No. 40469 (Emergency Rule): Section R602-2-4. Attorney Fees

DAR File No.: 40469
Filed: 06/06/2016 07:24:00 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this emergency rule is to remove the section regarding attorney fees.

Summary of the rule or change:

This rule change strikes the provisions regulating the payment of attorney fees in workers' compensation cases.

Emergency rule reason and justification:

Regular rulemaking procedures would place the agency in violation of federal or state law.

Justification: The Utah Supreme Court issued its decision in Injured Workers Assoc. of Utah v. State of Utah, 2016 UT 21, on May 18, 2016. The Court found Utah Code Section 34A-1- 309, the statutory provision that required the Utah Labor Commission to regulate attorney fees in workers' compensation cases, to be unconstitutional. The Court also found Subsection R602-2-4(C)(3), the administrative rule section that governs and regulates the payment of attorney fees, to be unconstitutional. The section places the Commission in violation of the Court's decision and will likely confuse practitioners, injured workers, employers, and insurance carriers. Moreover, all of Section R602-2-4 should be removed on an emergency basis, not merely Subsection R602-2-4(C)(3). The rule governs the payment of attorney fees and costs. The Commission's sole authority to regulate attorney fees was contained in Utah Code Section 34A-1- 309. Inasmuch as the statute has been found to be unconstitutional, the Commission lacks the authority to enforce the remaining provisions of the section. Also, the Commission lacks the authority to regulate or enforce the payment of costs.

State statutory or constitutional authorization for this rule:

• Section 34A-1-301 et seq.
• Section 63G-4-102 et seq.

Anticipated cost or savings to:

the state budget:

There will be no cost or savings to the state budget because of this rule change. Attorney fees are paid from the injured worker's benefits.

local governments:

There will be no cost or savings to local government because of this rule change. Attorney fees are paid from the injured worker's benefits.

small businesses:

There will be no cost or savings to small businesses because of this rule change. Attorney fees are paid from the injured worker's benefits.

persons other than small businesses, businesses, or local governmental entities:

The Commission is unable to anticipate whether there will be a cost for injured workers related to this rule change. Attorney fees are paid from an injured worker's benefits and, though possible, it is unclear whether the Supreme Court's decision will immediately result in attorneys seeking a higher percentage of the injured worker's benefits for attorney fees. Any impact, however, would be related to the Court's decision rather then deletion of this rule as the current rule is in direct conflict with the Court's decision.

Compliance costs for affected persons:

The Commission is unable to anticipate whether there will be a cost for injured workers related to this rule change. Attorney fees are paid from an injured worker's benefits, and though possible, it is unclear whether the Supreme Court's decision will immediately result in attorneys seeking a higher percentage of the injured worker's benefits for attorney fees. Any impact, however, would be related to the Court's decision rather then deletion of this rule as the current rule is in direct conflict with the Court's decision.

Comments by the department head on the fiscal impact the rule may have on businesses:

There will be no fiscal impact because of this rule change. Attorney fees are paid from the injured worker's benefits.

Sherrie Hayashi, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Labor Commission
Adjudication
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Heather Gunnarson at the above address, by phone at 801-536-7928, by FAX at 801-530-6333, or by Internet E-mail at [e-mail]
• Jaceson Maughan at the above address, by phone at 801-530-6036, by FAX at 801-530-6390, or by Internet E-mail at [e-mail]

This rule is effective on:

06/06/2016

Authorized by:

Sherrie Hayashi, Commissioner

RULE TEXT

R602. Labor Commission, Adjudication.

R602-2. Adjudication of Workers' Compensation and Occupational Disease Claims.

[R602-2-4. Attorney Fees.

A. Pursuant to Section 34A-1-309, the Commission adopts the following rule to regulate and fix reasonable fees for attorneys representing applicants in workers' compensation or occupational illness claims.

1. This rule applies to all fees awarded after July 1, 2015.

2. Fees awarded prior to the effective date of this rule are determined according to the prior version of this rule in effect on the date of the award.

B. Upon written agreement, when an attorney's services are limited to consultation, document preparation, document review, or review of settlement proposals, the attorney may charge the applicant an hourly fee of not more than $125 for time actually spent in providing such services, up to a maximum of four hours.

1. Commission approval is not required for attorneys fees charged under this subsection B. It is the applicant's responsibility to pay attorneys fees permitted by this subsection B.

2. In all other cases involving payment of applicants' attorneys fees which are not covered by this subsection B., the entire amount of such attorneys fees are subject to subsection C. or D. of this rule.

C. Except for legal services compensated under subsection B. of this rule, all legal services provided to applicants shall be compensated on a contingent fee basis.

1. For purposes of this subsection C., the following definitions and limitations apply:

a. The term "benefits" includes only death or disability compensation and interest accrued thereon.

b. Benefits are "generated" when paid as a result of legal services rendered after Adjudication Form 152 Appointment of Counsel form is signed by the applicant. A copy of this form must be filed with the Commission by the applicant's attorney.

c. In no case shall an attorney collect fees calculated on more than the first 312 weeks of any and all combinations of workers' compensation benefits.

2. Fees and costs authorized by this subsection shall be deducted from the applicant's benefits and paid directly to the attorney on order of the Commission. A retainer in advance of a Commission approved fee is not allowed.

3. Attorney fees for benefits generated by the attorney's services shall be computed as follows:

a. For all legal services rendered through final Commission action, the fee shall be 25% of weekly benefits generated for the first $25,000, plus 20% of the weekly benefits generated in excess of $25,000 but not exceeding $50,000, plus 10% of the weekly benefits generated in excess of $50,000, to a maximum of $18,590.

b. For legal services rendered in prosecuting or defending an appeal before the Utah Court of Appeals, an attorney's fee shall be awarded amounting to 30% of the benefits in dispute before the Court of Appeals. This amount shall be added to any attorney's fee awarded under subsection C.3.a. for benefits not in dispute before the Court of Appeals. The total amount of fees awarded under subsection C.3.a. and this subsection C.3.b. shall not exceed $26,819;

c. For legal services rendered in prosecuting or defending an appeal before the Utah Supreme Court, an attorney's fee shall be awarded amounting to 35% of the benefits in dispute before the Supreme Court. This amount shall be added to any attorney's fee awarded under subsection C.3.a. and subsection C.3.b. for benefits not in dispute before the Supreme Court. The total amount of fees awarded under subsection C.3.a, subsection C.3.b. and this subsection C.3.c shall not exceed $32,913.

D. The following expenses, fees and costs shall be presumed to be reasonable and necessary and therefore reimbursable in a workers' compensation claim:

1. Medical records and opinion costs;

2. Deposition transcription costs;

3. Vocational and Medical Expert Witness fees;

4. Hearing transcription costs;

5. Appellate filing fees; and

6. Appellate briefing expenses.

F. Other reasonable expenses, fees and costs may be awarded as reimbursable as the Commission may in its discretion decide in a particular workers compensation claim.

E. In "medical only" cases in which awards of attorneys' fees are authorized by Subsection 34A-1-309(4), the amount of such fees and costs shall be computed according to the provisions of subsection C and D.]

 

KEY: workers' compensation, administrative procedures, hearings, settlements

Date of Enactment or Last Substantive Amendment: June 6, 2016

Notice of Continuation: June 19, 2012

Authorizing, and Implemented or Interpreted Law: 34A-1-301 et seq.; 63G-4-102 et seq.

 

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