Court Opinion

ID: 9568023
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:00:00.102457+00
Date Added: 2024-06-11T10:24:16.565063
License: Public Domain

HARTZ, Chief Judge (Dissenting) (18)The majority opinion holds that an attorney may be entitled to a fee award pursuant to NMSA 1978, Section 52-1-54 (Cum.Supp.1996) for successfully defending a reimbursement claim under NMSA 1978, Section 52-5-17 (Repl.Pamp.1991) (effective Jan. 1, 1991). I disagree. Moreover, it was not necessary to reach that issue on this appeal. Even if the workers’ compensation judge (WCJ) had authority to award an attorney’s fee for successfully defending a reimbursement claim, the WCJ’s decision provides an adequate alternative ground for denying the fee in this case. (19) Worker retained her attorney to recover tort damages for injuries suffered as a result of the negligence of a co-worker who was driving the automobile in which Worker was injured. The attorney achieved a very favorable result. The automobile liability insurance company paid $50,000, even though it would appear that the tort claim against the co-worker was barred by the Workers’ Compensation Act. See NMSA 1978, § 52-1-8 (Repl.Pamp.1991). Pursuant to a contingent fee agreement with Worker, his attorney was entitled to one-third of the recovery as an attorney’s fee. (20) As I understand the law governing attorney-client fee agreements, Worker’s attorney would not be entitled to any additional fee for defending the tort recovery against a reimbursement claim by the employer/insurer unlesé the contingent fee agreement expressly so provided. “The stipulated percentage of the attorney’s fee is generally based on the amount actually recovered by the client____” 1 Robert L. Rossi, Attorney’s Fees § 2:11, at 121 (2d ed. 1995). In particular, the fee is not based on the amount of the judgment, which might far exceed what is collectible. See id. (21) To be sure, the amount “recovered” need not be money actually received by the client. It is enough if the money pays a debt that the client would have owed in the absence of a judgment. For example, if a creditor has placed a lien on the judgment or garnished the judgment, the amount obtained by the creditor is considered part of the recovery, because the plaintiff-client has received a benefit in the form of reduction of a debt to the creditor. See Hapaniewski v. Rustin, 179 Ill.App.3d 951, 128 Ill.Dec. 810, 535 N.E.2d 24 (1989). Payment to the creditor increases the plaintiffs net worth above what it was before the tort judgment. (22) On the other hand, a reimbursement claim by the employer/insurer should not be treated as a typical creditor’s lien. The amount paid to the employer/insurer does not reduce any obligation owed it by the worker. The worker is not indebted to the employer/insurer for the compensation benefits received, any more than one is indebted to a medical insurer that pays doctor’s bills. If the worker had no tort claim against a third party for an injury covered by worker’s compensation, the employer/insurer would be owed nothing. The purpose of reimbursement is to make the tortfeasor, rather than the employer/insurer, bear the burden of the expense of workers’ compensation benefits. Payment of reimbursement to the employer/insurer does not increase the worker’s wealth in any respect. (23) Thus, the “recovery” to the worker from the tort action is the proceeds from the defendant less any payment to the employer/insurer under a reimbursement claim. The attorney’s fee owed by the worker is therefore reduced when the employer/insurer obtains reimbursement. (The worker’s attorney probably does not suffer, however, because the reduction in the fee owed by the worker is generally replaced by the employer/insurer, which must pay its share of the expenses in the tort litigation. See Transport Indem. Co. v. Garcia, 89 N.M. 342, 552 P.2d 473 (Ct.App.1976).) In other words, the worker compensates the attorney for defending the reimbursement claim by paying the agreed contingent fee rate on the amount of the tort judgment preserved against a reimbursement claim. (24) Turning to the present case, the record below does not suggest that the contingent fee contract between Worker and his attorney contained any special provision relating to the possibility of having to defend a reimbursement claim. Consequently, the WCJ could reasonably have decided that Worker’s attorney had received fair compensation for all efforts relating to the reimbursement claim and hence she should not award the attorney any additional fee — which ordinarily would be paid half by Worker and half by the employer/insurer, see Section 52-1 — 54(J)—for that effort. This is apparently what the WCJ did decide. Although the WCJ’s findings and conclusions could have been more precise, her supplemental findings (after remand from this Court) include the following: 21. Pursuant to NMSA 1978, § 52-1-54, Worker is obligated to pay for one-half of the attorney fee for services performed by Worker’s attorney. Worker’s attorney admitted on the record that he had a separate fee agreement for 33% of the $50,000.00. For the Administration to order Worker to pay attorney fees, (on top of), the fee agreement, will result in Worker paying twice for the same money. 22. Worker’s attorney has .been sufficiently compensated for his involvement in obtaining the $50,000.00. She also entered the following supplemental conclusion: 5. With regard to the $50,000.00, Worker’s attorney has already been sufficiently compensated by the fee agreement in the tort case. Findings Nos. 21 and 22 and Conclusion No. 5 support affirmance of the WCJ’s attorney’s fee award, even if the majority opinion is correct in its interpretation of Section 52-1-54. (25) In any event, I do not agree with the majority opinion’s interpretation of Section 52-1-54. In my view that section does not authorize a WCJ to award attorney’s fees for successfully defending a reimbursement claim by an employer/insurer. (26) The starting point for my analysis is that a reimbursement claim does not affect what the worker receives in benefits to which the worker is entitled under the Workers’ Compensation Act: periodic disability benefits, medical benefits, right to a lump-sum payment, rights with respect to choice of medical care provider, etc. If the employer/insurer prevails, the worker receives less money, but that is less money from the tort recovery. The worker would not have to give back any money received in workers’ compensation benefits. As a result, the attorney’s effort in defending a reimbursement claim confers on the worker no benefit provided by the Workers’ Compensation Act. (27) Because a reimbursement claim does not affect compensation benefits, it is not a “compensation claim.” But Section 52-1-54 provides for attorney’s fees only with respect to such claims. Subsections B, C, E, and G set forth the circumstances in which a WCJ can award an attorney’s fee. (Although Subsection F contains provisions governing fees authorized by Subsection E, it is not an independent source of authority for awarding fees.) The predicate for each subsection is a claim for compensation benefits under the Act. Subsections B and C permit an award “where the jurisdiction of the workers’ compensation administration is invoked to approve a settlement of a compensation claim under the Workers’ Compensation Act.” Subsection E permits an award “where compensation to which any person is entitled under the provisions of the Worker’s Compensation Act is refused and the claimant thereafter collects compensation through proceedings before the workers’ compensation administration or courts.” Subsection G permits an award for “actions arising under the provisions of [NMSA 1978,] Section 52-1-56 [Repl.Pamp. 1991],” which relates to changes in the extent of the worker’s disability. None of these provisions authorizes attorney’s fees with respect to a dispute regarding reimbursement. (28) The provisions of Section 52-1-54 relating to the computation of attorney’s fees must be read in light of the limited circumstances in which fees can be awarded. For example, the first sentence of Section 52-1-54(H) states: In determining reasonable attorneys’ fees for a claimant, the workers’ compensation judge shall consider only those benefits to the worker that the attorney is responsible for securing. If the attorney secures no “benefit” for the worker, the attorney is not entitled to any attorney’s fee. Given that an attorney’s fee award is authorized by Section 52-1-54 only when compensation benefits are at issue, the word “benefits” in Subsection H must encompass only such benefits. (29) My reading of Section 52-1-54 is buttressed by an additional compelling consideration. That section not only authorizes attorney’s fees, it imposes limits on them. Section 52-l-54(A) states: It is unlawful for any person to receive or agree to receive any fees or payment directly or indirectly in connection with any claim for compensation under the Workers’ Compensation Act except as provided in this section. The first two sentences of Section 52-1-54(1) provide: Attorneys’ fees, including, but not limited to, the costs of paralegal services, legal clerk services and any other related legal services costs on behalf of a claimant or an employer for a single accidental injury claim, including representation before the workers’ compensation administration and the courts on appeal, shall not exceed twelve thousand five hundred dollars ($12,-500). This limitation applies whether the claimant or employer has one or more attorneys representing him and applies as a cumulative limitation on compensation for all legal services rendered in all proceedings and other matters directly related to a single accidental injury to a claimant. The conclusion is inescapable that if Section 52-1-54 authorizes an attorney’s fee award for any particular type of work, then the attorney’s fee for such work is subject to the statutory limit. Any contract between the attorney and the worker with respect to fees is restricted by Section 52-1-54. Hence, if an attorney’s fee can be awarded for successfully defending a reimbursement claim (as the majority opinion holds), then any fee for such work is subject to the $12,500 limit; for example, the worker cannot pay the attorney for efforts in defending a reimbursement claim if an attorney (not necessarily the one representing the worker in the tort case) has already received the statutory maximum of $12,500 for representation in the compensation case — regardless of the contract between the worker and the attorney with respect to the tort claim. (30)Moreover, the impact of Section 52-1-54 on the tort-claim attorney’s fee may extend beyond the work with respect to a reimbursement dispute. The approach of the majority opinion suggests consequences that are much more far reaching. The majority opinion states that the distinction between workers’ compensation benefits and tort recovery is “a distinction without a difference.” If, however, there is no real difference between compensation benefits and recovery in tort for the same injury, then presumably the $12,500 cap under Section 52-1-54(1) would apply to attorney’s fees in any tort action predicated on an accidental injury that also gives rise to workers’ compensation benefits. After all, according to the majority’s logic, it makes no difference to the worker where the money comes from. At the least, if the entire tort judgment is at risk because of a reimbursement claim, the worker could fairly argue that any fee owed the attorney for collecting on the tort claim is actually owed for defending the reimbursement claim, making the fee subject to the $12,500 cap. (31) Certainly this result could not have been intended by the legislature. Nor do I believe that any New Mexico court would impose the $12,500 limit on a fee for a tort case. But the above observations point out the need to recognize that Section 52-1-54 governs only fees for claims for compensation benefits, leaving fees for tort claims to the contract between the attorney and client. (32) Even if the impact of Section 52-1-54 on tort-litigation fees is confined by applying it only to reimbursement disputes, striking anomalies in the law arise. I have already mentioned one result: the $12,500 limit would restrict what the attorney could be paid for defending a reimbursement claim, regardless of the attorney-client fee contract for the tort claim. A more serious problem is that permitting an award of attorney’s fees under Section 52-1-54 for representation in a reimbursement dispute creates a glaring distinction between proceedings in district court and proceedings before the workers’ compensation administration with respect to reimbursement claims — a distinction that could greatly encourage forum shopping. Although I do not question that the workers’ compensation administration has jurisdiction to decide reimbursement claims, that jurisdiction is shared with the district court in which the tort claim was resolved. See Fernandez v. Ford Motor Co., 118 N.M. 100, 106-07, 879 P.2d 101, 107-08 (Ct.App.1994). Yet, an attorney’s fee award under Section 52-1-54 is permissible only when the jurisdiction of the workers’ compensation administration is invoked to resolve a dispute or approve a settlement. See § 52-l-54(B), (C), (E), (G). A district court has no authority to award an attorney’s fee under Section 52-1-54. Thus, when a worker’s attorney wishes to obtain extra-contractual attorney’s fees — from both the worker and the employer/insurer — for defending against a reimbursement claim, the attorney will seek to litigate the matter before the workers’ compensation administration. (I will assume that it is ethical for the worker’s attorney to select the forum that will increase what the client will owe as a fee.) The employer/insurer, on the other hand, will seek to have the matter placed first before the district court. A race to the desired forum will ensue. (33) My above comments are not meant to suggest that it is improper for an attorney to earn an additional fee for successfully defending a reimbursement claim. On the contrary, such an additional fee may be appropriate. If there is no additional fee, the worker’s attorney has no financial incentive to defend the reimbursement claim. Any work on behalf of the client in that regard is unpaid. The attorney will receive the same fee win or lose; the only question is what portion of the fee will be paid by the worker and what portion by an employer/insurer that obtains reimbursement. See Transport Indent. Co. The worker may be better off by paying extra for defense of a reimbursement claim. Nevertheless, the statutory language should not be distorted to reach an attractive result. The matter can be handled in the contingent fee contract itself. The statutory interpretation adopted by the majority opinion will create more problems than it solves. I am not sure who will benefit from the forum shopping that the opinion encourages, but the sure losers will be the workers of the state who will ultimately pay the additional transportation costs. (34) For the above reasons, I respectfully dissent.