Opinion ID: 2111644
Heading Depth: 1
Heading Rank: 1

Heading: Irwin v. Surdyk's Liquor et al.

Text: John Irwin was involved in a work-related motor vehicle accident on September 13, 1996. As a result of that accident, he suffered neck, shoulder, and jaw pain and headaches. Surdyk's Liquor and its insurer, American Compensation Insurance Company (hereinafter referred to collectively as Surdyk's) denied liability, and Irwin retained attorney David C. Wulff. Wulff filed a claim petition and represented Irwin at the hearing. Irwin claimed 15% permanent partial disability, payment of treatment from a physician for a billed amount of $4612.53, payment of treatment from another physician for a billed amount of $4955.12, payment of medical mileage reimbursement in the amount of $15.12, and statutory interest on all benefits. The compensation judge awarded Irwin $6000 for 8% permanent partial disability benefits, payment of all of one and a portion of the other physicians' charges pursuant to the fee schedule, medical mileage of $15.12, and statutory interest on each of these amounts. The compensation judge also ordered reimbursement of costs and disbursements advanced by Wulff and contingent fees to be withheld from Irwin's permanent partial disability award of $6000. Neither party appealed the award. On February 5, 1998, Wulff filed an application for payment of the withheld contingent fees and additional fees based on and related to the recovery of medical expenses, commonly called Roraff fees. See generally Roraff v. State, 288 N.W.2d 15 (Minn.1980). In this application, Wulff claimed that he performed 37 hours of professional services. He sought payment of the contingent fees already being withheld from Irwin's permanent partial disability award, and Roraff fees payable by Surdyk's in the amount of $4150. The requested Roraff fees and the contingent fees totaled $5550, which would have compensated Wulff for his 37 hours at the hourly rate of $150. Following a hearing, the compensation judge found that the 37 hours spent by Wulff were reasonable and necessary in light of the issues involved in the case. Surdyk's did not contest that the $150 per hour rate was reasonable. The compensation judge found that the $1400 contingent fee was inadequate to reasonably compensate Wulff for his 37 hours of services, and that Wulff was therefore entitled to Roraff fees based on the medical expenses paid. Those fees were based on 20% of the fee schedule amount paid, and totaled $1682.99. Combined with the $1400 contingent fee, the compensation judge awarded Wulff a total of $3082.99. The compensation judge also awarded Irwin 30% of all attorney fees paid to Wulff in excess of $250, under Minn.Stat. § 176.081, subd. 7. The judge interpreted this statute to provide an award (not a reimbursement) based on all attorney fees paid to claimant's attorney pursuant to Minn.Stat. § 176.081, not just contingent fees. Further, the compensation judge determined that although Wulff requested attorney fees for future medical benefits that might become payable, any such award would be premature, as no future medical benefits had been paid or disputed by the employers or insurers. Cross-appeals were filed by both parties. On appeal, Surdyk's did not contest the compensation judge's finding that the contingent fee award was inadequate to reasonably compensate Irwin's attorney, but disputed the compensation judge's finding that the amount of time Wulff spent on the case was reasonable. The WCCA upheld the award of Roraff fees based on medical expenses paid and held that the compensation judge's method of determining the adequacy of the contingent fees as compensation for the attorney was reasonable. After outlining the 1995 amendments to Minn.Stat. § 176.081, the WCCA stated, the current statute provides no standards for determining whether a contingent fee award is inadequate to reasonably compensate an attorney for representing an employee in a medical or rehabilitation dispute. While noting that there was some merit to Irwin's position challenging the constitutionality of Minn.Stat. § 176.081, subd. 1, the WCCA acknowledged that it lacked jurisdiction to determine the constitutionality of the statute. The WCCA concluded that the statute allowed an additional award based on medical benefits only in accordance with the precise percentage-based formula of Minn.Stat. § 176.081, subd. 1(a). Accordingly, the WCCA did not address the reasonableness of the requested attorney fees. The WCCA found no merit in Irwin's assertion that the attorney fee award should be based on the actual amount billed by the provider. The WCCA determined that Minn.Stat. § 176.136, subd. 1(a) (1998) limits the liability of an employer or insurer to the fee schedule amount, and because the compensation judge could not award a medical benefit in excess of that provided in this schedule, the fee schedule amount was the proper amount on which to base attorney fees. As to Irwin's contention that attorney fees should be awarded for future medical benefits, the WCCA stated that the phrase `benefit awarded' [as used in Minn.Stat. § 176.081, subd. 1(a)(1)] is plain and unambiguous and limits the attorney fees to the dollar amount of the benefits awarded in the proceeding. Finally, the WCCA determined that the compensation judge erred in ordering payment to the employee of 30% of all attorney fees under Minn.Stat. § 176.081, subd. 7. The WCCA looked to the purpose of subdivision 7, which is to reduce the impact of withholding reasonable attorney fees from the compensation benefits to which the employee is entitled. The WCCA determined that because courts have traditionally treated subdivision 7 fees as reimbursement to the employee, subdivision 7 fees should be based only on attorney fees paid by the employee, not on those paid by the employer.