State of Michigan Workers Compensation Proposal

					                     The social security number and dates of birth
                        have been redacted from this opinion.

                         STATE OF MICHIGAN

Ronald C. Bursley, Jr.
     SS# xxx



Bramer Masonry, Inc./
Associated Builders & Contractors of Michigan,
Citizens Management, Inc.,



THE TRIAL DATE:          March 20, 2007



       Kenneth R. Oosterhouse (P18508)
       Michelene B. Pattee (P48003)


       Jane C. Hofmeyer (P44352)
       Thomas R. Tasker (P21273)

Ronald C. Bursley, Jr.                                                                     2

Plaintiff filed an application dated October 13, 2005 alleging injury dates of September
2004, October 18, 2004 and June 15, 2005, which was the last day of work. The
application indicated that the plaintiff had injured his back and groin when lifting material
weighing approximately 90 pounds over a block wall, lost his balance, and jerked to
prevent from falling. He also alleged that subsequent work activities through the last
day of work aggravated his condition to the point of disability.

Plaintiff filed an amended application dated September 12, 2006, which further sought
attorney fees on medical expenses incurred by the plaintiff and submitted to defendant’s

Defendants filed responsive pleadings for each of the applications. On October 2, 2006
the parties entered into a voluntary payment agreement by which a sum certain would
be paid to the plaintiff for indemnity payments through September 16, 2006 and a set
sum would be paid for reimbursement of mileage expenses through the date of the
agreement. In addition, the parties agreed that partial benefits would continue to be
paid. The parties agreed, however, that the issue of any attorney fee on medical
expenses to be paid by the defendant would be left open for further proceedings.


On March 20, 2007, counsel for both plaintiff and the defendant stipulated on the record
that the sole issue to be determined by this Magistrate would be the issue of whether
the defendants should be responsible for payment of plaintiff’s attorney fees as they
relate to the medical expenses incurred by plaintiff and submitted to defendant’s
representatives pursuant to plaintiff’s application. Each party presented a trial brief with
exhibits as well as proposed facts. The parties agreed to the extent that plaintiff’s
proposed facts and defendant’s proposed facts are inconsistent, this Magistrate may
make any necessary factual determinations based upon the exhibits submitted by each
of the parties without the need for any testimony.



       1.     A 3/16/06 letter from plaintiff’s counsel, Michelene B. Pattee, to defense
              counsel, Jane C. Hofmeyer, which requests employment records from the
              defendant and then responds to the defendant’s letter of 1/25/06 by
              providing information concerning medical treatment, examining
              physicians, subsequent injuries, subsequent employment, educational and
              employment history, et cetera. A listing of medical and prescription
              expenses indicating the total billings of $72,575.69, with payments made
              by the plaintiff totaling $10,079.83, payments made by a health insurer of
              $1,156.13, leaving a balance of $61,342.73. There was a separate listing
Ronald C. Bursley, Jr.                                                                  3

            of dates of service and amounts paid with remaining balances concerning
            billings from Orthopedic Associates, Kent Radiology and Central
      2.    An 8/23/06 letter from Kenneth Oosterhouse to Jane Hofmeyer setting
            forth calculations of outstanding accrued indemnity benefits for periods of
            time missed from work as well as calculation of out-of-pocket medical
            expenses totaling $10,079.83, plus a claim for mileage of $308.00,
            bringing a total amount claimed due to the plaintiff of $43,387.83, but
            further indicating, however, that there was still a balance owed to medical
            providers of $62,944.37. This letter included a proposal for voluntary
            payment and there were attached statements, receipts, pay stubs, as well
            as a listing of medical and prescription expenses supporting the letter.
      3.    Copies of the following Appellate Commission decisions offered in support
            of plaintiff’s position: Russell-Kirby vs. Manor Care, Inc. 2006 ACO #210,
            Brackett vs. Focus Hope & Accident Fund Insurance Company of America
            2005 ACO #218, Petersen vs. Magna Corporation & Midwest Employers
            Casualty Company, et al. 2005 ACO #222, Beattie vs. Wells Aluminum
            Corporation Pennsylvania Manufacturers Association Insurance
            Company, et al. 2005 ACO #157, Sikkema vs. Taylor Carving, Inc., St.
            Paul Fire & Marine Insurance & Second Injury Fund 1992 ACO #469 and
            Kochanowski vs. State Farm Mutual Automobile Insurance Company,
            intervening plaintiff vs. Jefferson Beach Marina, Globe Indemnity/Royal
            Insurance Company and The Second Injury Fund (Permanent & Total
            Disability Provisions) 2005 ACO #224.
      4.    Deposition transcript of Joseph Todd Brown, D.O., taken on July 11, 2006.
      5.    The report of an independent medical evaluation of plaintiff by Michael
            Holda, M.D., dated August 11, 2006.
      6.    Copy of the Summons and Complaint and Prejudgment Stipulation and
            Order in the District Court matter of Metropolitan Hospital vs. Ronald C.
            Bursley seeking payment of $1,003.29, plus costs, attorneys fees and
            interest with the plaintiff being ordered to pay $25.00 per month beginning
            April 2006.
      7.    Letters from Kenneth Oosterhouse to Jane C. Hofmeyer dated January 5
            and February 1, 2007 concerning proposed stipulations of facts and
            confirming the scheduled trial on 3/20/07.


      A.    Records of Dr. David J. Presley beginning in early 2004 and ending with
            the las t office note of 9/13/05. Also included in Dr. Presley’s chart are lab
            studies, MRI and other radiographic reports and a report from a consulting
            neurologist, Michael W. Grof, D.O., from November 2004.
      B.    File material of Michael W. Grof, D.O., which includes a narrative report of
            the initial evaluation of 11/4/04, a report of an 11/12/04 EMG nerve
            conduction study, a narrative for a re-evaluation of 7/7/05, including an
Ronald C. Bursley, Jr.                                                                   4

            updated EMG and CT of that same date and a final one-page report of
      C.    A copy of the Notice of Dispute dated 7/25/05, indicating a need to obtain
            medical documentation to support ongoing disability as a result of
            occupational injury.
      D.    Office notes of orthopedic surgeon Joseph T. Brown, D.O., of 8/16/05,
            8/31/05, 10/11/05, 10/27/05, 11/08/05, 12/6/05, 1/31/06 and 2/3/06.


      1.    The parties agree that on 10/18/04 the plaintiff injured his back and groin
            when lifting material blocks weighing approximately 45 pounds over a
            block wall when he lost his balance and jerked to prevent himself from
            falling. The defendant, however, does not agree with plaintiff that that
            injury caused a T-10 compression fracture.

      2.    The parties agree that the plaintiff did treat with Dr. Presley shortly after
            this injury at which time he gave a history of straining his groin, but made
            no reference to any back injury. The parties could not agree on additional
            language concerning subsequent treatment with Dr. Goff, a neurologist.

      3.    There is agreement that the plaintiff was subsequently diagnosed with a T-
            10 compression fracture, and that he ultimately had a thoracic fusion
            performed on February 3, 2006.

      4.    The parties agree that the workers’ compensation carrier first received
            notice of a claim in July 2005 and that a notice of dispute was filed on July
            25, 2005.

      5.    It was also stipulated that the case was initially filed on October 15, 2005,
            alleging back and groin injury dates of September 2004, October 18, 2004
            and June 15, 2005.

      6.    It is also stipulated that the defendants filed an appearance and response
            on January 28, 2006 denying liability. The parties agreed that on July 22,
            2006 plaintiff’s attorney took the deposition of Joseph Brown, D.O., and
            that on July 17, 2006 the plaintiff did return to work with restrictions and
            has been working for the defendant since that time when work was
            available within his restrictions. The parties also agree that on August 23,
            2006 plaintiff’s attorney sent a letter to the defendant’s attorney enclosing
            a copy of all of the medical bills and prescription expenses for treatment
            for the plaintiff’s work injuries incurred up through that date, along with a
            chart setting forth the dates of service, the health care provider, the type of
            service, the amount billed by the provider, the amounts paid by the plaintiff
            and his health insurer, the amount that had been paid by the workers’
Ronald C. Bursley, Jr.                                                                    5

              compensation carrier, and the amount still owing. As of August 23, 2006,
              the total amount that had been billed by the plaintiff’s health care providers
              for his work-related injuries was $77,853.70. The amount that had been
              paid by the plaintiff out of his own pocket was $10,079.83. The amount
              that had been paid by the plaintiff’s health insurer was $1,894.09, and the
              amount that had been picked up by the workers’ compensation carrier was

       7.     The parties also agree on September 12, 2006 plaintiff filed an amended
              application for mediation or hearing with the only difference being the
              request for attorney fees on medical expenses incurred.

       8.     The parties also agree on September 21, 2006 defendants filed an
              amended carrier’s response disputing that the injury was work-related and
              disputing disability.

       9.     Finally, the parties agree that on October 2, 2006, the plaintiff and
              defendants entered into a voluntary payment agreement, in which the
              defendants agreed to voluntarily pay the plaintiff $35,245.00 in indemnity
              payments, reimburse the plaintiff $10,079.83 in medical expenses that the
              plaintiff had paid out-of-pocket, and paid $308.00 in mileage
              reimbursement to the plaintiff. The attorney fee to be charged on these
              amounts was to be 30 percent. The parties further agreed that the
              defendants would pay the medical expenses referenced in paragraph 9 to
              the providers and possible group carrier subject to cost containment. The
              issue of whether the plaintiff’s attorney should receive an attorney fee from
              the defendants on the outstanding medical expenses was left open for
              further proceedings, and is the sole issue currently before the Agency in
              this matter.


There are a number of items in plaintiff’s proposed facts that were simply left out of or
ignored in defendant’s proposed facts. If I were to treat the plaintiff’s proposed facts as
allegations in a complaint, and the defendant’s proposed facts as an answer to that
complaint, I would conclude that the defendant neither admits nor denies plaintiff’s
assertion in his proposed fact #1 that the injury caused the T-10 compression fracture,
that the description of treatment with Dr. Presley in proposed fact #2 was accurate, that
the description of treatment in plaintiff’s proposed fact #3 was correct, et cetera, et
cetera. Similarly, I would conclude that defendant neither admits nor denies that
plaintiff’s counsel sent copies of certain medical bills and expense items, as indicated in
proposed fact #9, or that plaintiff’s counsel provided notice of intent to introduce certain
medical records, as indicated in proposed facts #10, #11, #12, and #14 or that defense
counsel had filed objections or notices of deposition, as indicated in proposed facts #13
Ronald C. Bursley, Jr.                                                                     6

and #17. Most importantly, however, I would have to treat the defendant’s response as
neither admitting nor denying plaintiff’s proposed fact #19, which suggested all of the
medical services incurred by the plaintiff, which are subject matter of this case, were
reasonable and necessary to treat his work-related injuries. It would not appear that
any of the other areas that were not specifically agreed upon would bear any relevance
to the issue being litigated and whether or not the question of reasonableness and
necessity as an issue will be discussed later.


The case law cited by both plaintiff and defense counsel in their briefs and exhibits as
noted above, clearly support the position that the imposition upon a defendant for
attorney fees for unpaid medical expenses is not automatic in every case where medical
benefits are awarded and is within the discretion of the magistrate. This is not to say,
however, that the magistrate is free to order defendants to pay attorney fees in addition
to paying unpaid medical expenses without making some preliminary findings. There
are several cases which discuss different opinions as to what preliminary findings are or
should be necessary in order to trigger a discretionary award of attorney fees.

The first theory I wish to discuss is one proffered by my colleague, Magistrate Quist:
That attorney fees should be awarded in cases where wage loss is minimal or
nonexistent because in such cases there would be no incentive for a plaintiff attorney to
pursue a case involving unpaid medical expenses. An award of attorney fees based
upon that theory was affirmed by the Appellate Commission in Russel vs. Kirby, supra,
a 2006 Appellate Commission case. In Beattie, supra the Commission majority
remanded the issue of attorney fees to the magistrate where the magistrate had based
the award on the theory that 315(1) was intended to provide an incentive to plaintiff
attorneys to handle primarily medical-only cases. The Commission majority felt the
award was an abusive discretion and that awards must be based upon a breach of duty
by the defendant and further indicated that such an award requires a preliminary finding
that the treatment was reasonable and necessary and that the defendant had notice.
The concurring opinion agreed that plaintiff must show a breach of duty, but disagreed
that any dispute by the defendant would absolve the defendant’s obligation. In the
concurrence the Commissioner notes that the plaintiff’s medical bills had been paid by
the employer’s health care insurance coverage, which, in her opinion, would negate any
breach of duty. The July 2005 Beattie case is followed in September of 2005 by
Petersen vs. Magna Corporation & Midwest Employers Casualty Company, et al. 2005
ACO #222. Once again the Commission addressed an award of attorney fees that was
based upon the theory that 315 was intended to provide an incentive to plaintiff’s
counsel in cases primarily involving medical expenses. Once again the Commission
indicates that certain preliminary findings must be made, but in this case, it finds that the
magistrate did make those preliminary findings, at least implicitly, before awarding
attorney fees and affirms the entire opinion as a result. Those preliminary findings
required by the Commission are: (1) That defendant was provided a prior opportunity to
Ronald C. Bursley, Jr.                                                                    7

pay the medical bills; (2) that the plaintiff attorney had requested such relief at least by
the onset of trial; and (3) that the medical services in question were in fact reasonable
and necessary to treat a work-related injury. It is important to note that the
Commission’s opinion states clearly that in this case the “defendant knew of the medical
bills in question well in advance of trial and simply refused to pay them…”.

These Appellate Commission cases indicate that a magistrate’s discretion to grant
attorney fees in cases that involve primarily medical expenses requires that the
magistrate establish certain elements found necessary to establish that the employer
has failed, neglected or refused to pay for reasonable medical expenses in order to
comply with the language of Section 315(1) and the Court of Appeals cases which first
established the attorney fees which the magistrate may “prorate” are in fact payable by
defendant employers or carriers. See Boyce vs. Grand Rapids Paving 117 MichApp
546 (1982) and Zeeland Community Hospital vs. VanderWal 134 MichApp 815 (1984).

A question may arise as to whether or not this initial theory of recovery of attorney fees
based upon the need to provide an incentive to plaintiff’s counsel to pursue primarily
medical claims is alive and well in light of the fact that the above Appellate Commission
cases have added additional factors unrelated to that theory of recovery. We then look
to a case cited in the defendant’s brief of Croff vs. Mike Rosema Masonry 2006
ACO#147 in which the Commission states its agreement with the concurring opinion in
Beattie, supra, that “the receipt of an attorney fee for weekly benefits is a legitimate
factor to consider in determining that the magistrate did not abuse his discretion.”

In Kochanowski, supra, the Commission found that the magistrate’s refusal to award
attorney fees was not an abuse where the medical bills have been paid by another
carrier and there were no out-of-pocket expenses incurred by the plaintiff. In that case,
the no-fault carrier was represented by its own attorney, and therefore, it was deemed
that the plaintiff attorney had not been responsible for the no-fault carrier’s recovery
from the workers’ compensation carrier. By implication, plaintiff’s counsel would argue
that this case would support the imposition of attorney fees against the defendant here
because his client did have out-of-pocket expenses and most of the outstanding bills
are owed directly by the plaintiff to the healthcare providers. In Kochanowski the
Commission’s position is consistent with the concurring opinion in Beattie where
Commissioner Glazer felt that the health carrier, not guilty of any breach, should not be
forced to accept not only a lesser fee under cost containment, but also pay additional
attorney fees to plaintiff’s counsel. This would seemingly further support the theory that
attorney fees are appropriately imposed upon the carrier when that carrier’s been guilty
of a breach of duty, but to some extent breathes life into the theory of providing an
incentive to plaintiff’s counsel because, if the carrier is not to pay any attorney fee for
recovery, then how else would plaintiff’s counsel receive a fee for the services?

From these cases we conclude that the incentive theory is at least a valid factor to be
considered in the use of discretion.
Ronald C. Bursley, Jr.                                                                    8

The second theory has already been addressed indirectly. That theory is that imposition
of attorney fees against a defendant carrier is appropriate where there is a breach of a
duty. The language of 315 states there must be a failure, neglect or refusal to pay for
reasonable medical expenses and there are a number of cases that support the breach
of duty theory, some of which add interpretive or clarifying language, saying the
defendant must have failed, neglected or refused to pay medical treatment that the
plaintiff was “clearly entitled to.”

In looking at all of the cases discussed by counsel, it seems clear that there are really
two parts to this test. The first part is to establish that there was a failure, neglect or
refusal to pay certain bills. This requires the establishment of the first two elements
indicated in Petersen, supra, which essentially establish that the defendant had an
opportunity to pay.

The second major part has to do with whether the medical payment was reasonable
and necessary so that the plaintiff was clearly entitled to have those bills paid. The term
“clearly entitled” is a key element that must be addressed in this case. At first blush it
would seem to add one more hurdle for plaintiff’s counsel to clear in order to obtain
attorney fees under Section 315. However, one has to look at the entire subsection of
315(1) in its entirety and note that the very first sentence of that section states that “an
employer shall furnish or cause to be furnished to an employee who receives a personal
injury arising out of and in the course of employment, reasonable medical, surgical and
hospital services…when they are needed.” The second to last sentence of that section
discusses the situation “if the employer fails, neglects or refuses so to do, the employee
shall be reimbursed for the reasonable expense paid by the employee…by order of the
workers’ compensation magistrate.” The final sentence indicates that the “magistrate
may prorate attorney fees…”. It would seem clear to me that the entire subsection has
to be read together in order to make sense out of any one or two sentences. It does
appear therefore that payment of attorney fees may be imposed by the magistrate
where the personal injury arose out of and in the course of employment and the medical
treatment was reasonable and necessary. When all of those elements are found, then
one can say that the plaintiff was “clearly entitled” to payment of such medical

The next question is whether the defendant had a reasonable basis for disputing the
claim or not. If there was no reasonable basis for a dispute, then plaintiff was clearly
entitled to payment and a refusal or a failure or neglect to take care of the bills would
trigger a situation where the magistrate may exercise and probably should exercise
discretion in awarding attorney fees.

In Exhibit A we see that the 10/19/04 office note of Dr. Presley is devoid of any
reference to the alleged back injury on 10/18/04. In fact, there is no reference to back
complaints at all and on 12/2/04 he does complain of low back pain and right
parathesia, but still no history of injury. In Exhibit B we see that when Dr. Grof first saw
plaintiff on 11/4/04, he obtains a history that denies any neck or spine injuries, denies
any numbness or tingling in the legs or buttocks, with low back pain for several years.
Ronald C. Bursley, Jr.                                                                    9

The first history of a work injury seems to appear in Exhibit D when plaintiff tells Dr.
Brown, on 8/16/05, that he hurt his back in April of 2005. At that time he states he’s had
back pain since the injury and reports “it aches into his legs today.”

Based upon the above, I find that there was a reasonable basis for the defendant’s
initial decision to dispute compensability. I also find that applying a broad interpretation
of the terms “failure” “neglect” and “refusal,” as used in Section 315, so as to
encompass any dispute of a claim later found to be compensable (either by a
magistrate or by the claim’s representative) would be tantamount to automatic
sanctions which is clearly not what the legislature intended. See Burnett v St. Joseph
Hospital 1992 ACO#720. I also believe that using a defendant’s agreement to
voluntarily pay as an admission of liability, as plaintiff’s counsel suggests on page 5 of
his brief, would run contrary to the language on the voluntary agreement form and
would be contrary to public policy.

It appears to me that it did not become clear to the defendant that plaintiff’s case was
most likely compensable until after: a) plaintiff counsel took the deposition of Dr. Brown
in July of 2006 (Exhibit 4), b) defendant received the report of Dr. Holda’s 8/11/06
examination (Exhibit 5), and c) defendant had an opportunity to discuss this with

It is equally clear that during the time period, in which the parties were negotiating a
possible voluntary agreement, the 9/12/06 amended application seeking attorney fees
was filed and the parties ended up negotiating an agreement to leave this issue open
before submitting the voluntary payment agreement of October 2, 2006.

Under all of these circumstances, as of the time the 9/12/06 application was filed, as of
the time the parties entered into the voluntary agreement on 10/2/06, and within a
reasonable period thereafter, I find that the defendant had not violated a duty to pay so
as to trigger the sanctions of Section 315.

I should note plaintiff’s counsel’s statement in his brief that he does not know whether
the bills in question have been paid subsequent to the voluntary agreement and I have
no evidence before me as to whether the defendants have paid the medical bills they
promised to pay in the voluntary agreement. However, the application alleges
entitlement to payment of attorney fees based upon the facts as they existed prior to the
voluntary payment agreement and, therefore, I do not address in this opinion any issue
of possible entitlements that may exist as a result of the voluntary payment agreement
or the breach of any duties that may arise out of that agreement.


IT IS HEREBY ORDERED that Plaintiff’s Application for payment by defendant of
attorney fees is denied.
Ronald C. Bursley, Jr.                                                    10


                                 TIMOTHY MCAREE, MAGISTRATE (221G)

Signed this 9th day of April, 2006, at Grand Rapids, Michigan.

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