§8.1 Apportionment of Fees in Cases with Workers’ Compensation Subrogation Interest

The Case: Rushing v. Crockett , No. M2004-00324-COA-R3-CV, 2005 WL 415177 (Tenn. Ct. App. 2005).

The Basic Facts: Plaintiff suffered compensable work injury and injury by negligence of third party. The third party claim was resolved and the parties could not agree on a proportional allocation of fees.

The Bottom Line:

• “The tort action was settled for $100,000.00. Without objection Montgomery County had been allowed to intervene to protect its subrogated interest which was stipulated to be $43,487.40. Thereafter, the attorney for the plaintiff, Mr. Rassas, filed a motion to apportion his fee pursuant to Tenn. Code Ann. § 50-6-112, which provides:

  [T]he attorney representing such injured worker . . . and effecting the recovery, shall be entitled to a reasonable fee for the attorney’s services, and the attorney shall have a first lien therefor against the recovery; provided, that if the employer has engaged other counsel to represent the employer in effecting recovery against such other person, then a court of competent jurisdiction shall, upon application, apportion the reasonable fee between the attorney for the worker and the attorney for the employer, in proportion to the services rendered.”

  2005 WL 415177 at *1.
• “Mr. Rassas insists that he is entitled to a fee for his work in recovering the subrogable benefits, i.e., $43,487.40, while Mr. Nolan insists that each party should be responsible for his own fees, arguing that it would be unreasonable for Mr. Rasses to be paid a fee from the subrogable $43,487.40.” Id.
• “The worker’s compensation case was litigated and Mr. Rassas was awarded a fee of $4,625.28 for his services rendered on behalf of his client, the injured employee. This fee was deducted from the fee [$13,046.22] awarded proportionately to Mr. Rassas for his services in the tort action. The trial court explained that this deduction was necessary ‘to avoid a dual recovery.'” Id. at *3.
• “We are unable to agree with this rationale. Mr. Rassas represented his client in two disparate actions. He was successful in both cases, and is entitled to be paid for his services in both cases. The proof shows that Mr. Rassas maintained separate files, there were other attorneys involved, discovery was separate as were depositions. We also note that the client, Mr. Rushing, paid a fee of 20% of his recovery of benefits; the employer paid no fee, but was fully subrogated to all awards paid, less fees. The deduction ordered by the court arguably refunds to the employer the award paid by Mr. Rushing to his attorney. We are not aware of any statutory authority for this deduction, which was awarded to Mr. Nolan, attorney for Bi-County Solid Waste Management, Inc.” Id.
• “We affirm the apportionment of the fees. The deduction of $4,625.29 from the fee of Mr. Rassas is vacated.” Id.