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Appeal of Phillips

Supreme Court of New Hampshire

June 28, 2016

APPEAL OF THOMAS PHILLIPS New Hampshire Compensation Appeals Board

          Argued: March 3, 2016

          Wadleigh, Starr & Peters, P.L.L.C., of Manchester (Michael R. Mortimer on the brief and orally), for Thomas Phillips.

          Bernard & Merrill, PLLC, of Manchester (Andrew A. Merrill on the brief and orally), for State Farm Fire and Casualty Company.

          LYNN, J.

         The petitioner, Thomas Phillips, appeals a decision of the New Hampshire Compensation Appeals Board (CAB) denying his request for attorney's fees in the amount of one-third of the value of workers' compensation benefits awarded to him, as provided in a contingent fee agreement that he entered into with counsel. See RSA 281-A:44 (Supp. 2015). On appeal, the petitioner argues that the CAB erred when it failed to award: (1) the contingent fee in accordance with the fee agreement; or (2) at least a "generous fee" under the circumstances of this case. In addition to these issues, we requested that the parties brief the petitioner's renewed fee request in connection with his prior appeal in this matter. We vacate and remand.

         The following facts are taken from the record or from our prior decision in this matter. See Appeal of Phillips, 165 N.H. 226 (2013). The petitioner was injured in a workplace accident in 2006, which rendered him a quadriplegic. In 2009, the petitioner filed a claim for workers' compensation benefits, which the employer's insurer, State Farm Fire and Casualty Company (State Farm), denied for several reasons, including untimely notice and employee fault due to intoxication. The CAB agreed with State Farm as to these issues and determined that the employer was not liable for workers' compensation payments. On appeal, we held that the notice to the employer was sufficient and timely, and remanded the case to the CAB for further proceedings regarding whether the petitioner's intoxication caused his injury.

         Following remand, the chair of the CAB panel disclosed a potential conflict of interest and recused himself. Because the chair had participated in the prior proceedings, the petitioner moved for a de novo hearing before a new CAB panel. The CAB granted the petitioner's request.

         At the hearing before the new panel, the parties stipulated that our rulings in the prior appeal constitute the law of the case, and that the only issue that remained was whether the petitioner was barred from claiming benefits due to his intoxication. Following a hearing, the CAB ruled in the petitioner's favor and awarded him ongoing weekly total disability benefits and medical benefits.

         Subsequently, the petitioner requested that the CAB award him attorney's fees and expenses in connection with the litigation. See RSA 281-A:44, I. The petitioner argued that, pursuant to his contingency fee agreement with counsel, he was entitled to fees in the amount of one-third of "[t]he total amount of past medical bills, past benefits, plus future medical bills and future benefits including likely future permanent impairment and future indemnity payments." Based upon his calculations, the petitioner requested a fee award of $4, 138, 200.90, inclusive of expenses. The petitioner also included an alternative contingency fee request, if the fee were based only upon recovery to date, and an alternative hourly fee request. At around the same time, the petitioner filed a fee request with this court, asking for an hourly fee award for the prior appeal in the event that the CAB ordered an hourly fee award.

         In its objection filed at the CAB, State Farm acknowledged that the petitioner was entitled to the payment of reasonable attorney's fees and expenses pursuant to the workers' compensation statute and administrative rules. However, State Farm objected to the award of fees based upon the contingent fee agreement. Instead, State Farm argued that the CAB should award a fee only for reasonable time expended, at a reasonable hourly rate, and reasonable costs incurred for proceedings before the CAB.

         After holding a hearing, the CAB ruled that, although contingent fee agreements in workers' compensation cases are not per se unreasonable, the contingent fee requested in this case, which included one-third of all future benefits, was unreasonable. It stated that it was "not inclined to award fees based upon the hypotheticals counsel posed as to the gross amounts of indemnity or medical benefits the claimant may or may not receive over his lifetime." Ultimately, the CAB awarded the petitioner $79, 369.59 - an amount "equal to the hourly rate he would have been charged as set forth in the [fee] agreement had he elected to be charged on an hourly basis, " exclusive of fees and expenses incurred before this court in his prior appeal. After unsuccessfully moving for rehearing, the petitioner filed this appeal.

         "We will not disturb the CAB's decision absent an error of law, or unless, by a clear preponderance of the evidence, we find it to be unjust or unreasonable." Appeal of Kelly, 167 N.H. 489, 491 (2015) (quotation omitted); see RSA 541:13 (2007). "We review the factual findings of the CAB deferentially and review its statutory interpretation de novo." Appeal of Kelly, 167 N.H. at 491. "On questions of statutory interpretation, we are the final arbiters of the intent of the legislature as expressed in the words of a statute considered as a whole." Appeal of Phillips, 165 N.H. at 230. "We first examine the language of the statute and ascribe the plain and ordinary meanings to the words used." Id. "We interpret legislative intent from the statute as written and will not consider what the legislature might have said or add language that the legislature did not see fit to include." Id. "We construe the Workers' Compensation Law liberally to give the broadest reasonable effect to its remedial purpose." Id.

         We first address the petitioner's argument that the CAB erred by excluding the petitioner's future medical benefits from consideration as part of a contingent fee. RSA 281-A:44, I, currently provides in pertinent part that "[i]n any dispute over the amount of the benefit payable under [the Workers' Compensation Law] which is appealed to the [CAB] or supreme court or both, the employee, if such employee prevails, shall be entitled to reasonable counsel fees and costs as approved by the board or court." RSA 281-A:44, I(a). We have stated that contingent fees in workers' compensation cases are not per se unreasonable. See Couture v. Mammoth Groceries, Inc., 117 N.H. 294, 296 (1977) (decided under prior law). In Couture, we upheld the trial court's grant of attorney's fees in the amount of one-third of "any benefits received to date as well as for any future benefits." Id. at 295 (quotation omitted). We cautioned that "[t]his is not to say, however, that in all [workers'] compensation cases a one-third or one-quarter contingent fee is reasonable." Id. at 297. To that end, we included a list of considerations in determining the reasonableness of attorney's fees. Id. at 296.

         Eleven years after Couture, the legislature recodified the Workers' Compensation Law. See Laws 1988, 194:2, :3. Under the recodified law, the section allowing for attorney's fees retained virtually identical language to that which was in place when we decided Couture. Compare RSA 281:37-a (Supp. 1975) with RSA 281-A:44, I (Supp. 1988); see also Laws 1988, 194:1, I (stating that the enactment of RSA chapter 281-A "is merely a reorganization and new designation of the material that already existed as RSA 281" and "should not be interpreted as containing new material or making substantive changes"). Moreover, the recodified language does not materially differ from its current iteration. See RSA 281-A:44, I(a). From this we infer that, in the nearly four decades that have passed since we decided Couture, the legislature has not taken issue with our interpretation that contingent fees can be "reasonable counsel fees" under the Workers' Compensation Law. Cf. Ichiban Japanese Steakhouse v. Rocheleau, 167 N.H. 138, 143 (2014) (assuming our interpretation of a statute conformed to legislative intent when sixteen years elapsed without an amendment to the statute).

         In making its determination that the petitioner's contingent fee agreement was unreasonable, the CAB relied, in part, upon RSA 281-A:37, II (2010), which states that "[i]n no event shall the medical provisions of this chapter be lump summed." It reasoned that "[w]here it would be illegal for the claimant's counsel to lump sum settle [the petitioner's] eligibility for medical benefits under the Workers' Compensation Act, then logically it would seem to follow that it is inappropriate to bill [State Farm] a contingent fee inclusive of the claimant's medical expenses, under the fee shifting statute." However, the policy supporting a prohibition of lump sum medical benefits, as reflected in the statute's plain language, is to ensure that funds for future medical ...

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