S T A T E O F M I C H I G A N WORKERS COMPENSATION APPELLATE COMMISSION

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1 2008 ACO # 156 S T A T E O F M I C H I G A N WORKERS COMPENSATION APPELLATE COMMISSION MARY A. BUTLER, APPEAL FROM DEPUTY DIRECTOR CZYRKA. HARRY D. HIRSH FOR RICHARD R. WEISER FOR DEFENDANTS ACCIDENT FUND INSURANCE COMPANY OF AMERICA. PRZYBYLO, COMMISSIONER OPINION Plaintiff s attorney appeals the decision of Deputy Director Bruno Czyrka, mailed December 20, 2007, affirming Magistrate Christopher Ambrose s attorney fee determination. On appeal, plaintiff s attorney continues the argument that MCL and Administrative Rule 14, R , mandate that he receive a fee based on 15% of the first $25, of the settlement rather than the 10% the deputy director and magistrate awarded. We disagree. FACTS Defendants voluntarily paid plaintiff benefits. Plaintiff hired her attorney to facilitate a settlement. Plaintiff s attorney filed an Application for Mediation or Hearing. The parties agreed to a settlement figure after several months of negotiation. At the redemption hearing, the magistrate reduced plaintiff s attorney s fee because defendants voluntarily paid benefits; no dispute existed. Plaintiff s attorney appealed the order arguing that Rule 14 required the magistrate to either order a fee based on 15% of the first $25, of the settlement or hold a hearing to determine the appropriate fee. The deputy director heard the appeal. On appeal, plaintiff s attorney presented the same arguments. The deputy director affirmed the magistrate. He reasoned that because no dispute existed, the magistrate appropriately set the fee based on 10% of the first $25, of the settlement.

2 LAW MCL governs procedures concerning attorney fees. The statute mandates the magistrate s approval of the attorney fee. When the attorney fee issue creates disagreement, the disgruntled party may file an application for a hearing to resolve the dispute. Following the hearing, the magistrate sets the attorney fee by order. If the order does not satisfy any interested party, that party may request a review from the director within 15 days. If the director s order does not satisfy any interested party, then that party may seek review from the Appellate Commission within 15 days. In addition 858 grants the director the authority to prescribe rules to set maximum attorney fees and to devise the method for calculating fees. APPLICATION No error exists in the procedures or the discretionary attorney fee allocation. The magistrate properly exercised his discretion when he decided to limit the attorney fee in this case. As the deputy director indicated, the fee schedule sets maximum rate, it does not set a mandatory rate. Therefore, even if the maximum rate could be 15% of the first $25,000.00, the magistrate may award less in any case for an appropriate reason. In this case, the magistrate provided a sound reason for reducing the fee. He reasoned that because defendants voluntarily paid benefits before plaintiff s attorney filed the Application for Mediation or Hearing, no real dispute existed. On appeal, plaintiff s attorney fails to argue that this constitutes an abuse of discretion. Instead, he inaccurately argues that the statute and rules entitle him to a maximum fee unless a hearing establishes a lower rate. We disagree and uphold the magistrate s authority to set the appropriate attorney fee capped by the established maximums. Moreover, plaintiff s attorney failed to follow the mandatory procedures that required him to file a separate application to litigate the attorney fee dispute. Thus, the magistrate did not err when he did not conduct a separate hearing to determine the appropriate attorney fee. CONCLUSION Therefore, we affirm the attorney fee based on 10% of the first $25, of the settlement. Will concurs in result. Gregory A. Przybylo 2

3 MARY A. BUTLER, S T A T E O F M I C H I G A N WORKERS COMPENSATION APPELLATE COMMISSION GLASER, CHAIRPERSON, DISSENTING I respectfully dissent. I would remand for clarification as to the basis of the reduction of the attorney fee. It appears from the redemption transcript that Magistrate Ambrose was applying Rule 14(10), rather than the more general statutory language which requires that an attorney fee be approved by the magistrate. Rule 14(10) does not apply to the facts of this case. It reads as follows: (10) In a case where benefits are being voluntarily paid at time of redemption, and no application for mediation or hearing is pending, not more than 10% attorney fee will be allowed. While benefits were being paid on a voluntary basis at the time of the redemption, there was an application for mediation or hearing pending. That pending application takes the instant case out of the application of that rule, which would have automatically reduced the fee to 10%. If there had been a dispute, or the matter was in active litigation, there can be no doubt, based on the statements of the magistrate that the 15% attorney fee would have been approved. The statutory language that the majority relies on is found in MCL and states as follows: Sec (1) The cost of a hearing, including the cost of taking stenographic notes of the testimony presented at the hearing, not exceeding the taxable costs allowed in actions at law in the circuit courts of this state, shall be fixed by the board of magistrates and paid by the state as other expenses of the state are paid. The payment of fees for all attorneys and physicians for services under this act shall be subject to the approval of a worker s compensation magistrate. In the event of disagreement as to such fees, an interested party may apply to the bureau for a hearing. After an order by the worker s compensation magistrate, review may be had by the director if a request is filed 3

4 within 15 days. Thereafter the director s order may be reviewed by the appellate commission on request of an interested party, if a request is filed within 15 days. If the magistrate was not specifically applying Rule 14(10), then he would have applied Rule 14(3), which states as follows: (3) In a case involving a redemption of liability, the attorney, before computing the fee, shall deduct the reasonable expenses incurred on plaintiff s behalf from the total settlement. The fee that the magistrate may approve is as follows: (a) Of the first $25,000.00, a fee of not more than 15%. (b) Of any amount more than $25,000.00, a fee of not more than 10%. While the language of the statute and the rules infer discretion, there must be some basis for reducing the attorney fee. If a magistrate is applying Rule 14(10), the rule itself can act as a basis for reducing the fee. If not there must be some rational basis given. I believe it was error for the magistrate to rely on Rule 14(10). I would remand for consideration without reference to or reliance on Rule 14(10). Martha M. Glaser Chairperson 4

5 S T A T E O F M I C H I G A N WORKERS' COMPENSATION APPELLATE COMMISSION MARY A. BUTLER, This cause came before the Appellate Commission on a claim for review filed by plaintiff s attorney from Deputy Director Bruno R. Czyrka s order, mailed December 20, 2007, affirming Magistrate Christopher Ambrose s attorney fee determination. The Commission has considered the record and counsel s briefs, and believes that the deputy director s order should be affirmed. Therefore, IT IS ORDERED that the deputy director s order is affirmed. Gregory A. Przybylo Rodger G. Will

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