State News : Minnesota

Hufnagel v. Deer River Health Care Center, A17-2064 (Minn. July 18, 2018)

In this case, Employee sustained an admitted injury to her low back in 2009 while working for Deer River. Deer River then became Essentia Health-Deer River and changed its insurer in 2013. Employee continued to work there, and sustained aggravations to her low back in 2014 and 2015. Employee then filed a Claim Petition; however it was solely against the 2009 Deer River injury. Attorney for Deer River asked Employee’s attorney to join the 2014 and 2015 Essentia Health injuries to the matter, but he refused. Subsequently, Deer River filed a Motion for Joinder to add Essentia Health to the case. This was granted. At the Hearing, Employee’s attorney indicated that he did not believe there were any injuries in 2014 or 2015, which was contrary to the opinion of an Independent Medical Examiner. Judge Kohl instead found that there were injuries in 2014 and 2015 and ordered Essentia Health to make payment of wage and medical benefits. There were no benefits awarded against the 2009 injury and Deer River.

Employee subsequently claimed attorney fees under Roraff/Irwin and Minn. Stat. §176.191 in the amount of $31,120.00. In support of the claim for .191 fees, Employee asserted that the primary dispute in the case was between the two insurers, even though both insurers had denied primary liability. At the hearing for attorney fees, Employee’s attorney was found to be entitled to $8,000 inRoraff/Irwin fees. The compensation judge concluded that Employee was not entitled to recover attorney fees for the time her attorney spent in re-establishing the 2009 injury. Additionally, it was noted that since Deer River was actually the entity to join Essentia Health, which ultimately gave rise to compensation for Employee, that Employee’s attorney fee claim should be reduced. The compensation judge denied any additional fees under Minn. Stat. §176.191, as he found that the primary dispute was not between the insurers, but rather between the employee and the insurer(s).

The WCCA reversed this decision, holding that the compensation judge failed to fully consider the extent to which each employer sought to shift liability to the other employer and that it was error to deny the motion for fees under Minn. Stat. §176.191, subd. 1. They also held that Employee’s attorney was entitled to recover additional attorney fees underRoraff/Irwin.

Essentia Health appealed the decision to the Minnesota Supreme Court. The Minnesota Supreme Court affirmed the WCCA. The Court addressed two issues: (1) whether the compensation judge erred in concluding that there was no dispute between the two employers that would entitle her to fees under Minn. Stat. §176.191, and (2) whether the Employee is entitled to recover attorney fees for the time spent in establishing the 2009 injury.

With regard to the .191 fees, the Court concluded that it was error for the compensation judge to determine the dispute in this case was not primarily between the insurers. The Court held that whether the 2009 injury was a substantial contributing factor in the Employee’s ongoing physical condition was, at its heart, a dispute about which employer was liable for the benefits the Employee would be entitled for 2014 and 2015 injuries. The efforts by each employer to shift responsibility to the other employer greatly increased the burden on the Employee’s counsel to provide effective representation, and therefore the Court held she was entitled to receive reasonable attorney fees under Minn. Stat. §176.191, subd. 1. Even though the Employee had not been guaranteed any compensation for herself going into the Hearing as both insurers denied liability, the Court still found that the primary dispute was between the insures.

With regard to the issue of Roraff/Irwin fees, the Court held that although the case before the compensation judge was not itself about an award of benefits specific to the 2009 injury, some amount of time and effort was still necessary to adequately prepare for and respond to the argument the employers raised regarding the 2009 injury and its relationship to the 2014 and 2015 injuries. The Court discussed its expectation that attorneys thoroughly prepare to represent their clients and that an award of reasonable fees should be adequate to compensate an employee’s attorney for the value of representation provided, including for the time reasonably necessary to thoroughly prepare.

One key takeaway from this decision is that the standard for .191 attorney fees is not a bright-line rule. In a situation where there are two insurers (who even both deny primary liability), Employee’s attorney may be found to be entitled to fees under Minn. Stat. 176.191 if there is enough “finger pointing” between the two insurers. Such situations require a full case-by-case analysis of all the facts to make a determination.

For the full decision, click the link below.

https://mn.gov/workcomp-stat/sup/Hufnagel-sup%2018.html

Summary completed by Bryan Wachter, CWK Law Associate Attorney