 [] to ensure that settlement is in the claimant's 'best interests , '" 8 provided that the administrative judge may neither increase the amount due from the insurer , nor reduce the amount due to th e employee
. 9

8 Ellis also a rgued that the department denied his property right to reimbursement for expenses wi thout due process of law. Ellis does not pursue th is dubious argument on appeal , and in any event , it is waived.

9 At the outset t here is also a p atent flaw in Ellis being the sole plaintiff seeking such a declarato ry judgment
. General L aw s c. 231A, § 8 , inserted by St. 1945, c. 582, § 1, provides ,10

2. The framework for a lump sum settlement and administrative review
. The a ct allows an employee and an employer or insurer to settl e part or all of a claim for
worker s ' compensation through a lump sum settlement , which, when presented to an administrative judge, as was done here, is not perfected "until and unless approved by an administrative judge

or a dministrative law judge as being in the claimant's best interest." G. L. c. 152, § 48 (1), as amended by St. 19 91,

c. 398, § 74
. "Central to c. 152's statutory scheme is the Legislature's command that the department have oversight responsibility over lump sum settlements in order to ensure that any such settlement is 'in the claimant's best interest.' " Opare's Case , 77 Mass. App. Ct. at 541 , quoting from G. L.

c. 152, § 48
. "'The determination of a lump sum [settlement] calls for a careful scrutiny of th e evidence, the exercise of sound judgment and good practical sense, so that the amount will be as near as possible to the present value of all the compensation payments which the employee would be entitled to receive in the future.' Paltsios's Case , 329 Mass. 526, 529 (1952). The approval process under § 48 is designed to serve

" W hen declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding."11

that exacting inquiry." Opare's Case , 77 Mass. App. Ct. at 542 n.6
. There is no provision in the a ct that the "necessary expenses" allocated to an employee's attorney as part of a lump

sum settlement , once submitted to an administrative judge for approval, are exempt from this scrutiny. General L aws c. 152, § 13 A (8)(b), provides that once a lump sum settlement is

re ached, attorney's fee s , which are to be paid from the settlement, may not exceed twenty percent of the lump sum settlement. Twenty percent is an upper limit, not a lock box
that bar s review into the box. While the act does not refer to costs, § 13A(10) , inserted by St. 1991, c. 398, § 35, states that the d epartment "shall provide by rule the necessary expenses that are reimbursable under this section ," and reasonably necessary expense s have traditionally been allowed
. Pursuant to 452 Code Mass. Regs
. § 1.19 (2) (2013 ) , any employee's attorney entitled to a fee under G. L. c. 152, § 13A , shall submit to the administrative judge or reviewing board an itemization of reasonable and necessary expenses and disbursements , and the insurer shall pay those expenses approved by the administrative judge or reviewing boa rd. See 452 Code Mass. Regs. § 1.02 ( 2008 ) (defining "necessary expenses"). In an alternative approach , Ellis advances an "all or nothing" proposal as follows. Ellis contends that , even if an12

administrative judge is authorize d to review the "necessary expenses," § 19 of the a ct requires the administrative judge to reject the settlement as a whole , if t he judge finds that the allocation for "necessary expenses" is not necessary , not supported , or excessive. We are aware of no a uthority to support this all

- or - nothing approach . Furthermore, Ellis has

n o t cited a uthority by caselaw or statute t h at suggests that an employee's counsel is a "party" to a lump sum settlement agreement pursuant to § 48 and § 19 such that the reduction o f the "necessary expenses" component of the lump sum settlement requires an administrative judge to reject the agreement as a
whole. See Pinto v. Aberthaw Constr
. Co . , 418 Mass. 494, 497

n. 2 (1994) (attorneys signing third

- party settlement agreement in ca pacities as counsel for insurer and employee not "parties" to settlement agreement). Section 19, applicable to agreements in general, is incorporated by reference in to § 48. See Bertocchi's Case , 58 Mass. App. Ct. 561, 563

- 564 (2003)
. 3. The t h rust of Ellis 's frivolous litigation
. As
p reviously noted , and as the host of Ellis 's litigated cases
comp i led by citation in the beginning of this opinion show, this appeal is just one small part of a pattern of Ellis's frivolous litigation i n advancing legally unfounded claims on appeal
.

" [W] e will not hesitate to award attorney's fees and costs against counsel in appropriate cases." Hough's Case , 82 Mass.13

App. Ct. 1121 (2012)
. See Donovan's Case , 81 Mass. App. Ct. 1108 (2012). 10 In Donovan , we descr ibed the appeal as "meritless, redundant of the prior appeal, assaultive upon the integrity of the participants in the underlying administrative

s c hem e , and wasteful of the private resources o f the opposing party and of the public resources of the [departm ent] and of the Appeals Court. It qualifies as thoroughly frivolous within the meaning of Mass.R.A.P. 25, as appearing in 376 Mass. 949 (1979)." I bi d
. Under this standard, t his appeal is frivolous and worth y of sanctions. As with Ellis v. Travelers I ndem
. Co ., 77 Mass. App. Ct. 1104 (2010), see note 3 , supra , we refer this case to the
Board of Bar Overseers. Judgment affirmed
.

10 Although our rule 1:28 decisions are not p recedent, they may be cited for their persuasive value. S ee Chac e v. Curr an , 71 M ass. App. Ct. 258, 260 n.4 (2008). W e cite the 1:28 decisions here as part of the Ellis litigation history.