ATTORNEY S FEES IN AN ADMINISTRATIVE SYSTEM

Transcription

1 ATTORNEY S FEES IN AN ADMINISTRATIVE SYSTEM ROYCE V. BICKLEIN, Odessa Miller & Bicklein State Bar of Texas WORKERS COMPENSATION 101 August 1, 2012 Austin CHAPTER 5

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3 ROYCE V. BICKLEIN The Law Offices of Miller & Bicklein, P.C East University, Suite D-5 Odessa, Texas (432) (432) (fax) Odessa Lubbock 4555 East University, Suite D S. Loop 289, Suite 103A Odessa, Texas Lubbock, Texas San Antonio Abilene 8207 Callaghan Road, Suite Chestnut, Suite 213 San Antonio, Texas Abilene, Texas EDUCATION JD, St. Mary s University School of Law, San Antonio, Texas, BA, The University of Texas at San Antonio, EXPERIENCE Law Offices of Miller & Bicklein, P.C to Present Managing partner of a plaintiff s personal injury and workers compensation law firm. Representing injured Texans in pursuit of their rights before the DWC and in district court actions. LICENSURE / SPECIALIZATION 1998 Admitted to practice by Supreme Court of Texas Board Certified Workers Compensation Law by the Texas Board of Legal Specialization PROFESSIONAL ACTIVITIES / SPEAKING State Bar of Texas, Advanced Workers Compensation Law; 2012 Member of planning committee and frequent speaker on issues such as attorney s fees, ethical considerations, subrogation, legislation, and other topics Permian Basin Trial Lawyers: Present status of workers compensation Legislation and other changes State Bar of Texas, Legislative Update: Workers Compensation. Regular 2011 Contributor and speaker Workers Compensation Commission, 14 th Annual Conference, Scheduled Speaker; Claimant Rights: Bad Faith 2005 Workers Comp Publications, Speaker, Legislative Update Recurring Lobbying Texas Senate Committee on State Affairs and Texas House of Representatives Committee on Business & Industry regarding various legislation affecting injured workers. Fighting for the rights of his current and future clients.

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5 Attorney s Fees in an Administrative System Chapter 2 TABLE OF CONTENTS I. INTRODUCTION... 1 II. BILLING SPECIFICS... 1 A. How Much Can You Bill... 1 B. Cap on Activities... 1 C. Expenses... 1 D. Contingency... 1 III. THE MECHANICS OF BILLING... 2 IV. BILLING DISPUTES... 2 V. LIENS & PAYMENTS... 2 VI. SIBS BILLING: THE UN-WRITTEN CAP... 3 VII. DISTRICT COURT REPRESENTATION... 3 A. Generally... 3 B. District Court & Claimant s Counsel... 3 VIII. COMPETITION WITH OTHERS... 3 IX. CONCLUSION... 4 i

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7 Attorney s Fees in an Administrative System Chapter 2 ATTORNEY S FEES IN AN ADMINISTRATIVE SYSTEM I. INTRODUCTION When embarking on a new area of practice, a necessary part of the analysis involves determining profitability. Attorney s fees in the Texas Workers Compensation system are very tightly controlled by statutes and rules which govern both the number of hours, billable amounts, payment methodology, and virtually every aspect of the legal practice. The Texas Department of Insurance, Division of Workers Compensation (DWC) will make determinations on each and every fee billed to your clients. It is a system where billing for attorneys for injured workers is based on an hourly rate contingent upon prevailing. It is a very tight supervision of the practice of law. Part of the analysis of every case that an attorney accepts should include an analysis of whether he/she can be paid for their work. We have all taken cases based on our feelings for the client or defendant or based upon a point of law that we may feel passionate about. However, if all of our clients are taken based solely on this analyses; devoid of billing considerations; we would all likely cease practicing for our inability to keep the lights burning. What follows below is an introduction to the billing practice for the average workers compensation attorney with a slant towards Claimant s attorneys as they are more heavily regulated. It is intended to help the practitioner understand the system. II. BILLING SPECIFICS A. How Much Can You Bill Texas Labor Code and are the statutory authority on which the DWC is given control over the billing practice of attorneys participating in the system. These sections govern Claimant s counsel and Carrier s counsel respectively. Both sections dictate that fees, must be approved by the commissioner/division or court. It is from this point that all fees are controlled by the DWC. Attorneys in the workers compensation system are controlled first and foremost by Texas Administrative Code This provision sets the guidelines for all billing and fees for all attorneys in the State of Texas who participate in the workers compensation system. Enacted in 1991 and essentially unchanged since its inception. Let me repeat that again; enacted in 1991 and essentially unchanged since its inception. However, it is an area of the Rules that every attorney must learn. An attorney, practicing before the DWC in an administrative action may not bill more than $150 per hour. This cap is found in TAC (d). There is a narrow exception regarding SIBS cases that is 1 discussed below, but otherwise, an attorney may not exceed the billable cap. This provision also caps the amount a legal assistant can bill at $50 per hour. Although many other areas of the law have seen an increase in average billing rates the rates for workers compensation attorneys has remained constant for over 20 years. Although there have been recent discussions aimed at raising these fees, nothing to date has been successful. Please note that these caps apply to all attorneys practicing within the administrative system, whether representing injured workers or insurance carriers. B. Cap on Activities Along with an hourly rate cap, the DWC also caps the amount of work that an attorney can do. Again, referring back to TAC 152.4(c) the DWC has set guidelines for the amount of time attorneys can bill for interviews, setting up a file, communication with your client and others, preparation for hearings, and appeals. These services are not hard caps, and can be exceeded in some case, for practical purposes, this is difficult. Amounts billed at, or below the allowable hours will be automatically approved while anything in excess will be administratively reviewed. It is fairly standard practice within the industry to stay within the guidelines. C. Expenses As with fees, there is a method for recovering of an attorney s expenses. This is governed by TAC It outlines the allowable expenses that can be billed and recouped. D. Contingency For attorneys of injured workers, fees and expenses are both controlled by an hourly fee arrangement and contingent upon fees being paid. If undertaking a claim where benefits have been denied and weekly benefits are not being paid, a Claimant s attorney will not recoup any of his costs, fees, or expenses unless he/she prevails. An injured worker is not responsible for uncollected fees after benefits have been exhausted. As an example, if you undertake the representation of injured worker where the Carrier has denied compensability and refused to pay disability benefits, then in order to be paid, the Claimant s attorney must win. If you undertake this claim and lose, any fees or expenses that have been accrued will not be paid by anyone. It is the risk you assume in undertaking such claims. It is therefore vital to be able to evaluate the strengths and weaknesses of your case early on. For attorneys who represent other parties, such as sub-claimants and insurance carriers, they have no such burden. Although their fees are also controlled by

8 Attorney s Fees in an Administrative System Chapter 2 maximum allowable hours and billing rate, they are free to contract without a contingent component and can be paid win, lose or draw. For attorneys of injured workers, TAC 152.1(c) and TAC 152.2(d) governs that your fees and expenses combined, may not exceed 25% of the injured workers income benefits. No matter what your billing and expenses are, you will not be awarded more than 25% of the benefits then owed. Therefore, another important aspect of case analysis is determining the value of the dispute. Just because a case is winnable, it may not be payable. III. THE MECHANICS OF BILLING So you have signed a contract with an injured worker or an insurance carrier. And if you are representing an injured worker, you have also executed Form DWC-150. Now, how do you bill it? Form DWC-152 provides a papered methodology (example attached in Addendum A). The form can be completed following the rules set out above and submitted to the DWC. This form provides biographical data and billing totals, followed by itemized billing on the following pages. Billing must be itemized and submitted to the DWC field office which handles the claim for each worker. It is a tedious and generally unpleasant experience, but it must be done. Once received, the local field office personnel will enter the billing amounts into the DWC system. If the amounts are within the allowable maximums and do not contain any billing which must be especially approved it is normally approved within 24 hours of entry. How long it takes the local field office to enter the request is another question all together. This is a slow data-entry process and it could be done the day it was submitted, or it could take days or weeks. To avoid this delay, the better billing method is done online. This system is relatively new, only available within the last 10 years, and allows for attorneys to do the data entry for the DWC. First, you must apply for web access using Form DWC-151 (Addendum B). Once completed, this will allow you to access the online billing system available at Instead of manually entering the data on paper and then awaiting a DWC staff member to perform the data entry, attorneys can do the data entry on their own. I don t know any attorneys who actually submit paper billing any longer. The last time I did, I was chastised by the local field office personnel for doing so! Once submitted online, the same time frames apply. If your submission is within the maximum allowable limits, it will normally be approved within 24 hours. However, some billing must be reviewed. Texas Labor Code discusses that attorney s fees for CCHs must be approved and it contemplates 2 that each CCH decision has a separate specific award for fees. As a practical matter this never occurs and I don t recall seeing a CCH Decision and Order in the last twenty years that had such an award, it doesn t change the requirement. All billing for hearings, such as BRCs and CCHs must be reviewed by the presiding officer before approval is completed. Once you have submitted your bill and it is approved, then it is sent to the insurance carrier, the attorney, and if a bill for a Claimant a copy will also be sent to the injured worker. Special note: In this day and age many attorneys have their own internal billing computer system. A brilliant concept lost on workers compensation. Although discussed in 2005 the DWC does not presently have a system that allows your system, whatever it is, to communicate with and download billing to the DWC. If you use this type of system, you must still manually enter your time on paper or in the online system. IV. BILLING DISPUTES An injured worker, carrier, or attorney can contest a fee approved or denied within 15 days of DWC action. TAC You can only dispute the fees for which you have standing. In most cases this appeal for an approval or denial of fees will proceed to a CCH where a hearing officer determines what is proper. These are rare for most attorneys and if you find yourself attending these a lot, some introspection may be warranted. If the fee order in question was approved by a Hearing Officer, following a CCH, please note that the proper method of appealing the denial is the filing of a request for review, not another CCH. Failure to follow this rule will result in a waiver of the dispute. V. LIENS & PAYMENTS If you represent and injured worker within the administrative system, you will never be paid directly from the Claimant. The injured worker does not directly pay your bill. To be clear, it will likely come from the injured workers benefits, but it is paid directly by the Carrier to the attorney. TAC 152.1(c) dictates that your approved fee becomes a lien against any future payment of income benefits. TLC dictates that this lien is the primary lien applicable to the payment of income benefits by the Carrier. Attorney fee liens are treated as first-in-time liens. Each fee order is given a sequence number by the DWC and the Carrier will pay each in sequential order. Carriers will receive the fee orders and issue payments directly to Claimant s counsel. The amount of the payment is determined by the amount of the benefit paid to the injured worker, with no more than 25% of the benefit amount deducted from the injured workers indemnity payment and sent directly to

9 Attorney s Fees in an Administrative System Chapter 2 counsel. This continues at the same 25% rate until the fee order is paid in full. If no more payments are due to the injured worker and if there aren t enough benefits left to pay the remainder of the fees, then they will not be paid. If there are no lump sum payments due for unpaid back-due benefits, then attorneys are paid very slowly. With the maximum benefit rate around $750 per week, this could result in your bill being paid out at a rate of $180 per week. It can therefore take time to recover your billing. VI. SIBS BILLING: THE UN-WRITTEN CAP For your work before the DWC there is one exception to the billing cap rules. TLC outlines that in SIBS disputes filed by Carriers the billing cap rules do not apply. The Statute specifically removes the caps. Therefore, you are free to charge whatever you want. Well, not really. Despite the fact the cap doesn t apply the DWC has placed a cap on the billable amount of your fees at $200 per hour. You won t find this figure in the Texas Labor Code or Texas Administrative Code, but it exists none-the-less. The good news is that you can bill more than the 20- plus year old rate of $150 per hour, but that is quickly blanketed by the administratively created $200 perhour cap, as upheld at the administrative level by such cases as AP VII. DISTRICT COURT REPRESENTATION A. Generally As the introduction to this paper stated there is contemplation that fees may be approved by the DWC or a court. For all fees and work incurred at the DWC level in an administrative hearing, the DWC maintains jurisdiction for approval of these fees. However, if you undertake representation of an injured worker or insurance carrier on an appeal or defense of an appeal at district court, the court retains jurisdiction of the approval of your fees. The caps on hours and billable amounts do not apply in district court. TAC does not apply here. You may bill at whatever hourly rate the court will approve and for whatever work the judge deems reasonable. Whether you are counsel for the Carrier or the Claimant, your fees must be approved by the Court. B. District Court & Claimant s Counsel If you represent an injured worker, the 25% cap may still apply. If the injured worker lost at the administrative level and you undertake an appeal of that finding by filing a petition in district court seeking to overturn the DWC determination, then the 25% cap still applies. No matter how much the court approves, you will still be limited to no more than 25% of the benefits yet to be paid. Your hours and billable amount are not limited, but your overall fee is still capped and the contingent nature of that fee still exists. If the Claimant has prevailed at the administrative level and the Carrier chooses to appeal to District Court, then the caps no longer apply. TLC (c). If you are defending an injured worker in district court on an appeal of a DWC ruling filed by an insurance carrier, then your fees are not capped at 25% and are not subject to any maximum amounts. The fees must still be approved by the court, but the fees are not paid out of the Claimant s benefits. If you prevail in defense of an injured worker in these circumstances, then your fees are paid directly by the Carrier from their own pocket and not from future income benefits. Please note that when last this author checked the numbers of these types of cases have been dropping every year and in the entire state of Texas there are less than 100 cases per year. So don t count on these cases to pay your bills every year. Please also note that you may be forced to ask the jury to approve your fees. See, Transcontinental Ins. Co. v. Crump, 330 S.W.3d 211 (Tex. 2010). VIII. COMPETITION WITH OTHERS Certainly all attorneys expect that there is competition amongst their peers to represent injured workers in Texas. There are attorneys who both specialize and dabble in workers compensation who all dabble in the practice. However, along with these attorneys you must compete with non-attorneys and the Office of Injured Employee Counsel (OIEC). Non-attorneys can represent the interests of parties before the DWC so long as they have written authorization. TLC (37) and TAC 150.3(a)(3). Although non-attorneys can not collect a fee from an injured worker as outlined above there are both not-for-profit groups and others who undertake active representation of injured workers. These groups will compete with attorneys for clients. In 2005 the Texas Legislature created the Office of Injured Employee Counsel (OIEC). OIEC is a separate sub-agency under the Texas Department of Insurance and is given two major tasks. First, it represents the class of injured workers as a whole in public matters and activities such as the legislative process. Second, and more importantly for attorneys, OIEC undertakes assistance of injured workers through the ombudsmen program. OIEC actively assists injured workers through disputes and at hearings such as BRCs and CCHs. Since its creation, OIEC has been more active in seeking appointments or in recruiting claimants to use of its ombudsmen services than had ever existed in the past. 3

10 Attorney s Fees in an Administrative System Chapter 2 IX. CONCLUSION This is far from an exhaustive discussion of the myriad of rules and regulations regarding attorney s fees in the workers compensation system. It is intended as an introduction to the fee system and should work to give the practitioner a basic understanding of the system and how it works. One thing should be perfectly clear from this discussion it is that attorney s fees are heavily regulated and controlled by the DWC and any practitioner must devote himself or herself to an understanding of the system before embarking upon representation of the various parties within the system. 4