Cleary v. Md. Workers' Comp. Comm'n

• Decision Date: 18 December 2017
• Docket Number: No. 2220,2220
• Parties: THOMAS J. CLEARY v. MARYLAND WORKERS' COMPENSATION COMMISSION
• Court: Court of Special Appeals of Maryland

THOMAS J. CLEARY v. MARYLAND WORKERS' COMPENSATION COMMISSION

No. 2220

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2016

December 18, 2017

Circuit Court for Calvert County

Case No. 04-C-16-000075

UNREPORTED

Wright, Graeff, Thieme, Raymond G., Jr. (Senior judge, specially assigned) JJ.

Opinion by Thieme, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

This case arises out of an award of attorney's fees in a workers' compensation case. At all times relevant to this case, the workers' compensation claimant, Thomas J. Cleary, was represented by the same counsel. On November 18, 2015, Mr. Cleary, his employer, and the employer's insurer entered into a settlement agreement pursuant to which all of the parties agreed that Mr. Cleary's counsel would receive a fee of $30,000 for legal services and $240.82 as reimbursement for certain expenses. On January 12, 2016, the Maryland Workers' Compensation Commission ("Commission"), approved the settlement but reduced the attorney's fees by $10,000.

Mr. Cleary's counsel sought judicial review in the Circuit Court for Calvert County.¹ Thereafter, he filed a motion for summary judgment and, subsequently, a supplement to that motion. In an order dated November 15, 2016, the circuit court denied the motion and affirmed the decision of the Commission. This timely appeal followed.

QUESTIONS PRESENTED

The following questions are presented for our consideration:

I. Did the circuit court err in affirming the Commission's abuse of discretion, when the Commission failed to explain why the work performed by counsel over a ten-year period was not extraordinary enough to approve the full fee that had been negotiated as part of the settlement and agreed to by the injured worker?

II. Did the circuit court err in affirming the Commission's denial of due process, when the Commission does not have any criteria whatsoever for explaining what constitutes "extraordinary work"?

For the reasons set forth below, we shall affirm.

FACTUAL BACKGROUND

The facts giving rise to this appeal are not in dispute. On October 15, 2005, Mr. Cleary sustained injuries to his lower back arising out of and in the course of his employment. He has not been able to work since 2007. In 2006, he retained counsel to represent him with respect to a workers' compensation claim. On numerous occasions, disputes arose between Mr. Cleary and his employer and its insurer that his counsel handled without the need for litigation. Eventually, in 2015, Mr. Cleary's counsel negotiated a final compromise and settlement that gave Mr. Cleary and his beneficiaries entitlement to a minimum guaranteed benefit of $500,399.20 and a projected maximum benefit of $1,381,277.44, while maintaining Mr. Cleary's right to future reasonable, necessary and causally related medical treatment. Paragraph 15 of the final compromise and settlement agreement, which was agreed upon by all the parties, provided attorney's fees to Mr. Cleary's counsel in the amount of $30,000 to be paid out of the settlement.

In an order dated January 12, 2016, the Commission approved the proposed final compromise and settlement agreement. In accordance with COMAR 14.09.04.03B(2)²,the Commission found that there were "exceptional circumstances" and awarded fees in excess of the limits imposed by the schedule of attorney's fees set forth in COMAR 14.09.04.03B(7)³, but reduced the amount of attorney's fees from the $30,000 that had been agreed upon to $20,000. The Commission explained:

APPROVED WITH THE FOLLOWING MODIFICATIONS:

[Mr. Cleary's counsel] in the amount of $20,000.00 (plus $240.82/costs advanced)

Based upon standard in Mitchell v. Goodyear, 63 Md. App. 426 (1985), aff'd, 306 Md. 27 (1986), which requires the Commission to consider, work performed by counsel (filed claim, filed issues on several occasions, but did not attend any hearings, negotiated settlement, sent out correspondence, telephone contact with opposing counsel and adjuster/insurer), time represented (since 2005), the Commission will award an attorney fee of $20,000 which is $5,500 over amount permitted by Fee Guide. The Commission does not find worker [sic] performed by counsel extraordinary enough to warrant a fee of $15,500 over the Fee Guide.

Mr. Cleary's counsel filed a petition for judicial review arguing that the Commission's reduction of the attorney's fees to $20,000 was arbitrary, capricious, and not in accordance with the work performed and the benefits secured for Mr. Cleary. He argued that he had resolved many disputes between Mr. Cleary, his employer, and the employer's insurer, and eventually negotiated a settlement favorable to Mr. Cleary without the need for any litigation. He also argued that awarding fees of such a low amount would effectively undermine the purpose of the attorney's fee guide set forth in COMAR 14.09.04.03, and generally deprive claimants of the practical ability to obtain counsel. In a supplemental memorandum⁴, counsel argued that the limitations on attorney's fees servedto deprive injured workers of their right to a remedy as guaranteed by Article 19 of the Maryland Declaration of Rights.⁵ He asserted that the Commission's use of the fee guide to limit attorney's fees effectively penalized attorneys "who navigate their clients through the complexity of the Commission, to all three stages of the Maryland Court system[,]" and encouraged them to counsel their clients to enter into compromise settlements instead of seeking the remedies they are entitled to by law. According to Mr. Cleary's counsel, "[t]his sort of chilling effect, to convince injured workers to compromise their claims, is not what the attorneys' fee provision was initially designed to cause," and the Commission's use of the fee guide to limit attorney's fees has turned a provision designed to protect workers into one that works against the constitutional rights of workers.

The circuit court rejected these arguments. In a written opinion and order, the circuit court determined that the Commission acted within its discretion in determining that "exceptional circumstances" existed and in awarding fees of $5,500 in excess of what would otherwise be permitted under the fee guide. With respect to the constitutionality of the fee limits, the court determined that Mr. Cleary's counsel had not raised that issuebefore the Commission and did not raise it until the hearing on judicial review. As a result, the constitutional issue had been waived. In order to "head off future litigation," the court addressed counsel's "facial" challenge to the fee limits, but determined that he had not been denied due process because the Commission determined that "exceptional circumstances" existed and awarded attorney's fees in excess of the limits set by COMAR 14.09.04.03B.

STANDARD OF REVIEW

In an appeal from judicial review of an agency action, we review the agency's decision directly, not the decision of the circuit court. Hollingsworth v. Severstal Sparrows Point, LLC, 448 Md. 648, 654 (2016); Comptroller v. Science Applications Int'l Corp., 405 Md. 185, 192 (2008). Although generally "the decision of the Commission is presumed to be prima facie correct, this presumption does not extend to questions of law, which we review independently." Hollingsworth, 448 Md. at 654-55 (internal quotations and citations omitted). We respect the expertise of the agency and accord deference to the Commission's interpretation of the statute it administers. Hranicka v. Chesapeake Surgical, Ltd., 443 Md. 289, 297 (2015). We may reverse a Commission's decision only if we find "that the Commission's action was based on an erroneous construction of the facts or law." Baltimore County v. Thiergartner, 442 Md. 518, 529 (2015)(citations omitted).

In workers' compensation cases, attorneys "may not charge or collect a fee for . . . legal services in connection with a claim" unless the fee is approved by the Commission. Md. Code (2016 Repl. Vol.), § 9-731(a)(1)(i) of the Labor and Employment Article ("LE"). Because the Commission is vested with the authority to set counsel fees, in reviewing the Commission's decision regarding an award of attorney's fees, it is not our province "toconstrain the legitimate exercise of the [C]ommission's discretion," so long as the exercise of that discretion is neither arbitrary nor capricious. Brunson v. Univ. of Maryland Med. Sys. Corp., 221 Md. App. 583, 591 (2015), cert. denied, 443 Md. 735 (2015). As long as the Commission's award of attorney's fees is not arbitrary or capricious, the only issue before us is whether the Commission abused its discretion. Mayor & City Council of Baltimore v. Bowen, 54 Md. App. 375, 387 (1983). An abuse of discretion occurs when the Commission adopts a view that "no reasonable person would take" or "acts without reference to any guiding rules or principles." Bord v. Baltimore County, 220 Md. App. 529, 566 (2014)(quoting In re Adoption/Guardianship No. 3598, 347 Md. 295, 312 (1997)). The Commission also abuses its discretion when it issues a ruling that is "clearly against the logic and effect of facts and inferences" before it, or when the ruling is violative of fact and logic." Id. Under this standard, we may not reverse the Commission's decision unless it was "well removed from any center mark imagined by the reviewing court." Santo v. Santo, 448 Md. 620, 626 (2016)(internal quotations and citations omitted).

ATTORNEY'S FEES IN WORKERS' COMPENSATION CASES

In Brunson, Judge Graeff, writing for this Court, explained the workers' compensation statutory scheme with regard to attorney's fees which, for ease of reference, we repeat here:

In Engel & Engel, P.A. v. Ingerman, 353 Md. 43, 724 A.2d 645 (1999), the Court of Appeals explained that the worker's compensation statutory scheme was

"designed to

...