Opinion
C.A. No. 02A-06-004 WLW
Submitted: June 3, 2003
Decided: September 26, 2003
Upon an Appeal From a Decision of the Industrial Accident Board. Reversed and Remanded.
Walt F. Schmittinger, Esquire of Schmittinger and Rodriguez, P.A., Dover, Delaware, attorneys for the Claimant Below — Appellant.
James T. Perry, Esquire and Michael L. Sensor, Esquire of Perry Sensor, Wilmington, Delaware, attorneys for the Employer Below — Appellee.
ORDER
Introduction
Before this Court is Dorothy Porter's ("Claimant") appeal from a decision of the Industrial Accident Board ("IAB" or "Board") in which medical expenses and disability benefits were awarded to Claimant, but only one attorney's fee award was made. Insignia Management Corporation ("Employer") answered the appeal and filed a cross-appeal claiming that the JAB erred in making the award of medical expenses.
Background
Facts
In 1991, Claimant worked for Insignia as an apartment manager when she fell and injured her back. She had two back surgeries following the accident then returned to work after her recovery. In 1994, while working for the same employer, Claimant was planting flowers at an apartment complex when she tripped over a wire and injured her back again. She underwent a spinal fusion and again returned to work following her recovery. In 1996, she stopped working for Insignia. While working as a cashier for Eckerd Drug Store in 1998, a job which required her to stand on her feet all day and lift products from boxes, Claimant's back began hurting again. In December 2000, she began receiving injections from her doctor for her back pain. However, in May 2001, Claimant had to stop working because of her severe back pain. On May 30, 2001, Claimant underwent back surgery in which the doctor implanted Ray cages in her spine. One of the cages slipped causing her to lose control of her leg, and another surgery in June 2001 was required to correct it. Claimant remained in the hospital for 30 days while she learned to walk again.
A Ray cage is a metal device implanted in the spine in order to provide stability during the spinal fusion process. Koji Totoribe, Comparative Biomechanical Analysis of a Cervical Cage, Spine, May 15, 2003.
Claimant provided evidence to the Board that she incurred medical bills of $102,719.70 based on the surgeries in 2001 and subsequent medical treatment. Following the 2001 surgeries, Claimant was unable to return to work. It was unknown at the time of the hearing when she would be able to work again.
IAB's Decision
On April 2, 2002, the Board concluded that Claimant had been totally disabled since May 30, 2001, and, applying the last injurious exposure rule, concluded that Employer's insurer at the time of the second industrial accident, Reliance, was fully liable for Claimant's disability benefits. Therefore the Board denied Claimant's Petition to Determine Additional Compensation Due against Liberty Mutual, Insignia's insurer at the time of the first industrial accident. In addition, based on the conclusions of Claimant's doctor and Employer's doctor, the Board concluded that Reliance was liable for the medical expenses incurred by Claimant. Finally, the Board awarded one attorney's fee to Claimant in the amount of the lesser of 30% of the award or $7,036.50.
Porter v. Insignia Mgmt. Group, IAB Hearing Nos. 953035 and 1043296 (April 2, 2002). [Porter I]
On April 12, 2002, Employer filed a Motion for Rehearing and/or Clarification pursuant to IAB Rule 21. Employer stated that Reliance was in liquidation proceedings and that the claim was assigned to the Delaware Insurance Guaranty Association (DIGA). Employer claimed that only $3,726.49 of the $102,719.70 in medical bills remained outstanding at that time because Medicare had already paid $98,993.21. Employer stated that Reliance should only be required to pay the $3,726.49 in outstanding medical expenses, rather than the full amount. On May 20, 2002, the Board denied Employer's motion and upheld the Board's previous award. The Board reasoned that, because the Worker's Compensation Act provides that it is the exclusive remedy for industrial accidents and no statutory provision requires the Board to reduce its award of medical expenses by the amount already paid by Medicare, the award must stand. In addition, the Board awarded Claimant attorney's fees of $1,750.00. Procedural History
Porter v. Insignia Mgmt. Group, IAB Hearing Nos. 953035 and 1043296 (May 29, 2002). [Porter II]
On March 18, 2003, Claimant filed her appeal to this Court requesting that an additional award of attorney's fees be made in Porter I because she was successful on two issues and additional attorney's fees be awarded in Porter II because the Board did not consider all of the factors required. On April 21, 2003, Employer answered her appeal and filed a cross-appeal, alleging that the Board erred in awarding the full amount of medical expenses to Claimant. Employer bases this allegation on the fact that Medicare had previously paid a substantial portion of the medical bills and thus Claimant would receive a windfall if Reliance was required to pay the full amount. Claimant answered the cross-appeal on May 15, 2003.
Issues
There are several issues presented by these appeals:
(1) Was the Board correct in ordering Employer and Reliance to pay for all of Ms. Porter's medical expenses, despite the fact that a substantial portion had been paid by Medicare?
(2) Did the Board abuse its discretion in awarding one attorney's fee in Porter I, if the amount of the award for medical expenses was correct?
(3) Did the Board abuse its discretion in awarding $1,750 in attorney's fees in Porter II?
Parties Arguments
Appellant/ClaimantIn her appeal, Claimant argues that the Board erred in failing to award two attorney's fees when Claimant was successful on two claims, disability pay and medical expenses, on her Petition to Determine Additional Compensation Due. Claimant further contends that the Board did not make sufficient factual findings to properly determine the amount of the award and thus erred in awarding only $1,750 in attorney "s fees following her success at the Motion for Reargument.
Appellee/Cross-Appellant/Employer
Employer answered Claimant's appeal, agreeing with her analysis of the case law supporting the two attorney's fee awards. However, Employer contends that the Board erred in awarding over $100,000 in medical expenses to the Claimant, alleging that only $2,346.55 was actually due and owing at the time. Therefore, Employer argues that the Board calculated the amount of attorney's fees on an incorrect award.
Employer filed a cross-appeal alleging that the Board erred in awarding Claimant the medical expenses she claimed to be owed, because a large portion had already been paid by Medicare or reduced by Medicare write-offs. Thus, of the $102,719.70 in medical expenses, Employer states that $47,493.00 was paid by Medicare, $57,568.80 was adjusted by the providers who were paid by Medicare, and $2,715.74 was paid by Claimant's private health insurance provider. Therefore, Employer asserts that because Claimant owes or has paid only $2,346.55, she is only entitled to that amount. Employer's argument centers on the idea of not permitting the Claimant to recover medical bills for which she was never responsible.
Cross-Appellee/Claimant
Claimant answered the cross-appeal asserting that the issue of Medicare was not before the Board and was not relevant to the matter at issue — the awarding of disability benefits. Claimant's argument focuses on the workers' compensation statutes that hold the employer liable for medical expenses that are due to industrial accidents.
Analysis
Standard of Review
The scope of review for an appeal of an IAB decision is limited to an examination of the record for errors of law and a determination of whether substantial evidence is present on the record to support the IAB's findings of fact and conclusions of law. The role of the Superior Court is to determine whether there was substantial competent evidence to support the findings of the Board. Substantial evidence has been defined to mean, "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." The Court is not the trier of fact and does not have the authority to weigh the evidence or make its own factual findings. This Court determines if the evidence is legally adequate to support the Board's factual findings and must give "due account of experience and specialized competence of the agency and of the purposes of the basic law under which the agency acted." When the issue raised on appeal is exclusively a question of the proper application of the law, the review by this Court is de novo. The standard of review for a determination of the amount to award in attorney's fees, based on those issues on which the claimant is successful, is abuse of discretion. This Court will not find that the IAB abused its discretion unless its decision has "exceeded the bounds of reason in view of the circumstances." Discussion Is Employer entitled to an offset for medical expenses paid by Medicare?
Histed v. E. L Dupont de Nemours Co., 621 A.2d 340, 342 (Del. 1993); Willis v. Plastic Materials, 2003 Del. Super. LEXIS 9; Robinson v. Metal Masters, Inc., 2000 Del. Super. Lexis 264.
Johnson v. Chrysler Corp., 213 A.2d 64, 66 (Del. 1965).
Olney v. Cooch, 425 A.2d 610, 614 (Del. 1981), quoting Consolo v. Federal Maritime Commission, 383 U.S. 607, 620 (1966).
Id. at 66.
Del. Code Ann. tit. 29 Del. C. § 10142(d); see also Histed, 621 A.2d at 342.
Darnell v. BOC Group, Inc., 2001 Del. Super. LEXIS 283, *28, *29 aff'd 792 A.2d 1888 (Del. 2002).
Willis, 2003 Del. Super. LEXIS at *2-*3.
The Delaware Legislature provided for Workers' Compensation in Title 19 of the Delaware Code. Workers' compensation is the sole remedy when an employee is injured "in the course of [his or her] employment, regardless of the question of negligence and to the exclusion of all other rights and remedies." Title 19 Del. C. § 2322 of the Delaware Code provides that "the employer shall furnish reasonable surgical, medical . . . services . . . as and when needed, unless the employee refuses to allow them to be furnished by the employer." It further provides, "If the employer, upon application made to the employer, refuses to furnish the services . . . the employee may procure the same and shall receive from the employer the reasonable cost thereof within the above limitations." The statutes clearly provide that the employer is responsible for all reasonable medical costs associated with the industrial accident.
Del. Code Ann. tit. 19 Del. C. § 2304 (1995).
Del. Code Ann. tit. 19 Del. C. § 2322(a) (1995).
Del. Code Ann. tit. 19 Del. C. § 2322(b) (1995).
It is not disputed in the present case that Claimant was injured in an accident while employed by Employer. Employer does not dispute the reasonableness or the necessity of the medical expenses. Employer's only dispute is that because the medical bills were paid by Medicare, they are not due and owing. According to the Delaware Supreme Court,
In order for an employee to claim medical expenses incident to an award of compensation benefits he must present evidence that (a) he has incurred medical expenses, (b) such expenses are attributable to a work related injury and (c) the employer has not paid such expenses as required by 19 Del. C. § 2322.
Guy J. Johnson Transportation Co. v. Dunkle, 541 A.2d 551 (Del. 1988).
Claimant sought medical treatment and received it. She presented her medical bills to the Board showing a total of $102,719.70. Clearly, Claimant has incurred medical expenses. There is no dispute as to (b) and (c), both parties agree that the medical expenses were attributable to Claimant's work injury and Employer does not allege that it has paid the medical expenses. Employer admits that the bills have been paid by Medicare and Claimant. Thus, Claimant satisfied her burden to establish medical expenses. There was sufficient evidence for the Board to conclude that Claimant was entitled to receive payment for her medical expenses from Employer. The issues of Medicare making the payments and Medicare as a secondary payor are entirely irrelevant to the decisions of the Board and this Court. Medicare is not a party to this action and thus the right to reimbursement is not an issue before this Court.
Employer cites Dunkle in support of its contention that Claimant is not entitled to payment for her medical expenses. In Dunkle, the Court concluded that medical services payments made by a group insurance plan, for which the employer paid the premiums, discharged the employer's statutory duty to pay the medical expenses, therefore the Board could not award Mr. Dunkle the amount of the medical expenses because they had already been paid by the employer. However, Dunkle is distinguishable from the present situation because the employer in Dunkle paid the insurance premiums for the insurance policy that paid the medical bills. The issue in Dunkle was whether the employer's burden to pay the expenses had been satisfied and the Court was satisfied that the employer had satisfied its responsibility by providing an employer paid group insurance plan. In the present case, Employer did not have anything to do with the Medicare payments. Thus, Employer's burden to provide medical services to an injured employee was not satisfied by Medicare's payments.
A case more closely related to the present case is Adams v. Delmarva Power Light Co., in which the Delaware Supreme Court concluded that an employer was not entitled to an offset for payments made by an employee's underinsured motorist insurer following a work related automobile accident. The aspect that the Supreme Court focused on was that the underinsured motorist coverage was paid for by the employee, not the employer. Thus, payments received by the employee from the underinsured coverage did not discharge the employer from its statutory responsibility to pay the medical expenses incurred by the employee. The employer was still responsible for payment of its obligations under the workers' compensation statutes.
575 A.2d 1103 (Del. 1990).
Like the Adams case, Employer here did not pay for the coverage Claimant received from Medicare. Medicare's payment of Claimant's medical bills is comparable to Mr. Adams' underinsured motorist insurer paying his medical bills. Therefore, Employer is not entitled to an offset of the medical expenses and the decision of the IAB awarding Claimant $102,719.70 for her medical expenses is affirmed .
Did the IAB properly award attorney's fees?
According to title 19 of the Delaware Code Annotated § 2320(10), "A reasonable attorney's fee in an amount not to exceed 30 percent of the award or 10 times the average weekly wage in Delaware . . . whichever is smaller, shall be allowed by the Board to any employee awarded compensation." According to the language of the statute a claimant who receives a compensation award has a statutory right to an award of reasonable attorney's fees. The IAB does have discretion in determining the amount of attorney's fees it awards, provided it acts in a manner consistent with the purpose of the Worker's Compensation Act. In General Motors Corp. v. Cox, the Delaware Supreme Court developed a list often factors that the IAB must consider in deciding what amount of attorney's fees is reasonable. The Cox factors are as follows:
Del Code. Ann. tit. 19, § 2320(10)(a) (Supp. 2002).
Id.
Robinson, 2000 Del. Super. LEXIS at *7.
General Motors Corporation v. Cox, 304 A.2d 55, 57 (Del. 1973).
(1) The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) The likelihood, if apparent to the client that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) The fees customarily charged in the locality for similar legal services;
(4) The amount involved and the results obtained;
(5) The time limitations imposed by the client or by the circumstances;
(6) The nature and length of the professional relationship with the client;
(7) The experience, reputation, and ability of the lawyer or lawyers performing the services;
(8) Whether the fee is fixed or contingent;
(9) The employer's ability to pay;
(10) Whether the attorney for the claimant received or expects to receive compensation from any other source.
Id. and Pollard v. The Placers, Inc., 1996 Del. Super. LEXIS 327.
All of the factors must be considered to make an appropriate determination of attorney's fees and to provide the Court with sufficient information on appeal to make an informed decision. Failure to consider all the factors or basing a decision on improper or inadequate grounds is an abuse of discretion. Furthermore, although the attorney's fees awarded must be reasonable in relation to the benefit to the client, the fee is not dependent on the amount of the award. Porter I
Willis, 2003 Del. Super. LEXIS at *5 (citing Robinson, 2000 Del. Super. LEXIS 264).
Vaughn v. Genesis, 2000 Del. Super. LEXIS 253, *5.
In Porter I, the Board awarded Claimant ongoing disability benefits from May 30, 2001 and medical expenses totaling $ 102,719.70. In making its award of attorney's fees, the Board stated:
Having received an award, Claimant is entitled to a reasonable attorney's fee assessed as costs against Reliance, pursuant to 19 Del. C. § 2320(j). Claimant's attorney attested that he spent twenty hours preparing for the hearing, which lasted approximately two hours. His first contact with Claimant was in April 2, 1996. Claimant's attorney has been practicing law in Delaware for over thirty-five years. Based on these factors, and on the results obtained, the Board awards one attorney's fee in the amount of thirty percent of the award or $7,036.50, whichever is less. 19 Del. C. § 2320(j).
Porter I at 9.
In its statement, the Board considered the time and labor required, the amount involved and the results obtained, the time limitations imposed by the client, the nature and length of the professional relationship with the client the experience of the lawyer, and the statement of the attorney as to how much time he spent working on the case. However, the Board did not mention several factors, including the fees customarily charged for similar legal services, the likelihood that the acceptance of this case would preclude other employment, whether the fee was fixed or contingent, the fees counsel may receive from other sources, and the ability of the employer to pay.
Claimant contends that the Board erred in awarding only one attorney's fee when she was successful on two issues — medical expenses and disability benefits. The Delaware Supreme Court has upheld awards of multiple attorney's fees when the claimant is successful on multiple issues. However, the issue before this Court is whether the Board's failure to award two attorney's fees was an abuse of discretion.
See General Motors Corp. v. Burgess, 545 A.2d 1186 (Del. 1988).
An award of attorney's fees is mandatory when the claimant has been successful before the Board. In Darnell v. BOC Group, the Superior Court affirmed a decision by the Board to award only one attorney's fee when the claimant received an award for total disability for three days and medical expenses arising from an industrial accident. Darnell is distinguishable from the present situation because the Board in Darnell explained why they were awarding only one attorney's fee, stating that the "question of medical expenses was subsumed within the issues of causation." In Porter I the Board did not make any reference as to why they were awarding only one attorney's fee. As was stated by this Court previously, "[This] Court cannot properly exercise its function on appeal without an adequate statement of findings by the Board."
Del. Code Ann. tit. 19 Del. C. § 2320(10) (Supp. 2002).
Darnell v. BOC Group, 2001 Del. Super. LEXIS 283, aff'd 792 A.2d 188 (Del. 2002).
Id. at *28.
Robinson, 2000 Del. Super. LEXIS at *12. citing City of Wilmington v. Clark, 1991 Del. Super. LEXIS at *8.
The Board did not make a clear statement as to why they were awarding only one attorney's fee even though Claimant received medical expenses and disability benefits. Due to the lack of information, the Board's decision regarding the award of attorney's fees is reversed and this matter is remanded for further proceedings consistent with this opinion.
Porter II
In Porter II, the Board made a similar statement regarding the attorney's fees awarded in that case. Porter II resulted from Employer filing a Motion for Rehearing asking the Board to reverse its award of medical expenses totaling $102,719.70 and award instead $3,726.49. The Board determined that Claimant was entitled to the full medical expenses award. Concluding that Claimant's counsel had secured a benefit for his client, the Board awarded Claimant attorney's fees, stating,
[C]ounsel for Claimant is entitled to a reasonable attorney's fee assessed as costs against Insignia, pursuant to 19 Del. C. § 2320(j). Because of Insignia's Motion, Claimant's attorney was required to spend time preparing his response. Claimant's attorney attested that he spent 7.3 hours preparing that response. His first contact with Claimant was on April 2, 1996. Claimant's attorney has been practicing law in Delaware for over thirty-five years. Based on these factors, and on the results obtained, the Board awards an attorney's fee in the amount of $1,750.00.
Porter II at 3.
In this statement the Board considered the same factors as were considered in Porter I and failed to mention the same factors as they failed to mention in Porter I. Claimant alleges that the Board erred by not considering all of the Cox factors in making their award of attorney's fees.
The decision of the Board regarding attorney's fees was reversed and remanded when the Board incorrectly applied one of the Cox factors and failed to address several other factors in Robinson v. Metal Masters, Inc. The Board in Robinson made a statement in reference to attorney's fees which was very similar to the Board's statement in Porter II. The most significant factor in that Court's decision was the failure of the Board to discuss or even mention whether the fee was fixed or contingent, the employer's ability to pay, and the fees counsel may receive from other sources. The Court concluded, "[This Court] `should not be compelled to speculate or make assumptions' as to what factors the Board considered in making its determination."
2000 Del. Super. LEXIS 264, see also Taylor v. Walton Corp., 2002 Del. Super. LEXIS 63.
Id. at *12.
Id. citing City of Wilmington v. Clark, 1991 Del. Super. LEXIS 118 at *8.
The Board's failure to mention five of the Cox factors, including the fees customarily charged for similar legal services, the likelihood that the acceptance of this case would preclude other employment, whether the fee was fixed or contingent, the fees counsel may receive from other sources, and the ability of the employer to pay, puts this Court in the same situation as the Court in Robinson. In order to conclude that the amount awarded for attorney's fees was valid, this Court would be forced to assume that the Board considered these factors but did not find any of them relevant in making the award. That is something the Court will not do. Therefore, this Court concludes that the Board's failure to address all of the Cox factors in Porter II resulted in an award that was an abuse of the Board's discretion. As such, the decision regarding the award of attorney's fees in Porter II is reversed and this matter is remanded for further proceedings consistent with this opinion.
Conclusion
In conclusion, Employer is not entitled to an offset of the medical expenses and the IAB's decision awarding Claimant $102,719.70 for medical expenses is affirmed. Due to lack of information, the Board's decision regarding the award of attorney's fees in Porter I is reversed and remanded and because the Board failed to address all of the Cox factors in Porter II regarding the award of attorney's fees, this decision is also reversed and remanded for further proceedings consistent with this opinion.
IT IS SO ORDERED.