State ex rel. Wyoming Workers' Compensation Div. v. Brown

• Decision Date: 30 January 1991
• Docket Number: No. 89-134,89-134
• Parties: STATE of Wyoming, ex rel. WYOMING WORKERS' COMPENSATION DIVISION, Appellant (Objector-Defendant), v. James L. BROWN, Appellee (Employee-Claimant).
• Court: Wyoming Supreme Court

Page 830

805 P.2d 830

STATE of Wyoming, ex rel. WYOMING WORKERS' COMPENSATION DIVISION, Appellant (Objector-Defendant), v. James L. BROWN, Appellee (Employee-Claimant).

No. 89-134.

Supreme Court of Wyoming.

Jan. 30, 1991.

Joseph B. Meyer, Atty. Gen., Ron Arnold, Sr. Asst. Atty. Gen., and Larry M. Donovan, Asst. Atty. Gen., for appellant.

Valerie Hafner Phifer, Lander, for appellee.

Before CARDINE, C.J., ^* and THOMAS, URBIGKIT, MACY and GOLDEN, JJ.

URBIGKIT, Chief Justice.

The Wyoming Worker's Compensation Division appeals from a district court order restoring legal fees and costs billed by the attorney appointed to represent an injured worker. Counsel petitioned for review by the district court following an administrative hearing examiner's reduction of her compensation by more than thirty-three percent and disallowance of about half of her costs. The immediate issue is whether a district court can hear an appeal from an order by an administrative hearing examiner and modify the order when the district court judge finds the amount awarded is unreasonable and is established by an improper legal standard within the worker's compensation statutes, W.S. 27-14-101 through 27-14-805, and the state constitution.

The issues in this case involve the right of an injured worker to counsel when pitted against the private attorneys who represent the employer in conjunction with state employed attorneys in the Attorney General's office who represent the Wyoming Workers' Compensation Division. Also presented is the right of any attorney who represents the injured worker to be compensated fairly. Justification for the attorney fee reduction and cost denial came from the application of adopted rules supplemented by applied practice.

We affirm the district court.

I. ISSUES ARGUED

Appellant, Wyoming Workers' Compensation Division (Division), asks whether the district court:

I. * * * lack[ed] statutory authority and jurisdiction to enter an order awarding attorney fees for representation of appellee before the Office of Administrative Hearings.

II. * * * err[ed] as a matter of law in holding a hearing and taking additional evidence regarding attorney fees for representation of appellee before the Office of Administrative Hearings.

III. * * * err[ed] as a matter of law by substituting its judgment on the amount of attorney's fees and costs [ ] reasonably incurred in the representation of appellee before the Office of Administrative Hearings.

IV. * * * err[ed] as a matter of law by failing to follow W.S. 16-3-114(c) when entering its findings and order.

Appellee, James L. Brown (Brown), asks whether the district court:

1. * * * lack[ed] authority and jurisdiction to change the order of the Office of Administrative Hearings regarding the award of attorney fees and costs for representation of appellee?

2. * * * err[ed] as a matter of law in holding a hearing and taking additional evidence regarding attorney fees for representation of appellee before the Office of Administrative Hearings?

3. * * * after holding a hearing and taking additional evidence, err[ed] as a matter of law by entering an order directing the Workers' Compensation Division to pay the amount of attorney fees and costs reasonably incurred in the representation of appellee before the Office of Administrative Hearings?

4. * * * err[ed] as a matter of law when omitting from its decision specific reference to one of the alternate legal conclusions set forth in section 16-3-114(c) of Wyoming's Administrative Procedure Act?

We address these issues within the substantive context presented of the injured worker's right to competent counsel and the counsel's right to reasonably adequate compensation for legal services.

II. WHAT HAPPENED

Valerie Hafner Phifer (Phifer) was appointed in the summer of 1988 to represent an employee injured during the winter of 1986. The case was sufficiently difficult and complex to cause a prior attorney to withdraw prematurely. Four months later, Phifer obtained an award of approximately $46,000 for her client. The injury claim, resulting from a motor vehicle accident, was settled with a stipulated sixty-five percent per annual total disability resulting from the initial head injury and succeeding vertigo and/or mental problems. Following settlement success, Phifer submitted a motion and billing for attorney fees of $1,533.50 and costs of $248.96 to the Office of Administrative Hearings. The administrative hearing officer's order reduced her attorney fees to $1,000 and her costs to $167.07. The letter from the hearing examiner to Phifer explained the reduction in fees by stating that "Section 4, Rules of the Office of Administrative Hearings, Practices and Procedures in Contested Cases" requires legal fees over $1,000 to be approved in advance and that attorney's costs for office copy machine charges and express mail costs are routinely denied. ¹

Phifer filed a motion for reconsideration. Neither a response to the motion for reconsideration nor a factual hearing was provided within the limited time available to request judicial review. Consequently, Phifer appealed to the district court where the reviewing court heard testimony from Phifer and another attorney, who routinely handles worker's compensation cases, each claiming reduction error and unreasonableness of the allowance in this case for the services furnished. Evidence presented to the district court included statements that the current amount of fees generally allowed in worker's compensation cases are unreasonably low, so low in fact that a problem with broad implications is beginning to emerge in the shrinking pool of attorneys who can afford to represent injured wage earners. ² The district court order stated, however, that the court did not rely on that hearing testimony in making the decision as a conclusion of law rejecting reduction when there was no factual basis to determine that the fees billed by Phifer were not reasonable and necessary.

III. STANDARD OF REVIEW

Judicial review of an agency action is directed by W.S. 16-3-114, under which 16-3-114(a) allows any person aggrieved or adversely affected in fact by the actions or inactions of an agency to obtain judicial review by the district court. "This court is governed by the same rules of review as was the district court." Atchison v. Career Service Council of State of Wyoming, 664 P.2d 18, 20 (Wyo.), cert. denied 464 U.S. 982, 104 S.Ct. 424, 78 L.Ed.2d 359 (1983). See also Banda v. State ex rel. Wyoming Workers' Compensation Div., 789 P.2d 124 (Wyo.1990). While this court typically remands an administrative decision back to the agency when that decision relies upon findings of fact, Cook v. Zoning Bd. of Adjustment for the City of Laramie, 776 P.2d 181 (Wyo.1989); FMC v. Lane, 773 P.2d 163 (Wyo.1989), remand is not mandatory when the question before the district court or this court is a question of law or a mixed question of fact and law. Natrona County School Dist. No. 1 v. McKnight, 764 P.2d 1039, 1049 (Wyo.1988). The rationale underlying remand when findings of fact by an agency are involved is our reliance on the expertise of an agency. "[W]e have indicated we defer to the experience and expertise of the agency in its weighing of the evidence and will disturb its decisions only where it is clearly contrary to the overwhelming weight of the evidence on record." Southwest Wyoming Rehabilitation Center v. Employment Sec. Com'n of Wyoming, 781 P.2d 918, 921 (Wyo.1989) (emphasis added) (accord Cody Gas Co. v. Public Service Com'n of Wyoming, 748 P.2d 1144, 1146 (Wyo.1988)).

In the case of a question of law, it is the courts and not the agencies which display the dominant expertise since courts, as a matter of course, deal with questions of law and legislative intent. If an agency determination is not in accordance with law, this court corrects the determination to assure accordance with law. See Employment Sec. Com'n of Wyoming v. Western Gas Processors, Ltd., 786 P.2d 866 (Wyo.1990). Unreasonableness of a compensatory legal fee assessment is addressed by the court as a matter of law if the underlying facts are not in dispute. The scope of review of the standard that is used for calculating the attorney fee is plenary with the appellate court. Bell v. United Princeton Properties, Inc., 884 F.2d 713 (3rd Cir.1989).

This court in Hohnholt v. Basin Elec. Power Co-op, 784 P.2d 233 (Wyo.1989) addressed the specific standard for review in worker's compensation cases within the new organizational structure provided by the hearing examiner provision of W.S. 27-14-602. The Hohnholt test is substantial evidence for support of the findings and conclusions when evidentiary issues exist.

"We examine the entire record to determine if there is substantial evidence to support an agency's findings. If the agency's decision is supported by substantial evidence, we cannot properly substitute our judgment for that of the agency, and must uphold the findings on appeal. Substantial evidence is relevant evidence which a reasonable mind might accept in support of the conclusions of the agency. It is more than a scintilla of evidence." (citation omitted) Trout v. Wyoming Oil & Gas Conservation Comm'n, 721 P.2d 1047, 1050 (Wyo.1986).

Id. at 234. The standard is similarly applied in the federal courts for the administrative agency appeal as one of substantial evidence for factual review. Mangus v. Director, Office of Workers' Compensation Programs, U.S. Dept. of Labor, 882 F.2d 1527 (10th Cir.1989). A plenary review of questions of law and substantial evidence for questions of fact are the general standard of review for worker's compensation attorney fee contest actions. Matter of Death of Smithour, 778 P.2d 302 (Colo.App.1989); Weyerhaeuser Co. v. Fillmore, 98 Or.App. 567, 779 P.2d 1102 (1989).

The standard to be applied for assessment of the reasonableness of attorney fees is a question of law; reasonableness within the...