The Minnesota Supreme Court recently addressed a challenge to the reasonableness of contingent attorney fees that were awarded within the statutory cap in David v. Bartel Enterprises (Nitro Green), No. A13-2141 (Minn. Nov. 26, 2014).
Since 1999, the Court has allowed contingent attorney fees in excess of the statutory cap by their decision in Irwin v. Surdyk’s Liquor, 599 N.W.2d 132 (Minn. 1999). In the Irwin decision, the Court held portions of Minnesota Statute § 176.081, specifically with regard to the maximum attorney fees awardable, unconstitutional because it did not allow a court the power to review an award. Irwin provided a series of factors that would allow an award to push past the maximum. These factors include: “the statutory guidelines,…the amount involved, the time and expense necessary to prepare for trial, the responsibility assumed by counsel, the experience of counsel, the difficulties of the issues, the nature of the proof involved, and the results obtained.” Until recently, these factors could arguably have applied to an award falling below the maximum fee as well as those in excess.
In David, the plaintiff injured his back in a work-related incident and incurred medical expenses. Bartel Enterprises and its insurer, SFM Mutual Insurance Company, agreed to pay $233,054.50 to settle all of David’s medical bills. David’s attorney sought an award of contingent attorney fees in the amount of $46,810.90, pursuant to Roraff, but disregarding the upper limit set by the statutory formula. The compensation judge set the award at the previous statutory maximum of $13,000. Nevertheless the employer and insurer challenged the reduced amount by arguing for an application of the Irwin factors even though the award was within the maximum set by statute.
The Minnesota Supreme Court opined that a fee could be challenged using the Iriwin factors, but only if it was above the statutory maximum. The primary issue before the court in David was whether a fee, which followed the statutory guidelines only, was challengeable based on the other factors listed above. The Court held that in general only a fee that was determined to be beyond the statutory maximum could be challenged. It based this decision upon the principle of “comity,” a term denoting respect and deference, in this case as regards the power of the legislature. As a result, the Court declared that so long as the fee was calculated by the statutory guidelines, it was “presumptively reasonable” unless there were “exceptional circumstances.” The latter term of art was not supplied with much support or explication but the Court did give guidance in a footnote in the opinion, wherein they suggest that such circumstances are when an award is “arbitrary and unwarranted by the evidence.” The rest of the Court’s opinion, however, strongly suggests that so long as an award is consistent with the statute, it is presumptively reasonable. Today, after August 1, 2014, the increased statutory maximum of 20 percent of the first $130,000 of compensation awarded to the employee is presumed reasonable.
The claim further illustrates the necessity to carefully consider whether to certify medical disputes or seek time to obtain records, reports and an independent medical evaluation prior to advising the Department that a dispute over medical treatment exists. Once a certification is provided, there are few avenues available to challenge contingent fees based on the value of those services.
If you have any questions about attorney fees, awards, or any other workers’ compensation matter, please feel free to call or e-mail any one of our many experienced attorneys. 651-482-8900.
