Injured Workers Ass'n v. State

2016 UT 21, 374 P.3d 14, 813 Utah Adv. Rep. 21, 2016 WL 2924501, 2016 Utah LEXIS 64
CourtUtah Supreme Court
DecidedMay 18, 2016
DocketCase No. 20140372
StatusPublished
Cited by18 cases

This text of 2016 UT 21 (Injured Workers Ass'n v. State) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Injured Workers Ass'n v. State, 2016 UT 21, 374 P.3d 14, 813 Utah Adv. Rep. 21, 2016 WL 2924501, 2016 Utah LEXIS 64 (Utah 2016).

Opinion

Justice DURHAM,

opinion of the Court:

INTRODUCTION

11 In Utah, attorneys represénting injured workers in workers' compensation claims receive their fees out of the compensation awarded to the worker, By statute, the legislature delegated the authority to regulate these fees to the Utah Labor Commission. Utax Cop® § 34A-~1-809. The Labor Commission created a sliding-scale fee schedule and an overall cap on the maximum amount of attorney fees for attorneys representing injured workers. Utax Aomin. Cop® R6O2-2-4(C)(8).

T2 The Injured Workers Association of Utah and several of its member attorneys (collectively, IWA) challenge the statute and the Labor Commission's fee schedule as unconstitutional. IWA argues that under the Utah constitution, the Utah Supreme Court is vested with exclusive authority to regulate the practice of law, and that this authority extends to the regulation of attorney fees.

T8 We agree with IWA and hold that the regulation of attorney fees is included within the power to govern the practice of law. Because the Utah Supreme Court is vested with exclusive inherent and constitutional authority to govern the practice of law-and the court cannot under the separation-of-powers doctrine delegate the regulation of attorney fees to the legislature or the Commission-we hold both the Commission's fee schedule and its authorizing statute unconstitutional.

BACKGROUND

T4 The Utah legislature enacted the Workers' Compensation Act in 1917. 1917 Utah Laws 806. The legislature designed this act as a "security system" to compensate workers for their injuries without requiring costly litigation. See Helf v. Chevron U.S.A., Inc., 2015 UT 81, ¶ 84, 361 P.3d 63 (citation omitted). Workers give up common law tort remedies against their employers, and in exchange, employers must compensate workers for workplace injuries regardless of fault. See Utah Code § 34A-2-105(1); Shattuck, Owen v. Snowbird Corp., 2000 UT 94, ¶ 19, 16 P.3d 555.

T5 Shortly after promulgating the Workers' Compensation Act, the legislature granted the Industrial Commission "full power to regulate and fix the fee charge" of attorneys involved in workers' compensation cases. 1921 Utah Laws 182, This power now resides with the Labor Commission 1 and is codified in Utah Code section 84A-1- *17 309(1): "In a case before the commission in which an attorney is employed, the commission has full power to regulate and. fix the fees of the attorney."

T6 Initially, the Commission created a scheme in which attorneys received a minimum fee of ten dollars, plus 5 percent of the injured worker's award. See Willis v. Indus. Comm'n, 91 Utah 432, 64 P.2d 363, 370 (1937) (noting the Commission's adoption of this policy on July 21, 1921). Under this policy, the Commission retained discretion to adjust the attorney fee upward or downward if the fee would otherwise be considered unjust to the parties. Id. The Commission's scheme affected injured workers' attorney fees only. The Commission has never regulated fees of attorneys representmg employers or insurance companies.

17 The fee schedule has been adjusted several times since its inception, typically for inflation. Today the regulation grants successful 2 injured workers' attorneys a fee of 25 percent for the first $25,000 of the award, 20 percent for the next $25,000 of the award, and 10 percent of amounts awarded in exeess of $50,000. Uran Apum. Cop® R602-2-4(C)(8)(a). Beginning in 1991, the Commission also added a cap to the overall fees. 3 Currently, attorneys may not receive fees in excess of $18,590 for "all legal services rendered through final commission action." Id. Some additional fees are awarded if the case is appealed. Id. R602-24(C)@B)(b)-(c). The regulation no longer allows the Commission discretion in awarding fees; the amount of attorney fees awarded depends solely on the size of the judgment. -

{8 IWA petitioned the district court for declaratory judgment, challenging the constitutionality of the Commission's fee schedule and the statute authorizing the Commission to regulate attorney fees. IWA attacked the fee schedule on four grounds, but only the separation of powers argument is at issue on this appeal. 4 IWA argues that under our state's constitution, the Utah Supreme Court has the exclusive power to govern the practice of law; the regulation of attorney fees falls within this power; and therefore, any attempt by the legislature to cireumvent this power violates the separation of powers doe-trine.

1 9 In response, the State cited Thatcher v. Industrial Commission, in which this court rejected the notion "that the regulation and fixing of fees of attorneys is essentially and solely the power of the judiciary." 115 Utah 568, 207 P.2d 178, 181 (1949). The Thatcher court recognized this court's inherent power to govern the practice of law, but nonetheless stated it was unaware of any power belonging to this court to regulate attorney fees, ultimately finding it unnecessary "to determine whether the judiciary has the power to regulate or fix fees" because it found that at the very least the legislature had the right to do so. Id. at 181-82.

¶ 10 IWA acknowledged Thatcher but argued that the law changed after the 1985 revision of article VIII of the constitution, when the supreme court's power to govern the practice of law became explicit and exclusive. The district court was not persuaded by IWA's argument, determining that

insofar as the power to regulate the practice of law is concerned, the 1985 amendment did not alter the previous allocation of such power in Utah, but merely "ratified" and stated "expressly" what was previously understood to be inherent. That being the case, there is no basis for concluding that the amendment somehow superseded Thatcher's holdmg that the 'Leg1slature may "giviel to the Industrial *18 Commission full power to regulate and fix reasonable fees of attorneys in cases before the commission in which attorneys have been employed."

(citation emitted)

T11 The district court additionally relied on a comment to rule 1.5 of the Utah Rules of Professxenal Conduct, which states that "[alpplicable law may impose limitations on contingent fees, such as a ceiling on the percentage allowable," and may apply in other fee agreements beyond contingency fees, Urax R. Pror. Conpuor 1.5 emt. 8. The court found this comment consistent with the Thatcher opinion and its determination that the 1985 amendment did not alter the seope of this court's inherent power to govern the practice of law; accordingly, the court denied IWA's petition at the summary judgment stage.

112 On appeal, IWA asks us to strike down the Labor Commission's fee schedule and its enabling statute as a "direct, unconstitutional, circumvention of the Utah Supreme Court's exclusive authority to regulate the practice of law." 5 The constitutionality of a statute presents a question of law. State v. Candedo, 2010 UT 82, ¶ 7, 232 P.3d 1008.

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Bluebook (online)
2016 UT 21, 374 P.3d 14, 813 Utah Adv. Rep. 21, 2016 WL 2924501, 2016 Utah LEXIS 64, Counsel Stack Legal Research, https://law.counselstack.com/opinion/injured-workers-assn-v-state-utah-2016.