Opinion ID: 1543653
Heading Depth: 1
Heading Rank: 1

Heading: Ayotte v. United Services, Inc.

Text: On September 9, 1986, Ethel Ayotte injured her lower back while at work. Hartford accepted her claim, filed its memorandum of payment on October 14, 1986, and began to pay Ayotte $48.52 per week. Ayotte returned to work on November 12, 1986, and Hartford discontinued her benefits. Ayotte worked only three days before her chiropractor advised her that work was aggravating her injury. She retained Dunleavy on November 24, 1986. After some communication with Dunleavy, Hartford resumed paying Ayotte's benefits on January 13, 1987. Hartford filed a notice of controversy on March 4, 1987, contesting its responsibility to compensate Ayotte for an elbow injury. The issue was resolved at an informal conference held on April 13, 1987, at which no party was represented by counsel. Hartford filed another notice of controversy on August 10, 1987, contesting a similar claim, but the parties resolved the issue without another conference. By November 3, 1987, Ayotte had received about $2,500 in total benefits and Dunleavy had billed $1,851 on this case. In January 1988 the parties began negotiating a lump sum settlement because Ayotte wanted to return to work. After opening negotiations with a demand of $50,000, Dunleavy offered to settle the case on February 17, 1988, for $8,500, contingent upon Hartford's paying Dunleavy's charges in the entirety. His fee had by that time grown to $2,273 and Hartford refused. The parties eventually negotiated a lump sum settlement in which Hartford would pay Ayotte $8,500 and Dunleavy $850. On May 6, 1988, the same day that the parties were to appear before a hearing commissioner for approval of the settlement proposal, Dunleavy had Ayotte sign an agreement that required her upon receiving her settlement check from Hartford to pay an additional $996.51 to Dunleavy in lieu of payment of attorney fees and expenses of $1,993.03. The extra fee would diminish her lump sum settlement by 12% and raise Dunleavy's percentage take on the settlement from 10% to 22%. The commissioner approved the settlement proposal but ruled that Ayotte need not pay Dunleavy any additional fee under the separate agreement. In response to Dunleavy's request for findings of fact and conclusions of law, the commissioner expressly found the additional billing of $996.51 excessive. In answer to Dunleavy's challenging the Commission's authority to regulate his fee, the commissioner held that: As a matter of law, part of the Commission's mandate under Section 110 and under Section 71 ... is to review the reasonableness of attorneys fees upon the submission of a lump sum settlement proposal. It is within the province of the Commission to review the reasonableness of the fee requested by the employee's attorney, both from the insurance carrier and the employee. Further, the Commission has the authority to establish the appropriate fee amount, if that amount differs from the amount requested by the employee's attorney. [2] Dunleavy took his challenge to the Appellate Division. Affirming the commissioner's award on April 3, 1989, the Appellate Division stated: Implicit in the Commission's legislative mandate and regulatory authority is the duty to oversee attorney's fees. In lump-sum cases, the Commission's authority must by necessity extend to an investigation of the reasonableness of fees charged to the employee. Otherwise, how would a commissioner determine whether or not the settlement was in the employee's best interest. The Commission has the responsibility to review, supervise and limit, if necessary, the attorney's fees to be paid by the employee. In this case the commissioner did exactly that. Dunleavy argues on this appeal that the Commission had no authority to regulate the fees Ayotte agreed to pay in the separate contract. He also argues that the Commission's regulation of fees in this context would impede Ayotte's ability to retain counsel and so deny her equal protection of the laws. Since the best interests mandate of section 71 and the prevail rule of section 110(2) both empower the Commission to regulate Dunleavy's entire fee in this case, we find no legal error in the commissioner's decision.
Under the best interests mandate of section 71, which applies to lump sum settlements under the Act, the Commission has regulated attorney fees consistently with our assertion in Willet v. Hascal & Hall, Inc., 275 A.2d 247, 248 (Me.1971), that: The legislature has placed with the Commission the duty of determining the justification for and the reasonableness of a fee for the employee's attorney and of assessing the employer with that amount. While the statute does not give the Commission an uncontrolled or arbitrary power, the amount to be allowed lies in the commissioner's discretion and the Court should interfere only if this discretion is abused. See, e.g., Allen v. F.J. O'Hara & Sons, Inc., No. 88-33, at 2435 (Me.Workers' Comp.Comm'n App.Div. Mar. 13, 1988) (Although the agreement of the parties is a significant factor to be considered in approving a fee, agreement of the parties does not deprive the Commission of jurisdiction over fees under 39 M.R.S.A. § 71). The chairman of the Commission through the general supervisory powers granted by 39 M.R.S.A. § 92 (1989) has promulgated Me.Workers' Comp.Comm'n Regulation 22.12(A), which provides that: When there is a dispute between the parties concerning the attorney's fee, counsel for the worker shall file Form WCC-25, Motion for Award of Fees and Disbursements. This motion shall be served upon opposing counsel involved at the time of the disputed legal services or, if there was no legal representation, directly upon the opposing party. A motion shall be filed in the appropriate district office. Within 30 days following the receipt of this motion, the opposing party or counsel for the opposing party shall submit a written statement of objections to the fee for which payment is sought. Within 10 days following the receipt of the objections of the opposing party, counsel for the worker shall file a reply. The presiding commissioner shall issue an order assessing a fee. The commissioner shall consider at least the following factors in his determination: (1) the complexity of the issues presented; (2) the novelty of the questions raised; (3) the quality of the representation; (4) the time and labor required; (5) the skills and experience of the attorney; and (6) the benefits to the worker. The commissioner's fee order shall not be disturbed on appeal unless it can be shown that it is arbitrary and capricious. The chairman has also promulgated Me. Workers' Comp.Comm'n Regulation 22.12(C), which provides that [a]n employee's attorney may not receive a fee for a lump sum settlement pursuant to 39 M.R.S.A. § 71-A, regardless of the source, without Commission approval. These regulations give hearing commissioners concrete tools with which to control the proceeding and to protect the injured employee's interests down to the award of attorney fees, which do directly affect the net amount an injured worker receives in settlement or adjudication of a claim. We have held that the construction of a statute by an agency charged with enforcing it is entitled to great deference. [This court] shall accept the agency's construction, especially if . . . it is long established or contemporaneous with the statute, unless it clearly violates the legislative intent. Bar Harbor Banking & Trust Co. v. Superintendent of the Bureau of Consumer Protection, 471 A.2d 292, 296 (Me.1984) (citations omitted). See also Georgia-Pacific Corp. v. State Tax Assessor, 562 A.2d 672, 674 (Me.1989); Mercy Hosp. v. Maine Health Care Financing Comm'n., 559 A.2d 352, 354 (Me.1989); Kelley v. Halperin, 390 A.2d 1078, 1080 (Me.1978). The Commission's interpretation in these regulations of the best interests mandate of section 71 is entirely consistent with the legislative intent behind the Act, to compensate injured workers with a minimum of cost and delay. See Ciccotelli v. KTS Indus., 415 A.2d 1091, 1092 (Me.1980) (per curiam) ([W]e remind the Bar and the Commission of the statutory mandate that the Commission's procedural orders shall assure `a speedy, efficient and inexpensive disposition of all proceedings.' 39 M.R.S.A. § 92.) Regulation of the employee's attorney fee in lump sum proceedings under section 71 and its successors falls within the authority of the Commission.
Contrary to the assertions of both Dunleavy and amicus A.F.L.-C.I.O., Ayotte by her settlement in this case has also prevail[ed] within the definition of that term in 39 M.R.S.A. § 110(2). [3] That section provides that [i]f an employee prevails in any proceeding involving a controversy under this Act, the commission or commissioner may assess the employer costs of a reasonable attorney's fee. (Emphasis added) Ayotte's receipt of benefits in a lump sum brings her within the definition of having prevail[ed] under the second sentence of section 110(2)(A) in that she has obtain[ed] or retain[ed] compensation or benefits under the Act. The settlement process is a proceeding, a prescribed course of action for enforcing legal rights and remedies. Kennie v. City of Westbrook, 254 A.2d 39, 43 (Me.1969). The controversies involved in Ayotte's receipt of benefits satisfy the final requirement under section 110(2) for regulation of fees. Hartford terminated Ayotte's benefits after she returned to work, and Ayotte hired Dunleavy to help resolve the problem. Hartford filed two separate notices of controversy, which resulted in one informal conference before the Commission. Having argued throughout this case that his services were instrumental in Ayotte's receipt of benefits and that the proceedings were controverted enough for him to generate a bill of $2,800, Dunleavy will not now be heard to argue that there was no controversy under the Act so as to trigger section 110(2). Thus the commissioner possessed statutory authority also under the prevail standard of section 110(2) to regulate the extra fee Dunleavy wanted to charge his client. His employee client having prevailed in this case, Dunleavy becomes subject to the express fee regulating provisions of section 110(2), specifically that: No attorney representing an employee who prevails in a proceeding involving a controversy under this Act may receive any fee from that client for an appearance before the commission, including preparation for that appearance, except as provided in section 83, subsection 7 and section 94-B, subsection 3. Any attorney who violates this paragraph shall lose his fee and be liable in a court suit to pay damages to his client equal to 2 times the fee charged for that client. Section 110(2) also specifically exempts the employer from responsibility for the employee's attorney fee prior to one week following an informal conference [hereinafter the informal conference period] where, as here, no party adverse to the employee was actively represented by counsel during that period. [4] In this case the informal conference period ran from November 24, 1986, through April 20, 1987. Thus, in settling the entire attorney fee in this case at $850, Hartford paid not only its own share of the fee, but also that attributable to Ayotte for the informal conference period. Hartford, however, has not appealed the award and in fact negotiated the $850 fee. Finally, we find no merit in Dunleavy's contention that the Commission's regulation of the attorney fee in lump sum settlements violates equal protection provisions of the state and federal constitutions. The regulation of fees in this situation bears a rational relationship to the legitimate state purpose of protecting injured workers' best interests and does not violate constitutional guarantees of equal protection. See B.P.O.E. Lodge No. 2043 of Brunswick v. Ingraham, 297 A.2d 607, 616 (Me.1972), appeal dismissed, 411 U.S. 924, 93 S.Ct. 1893 reh'g denied 412 U.S. 913, 93 S.Ct. 2288, 36 L.Ed.2d 977 (1973). Accord Hudock v. Virginia State Bar, 233 Va. 390, 393, 355 S.E.2d 601, 604 (1987); Crosby v. State Workers' Compensation Board, 57 N.Y.2d 305, 309, 456 N.Y.S.2d 680, 683, 442 N.E.2d 1191, 1194 (1982).