Banavidez v. Red Sky Plating & NMMCC

This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date. 1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO 2 PHILLIP BENAVIDEZ, 3 Worker-Appellant, 4 v. No. A-1-CA-35977 5 RED SKY PLATING AND NMMCC, 6 Employer/Insurer-Appellees. 7 APPEAL FROM THE WORKERS’ COMPENSATION ADMINISTRATION 8 Leonard J. Padilla, Workers’ Compensation Judge 9 Dunn Law Offices 10 Rodney Dunn 11 Rio Rancho, NM 12 for Appellant 13 Law Office of Nathan Cobb LLC 14 Nathan A. Cobb 15 Albuquerque, NM 16 for Appellee 17 MEMORANDUM OPINION 18 ZAMORA, Judge. 1 {1} Phillip Benavidez (Worker) appeals the workers’ compensation judge’s 2 (WCJ) order denying his request to require Red Sky Plating and New Mexico 3 Mutual Casualty Company (collectively, Employer/Insurer) to pay one hundred 4 percent of his attorney fees pursuant to the fee-shifting provision of the Workers’ 5 Compensation Act (the Act). We hold that Worker made an offer sufficient to 6 trigger the mandatory fee-shifting provision of Section 52-1-54(F)(4) (2013) and 7 therefore, we reverse the WCJ’s order and remand the matter for further 8 proceedings consistent with this opinion. 9 BACKGROUND 10 {2} Worker was injured by a chemical exposure that occurred on September 17, 11 2013, during the course and scope of his employment. Worker filed a complaint 12 seeking indemnity and medical benefits for work-related injuries on October 22, 13 2014. On March 4, 2015, Worker made an offer of judgment to Employer/Insurer. 14 The relevant terms of Worker’s offer of judgment are as follows: (1) Worker’s 15 maximum compensation rate is $300 per week; (2) Employer/Insurer shall pay 16 worker weekly temporary total disability (TTD) benefits in the amount of $300 17 beginning April 4, 2014, and continuing until he reaches maximum medical 18 improvement (MMI) for his occupational asthma and all other conditions 19 subsequently determined to be causally related to chemical exposure during the 20 course of his employment; (3) Employer/Insurer is responsible for ongoing [2] 1 medical care and payment of all medical bills for Worker’s occupational asthma 2 and/or other conditions determined to be causally related to Worker’s work-related 3 chemical exposure; (4) entitlement to permanent partial disability (PPD) benefits, 4 if any, is deferred until Worker has reached MMI; (5) payment of attorney fees 5 payable 50 percent by Employer/Insurer and 50 percent by Worker; and, (6) costs 6 to date actually incurred by Worker shall be borne by Worker. 7 {3} Employer/Insurer never responded to Worker’s offer of judgment and 8 neither party disputes that the offer was rejected. The claim proceeded to trial, 9 where the only contested issues were the compensability of Worker’s occupational 10 asthma and the extent of disability. 11 {4} The WCJ issued a compensation order in favor of Worker. The 12 compensation order provided that Employer/Insurer was liable for Worker’s 13 occupational asthma, sinusitis, acid reflux, and anxiety. Worker was awarded TTD 14 benefits at his maximum compensation rate in the amount of $364.69 per week 15 from September 17, 2013 (date of injury), until he reached MMI on September 29, 16 2015. After reaching MMI, Worker was entitled to PPD benefits at 30 percent of 17 his maximum compensation rate. 18 {5} Worker filed an application seeking an award of attorney fees to be paid 19 entirely by Employer/Insurer pursuant to Section 52-1-54(F)(4). Employer/Insurer 20 opposed Worker’s application. The WCJ determined that Worker’s offer of [3] 1 judgment was insufficient to establish a basis for fee shifting under Section 52-1- 2 54(F)(4) because his offer failed to adequately address certain issues, such as 3 PPD.1 The WCJ decided that Employer/Insurer should only bear 50 percent of 4 Worker’s attorney fees. Worker appeals. 5 DISCUSSION 6 {6} The sole issue on appeal is whether the WCJ properly determined that the 7 fee-shifting provision of the Act does not apply. Worker argues that the Act does 8 not require a worker to reach MMI and calculate PPD as a prerequisite to filing an 9 offer of judgment. In response, Employer/Insurer claims that because the offer of 10 judgment failed to establish an amount of PPD benefits and the date of MMI was 11 unresolved, it deprived Employer/Insurer of the requisite information necessary to 12 determine the extent of its liability. Employer/Insurer also argues that Worker’s 13 offer of judgment was deficient because it did not include all of the injuries 14 claimed in Worker’s complaint.2 Subsequent to the WCJ’s decision, our Supreme [1] In the attorney’s fee order, the WCJ wrote that “[t]he [offer of judgment] does not address issues related to ensuing developments i[n] Worker’s case as the litigation developed.” [2] In Worker’s pro se complaint, he alleged a head injury and secondary mental impairment as a result of his work-related accident. However, in Worker’s offer of judgment, which was filed the same day as his attorney’s entry of appearance, he did not include these alleged injuries. The only medical condition Worker included as compensable in the offer of judgment was occupational asthma and any other medical conditions determined to be causally related to the workrelated accident, pursuant to NMSA 1978, Section 52-1-28 (1987). Employer/Insurer has therefore been on notice since at least the filing of the offer [4] 1 Court decided Baker v. Endeavor Servs., Inc., 2018-NMSC-035, ¶ 23 , 428 P.3d 2 265, which held that uncertainty about an MMI date or a PPD rate is insufficient to 3 invalidate an offer of judgment “if the worker’s healing process is incomplete.” 4 Applying Baker here, we reverse. 5 A. Standard of Review 6 {7} Normally, we review the WCJ’s award of attorney fees for abuse of 7 discretion. See Leonard v. Payday Prof’l, 2007-NMCA-128, ¶ 21 , 142 N.M. 605 , [8] 168 P.3d 177 ; Cordova v. Taos Ski Valley, Inc., 1996-NMCA-009 , ¶ 15, 121 N.M. 9 258, 910 P.2d 334 (“Awarding attorney fees under the Act is a matter entirely 10 within the discretion of the workers’ compensation judge.”). Employer/Insurer 11 argues that this Court should apply a rational basis standard of review, which 12 requires a reviewing court to “affirm such a finding if it was rational for the fact[- 13 ]finder to disbelieve evidence offered in support of the finding.” Sosa v. Empire 14 Roofing Co., 1990-NMCA-097 , ¶ 8, 110 N.M. 614 , 798 P.2d 215 . However, this 15 Court is not assessing whether there were sufficient facts to support the WCJ 16 finding. Rather, we are interpreting the attorney fee statute and the WCJ’s of judgment that Worker was no longer pursuing an alleged head injury or a claim for secondary mental impairment. As such, we need not address Employer/Insurer’s contention that the offer of judgment failed to include the claims for a head injury and secondary mental impairment. [5] 1 application of the law to the facts. We therefore are required to apply a de novo 2 standard of review. See Baker, 2018-NMSC-035, ¶ 15 . 3 B. The Worker’s Offer of Judgment Was Sufficient to Trigger the Fee4 Shifting Provision of Section 52-1-54(F)(4) 5 {8} Attorney fees are only permitted as provided in Section 52-1-54 of the Act. 6 Generally, a worker’s attorney fee is split equally between a worker and 7 employer/insurer, unless the provisions of Section 52-1-54(F) are applicable. 8 Section 52-1-54(J). 9 Section 52-1-54(F)(4) provides as follows: 10 [I]f the worker’s offer was less than the amount awarded by the 11 compensation order, the employer shall pay one hundred percent of 12 the attorney fees to be paid the worker’s attorney, and the worker shall 13 be relieved from any responsibility for paying any portion of the 14 worker’s attorney fees. 15 Id.; see Abeyta v. Bumper To Bumper Auto Salvage, 2005-NMCA-087, ¶ 9 , 137 16 N.M. 800 , 115 P.3d 816 (referring to Section 52-1-54 as a fee-shifting provision). 17 The primary purpose of the fee-shifting provision of the Act is to facilitate 18 settlement and prevent litigation. See Baber v. Desert Sun Motors, 2007-NMCA- 19 098, ¶ 18, 142 N.M. 319 , 164 P.3d 1018 . The fee-shifting provision of the Act is 20 aimed at encouraging the litigants “to make and accept reasonable offers of 21 judgment by providing financial sanctions for the rejection of an offer of judgment [6] 1 if the rejecting party does not obtain a more favorable ruling.” Id. (internal 2 quotation marks and citation omitted). 3 {9} The mandatory fee-shifting provision is triggered when the following three 4 requirements are met: (1) a worker’s offer of judgment is valid pursuant to the Act, 5 (2) the offer is for an amount less than that awarded at trial, and (3) the worker’s 6 offer was rejected. Baker, 2018-NMSC-035, ¶ 18 . We need only address the first 7 two requirements as the parties do not dispute that the Worker’s offer of judgment 8 was rejected. 9 1. The Worker’s Offer of Judgment is Valid Pursuant to the Act 10 {10} In denying Worker’s request to apply the fee-shifting provision, the WCJ 11 determined that Worker’s offer deferred the issue of PPD and did not address 12 “issues related to ensuing developments [in] Worker’s case as the litigation 13 developed.” We disagree. 14 {11} In Baker, our Supreme Court established the requirements for a valid offer 15 of judgment pursuant to the mandatory fee-shifting provision. An offer of 16 judgment must “[make] clear the intent of the offeror and implications of 17 acceptance by the opposing party.” Id. ¶ 20. The offer must provide a frame of 18 reference for the opposing party to determine its liability in order to decide whether 19 to accept or reject the offer. Id. ¶ 21. The WCJ should be able to “ascertain whether 20 the offeror received a more or less favorable outcome in the final compensation [7] 1 order compared to what was offered in the offer of judgment.” Id. Finally, an offer 2 must address “the critical issues raised in the complaint.” Baker, 2018-NMSC-035 , 3 ¶ 21. 4 {12} Baker held that the absence of an MMI date in an offer of judgment does not 5 necessarily invalidate an offer or preclude an opposing party from ascertaining its 6 potential liability. Id. ¶ 23. Our Supreme Court stated that, “an offer of judgment 7 need not establish the date of MMI or amount of PPD benefits if the healing 8 process is still underway.” Id. ¶ 32. To require litigants to include in their offer 9 details that are dependent on the healing process of the worker would drastically 10 delay settlements in compensation cases. Id. ¶ 23. 11 {13} Here, the offer of judgment provided Employer/Insurer with sufficient 12 information related to the offeror’s intent, allowed Employer/Insurer to evaluate its 13 potential liability, and addressed all of the critical issues raised in Worker’s 14 complaint. See id. Worker’s offer of judgment included all of the critical issues 15 related to his claim that could possibly have been included at the time of his offer. 16 The offer included an exact maximum compensation rate that would be used for all 17 future indemnity benefits (TTD and PPD). The offer was clear in stating that TTD 18 benefits would not commence from the date of the accident, but rather months later 19 on April 4, 2014. Worker made clear that he was only seeking medical care and 20 payment of medical bills for his occupational asthma and any other injuries [8] 1 subsequently determined to be causally related to his work-related accident. 2 Additionally, although Worker’s offer was made months prior to him reaching 3 MMI and Worker did not include an MMI date or PPD amount in his offer, the 4 absence of a definitive MMI date in Worker’s offer did not preclude 5 Employer/Insurer from assessing its potential liability. See id. ¶ 32. For these 6 reasons, we conclude that the intent of Worker’s offer was clear, unambiguous and 7 provided sufficient notice to Employer/Insurer of its potential liability. Applying 8 Baker, we conclude that Worker made a valid offer of judgment. 9 2. The Offer of Judgment Was for an Amount Less Than the Award at 10 Trial 11 {14} If Worker’s offer was for “less than the amount awarded by the 12 compensation order, the Employer shall pay one hundred percent” of Worker’s 13 attorney fees. Section 52-1-54(F)(4). Here, the Worker received more pursuant to 14 the compensation order than he would have received if Employer/Insurer had 15 accepted his offer of judgment. 16 {15} As Worker points out, his maximum compensation rate not only impacts the 17 amount of TTD benefits he received, but also the amount of PPD benefits he was 18 eligible to receive. Worker’s offer of judgment proposed a maximum 19 compensation rate of $300 per week, however, the compensation order set 20 Worker’s maximum compensation rate at $364.69 per week. The WCJ awarded 21 Worker TTD benefits at his maximum compensation rate in the amount of $364.69 [9] 1 per week, which is $64.69 more than he would have received under his offer of 2 judgment. 3 {16} Further, the WCJ determined Worker reached MMI on December 29, 2015, 4 and awarded weekly PPD benefits in the amount of $109.40, which is equivalent to 5 30 percent of his maximum compensation rate of $364.69. Had the 6 Employer/Insurer accepted the offer of judgment, Worker would have only 7 received weekly PPD benefits in the amount of $90, which is equivalent to 30 8 percent of the $300 maximum compensation rate, which again, was the amount 9 specified in the offer of judgment. 10 {17} In addition, Worker received TTD benefits for a longer duration pursuant to 11 the compensation order than he would have received had the Employer/Insurer 12 accepted his offer of judgment. Worker’s offer of judgment stated that TTD 13 benefits would commence on April 4, 2014, but the WCJ ordered that the TTD 14 benefits would commence almost seven months earlier on September 29, 2015. 15 {18} Comparing the offer of judgment to the compensation order, Worker’s offer 16 of judgment was more favorable to Employer/Insurer than the determination made 17 by the WCJ. The total amount of indemnity (TTD & PPD) benefits awarded to the 18 Worker by the WCJ exceeded the total amount of indemnity benefits he would 19 have received based on his offer of judgment. Consequently, the Employer/Insurer [10] 1 should have been required to pay one hundred percent of Worker’s attorney fees 2 pursuant to the mandatory fee-shifting provision of the Act. Section 52-1-54(F)(4). 3 CONCLUSION 4 {19} We hold that Worker’s offer of judgment was valid, that Worker was 5 awarded benefits that exceeded the amount he proposed in his offer, and the offer 6 was rejected. The fee shifting provision of the Act was therefore triggered and 7 Employer/Insurer should have been ordered to pay 100 percent of Worker’s 8 attorney fees. See Baker, 2018-NMSC-035, ¶ 30 (“The plain language of the 9 statute is clear and unambiguous and requires attorney fees to be shifted to the 10 rejecting party if the final compensation awarded to the offeror exceeds what was 11 initially offered.”). 12 {20} We therefore reverse the WCJ’s order denying Worker’s request for fee 13 shifting and remand for further proceedings consistent with this opinion. 14 {21} IT IS SO ORDERED. 15 _____________________________ 16 BRIANA H. ZAMORA, Judge 17 WE CONCUR: 18 ________________________________ 19 M. MONICA ZAMORA, Chief Judge [11] 1 ________________________________ 2 MEGAN P. DUFFY, Judge