ERIC JACOBSON, Applicant
MILWAUKEE SIGN COMPANY LLC, Employer
GREENWICH INSURANCE CO, Insurer
On June 13, 2006, an administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development issued a letter ordering the insurer to pay $4,306.80 to the applicant's attorney. The employer and its insurer (collectively, the respondent) filed a petition for review.
The commission has considered the petition and the positions of the parties. Based on its review, the commission concludes it has jurisdiction of the matter in dispute and makes the following:
1. Facts and posture.
In 2003, the applicant suffered a compensable injury when he fell 3 or 31/2 feet to a concrete floor while working. He had shoulder and arm pain, which was initially treated by a rotator cuff surgery. The respondent conceded liability for the rotator cuff injury, and paid the compensation associated therewith. However, the applicant's symptoms continued, and he eventually underwent a cervical discectomy and fusion. The respondent disputed its liability for the cervical problem and the matter went to hearing.
ALJ Randall Kaiser awarded the applicant temporary total disability for the neck condition and a 20 percent fee on that award to the applicant's attorney under Wis. Stat. § 102.26. As it had not yet been rated by the treating doctor, ALJ Kaiser did not award permanent partial disability for the neck injury. The respondent appealed, and the commission affirmed ALJ Kaiser's decision by order dated December 13, 2005. No further appeal was taken.
On January 31, 2006, a few weeks after the commission's decision, the applicant's treating doctor estimated permanent partial disability for the cervical condition and surgery at 10 percent. On February 3, 2006, the insurer sent the applicant a letter addressing the cervical permanent partial as rated by the treating doctor. The letter calculated the total amount (1) to be 102.5 weeks ($22,755), most of which ($19,314) had accrued to February 28, 2006. The insurer paid the accrued amount in full directly to the applicant by enclosed check. The insurer informed the applicant that he would get the rest in monthly checks of $962, until the remaining $3,441 was paid. No sums were withheld or paid to the applicant's attorney in fee, but a copy of this letter was sent to the applicant's attorney.
Two months later, on April 10, 2006, the applicant's attorney, Steven Tilton, wrote to the department stating that the insurer paid the lump sum permanent partial disability for the cervical spine without withholding the 20 percent fee, and was paying the $962 per month without withholding the fee. He asked the department to approve a 20 percent fee on the $22,755.
Accordingly, on April 17, 2006, ALJ Andrew Roberts sent the respondent's attorney a letter stating:
Please consider this as authorization to pay Attorney Stephen Tilton 20 percent attorney fees as requested in his April 10, 2006 correspondence.
There followed further correspondence between the parties and the department regarding the fee. Mr. Tilton asserted the insurer made a mistake by overpaying the applicant and underpaying Mr. Tilton. The respondent's attorney, Mr. Zitzer pointed out that while the insurer sent Mr. Tilton a copy of the letter regarding the payment to the applicant on February 6, 2006, Mr. Tilton did not raise the fee issue until his letter dated April 10. ALJ Cathy Lake responded to the matter by letter dated June 13, 2006. ALJ Lake's letter is the focus of the petition for review in this case.
ALJ Lake began her June 13, 2006 letter by setting out a slightly different calculation for disability than that used by the insurer, (2) but concluded that the full amount due had been fully paid to the applicant. ALJ Lake also determined that the appropriate attorney fee was $4,306.80. (3)
The dispute arises because ALJ Lake went on to state:
...I realize that this sum [the $21,534] has already been paid to the applicant.
However, it is my understanding that the insurance carrier issued the permanent disability benefits without withholding attorney's fees. My file reflects that Attorney Tilton has represented the applicant for a lengthy period of time. His representation also included a hearing before ALJ Kaiser. While the failure to withhold attorney's fees may have been an oversight, it has placed Attorney Tilton in an awkward position. The insurance adjuster's letter never addressed the issue of attorney's fees. As such I do not agree with Attorney Zitzer's claim that Attorney Tilton's claim for fees in April 2006 was just too late in the game.
As such I am ordering the insurance carrier to pay Attorney Zitzer the sum of $4,306.80 as attorney's fees. This sum is to be deducted from any future benefits that the applicant may be owed.
In other words, ALJ Lake ordered the insurer to pay the part of the applicant's award attributable to the attorney fee a second time to the applicant's attorney. The respondent appeals.
2. Commission jurisdiction to review.
On appeal, the respondent acknowledges the commission generally does not have jurisdiction to address orders dealing with attorney fees. As the commission has explained:
The commission's review authority on petition under Wis. Stat. § 102.18(3) is limited to decisions that award or deny compensation. An attorney fee is not "compensation" for the purposes of Wis. Stat. ch. 102. Eisenberg v. ILHR Department, 59 Wis. 2d 98, 105 (1973); Cranston v. Industrial Commission, 246 Wis. 287, 289; (1944). Moreover, Wis. Stat. § 102.18(3) provides that a "party in interest" may petition the commission for review of a department order, and an attorney representing an applicant in a worker's compensation proceeding is not a "party in interest" under the statute, [Eisenberg, at] 59 Wis. 2d 105, and Cranston v. Industrial Commission, [at] 246 Wis. 289.
Thus, the commission has consistently found it lacks jurisdiction on petitions that raise only an issue as to the amount of the attorney fee. Roman Gabrielson v. J H Findorff & Son, WC Claim No. 1997-025346 (LIRC, January 28, 2000); Donohoe v. Green Bay Packers, WC Claim No. 87041220 (LIRC, December 11, 1989); Boesharr v. Jeffs Fast Freight, WC Claim No. 2002-027635 (LIRC, February 12, 2004); Rick Dregne Builders v. David Kelley, Claim No. 2000-011994 (LIRC, September 26, 2003); see also: Neal & Danas, Workers Compensation Handbook § 1.5 (4th ed. 1997). The commission therefore concludes it lacks jurisdiction under Wis. Stat. § 102.18(3) to decide the applicant's attorney's "petition for review" as such.
However, the respondent points out the holdings on this point arise from attempts by an injured worker's attorney to challenge an ALJ's division of a compensation award between the injured worker and the attorney. Such a division does not award "compensation," particularly since an injured worker's attorney is not recognized as a "party" to a worker's compensation proceeding. Further, because the fee is paid from an award of compensation, there is no net effect on the amount paid by worker's compensation insurer -- who is a party -- in such cases.
Here, however, the ALJ is ordering the insurer to pay an additional amount above and beyond the compensation proven to this point; ALJ Lake's letter in effect awards compensation. Again, the insurer, who has been ordered to pay the additional compensation, is a party unlike an attorney who raises a fee issue. Thus, the respondent asserts, the commission has jurisdiction to review under Wis. Stat. § 102.18(3).
The commission agrees. "Compensation" in Wis. Stat. ch. 102 is defined as "worker's compensation" which in turn is defined as allowances, recoveries and liabilities under Wis. Stat. ch. 102. See: Wis. Stat. § 102.01(1). By awarding the payment of additional money, ALJ Lake's order goes beyond simply dividing the award to protect a fee. ALJ Lake does includes language stating that the insurer can deduct the payment from any future benefits that may be owed to the applicant, but that does not change the character of ALJ Lake's order. ALJ Lake's letter awards compensation.
Nor does the fact that ALJ Lake ordered the insurer to pay the fee by letter, rather than in a formally styled "order," matter. Wisconsin Stat. § 102.18(3) allows the commission to review "decisions awarding or denying compensation." The term "decision" itself is not defined in Wis. Stat. § 102, but the reference to "any decision made by the department" in the definition of "order" suggests a very broad meaning for the term "decision" Wisconsin Stat. § 102.01(2)(dm). Further, as the respondent points out, "whether or not a particular determination of an administrative agency constitutes a reviewable order is gauged by the substance of what the agency has purported to do, and not necessarily by the label placed upon such determination." Chevrolet Division, G.M.C., v. Industrial Commission, 31 Wis. 2d 481, 486 (1966).
The applicant's attorney, however, asserts the appeal is untimely. He contends that the decision actually on review is ALJ Roberts' letter dated April 10, 2006, which authorized the payment of the fee. Since the respondent's petition for commission review was not filed until June 30, 2006, or 73 days after ALJ Roberts' letter, the applicant's attorney asserts it is untimely given the 21-day deadline in Wis. Stat. s 102.18(3).
The commission is not persuaded. ALJ Lake ordered the insurer pay the applicant's attorney an additional $4,306.80 in her June 13, 2006 letter. This is not just an explanation or clarification of ALJ Roberts' earlier authorization of the fee. It is, after all, ALJ Lake's letter -- not ALJ Roberts' fee authorization -- that the respondent is trying to have set aside and that the applicant's attorney desires to have enforced.
3. Commission action on review.
Having decided it has jurisdiction to consider the respondent's petition for review, the commission next address what relief, if any, should be granted.
The respondent points out that the authority of the department -- and by extension the commission -- to award attorney fees is limited by Wis. Stat. § 102.26 which provides in relevant part:
102.26 (3) (a) Except as provided in par. (b), compensation exceeding $100 in favor of any claimant shall be made payable to and delivered directly to the claimant in person.
(b) 1. The department may upon application of any interested party and subject to sub. (2) fix the fee of the claimant's attorney or representative and provide in the award for that fee to be paid directly to the attorney or representative.
...(c) Payment according to the directions of the award shall protect the employer and the employer's insurer, or the uninsured employers fund if applicable, from any claim of attorney's lien
In other words, the statute provides that an insurer is supposed to pay a fee directly to the injured worker, unless the department provides in the award for an award to be paid directly to the worker's attorney or representative. If an insurer pays according to the directions in an award, it is protected from any claim of any attorney lien.
Department practice may permit letters -- like ALJ Roberts' letter -- which authorize a fee on amounts not actually awarded by order but subsequently paid as a consequence of the award. However, neither the statute nor the administrative code authorizes ordering an insurer to make what in effect is a second payment of part of the compensation that has already been paid. The commission concludes it must therefore set aside ALJ Lake's June 13, 2006 letter insofar as it orders the insurer to pay the fee to the applicant's attorney, rather than to deduct the fee from any future award made to the applicant for additional disability compensation.
As ALJ Lake noted, this leaves the applicant's attorney in the awkward position of pursuing his fee directly from his client or waiting for future compensation liability that may never arise. Again, however, the respondent points to the commission's prior holding that:
"...a valid fee agreement between an injured worker and the attorney representing him or her in a workers compensation case is an enforceable contract permitting the attorney to seek the fee directly from the worker."
Gabrielson v. J.H.Findorff and Son, WC claim no. 1997-025346 (LIRC, January 28, 2000).
The applicant's attorney suggests in his May 17, 2006 letter that rather than having to wait for the fees he has earned until -- if ever -- the applicant is owed more disability compensation, a more just arrangement would be for the insurer to pay him now and wait to reimburse itself from any future benefits. However, worker's compensation remedies are established by statute and the relief provided must be within the statute. Yunker v. LIRC, 115 Wis. 2d 525, 534 (Ct. App. 1983). The commission cannot fashion an equitable remedy where none exists by statute. Ibid. See also: Employers Mutual Liability Insurance Co. v. Industrial Comm., 230 Wis. 374, 376 (1939) (holding that the Industrial Commission lacked the power to try an equitable issue of right to reimbursement for money paid under mistake of fact.)
NOW, THEREFORE, the Labor and Industry Review Commission makes this
The findings and order of the administrative law judge in her June 13, 2006 letter are reversed to the extent they order the insurer to pay ($4,306.80) to the applicant's attorney, Steven Tilton. Instead, if the insurer makes any future award to the applicant for additional disability compensation, the insurer shall deduct the amount of the fee now at issue ($4,306.80) from the amount due the applicant under that future award and pay the amount to Mr. Tilton.
Jurisdiction continues to be reserved under the terms of ALJ Kaiser's June 14, 2005 order, as affirmed by the commission on December 13, 2005.
Dated and mailed November 9, 2006
jacobse . wrr : 101 : 9 ND § 1.5 § 9.2
James T. Flynn, Chairman
/s/ David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
In its decision in this case, the commission considered its prior decision in David Kelley v. Rick Dregne Builders and Wis. WC UEF, WC claim no. 2000011994 (LIRC, June 22, 2001). There, an ALJ issued an award directing payment of compensation to the injured worker, David Kelley, and a twenty percent fee to his attorney, Daniel Kelley. The insurer instead paid the entire sum ordered paid under the award to the worker. Upon complaint by the injured worker's attorney, the ALJ issued a second order, again directing the insurer to pay the fee as specified in the initial award. The effect, of course, was to have the insurer pay the fee twice--as ALJ Lake's order does here.
In Kelley, the commission held it did not have jurisdiction, reasoning the ALJ's second order did not award or deny compensation, but merely directed payment of compensation that had been awarded under the first order. Because it declined to take jurisdiction, the commission left in effect the ALJ's order requiring the double payment. Superficially, Kelley seems inconsistent with the commission's decision here.
However, Kelley is distinguishable, as it involved an insurer who failed to pay the fee as required by the explicit terms of an award. In his initial decision in Kelley, the ALJ expressly ordered payment of the fee to Attorney Daniel Kelley, but the insurer instead paid the full amount to Worker David Kelley. Thus, Kelley involved an insurer's failure to pay compensation in accordance with the express terms of a department order, not the failure to infer or predict a fee authorization on subsequently conceded amounts. Under the facts in Kelley, thus, the second order did not really make any new award of compensation, but simply enforced the terms of the first order.
cc:
Attorney Steven F. Tilton
Attorney Daniel L. Zitzer
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