MILLER_V_IBM.94-266; 163 Vt 396; 659 A.2d 1126
NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
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David Miller Supreme Court
On Appeal from
v. Department of Labor & Industry
IBM and Liberty Mutual January Term, 1995
Mary S. Hooper, Commissioner
Roger E. Kohn and Beth DeBernardi of Kohn & Rath, Hinesburg, for
Keith J. Kasper and Harold Goldman of McCormick, Fitzpatrick & Mertz, P.C.,
Burlington, for defendant-appellee
PRESENT: Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.
DOOLEY, J. Plaintiff David Miller appeals, challenging as inadequate
an award of attorney's fees, following a successful workers' compensation
claim against defendant. The Commissioner of Labor & Industry (Commissioner)
awarded plaintiff attorney's fees in accordance with Workers' Compensation
Rule 10 (WC Rule 10), which caps these fees at $35 per hour. On appeal,
plaintiff argues that the hourly rate limit in WC Rule 10 is invalid.(FN1)
We first consider plaintiff's argument that WC Rule 10 is not valid.
Two statutes bear
on this argument.(FN2) The primary statute is 21 V.S.A. 678(a), which
provides in pertinent part: "The commissioner may allow the claimant to
recover reasonable attorney fees when he prevails." Also relevant is 602,
which authorizes the commissioner to issue rules: "All process and procedure
under the provisions of this chapter shall be as summary and simple as
reasonably may be. The commissioner may make rules not inconsistent with
such provisions for carrying out the same . . . ." The Commissioner claims
that WC Rule 10 is authorized by 602 and is consistent with 678(a).
Plaintiff argues that the rule is inconsistent with 678(a) because the
rate allowed is not "reasonable." We agree with the Commissioner's position.
We must first consider plaintiff's argument that we have already decided
this case in his favor in Jackson v. True Temper Corp., 156 Vt. 247, 590 A.2d 891 (1991). Jackson considered a fee award at an hourly rate of $75 made by
the superior court for a case that went from the Commissioner to the superior
court and then to this Court. The fee award covered work done by the
attorney in each administrative and court forum, and the defendant argued
that WC Rule 10 governed an award for the attorney's hours irrespective of
the forum in which the work was done. We rejected this argument, holding
that subsection (b) of 678 governed an award for attorney's work done in
the superior and supreme courts and that the subsection authorized the
superior court to determine a reasonable rate without regard to the
Commissioner's limit. Id. at 250, 590 A.2d at 893. We affirmed the award of
$75 per hour for that part of the lawyer's work.
We did not, however, affirm the award for the work done before the
Commissioner. For that work, we stated "Rule 10 is at least a starting point
for a determination of the appropriate hourly rate for attorney time spent on
the proceedings before the Commissioner." Id. We went
on to hold that the amount of fees for such proceedings "should be
determined, in the first instance, by the Commissioner," id., and remanded
for such a determination.
We acknowledge that our description of the fee limits in WC Rule 10 as
"at least a starting point" suggested that the limits were not always
determinative. We think, however, that the language was used to keep open
the exact issue raised in this case, rather than to point to its resolution.
Thus, we do not find that Jackson is determinative of this case.
In considering the validity of WC Rule 10, we must first emphasize the
limited standard of review. Rules are "prima facie evidence of the proper
interpretation" of the enabling legislation. See 3 V.S.A. 845(a). They
enjoy a presumption of validity and are valid if "they are reasonably related
to the purposes of the enabling act." Vermont Ass'n of Realtors v. State,
156 Vt. 525, 530, 593 A.2d 462, 465 (1991) Further, "absent compelling
indication of error," we accept the construction of a statute made by the
administrative agency responsible for its implementation. In re Petition of
Twenty-Four Vermont Utilities, 159 Vt. 339, 361, 618 A.2d 1295, 1308 (1992).
Plaintiff has two main arguments why, despite the deference we must pay
to the Commissioner's action, the rule is nonetheless invalid. First, he
argues that the rule is not reasonably related to the remedial purpose of the
fee statute "of making employees injured on the job whole". Hodgeman v. Jard
Co., 157 Vt. 461, 464, 599 A.2d 1371, 1373 (1991). Second, he argues that the
Commissioner's interpretation of the statute is inconsistent with how we have
construed the term "reasonable attorney fees." In particular, he argues
that we have held that the question of the reasonableness of a fee is one of
fact to be determined by various factors, including usual and customary rates
for similar work, the difficulty of the work, and the amount of time and
labor required. See Parker, Lamb & Ankuda, P.C. v. Krupinsky, 146 Vt. 304,
306-07, 503 A.2d 531, 532-33 (1985). This interpretation of "reasonable
attorney fees" focuses on how to determine a reasonable fee absent a
contractual specification of the fees to be charged or when the fee agreement
is contested. See id. at 306, 503 A.2d at 532; see also
Bruntaeger v. Zeller, 147 Vt. 247, 254-55, 515 A.2d 123, 128 (1986)
(attorney's bill, listing work performed, total time, and hourly rate
insufficient to assess reasonableness of fee).
In support of these arguments, plaintiff points out that the
$35-per-hour limit was adopted in 1980, and that inflation has effectively
lowered the cap. Thus, he argues, if the limit provided reasonable fees in
1980, it no longer does so.
Although plaintiff's points are well taken, we cannot conclude that they
show the rule is invalid. The statute may have multiple purposes. Thus, our
first examination of an earlier version of the statute concluded: "Its main
purpose was to discourage unreasonable delay and unnecessary expense in the
enforcement or defence of that class of claims." Kelley v. Hoosac Lumber
Co., 96 Vt. 153, 157, 118 A. 520, 522 (1922); see also Morrisseau v. Legac,
123 Vt. 70, 79, 181 A.2d 53, 59 (1962) (restating Kelley after statute was
amended to allow fees only to claimant). The statute does not impose any
limit on the fees an attorney may charge the client. Instead, the statute
and the rule impose a limit on the amount of the claimant's attorney's fees
which may be shifted to the employer. Although the statute directs the
Commissioner to award costs when the claimant prevails, it provides only an
authorization that the Commissioner "may" award attorney fees. 21 V.S.A.
678(a). Thus, we have held that the Commissioner has "discretion" under the
section. See Hodgeman v. Jard, 157 Vt. at 466, 599 A.2d at 1374. In Hodgeman
we upheld an award of fees in part because it was based on a percentage of
recovery but contained a dollar limit. See id.
We also note that other jurisdictions have adopted regulatory and
statutory provisions that cap "reasonable" attorney fees. See Del. Code Ann.
tit. 19, 2127(a) (1985) (reasonable attorney's fee not to exceed 30% of
the award or $2250, whichever is smaller); N.J. Stat. Ann 34:15-64 (West
1988) (award of reasonable attorney fee not to exceed 20% of judgment). The
cap is not seen as inconsistent with the requirement that the fee be
reasonable. See Baghini v. District of Columbia Dep't of Empl. Servs., 525 A.2d 1027, 1030 (D.C. 1987).
Moreover, even those jurisdictions that cap fee attorneys may charge
clients, do not find
that the cap discourages competent attorneys from representing workers'
compensation claimants. For example, the Supreme Court of Idaho upheld a rule
limiting most attorney fees to 25% of new money awarded to the claimant,
holding that the rule was rationally related to the purpose of fostering sure
and certain relief for injured workers, and did not prejudice the ability of
injured employees to obtain legal counsel. Rhodes v. Industrial Comm'n, 868 P.2d 467, 470-71 (Idaho 1993); see also Edmond v. Ten Trex Enters., Inc., 575 A.2d 1267, 1272 (Md. Ct. Spec. App. 1990) (limiting fee to be charged to
client to percentage of award, is not miserly and does not hinder effective
representation of claimants, given seeming abundance of attorneys
We conclude that the cap is reasonably related to the purpose of
avoiding "unnecessary expense in the enforcement or defense" of claims. Like
health plan copayment requirements, it encourages wise use of the service
involved because some percentage of that service may be borne by the
claimant. On the other hand, it does not make this service unavailable to
any claimant. We do not find "compelling indication of error" in the
Commissioner's interpretation of reasonableness in light of the cost-shifting
We recognize that a fee rate that once was reasonable can become
unreasonable over time. Beyond plaintiff's assertion that inflation must be
resulting in lower percentages of fees being borne by employers, we have no
evidence of the effect of the fee limit. Further, it appears that the
Commissioner has amended the regulation, without changing the limit, and thus
has considered its effect.(FN3) See Edmond v. Ten Trex Enters., Inc., 575 A.2d at 1272. We cannot conclude on this record that the rule has become
unreasonable in violation of the statute.
FOR THE COURT:
FN1. Plaintiff also argues that WC Rule 10 should be interpreted to allow a
higher rate when evidence is presented that $35 per hour is unreasonable.
Plaintiff has not suggested that this result can be reached from the wording
of the regulation. Instead, he is claiming that the authority to allow a
higher rate must be implied to avoid conflict with 21 V.S.A. 678(a). We
consider this argument to be a variation of the basic argument that the rule
is invalid because it is in contravention of the statute, and do not consider
FN2. Defendant argues that claimant cannot challenge the validity of WC Rule
10 in this proceeding, but must instead seek a rule change under 3 V.S.A.
806 or a declaratory judgment under 3 V.S.A. 807. In our discretion, we
have reached the merits and have not considered defendant's jurisdictional
FN3. Plaintiff has supplied us the version of WC Rule 10 in effect from 1986
to 1993, and a new version adopted in 1993. In response to a question at
oral argument, defendant supplied the history of a 1994 proposal to amend the
rule. Plaintiff has objected to this history as outside the record. We have
not considered the additional history supplied by defendant.