ALASKA WORKERS' COMPENSATION BOARDappeals.dol.alaska.gov › docs › workerscomp › 2010 › 1… · Web viewALASKA WORKERS' COMPENSATION BOARD P.O. Box 115512 Juneau, Alaska 99811-5512

ALASKA WORKERS' COMPENSATION BOARD

P.O. Box 115512 Juneau, Alaska 99811-5512

MICHAEL D. BANIE, employee, Claimant and Petitioner

v. TONGASS BUSINESS CENTER, employer, andCOMMERCE & INDUSTRY INS. CO., insurer,

Defendants, Petitioners, and Respondents.

v.

STATE OF ALASKA, SECOND INJURY FUND, Respondent.

Adjuster: (for employer and insurer): Northern Adjusters, Inc.

)))))))))))))))))))))))

FINAL DECISION AND ORDER

AWCB Case No. 200606973

AWCB Decision No. 10-0092

Filed with AWCB Juneau, Alaskaon May 21, 2010

On May 11, 2010, at Juneau, Alaska, the Southern Panel of the Alaska Workers’ Compensation

Board (“board”) heard Michael Banie’s (“employee”) claim for unreimbursed medically-related

travel expenses, attorney fees, paralegal fees and other expenses. Attorney Paul Hoffman repre-

sented the employee. The employer Tongass Business Center and insurer Commerce & Industry

Insurance Co., (jointly, “employer”) were represented by Steve Nelson, legal assistant of Griffin

& Smith. The Second Injury Fund did not appear at the hearing, and submitted no briefs on the

questions presented. The employee and his wife Kathleen Banie testified via telephone. Other

than Mr. Hoffman’s affidavits, no other witness testimony was offered into evidence at the May

MICHAEL D. BANIE v. TONGASS BUSINESS CENTER

11 proceeding, and no requests for cross-examination were filed. The employer was permitted to

file a marked-up copy of the employee’s January 20, 2010 Notice of Intent to Rely, with certain

disputed items circled, as a summary of its argument on the disputed medical travel expenses.

On May 13, 2010, the employee submitted three petitions: (1) to accept a late-filed Affidavit of

paralegal Ms. O’Leary; (2) to strike the documents and argument of Steve Nelson, and (3) expe-

dited consideration of these two petitions. The employer answered on May 14, 2010. Expedited

consideration was granted and the May 13 petitions were heard on May 18 and 19, 2010.1 After

requesting and receiving argument on the applicability of 8 AAC 45.195, the panel found that

manifest injustice would result unless the panel relaxed the board’s rules of procedure, denied

the petition on Ms. O’Leary’s late-filed affidavit as moot, and denied the petition to strike. The

panel then proceeded to the merits of the medical travel expense, attorney fee and expense

claims, based on the written record as closed on May 11, 2010, with additional evidence and ar-

gument received during the May 18 hearing. The entire record closed on May 18, 2010.

ISSUES

The employee contended entitlement to additional reimbursement for medical travel expenses

incurred in Washington state while receiving prescribed medical care. The employer argued the

disputed expenses were ordinary living expenses the employee or his spouse would have incurred

anywhere.

(1) Shall the board award $222.97 as reasonable meal or lodging expenses incurred

while obtaining necessary medical treatment?

The employee seeks a total award of $16,896.32 in attorneys fees and costs for work performed

after a November 2008 partial compromise and release (“Partial C&R”) agreement. The employee

argued the employer’s May 19, 2009 petition to terminate TTD benefits, and its later conduct

leading to the employee filing his October 15, 2009 petition seeking compliance with Section 8 of

the Partial C&R, required the assistance of his attorney and paralegal. The employee argued the

employer controverted in fact, and otherwise resisted the payment of medical and related benefits.

1 Panelist Mr. Weel was unable to attend the May 18 proceeding in person. A copy of the audio recording of the proceeding, as well as the relevant papers, were supplied to him, under 8 AAC 45.070(k). Mr. Weel joins in the rulings announced by the two-member quorum during the May 18, 2010 proceeding.

2


The employer argued it informed the employee by e-mail on July 15, 2009 that it intended to take

no action on the May 19, 2009 petition to terminate TTD, and it withdrew the petition on

November 3, 2009. The employer further argued it filed no notice of controversion of any medical

benefits, there was no controversion in fact, and the employer has paid all medical benefits due

according to the payment schedule under the Alaska Workers’ Compensation Act (“Act”), after a

bill for the performed services had been submitted for payment.

As to any disputes over medical care for which the employer’s pre-authorization was sought, the

employer argued it is not required under the Act to pre-authorize medical services, particularly if the

cost for the services sought exceeds the fee schedule.

The employer also argued the attorneys fees claimed are excessive,2 were impermissibly “block-

billed,” the paralegal charges included secretarial functions, and the board could not award

paralegal expenses in the absence of an affidavit by the paralegal as to the services performed, under

8 AAC 45.180(f)(14)(D). The employee replied the fees and expenses were reasonable, necessary,

and vouched by Mr. Hoffman’s affidavits.

(2) Shall the board award attorneys fees and costs for work performed in response to

the employer’s May 19, 2009 petition to terminate TTD?

(3) Shall the board award attorneys fees and costs for work performed regarding the

employer’s October 15, 2009 petition to compel the employer to comply with

Section 8 of the C&R?

In his May 13, 2010 petition to receive the affidavit of Ms. O’Leary, the employee argued the

record should be augmented to meet the employer’s objection under 8 AAC 45.180(f)(14)(D). The

employer responded Ms. O’Leary’s affidavit is untimely.

2 The subarguments made to support the excessive fee argument were that attorney Keenan Powell’s hours were more efficient over a longer period of time; Mr. Hoffman over-billed for the time spent at a PHC; Mr. Hoffman overbilled for time spent preparing an answer to the 5/19/09 petition; and Mr. Hoffman spent a half-hour reviewing messages from his client. See 5/4/10 Employer’s Hearing Br., at page 7, notes 10-12 and accompanying text.

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(4) Where the employee claims paralegal expenses with the paralegal time verified

by the supervising attorney’s affidavit, would manifest injustice result to deny the

claimed expense on ground of failure to comply with 8 AAC 45.180(f)(14)(D), such

that the panel should relax the requirement of the regulation?

On the May 13, 2010 petition to strike, the employee argued that Mr. Nelson failed to comply with

8 AAC 45.178(a)(2), Mr. Nelson’s work amounted to the unauthorized practice of law, and the

board should strike all documents signed by him, as well as all oral argument or other participation

by him in the proceeding. The employer replied that any objection under 8 AAC 45.178(a)(2) was

waived, and that to strike all of Mr. Nelson’s work in the case would work a default against the

employer and insurer, causing manifest injustice. On May 17, 2010, the employer also submitted a

written authorization ratifying Mr. Nelson’s past representation.

(5) Where a non-attorney representative is employed by an Alaska law firm, is

supervised by an Alaska attorney, and representation is in the firm’s name, would

manifest injustice result to strike the representative’s work on ground of failure to

comply with 8 AAC 45.178(a)(2), such that the panel should relax the requirement

of the regulation?

FINDINGS OF FACT

A preponderance of the evidence establishes the following facts:

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1. The employee reported injury to his left hip and back on May 10, 2006, while assembling

heavy furniture. (5/18/06 Report of Injury; 5/11/06 D. Bowen, MD, Family Practice Clinic Chart

Note, SIME Binder 006; 3 5/11/2010 Hearing, testimony of Mike Banie).

2. The employee was released from work for a time, then released back to modified, light duty,

underwent a course of physical therapy, treatment of pain with narcotics, and injection of the low

back and left hip joint with steroids and pain medications. The left hip joint injection brought

immediate but temporary pain relief. (SIME Binder passim, 0006 through 0090, especially 6/3/06

D. Liljegren, MD, Family Practice Clinic chart note, 8/21/06 J. Bursell, MD, Procedure Note,

10/16/06 L. Molloy, MD, Report of X-Ray Hip Arthrogram Injection, and 10/17/06 A.Wolf, MD,

Chart Note, SIME Binder 026, 065-65, 088 and 090).

3. On October 4, 2006, the employer terminated the employee. (10/4/06 M. Davis, president,

Tongass Business Center, Inc., Letter to M. Banie, attached to 6/7/07 K. Powell, Medical Summary

(filed 6/11/07).

4. Mr. Banie has not worked since termination, except for minor part-time work as a Santa

Claus at a mall during the 2006 holiday season. (Banie Depo. at page 33, line 22 to page 35, line

13; page 56, lines 1-7).

5. An October 30, 2006 MRI identified a loose body in the hip joint. On November 16, 2006,

John Bursell, MD referred the employee to Philip R. Downer, MD for consideration of left hip

arthroscopy. (11/16/06 J. Bursell, MD, Office/Outpatient Visit Note, 11/29/06 J. Bursell, MD,

Letter to P.R. Downer, MD, 10/30/06 G. Kienzle, MD, Report of MR Hip Left w Contrast, SIME

Binder at 097-098, 101 and 104).

6. On December 21, 2006, Dr. Downer, without having physically examined Mr. Banie,

indicated willingness to consider arthroscopy, thought he saw evidence of a labral tear, and

described the possibility of other surgical modification of the left hip joint that might be indicated.

(12/21/06 P.R. Downer, MD, Letter to J. Bursell, MD, SIME Binder 105).

7. On February 14, 2007, employer-sponsored independent medical examiner (“EIME”)

Steven J. Schilperoort, MD opined the employee’s left hip condition was not work-related, Mr.

3 References to the medical records contained in the black, bound SIME binder shall use this format: “SIME Binder [page #]. There are no pages 1-5 of the SIME Binder. See 9/11/07 Affidavit of Service (verifying service of SIME Binder pages 0006 through 129; 10/9/08 R. Briggs, HO, Letter to P. Hoffman, et al.; 10/10/08 C. Smith, Griffin & Smith, Fax conveying missing page 16 (but including no pages 1 through 5).

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Banie was medically stable as of June 28, 2006, with no permanent physical impairment (“PPI”).

(2/14/07 S.J. Schilperoort, MD, EIME Report, at pages 10-11, paras. 4-6, SIME Binder 117-118).

8. On March 7, 2007, the employer controverted medical treatment of the left hip, PPI,

temporary total disability (“TTD”) benefits from June 28, 2006 forward, stopped paying TTD

benefits, and declared an overpayment for TTD paid from June 29 to February 28, 2007. (3/7/07

Controversion Notice; 3/7/07 Compensation Report, at Blocks 25 and 40).

9. On April 6, 2007, as amended on May 22, 2007, the employee claimed medical benefits,

TTD, PPI, and a board-ordered Second Independent Medical Examination (“SIME”). (4/2/07 and

5/22/07 Workers’ Compensation Claims (“WCC”)).

10. On December 17, 2007, SIME physician Fred Blackwell, MD recommended hip

arthroscopy, finding the left hip condition work-related. Dr. Blackwell affirmed his opinion after

review of supplemental medical records, after the December 17 report. (12/17/07 and 12/21/07 F.

Blackwell, MD, SIME Report, at page 14, para. 3 and at page 3).

11. On March 12, 2008, Blackwell affirmed at deposition that arthroscopy of the left hip was

indicated. Based on a two-page excerpt from the employee’s deposition, Dr. Blackwell changed his

opinion on whether the hip condition was work-related. Later in the deposition, during examination

by Ms. Powell, Dr. Blackwell admitted that the employee might have sustained a labral tear, or

exacerbated a labral tear, depending upon the precise body mechanics at time of injury. (3/12/08

Transcript of Deposition, F. Blackwell, MD, at pages 11, line 22 to page 12, line 4; at page 24, line

9 to page 25, line 15; page 27, lines 6-9; page 28, line 23 to page 29, line 8; page 30, lines 2-10;

page 41, line 1 to page 43, line 10).

12. Treating physician Dr. Bursell opined that the employee needed a companion to accompany

him and assist him during treatment in Seattle. (6/29/07, 1/22/08, 12/20/08, and 12/29/09 J.

Bursell, MD, Letters to Whom it May Concern and to Paul Hoffman, filed severally with 3/6/08 J.

Skogen, Griffin & Smith, Medical Summary, 12/23/08 and 12/30/09 A. O’Leary, Hoffman, Silver,

Gilman & Blasco, PC, Medical Summaries.

13. On April 2, 2008, six days before a hearing set for April 8, 2008, the employee’s first

attorney, Keenan Powell, withdrew from representation, after filing a hearing memorandum

supported by exhibits, including a statement of 88.2 hours attorney time (billed at $200 per hour)

and 4.5 hours paralegal time (billed at $90 per hour) on the case. (4/2/08 Notice of Withdrawal of

Counsel; 4/2/08 Employee’s Hearing Memorandum).

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14. On April 21, 2008, the employer and former attorney Powell submitted a Stipulation for

Attorneys Fees paying Ms. Powell $13,705 in attorney fees and $2,712.94 in costs up through the

date of Michael Banie’s deposition,4 reciting Ms. Powell’s success in obtaining voluntary payment

of TTD “through 10/26/2006” and a 7% PPI rating.

a) The amount of additional timeloss benefits paid by the employer due to Ms. Powell’s

representation is not stated in the Stipulation for Attorneys Fees, but after a series of amended

Compensation Reports, the total timeloss paid from June 28 to October 26, 2006 was $1,854.22.5

(1/8/09 B. McLoud, Northern Adjusters, Compensation Report, Blocks 17.c-.g, 38.a-.g).

b) The employer did not report payment of the 7% PPI ($12,390), apparently paid in

installments as TTD, until on or about January 8, 2009. (B. McLoud, Northern Adjusters,

Compensation Report, at Block 40, Remarks; but see Blocks 18 and 19 (failing to report or account

for PPI rate or payments)).

15. The April 21, 2008 stipulation recites that the employer continued to dispute TTD after

October 26, 2006, medical stability, and medical benefits for the left hip. The Stipulation recited

that there was no dispute as to the reasonableness of Ms. Powell’s fees and costs. This stipulation

was approved by the board. (4/22/08 Stipulation for Attorneys Fees (approved 5/14/2008)).

16. On May 19, 2008 the employer filed a Controversion Notice disputing TTD after October

26, 2006, PPI in excess of 7%, and medical and indemnity benefits for the left hip. (5/19/08

Controversion Notice, Blocks 15 & 16).

17. On May 23, 2008, Mr. Hoffman entered his appearance, and on May 28, 2008, filed the

third WCC in the case. (5/23/08 Entry of Appearance; 5/28/08 WCC).

18. On September 16, 2008, orthopedist John Schwartz, MD of Ketchikan recommended left

hip arthroscopy, “to see if the loose body can be found and extracted and inspect the labrum for

impingement lesions that may need to be debrided and/or decompressed,” stating “[t]here are not

many orthopedists that are facile with this approach and he would have to find one most likely in

4 See 7/3/08 K. Powell, Affidavit of Counsel Regarding Fees and Costs, at page 2, para. 4 (reciting “AIG had agreed to pay for my fees and costs through the date of the deposition” of Mr. Banie, attached to 7/3/08 Attorney LienAS 34.40.430. Ms. Powell’s claim for more than $5,000 in attorneys fees and costs incurred after Mr. Banie’s deposition, and prior to her withdrawal, were settled for $4,000. (9/21/09 Stipulation (approved 10/26/09)).5 $70.10+70.10+207.5+112.92+1393.60=$1,854.22.

7


the Seattle area that would do this.” (9/16/08 J. Schwartz, MD, Chart Note, filed with 9/25/08 A.

O’Leary, Hoffman, Silver, Gilman & Blasco, PC, Medical Summary (filed 9/25/08)).

19. On the eve of a merits hearing re-set for October 26, 2008,6 the parties entered into a partial

settlement that was reduced to a Partial Compromise and Release Agreement (“Partial C&R”)

signed on November 12 and 13, 2008, filed with the board on November 17, 2008. In the Partial

C&R, the employer committed to:

“withdraw the Controversion dated March 7, 2007 and May 19, 2008 and be

responsible under the terms of the Alaska Workers’ Compensation Act for

reasonable and necessary medical benefits and reimbursable travel expenses,

which although incurred in the future, are attributable to the employee’s lumbar

and left hip conditions described herein. It is also agreed that the right of the

employer and carrier/adjuster to contest liability for future medical benefits is

not waived under the terms of this settlement agreement.”

(11/12/08 Partial C&R, at page 9, para. 8 (emphasis added)).7

20. On December 22, 2008, the employer filed a petition for an order of reimbursement by the

Second Injury Fund (“SIF”), and on March 20, 2009 filed an Affidavit of Readiness for Hearing

(“ARH”) on this petition. (12/22/08 [Employer’s] Petition; 3/20/09 ARH).

21. Dr. Bursell referred the employee again to Dr. Downer in 2008, but in January 2009 Dr.

Downer opined that with the delay between injury and surgery, he felt the “degenerative process has

progressed past the point where joint preservation surgery would be a good option.” After his first

physical examination of the employee in March 2009, Dr. Downer stated that a total hip

replacement would be required eventually, but he was not willing to perform the surgery, citing in

part the employee’s current high doses of narcotics for pain relief. (1/8/09 P. Downer, MD, Letter to

J. Bursell, at page 1 and 3/18/09 P.R. Downer, MD, filed with 5/12/09 A. O’Leary, Hoffman, Silver,

Gilman & Blasco, PC, Medical Summary (filed 5/15/09); see also 5/11/10 Hearing, testimony of

Michael D. Banie).

6 See 8/26/08 Pre-Hearing Conference Summary, at page 2 (setting 10/14/08 hearing date); 10/13/08 Pre-Hearing Conference Summary (reciting tentative settlement, cancelling hearing). 7 The board panel reviewed and approved the stipulated attorneys fees, under AS 23.30.145. See Order Approving Attorneys Fee Stipulation, Partial C&R, at page 12 (filed and served 11/18/08). This stipulation resolved only past claims for benefits, the employee was represented by an attorney, and so the rest of the Partial C&R became effective on filing, without review by the board. AS 23.30.012(b).

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22. On May 12, 2009, paralegal Ms. O’Leary e-mailed a copy of Dr. Downer’s 1/8/09 letter and

3/18/09 chart note to Mr. Nelson, noting Dr. Bursell’s referral to John R. Green, MD of the

University of Washington. The same documents were served via mail attached to a medical

summary, and were received by the employer’s counsel on May 14, 2009. (5/12/09 A. O’Leary, E-

mail to S. Nelson, with attachments, filed with 4/21/10 [Employee’s] Notice of Intent to Rely (filed

4/21/10);8 5/12/09 A. O’Leary, Hoffman, Silver, Gilman & Blasco, PC, Medical Summary (filed

5/15/2009); 5/18/10 Hearing, statements of Mr. Smith and Mr. Nelson).

23. On May 19, 2009, the employer filed its petition to terminate TTD, asserting “the employee

has refused to proceed with hip arthroscopy, as recommended by four different physicians, that

would improve his condition,” citing the 12/21/06 opinion of Dr. Downer; the 3/12/08 opinion of

Dr. Blackwell (during his deposition); the 9/16/08 opinion of Dr. Schwartz; and the 10/2/08 opinion

of Dr. Bursell. The petition made no reference to the 1/8/09 and 3/18/09 documents from

Dr. Downer that had been served on the employer just days before. (5/19/09 [Employer’s] Petition).

24. On June 4, 2009, after examination, Dr. Green of the University of Washington also felt the

employee was not a good candidate for arthroscopy, recommending a comprehensive rehabilitation

strengthening program for hip and core musculature, weaning “completely off” narcotic pain

medication, and a total hip replacement procedure if pain persisted. (4/24/09 J. Bursell, MD, Letter

to J.R. Green, MD (requesting additional opinion on hip arthroscopy, noting Dr. Downer’s opinion),

filed with 5/5/09 A. O’Leary, Hoffman, Silver, Gilman & Blasco, PC, Medical Summary; 6/4/09

J.R. Green, MD, Chart Note, at page 3, filed with 6/15/09 A. O’Leary, Hoffman, Silver, Gilman &

Blasco, PC, Medical Summary (filed 6/16/09)).

25. In his Answer of June 10, 2009, the employee responded to the May 19, 2009 employer’s

petition asserting that “[t]he employer and carrier so interfered with employee’s attempts to obtain

8 The employee filed two different Notices of Intent to Rely on April 21, one consisting of out-of-pocket expense receipts, the second containing e-mail and other communications between the parties. The employer objected to the panel’s consideration of the receipts for expenses in the 4/21/10 Notice of Intent to Rely, arguing it was untimely as an employer generally has thirty days to evaluate and reimburse out-of-pocket expenses. The employee at the May 11, 2010 hearing suggested it was unnecessary for the panel to consider the 4/21 Notice of Intent that consisted of out-of-pocket expense receipts. In context, Mr. Nelson’s timeliness objection and Mr. Hoffman’s statements are interpreted to refer to the Notice of Intent appending the expense receipts, not the one appending e-mail communications. Both Notices of Intent to Rely were served and filed with the board on April 21, 2010, twenty or more days prior to the May 11, 2010 hearing, and so the employer’s objection is overruled as to the notice containing the e-mail communications. The board panel considered the e-mail documents. 8 AAC 45.120(f).

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medical care, that upon the case being settled the physicians had to reevaluate and further determine

what was appropriate care. Employee continues to seek medical care.”

26. On July 8, 2009, Dr. Bursell referred the employee for comprehensive pain management at

the Rehabilitation Institute of Washington (“RIW”), noting that after Dr. Green’s consultation that

arthroscopy is no longer recommended, and that “he will likely require a hip replacement, but that is

not recommended at this point.”. (7/8/09 J. Bursell, MD, Letter to P. Hoffman), filed with 7/13/09

A. O’Leary, Hoffman, Silver, Gilman & Blasco, PC, Medical Summary (filed 7/14/09)).

27. Ms. O’Leary served a copy of Dr. Bursell’s July 8, 2009 letter on July 13, 2009. (7/13/09

A. O’Leary, Hoffman, Silver, Gilman & Blasco, PC, Medical Summary).

28. On July 13, 2009, a Pre-Hearing Conference (“PHC”) attended by Mr. Hoffman and Mr.

Nelson was scheduled to begin at 2:00 p.m. The PHC actually began at 2:10 p.m., and lasted until

2:29 p.m. At this PHC, Mr. Nelson asserted that the 5/19/09 Petition for termination of TTD

benefits was not ripe for adjudication. Mr. Nelson also noted that the case was on-going with

continuing disputes, including fees being generated by Mr. Hoffman. (7/13/09 Recording of PHC;

7/13/09 PHC Summary).

29. In response to Mr. Hoffman’s invitation for the employer to withdraw the May 19, 2009

Petition to terminate TTD, Mr. Nelson replied by e-mail on July 13, 2009, “[w]e do not plan to

pursue anything on our Petition, if at all, until after the SIF Hearing.” (7/15/09 S. Nelson, E-

mail reply to P. Hoffman (emphasis added), replying to 7/13/09 P. Hoffman to S. Nelson, filed with

4/21/09 [Employee’s] Notice of Intent to Rely).9

30. On July 16, 2009, employer’s counsel sent an “informal discovery request” to the

employee’s counsel seeking, inter alia, all medical reports “relating to the . . . employee’s

entitlement to any workers’ compensation benefits, and/or the employee’s physical condition.”

(7/16/09 S. Nelson, Griffin & Smith, letter to P. Hoffman, attached as Exhibit A to 10/23/09

[Employer’s] Petition to Compel Discovery).

31. On August 10, 2010, Mr. Hoffman wrote via e-mail to the employer’s counsel noting RIW’s

policy of requiring pre-approval prior to initiating treatment, and that the intake coordinator for the

program, Dave Kidder of RIW had been referred by the adjuster to “the attorneys” to obtain prior 9 This document, in the board’s possession for 20 or more days prior to the 5/11/2010 hearing, is admitted and considered under 8 AAC 45.120(f). See note 10, supra. In addition, during the 5/11/2010 hearing both counsel alluded to Mr. Nelson’s 7/13/2009 e-mail, and thus both parties adopted the e-mail by admission, rendering the document admissible non-hearsay under ARE 801(d)(2), 8 AAC 45.120(h)(2) and 45.120(j).

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authorization of payment for treatment. (8/10/09 P. Hoffman, E-mail to C. Smith and S. Nelson,

Griffin and Smith, attached to 4/21/10 [Employee’s] Notice of Intent to Rely).

32. On August 19, 2009, Dave Kidder of RIW provided employer’s counsel its referral criteria

and cost information. The treatment program involved a multi-week treatment regimen, at a

minimum cost of $12,759 for an 18-day course of treatment. One referral criterion for RIW pain

management is that “surgery or other invasive treatment is not recommended.” (Exhibit 2,

pages 3-5 (emphasis added), attached to 10/27/09 [Employee’s] Answer to [Employer’s] Petition of

October 23, 2009).

33. On September 2, 2009, the employer through its counsel “authorized [Mr. Kidder at RIW]

to proceed with the telephonic assessment to determine if Mr. Banie is a candidate for [the RIW]

program,” 14 days after Mr. Kidder corresponded to Mr. Nelson on the costs of the RIW program.

(9/2/09 S. Nelson, Griffin & Smith, E-mail to D. Kidder, RIW, responding to 8/19/09 D. Kidder,

RIW, E-mail to S. Nelson re: “RIW Cost Info,” id. at page 2; see also attachment attached to

4/21/10 [Employee’s] Notice of Intent to Rely; see also 5/12/10 Hearing, at 8:41-42, Argument of

Mr. Nelson (identifying 9/2/09 authorization of telephonic assessment with RIW)).

34. Mr. Nelson declined to respond whether the employer would provide: (a) prior approval and

agreement for the employee’s wife to travel with and stay with the employee per doctor’s orders,

even though that had clearly been prescribed by Dr. Bursell; (b) agreement to pay per diem during

the period of treatment while the employee and his wife were housed in an RIW apartment in

Washington state while the employee was undergoing treatment; and (c) prior approval of the RIW

treatment program itself until he received “the results of the [RIW] assessment.” (9/10/09 S.

Nelson, Griffin & Smith, E-mail to P. Hoffman, Re: RIW Cost Info (Michael Banie v. Tongass

Business Center), replying to 9/10/10 P. Hoffman, E-mail to S. Nelson, Griffin & Smith, Re: same,

attached as Exhibit 2, pages 2-3, 10/27/09 [Employee’s] Answer to [Employer’s] Petition of

October 23, 2009).

35. On September 9, 2009, Drs. David Heard and James Moore of RIW issued a Telephone

Treatment Planning Note, served on the employer via medical summary on September 16, 2009.

This Telephone Treatment Planning Note concluded “[f]rom our review of the medical records, he

is not a candidate for surgical treatment. He most recently saw Dr. John Green, orthopedic

surgeon . . . who noted left hip pain with early degenerative changes and calcification of the

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ligmentum teres. . . .” (9/9/09 D. Heard, MD and J. Moore, Ph.D., RIW (emphasis added), attached

to 9/16/09 A. O’Leary, Hoffman, Silver, Gilman & Blasco, PC, Medical Summary (filed 9/17/09)).

36. On September 16, 2009, the employee filed an ARH on the employer’s May 19, 2009

petition to terminate TTD benefits. The employer opposed the ARH, stating that the employee was

not the petitioner. In its opposition, the employer did not state it was withdrawing the petition.

(9/23/09 Employee’s ARH; 9/25/09 Affidavit of S.E. Nelson in Opposition to ARH).

37. By October 15, 2009, the employer had still failed to approve the RIW treatment program.

(10/15/09 A. O’Leary, E-mail to P. Hoffman (reciting telephone call with Mr. Kidder), Exhibit 3,

page 1, attached to 10/27/09 [Employee’s] Answer to [Employer’s] Petition of October 23, 2009).

38. On October 15, 2009, the employee filed his petition to compel compliance with Section 8

of the Partial C&R, alleging, inter alia, the “Employer has repeatedly failed to authorize treatment”

in the RIW program. (10/15/09 [Employee’s] Petition, at page 2, and at Exhibit B).

39. On October 23, 2009, the employer filed a petition to compel discovery, attaching the July

16 discovery request, again without withdrawing the May 19, 2009 petition. (10/23/09

[Employer’s] Petition).

40. On November 3, 2009, the employer withdrew its May 19, 2009 petition to terminate TTD,

with reservation of “the right to assert additional defenses and affirmative defenses as they become

known through continuing discovery in this matter.” (11/3/09 Notice of Withdrawal of Employr’s

[sic] Petition to Terminate TTD Dated May 19, 2009, at page 2).

41. Also on November 3, 2009, the employer submitted its Answer to the employee’s October

15, 2009 petition, stating, inter alia:

“the employee seeks to commit the employer and carrier to guarantee payment for a treatment program based on costs supplied by RIW. The employer has no duty to preauthorize medical care, let alone medical care that a provider wishes to charge if those charges are outside the scope of AS 23.30.097 and the corresponding regulation under 8 AAC 45.082(i). The employer/carrier’s liability is limited to fees for medical treatment and services as promulgated by Alaska Statute, not for fees desired by medical providers. The employer/carrier is concerned that RIW is making Mr. Banie’s admission to their programs contingent upon an outright acceptance of their internally set fees. If RIW is willing to stipulate that its fees for any services provided to Mr. Banie are governed by AS 23.30 et seq, it would resolve this legitimate concern. The employer/carrier is under no obligation to incur liability outside of the AWCA. See also Delkettie v. Providence Alaska Medical Center, AWCB Decision No. 05-0198 (July 28, 2005)(holding medical provider’s claim for payment above the usual and customary charge allowed for services under AS 23.30.095 [renumbered in the 11/07/05 statutory revision to AS 23.30.097] and 8

12


AAC 45.084 was denied). . . . Additionally, the employer/carrier is concerned with the sufficiency of the “Telephonic Treatment Planning Note” prepared by David Heard, MD and James Moore, PH.D and whether such constitutes substantial evidence for the recommended treatment. . . . It is undisputed that on December 21, 2006, Dr. Downer recommended an arthroscopic hip procedure. It is undisputed that SIME physician Fred Blackwell, MD testified on March 12, 2008 that the employee needed an arthroscopic hip procedure. It is undisputed that on September 16, 2008, Dr. John Schwartz opined that Mr. Banie needed an arthroscopy of the hip. It is undisputed that on October 2, 2008, Dr. Bursell, in his deposition, concurred that arthroscopy of the hip was the likely next step to treat Mr. Banie’s hip pathology. Four physicians have recommended arthroscopy which raises a legitimate concern over the records presented to RIW by the Employee for completion of the “Telephonic Treatment Planning Note.” (emphasis added)

(11/3/2009 Answer, at pages 2-4, paras. II & III (emphasis added))

42. The 11/3/09 Answer made no reference to Dr. Downer’s later-expressed 2009 opinions that

arthroscopy was no longer indicated, nor to Dr. Green’s opinion against arthroscopy.

43. On or about November 4, 2009, the employer wrote a letter to RIW physicians. The letter

itself is not in the board’s file. (See 11/10/09 D. Heard, MD, Letter to S. Nelson, Griffin & Smith,

responding to “your letter of November 4, 2009”, attached to 11/13/09 S. Nelson, Griffin & Smith,

Medical Summary).

44. In their November 10, 2009 response to Mr. Nelson’s letter, Dr. Heard again described the

June 2009 evaluation by Dr. Green. This November 10 letter bears fax markings of facsimile

transmission to the office of Griffin & Smith on November 13, 2009. (see id., fax markings across

the top of the page).

45. Michael Banie testified that the insurer ultimately paid for the cost of his, and his wife

Kathleen’s, travel for the employee to be examined by Dr. Downer and Dr. Green, but “not without

a lot of legal help that I received from Paul [Hoffman] and Anne [O’Leary]” and that although most

medical travel expenses were paid, that payment was received “not without a fight,” and that it was

an “uphill battle.” (5/11/10 Testimony of Michael Banie).

46. Mr. Banie testified that his attorney paid for Suboxone medication that he could not himself

afford to pay, because the employer was unwilling to authorize payment in advance for the

medication, and would only reimburse for payment made by another. (Id).

47. The January 5, 2010 RIW initial evaluation, after physical exam and face-to-face intake,

was served on the employer on January 8, 2010. (1/8/10 A. O’Leary, Hoffman, Silver, Gilman &

Blasco, PC, Medical Summary).

13


48. The employee underwent treatment in the RIW program in Seattle, from January 5, 2010 to

February 26, 2010, with follow-up consultations by telephone in March and April 2010. (RIW

chart notes, filed with 4/14/10 A. O’Leary, Medical Summary).

49. The employee incurred out-of-pocket expenses incidental to participating in the RIW

program. (5/11/10 Hearing, testimony of Michael and Kathleen Banie; 1/21/10 Amended Notice of

Intent to Rely).

50. Of the unreimbursed out-of-pocket expenses incurred while the employee received

treatment in the RIW program, the total disputed by the employer amounts to $222.97, identified

as:

Date of receipt Vendor Total of Receipt Total, Disputed Items

1/04/10 Safeway $257.59 $25.26

1/08/10 Walgreens $16.38 $5.97

1/09/10 Bartell Drugs 127.79 71.22

1/10/10 Safeway 195.33 41.86

1/14/10 Safeway 97.52 30.68

1/16/10 Safeway 116.37 47.98

TOTAL: $222.97

(See items circled or surrounded by a square on Mr. Nelson’s marked-up copy of the Employer’s

Notice of Intent to Rely (including the word “NOTES” on the first page) (filed 5/11/2010); cf.

1/21/10 [Employee’s] Amended Notice of Intent to Rely (deleting certain items from

reimbursement request); 5/11/10 Hearing, statements of Mr. Nelson; 5/4/10 Employer’s Br. at 4-5).

51. With the sole exception of $9.19 claimed for slow-release iron for Kathleen Banie, all of the

disputed out-of-pocket expenses were reasonably purchased in lieu of cooked meals or lodging by

day (with the customary daily change of bedding and daily cleaning services), given the apartment

lodging provided for Mr. Banie’s treatment in Seattle. (5/11/09 proceedings, testimony of Michael

and Kathleen Banie; 1/21/10 [Employee’s] Amended Notice of Intent to Rely).

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52. As of the January 20, 2010 pre-hearing conference, Mr. Nelson stated that the employer had

not agreed to pay for the expense of the RIW program, that the employer was “evaluating payment”

of the program. (1/20/10 Pre-Hearing Conference (statements of Mr. Nelson); see 1/20/10 Pre-

Hearing Conference Summary, at page 3).

53. The approximate value of TTD at the employee’s current TTD rate, for the 24-week period

from May 19, 2009 to November 13, 2009, is $9.000.10

54. The employee made a written claim to the board for medical benefits as the progression of

his condition required. (5/22/07 and 5/28/08 WCCs).

55. The employer’s petition to terminate TTD was a controversion-in-fact of TTD from the date

of its filing, until it was withdrawn.

56. The employer resisted the payment of TTD by filing its petition to terminate TTD benefits,

beginning on May 19, 2009 and continuously until that petition was withdrawn on November 3,

2009, causing the employee’s law firm to incur reasonable and necessary attorney time, paralegal

time, and expenses to be prepared to respond to and overcome that petition.

57. Mr. Nelson’s statement that in a July 15, 2009 e-mail the employer clarified it did not intend

to pursue the May 19 TTD termination petition was contradicted by:

(a) the qualifying language of the July 15 e-mail itself (which left open the possibility

that the petition might be continued “after the SIF hearing,”)

(b) the employers’ subsequent conduct, including its:

i. four-month delay in withdrawing the May 19 petition (not withdrawn until

November 3, 2009);

ii. failure to withdraw the May 19 petition at the July 13, 2009 PHC, and relating

“continuing disputes” during that PHC;

iii. October 26, 2009 petition to compel responses to the July 19, 2009 discovery

request;

iv. failure to respond to the September 9, 2009 telephonic evaluation by Drs. Heard and

Moore;

v. failure to withdraw the May 19 petition in opposing the employee’s September 16,

2009 ARH, and in answering the employee’s October 15, 2009 petition.

1024 weeks x $375.20/week =$9,000.48.

15


All of this conduct was consistent with a litigant intending to pursue its May 19, 2009 petition to

terminate TTD payments.

58. With the passage of time, the progression of the employee’s condition required a course of

treatment by RIW consisting of continuing and multiple treatments of a similar nature. (E.g.,

7/8/09 J. Bursell, MD, Letter to P. Hoffman).

59. Notwithstanding its statement the controversions were withdrawn in the Partial C&R, by its

conduct, the employer controverted-in-fact the employee’s claim for a course of pain management

treatment (as was ultimately provided by RIW), beginning on May 19, 2009 (on the filing of the

petition to terminate TTD that ignored Dr. Downer’s opinion of necessity for a pain management

treatment program), through November 3, 2009 (when the employer simultaneously filed a

withdrawal of the May 19, 2009 petition but also filed an Answer showing continuing advocacy for

arthroscopy) and continuing until at least January 20, 2010 (at the pre-hearing conference at which

Mr. Nelson stated that prior approval of the continuing course of treatment at RIW had not been

approved).

60. The testimony of the employee and his wife Kathleen Banie, that the efforts of attorney

Hoffman and paralegal O’Leary were necessary to successfully obtain reimbursement for out-of-

pocket expenses and treatment by RIW, is credible.

61. The employer’s argument that it first needed clarification why the employee was not seeking

arthroscopy, before proceeding to authorize evaluations for and approval of the prescribed pain

management program at RIW, is not credible in light of the clearly expressed opinions of Dr.

Downer, received by the employer on May 14, 2009, and later confirmed by the opinions of Dr.

Green, served on June 15, 2009. (5/12/09 and 6/15/09 A. O’Leary, Medical Summaries (conveying

reports of Dr. Downer and Dr. Green).

62. The employer resisted the authorization of treatment by RIW.

63. The employer resisted the payment of certain out-of-pocket expenses incurred by the

employee and his wife.

64. The efforts of the employee’s counsel Mr. Hoffman and paralegal Ms. O’Leary were

successful in defending the employee’s entitlement to TTD in the face of the employer’s petition to

terminate TTD.

65. The efforts of the employee’s counsel Mr. Hoffman and paralegal Ms. O’Leary were

successful in obtaining the continuing course of treatment by RIW.

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66. The panel has reviewed the attorney fee and expense affidavits and the attached statements

of work performed and expenses incurred.

67. Mr. Hoffman affied he worked 9.3 hours from May 21, 2009 to November 3, 2009, and

billed this work at $300 per hour, or $2,790, and Ms. O’Leary worked 17.1 hours from May 21,

2009 to October 27, 2009, and billed this work at $85 per hour, or $1,453.50. Including out of

pocket expenses of $136.87 and CBJ taxes of $212.18, the total attorneys fee and expense claim for

work performed from May 19, 2009 to November 3, 2009 is $4,592.55. (11/9/09 Affidavit of

Attorneys Fees, para. 4 and Attachment at pages 2-8).

68. Mr. Hoffman affied working 21.1 hours from November 3, 2009 to April 23, 2010, and

billed this work at $300 per hour, or $6,330, and Ms. O’Leary worked 61.8 hours from October 29,

2009 to April 29, 2010, and billed this work at $85 per hour, or $5,253.00. Including out of pocket

expenses of $720.77 and CBJ taxes of $375.00, the total attorneys fee and expense claim for work

performed from October 29, 2009 to April 23, 2010 is $12,303.77. (5/4/10 Affidavit of Attorney’s

Costs and Fees, para. 4 and Attachment, at pages 2-20).

69. Mr. Hoffman’s and Ms. O’Leary’s billing rates are reasonable and appropriate, taking into

consideration their skill, education and experience, and the rates paid for services of their caliber in

other board proceedings and within the community.

70. Mr. Hoffman’s 30.4 hours of attorney time was reasonable, necessary, and decisive to

effectuate the provision of benefits to the employee, in response to the employer’s controversion-in-

fact or resistance to the benefits sought by the employee.

71. Ms. O’Leary’s 78.9 hours of paralegal time were reasonable, necessary, and decisive to

effectuate the provision of benefits to the employee, in response to the employer’s controversion in

fact or resistance to the benefits sought by the employee.

72. Based on the panel’s experience, judgment, observations, the unique and peculiar facts of

this case, and the inferences drawn from all of the above, the total attorney fees, paralegal fees, and

other fees and expenses claimed were reasonable, necessary, and decisive to effectuate the provision

of benefits to the employee.

PRINCIPLES OF LAW

1. On medical benefits:

AS 23.30.095, Medical treatments, service, and examinations, provides, in part:

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(a) The employer shall furnish medical, surgical, and other attendance or treatment, nurse and hospital service, medicine, crutches, and apparatus for the period which the nature of the injury or the process of recovery requires, not exceeding two years from and after the date of injury to the employee. . . . [I]f continued treatment or care or both beyond the two-year period is indicated, the injured employee has the right of review by the board. The board may authorize continued treatment or care or both as the process of recovery may require.

* * *

(c) A claim for . . . treatment requiring continuing and multiple treatments of a similar nature is not valid and enforceable against the employer unless, within 14 days following treatment, the physician or health care provider giving the treatment or the employee receiving it furnishes to the employer and the board notice of the injury and treatment, preferably on a form prescribed by the board. . . . When a claim is made for a course of treatment requiring continuing and multiple treatments of a similar nature, in addition to the notice, the physician or health care provider shall furnish a written treatment plan if the course of treatment will require more frequent outpatient visits than the standard treatment frequency for the nature and degree of the injury and the type of treatments. The treatment plan shall be furnished to the employee and the employer within 14 days after treatment begins. The treatment plan must include objectives, modalities, frequency of treatments, and reasons for the frequency of treatments. If the treatment plan is not furnished as required under this subsection, neither the employer nor the employee may be required to pay for treatments that exceed the frequency standard.

8 AAC 45.082(i)(3)(C), Medical treatment, provides that:

If the type of treatment or service the employee received is not included in the organization’s data and the employer has evidence that the fee exceeds the usual, customary and reasonable fee charged in the community for the treatment or services rendered, the employer shall pay the physician based on the employer’s evidence. In accordance with AS 23.30.110 and 8 AAC 45.070, the physician may request a hearing for a board determination of the usual, customary, and reasonable fee in the community for the treatment or service, and the board will determine and award the usual, customary and reasonable fee.

8 AAC 45.084(e), Medical travel expenses, provides that:

A reasonable amount for meals and lodging purchased when obtaining necessary medical treatment must be paid by the employer if substantiated by receipts submitted by the employee. Reimbursable expenses may not exceed the per diem amount paid by the state to its supervisory employees while traveling.

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In Summers v. Korobkin Const., 814 P.2d 1369, at 1371-72 (Alaska 1991), citing Kauffman v.

Workmen’s Compensation Appeals Bd., 273 Cal.App.2d 829, 78 Cal.Rptr. 620, 627 (1969) and

McAree v. Gerber Prods. Co., 342 A.2d 608, 611 (R.I. 1975), the Alaska Supreme Court held:

There is no requirement that the injured worker have incurred unpaid medical expenses [to make a claim for medical benefits]. . . . [W]e believe that an injured worker who has been receiving medical treatment should have the right to a prospective determination of compensability. . . . Injured workers must weigh many variables before deciding to pursue a course of medical treatment or related procedures. A salient fact in many cases will be whether the indicated treatment is compensable under AWCA.

2. On attorneys fees and expenses:

AS 23.30.145, Attorney fees, provides, in part:

(a) Fees for legal services rendered in respect to a claim are not valid unless approved by the board, and the fees may not be less than 25 per cent on the first $1,000 of compensation or part of the first $1,000 of compensation, and 10 percent of all sums in excess of $1,000.00 of compensation. When the board advises that a claim has been controverted, in whole or in part, the board may direct that the fees for legal services be paid by the employer or carrier in addition to compensation awarded. In determining the amount of fees the board shall take into consideration the nature, length, and complexity of the services performed, transportation charges, and the benefits resulting from the services to the compensation beneficiaries.

(b) If an employer fails to file timely notice of controversy or fails to pay compensation or medical and related benefits within 15 days after it becomes due or otherwise resists the payment of compensation or medical and related benefits and if the claimant has employed an attorney in the successful prosecution of his claim, the board shall make an award to reimburse the claimant for his costs in the proceedings, including a reasonable attorney fee. The award is in addition to the compensation or medical and related benefits ordered.

An attorney representing an employee may receive attorney fees only upon board approval, for any

fee in excess of $300. AS 23.30.260.

8 AAC 45.180(b) requires that “[a] request for approval of a fee to be paid by an applicant must

be supported by an affidavit showing the extent and character of the legal services performed.”

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Attorney fees under the act should be reasonable and fully compensatory, considering the

contingency nature of representing injured workers, to insure adequate representation. The board

must recognize that an attorney representing an employee receives a fee award only upon board

approval, when the employee prevails on the merits of a claim, and the board must consider the

nature, length, and complexity of the services performed, the resistance of the employer, as well as

the benefits resulting from the services obtained, when determining reasonable attorney fees for the

successful prosecution of a claim. Wise Mechanical Contractors v. Bignell, 718 P.2d 971, 974-975

(Alaska 1986).

To award attorneys fees under AS 23.30.145(a), if the employer has filed no Controversion Notice,

the board must find there has been a controversion in fact. A controversion in fact occurs when the

employer takes some action in opposition to the employee’s claim, after the claim has been filed.

Harnish Group, Inc. v. Moore, 160 P.3d 146, 151-52 (Alaska 2007); Wien Air Alaska. v. Arant, 592

P.2d 352, 364-65 (Alaska 1979).

A “claim” is a written statement of application for benefits that is filed with the board. Harnish

Group, Inc. v. Moore, 160 P.3d 146, 152 n. 18 and accompanying text (Alaska 2007), citing

AS 23.30.395 and Jonathan v. Doyon Drilling, Inc., 890 P.2d 1121, 1123.

Even though no controversion has been filed, or no controversion in fact has occurred, the board

may award fees under AS 23.30.145(b) if the employer or carrier contests the amount of

compensation owed, delays payment, or otherwise resists payment for the benefit. “In such cases, if

the claimant has hired an attorney in successful prosecution of his claim, AS 23.30.145(b) entitles

him to reasonable attorney’s fees in addition to any added compensation that is awarded to him.”

Bradley v. Mercer, 563 P.2d 880, 881 (Alaska 1977).

In a case where the employer has resisted payment on a claim, and an attorney is retained to pursue

a claim on behalf of an employee, and the attorney’s representation resulted in the payment on the

claim without an award, the board may award fees for the attorney’s work under AS 23.30.145(b).

Harnish Group, Inc. v. Moore, 160 P.3d 146, 152-54 (Alaska 2007).

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In determining a reasonable fee under AS 23.30.145(b), the board is required to consider the

contingent nature of the work for an employee in workers’ compensation cases, the nature, length

and complexity of the services performed, the resistance of the employer or carrier, and the benefits

resulting from the services performed. Wise Mech. Contractors v. Bignell, 718 P.2d 971, 973, 975

(Alaska 1986).

While the board in dictum in one case suggested an attorney fee claim may be questioned on the

ground that the attorney fee affidavit “block-billed,” with respect to the award of attorney fees

under Civil Rule 82, the Alaska Supreme Court has held “a table with short descriptions of work

performed, arranged by billing attorney and date” without requiring greater specificity, is an

adequate itemization of time spent in a case to support an award of attorney fees. Matanuska

Elec. Ass’n v. Rewire the Board, 36 P.3d 685, 698 (Alaska 2001)(finding affidavit of counsel

adequate to support attorney fee claim under Civil Rule 82); Lawrence v. Channel Sanitation

Corp., AWCB Dec. No. 97-0121 (May 30, 1997).

ANALYSIS

A. Shall the board award $222.97 as reasonable meal or lodging expenses incurred while obtaining necessary medical treatment?

8 AAC 45.084 provides for reimbursement for reasonably-incurred meals and lodging “when

obtaining necessary medical treatment.” Here, given the employee’s physical limitations and the

predicted course of treatment including anticipated withdrawal from narcotics, there was a

medically-prescribed companion. The employer did not dispute the necessity of Kathleen Banie

accompanying her husband and assisting him during the course of treatment in Seattle. Ordinarily,

an employee and traveling companion would be entitled to reimbursement for actual expenses for

meals and lodging, with meal reimbursement limited to the per diem rate provided for State

employees. 8 AAC 45.084(e). While it may be true that Kathleen Banie would have needed

21


groceries for her own sustenance whether she accompanied Mike Banie or not, it is also true that

had

Ms. Banie not accompanied her husband, the employee would have required a hired companion,

whose out-of-pocket meal expenses the employer would have been obliged to pay under the

regulation. By accompanying her husband, Kathleen Banie removed herself from the employment

market in Ketchikan, and thus reduced her earning capacity, such that reimbursement for meal

expenses was entirely appropriate for her. The employer has submitted no evidence that the out-of-

pocket expenses claimed for groceries shared by Mike and Kathleen Banie exceeded the actual per

diem for meals for both of them. In the absence of proof that grocery items for this type of long-

term medically-related travel with a companion exceeded the daily per diem rate, all of the disputed

grocery items claimed are therefore compensable.

For non-food items, Kathleen Banie and Mike Banie provided persuasive testimony as to the

reasonableness of all items claimed, with the exception of the $9.19 claimed for slow-release iron

pills for Ms. Banie’s use. Because of the lodging in an apartment that did not have daily cleaning

services, and the lack of sufficient bedding and other supplies that a day-to-day lodging would

ordinarily supply, the non-food grocery items were reasonable and compensable.

B. Shall the board award attorneys fees and costs for work performed in response to the employer’s May 19, 2009 petition to terminate TTD?

The panel recites at length the history preceding the Partial C&R, to demonstrate that the case file

reflects a continuing course of delay and resistance by the employer to payment of medical

treatment of the left hip. While certainly the employer is not entirely responsible for the delay in

consultation with Dr. Downer, its conduct did contribute significantly to the delay. By the time the

employee was physically examined by Dr. Downer in March 2009, nearly three years had passed

from the date of injury. It would be a very remarkable case in which an employee’s physical status

would remain the same between the 2006 injury and the March 2009 initial face-to-face

consultation between patient and surgeon. Dr. Downer’s change in opinion on the efficacy of

22


arthroscopy, after such delay between reported injury and orthopedic surgical examination, is

unsurprising. What is surprising in this case is the employer’s intransigence in accepting

Dr. Downer’s 2009 opinion, Dr. Green’s 2009 opinion, and the RIW physicians’ agreement with

those opinions, that hip arthroscopy was no longer indicated given the patient’s condition on

consultation and physical examination in 2009, three years after injury.

It is no answer that the employee should have obtained examination by Dr. Downer or Dr. Green

earlier. The employee had lost his income due to the employer’s termination; medical benefits (and

related travel) to treat the left hip had been controverted; and the employee living in Ketchikan was

geographically isolated from Drs. Downer and Green who practice in Seattle. Consultation with

orthopedist Dr. Schwartz in Ketchikan did not occur until September 2008, after the employer

agreed to withdraw its controversion of treatment of the left hip; by then it was two years post-

injury. Dr. Schwartz, in recommending arthroscopy in September 2008, was careful to note “[t]here

are not many orthopedists that are facile with this approach and he would have to find one most

likely in the Seattle area that would do this.” Thus Dr. Schwartz admitted he did not feel competent

performing the hip arthroscopy. The record shows no referral by Dr. Schwartz or

Dr. Bursell to any other orthopedic surgeon in Southeast Alaska to perform the hip arthroscopy.

The employer’s filing of a petition to terminate TTD was a controversion-in-fact of TTD. Although

payment of TTD continued, the employer was asserting a position contrary to the continuation of

TTD benefits. The employer presented a petition that could have supported a finding of

overpayment and withholding of future benefits. Even if not a controversion-in-fact, the TTD

termination petition, and the delay in withdrawal of that petition, showed the employer “otherwise

resisted” the payment of TTD from May 19, 2009 until November 3, 2009.

Because of the employer’s continued pursuit of the TTD termination petition, the employee was

obliged to engage an attorney to respond to it. Mr. Hoffman’s and Ms. O’Leary’s work ultimately

succeeded in effecting withdrawal of the May 19, 2009 petition. The attorney and paralegal time

invested to refute the May 19, 2009 petition was prudent and justified. The employee’s attorney’s

efforts to persuade the employer to approve the medical treatment his providers were actually

recommending were reasonably incurred to persuade the employer that the TTD petition was at

23


least uninformed and ill-advised, if not meritless and superficial. The employee is entitled to

reasonably-incurred attorneys fees and expenses for the time period between May 19 – November 3,

2009, for responding to the employer’s resistance to payment of TTD, and successfully defending

the employee’s continued entitlement to TTD. AS 23.30.145(b); Harnish Group, Inc. v. Moore,

160 P.3d 146, 152-53 (Alaska 2007); Bradley v. Mercer, 563 P.2d 880, 881 (Alaska 1977).

C. Shall the board award attorneys fees and costs for work performed regarding the employer’s October 15, 2009 petition to compel the employer to comply with Section 8 of the C&R?

The reservation language in the Partial C&R left open the possibility that disputes might arise

between the parties regarding the compensability of specific medical procedures. Disputes did

arise, and from the panel’s review of the record, these disputes were not the fault of Mr. Hoffman,

Ms. O’Leary, the employee, Kathleen Banie, or the employee’s treating providers.

1) Controversion-in-fact of the RIW treatment program

The employee filed a claim for continuing medical benefits, for treatment “which the nature of the

injury or the process of recovery requires.” AS 23.30.095(a). The employer’s conduct relating to

the RIW program showed that it controverted-in-fact that treatment. The employer’s argument that

it was not required under the Act to pay in advance for the treatment program until the services had

been delivered fails to refute the fact that the employer’s conduct constituted a controversion-in-fact

of a claimed benefit. Many times an employer or carrier controverts a particular course of

treatment, or treatment of a particular condition or body part, by filing a Controversion Notice. This

is a controversion of future treatment. AS 23.30.095(c) requires a treating provider who plans to

engage in a continuing course of treatment in the future to provide certain information, including a

treatment plan, explanation of modalities of treatment, frequency of treatment, etc. Requiring

provision of a treatment plan for a continuing course of treatment would serve little purpose if the

law did not oblige the employer or carrier to give notice of its intention to controvert the anticipated

treatment plan. See Wien Air Alaska v. Arant, 592 P.2d 352, 365 (Alaska 1979)(awarding attorneys

fees for controversion-in-fact, to avoid creating an incentive for employers to withhold notice of

24


controversion); Summers v. Korobkin Const., 814 P.2d 1369, 1372 (Alaska 1991)(employees have

the right to determination of entitlement to prior authorization for needed medical treatment).

Regardless whether and when the employer was obligated to controvert the RIW program, the

record shows the employee made a claim for prior authorization for the RIW program no later than

July 13, 2009, when the employee’s pending, on-going claim for medical benefits relating to

treatment of the left hip was shown to include referral to the RIW program. (7/13/09 A. O’Leary,

Medical Summary (containing Dr. Bursell’s referral to RIW)). Communications to the employer in

July and August 2009 made clear prior authorization for a recommended course of treatment was

sought. The employer silently failed to provide prior authorization, but in November 2009, in its

Answer to the employee’s petition to compel compliance with Paragraph 8 of the Partial C&R,

made clear it opposed prior authorization of the treatment program. The fact the employer

continued to ignore relevant evidence – Dr. Downer’s 2009 opinions, which were received by the

employer on May 14, 2009, and later Dr. Green’s opinions, which were served on the employer on

June 15, 2009 – supports the inference that the employer’s silence was not mere investigation or

resistance based on a general policy against pre-authorizing services, but actual opposition to the

merits of treatment.

Because the employer’s conduct opposed the employee’s claim, was a controversion-in-fact of the

employee’s entitlement to medical benefits, and the employee ultimately prevailed in obtaining the

claimed medical benefits, there is a basis for award of reasonable attorneys fees and expenses under

AS 23.30.145(a) from July 13, 2009 through April 23, 2010. This entitlement is independent of the

basis for entitlement to attorneys fees and expenses due to the successful response to the employer’s

May 19, 2009 TTD petition.

2) Resistance to the RIW program:

Even if the employer’s conduct was not a controversion-in-fact, the employer is entitled to attorney

fees and expenses for successfully overcoming the employer’s resistance to that program. The

employer’s failure to cite the clearly-expressed opinions of Dr. Downer and Dr. Green makes sense

only in the context that the RIW program included a referral criterion that “surgery or other invasive

treatment” is not recommended. Exh. 2, page 4, attached to 10/27/09 [Employee’s] Answer to

25


[Employer’s] Petition of October 23, 2009). Thus by refuting the conclusion of the RIW physicians

that surgery was not indicated, the employer was refuting a referral criterion for the treatment, and

in essence opposing the RIW treatment program. The employer asserted as late as November 3,

2009 – well after Dr. Green’s and Dr. Downer’s more recent opinions had been served – that it was

“clearly erroneous” for RIW physicians to find the employee was not a candidate for surgery. The

argument the RIW physicians did not clearly explain themselves until a November 10, 2009 letter is

specious – the November 10 letter merely repeated Dr. Green’s previously communicated expert

orthopedic assessment that was described in the RIW’s September 9, 2009 Telephonic Treatment

Planning Note.

The employer’s conduct of selectively relying on evidence tending to refute the referral criteria for

the RIW program, while ignoring and failing to cite evidence supporting the referral, is reasonably

viewed as an effort to undermine the referral to the RIW treatment program. This was as much an

effort to undermine the RIW program as was the employer’s efforts in the Moore case to prolong

the reemployment process in order to undermine a PTD claim. The Alaska Supreme Court in

Moore found such oppositional conduct sufficient to constitute a resistance on the claim, and

ordered an award of fees and costs under AS 23.30.145(b). Harnish Group, Inc. v. Moore, 160 P.3d

146, 152-54 (Alaska 2007). The same result is warranted here.

The employer’s assertion in its Answer to the employee’s October 23, 2009 petition, that RIW’s

fees are in excess of the Alaska fee schedule, is unsupported by any evidence as to what the Alaska

fee schedule provides for reimbursement of the multi-disciplinary RIW program. The board’s

regulation requires the employer to “pay . . . based on the employer’s evidence” the lower usual,

customary and reasonable fees charged in the community, and the medical provider may decide

whether to pursue the difference. 8 AAC 45.082(i)(3)(C). There is no evidence of the ordinary,

customary and reasonable fees in the Seattle area or Alaska for the treatment program or services

provided by RIW, much less that such fees are lower than RIWs. So there is no factual basis for the

employer’s resistance to authorization on the argument that RIW fees were inflated. Even if there

were evidence that RIW’s fees were higher than others in the community, the appropriate course for

the employer to take would have been to authorize the treatment at the lower, prevailing rate within

the community, and clearly communicate that authorization to the provider so that treatment could

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begin. Alternatively, if an employer truly believes a multi-disciplinary program of continuing

treatments is not medically-indicated, the appropriate course is to candidly file a controversion.

The employer stated that by January 20, 2010 it had not authorized the RIW program, and yet by the

May 11, 2010 hearing the employer stated it was paying on the RIW program. The employee is

entitled to an award of fees and expenses for the success in obtaining payment after employer’s

resistance of prior authorization of the RIW program.

D. Reasonableness of the employee’s attorneys fees, paralegal fees, and other expenses claimed:

The employer makes a general argument the employee’s attorney and paralegal hours are inflated

and unreasonable, identifying only two specific billings to support the argument.11 The employer’s

first specific objection was that Mr. Hoffman excessively billed 0.9 hours on June 4 and 10, 2009 to

draft a response to the May 19, 2009 petition to terminate TTD benefits. In light of the voluminous

record, the amount of time claimed to prepare this document was not excessive. Second, the

employer objected to Mr. Hoffman’s billing of 0.9 hours to send an e-mail, and prepare for and

attend a pre-hearing conference, because Mr. Nelson billed only 0.4 hour to attend a July 13, 2009

conference. The board’s record shows that the conference, scheduled to begin at 2:00 p.m., started

10 minutes late and lasted until 2:29 p.m. Mr. Hoffman was obliged to be ready for the pre-hearing

conference at 2:00 p.m., and properly billed for the time spent waiting for it to begin. Because the

record in this case is extensive, and the documents regarding the RIW program dispute are

voluminous, a billing of 0.9 hr that includes both for preparation and attendance at the pre-hearing

conference, and drafting and sending an e-mail, was reasonable. The employer objected to

“multiple paralegal charges for secretarial functions” such as preparing mail and sending facsimiles,

but from review of the fee affidavits and documents in the record, Ms. O’Leary’s work was not

clerical in nature.

11 The employer objected to a September 2, 2009 billing entry, describing it as “almost half an hour” for review of messages from the client. The September 2 2009 entry, however, is for 0.2 hour, and does not support the employer’s objection.

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The employer argued that Mr. Hoffman’s work of 30.8 hours (billed at $300 per hour) and

Ms. O’Leary’s work of 78.9 hours was less efficient and effective than the 88.2 hours of attorney

time (billed at $200 per hour) and 4.5 hours of paralegal time (billed at $90 per hour) by Ms.

Powell, prior to her withdrawal. At the time of her withdrawal, Ms. Powell had successfully

obtained payment of TTD for the employee for the period through October 2006 (worth a total of

$1,854.22), and a 7% PPI rating, based on the opinion of SIME Dr. Blackwell (worth $12,390),

roughly $14,000 worth of benefits for the employee. For this work, the employer paid Ms. Powell

$16,417.94, and continued to deny the compensability of medical benefits, as well as TTD after

October 2006.

As found above, the employer controverted-in-fact and resisted the RIW program, which for the

usual 18-day course would have cost not quite $13,000. Mr. Hoffman’s efforts on the employee’s

behalf also caused the employer to withdraw its petition to terminate TTD. This work prevented the

employee from having to pay $9,000 as an overpayment for TTD paid during the pendency of the

TTD termination petition (or perhaps more, depending upon when the employer alleged the start of

the failure to seek treatment). In this way, the $16,896.32 claimed for Mr. Hoffman’s and Ms.

O’Leary’s work and expenses has been at least as efficient and productive as Ms. Powell’s work in

the case, given that at least $22,000 worth of benefits or more were at stake in the litigation over

continued entitlement to TTD, and for disputed medical benefits.

The employer asserted that the board could not award fees for services that were “block-billed,”

citing only the decision in Lawrence v. Channel Sanitation Corp., AWCB Dec. No. 07-0121

(May 30, 1997). In that decision, the employer at oral hearing challenged an attorney fee

affidavit for “block-billing” that was too imprecise to account for time reported. The employer’s

argument was rejected as untimely. In dictum, the panel suggested that more precision should be

demanded of attorney fee affidavits. Lawrence, at pages 5-6, n. 3 and accompanying text. No

subsequent board decision has been found following the Lawrence dictum.

Process and procedure before the board is supposed to be “as summary and simple as possible.”

AS 23.30.005(h). The board’s regulation 8 AAC 45.180(d)(1) requires only an itemization of the

hours expended and a showing of the extent and character of the work performed. This regulation

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does not require a strict, issue-by-issue, minute-by-minute record of how time is spent. It is

doubtful the standard for precision in attorney fee affidavits before the board is higher than the

standard set for attorney fee affidavits under the Alaska Civil Rules of Procedure. The Alaska

Supreme Court has stated that an attorney fee affidavit under the ARCivP was sufficient if

accompanied by a “table with short descriptions of work performed, arranged by billing attorney

and date. . . . No greater specificity was required.” Matanuska Electric Ass’n v. Rewire the Board,

36 P.3d 685, 698 (Alaska 2001). Rewire states a more persuasive standard for precision in attorney

fee affidavits, whereas Lawrence defines no standard at all except to criticize an ill-defined practice

amorphously termed “block-billing.” Lawrence is not persuasive authority.

Mr. Hoffman’s affidavits with attachments meet the Rewire standard. The fee affidavits contain

sufficient detail to show the time spent by Mr. Hoffman and Ms. O’Leary was reasonable, not

excessive, and necessary for the result obtained in light of the opposition mounted and positions

taken by the employer and its representatives. Mr. Hoffman did not seek any workers’

compensation benefits for Mr. Banie that were denied by the board. Therefore, no reduction in

Mr. Hoffman’s fee claim is warranted due to a failure to obtain the benefits sought.

E. Shall the board panel relax its procedural rules regarding the paralegal fees and

Mr. Nelson’s authority to act?

The parties’ arguments under 8 AAC 45.178 and 45.180(f)(14)(D) conflict with the mandate of

AS 23.30.001(1) and AS 23.30.005(h). Zealous advocacy on a technically correct point of minutia

sometimes overlooks common sense. Mr. Hoffman’s affidavit, coupled with the many filings

bearing Ms. O’Leary’s original signature, verify Ms. O’Leary’s time spent in the case is not

overblown or excessive. It would be manifestly unjust to deny the claim for paralegal expenses on

the lack of a vouching paralegal affidavit, when the affidavit by the supervising attorney verifies the

paralegal time spent, and the work is so well-documented in the voluminous documents on file. In

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these circumstances the board panel relaxes the strict application of 8 AAC 45.180(f)(14)(D), and

rejects this aspect of the employer’s objection to award of paralegal fees.12

Similarly, a spirited attack was launched on Mr. Nelson’s authority, due to a technical failure to

comply with 8 AAC 45.178(a). The employee’s position overlooks the fact that Mr. Nelson acted

as an employee of the Alaska law firm of Griffin & Smith, and under circumstances showing the

law firm at all times represented the employer and carrier. This is an ordinary delegation by

lawyers, that occurs on a daily basis before the board, by law firms that represent both employees

and employers. While a strict reading of 8 AAC 45.178 might technically require that every non-

attorney representative before the board obtain and file the written authorization of the client as

specified by the regulation, even though the actual representation agreement is between the firm and

the client, this would elevates form over substance, and certainly is contrary to the spirit of

AS 23.30.001 and 23.30.005(h). Because manifest injustice would result from an effective default,

the board panel waived the technical requirement of 8 AAC 45.178(a), and denied the employee’s

petition to strike. In any event the employer cured this defect. 13

The employee’s argument and evidence that Mr. Nelson’s work constitutes the unauthorized

practice of law is beyond the board’s jurisdiction to decide, and irrelevant in light of the board’s

regulation which does not prohibit representation before the board by non-attorneys.

CONCLUSIONS OF LAW

1. The employee is entitled to reimbursement of out-of-pocket expenditures for medically-

related travel in the amount of $213.78 under AS 23.30.095 and 8 AAC 45.084(e).

2. The employee is entitled to payment of $4,592.55 for attorney fees and costs incurred in

responding to the employer’s May 19, 2009 petition to terminate TTD benefits under AS

23.30.145(a) and (b).

12 The requirement filing of an attorney fee affidavit 3 days before hearing has been held inapplicable to a paralegal affidavit. House v. Bechtel, AWCB Dec. No. 09-0184, at pages 40-41 (Dec. 28, 2009). This decision suggests that Ms. O’Leary’s affidavit was not untimely, but neither party raised this point. The appropriate approach here is to decide the attorneys fee and expense petition, including the paralegal fees, on the written record as closed on May 11, 2010. 13 5/17/10 [Employer’s] Notice of Filing.

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3. The employee is entitled to payment of $12,303.77 for attorney fees and costs incurred on

the employee’s October 23. 2009 petition to compel compliance with Section 8 of the Partial C&R

under AS 23.30.145(a) and (b).

ORDER

1. The employee is awarded the total of $213.78 under AS 23.30.095 and 8 AAC 45.084(e).

2. The employee and his attorney are awarded $16,896.32 for attorney fees and costs under

AS 23.30.145(a) and (b).

3. Jurisdiction over other pending, unresolved disputes in the case is otherwise reserved.

Dated at Juneau, Alaska this ___ day of May, 2010.

ALASKA WORKERS' COMPENSATION BOARD

____________________________ Robert B. Briggs, Designated Chairman

____________________________ Robert Weel, Member

____________________________ Michael Notar, Member

If compensation is payable under terms of this decision, it is due on the date of issue. A penalty of 25 percent will accrue if not paid within 14 days of the due date, unless an interlocutory order staying payment is obtained in the Alaska Workers’ Compensation Appeals Commission. If compensation is awarded, but not paid within 30 days of this decision, the person to whom the compensation is payable may, within one year after the default of payment, request from the board a supplementary order declaring the amount of the default.

APPEAL PROCEDURESThis compensation order is a final decision. It becomes effective when filed in the office of the board unless proceedings to appeal it are instituted. Effective November 7, 2005 proceedings to appeal must be instituted in the Alaska Workers’ Compensation Appeals Commission within 30 days of the filing of this decision and be brought by a party in interest against the board and all other parties to the proceedings before the board. If a request for reconsideration of this final decision is timely filed with the board, any proceedings to appeal must be instituted within 30 days after the reconsideration decision is mailed to the parties or within 30 days after the date the reconsideration

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request is considered denied due to the absence of any action on the reconsideration request, whichever is earlier. AS 23.30.127

An appeal may be initiated by filing with the office of the Appeals Commission: (1) a signed notice of appeal specifying the board order appealed from and 2) a statement of the grounds upon which the appeal is taken. A cross-appeal may be initiated by filing with the office of the Appeals Commission a signed notice of cross-appeal within 30 days after the board decision is filed or within 15 days after service of a notice of appeal, whichever is later. The notice of cross-appeal shall specify the board order appealed from and the grounds upon which the cross-appeal is taken. AS 23.30.128

RECONSIDERATIONA party may ask the board to reconsider this decision by filing a petition for reconsideration under AS 44.62.540 and in accordance with 8 AAC 45.050. The petition requesting reconsideration must be filed with the board within 15 days after delivery or mailing of this decision.

MODIFICATIONWithin one year after the rejection of a claim, or within one year after the last payment of benefits under AS 23.30.180, 23.30.185, 23.30.190, 23.30.200, or 23.30.215, a party may ask the board to modify this decision under AS 23.30.130 by filing a petition in accordance with 8 AAC 45.150 and 8 AAC 45.050.

CERTIFICATIONI hereby certify that the foregoing is a full, true and correct copy of the Final Decision and Order in the matter of MICHAEL D. BANIE employee / applicant v. TONGASS BUSINESS CENTER, employer; COMMERCE & INDUSTRY INS. CO., insurer / defendants; Case No. 200606973; dated and filed in the office of the Alaska Workers' Compensation Board in Juneau, Alaska, on May 21, 2010.

Robert B. Briggs, Hearing Officer

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Documents

ALASKA WORKERS' COMPENSATION BOARDappeals.dol.alaska.gov › docs › workerscomp › 2010 › 1… · Web viewALASKA WORKERS' COMPENSATION BOARD P.O. Box 115512 Juneau, Alaska 99811-5512