Court Awards Contingent, Lump Sum Attorneys’ Fee in LIBs Case
The El Paso Court of Appeals has affirmed an attorneys’ fee award of $171,138, payable in a lump sum in a Lifetime Income Benefits case. In State Office of Risk Management v. Olivas, (No. 08-14-00071-CV, May 27, 2016), the claimant secured a jury finding that she was entitled to LIBs. The carrier did not appeal that portion of the judgment.
The attorney filed an application for attorneys’ fees after the trial of the case. In that application attorney swore that he had a 25% contingency fee agreement with the claimant. The application recited the number of prior administrative proceedings before the DWC as well as the work that he performed attendant to the judicial review case, including participation in a 3-day trial. Neither the application nor the attorney’s affidavit provided the total number of hours expended, the amount of time for each of the tasks performed, or a billing rate for the attorney or his staff. The application claimed that a 25% contingency is customary in the local market for this type of case. The application further contended the claim for lifetime benefits involved unique and novel questions of law, and the amount at issue was substantial. The affidavit then set out the benefits obtained for Olivas. Pursuant to the jury’s finding, Olivas would be paid benefits of $755.36 per week for life. Her life expectancy was estimated at 27.18 years as per a Center for Disease Control’s Mortality Table. Multiplying the weekly benefits times her life expectancy yielded a gross total of future payments of $1,067,323.68. The application then calculated the discounted present value of the future payments at $684,552.60. Applying a 25% contingency to that present value figure yielded a total of $171,138 in attorney’s fees. The affidavit then stated that $31,800 had previously been paid for the prior proceedings before the DWC. After deducting the previous payments, the net remaining fee was $139,338.
The carrier, which provides coverage for state employees, challenged the award of attorneys’ fees. First it contended that the award was barred by the doctrine of sovereign immunity. The court rejected the argument because the attorney’s lump sum fee award was ordered to be paid only out of the worker’s recovery.
Next, the court rejected SORM’s arguments that the fee was incorrectly calculated and that it was entitled to a jury trial over the attorneys’ fee issue.
these attorney’s fees were not awarded under Section 408.221(c). Rather, they were to be paid out of the worker’s recovery. It would be improper for a Section 408.221(b) attorney’s fee to be determined by a jury. [The Texas Supreme Court, in Transcontinental Insurance Co. v.] Crump itself notes that only the court should approve the amount of attorney’s fees which are deducted from the worker’s recovery. 330 S.W.3d at 229-30, quoting Tex. Employers Ins. Ass’n v. Hatton, 152 Tex. 199, 255 S.W.2d 848, 849 (1953)(“The amount of attorney’s fees to be allowed in a compensation case is exclusively for the court and not the jury, . . . .”).
Finally, the court rejected SORM’s argument that the fee award could not be commuted to a lump sum.
The present Act expressly allows for the commutation of attorney’s fees in all but death benefit cases. TEX.LAB.CODE ANN. § 408.221(e)(“The commissioner by rule or the court may provide for the commutation of an attorney’s fee, except that the attorney’s fee shall be paid in periodic payments in a claim involving death benefits if the only dispute is as to the proper beneficiary or beneficiaries.”). The DWC rules also allow for commutation of fees, but provide no further guidance on when commutation should or should not be allowed.
We reject SORM’s argument that the text of the Act disallows commutation. First, Section 408.221(e) specifically allows for commutation in all but uncontested death benefit cases. The Legislature is presumed to know the existing law when it enacts a statute. TEX.GOV’T CODE ANN. § 311.023(4). Commutation of attorney’s fee awards was accepted prior to the adoption of the new Act. If the Legislature had wanted to disallow commutation of attorney’s fees, it could have done so, but instead it specifically permitted them.
This case may well head to the Texas Supreme Court. It touches on questions that the Court has shown interest in in the past: jury trial, sovereign immunity and LIBs entitlement. One of the most troubling aspects of the case is the fact that the court allows the attorney to switch his attorneys’ fee theory in mid case. A contingency award is generally allowed to exceed the time and expense that the attorney put into the case because an attorney in some cases may not receive any payment. Here, however, the attorney received $31,800 in previously ordered attorneys’ fees and thereafter received a fee award. The attorney was never in jeopardy of receiving zero in attorneys’ fees.
FOLIO
