Panel Clarifies Requirements for Determining Reasonableness of Fee Awards

Friday, July 8, 2022 | 0

The Supreme Court of Tennessee’s Special Workers' Compensation Appeals Panel upheld a lump-sum award of attorney fees representing 20% of a widow’s recovery.

Case: Henderson v. Pee Dee Country Enterprises Inc., No. M2021-00970-SC-R3-WC, 06/20/2022, published.

Facts: On Sept. 18, 2019, David Joe Turner was killed in a motor vehicle accident while in the course and scope of his employment with Pee Dee Country Enterprises Inc.

Pee Dee maintained its business in Tennessee, but Turner and his wife lived in Mississippi.

Pee Dee paid death benefits in accordance with Mississippi law.

In December 2019, Turner’s widow retained counsel who advised her to seek benefits under Tennessee law. The widow agreed to pay counsel 20% of the difference between the maximum amount of death benefits payable under Mississippi law ($199,714.50) and the maximum amount of benefits payable under Tennessee law ($432,000).

Counsel then filed a petition for benefits with the Court of Workers' Compensation Claim in Tennessee. Pee Dee objected to paying attorney fees of $46,457.10 in accordance with the widow’s agreement.

Procedural history: The CWCC ordered counsel to submit an affidavit explaining why the agreed-upon fee was reasonable under the Tennessee Rules of Professional Conduct.

Counsel submitted the affidavit, which the CWCC faulted for failing to provide specific information about the time and labor required by the claim. Counsel then filed a 15-page itemization of work performed.

The CWCC later approved a settlement between Pee Dee and the widow for the difference between the maximum amount of death benefits payable under Mississippi law and the maximum amount of death benefits payable under Tennessee law. The CWCC then awarded counsel fees of only $17,421.41, representing 7.5% of the recovery.

The Workers' Compensation Appeals Board vacated the fee award and remanded for further proceedings.

On remand, the CWCC awarded $17,421.41 to be paid in a lump sum.

The Appeals Board again vacated, and after a second remand, the CWCC issued an award of fees of $46,457.10, payable in a lump sum.

Analysis: The Supreme Court of Tennessee’s Special Workers' Compensation Appeals Panel said Tennessee Code Annotated Section 50-6-226(a)(1) provides for an award of attorney fees, “subject to the approval of the workers' compensation judge,” that does not exceed 20% of the recovery or award to be paid by the party employing the attorney.

The statute then says the “department” shall deem a fee reasonable if it does not exceed 20% of the recovery or 20% of the first 450 weeks of the award.

The panel said the use of “judge” and “department” in the same statute “creates some ambiguity, and this discrepancy in the language is ripe for review by the legislature,” but it appeared that the continued use of the word "department" is a vestige from the previous statutory scheme when authorized designees of the Department of Labor's Division of Workers' Compensation approved fee awards in certain circumstances.

Under the current Workers’ Compensation Act, the panel said, the CWCC operates under the auspices of the Bureau of Workers' Compensation.

The panel said the “department” used in Section 50-6-226(a)(1) must include the CWCC.

The panel also noted that the legislature has specifically articulated the circumstances under which a review of the reasonableness of time and expenses is required in Subsection 226(a)(2)(C), but not in 226(a)(1). Thus, the panel said, “[W]e conclude that Subsection (a)(1) is properly construed to require that attorney fees be deemed reasonable when those fees do not exceed 20% of the award,” and it affirmed the fee of $46,457.10.

The Supreme Court adopted the panel’s decision as its own.

Disposition: Affirmed.

To read the court’s decision, click here.