Schoch v. Luepold & Stevens

• Decision Date: 04 August 1999
• Parties: In the Matter of the Compensation of Lois J. Schoch, Claimant. Lois J. SCHOCH, Petitioner, v. LUEPOLD & STEVENS and Liberty Northwest Insurance Corporation, Respondents.
• Court: Oregon Court of Appeals

987 P.2d 13

162 Or. App. 242

In the Matter of the Compensation of Lois J. Schoch, Claimant.

Lois J. SCHOCH, Petitioner, v. LUEPOLD & STEVENS and Liberty Northwest Insurance Corporation, Respondents.

(92-09982; CA A98548)

Court of Appeals of Oregon.

Argued and Submitted January 29, 1999.

Decided August 4, 1999.

Meagan Flynn, Portland, argued the cause for petitioner. With her on the brief was Pozzi Wilson Atchison, LLP.

David O. Wilson, Senior Trial Counsel, argued the cause and filed the brief for respondents.

Before EDMONDS, Presiding Judge, and ARMSTRONG and KISTLER,¹ Judges.

KISTLER, J.

The Workers' Compensation Board awarded claimant $3,000 in attorney fees for time spent successfully challenging an order of the Director of the Department of Consumer and Business Services that denied claimant's request for back surgery. This court affirmed the fee award, and the Supreme Court reversed and remanded. It held that the Board's explanation was not sufficient to determine whether the Board had acted within its discretion in setting the fee. Schoch v. Leupold & Stevens, 325 Or. 112, 934 P.2d 410 (1997). On remand, the Board offered a more detailed explanation and adhered to the $3,000 figure. On review, claimant argues that the Board abused its discretion when it awarded claimant's counsel only half that to which the time spent and his customary rate should have entitled him. We reverse and remand. This case has a complex procedural history that arises out of two parallel proceedings claimant pursued to receive one surgery.² In January 1990, claimant suffered a compensable low back injury. Claimant's doctor requested authorization for surgery on February 14, 1992. Liberty, the insurer, requested review of the proposed surgery by the Director. On July 16, 1992, the Director issued his proposed and final order finding that surgery was not appropriate. Claimant asked for a hearing on July 28, 1992, arguing, among other things, that the Director had no original jurisdiction over a medical services issue involving reasonable and necessary care. On December 10, 1992, ALJ Holtan issued an opinion and order affirming the Director's order. Claimant requested review of that order.

On May 25, 1993, while claimant's challenge to the denial of her first request for surgery was pending before the Board, claimant's doctor submitted a second request for surgery. On July 12, 1993, Liberty issued a denial of claimant's current condition, disability and the need for medical treatment. Claimant filed a request for hearing on that denial, which was held on November 9, 1993, before ALJ Podnar. Liberty orally withdrew its July 12, 1993, denial letter at closing argument but maintained its de facto denial of surgery, arguing that the surgery was not reasonable and necessary.

On December 3, 1993, the Board concluded that, under ORS 656.327, the Director had no jurisdiction to review claimant's first request for surgery. It accordingly vacated ALJ Holtan's December 10, 1992, order and remanded for further proceedings. In response to a letter from claimant, the Board issued an order of abatement on December 29, 1993, in order to determine whether a remand was necessary.

On January 10, 1994, ALJ Podnar found that the second request for surgery was reasonable and necessary and set aside Liberty's denial of that request for surgery. ALJ Podnar awarded claimant's attorney an assessed fee of $10,500, which the Board reduced to $5,750.³

On January 12, 1994, claimant wrote to the Board, regarding the first claim for surgery, and enclosed a copy of ALJ Podnar's January 10, 1994, order, finding that the surgery was reasonable and necessary. The Board entered an order on reconsideration on January 28, 1994, remanding the case to ALJ Holtan to allow both sides to present additional evidence regarding claimant's first request for surgery.⁴ Liberty wrote a letter to the Board stating that it would not appeal ALJ Podnar's January 10, 1994, order because it was no longer contesting claimant's request for surgery. In the letter, Liberty argued that ALJ Podnar's decision approving the second request for surgery rendered claimant's first request for surgery moot and asked the Board to dismiss the case arising out of that first request.

On remand, ALJ Holtan found that the original Director's order was invalid but that the substance of the medical services dispute had been rendered moot by the approval of the request for surgery in the second claim. He also denied claimant's request for attorney fees. Claimant requested review of ALJ Holtan's order on remand.

On review, the Board found that the first request for surgery was not moot and awarded claimant attorney fees of $3,000 under ORS 656.386(1).⁵ The Board's order stated:

"After considering the factors set forth in OAR 438-15-010(4) and applying them to this case, we find that a reasonable attorney fee for claimant's counsel's services at hearing, on Board review and on remand concerning the validity of the Director's July 16, 1992 order is $3,000, to be paid by the insurer. In reaching this conclusion, we have particularly considered the time devoted to the case (as represented by the record and claimant's appellate briefs), the complexity of the issue, the value of the interest involved, and the risk that claimant's counsel might go uncompensated."

Lois J. Schoch, 47 Van Natta 71, 73 (1995). Claimant asked the Board to reconsider the amount of fees it had awarded and submitted a statement of services totaling $19,897.50. In its order on reconsideration, the Board adhered to its earlier decision. We affirmed without opinion, and the Supreme Court allowed review.

The Supreme Court reversed. The court assumed that the Board had considered all of the factors mentioned in OAR 438-015-0010(4). The problem, the court reasoned, was that the Board had failed to explain how those factors had weighed in its decision making process. Schoch, 325 Or. at 119, 934 P.2d 410. What was missing from the Board's opinion was the rationale that had led it from the factors it considered to the fee it awarded. Id. It was unclear to the court whether the Board had thought that the hourly rate was too high, whether it thought that the time spent on the case was excessive, or whether the Board had discounted claimant's fee request because of the fees awarded in the parallel proceeding. Id. at 119-20, 934 P.2d 410. The court explained: "In sum, we conclude that the Board's order does not contain a sufficient explanation to permit an appellate court to review the Board's exercise of discretion in setting a reasonable attorney fee." Id. at 119, 934 P.2d 410. The court accordingly remanded the case to the Board.

In its order on remand, the Board reaffirmed that $3,000 is a reasonable fee. It reasoned:

"As compared to typical medical services cases which come before us, the issues here were of average complexity. The hearing was also of average length. On the other hand, in light of the `original/appellate jurisdiction' and `de novo/substantial review' aspects of this case, we consider the issues to have been of above average procedural complexity. Moreover, the nature of the proceedings was also beyond the normal case in that claimant's counsel performed services at the hearings level, on Board review, and before the Board on remand.

"Considering the complicated procedural aspects of the claim, there was a decided risk that claimant's counsel's efforts might have gone uncompensated. For the same reason, expenditure of substantial time was required to secure claimant's benefits. The parties' respective counsels also presented their positions in a thorough, well reasoned and skillful manner.

"Finally, we take into consideration that claimant previously prevailed against a denial of the same surgery in a collateral proceeding for which her counsel has already been awarded a $5,750 attorney fee. In addition, claimant's counsel is not entitled to an attorney fee for services devoted to the insurer's withdrawal of its appeal from the Order on Reconsideration. Finally, no attorney fee is awardable for claimant's counsel's services at any level concerning the attorney fee issue.

"After considering the aforementioned factors, we continue to conclude that $3,000 is a reasonable assessed attorney fee for claimant's counsel's services regarding the insurer's `pre-remand hearing' concession concerning claimant's surgery. In particular, we have considered the time devoted to the issue (as represented by the record, claimant's appellate briefs, and her counsel's statements of services), the procedural complexity of the issue, the nature of the proceedings (hearing, Board review and remand), the value of the interest involved, and the risk that claimant's counsel might go uncompensated."

Lois J. Schoch, 49 Van Natta 788, 789-90 (1997) (footnotes and citations omitted).

The Board added in a footnote:

"In reaching this conclusion, we wish to emphasize that we are not questioning claimant's counsel's representations regarding the amount of time expended in pursuit of the insurer's eventual concession regarding claimant's surgery claim. Rather, for the reasons expressed

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