Opinion ID: 2633465
Heading Depth: 2
Heading Rank: 1

Heading: Disclosure Statements

Text: The Industrial Commission based its order that Pena forfeit all fees he collected from his former client on Pena's failure to provide her with a fee disclosure statement as required by IDAPA rule 17.02.08.033.04 (the disclosure rule). The disclosure rule was created by the Commission under its statutory powers to monitor the appropriateness of fees charged workers' compensation claimants pursuant to I.C. § 72-803. Rhodes v. Indus. Comm'n, 125 Idaho 139, 141, 868 P.2d 467, 469 (1993); see I.C. § 72-803. In pertinent part the disclosure rule provides: Upon retention, the attorney shall provide a claimant a copy of a disclosure statement. No fee may be taken from a claimant by an attorney on a contingency fee basis unless the claimant acknowledges receipt of the disclosure by signing it. Upon request by the Commission, an attorney shall provide a copy of the signed disclosure statement to the Commission. The terms of the disclosure may be contained in the fee agreement, so long as it contains the text of the numbered paragraphs one (1) and two (2) of the disclosure. A copy of the agreement must be given to the client. The disclosure statement shall be in a format substantially similar to the following:    DISCLOSURE STATEMENT 1. In workers' compensation matters, attorney's fees normally do not exceed twenty-five percent (25%) of the benefits your attorney obtains for you in a case in which no hearing on the merits has been completed. In a case in which a hearing on the merits has been completed, attorney's fees normally do not exceed thirty percent (30%) of the benefits your attorney obtains for you. 2. Depending upon the circumstances of your case, you and your attorney may agree to a higher or lower percentage which would be subject to Commission approval. Further, if you and your attorney have a dispute regarding attorney fees, either of you may petition the Commission to resolve the dispute. IDAPA 17.02.08.033.04 (emphasis added). Pena maintains it was inappropriate for the Industrial Commission to order him to surrender all of his fees pursuant to the disclosure rule. Pena first argues the rate of compensation called for in the fee agreement between himself and Cheung is reasonable and in compliance with the usual and customary charge in the legal community. The Industrial Commission, however, did not determine the terms of the fee agreement were themselves unreasonable. Instead, the Industrial Commission observed that Pena neglected to provide a disclosure statement to Cheung, and, pursuant to the disclosure rule, ordered a forfeiture of fees. Whether the fee structure outlined in the fee agreement between Pena and Cheung was reasonable and customary has no bearing on the question of whether Pena provided Cheung with the legally required disclosure statement. Next, Pena asserts the disclosure rule consists of vague language and does not outline when complete forfeiture may or may not be applied. This argument is unpersuasive. The rule unambiguously states that [n]o fee may be taken absent a disclosure statement containing the specific language given in the rule. In this instance the presence of the word may following the command to charge [n]o fee does not render the operative language optional or ambiguous. Admitting his fee agreement with Cheung did not contain the actual language required by the rule, Pena nevertheless argues the agreement satisfied the rule because the agreement mentioned fees broadly consistent with the fee levels the rule outlines. The disclosure rule, however, requires the attorney to provide the client with a disclosure containing the specific language in the rule  not simply that the terms of the agreement impose similar fee levels as those noted in the rule. See IDAPA 17.02.08.033.04. Pena next argues that because the Industrial Commission has approved other fee agreements that did not include the required disclosure statements its enforcement of the rule in this instance was arbitrary and capricious and thus an abuse of discretion. See Curr v. Curr, 124 Idaho 686, 691, 864 P.2d 132, 137 (1993) (stating that an arbitrary and capricious act by the Industrial Commission amounts to an abuse of the Commission's discretion). It should be noted, however, that fee agreements and disclosure statements are not the same thing. The disclosure rule provides that the mandated disclosure statement may be included in a fee agreement, or it may be provided separately, so long as it is provided and it includes the required text. IDAPA 17.02.08.033.04. In other words, disclosure statements are required, but need not be a contained in the fee agreement itself. Id. As a result, the Commission's approval of fee agreements that did not themselves include disclosure statements has no bearing on this case. The Industrial Commission determined Pena forfeited his fees not because he failed to include a disclosure statement with his fee agreement, but instead because he failed to provide the mandated disclosure statement entirely. Moreover, Pena has failed to direct this Court's attention to any case in which the Industrial Commission considered the question of disclosure statements. That this case was one of first impression does not render the Industrial Commission's decision arbitrary and capricious. Finally, Pena argues the Industrial Commission's order violated his due process rights under the United States Constitution. Specifically, Pena asserts he was denied his right to notice and an opportunity to be heard because the Commission's rules neglect to provide a clear guideline of what penalty is applied for failure to provide a client with a disclosure statement pursuant to IDAPA 17.02.08.033.04. With respect to Pena's opportunity to be heard, he concedes the Industrial Commission conducted a full and proper hearing. With respect to notice, the language of the disclosure rule unambiguously states that [n]o fee may be collected absent the presentation and signing of a disclosure statement as mandated by the rule. IDAPA 17.02.08.033.04. The meaning of the rule is readily apparent, and the Industrial Commission's interpretation of the rule to permit fee forfeiture is reasonable. We accordingly affirm the Industrial Commission's determination that Pena's failure to comply with the disclosure requirement of IDAPA 17.02.08.033.04 merited the forfeiture of his fees earned in the worker's compensation action.