In re Appeal of the Fee Award of the North Carolina Industrial Commission in N.C. I.C. Nos. W82780 & W98474
ADP TOTALSOURCE FI XI, INC., Employer, KEITH SAUNDERS LIBERTY MUTUAL/HELMSMAN MANAGEMENT SERVICES, Carrier
in the Supreme Court on 27 August 2018.
discretionary review pursuant to N.C. G.S. § 7A-31 of a
unanimous decision of the Court of Appeals, 249 N.C.App. 361,
791 S.E.2d 466 (2016), vacating and remanding an order
entered on 4 September 2015 by Judge Alan Z. Thornburg in
Superior Court, Buncombe County that reversed in part an
opinion and award filed on 23 February 2015 by the North
Carolina Industrial Commission.
Sumwalt Law Firm, by Mark T. Sumwalt, Vernon Sumwalt, and
Lauren H. Walker; and Grimes Teich Anderson, LLP, by Henry E.
Teich, for plaintiff-appellant.
Hedrick Gardner Kincheloe & Garofalo LLP, by M. Duane
Jones, Kari L. Schultz, and Linda Stephens, for
Keith Saunders appealed the Opinion and Award of the North
Carolina Industrial Commission (the Commission), which
declined to award certain attorney's fees to
plaintiff's attorneys, to the Superior Court in Buncombe
County pursuant to N.C. G.S. § 97-90(c). The superior
court reversed the Commission's decision and ordered
attorney's fees to be paid to plaintiff's attorneys
from the reimbursement for retroactive attendant care medical
compensation that the Commission had awarded to plaintiff.
Both plaintiff and defendants ADP
Fi Xi, Inc. and Liberty Mutual/Helmsman Management Services,
appealed from the superior court's order. On appeal, the
Court of Appeals vacated the superior court's order and
remanded the matter to the court for further remand to the
Commission, holding that the superior court exceeded the
"narrow scope" of its statutory authority to review
the reasonableness of a Commission's fee award under N.C.
G.S. § 97-90(c) by taking and considering new evidence
that was not presented before the Commission. Saunders v.
ADP TotalSource Fi Xi, Inc., 248 N.C.App. 361, 376, 791
S.E.2d 466, 477-78 (2016). Because we conclude that N.C. G.S.
§ 97-90(c) authorizes the superior court to consider
additional evidence and exercise its "discretion"
in reviewing the reasonableness or setting the amount of
attorney's fees, we reverse.
was employed as a bartender for defendant-employer when on 6
March 2010 and 7 July 2010 he sustained two work-related
injuries by accident to his lower back. On 15 October 2010,
defendants filed a Form 60 with the North Carolina Industrial
Commission, in which they accepted plaintiff's claim as
compensable under the Workers' Compensation Act (the Act)
and described the injury as "extruded disk herniation
left side L4-5." On 21 October 2010, plaintiff underwent
back surgery performed by Stephen David, M.D. "involving
L4 and L5-S1 laminectomies, bilateral partial medial
facetectomies, and bilateral foraminotomies with
discectomy." In spite of his surgery, as well as
extended physical therapy, plaintiff continued to experience
"severe disabling pain" and he developed left foot
drop and "reflex sympathetic dystrophy (RSD), or complex
regional pain syndrome (CRPS)."
November 2010, plaintiff retained Henry E. Teich to represent
him before the Commission. Plaintiff and Mr. Teich entered
into a fee agreement that provided Mr. Teich's law firm a
contingency fee of "25% of any recovery as Ordered by
the North Carolina Industrial Commission." At the time
of this agreement, there were no issues involving attendant
care or home modification. Plaintiff and Mr. Teich later
supplemented this agreement to provide for an attorney's
fee of 25% of ongoing temporary total disability payments. On
23 April 2012, the Commission filed an order approving this
arrangement through which Mr. Teich's firm received every
fourth temporary total disability check due plaintiff.
deteriorating medical condition resulted in his
"suffer[ing] several falls or near-falls, . . . which
place him at a significant[ly] increased risk of suffering a
fall," and plaintiff was ultimately rendered incapable
of "perform[ing] activities of daily living or otherwise
liv[ing] independently." Multiple medical providers
recommended that plaintiff install safety equipment and
assistance devices in his home and that he receive attendant
care medical services. Defendants received notice of
plaintiff's attendant care needs at least as of January
2012, and they agreed to provide attendant care to plaintiff
starting on 4 February 2012, but they conditioned continued
payments for attendant care upon being allowed to take
depositions of two of plaintiff's doctors without an
evidentiary hearing. Following a dispute about the
depositions, defendants ceased providing attendant care
payments to plaintiff on 8 May 2012. In the absence of
continued attendant care provided by a home health agency,
plaintiff's then-partner and now-husband, Glenn Holappa,
began providing the necessary attendant care services to
plaintiff on a daily basis.
2012, with the consent of plaintiff and Mr. Holappa, Mr.
Teich associated Mark T. Sumwalt and The Sumwalt Law Firm to
assist in litigating the attendant care issues in
plaintiff's claim. Mr. Teich had associated Mr. Sumwalt
in previous workers' compensation cases involving
attendant care issues because of Mr. Sumwalt's
significant experience and expertise in attendant care
litigation. On 7 January 2013, plaintiff filed a Form 33
requesting a hearing before the Commission because
"defendants are refusing to pay compensation for
attendant care services." Plaintiff's counsel
extensively litigated the attendant care issues, as well as
issues "pertaining to home modifications, equipment
needs, prescription medications, and psychological
treatment." Plaintiff sought, inter alia,
ongoing future attendant care through a home health care
agency and retroactive compensation for the attendant care
services provided by Mr. Holappa following defendants'
refusal to provide attendant care beyond 8 May 2012.
Defendants denied any compensation for past attendant care,
future attendant care, and psychological treatment.
Commissioner J. Brad Donovan heard the matter on 19 March
2013. On 23 December 2013, Deputy Commissioner Donovan
entered an "Opinion and Award in which he awarded
retroactive attendant care compensation to Plaintiff's
family for eight hours per day, seven days per week, at a
rate of $18.00 per hour, and ongoing attendant care
compensation for eight hours per day, seven days per week at
a rate of $18.00 per hour." Moreover, Deputy
Commissioner Donovan "approved a reasonable
attorneys' fees [sic] of 25% of the value of the
retroactive attendant care services provided by
Plaintiff's family from May 8, 2012 to December 23, 2013,
which were payable to plaintiff and/or his family."
Defendants appealed to the Full Commission, which heard the
case on 15 May 2014.
February 2015, the Full Commission issued an "Opinion
and Award in which it awarded retroactive attendant care
compensation to Mr. Holappa, for six hours per day, seven
days per week, at a rate of $10.00 per hour, and ongoing
attendant care compensation through a home health agency for
eight hours per day, seven days per week." The
Commission found that because plaintiff had not paid Mr.
Holappa for the attendant care services he provided,
"any payment for retroactive attendant care services
should be paid to the provider in the first instance, i.e.,
Mr. Holappa, as opposed to plaintiff as reimbursement for
what he paid out of pocket." Furthermore, the Commission
found that "[t]he only attorney fee agreement of record
at the Industrial Commission is the one entered into between
Grimes & Teich, L.L.P. and plaintiff." With regard
to the attorney's fee of twenty-five percent of the
reimbursement for retroactive attendant care compensation,
the Commission concluded:
In the case at bar, the Full Commission finds and concludes
that the fee agreement between plaintiff and plaintiff's
counsel is reasonable, as is the attorney fee plaintiff's
counsel has received and will continue to receive from
plaintiff's ongoing indemnity compensation. However,
"[m]edical and hospital expenses which employers must
provide pursuant to N.C. G.S. § 97-25 are not a part of
'compensation' as it always has been defined in the
Workers' Compensation Act." Hyler v. GTE
Products Co., 333 N.C. 258, 264, 425 S.E.2d 698, 702
(1993) (citation omitted). "[T]he relief obtainable as
general 'compensation' is different and is separate
and apart from the medical expenses recoverable under the
Act's definition of 'medical compensation."
Id. at 265, 425 S.E.2d at 703. There is no evidence
of a fee agreement between plaintiff's counsel and any of
plaintiffs medical providers, including Mr. Holappa. The Full
Commission concludes that to the extent plaintiff's
counsel's fee agreement with plaintiff, and specifically
the phrase "any recovery," could be interpreted to
include medical compensation, it is unreasonable under the
facts of this case. The Full Commission therefore declines to
approve an attorney fee for plaintiff's counsel out of
the medical compensation which defendants have been ordered
to pay to Mr. Holappa.
appealed the Commission's denial of attorney's fees
to the Superior Court in Buncombe County pursuant to N.C.
G.S. § 97-90(c), which authorizes the senior resident
superior court judge to "consider the matter and
determine in his discretion the reasonableness of said
agreement or fix the fee" in situations in which there
is an agreement and "[i]n all other cases where there is
no agreement for fee or compensation . . . [to] consider the
matter of such fee and determine in his discretion the
attorneys' fees to be allowed in the cause." On 27
April 2015, defendants filed a motion to intervene, which was
allowed by the superior court.
hearing, the superior court entered an order on 25 August
2015, followed by an amended order on 4 September 2015 in
order to cure an ambiguity in the final paragraph of the
initial order. The superior court reversed the
Commission's denial of attorney's fees from the
reimbursement for retroactive attendant care medical
compensation. In its order, the superior court found, in
7. With the knowledge and approval of Plaintiff and Mr.
Holappa, attorney Mark T. Sumwalt and his firm The Sumwalt
Law Firm were subsequently associated to assist in litigating
the attendant care issues that had arisen in Plaintiff's
claim as a result of Defendants' refusal to voluntarily
provide the recommended attendant care to Plaintiff and
compensate Mr. Holappa for the attendant care services he
provided to Plaintiff.
8. Mr, Holappa, through Plaintiff's counsel, submitted an
affidavit to this Court in which he stated that he consented
and agreed to Plaintiff's counsel's pursuit of such
recovery on his behalf with the understanding and desire that
any recovery made on his behalf through Plaintiff's
workers' compensation claim would be subject to the 25%
fee previously agreed to in the retainer agreement.
9. Mr. Sumwalt was associated in approximately June 2012, and
litigation commenced with the clear understanding of all
parties involved that any compensation recovered on behalf of
Mr. Holappa for providing attendant care services to
Plaintiff would be subject to the previously agreed upon
amount of 25% of any benefits ordered by the Industrial
Commission, in accordance with the parties' retainer
. . . .
13. Plaintiff's counsel did not request fees from the
home modifications, equipment needs, prescription
medications, or compensation for psychological treatment that
Plaintiff's counsel obtained on Plaintiff's behalf
through litigation, despite the significant monetary value of
these awards. Plaintiff's counsel requested an
attorneys' fee only from the attendant care compensation
obtained for Mr. Holappa in accordance with the retainer
. . . .
20. At the hearing in this matter, Mr. Sumwalt represented to
this Court that his firm has invested over 500 hours of
attorney time in this case and over $13, 000.00 in litigation
21. As a result of Mr. Sumwalt's and Mr. Teich's
representation, Mr. Holappa recovered over $61, 000.00 in