Buckingham v. Health South Rehabilitation Hospital

BOSSON, Judge

(specially concurring).

30. We concur in the opinion of Chief Judge Hartz with respect to the discussion and holding of issue 11(A) “Past-Due Disability Benefits.” We do not agree with the discussion thereafter regarding issue 11(B) “Medical Benefits.” The following represents the opinion of the Court, and shall hereafter be cited as such, concerning an award of attorneys’ fees for securing future medical benefits pursuant to NMSA 1978, Section 52-1-54(H) (1993).

31. The workers’ compensation judge (WCJ) awarded attorneys’ fees of $4000 plus tax and costs. In explaining the award, the WCJ indicated the number of hours Worker’s attorney had “reasonably and necessarily expended” (23.9) and the attorney’s regular hourly billing rate ($140 per hour). The WCJ indicated that the issues were contested to an average degree; they were of average complexity and novelty; and the WCJ further noted the attorney’s excellent reputation and the relative degree of success in this case. An award based solely upon the hours expended at the attorney’s normal billing rate would equal approximately $3360. Yet the WCJ awarded a fee of $4000, approximately $640 more. Apparently, the WCJ justified this differential by calculating the present value of the future medical benefits Worker had been awarded ($25,000). Employer claims that any award of attorneys’ fees to secure future medical benefits is in error. To the extent the WCJ based his award in this case upon the present value of future medical benefits, we agree. However, a WCJ may base an attorneys’ fee award on other factors as discussed hereinafter, and, if so, an award for securing future medical benefits is not provided by the Act. Because the record is unclear, we reverse and remand on this issue for further consideration of an appropriate attorney’s fee award.

32. NMSA 1978, Section 52-l-54(H) (1993) governs attorneys’ fees for recovery of future medical benefits stating:

In determining reasonable attorneys’ fees for a claimant, the workers’ compensation judge shall consider only those benefits to the worker that the attorney is responsible for securing. The value of future medical benefits shall not be considered in determining attorneys’ fees.

This statute quite clearly prohibits an attorneys’ fee calculated upon “the value of future medical benefits.” It has been quite clear for some time that, however attorneys’ fees are calculated in workers’ compensation cases, they may not be determined based upon a percentage of the value of future medical benefits. See Board of Educ. v. Quintana, 102 N.M. 433, 435, 697 P.2d 116, 118 (1985); County of Bernalillo v. Sisneros, 119 N.M. 98, 103, 888 P.2d 980, 985 (Ct.App. 1994).

33. Worker suggests that this prohibition applies only when the award of future medical benefits is uncertain or speculative in amount, as indeed it oftentimes is. Worker relies on certain language in Quintana which notes the speculative nature of future medical costs in workers’ compensation cases. Worker would have us contrast Quintana with the present case in which, she claims, both the cost and the likelihood of the future medical procedure is susceptible of more precise calculation. 102 N.M. at 435, 697 P.2d at 118. We disagree with Worker on this point and suggest that Worker misperceives the reason that attorneys’ fees may not be premised upon the value of future medical benefits.

34. The uncertainty of a future medical award may be one factor. However, we believe the cases and the statutory history reflect a more fundamental opposition to calculating an attorney’s fee based upon the value of future medical benefits. The reason has more to do with limiting the size of fee awards, especially when future medical benefits usually follow as a matter of course without a need for substantial attorney effort focussed on that issue alone. See id.; Sisneros, 119 N.M. at 103, 888 P.2d at 985. Therefore, we reject any claim that Worker is entitled to attorneys’ fees based upon the present value of future medical benefits.

35. On the other hand, Employer suggests that Worker can never recover any attorneys’ fees, no matter how calculated, when incurred in obtaining future medical benefits. The answer to Employer’s proposition is that the statute on its face does not prohibit an award of attorneys’ fees for securing future medical benefits; it only stipulates that “[t]he value of future medical benefits shall not be considered in determining attorneys’ fees.” Section 52-l-54(H) (emphasis added). This means no percentage contingency fee premised upon the “value” of future medical benefits. Why would the legislature make such a choice? To save money. As in the case before us, the value of future medical benefits may well be a sizable figure, and an attorneys’ fee based upon a percentage of that amount would likely be large as well. The legislature is entitled to exclude that method of computing attorneys’ fees. But this is not to say that the legislature expected attorneys to work for free, even while successfully gaining future medical benefits for their clients over employer opposition, as in this case. There are other ways for the WCJ to calculate an award which have been exhaustibly discussed in other opinions of our courts. See, e.g., Fryar v. Johnsen, 93 N.M. 485, 601 P.2d 718 (1979) (Fryar I). In our view, this means the WCJ may calculate a reasonable award of attorneys’ fees for procuring future medical benefits as long as that calculation is based upon reasonable factors, such as those set forth in Fryar I, 93 N.M. at 487, 601 P.2d at 720, but which do not include a percentage of “the value” of those future medical benefits.

36. Our reading of Section 52-l-54(H) is consistent with the way attorneys’ fees in workers’ compensation cases have always been calculated. Perhaps as early as the first Workers’ Compensation Act (the Act) in 1929, but surely beginning at least forty years ago, the legislature delegated the task of calculating attorneys’ fees to the appropriate adjudicative authority, first to the district court, later to a hearing officer, and then to a WCJ, according to a broad discretionary standard of reasonableness. See 1929 N.M. Laws, ch. 113, § 22; 1955 N.M. Laws, ch. 274, § 1. Starting in 1959, the legislature began to narrow judicial discretion to award attorneys’ fees by stipulating that the court must consider: (1) prior attempts at settlement and the amount, if any, the attorney improved the worker’s case by litigation, and (2) “the present value of the award made in the work[er’s] favor.” 1959 N.M. Laws, ch. 67, § 28. Because attorneys’ fees were only awarded for collecting “compensation through court proceedings,” this Court initially held that attorneys were entitled to no award of fees for securing medical benefits, whether retroactive or prospective. See Wuenschel v. New Mexico Broad. Corp., 84 N.M. 109, 111, 500 P.2d 194, 196 (Ct.App. 1972). We were in error. The Supreme Court subsequently reversed this Court and adopted a broader view of that same language in the Act, concluding that “medical expenses are compensation for the purpose of allowing attorney fees under [the Act].” Schiller v. Southwest Air Rangers, Inc., 87 N.M. 476, 478, 535 P.2d 1327, 1329 (1975).

37. Subsequently, our Supreme Court in Fryar I, 93 N.M. at 487, 601 P.2d at 720, codified a series of supplemental factors that went beyond the language of the Act. The so-called Fryar factors are used still today to calculate the true value of the attorney’s effort to the worker in light of a public policy concerned about balancing the need to curb the expense of unnecessary litigation against the chilling effect of miserly attorneys’ fees on justice to the worker. See Woodson v. Phillips Petroleum Co., 102 N.M. 333, 336-38, 695 P.2d 483, 486-88 (1985). Following Fryar I, this Court again tried unsuccessfully to narrow the discretion of the judge in calculating a fair attorneys’ fee award by prohibiting the use of a percentage contingency fee even as a guide to determine a fair fee. See Johnsen v. Fryar, 96 N.M. 323, 328-29, 630 P.2d 275, 280-81 (Ct.App.1980) (Fryar II). We concluded erroneously that “a fee based on a percentage of the award is not authorized either by § 54-l-54(D), ... or by the additional factors listed in Fryar v. Johnsen.” Fryar II, 96 N.M. at 328, 630 P.2d at 280. The Supreme Court eventually overturned the Fryar II decision and made clear that there was nothing in the Act or in Fryar I that prohibited a court from utilizing a percentage of total recovery as one of several methods of arriving at a fair fee. See Woodson, 102 N.M. at 338, 695 P.2d at 488. Indeed, in Quintana, the Supreme Court noted that the Act continued to require the trial judge to take into consideration “ ‘[t]he present value of the award made in the work[er’s] favor.” ’ 102 N.M. at 435, 697 P.2d at 118 (quoting Section 52-1-54(D)(2)). We think our Supreme Court made clear in Quintana that, along with all the other Fryar factors, a court must consider, as a rule of reasonableness or proportionality, how a percentage of total recovery (excluding the value of future medical benefits) compares with other methods of determining a reasonable fee. Quintana, 102 N.M. at 435, 697 P.2d at 118.

38.In its first wholesale modification of the Workers’ Compensation Act in 1986, the legislature stipulated that a fair attorneys’ fee could not exceed a sliding scale based on a percentage of recovery which was “twenty percent of the first five thousand dollars ($5000) of the benefits secured, fifteen percent of the next five thousand dollars ($5000) of the benefits secured and ten percent of the remaining benefits secured.” 1986 N.M. Laws, ch. 22, § 18. In the next subsection, the Act stipulated, for the first time and in language identical to the present Act, that “[t]he value of future medical benefits awarded shall not be considered in determining attorneys’ fees.” Id. The clear legislative intent was: (1) to establish a cap based on a percentage, and (2) to ensure that the value of future medical benefits was not included in that calculation. The net effect was to keep attorneys’ fees lower. Except for the notion of a cap on fees, this was nothing new. Fees could still be calculated based on the Fryar I factors subject to the cap. In 1987 that cap was changed to a flat fee ($12,500). See 1987' N.M. Laws, ch. 235, § 24. As in the prior Act, the judge was still to consider “the present value of the award made in the worker’s favor” in determining a reasonable fee, and that “present value” was not to include the “value of future medical benefits.” Id. This remains the law today. See § 52-1-54(D)(2), -54(A), -54(H).

39. In sum, the WCJ is to use both the language of the Act and the various Fryar I factors in calculating a reasonable attorneys’ fee, no different from how judges have determined fees for the past twenty years since Fryar I, except of course for the cap. One factor among several is a rule of proportionality based on a percentage of total recovery, somewhere between ten percent and twenty percent. See Woodson, 102 N.M. at 338, 695 P.2d at 488; Quintana, 102 N.M. at 434-35, 697 P.2d at 117-18; Sisneros, 119 N.M. at 103, 888 P.2d at 985. Total recovery for that proportionality computation does not include the value of future medical benefits, just as it never has. The WCJ is not precluded from calculating a fee based upon the mosaic of considerations that make up the Fryar I factors. We see nothing in the Act or in its history to suggest a different result.

40. We note that any award of attorneys’ fees is always subject to a determination of reasonableness by the WCJ, and we are confident this will prevent any overreaching at the expense of employers. In the great majority of cases, an award of future medical benefits follows as a matter of course, and there should be no need for a separate award of attorneys’ fees for time spent solely on this matter. In the rare exception, such as the case before us, the WCJ may exercise his discretion according to permissible criteria and determine a fair award without violating Section 52-l-54(H). Accordingly, we remand to the WCJ for a reconsideration of the attorney’s fees question, along with appropriate findings, which would include a fair and reasonable fee for services expended by Worker’s attorney on appeal.

WECHSLER, J„ concurs.