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Helen Schott's August 2, 1988 Memo Concerning Attorney's Fees in Contested Cases

Department Policy Concerning Awarding 20 percent Attorney's Fees on Medical Expenses

Date: August 2, 1988
To: Administrative Law Judges
From: Helen L. Schott, Director Legal Services Bureau

Some questions have been raised dealing with the Department policy on Attorney's fees in contested cases. Generally, in contested cases, the attorney's fee is 20 percent of the compensation due to the employe [sic]. Generally the attorney's fee is not set on the medical expenses.

This is a longstanding policy at the Department. This has been the policy for the last 20 years at least. The reasons for this policy are that the statute clearly allows an attorney's fee of 20 percent to be paid to the attorney. If the attorney's fees are assessed on the medical expense, this means that the medical providers generally get 100 percent and that attorney's fee must then come out of the temporary disability or permanent disability compensation paid to the applicant under the order, which would result in the applicant getting much less than the 80 percent of the compensation payable to him [sic]. For instance, if we have a case where the compensation due is $5,000 and the outstanding medical expenses due are $5,000 and if an attorney's fee of 20 percent is paid upon the whole compensation and medical expenses due, then the attorney's fee is 20 percent or $2,000. The medical providers will receive $5,000, the attorney, $2,000, and the employe [sic], $3,000.

Based upon the longstanding interpretation of sec. 102.26, a change in the administration of this section at this point would be to radically change the attorney's fees payable in worker's compensation cases. It would mean that the applicant receives less than the 80 percent of the compensation which is assessed in each case.

Also, the fact that no attorney's fees are paid on disputed medical expenses encourages the submission of these medical expenses to third party insurers such as Blue Cross and Time Insurance, to make sure that these claims are paid promptly. When the medical expenses have been paid before the settlement or the award in the case, there is no attorney's fees on medical expense reimbursed to the third party group medical insurers. To treat attorney's fee differently in these cases would be to discourage prompt submission of medical bills to third party carriers to the detriment of employes [sic].

Also, another reason for the policy is that medical expenses in cases where the dispute is whether the injury arose out of the employment and often nature and extent of disability are paid almost automatically if they are submitted and if the case is found to be a compensable one. For instance in a hernia case, if the hernia is found to arise out of the employment, the medical expenses are paid as a matter of course without requiring burdensome submission of separate medical reports covering the medical bills. The matter of proof submitted in these cases is generally quite meager and if and when the claim is found to be compensable follows generally as a matter of course.

As a practical matter in some cases where there is no third party group medical carrier and where the medical bills are in fact the greater majority of the claim and the reason why the claim disputed, some allowance is sometimes made for an attorney's fee in a limited amount to be made on the medical expenses in this type of case. However, the medical expenses must be quite large in comparison to the primary compensation claimed and not be covered by any medical provider.

In many cases, the group carrier will not pay the compensation until there has been a dismissal order of the Department. In these cases, there are no attorney's fees on medical expenses since the employe [sic] will get the medical expenses paid whether he [sic] wins or loses. In this case the medical fee expenses are not considered to be in dispute and the attorney is not considered to have secured their payment by the issuance of an award or compromise or an order approving a compromise from this Department since a dismissal order would result in their payment also.