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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Sandra Rusch and Barbara Dockter v. Southeast Alaska Regional Health Consortium and Alaska National Insurance Company (9/30/2022) sp-7623
Notice: This opinion is subject to correction before publication in the P ACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@akcourts.gov.
THE SUPREME COURT OF THE STATE OF ALASKA
SANDRA J. RUSCH and BRENDA )
DOCKTER, ) Supreme Court No. S-18038
)
Appellants,
) Alaska Workers' Compensation
) Appeals Commission Nos. 17-001,
v. ) 17-002
)
SOUTHEAST ALASKA REGIONA
L ) O P I N I O N
HEALTH CONSORTIUM and )
ALASKA NATIONAL INSURANC )
E No. 7623 - September 30, 2022
COMPANY, )
)
Appellees. )
)
Appeal from the Alaska Workers' Compensation Appeals
Commission.
Appearances: David A. Graham, Sitka, and J. John Franich,
Franich Law Office, LLC, Fairbanks, for Appellants.
Michael A. Budzinski, Meshke Paddock & Budzinski,
Anchorage, for Appellees.
Before: Winfree, Chief Justice, Maassen, Carney,
Borghesan, and Henderson, Justices.
HENDERSON, Justice.
I. INTRODUCTION
Does the Alaska Workers' Compensation Act authorize the Alaska
Workers' Compensation Appeals Commission to award enhanced attorney's fees to
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successful claimants for their attorneys' work in a Commission appeal? The
Commission decided the Act did not. Before the Commission was created, we allowed
enhanced attorney's fees in workers' compensation appeals. We have previously
decided the legislature intended attorney's fees in Commission appeals to be comparable
to fees awarded under the appellate rules; we thus hold that the Act authorizes enhanced
awards for work before the Commission as a means of accounting for the contingent
nature of representing workers' compensation claimants. Because the Commission's
decision rested on an incorrect interpretation of the Act and because the Commission
failed to consider the claimants' evidence and arguments in favor of enhancement, we
reverse the decision and remand the case to the Commission for further proceedings.
II. FACTS AND PROCEEDINGS
This consolidated appeal is before us a second time; we set out the relevant
1 Sitka attorney David Graham
factual background from our decision of the first appeal.
represented Sandra Rusch and Brenda Dockter in separate proceedings against the same
2 Rusch injured her back
employer before the Alaska Workers' Compensation Board.
working for the Southeast Alaska Regional Health Consortium(SEARHC) in Klawock.3
Dockter sustained a knee injury at work for SEARHC in Sitka.4 After litigation the
parties successfully settled most issues with the assistance of a Board mediator.5
The
parties were unable to resolve the amount of attorney's fees SEARHC would pay for
1 Rusch v. Se. Alaska Reg'l Health Consortium, 453 P.3d 784 (Alaska 2019).
2 Id. at 788-89.
3 Id. at 787.
4 Id. at 788.
5 Id. at 788-89.
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6
Graham's work, so that issue proceeded to hearings, which the Board heard jointly. The
7
Board awarded far less in attorney's fees than the claimants sought.
The claimants, now
represented by J. John Franich with assistance from Graham, appealed to the
8 The Commission affirmed the Board's decisions, and the claimants
Commission.
appealed that final order to us.9 We reversed the Commission's decisions, resolving
most but not all issues in favor of the claimants, and remanded the case to the
10
Commission with instructions to remand the case to the Board for further proceedings.
We instructed the Board to consider the factors from the Alaska Rules of Professional
Conduct to determine reasonable fees.11
After we awarded attorney's fees to the claimants for their appeal to us,12
the claimants sought fees for their work in the first appeal to the Commission, asking the
Commission to adopt the modified lodestar approach to awarding fees. The claimants
6 Id. at 788-90.
7 Id. at 790, 792.
8 Id. at 792.
9 Id.
10 Id. at 807 (affirming Commission decision as to one issue and reversing as
to all others).
11 Id. at 798-99.
12 We entered one $60,000 award for both attorneys for the consolidated
appeals. Rusch v. Se. Alaska Reg'l Health Consortium, No. S-17069/S-17070 (Alaska
Supreme Court Order, Nov. 23, 2020).
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pointed out that the factors in the Rules of Professional Conduct are similar to the
Johnson-Kerr factors used in the modified lodestar approach to fees, which we adopted
13
for certain fee-shifting cases in Adkins v. Collens .
In their Commission argument, the claimants detailed the steps in the
modified lodestar approach from Adkins : "[C]ourts following this approach first
calculate a baseline attorney's fee award by determining the reasonable number of hours
14 The court can
the attorney worked and multiplying that by a reasonable hourly rate."
then exercise its "discretion to adjust this baseline 'lodestar' amount to arrive at the final
fee award."15 The court "may consider a variety of factors in calculating the lodestar and
deciding whether to adjust it, including what we have called the Johnson-Kerr factors."16
13 444 P.3d 187, 199 (Alaska 2019) (first citing Johnson v. Ga. Highway
Express, Inc. , 488 F.2d 714, 717-19 (5th Cir. 1974); and then citing Kerr v. Screen
Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975)). Adkins and State, Department of
Health & Social Services v. Okuley , 214 P.3d 247 (Alaska 2009), which Adkins cited,
both observed that the Johnson-Kerr factors are similar to the factors for determining
reasonable fees in the Rules of Professional Conduct and the Alaska Bar Rules. Adkins ,
444 P.3d at 199-200 & n.33; Okuley, 214 P.3d at 251 n.13.
14 Adkins , 444 P.3d at 199 (citing Hensley v. Eckerhart, 461 U.S. 424, 433
(1983)).
15 Id.
16 Id. (citing Okuley, 214 P.3d at 251 n.13). Okuley listed a number of
factors, noted the parties called them the Johnson-Kerr factors, and adopted that usage.
214 P.3d at 251 n.13. In Adkins we explicitly distinguished federal law and allowed
courts to consider a contingency enhancement when deciding whether to adjust the
lodestar even if contingency was a factor in determining the baseline lodestar amount
because we recognized that such an enhancement "can provide a 'risk premium'
necessary to induce competent counsel to litigate claims." Adkins , 444 P.3d at 200.
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17
The claimants argued that in Wise Mechanical Contractors v. Bignell the superior court
and this court had used a method similar to the modified lodestar approach and that we
had in our first Rusch decision directed the Board to use the Bignell factors to set
reasonable fees on remand. They contended that these same factors should apply in
Commission appeals.
The claimants sought a lodestar amount using an hourly fee of $450 for all
of the hours their attorneys documented. They supplied the Commission with affidavits
from both Franich and Graham about their professional experience and the amount they
normally charged for appellate work. Franich stated he charged $450 an hour for "non-
contingent" appeals, with a lower rate for non-contingent trial work. Graham said he
"currently charge[s] . . . an hourly rate of $450" without distinguishing appellate from
trial work. Franich attached to his affidavit several exhibits showing fees paid to other
attorneys in areas of law in which contingency fee agreements are less common to
support his statement that Graham's and his non-contingent hourly fees were within the
range of fees attorneys with similar levels of experience charged. The exhibits included
contracts and affidavits related to attorney's fees in constitutional cases, as well as a
contract for mediation services.
The claimants argued that their attorneys' proposed "lodestar rate does not
reflect the contingen[t] nature of workers' compensation appeals and is therefore not a
fully compensable rate," justifying an enhancement of the lodestar amount. They noted
that the modified lodestar method allows theCommission to "further adjust[] the lodestar
fee," including application of the same factors used to determine a lodestar amount. The
claimants then discussed the different Johnson-Kerr factors, identifying several that they
argued would merit an upward adjustment of the lodestar amount in order for the fee
17
718 P.2d 971 (Alaska 1986).
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award to be reasonable and fully compensatory. They sought $600 an hour, a one-third
upward adjustment of $450.
SEARHC raised several arguments in opposition and also asked the
Commission to strike the exhibits attached to Franich's affidavit. SEARHC contended
we had not adopted the modified lodestar approach in workers' compensation cases, but
its oppositionwas devoted largely to addressing specific Johnson-Kerr factors. It argued
that the Board implemented Bignell 's directive about contingency by awarding Franich
an enhanced hourly rate of $400, citing two Board decisions, one from 2012 and the
other from 2016, to support this argument. SEARHC maintained that this hourly rate
was already enhanced for contingency and that further enhancement was unjustified.
SEARHC urged the Commission to award no fees to Graham because he was not the
claimants' attorney of record on appeal. It alternatively argued that the Commission
should award no more than $300 an hour to Graham, the hourly rate the Board awarded
to him in the decision we reversed. SEARHC did not provide affidavits or other
evidence with its opposition, but it argued that an hourly fee of $600 would be "240%
above fees commonly charged by defense counsel." SEARHC did not object to any of
the attorneys' individual time entries as unreasonable or unnecessary.
The Commission refused to strike the exhibits but did not place "much
value" on them because the information was about rates in fields other than workers'
compensation. The Commission concluded there was no legal basis to strike the
documents because the Act expressly allows the Commission to "receive evidence on
18 and its regulations did not limit the type of
applications for . . . attorney['s] fees"
18 AS 23.30.128(c).
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evidence. In distinguishing fees in different fields, the Commission discussed only the
difference between torts and workers' compensation even though most of the exhibits
related to litigation of constitutional issues.
The Commission decided not to apply the modified lodestar approach to
awarding fees, declining to award an enhancement because we had "not mandated" that
19 The Commission first decided $400 to $450 was a reasonable contingent
it do so.
hourly rate for Commission appeals because parties in other cases, which the
Commission did not identify, had so characterized these rates. It also pointed out that
Graham had previously asked the Board for an hourly rate of $425, "describing it as a
fair market rate for practitioners before the Board." The Commission reasoned that
enhancing the fees awarded above this "lodestar" amount would "contraven[e] . . . the
Act's mandate that workers' compensation claims be resolved, in part, at a cost
reasonable to the employer," but it did not discuss other aspects of the legislature's
20 It thought that allowing enhanced fees "in the no-fault system of workers'
intent.
compensation could have a chilling effect on the willingness of an employer to appeal
what it perceives to be an incorrect decision." The Commission was concerned that
19 We agree with the parties that the Commission did not use the proper terms
when discussing themodified lodestar method. The Commission used "lodestar" to refer
to an enhancement, but the lodestar amount is the baseline amount of attorney's fees
calculated "by determining the reasonable number of hours the attorney worked and
multiplying that by a reasonable hourly rate." Adkins , 444 P.3d at 199. After calculating
the "baseline 'lodestar' amount," a court using the modified lodestar method has "the
discretion to adjust this baseline 'lodestar' amount to arrive at the final fee award." Id.
20 AS 23.30.001(1) ("It is the intent of the legislature that . . . [the Act] ensure
the quick, efficient, fair, and predictable delivery of . . . benefits to injured workers at a
reasonable cost to . . . employers.").
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allowing further enhancement above what it saw as high hourly fees "might also
encourage employees to appeal minor or even frivolous issues" that they had lost at the
Board level because "they potentially would receive a very large award of attorney fees."
Instead the Commission cited some of the factors outlined in the Rules of
Professional Conduct to set a reasonable hourly fee. Because the factors in Professional
Conduct Rule 1.5 are similar to the Johnson-Kerr factors, the Commission considered
many of the arguments the parties made about them. The Commission rejected
SEARHC's argument that Graham should be awarded no fees, observing that its
regulations do not limit fee awards to the attorney of record and that Graham had
provided unrebutted evidence that he assisted Franich in briefing the case. The
Commission awarded $450 an hour to both attorneys. TheCommissionidentifiedfactors
it had considered and found the following: (1) both attorneys had significant experience
in appellate work; (2) Graham"achieved significant benefits" for both claimants; and (3)
Franich "achieved significant results for both appellants" in the appeal to us. The
Commission said the attorneys were entitled to fully compensatory and reasonable
attorney's fees at an hourly rate of $450 and did not reduce any of the claimed hours.
It awarded $34,777.40 to Rusch and $8,928.50 to Dockter as fees and costs. The
21
claimants appeal.
21 Theclaimantscontendedthat theCommission's attorney's fees order in this
case was final for purposes of appeal but sought clarification of this point. See D&D
Services v. Cavitt , 444 P.3d 165, 168-69 (Alaska 2019) (holding that attorney's fees
order was not final for purposes of appeal when Commission remanded case to Board
at conclusion of appeal). SEARHC agreed that the order was final for purposes of
appeal. We agree with the parties: because the Commission decision underlying the fee
award was final - and in fact was appealed - the fee order was itself appealable under
Alaska Appellate Rule 204.
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III. STANDARD OF REVIEW
"Weuseourindependentjudgment to interpret theattorney's feesprovision
22
of the Workers' Compensation Act."
"Whether the Commission correctly applied the
law in determining an award of attorney's fees is a question of law that we review de
23
novo." "When the Commission makes factual findings, its 'findings of fact may be
reversed on appeal if not supported by substantial evidence in light of the whole
24
record.' "
IV. DISCUSSION
The Alaska Workers' Compensation Act regulates the fees attorneys can
receive for representing claimants. Claimants' attorneys are limited to attorney's fees
25
awarded by the Board, the Commission, or a court,
with two exceptions not applicable
26 27
here. We have refused to enforce fee agreements that do not comply with the Act.
22 Warnke-Green v. Pro-West Contractors, LLC, 440 P.3d 283, 287 (Alaska
2019).
23 Lewis-Walunga v. Mun. of Anchorage , 249 P.3d 1063, 1066 (Alaska 2011).
24 Id. (quoting AS 23.30.129(b)).
25 See AS 23.30.145(a) ("Fees for legal services rendered in respect to a claim
are not valid unless approved by the [B]oard . . . ."); AS 23.30.145(c) (authorizing court-
awarded attorney's fees); AS23.30.008(d) (requiringattorney'sfees award to successful
party in Commission appeals).
26 See AS 23.30.260 (providing that it is a misdemeanor to "receive[] a fee,
other consideration, or a gratuity on account of any services rendered for representation
or advice with respect to a claim, unless the consideration or gratuity is approved by the
board or the court"). The exceptions are when either "the fee does not exceed $300 and
is a one-time-only charge to an employee by an attorney licensed in this state who
performed legal services with respect to the employee's claim but did not enter an
appearance," AS 23.30.260(b)(1), or the parties settle the claim in a way that dispenses
(continued...)
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Claimants' attorneys must prevail "on a significant issue on appeal" to be awarded fees
28 29
for an appeal;
in contrast Board-awarded fees depend on success on the claim itself.
In both instances, however, fee awards depend on success and are thus contingent fees.30
The Commission must award a successful party attorney's fees that the
31 In Lewis-Walunga
Commission "determines to befully compensatoryand reasonable."
v. Municipality of Anchorage, we considered legislative history and decided "the
legislature intended Commission attorney's fees awards to follow the same rules as
appellate attorney's fees awards in the courts."32 We stated, "The Commission itself has
noted that 'AS 23.30.008(d) is modeled on Alaska Rule of Appellate
26 (...continued)
with Board review and approval. AS 23.30.260(b)(2); AS 23.30.012.
27
McShea v. State, Dep't of Labor, Workers' Comp. Bd., 685 P.2d 1242,
1246, 1248 (Alaska 1984) (affirming superior court and Board decisions that refused to
award fees pursuant to a contingent-fee agreement between claimant and attorney);
Hulsey v. Johnson & Holen, 814 P.2d 327, 328-29 (Alaska 1991) (holding that law firm
that charged claimant for legal services done to reopen compensation claim but did not
seek board approval for the charged fee "had no right to charge" client under
AS 23.30.145).
28 Warnke-Green v. Pro-West Contractors, LLC, 440 P.3d 283, 291 (Alaska
2019) (emphasis omitted) (quoting Lewis-Walunga, 249 P.3d at 1068 & n.16).
29 See Adamson v. Univ. of Alaska, 819 P.2d 886, 895 (Alaska 1991)
(construing AS 23.30.145(b) as requiring that employee "be successful on the claim
itself").
30 See Contingent Fee, BLACK 'S LAW DICTIONARY (11th ed. 2019) (defining
"contingent fee" as "[a] fee charged for a lawyer's services only if the lawsuit is
successful or is favorably settled out of court").
31 AS 23.30.008(d).
32 249 P.3d at 1067.
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33
Procedure 508(g)(2).' " We have used the policies underlying former Appellate
Rule 508(g) as well as our precedent decided under it when reviewing Commission fee
34
awards. We have consistently construed the Act as requiring attorney's fee awards for
claimants in both court and administrative proceedings to be "fully compensatory and
reasonable so that competent counsel will be available to furnish legal services to injured
35
workers."
Before the Commission's creation, both the superior court and this court
awarded attorney's fees pursuant to AS 23.30.145(c) and were guided by our precedents
related to appellate fee awards and former Alaska Appellate Rule 508(g). We focus our
discussion on these precedents in light of the legislature's intent that Commission fee
awards be similar to those awarded under former Rule 508(g).
A. The Commission Misconstrued The Act When Deciding Enhanced
Fees Are Prohibited In Appeals To The Commission.
The claimants challenge what they consider to be factual findings made by
theCommission,arguing thatno evidencesupports those"findings." SEARHCresponds
33 Id. at 1067-68 (citing Mun. of Anchorage v. Syren , AWCAC Dec. No. 015
at 2 (Aug. 3, 2007); Doyon Drilling Inc. v. Whitaker , AWCAC Dec. No. 008 at 2 n.3
(Apr. 14, 2006)).
34 E.g., id. at 1068 & n.16; Warnke-Green, 440 P.3d at 293-94 (deciding that
Commission fee award was "contrary to the policy underlying former Appellate Rule
508(g) and by extension AS 23.30.008(d)").
35 Wise Mech. Contractors v. Bignell, 718 P.2d 971, 973 (Alaska 1986);
Cortay v. Silver Bay Logging, 787 P.2d 103, 109 (Alaska 1990) (including instruction
to Board on remand to award full reasonable attorney's fees because "[i]f lawyers could
only expect 50% compensation on issues on which they prevail, they will be less likely
to take injured workers' claims in the first place").
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----------------------- Page 12-----------------------
that the Commission made adequate findings to support its award because the
Commission relied "on its own direct experience in making fee awards" in deciding that
the hourly rate it awarded was fully compensable.
WeconstruetheCommission's decisiondifferently than thepartiesbecause
in our view the Commission engaged in statutory interpretation when it rejected the
claimants' request for an award consistent with the modified lodestar method. We
understand some of the Commission's "findings" as explaining its interpretation of the
Act. For example the Commission used the verb "find" when it rejected enhanced fees,
"find[ing]" them to be "in contravention" of legislative intent, but that usage does not
transform legal reasoning into a factual finding. Nothing in the Commission decision
suggests that its refusal to award fees using the modified lodestar method was confined
to this case or was based on its particular facts.
The Commission's main objections to the claimants' request for enhanced
fees were that we had not mandated enhanced fees in appellate workers' compensation
cases and that they were inconsistent with legislative intent that the "workers'
compensation claims be resolved, in part, at a cost reasonable to the employer." It also
expressed concern that enhanced fees might dissuade employers from appealing Board
decisions, presumably because the fees awarded to a claimant successfully defending
those decisions might be higher. Finally it worried that enhanced fees would encourage
appeals of "minor or even frivolous issues" because if the claimant were successful on
the minor issues, the attorney "potentially would receive a very large [fee] award."
Theclaimants offer usargumentsaddressing thoseconcerns. Theclaimants
36 a foundational case about appellate
rely on Wise Mechanical Contractors v. Bignell ,
workers' compensation attorney's fees, to argue that we have authorized use of the
36 718 P.2d 971.
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modified lodestar method, including awards of enhancedfees,in workers' compensation
appeals. As to legislative intent, the claimants argue that using the modified lodestar
approach or granting enhanced fees promotes a different legislative intent, which the
37 They point to the number of
Commission did not discuss: fairness to injured workers.
unrepresented claimants in workers' compensation appeals as well as a lower overall
percentage of claimants' legal costs in the workers' compensation system from 2009 to
2019 to argue that low fees discourage attorneys from representing claimants.
SEARHC responds that low fees are not the reason so many claimants are
unrepresented, theorizing that claimants do not look hard enough for representation or
simply have non-meritorious cases. It explains that the larger proportion of legal costs
for employers is related to the need for legal work in all cases, not just litigated claims.
We agree with the claimants that the Commission erred in determining that
the Workers' Compensation Act does not allow awards of enhanced attorney's fees
under a modified lodestar approach. In so ruling, the Commission focused exclusively
on the potential cost to employers associated with enhanced fees. The legislature's
intent, however, is that the Act "be interpreted so as to ensure the quick, efficient, fair,
and predictable delivery of indemnity and medical benefits to injured workers at a
38 The statutory language calls not only for focus
reasonable cost to [their] employers."
upon employer costs, but for a balancing of competing interests. In its decision
reviewing the Board's fee award, the Commission observed that "represented claimants
frequently are more successful than unrepresented claimants . . . because attorneys are
skilled in collecting and presenting the kind of evidence necessary to succeed in a
37 See AS 23.30.001(1) (requiring Act to be interpreted so as 'to ensure the
quick, efficient, fair, and predictable delivery of . . . benefits").
38 AS 23.30.001(1).
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39
workers' compensation case." We too have noted that "a litigant's chance of success
on a workers' compensation claim may be decreased" when a claimant is
40
unrepresented. Adequatefeeawards areessentialto "ensur[ing]that competent counsel
41
In contrast to its position on appeal to us,
are available to represent injured workers."
during the claimants' Board hearings, SEARHC was "willing to stipulate to . . . the
difficulties injured workers face in finding attorneys to represent them, 'particularly in
42
Employers' costs for workers'
the Juneau venue and the Fairbanks venue.' "
compensation are a consideration when construing the Act, but they are not the only one.
Fairness to claimants, which includes access to possible representation by competent
attorneys, is another consideration.
None of the Commission's other expressed concerns justifies its
interpretation of the statute. It is not apparent how the possibility of enhanced fees for
claimants would discourage employers from filing appeals. The possible cost of
attorney's fees presumably is a consideration anytime an employer contemplates
appealing an adverse Board decision, and it is unlikely that potential application of the
modified lodestar method would change the decision. As for the concern that employees
would file appeals of minor or frivolous issues in hopes of procuring munificent fees, we
39 Rusch v. Se. Alaska Reg'l Health Consortium , AWCAC Dec. No. 245 at 36
(Mar. 29, 2018), rev'd 453 P.3d 784 (Alaska 2019).
40 Bustamante v. Alaska Workers' Comp. Bd., 59 P.3d 270, 274 (Alaska
2002).
41 Bignell, 718 P.2d at 975.
42 Rusch v. Se. Alaska Reg'l Health Consortium, 453 P.3d 784, 790 (Alaska
2019).
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----------------------- Page 15-----------------------
agree with the claimants that the Commission "has sufficient discretion to prevent this
result." The Commission awards fees only to a successful party on appeal and has the
43
power to award fees against an employee who files a frivolous appeal.
Finally, the Commission refused to consider enhancement of any lodestar
amount because we had not required it. But our holding in Bignell allows, even if it does
not require, such enhanced fees for claimants' counsel. We require that attorney's fees
for claimants be fully compensatory and reasonable and explicitly stated in Bignell that
44 Later, in
"full compensation is not necessarily limited to an award of an hourly fee."
Pioneer Construction v. Conlon,45 we acknowledged we had approved fees "in excess
of the fee that the attorney would have earned had he been employed on an hourly basis"
in order to ensure "competent counsel for . . . claimants."46 We required findings
47 but we did
justifying enhancement in Conlon because of a lack of "explicit norm[s],"
not disavow enhanced fees.
The claimants base much of their argument for enhanced fees on Bignell,
highlighting its similarities to their own cases and contending as a result that Bignell
mandates enhanced fees for them. At oral argument before us, they suggested, based on
Bignell, that a multiplier of two be used in all cases to account for contingency. They
acknowledge, however, that the modified lodestar method does not always enhance, and
sometimes even decreases, baseline hourly fees. SEARHC meanwhile seeks to limit
43 AS 23.30.008(d).
44 Bignell, 718 P.2d at 973.
45 780 P.2d 995 (Alaska 1989).
46 Id. at 1001 (citing Bignell, 718 P.2d at 972-73, 975).
47 Id.
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Bignell 's impact by arguing that our decision in that case was based on the trial court's
determination that the attorney had underestimated his hours.
In Bignell we affirmed the superior court's award of appellate attorney's
fees, which was twice the fee the claimant's attorneys "would have received had they
48 The superior court awarded the requested fees
been working on an hourly fee basis."
noting that it was convinced that Bignell's counsel spent
substantially more time on appeal than the 147 hours they
had estimated; that the benefits resulting from their services
were of a high degree; and that their compensation was
contingent upon success on appeal, an unlikely event once
compensation had been denied at the superior court level.[49]
We affirmed the superior court's award, citing four factors: (1) "the time spent by
counsel"; (2) "the complexity and novelty" of the case; (3) the benefit to the client; and
(4) "the contingent nature of counsel's right to compensation."50 Our affirmance was
based on multiple factors, not solely on the contingent nature of the work.51 The factors
we cited support the claimants' argument here that at times enhancement of a lodestar
fee may be appropriate to fully compensate attorneys representing claimants in difficult
cases.
SEARHC asserts that we rejected any individualized inquiry into
48 Bignell, 718 P.2d at 972.
49 Id.
50 Id. at 975.
51 Our decision in Pioneer Construction v. Conlon illustrates this point: we
required some explanation for the enhanced fees awarded in that superior court appeal.
780 P.2d at 1000-01.
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52
contingency in State, Department of Revenue v. Cowgill, and it maintains the
Commission properly relied on its own experience in other cases when setting the hourly
rate for Franich and Graham. But SEARHC misinterprets our decision in Cowgill when
it argues that we "expressly rejected efforts to base fee claims on . . . 'individualized
inquiries.' " In Cowgill we expressly rejected the employer's effort to tie claimants'
attorney's fees to fees paid to employers' attorneys because of the different nature of
these two practices and because the "differences work to drive defense counsel rates
downward and militate against using defense rates as a benchmark in awarding fees to
53 We also rejected the employer's suggestion that the Board deal
employees' attorneys."
with contingency for claimants' attorneys by considering how successful an individual
attorney had been in past cases to determine whether that attorney should be awarded a
54 This is the individualized contingency
higher, contingent rate in the case then before it.
inquiry we rejected. But we reiterated in Cowgill what we said in Bignell : contingency
is an appropriate factor to consider when awarding fees to claimants' counsel, and "fees
from successful cases ideally serve as a rough counterbalance to unpaid time spent on
55 We note that the factors set out in Professional Conduct
unsuccessful cases."
Rule 1.5(a) require some individualized inquiry in all cases because they include such
52 115 P.3d 522 (Alaska 2005).
53 Id. at 525.
54 Id. at 526.
55 Id.
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----------------------- Page 18-----------------------
considerations as the attorney's "experience, reputation, and ability" as well as thenature
56
and length of the attorney-client relationship.
Those factors necessarily apply to
individuals and are not readily applicable to broad groups or categories.
Our precedent authorizes enhanced fees for claimants asonewaytoaccount
for contingency and provide fully compensatory and reasonable fees. The Commission
therefore erred in construing the Act as prohibiting enhancement of a lodestar fee in all
cases. The Act does not require enhancement of a lodestar amount, but the Act also does
not prohibit it. On remand the Commission must evaluate the claimants' arguments
about both the overall contingent nature of representing claimants and the difficulties of
each claimant's appeal, among the Rule 1.5(a) factors, in determining whether
enhancement under the modified lodestar method is appropriate.
B. The Commission's Findings Regarding What Constitutes A Fully
Compensatory and Reasonable Fee Award Must Consider Relevant
Argument and Evidence.
The Commission decided that $450 an hour was "a fully compensatory and
reasonable rate" for both attorneys in this matter. Although the Commission stated it was
applying the factors in Professional Conduct Rule 1.5(a) in reaching its determination,
it did not explain in any detail how it weighed the relevant factors to reach that result.
Moreover, the Commission stated that it considered the contingent nature of workers'
compensation practice and had relied on unidentified prior cases to reach the hourly
57 but it did not address some of the claimants' arguments about contingency or the
fee,
56 Alaska R. Prof. Conduct 1.5(a)(6)-(7).
57 Final Commission decisions do not include a fee award for the appeal.
Under the Commission's regulation regarding attorney's fees, a party seeking fees does
so by filing a motion within ten days of a final Commission decision. 8 AAC 57.260(a).
We have observed that "[t]he Commission has published few of its attorney's fees
(continued...)
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evidencetheysubmitted about their own andother attorneys' non-contingenthourlyfees.
For example, the claimants argued an enhancement was justified because of the novelty
58 The Commission did not say how it evaluated
and difficulty of the issues in the case.
this argument, even though we identified "the complexity and novelty" of the case as
well as "the contingent nature of counsel's right to compensation" as reasons to affirm
enhanced fees in Bignell.59
On appeal to us, the claimants argue the Commission's findings about the
hourly rates are not supported by the record; SEARHC counters that the Commission
appropriately relied on its own experience and judgment when it decided $450 was a
fully compensatory and reasonable rate that accounted for contingency.
57 (...continued)
decisions." Warnke-Green v. Pro-West Contractors, LLC, 440 P.3d 283, 293 & n.40
(Alaska 2019). As a result we are unable to compare the Commission's awards in other
cases with the award here. The Commission's reliance on our decision in Warnke-Green
to justify its award here is inapposite. In that case we reversed the Commission's
reduction of the claimant's attorney's requested hourly fee. The only evidence
demonstrating a "reasonable hourly rate[] in the record" was an affidavit submitted by
the claimant's attorney in support of his $400 request, which the employer had not
challenged. Id. at 293. Our decision rested on the lack of evidence supporting the
Commission's reduction of the fee award to a $300 hourly rate, id. at 293, which is a
concern in this case as well.
58 See AlaskaR.Prof.Conduct1.5(a)(1) (including"thenovelty and difficulty
of the questions involved" as factor to consider for reasonable fee).
59 Wise Mech. Contractors v. Bignell, 718 P.2d 971, 975 (Alaska 1986).
Novel or difficult issues may increase risk in contingent cases and serve as an additional
reason for high fee awards. See Alaska R. Prof. Conduct 1.5(a)(1); cf. Thomas v. Bailey,
611 P.2d 536, 542 (Alaska 1980) (observing in public interest litigation that "an upward
adjustment" in fees may be justified when "pertinent law is unclear at the outset of a
case" (quoting Note, Court Awarded Attorney's Fees and Equal Access to the Courts,
A. L. R EV. 636, 710-11 (1974))), superseded by statute ch. 86, SLA 2003.
122 U. P
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While the Commission's decision did not clearly state its reasoning, we are
concerned that the Commission seems to have relied solely on representations made in
other workers' compensation appeals and examined past Board awards, and did not
engage with evidence provided by the claimants, in determining attorney's fees in this
matter. Doing so may have given undue weight to workers' compensation experience
and discounted other relevant factors that must be considered when determining a
reasonable fee. In Rusch's first appeal we explicitly held that workers' compensation
experience, while relevant, is not the only consideration the Board should use when
awarding fees; "an attorney's experience in related legal fields . . . should be relevant as
60 This premise applies equally to the Commission's determination of fee awards.
well."
The claimants submitted evidence before the Commission regarding
Franich's and Graham's hourly rates in non-contingent cases, as well as evidence that
$450 per hour for non-contingent work was not exorbitant, but was within the range of
reasonablenon-contingent feesforattorneyswithcomparablelegal experiencepracticing
in other potentially related areas of law. SEARHC provided no evidence in opposition.
The Commission appeared to dismiss the claimants' evidence out of hand because it
involved work in areas of law other than workers' compensation. In doing so, the
Commission ignored one of our holdings in the first Rusch appeal and failed to at least
minimally address relevant evidence and related argument. The Commission may
certainly weigh the credibility of the evidence presented by the claimants, and explain
why it gives the evidence more or less weight in its determination, but a decision to give
this evidence little or no weight simply because it involves practice and fees in an area
of law other than workers' compensation would be an abuse of discretion.
60
Rusch v. Se. Alaska Reg'l Health Consortium, 453 P.3d 784, 799-800
(Alaska 2019).
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Relatedly, at oral argument before us SEARHC outlined the Board's tiered
approach to awarding fees based on attorneys' experience representing claimants, which
may also be used by the Commission. According to SEARHC's argument, attorneys
move to higher tiers as they represent more claimants, and the hourly rate for each tier
appears to increase when the Board is convinced that claimants' attorneys as a whole are
undercompensated. This method, while providing structure and presumably limiting
litigation,also rewardsattorneys inmarketswithmoreworkers'compensation claimants,
as these attorneys can more easily specialize in claimants' cases. The fee structure may
discourage attorneys in smaller markets and those with a more general practice from
representingclaimants when thoseattorneys can earnas much or moreon non-contingent
cases. In light of SEARHC's acknowledgment before the Board about claimants'
61 the Commission should
difficulties finding attorneys to represent theminsmaller cities,
consider the possible impact of this method of awarding fees on the availability of
representation for the claimants here.
We reiterate that workers' compensation experience, while relevant, is not
the only factor the Commission should look to when considering the claimants' fee
request. All work before the Commission is appellate, and the Commission itself
recognized that both attorneys here were experienced in appellate law. Yet the
Commission ultimately discussed solely workers' compensation attorney's fee requests
in explaining its decision.
The claimants ask us to award fees for the Commission appeal under
AS 23.30.145(c), but because the Commission erred in construing the Act and because
61 Id. at 790.
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62
we review the amount of fee awards for abuse of discretion, it is appropriate for the
Commission to exercise its discretion and to make the fee award as permitted under a
correct understanding of the Workers' Compensation Act. On remand the Commission
should evaluate the claimants' requests and evidence, and make findings that explain
how it considered the Professional Conduct Rule 1.5(a) factors in determining fees,
understanding that it is permitted, but not required, to enhance fees under a modified
lodestar approach.
V. CONCLUSION
We REVERSE the Commission's attorney's fee decision, VACATE its fee
award, and REMAND the case to the Commission for further proceedings consistent
with this opinion.
62 D&D Servs. v. Cavitt, 444 P.3d 165, 168 (Alaska 2019).
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