Smith's Food & Drug, Inc. v. Labor Commission

2015 UT App 79THE UTAH COURT OF APPEALS
SMITH’S FOOD & DRUG, INC. AND KROGER CO.,
Petitioners,
v.
LABOR COMMISSION AND MARY DEE COX,
Respondents.
Opinion
No. 20131145-CA
Filed April 2, 2015
Original Proceeding in this Court
Bret A. Gardner and Kristy L. Bertelsen, Attorneys
for Petitioners
Jaceson R. Maughan, Attorney for Respondent
Labor Commission
Aaron J. Prisbrey and Trevor C. Sanders, Attorneys
for Respondent Mary Dee Cox
JUDGE JAMES Z. DAVIS authored this Opinion, in which JUDGES
STEPHEN L. ROTH and MICHELE M. CHRISTIANSEN concurred.
DAVIS, Judge:
¶1 Smith’s Food & Drug, Inc. and Kroger Co. (collectively,
Kroger) seek our review of the Utah Labor Commission’s
decision affirming the administrative law judge’s (ALJ) order
awarding legal fees to Mary Dee Cox. We decline to disturb the
Commission’s decision.
BACKGROUND
¶2 Cox injured her right shoulder in March 2005 while she
was working for Kroger. Kroger paid medical benefits related to
the industrial accident through a third-party administrator (the
Smith's v. Labor Commission
Adjuster). In 2008, Cox’s physician recommended that she
undergo surgery on her right shoulder. The Adjuster’s internal
medical review approved a total shoulder replacement, but Cox
ultimately underwent only a partial shoulder replacement.
¶3 Cox continued experiencing shoulder pain after the
surgery, and in 2011, her physician recommended that she see a
specialist at the University of Utah. Cox sought authorization
from the Adjuster to see a specialist, but the Adjuster failed to
respond. Cox subsequently hired an attorney and filed an
application for hearing with the Commission, seeking medical
benefits and attorney fees. She later clarified that she sought
benefits relating to her request to see a specialist and for a total
shoulder replacement.
¶4 By the time the ALJ held an evidentiary hearing, ‚Kroger
had accepted liability for the total shoulder replacement,‛
leaving only ‚the issue of attorney fees . . . in dispute.‛ The ALJ
concluded that attorney fees were warranted because ‚*t+he
filing of the Application for Hearing is what generated a review
of the insurance company’s position of denial and allowed for
the approval of medical benefits for continued treatment of Ms.
Cox’s right shoulder industrial injury.‛ See Utah Code Ann.
§ 34A-1-309(4)(a)(ii) (LexisNexis 2011) (permitting the
commission to award attorney fees if, ‚after the employee
employs an attorney, medical benefits are paid or ordered to be
paid‛).
¶5 The ALJ rejected Kroger’s argument that ‚at the time the
Application for Hearing was filed no benefits had been denied‛
because Cox had not requested approval for a total shoulder
replacement since 2008 and the 2008 request had been granted.
Kroger sought the Commission’s review of the ALJ’s decision,
reiterating its argument that it never denied Cox’s request for
benefits because ‚it did not learn of *her+ requested surgery until
after she filed her application for hearing and that it originally
20131145-CA 2 2015 UT App 79Smith's v. Labor Commission
believed she was only seeking medical expenses related to the
consultation *with a specialist+.‛
¶6 The Commission considered Cox’s 2008 request for the
total replacement surgery to have gone unanswered until Cox’s
application for hearing prompted Kroger’s approval in 2012. The
Commission noted that in 2008, ‚*f+or some reason, Ms. Cox
received authorization for only a partial procedure . . . despite
[the Adjuster internally] approving payment for a total shoulder
replacement.‛ Accordingly, the Commission reasoned that
‚Kroger was aware of [the] required treatment in 2008 but did
not actually approve it until . . . 2012.‛ The Commission
concluded that Kroger’s approval did not occur within a
reasonable amount of time, observing that ‚an insurance carrier
or a self-insured employer like Kroger‛ generally is ‚allowed 21
or 45 days to approve medical benefits such as Ms. Cox’s
requested total shoulder replacement.‛ Therefore, the
Commission upheld the ALJ’s award of attorney fees to Cox
under Utah Code section 34A-1-309(4)(a).
ISSUE AND STANDARDS OF REVIEW
¶7 Kroger seeks our review of the Commission’s decision to
award attorney fees under Utah Code section 34A-1-309(4)(a).
That statute provides the Commission with the discretion to
award fees if certain conditions are met. See id. § 34A-1-309(4)(a)
(indicating that ‚the commission may award reasonable attorney
fees‛ (emphasis added)). Accordingly, we review the
Commission’s decision for an abuse of discretion, which requires
us ‚to ensure that *the decision+ falls within the bounds of
reasonableness and rationality.‛ See Murray v. Utah Labor
Comm'n, 2013 UT 38, ¶ 32, 308 P.3d 461 (‚Reasonableness . . . is
essentially a test for logic and completeness rather than the
correctness of the decision.‛); see also id. ¶ 29 (‚*F+or an ‘abuse of
discretion’ standard to apply on appeal, the agency action under
review must involve ‘discretion.’‛).
20131145-CA 3 2015 UT App 79Smith's v. Labor Commission
¶8 Kroger’s challenge necessarily focuses on a subsidiary
determination inherent to the Commission’s award of fees—that
the facts of this case satisfy the conditions outlined in section
34A-1-309(4)(a). ‚*T+he question of whether a set of facts falls
within a legal standard is . . . a question of law.‛ Id. ¶ 33.
Whether the facts satisfy the statutory requirements turns on
‚the legal effect of‛ the facts. See id. ¶¶ 34, 40. While some of the
facts here are disputed, namely, whether the Adjuster actually
communicated to Cox that it had approved a total shoulder
replacement in 2008, ‚the ultimate question is the legal effect of
the facts rather than witness credibility or demeanor.‛ See id.
¶ 40. Accordingly, in conducting our review, we afford the
Commission’s application of the law to the facts no deference.
See Sawyer v. Department of Workforce Servs., 2015 UT 33, ¶ 11; see
also Murray, 2013 UT 38, ¶¶ 36–40 (explaining the difference
between issues that are more ‚law-like‛ and issues that are more
‚fact-like‛).
ANALYSIS
¶9 Kroger interprets section 34A-1-309(4)(a) as requiring ‚a
current dispute over a denied medical benefit at the time the
Application for Hearing is filed by the claimant with the Labor
Commission‛ as a precondition to an award of attorney fees.
Kroger asserts that because there was ‚no current medical
benefit dispute between the parties,‛ there was no need for Cox
to hire an attorney and file an application for hearing.
¶10 ‚In interpreting a statute, *we+ must look first to its plain
language.‛ Valcarce v. Fitzgerald, 961 P.2d 305, 318 (Utah 1998).
And ‚we assume, absent a contrary indication, that the
legislature used each term advisedly according to its ordinary
and usually accepted meaning,‛ and ‚*w+hen the meaning of *a+
statute can be discerned from its language, no other interpretive
tools are needed.‛ Marion Energy, Inc. v. KFJ Ranch P'ship, 2011
20131145-CA 4 2015 UT App 79Smith's v. Labor Commission
UT 50, ¶¶ 14–15, 267 P.3d 863 (second alteration in original)
(citations and internal quotation marks omitted).
¶11 Section 34A-1-309(4)(a) provides,
[T]he commission may award reasonable attorney
fees on a contingency basis for medical benefits
ordered paid . . . if:
(i) medical benefits are not approved by:
(A) the employer or its insurance carrier; . . .
...
(ii) after the employee employs an attorney,
medical benefits are paid or ordered to be paid;
(iii) the commission’s informal dispute resolution
mechanisms are reasonably used by the parties
before adjudication; and
(iv) the sum of the following at issue in the
adjudication of the medical benefit claim is less
than $4,000:
(A) disability or death benefits; and
(B) interest on disability or death benefits.
Utah Code Ann. § 34A-1-309(4)(a) (LexisNexis 2011). We agree
that the statute conditions the availability of attorney fees on the
existence of a medical benefit dispute in the proceedings before
the Commission. The statute imposes four preconditions on the
Commission’s ability to award fees. The first condition requires
that ‚medical benefits are not approved by . . . the employer or
its insurance carrier.‛ Id. This language clearly predicates the
availability of attorney fees on an insurance adjuster’s or
20131145-CA 5 2015 UT App 79Smith's v. Labor Commission
employer’s decision to ‚not approve*+‛ a claim for benefits. Id.We note that the language does not require that the insurer or
employer specifically deny benefits.
¶12 Here, Cox’s request to see a specialist was ‚not approved‛
by the Adjuster by the time she filed her application for hearing.1
See id. Both parties acknowledge that Cox’s request to see a
specialist went unanswered and that Cox attached medical
records related to that request to her application for hearing.
Thus, we reject Kroger’s assertion that no medical benefits were
in dispute when Cox filed her application. The other
requirements of section 34A-1-309(4)(a) are not in dispute. As the
Commission stated, ‚[t]here is no dispute that medical benefits
were paid to Ms. Cox after she retained an attorney‛ or ‚that the
parties reasonably used the Commission’s informal dispute
1. The Commission and the parties spend a significant amount of
their analyses parsing what occurred in response to Cox’s 2008
request for a total shoulder replacement. See supra ¶¶ 2–6. The
Commission tied the Adjuster’s 2012 authorization for a total
shoulder replacement to Cox’s 2008 request for that procedure
and concluded that the Adjuster’s approval was unreasonably
untimely. Kroger disputes the Commission’s finding that only a
partial replacement was authorized in 2008, arguing that the
partial replacement occurred not because the Adjuster’s
authorization limited Cox to that procedure but because Cox’s
treating physician opted for a partial replacement. Kroger
characterizes Cox’s subsequent request for a total replacement as
an entirely new claim for benefits. We do not consider the
characterization of Cox’s 2008 request to be central to our
analysis. Our analysis starts from the premise that, regardless of
what occurred in 2008, the Adjuster’s undisputed failure to
respond to Cox’s request to see a specialist existed at the time
Cox hired an attorney and filed her application for hearing.
20131145-CA 6 2015 UT App 79Smith's v. Labor Commission
resolution mechanisms prior to adjudication.‛2 See id. § 34A-1-
309(4)(a)(ii)–(iii).
¶13 Kroger nonetheless asserts that because Cox’s claim for a
total shoulder replacement was not in dispute at the time she
initiated proceedings, the Adjuster’s ultimate approval of that
procedure cannot be considered in the Commission’s calculation
of the attorney fee award. We disagree.
¶14 Nothing in the statute’s language ties the benefits upon
which an attorney fee award is ultimately calculated to the
benefits that were in dispute at the time an application for
hearing was filed. Rather, section 34A-1-309(4)(a) provides
attorney fees on a contingency basis based on the total amount of
benefits ‚‘generated,’‛ i.e., ‚paid as a result of‛ the claimant
hiring an attorney. See Utah Admin. Code R602-2-4(C), (E). In
other words, the amount the Commission can award is a
percentage of the total amount of benefits generated and is not
limited to a subset of the generated benefits that reflects only the
benefits that were in dispute at the time the application for
hearing was filed. See id.; see also Black’s Law Dictionary 362 (9th
ed. 2009) (‚Contingent fees are usu*ally+ calculated as a
percentage of the client’s net recovery . . . .‛). While in practice it
may be that the benefits generated and the benefits initially in
dispute are similar, the statute does not impose such a limitation.
¶15 The legislative history of section 34A-1-309(4) appears to
support our plain language interpretation. The legislature
enacted this provision to close a gap in the statutory framework
pertaining to the Commission’s ability to award attorney fees. As
explained by the legislation’s sponsor, Senator Karen Mayne,
individuals utilizing the Commission’s dispute resolution
2. The requirements of subsection (iv) are also not at issue in this
case.
20131145-CA 7 2015 UT App 79Smith's v. Labor Commission
system often have a wage dispute, medical benefit dispute, or
both, and until this provision was enacted, the statutory
framework provided attorney fees for wage disputes only. See
Recording of Utah Senate Floor Debates, 58th Leg., Gen. Sess.
(Feb. 10, 2009) (statements of Sen. Karen Mayne). Moreover,
Senator Mayne explained, medical benefit disputes can be
complicated and time consuming and attorneys working on
medical benefit disputes were simply not ‚get*ting+ paid for
their services,‛ even when an employer or insurer would grant
the disputed benefit on ‚the eve of the trial.‛ Id. Thus, the
legislature appeared to intend section 34A-1-309(4) to remedy
this ‚financial situation.‛ Id.; see also id. (Feb. 11, 2009) (‚*W+e
have injured workers that need counsel, and we have attorneys
that are willing to do this. So, this bill addresses that the
attorneys will get medical fees and wage fees.‛).
¶16 Additionally, as the ALJ recognized, Kroger did initially
resist Cox’s latest application for the total replacement surgery
and was ‚actively preparing a defense to the claim and denying
liability.‛ Although Kroger ‚acted ethically and fairly‛ when it
withdrew its defense after receiving the report from its internal
medical review that ‚was favorable‛ to Cox, we are not
convinced that the Commission abused its discretion when it
concluded that these circumstances met the statute’s
requirements that ‚medical benefits *were+ paid or ordered to be
paid‛ after and because Cox employed an attorney. See Utah
Code Ann. § 34A-1-309(4)(a)(ii) (LexisNexis 2011).
CONCLUSION
¶17 Kroger exposed itself to liability for Cox’s attorney fees by
failing to address Cox’s request to see a specialist. The
Commission has the discretion to award attorney fees pursuant
to Utah Code section 34A-1-309(4)(a), and we are not convinced
20131145-CA 8 2015 UT App 79Smith's v. Labor Commission
that its award was an abuse of that discretion. We therefore
decline to disturb the Commission’s decision.3
3. We deny Cox’s request for attorney fees and costs as a
sanction pursuant to rule 33 and 34 of the Utah Rules of
Appellate Procedure. Although Kroger did not succeed on its
appeal, its arguments are not ‚obviously without merit, with no
reasonable likelihood of success,‛ and do not warrant imposing
fees or costs as a sanction. See Midland Funding, LLC v. Sotolongo,
2014 UT App 95, ¶ 41, 325 P.3d 871 (citation and internal
quotation marks omitted) (construing rule 33 of the Utah Rules
of Appellate Procedure).
20131145-CA 9 2015 UT App 79