Wilson v. Twin Town Logistics, No. WC17-6072 (W.C.C.A. February 9, 2018)
The employee sustained an injury on February 4, 2013 which was accepted by the employer and insurer and benefits were paid. In January of 2014, the employee’s attorney filed a Claim Petition seeking attorney fees and penalties based on late payment of attorney fees. Shortly thereafter, in April of 2014, the employer was declared insolvent so the employee’s attorney submitted the claims to the Minnesota Insurance Guaranty Association (MIGA), who declined to provide coverage so liability fell directly on the employer. The employee’s attorney amended the Claim Petition 3 times to add in additional claims for TPD, medical treatment, penalties for late payment of wage loss benefits, and rehabilitation services and expenses. A hearing was set but cancelled based on a tentative settlement of the parties that ultimately fell through. A second hearing was set and the employee’s claim was heard by Judge Bouman who issued a Findings and Order on November 8, 2016 awarding various benefits to the employee including penalties and medical benefits.
The employee’s attorney filed a Statement of Attorney fees claiming $4,493.78 in contingent fees, $2,368.22 as Roraff fees, $30,572 as excess fees under Irwin, plus additional costs and subdivision 7 fees. After a hearing on the attorney fee dispute, heard also by Judge Bouman, a Findings and Order was issued that awarded $3,000 to the employee’s attorney for a combination of Roraff/Irwin and excess fees. The employee’s attorney appealed.
The W.C.C.A. found that Judge Bouman was very familiar with the employee’s claim and the complexity of that claim having heard both the claims on the Claim Petition and on the Statement of Attorney fees. They noted that the compensation judge made 43 specific and detailed findings regarding the parties’ disputes and also discussed the actions taken on behalf of the employee by her attorney. They specifically pointed out that the compensation judge found that the issues were not especially complex or technical and that the 17-page document containing hundreds of time entries from the employee’s attorney included some excessive, duplicative, and “secretarial type” entries. The W.C.C.A. indicated that, while they have reversed or remanded awards of excessive fees, they generally give deference to a compensation judge’s decision about what constitutes reasonable fees under the circumstances. Thus, the W.C.C.A upheld the award of $3,000 as a combined Roraff/Irwin/excess fee.
Chief Judge Milun wrote a dissenting opinion noting that the W.C.C.A.’s job is to first review whether the judge applied the correct legal standard under Irwin, which is done de novo, and if the correct legal analysis was performed, the compensation judge’s order must be reviewed for abuse of discretion. Chief Judge Milun disagreed with the majority opinion that the compensation judge’s factual findings supported the award ordered based on Irwin. She noted that there was only a conclusory statement accompanying each Irwin factor, which was not adequate to support the award.
Chief Judge Milun also opined that the judge’s award was an abuse of discretion as it was such a drastic reduction on the fee claimed by the employee’s attorney – $30,572 reduced to $3,000. She found that the preparation time for the two scheduled hearings alone amounted to $6,000 based on an hourly rate of $330, which was found to be reasonable by the compensation judge. Ultimately, Chief Judge Milun opined that the employee’s attorney had performed reasonable work on behalf of the employee over 2.5 years which included a greater amount of effort due to issues such as the insolvency of the insurer and the failure to make timely payments by the employer, and thus the award of only $3,000 in excess fees was an abuse of discretion.