David v. Bartel Enterprises, 856 N.W.2d 271 (Minn. 2014).
On November 26, 2014, the Minnesota Supreme Court issued a decision regarding attorney’s fees for worker’s compensation cases in David v. Bartel Enterprises, 856 N.W.2d 271 (Minn. 2014).
In this case, the employee sustained a low back injury and received significant medical treatment. As part of the settlement, the employer and insurer resolved the medical intervention claims for $233,054.50. The employee’s attorney requested $36,810.93 in Roraff fees based on the statutory 25/20 formula (25 percent of the first $4,000 and 20 percent of the remaining amount).
At a hearing on the issue, the employer and insurer argued that under the Minnesota Supreme Court’s Irwin decision, the statutory 25/20 formula resulted in excessive fees at a rate of nearly $1,000 an hour based on the time the employee’s attorney actually spent working on the file. The judge awarded the statutory $13,000 in fees and did not consider whether this fee was reasonable under Irwin.
The employer and insurer appealed, challenging the constitutionality of the statutory formula since it precluded judicial review of a fee award under Irwin. The WCCA affirmed the compensation judge because a constitutional challenge could only be addressed by the Minnesota Supreme Court.
The employer and insurer appealed to the Minnesota Supreme Court and made the same constitutional challenge. The Supreme Court rejected the employer/insurer’s argument by declining to expand its reasoning in Irwin to include cases in which an attorney fee is awarded under the statutory formula. The Court stated that absent “exceptional circumstances,” an attorney fee under the 25/20 statutory formula was not per se excessive.
In response, the state legislature revised Minn. Stat. §176.081 and their revisions became effective on October 1, 2013. After these changes, an attorney can now claim contingency fees of 20 percent of the first $130,000 in compensation awarded.
As a result, after the David decision and the subsequent legislative change, an employee’s attorney can now claim $26,000 in fees without consideration of the time and effort she spends on the file.