Ellis v. Comm'r of the Dep't of Indus. Accidents
| Decision Date | 18 September 2015 |
| Docket Number | No. 13–P–402.,13–P–402. |
| Citation | 88 Mass.App.Ct. 381,37 N.E.3d 681 |
| Parties | James ELLIS v. COMMISSIONER OF the DEPARTMENT OF INDUSTRIAL ACCIDENTS & another. |
| Court | Appeals Court of Massachusetts |
Teresa Brooks Benoit for the plaintiff.
Timothy J. Casey, Assistant Attorney General, for Commissioner of the Department of Industrial Accidents.
Michael K. Landman, for Landman, Akashian & White, P.C., was present but did not argue.
Present: BERRY, GREEN, & TRAINOR, JJ.
BERRY
, J.
Reduced to essentials, in this latest appellate foray, the plaintiff, James Ellis, contends that, in considering whether to approve a lump sum agreement under § 48 of G.L.c. 152, the Workers' Compensation Act (act), for injuries to a worker, an administrative judge of the Department of Industrial Accidents (department) or a law judge on the department's reviewing board
reviewing board) (hereinafter collectively referred to as administrative judge) is absolutely foreclosed from reviewing the authenticity of the legal expenses and from adjusting those expenses downward, leaving more money for the injured worker under the lump sum settlement payment.
We reject Ellis's contentions regarding total unreviewability of the claimed legal expenses. Ellis offers no precedent, i.e., no caselaw or statutory authority, for this proposition. See note 8, infra. We conclude that an administrative judge—in review of a proposed lump sum awarded and to be paid in settlement to an injured worker—does have the authority to review and adjust downward unsubstantiated or unreasonably excessive attorney's fees and expenses. Put another way, it is within the purview of an administrative judge to modify the amount allocated in the lump sum settlement to an employee's attorney for attorney's fees and necessary expenses where the fees and expenses, upon review, are insufficiently supported or deemed not necessary, and the administrative judge, by such an adjustment, neither increases the burden on the insurer nor decreases the net sum to be paid to the employee.
In the past five years alone, Ellis or his legal assistants (collectively, Ellis) have filed over one hundred and fifty workers' compensation appeals in this court. In a substantial number of these appeals, Ellis also sought further appellate review in the Supreme Judicial Court where this court decided the appeals adversely to the contentions advanced. Ellis's attorney's fees and expenses frequently have been the main subject in these appeals.3 In a series of these cases, Ellis has been sanctioned for filing
frivolous appeals and, similarly, for presenting frivolous claims involving fees and expenses before the department.4 , 5
Against this backdrop, this appeal from a Superior Court judgment—again rejecting Ellis's makeshift contentions regarding “necessary expenses”—presents yet another unsustainable effort by Ellis to manipulate the workers' compensation system to Ellis's financial advantage vis-à-vis legal expenses.
Ellis's contention that attorney's fees and expenses are nonreviewable—even if unnecessary or unsubstantiated—is contrary to best interests of injured employees, and is at odds to the very purposes served by the act. “It has long been recognized that the [a]ct ‘was enacted as a “humanitarian measure” in response to strong public sentiment that the remedies afforded by actions of tort at common law did not provide adequate protection to workers.’ ” Spaniol's Case, 466 Mass. 102, 106, 992 N.E.2d 1028 (2013)
, quoting from
Neff v. Commissioner of the Dept. of Industrial Accs., 421 Mass. 70, 73, 653 N.E.2d 556 (1995)
.
We are mindful that legal representation of injured employees is an important part of the workers' compensation statutory and regulatory scheme, and that payment of attorney's fees and expenses are specifically provided for at various stages of proceedings before the department and the courts.6 However, fees and expenses for appropriate legal representation is not a carte blanche to an open credit line for an attorney to draw upon without validity. Particularly is this so where, as here, the attorney-related expenses have not been shown to be reasonable or actually incurred. Indeed, in this case, Ellis failed to provide to the department and the lower court appropriate documentation for these expenses, certain of which were deemed unreasonable and excessive.7
Oversight of the allocation to an attorney of attorney's fees and necessary expenses is an important part of the task of an administrative judge in approving a lump sum settlement agreement. Particularly is this so because the fees and expenses in a lump sum settlement differ in allocation from other, necessary fees and expenses awardable in other contexts, which under the act may be payable to an attorney directly by the insurer. See G.L. c. 152, § 13A(1)
-(7). In contrast, in a lump sum settlement agreement, attorney's fees and expenses are paid from the very lump sum settlement deemed due to the injured worker. It is illustrative to view the legal setting of a lump sum settlement arrangement. Once the insurer agrees to payment of a sum certain lump sum settlement, the insurer has little incentive to scrutinize the attorney's fees and expenses submitted by the employee's attorney. Further, the injured employee would be placed in an awkward position, if called upon to contest the fees and expenses of the attorney who has represented that employee through the settlement process. Thus, it is the impartial administrative judge who stands as the overseer to the fairness and propriety of the lump sum settlement and the fees and expenses incorporated therein. See G.L.c. 152, § 48.
1. Procedural background. The appeal involves prior proceedings in two workers' compensation cases litigated during 2008, in
which Ellis represented employees seeking workers' compensation for injuries sustained at work.
The first case involves Michael X. Smith. Smith and the insurance company reached agreement as to a lump sum of $50,000 after Smith had reached maximum medical improvement to compensate him for lingering effects of a tibia-fibula fracture, including persistent pain and limitation. The agreement provided for attorney's fees of $7,500, and expenses of $3,574.31. The agreement was submitted to an administrative judge for approval pursuant to G.L.c. 152, § 48
. The administrative judge approved the agreement but modified it by withholding payment of the expenses pending documentation, and ultimately approved only $1844.31 in expenses and awarded the balance of $1730 to the employee. The administrative judge denied expenses that were related to pursuing a psychological injury that was not part of the settlement. The record does not contain the documentation or other evidence provided to the administrative judge related to the expenses incurred.
The second case involves Brian Tape, who had injured his right ankle at work. The parties entered an agreement for a lump sum of $15,000 and future medical expenses, from which attorney's fees of $3,000 and expenses of $3,484.73 were to be paid. The administrative judge approved the settlement pursuant to § 48
, but modified the expenses arrangement by releasing the full amount of the expenses to the employee to disburse “to his counsel as he deems appropriate.”
Of note in both cases, neither the injured employees nor the compensation insurers filed appeals concerning the lump sum settlement with the adjusted fees. “Once the department gives its approval of the parties' lump sum agreement pursuant to § 48
, ‘further inquiry’ of the merits of the controversy must be had in Superior Court.” Opare's Case, 77 Mass.App.Ct. 539, 541, 932 N.E.2d 863 (2010), quoting from Perkins's Case, 278 Mass. 294, 299, 180 N.E. 142 (1932).
Ellis did not seek any such “further inquiry” or direct appellate review in either case. Instead, acting solely on his own behalf and in his interests—and without joining either the insurer or injured employee—Ellis filed an independent declaratory judgment lawsuit in the Superior Court. Specifically, Ellis, acting in his own name and doing business as Ellis & Associates, commenced in the Superior Court a G.L.c. 231A declaratory judgment complaint coupled with a claim in equity to reach and apply against insurer's counsel. The declaration sought in the Superior Court—
tracking the position Ellis continues to advance in this appeal—is that an administrative judge is prohibited from considering attorney's fees and expenses embedded in a lump sum settlement; and that under G.L.c. 152, § 19
, the administrative judge's only recourse in the event that he finds that a lump sum agreement is not in the best interests of the employee is to reject the settlement as a whole.
A Superior Court judge rejected Ellis's contentions. The judge correctly reasoned—a rationale which we adopt in this appeal—that administrative judges “have the power to adjust Lump Sum Agreements in favor of claimants pursuant to their responsibility under G.L.c. 152, § 48
[ ] to ensure that settlement is in the claimant's ‘best interests,’ ”8
provided that the administrative judge may neither increase the amount due from the insurer, nor reduce the amount due to the employee.9
2. The framework for a lump sum settlement and administrative review. The act allows an employee and an employer or insurer to settle part or all of a claim for workers' compensation through a lump sum settlement, which, when presented to an administrative judge, as was done here, is not perfected “until and unless approved by an administrative judge or administrative law judge as being in the claimant's best interest.” G.L.c. 152, § 48(1)
, as amended by St. 1991, c. 398, § 74. “Central to c. 152's statutory scheme is the Legislature's command that the department have oversight responsibility over lump sum settlements in order to ensure that any such settlement is ‘in the claimant's best interest.’ ” Opare's Case, 77 Mass.App.Ct. at...
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