Gerald Grace v. Smith Foundry, Co., et. al.

Gerald Grace v. Smith Foundry, Co., et. al. No. WC20-6368 (W.C.C.A. January 12, 2021).

The employee suffered injuries to his left upper extremity as a result of a 2015 injury.  At hearing, the compensation judge found the employee did not sustain an injury to the cervical spine. That holding was affirmed by the Minnesota Supreme Court.  In 2019, the employee brought a new claim for benefits, and alleging thoracic outlet syndrome as a result of the 2015 injury. That matter also went to hearing, where the compensation judge found the condition was compensable, and awarded wage loss, and medical benefits and intervention claims related to the thoracic outlet syndrome.

The Employee’s attorney filed a statement of attorney fees for over $8,000.00 in contingency fees, $26,000.00 in Roraff/Heaton/Irwin fees, reimbursement of over $2,000.00 in Sub. 7 fees, and about $11,000.00 in taxable costs.  The compensation judge awarded the contingency fees, approximately $17,000.00 in Roraff/Irwin fees, a portion of subd. 7 fees, and approximately $8,000.00 in taxable costs. The self-insured employer appealed the compensation judge’s award of Roraff/Irwin attorney’s fees, and the employee’s attorney cross-appealed a denial of a portion of the claimed taxable disbursements.

On appeal, the self-insured employer argued that the Roraff/Irwin fees were premature because the employee’s wage loss, which contingency fees were based off, were only temporarily discontinued due to the COVID-19 pandemic, and that the award, in part, was based off benefits not yet recovered by the employee.  On appeal, the WCCA noted that fees beyond contingency fees shall be assessed only if the attorney establishes that contingency fees are inadequate to reasonably compensate the attorney for representing the employee in the medical or rehabilitation dispute. The determination of whether a contingent fee is adequate cannot be made while indemnity benefits continue to be paid and while fees continue to be withheld.  Here, the WCCA found that the employee had been furloughed and had still not been called back to work. There was no ongoing stream of benefits to collect fees, and therefore, was not premature for the judge to make a determination on the adequacy of contingency fees.  However, an award of Roraff fees based on medical treatment not yet provided is premature.  Here, although the Employee prevailed, it could not be determined to what extent the judge considered potential future benefits that were not yet recovered. For that reason, the issue of fees was vacated for the judge to apply the Irwin factors without a consideration of benefits not yet recovered.

Lastly, the WCCA addressed the employee’s argument on the denial of certain taxable costs relating to expert reports addressing the unsuccessful cervical spine claim, arguing the judge still formed her opinion, in part, using these reports.  However, the WCCA noted that the compensation judge is in the best position to address this issue, and as the compensation judge declined to find the past reports were necessary or directly related to the issues. The WCCA affirmed this issue.

Takeaway:  It is not premature for a judge to award Roraff/Irwin fees if an employee is furloughed. However, those benefits must not be based off benefits not yet recovered by the Employee.