Engel & Engel, P.A. v. Ingerman

CHASANOW, Judge. The primary issue in this appeal concerns the jurisdiction of the Workers’ Compensation Commission (Commission) over ⁴⁶ a dispute between attorneys for legal fees related to a worker’s claim before the Commission. We conclude that the Commission’s jurisdiction over attorney’s fees under Maryland Code (1991 Repl.Vol.), Labor and Employment Article, § 9-731 is not exclusive where the Commission rendered a decision approving the appropriate fee for legal services and the dispute involves an alleged contract about how that fee subsequently should be divided among attorneys who claim a portion of the fee. I. The basic facts in this case are not contested.

The dispute is between two law firms over the division of $12,500 in attorney’s fees approved by the Commission in 1995. The Commission’s approval related to the $200,000 settlement of a claim filed on behalf of Vonnie Colson, an employee of Owens-Corning Fiberglass, for work-related injuries to his back. Both Appellant and Appellee represented Colson in pursuit of his claim for workers’ compensation benefits before the Commission during the years 1989 to 1995. Appellant Engel & Engel, P.A.

(Engel) represented Colson from 1989 to 1992. In 1992, Colson discharged Engel and retained Ingerman & Horwitz (Ingerman), the Appellee in this case, as new counsel. The evidence of the alleged fee-sharing contract is based on a letter sent by Engel on December 3, 1992, to Ingerman. The letter mentions Engel’s transfer of Colson’s file to Ingerman and purports to confirm an agreement between the two law firms of a 50-50 division of attorney’s fees generated as a result of Colson’s claim.

In relevant part, the letter stated: “It is my understanding that due [to] the extensive work undertaken by our office in these matters, you have agreed to split any fees recovered in these matters on a 50-50 basis. You have also agreed to reimburse our office for the expenses incurred in the appeal that was tried before the Circuit Court for Baltimore City as it relates to [Colson’s] injury. Our expenses for same total $116.00.” ⁴⁷ On January 27,1993, in apparent response to Engel’s letter, Ingerman sent Engel a check for the $116.00 in expenses. A brief letter sent with the check did not dispute the terms of Engel’s December 3 letter.

Ingerman then served as Colson’s counsel until the settlement was reached in 1995. While Ingerman was retained as Colson’s counsel, Philip Sturman was responsible for most of the work on the Colson case. Sturman’s work on the case initially took place as an employee of Ingerman but later, after he left the firm to begin a solo practice, as a subcontractor to Ingerman pursuant to a written agreement under the terms of which Sturman was paid an hourly rate. Sturman submitted to Ingerman monthly bills for his work, which Ingerman paid.

Sturman was the individual ultimately responsible for negotiating the settlement with Owens-Corning. After the settlement was reached, Ingerman submitted a petition, drafted by Sturman, to the Commission for attorney’s fees totaling $12,500, which were approved. Engel then sought 50 percent, or $6,250, of the fees pursuant to the agreement stated in his December 3,1992, letter. Engel filed suit in the District Court of Maryland sitting in Baltimore City after Ingerman refused Engel’s repeated demands for $6,250.

The District Court denied Ingerman’s motion for summary judgment, which contended that the court had no jurisdiction to hear a case concerning attorney’s fees arising out of a workers’ compensation claim. Based on testimony from witnesses for both parties, the District Court judge, Alan M. Resnick, concluded that the correspondence indicated that a 50-50 fee-sharing agreement had been reached and entered a judgment on the merits for Engel for $6,250 plus costs. On Ingerman’s appeal, the circuit court reversed the District Court’s decision without reaching the merits of Engel’s claim. The circuit court found that, although no cases addressed Ingerman’s jurisdictional defense, “the language ... in the various cases appears to suggest that the legislative policy [requiring Commission approval of attorney’s fees related to claims before the Commission] is an all encompassing preemption of the field of attorney’s fees.” That court there ⁴⁸ fore concluded as a matter of law that the District Court had no jurisdiction to entertain Engel’s suit and that Engel should seek recovery at the Commission.

The jurisdictional issue is now before us on certiorari review from the circuit court’s decision. 1 We will provide more facts as necessary in the analysis that follows.

II

A. The statute conferring jurisdiction on the Commission over attorney’s fees, Md.Code (1991 RepLVoL), Labor and Employment Art., § 9-731, 2 states as follows: “(a) In general.—(1) Unless approved by the Commission, a person may not charge or collect a fee for: (i) legal services in connection with a claim under this title; (ii) medical services, supplies, or treatment provided under Subtitle 6, Part IX of this title; or (in) funeral expenses under Subtitle 6, Part XIII of this title. (2) When the Commission approves a fee, the fee is a lien on the compensation awarded. (3) Notwithstanding paragraph (2) of this subsection, a fee shall be paid from an award of compensation only in the manner set by the Commission. (e) Attorney’s fees—Administrative review.—On application of a party, the Commission may: ⁴⁹ (1) hear and decide any question concerning legal services performed in connection with a claim; and (2) order a person who received a fee for legal services to refund to the payer any part of the fee that the Commission may find to be excessive.

(d) Same—Enforcement and appeal.—An order of the Commission regulating payment or refund of payment for legal services may be enforced or appealed in the same manner as a compensation award.” The attorney’s fee provisions were originally enacted in 1957 as § 57 of Article 101 and their recodification as § 9-731 occurred in 1991 without any substantive changes relevant here. As a result, throughout this opinion our references to Maryland Code (1957, 1964 Repl.Vol., 1977 Cum.Supp.), Article 101, § 57 should be viewed as synonymous with § 9-731. In the typical workers’ compensation case, the Commission will approve the legal fee for the attorney’s work upon approving an award to a worker-claimant. For guidance as to the appropriate fee, the Commission has promulgated a schedule of fees.

Code of Maryland Regulations (COMAR) 14.09.01.25. The schedule establishes maximum amounts for attorney’s fees based on the extent of the disability and the amount of the award. Id. The regulations also allow for a claimant’s attorney to file a petition with the Commission for a fee in excess of the fee schedule.

COMAR 14.09.01.24(B)(describing necessary contents of petition); COMAR 14.09.01.25(B)(2)(stating that the Commission “may approve an attorney’s fee in excess of the limits set forth in this section only if exceptional circumstances are shown”). In one of our leading cases interpreting Md.Code (1957, 1964 Repl.Vol., 1977 Cum.Supp.), Art. 101, § 57, Feissner v. Prince George’s Co., 282 Md. 413 , 384 A.2d 742 (1978), we addressed how an award of attorney’s fees under that section operates as a lien on the claimant’s recovery. The appellant in Feissner served as an attorney for individual claimants and was awarded attorney’s fees by the Commission. Prince George’s County, the employer, refused to pay the fees be ⁵⁰ cause of the statutory offset provisions that then applied under former Md.Code (1957, 1964 Repl.Vol., 1977 Cum.

Supp.), Art. 101, § 33(c) and (d), which limited a claimant’s' recovery when the claimant’s pension or other benefits exceeded the compensation benefits. 3 The circuit court ordered the County to pay the attorney’s fees, and the County appealed. The Court of Special Appeals reversed the circuit court, holding that the offset provisions of § 33 extinguished the compensation award granted by the Commission and precluded the creation of the lien on the compensation benefits for payment of legal fees. We affirmed, holding that when the Commission approves attorney’s fees under Md.Code (1957, 1964 Repl.Vol., 1977 Cum.Supp.), Art. 101, § 57, the award operates as a lien on the worker’s claim and is not a separate cost to be paid by the employer. Feissner, 282 Md. at 418-19 , 384 A.2d at 745-45 .

See also § 9-731(a)(2)(“When the Commission approves a fee, the fee is a lien on the compensation awarded.”). We explained in Feissner that: “[U]nder the Maryland statutory scheme, the payment of legal fees does not become an independent obligation of the employer or his insurer, but instead remains at all times the personal responsibility of the claimant. Thus legal fees are not among the enumerated benefits available to the claimant from his employer under the workmen’s compensation laws of this state.” 282 Md. at 418 , 384 A.2d at 745 . See also Chanticleer Skyline Rm. v. Greer, 271 Md. 693, 700 , 319 A.2d 802, 806 (1974)(ex-plaining that the attorney’s fee provision does not operate as an add-on to the compensation award that the employer must pay, but instead provides that “a single award of compensation is made” to the claimant).

Thus, our cases clearly establish that, under § 9-731, the claimant remains responsible for the attorney’s fees generated in pursuing his or her claim. ⁵¹ B. Because this case requires us to determine the reach of the statute conferring jurisdiction to the Commission over attorney’s fees, we pause here to examine the context of that statute and the objectives the legislature sought to achieve through its enactment. As we observed in Kaczorowski v. Mayor of Baltimore, 309 Md. 505 , 525 A.2d 628 (1987), when interpreting statutory language the “legislative purpose is critical, that purpose must be discerned in light of context, and that ‘statutes are to be construed reasonably with reference to the purpose to be accomplished.... ’ The purpose, in short, determined in light of the statute’s context, is the key.” 309 Md. at 516 , 525 A.2d at 633 (quoting Potter v. Bethesda Fire Dep’t, 309 Md. 347, 353 , 524 A.2d 61, 64 (1987), in turn quoting State v. Fabritz, 276 Md. 416, 421 , 348 A.2d 275, 278 (1975), cert. denied, 425 U.S. 942 , 96 S.Ct. 1680 , 48 L.Ed.2d 185 (1976)). We previously have observed that the legislative act creating the Commission was “designed to protect workers and their families from hardships inflicted by work-related injuries. More particularly, it is designed to provide workers with compensation for loss of earning capacity resulting from accidental injury, disease or death arising out of and in the course of employment, to provide vocational rehabilitation, and to provide adequate medical services.” Queen v. Agger, 287 Md. 342, 343 , 412 A.2d 733, 734 (1980).

It is in light of the legislature’s goal of adequately compensating injured workers that we must interpret the attorney’s fee provision of § 9-731. As in litigation generally, in a workers’ compensation case the party seeking compensation is responsible for his or her own attorney’s fees. See supra Part II. A. Since workers’ compensation law is designed to provide financial assistance to the injured or disabled worker in lieu of lost wages, the legislature recognized that the purpose of the law would ⁵² be subverted if a worker’s recovery were dissipated as a result of excessive fees incurred in recovering the compensation.

As Professor Larson has observed, when the general rule that a party must pay his or her own legal fees “is superimposed upon a closely calculated system of wage-loss benefits, a serious question arises whether the social objectives of the legislation may to some extent be thwarted. The benefit scales are so tailored as to cover only the minimum support of the claimant during disability. There is nothing to indicate that the framers of the benefit rates included any padding to take care of legal and other expenses incurred in obtaining the award.” (Footnote omitted). 3 Arthur Larson, Larson’s Workmen’s Compensation Law § 83.11, at 15-1271 (1989). See also Chanticleer Skyline Rm., supra.

Thus, in Feissner we recognized that “a serious risk exists that the purpose of the compensation award will be frustrated if benefits are exhausted by payment of excessive legal fees. Consequently, the primary function of [Md.Code (1957, 1964 Repl.Vol., 1977 Cum. Supp.), Art. 101,] § 57 is to protect against this possibility by authorizing the Commission to adopt appropriate safeguards.” (Footnote omitted). 282 Md. at 418 , 384 A.2d at 746 . Similarly, in Chanticleer Skyline Rm., we observed that the provision for attorney’s fees is intended to “prohibit the dissipation of an employee’s compensation through the payment of excessive legal fees out of the award by giving the Commission the power to regulate when and how much remuneration an attorney who represents a claimant in [workers’] compensation litigation is to receive from the employee for legal services rendered to him.” 271 Md. at 699-700 , 319 A.2d at 805 .

See also Stevens v. Rite-Aid, 340 Md. 555 , 564 n. 10, 667 A.2d 642 , 646-47 n. 10 (1995)(quoting Chanticleer Skyline Rm.); cf. Queen, 287 Md. at 344 , 412 A.2d at 734 (holding that a health care provider ⁵³ may not enforce a contract the “result of which is to require an eligible injured employee to pay an amount greater than the amount approved by the Commission and paid by the employer or its insurer for services which the Commission requires the employer to provide”). Therefore, consistent with the purpose of workers’ compensation law generally, a primary objective behind the attorney’s fee provision is to afford workers some degree of protection that their compensation will not be unduly diminished by excessive costs associated with obtaining recovery. C. While claimants must be protected from exorbitant legal fees, there also exists a need to ensure that workers are able to obtain competent counsel to pursue their claims. Attorney’s fees should not be so large as to be excessive, but they also should not be so low as to make representing claimants undesirable to the legal practitioner. 3 Arthur Larson, Larson’s Workmen’s Compensation Law § 83.16, at 15-1347-1349 (1989)(stating that attorney’s fees may not be fixed so low as to deny claimants’ effective legal representation).

See also Mitchell v. Goodyear Service Store, 63 Md.App. 426, 434 , 492 A.2d 984, 988 (1985)( “[T]he Commission may not set fees so cheeseparingly as to deprive claimants of the practical ability to obtain competent counsel.”), aff'd 306 Md. 27 , 506 A.2d 1178 (1986); City of Baltimore v. Bowen, 54 Md.App. 375, 386 , 458 A.2d 1242, 1249 (1983)(same). If the. legislature itself had inflexibly established attorney’s fees for workers’ compensation cases through statutory enactment, a risk would have been created that the fees would be set too low so as to deny workers adequate legal representation. Thus, the legislature sought to balance the need to protect claimants from excessive legal fees against the need of workers to retain competent legal representation to pursue their claims. The delegation to an administrative agency with special expertise in the law of workers’ compensation, ie., the Commission, was the best way to effectuate the balance of these potentially conflicting goals.

Thus, the legislature ⁵⁴ granted the Commission broad authority over attorney’s fees in workers’ compensation cases, including the power to promulgate rules governing such fees. See § 9-309(a)(granting the Commission the power to “adopt regulations” in furtherance of its statutory mandates); Feissner, 282 Md. at 418 , 384 A.2d at 746 (discussing the Commission’s broad authority to set attorney’s fees); Edmond v. Ten Trex, 83 Md.App. 573, 581 , 575 A.2d 1267, 1270-71 (1990)(discussing the Commission’s power to promulgate regulations). Furthermore, the Commission has relatively greater flexibility than the legislature for responding to the changing economic circumstances by lessening or increasing the attorney’s compensation. The Commission has authority to modify its fee schedule, and its current fee schedule, which spans four pages of COMAE, gives the agency wide latitude in determining the appropriate fee size depending on the nature of the claim.

COMAE 14.09.01.25. The agency is therefore uniquely positioned to conduct the delicate balance of protecting claimants and assuring adequate compensation. The role of the courts with respect to Commission-approved fees is much more limited. The courts retain a supervisory role over the Commission’s approval of legal fees to guard against agency abuses of discretion and arbitrariness, but the courts may not substitute their own judgment as to the appropriate fee for the judgment of the Commission.

As the Court of Special Appeals has observed: “The agency’s expertise in setting attorney’s fees in workmen’s compensation cases is not to be undermined.” Mitchell, 63 Md.App. at 433 , 492 A.2d at 988 . See also Rogers v. Welsh, 113 Md.App. 142 , 686 A.2d 1107 (1996)(upholding Commission’s decision not to exercise its discretion to award attorney’s fees in excess of the regulatory guidelines); Workers’ Compensation Comm’n v. May, 88 Md.App. 408, 416 , 594 A.2d 1232, 1236 (1991), quoting Bowen, 54 Md.App. at 386 , 458 A.2d at 1242 (“The amount of [attorney’s] fees awarded is a decision within the sound discretion of the Commission and ‘it is not the province of the courts to constrain the legitimate exercise of the Commission’s dis ⁵⁵ cretion.’ ”); Ten Trex, 83 Md.App. at 578-80 , 575 A.2d at 1269-70 (upholding Commission’s award of attorney’s fees). Keeping in mind the purposes of the Workers’ Compensation Act generally and the attorney’s fee provision specifically, as well as the Commission’s special expertise in these areas, we now turn to the jurisdictional question posed by the instant case.

III

This case concerns a dispute over the division of a fee that has already been approved by the Commission, rather than a dispute as to the Commission-approved fee itself. Thus, this appeal requires us to consider the scope of § 9-731, which gives the Commission jurisdiction over attorney’s fees made “in connection with” a claim filed before the Commission. Ingerman contends that Engel should have pursued his claim for 50 percent of the attorney’s fee before the Commission and not the courts, a position with which the circuit court agreed. Ingerman argues that both the plain meaning of the statute and a reading of the case law give the Commission exclusive jurisdiction over any dispute involving legal fees for services rendered in the course of pursuing a worker’s claim for compensation.

We disagree. We initially explain why we believe that the plain words of the statute do not give the Commission exclusive jurisdiction and why the appellate decisions of this State fail to resolve the jurisdictional question posed in this appeal. We then look to the legislature’s purpose and statutory scheme to determine how § 9-731 should apply in the instant case. A. We begin by examining the text of § 9-731 to determine whether its meaning is plain and unambiguous. “If the language of the statute is plain and clear and expresses a meaning consistent with the statute’s apparent purpose, no further analysis is ordinarily required.” Gargliano v. State, 334 Md. 428, 435 , 639 A.2d 675, 678 (1994); see also Prince ⁵⁶ George’s County v. Vieira, 340 Md. 651, 658 , 667 A.2d 898, 901 (1995).

Ingerman contends that subsection (a)(1) plainly covers an attorney’s attempt to charge or collect a portion of a fee already collected by another attorney. We conclude, however, that the statutory language accurately reflects the legislature’s intention of conferring to the Commission jurisdiction over disputes between attorneys and parties to compensation claims, ie., between attorneys and claimants or employers, but not over disputes as to fee-sharing agreements among attorneys. Section 9-731(a)(l) states in pertinent part that: “Unless approved by the Commission, a person may not charge or collect a fee for: (i) legal services in connection with a claim under this title.” (Emphasis added). These words provide no indication that the Commission must approve the payment of monies by one attorney to another attorney which, coincidentally, relate to a workers’ compensation claim.

Under such circumstances the attorney seeking payment is not charging or collecting a fee from a claimant’s compensation; rather, that attorney is seeking to enforce a contractual obligation. Thus, we reject Ingerman’s argument that, because the statute “does not make exceptions for cases which do not affect the overall amount of the lien on the Claimant’s award,” the Commission has exclusive jurisdiction over the fee-sharing dispute. Since the fee-sharing dispute does not involve charging or collecting a fee from a claimant, no statutory “exception” is needed to conclude that jurisdiction properly lies with the District Court. The only possible ambiguity that may be read into subsection (a)(1) stems from its failure to expressly indicate from, whom a person may not charge or collect a fee without Commission approval.

Perhaps, ideally, the legislature would have indicated in specific terms from whom one may not charge or collect a fee, but such additional language seems unnecessary when one considers the implications of Ingerman’s argument. Ingerman’s contention presumes that attorney A (here, Engel) may not attempt to collect a portion of a fee from attorney B (Ingerman) without Commission approval, ⁵⁷ if the fee earned by attorney B was for compensation for a claim before the Commission and attorney A’s services included work on the worker’s claim. Thus, Ingerman’s argument would apparently encompass any lawyer’s claim against any other lawyer if there is any connection to a claim before the Commission. This argument is belied by the facts of this case.

Ingerman does not dispute that Philip Sturman, the former employee of the firm who later worked as a subcontractor, performed much of the work on the Colson case. Sturman was paid on an hourly basis and performed most, if not all, of the work on Colson’s case, following Ingerman’s involvement, including negotiating the ultimate