Opinion ID: 880287
Heading Depth: 1
Heading Rank: 4

Heading: forfeiture of fees

Text: We note at the outset that this Court is guided by the purpose of the workers' compensation statutes. That purpose is protection of the interests of the injured worker. North American Van Lines v. Evans Transfer and Storage (Mont. 1988), 766 P.2d 220, 223, 45 St.Rep. 1848, 1852. The Montana workers' compensation statute on attorney fees provides: If an attorney violates a provision of this section, a rule adopted under this section, or an order fixing an attorney's fee under this section, he shall forfeit the right to any fee which he may have collected or been entitled to collect. § 39-71-613(3), MCA. The workers' compensation regulation in effect when this case arose provided that an attorney may not charge: (a) for cases that have not gone to a hearing before the workers' compensation judge, a fee above twenty-five percent (25%) of the amount of compensation payments the claimant receives due to the efforts of the attorney. § 24.29.3801, ARM (1985). Appellant Hartford argues that the Workers' Compensation Court erred in relying on the current version of the regulation, section 24.29.3802, ARM (1987), instead of the version which controlled at the time the dispute arose, section 24.29.3801, ARM (1985). The appellant is correct, but the error is harmless. For the purposes of this case, the regulations are essentially identical in wording and meaning. Prior to reaching the Supreme Court, appellant Hartford argued that he did not violate the attorney fees regulation by charging Mrs. Young for the advances and overpayment. He asserted that they were debts which the insurer waived due to his negotiating efforts. We agree that in workers' compensation cases, an attorney may bill for debts waived through the attorney's efforts. A waiver of debt is a benefit to the claimant obtained by the attorney and is fully compensable within the limitations of the attorney fees regulation. The regulation limits compensation in at least two aspects. First, an attorney may not charge more than twenty-five percent of the compensation the claimant receives. § 24.29.3801, ARM (1985). The regulation looks first to the claimant's recovery in capping attorney fees. Undoubtedly, an attorney may become involved in several distinguishable efforts in securing a single recovery for the client. In such cases, agency approval of increased fees may be appropriate. See § 24.29.3801(4), ARM (1985). However, absent such approval, the attorney may not bill more than twenty-five percent on each amount received by the client. Second, the recovery must be due to the efforts of the attorney. § 24.29.3801, ARM (1985). Whether the attorney's efforts brought about the waiver, as opposed to a voluntary waiver by the insurer, is a question of fact to be determined by the hearing examiner. See §§ 2-4-621(2), 2-4-623, MCA. Appellant Hartford also argues that he made a mistake in calculating his fees and is being excessively punished for pursuing a good faith claim. We agree that a simple mistake in calculation should not result in total forfeiture of attorney fees. However, we do not agree that his is a good faith claim. Hartford consistently and vehemently argued that he was entitled to additional attorney fees for Mrs. Young's advances and overpayments because they were debts the insurer waived through Hartford's negotiating efforts. He made this argument in a series of letters to Judge Reardon of the Workers' Compensation Court after Mrs. Young complained to the judge about Hartford's excessive fees. He maintained the same inflexible position before the hearing examiner, the administrator, and the Workers' Compensation Court. Now before this Court, Hartford admits for the first time that he was not entitled to those fees, and asserts that he was merely mistaken in his calculations. If Hartford's former argument is incorrect at this appellate level, he should have known that it was incorrect at the agency level. We cannot credit Hartford with good faith in pursuing attorney fees under a theory which even he admits is without legal merit. We agree with the Workers' Compensation Court that Hartford violated the regulation in at least two instances. First, Mrs. Young received the two advances totaling $3,500 prior to retaining Hartford. Those advances were settlements of future benefits owing to Mrs. Young and not debts she was required to repay. Charging for those benefits violates the regulation because, as appellant now admits, the claimant received those advances due to her own efforts and not Hartford's. Furthermore, the parties' agreement stated that the attorney would not charge for amounts previously received. To now label these advances debts waived through the attorney's efforts is at least a violation of their agreement. Second, Mrs. Young received a $12,466.65 advance through Hartford's efforts, but he was paid $2,493.33 for those efforts. To now call this advance a waived debt would allow the attorney to charge a twenty-five percent fee in addition to the twenty percent fee already received. We hold that attorney Hartford's attempts to overcharge the claimant are in violation of the attorney fees regulation and the purposes of the workers' compensation statutes. Total forfeiture of fees is required by section 39-71-613(3), MCA. As the Workers' Compensation Court noted, this is a harsh result considering that Mrs. Young received more than $58,000 through Hartford's efforts. However, the statute is clear and it is mandatory. Affirmed. HARRISON, BARZ, WEBER and HUNT, JJ., and FRANK I. HASWELL, Chief Justice, [] Retired, concur.