Lisa Borucki Vukelich v. Rise, Inc.

Lisa Borucki Vukelich v. Rise, Inc. No. WC19-6320. (W.C.C.A. June 12, 2020).

Background:

On July 20, 2017, employee Lisa Borucki Vukelich sustained serious injuries in a motor vehicle accident, while on her way to a work meeting. Her employer, Rise, Inc., and its insurer, Sentry Insurance Group, denied liability for her injuries. Ms. Vukelich retained an attorney to represent her, and subsequently filed a claim petition, seeking workers’ compensation benefits. Ms. Vukelich also filed a no-fault insurance claim with her automobile insurance company, State Farm. State Farm paid both the policy limits of $20,000.00 for wage loss benefits and $20,000 for medical expenses, and also intervened in the pending workers’ compensation case.

Ms. Vukelich entered into a stipulation for settlement with Rise, Inc., resolving all of her claims on a “full, final, and complete” basis, including claims for future medical benefits. Ms. Vukelich was awarded $64,900.00, and of that settlement award, $12,900.00 was paid to her attorney for attorneys’ fees arising out of the settlement. Intervenor claims, except for State Farm, were settled as well. State Farm disagreed with the settlement offer, believing it was inadequate, and proceeded to a Parker/Lindberg hearing.

State Farm retained an attorney to represent its interests at the Parker/Lindberg hearing, and subpoenaed Ms. Vukelich to testify that her injuries were work-related. Her attorney was present during the hearing, but did not participate or ask any questions. The compensation judge issued his Findings and Order on April 5, 2019. He determined that the injuries were in fact, work related, and that State Farm was entitled to full reimbursement of the no-fault benefits it paid to Ms. Vukelich. Rise, Inc. and Sentry Insurance Group appealed this finding, but settled with State Farm to resolve the intervention claim when the appeal was pending. Ms. Vukelich and her attorney were not parties to the agreement between her employer and insurer, nor did they participate in negotiations.

On June 24, 2019, Ms. Vukelich’s attorney filed a statement of attorney fees seeking a $7,000.00 Edquist fee. Of this fee, 20 percent would be awarded to State Farm. Following the filing of the statement seeking attorney fees, State Farm objected to the fee claim and a hearing occurred on July 8, 2019. On August 28, 2019, the workers’ compensation judge issued a Findings and Order, in which he awarded an Edquist fee, claiming that Edquist fees are based on “recovery rather than effort,” and that the employee “had a right to be represented at the Parker/Lindberg hearing. From these Findings and Order, State Farm appeals.

Holding:

The Court of Appeals reversed the compensation judge’s award of an Edquist fee to the employee’s attorney, reducing State Farm’s reimbursement. The Court held that this case did not present a “typical” Edquist fee scenario. In this case, State Farm made the effort and took the financial risk when they asserted primary liability and asserted their right to reimbursement. In contrast, in Edquist, the Minnesota Supreme Court awarded attorney fees when the employee’s attorney, not the intervenor’s attorney, recovered benefits for the employee, based on their efforts at trial.