February 14, 2019- Phillip Benavidez v. Red Sky Plating and NMMCC, No. A-1-CA-35977

1 	IN THE COURT O;F 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.
19 	{l} 	Phillip 	Benavidez (Worker) 	appeals 	the 	workers' 	compensation judge's
20 (WCJ) order denying his request to require Red Sky Plating and New Mexico Mutual
21 	Casualty Company (collectively, Employer/Insurer) to pay one hundred percent of
22 his 	attorney 	fees 	pursuant 	to 	the 	fee-shifting 	provision 	of 	the 	Workers'
23 	Compensation Act (the Act). We hold that Worker made an offer sufficient to trigger
Court of Appeals of New Mexico
Filed 2/14/2019 11:19 AM
Mark Reynolds

1 the mandatory fee-shifting provision of Section 52-1-54(F)(4) (2013) and therefore,
2 we reverse the WCJ's order and remand the matter for further proceedings consistent
3 with this opinion.
4 BACKGROUND
5 	{2} 	Worker was injured by a chemical exposure that occurred on September 17,
6 2013, during the course and scope of his employment. Worker filed a complaint
7 seeking indemnity and medical benefits for work-related injuries on October 22,
8 2014. On March 4, 2015, Worker made an offer of judgment to Employer/Insurer.
9 The relevant terms of Worker's offer of judgment are as follows: (1) Worker's
10 maximum compensation rate is $300 per week; (2) Employer/Insurer shall pay
11 	worker weekly temporary total disability (TTD) benefits in the amount of $300
12 beginning April 	4, 	2014, 	and 	continuing 	until 	he 	reaches 	maximum 	medical
13 	improvement 	(MMI) 	for 	his 	occupational 	asthma 	and 	all 	·other 	conditions
14 subsequently determined to be causally related to chemical exposure during the
15 	course of his employment; (3) Employer/Insurer is responsible for ongoing medical
16 care and payment of all medical bills for Worker's occupational asthma and/or-other
17 conditions determined to be causally related to Worker's work-related chemical
18 	exposure; (4) entitlement to pennanent partial disability (PPD) benefits, if any, is
19 deferred until Worker has reached MMI; (5) payment of attorney fees payable 50
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1 percent by Employer/Insurer and 50 percent by Worker; and, (6) costs to date
2 actually incurred by Worker shall be borne by Worker.
3 	{3} 	Employer/Insurer never responded to Worker's offer of judgment and neither
4 party disputes that the offer was rejected. The claim proceeded to trial, where the
5 only contested issues were the compensability of Worker's occupational asthma and
6 the extent of disability.
7 	{4} 	The WCJ issued a compensation order in favor of Worker. The compensation
8 order provided that Employer/Insurer was liable for Worker's occupational asthma,
9 sinusitis, acid reflux, 	and anxiety. 	Worker was awarded TTD benefits at his
10 maximum compensation rate in the amount of $364.69 per week from September
11 	17, 2013 (date of injury), until he reached MMI on September 29, 2015. After
12 reaching MMI, Worker was entitled to PPD benefits at 30 percent of his maximum
13 	compensation rate.
14 {5} 	Worker filed an application seeking an award of attorney fees to be paid
15 	entirely by Employer/Insurer pursuant to Section 52-1-54(F)(4). Employer/Insurer
16 opposed 	Worker's 	application. 	The 	WCJ 	determined that 	Worker's 	offer 	of
17 judgment was insufficient to establish a basis for fee shifting under Section 52-1-
18 	54(F)(4) because his offer failed to adequately address certain issues, such as PPD. 1
1In the attorney's fee order, the WCJ wrote that "[t]he [offer ofjudgment] does
not address issues related to ensuing developments i[n] 	Worker's case as the
litigation developed."
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1 The WCJ decided that Employer/Insurer should only bear 50 percent of Worker's
2 attorney fees. Worker appeals.
3 DISCUSSION
4 	{6} 	The sole issue on appeal is whether the WCJ properly determined that the fee-
s shifting provision of the Act does not apply. Worker argues that the Act does not
6 require a worker to reach MMI and calculate PPD as a prerequisite to filing an offer
7 	of judgment. 	In 	response, 	Employer/Insurer claims that because the 	offer 	of
8 judgment failed to establish an amount of PPD benefits and the date of MMI was
9 unresolved, it deprived Employer/Insurer of the requisite information necessary to
10 determine the extent of its liability. Employer/Insurer also argues that Worker's offer
11 	of judgment was deficient because it did not include all of the injuries claimed in
12 Worker's complaint. 2 Subsequent to the WCJ's decision, our Supreme Court decided
13 	Baker v. Endeavor Servs., Inc., 2018-NMSC-035, ~ 23, 428 P.3d 265, which held
2In Worker's prose 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 work-related 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 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.
4

1 that uncertainty about an MMI date or a PPD rate is insufficient to invalidate an offer
2 	of judgment "if the worker's healing process is incomplete." Applying Baker here,
3 we reverse.
4 A. 	Standard of Review
5 {7} 	Normally, we review the WCJ' s award of attorney fees for abuse of discretion.
6 See Leonardv. Payday Prof'/, 2007-NMCA-128, 121, 142 N.M. 605, 168 P.3d 177;
7 	Cordova v. Taos Ski Valley, Inc., 1996-NMCA-009, 1 15, 121 N.M. 258, 910 P.2d
8 334 ("Awarding attorney fees under the Act is a matter entirely within the discretion
9 	of the workers' compensation judge."). Employer/Insurer argues that this Court
10 should apply a rational basis standard of review, which requires a reviewing court to
11 	"affirm such a finding if it was rational for the fact[-]finder to disbelieve evidence
12 offered in support of the finding." Sosa v. Empire Roofing Co., 1990-NMCA-097,
13 18, 110 N.M. 614, 798 P.2d 215. However, this Court is not assessing whether there
14 were sufficient facts to support the WCJ finding. Rather, we are interpreting the
15 	attorney fee statute and the WCJ's application of the law to the facts. We therefore
16 are required to apply a de novo standard of review. See Baker, 2018-NMSC-035,
17 115.
18 B.
19
20 	{8}
The Worker's Offer of Judgment Was Sufficient to Trigger the Fee-
Shifting Provision of Section 52-1-54(F)(4)
Attorney fees are only permitted as provided in Section 52-1-54 of the Act.
21 	Generally, 	a 	worker's 	attorney 	fee 	is 	split 	equally 	between 	a 	worker 	and
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1 employer/insurer, 	unless 	the 	prov1s10ns 	of Section 52-l-54(F) 	are 	applicable.
2 	Section 52-1-54(J).
3
4
5
6
7
8
Section 52-1-54(F)(4) provides as follows:
[I]f the worker's offer was less than the amount awarded by the
compensation order, the employer shall pay one hundred percent of the
attorney fees to be paid the worker's attorney, and the worker shall be
relieved from any responsibility for paying any portion of the worker's
attorney fees.
9 Id.; see Abeyta v. Bumper To Bumper Auto Salvage, 2005-NMCA-087, 1 9, 137
10 N.M. 800, 115 P.3d 816 (referring to Section 52-1-54 as a fee-shifting provision).
11 	The primary purpose of the fee-shifting provision of the Act is to facilitate settlement
12 and prevent litigation. See Baber v. Desert Sun Motors, 2007-NMCA-098, 118, 142
13 	N.M. 	319, 	164 P.3d 	1018. The fee-shifting provision of the Act is aimed at
14 encouraging the litigants "to make and accept reasonable offers of judgment by
15 	providing financial sanctions for the rejection of an offer of judgment if the rejecting
16 party does not obtain a more favorable ruling." Id. (internal quotation marks and
17 citation omitted).
18 	{9} 	The mandatory fee-shifting provision is triggered when the following three
19 requirements are met: (1) a worker's offer of judgment is valid pursuant to the Act,
20 (2) the offer is for an amount less than that awarded at trial, and (3) the worker's
21 	offer was rejected. Baker, 2018-NMSC-035, 1 18. We need only address the first
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1 two requirements as the parties do not dispute that the Worker's offer of judgment
2 was rejected.
3 	1. 	The Worker's Offer of Judgment is Valid Pursuant to the Act
4 	{to} 	In denying Worker's request to apply the fee-shifting provision, the WCJ
5 determined that Worker's offer deferred the issue of PPD and did not address "issues
6 related to ensuing developments [in] Worker's case as the litigation developed." We
7 disagree.
8 	{11} 	In Baker, our Supreme Court established the requirements for a valid offer of
9 judgment pursuant to the mandatory fee-shifting provision. An offer of judgment
10 must "[make] clear the intent of the offeror and implications of acceptance by the
11 	opposing party." Id. 	,r 20. The offer must provide a frame of reference for the
12 opposing party to determine its liability in order to decide whether to accept or reject
13 	the offer. Id. ,r 21. The WCJ should be able to "ascertain whether the offeror received
14 a more or less favorable outcome in the final compensation order compared to what
15 	was offered in the offer of judgment." Id. Finally, an offer must address "the critical
16 	issues raised in the complaint." Baker, 2018-NMSC-035, ,r 21.
17 	{12} 	Baker held that the absence of an MMI date in an offer of judgment does not
18 necessarily invalidate an offer or preclude an opposing party from ascertaining its
19 potential liability. Id. ,r 23. Our Supreme Court stated that, "an offer of judgment
20 need not establish the date ofMMI or amount of PPD benefits if the healing process
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1 is still underway." Id. ~ 32. To require litigants to include in their offer details that
2 are 	dependent on the healing process 	of the worker would drastically delay
3 settlements in compensation cases. Id.~ 23.
4 {13} 	Here, 	the 	offer 	of judgment provided Employer/Insurer with 	sufficient
5 information related to the offeror' s intent, allowed Employer/Insurer to evaluate its
6 potential liability, and addressed all 	of the critical issues raised in Worker's
7 complaint. See id. Worker's offer of judgment included all of the critical issues
8 related to his claim that could possibly have been included at the time of his offer.
9 The offer included an exact maximum compensation rate that would be used for all
10 future indemnity benefits (TTD and PPD). The offer was clear in stating that TTD
11 	benefits would not commence from the date of the accident, but rather months later
12 on April 4, 2014. Worker made clear that he was only seeking medical care and
13 	payment 	of medical bills for his occupational asthma and any other injuries
14 subsequently 	determined to 	be 	causally related to 	his 	work-related 	accident.
15 	Additionally, although Worker's offer was made months prior to him reaching MMI
16 and Worker did not include an MMI date or PPD amount in his offer, the absence of
17 a definitive MMI date in Worker's offer did not preclude Employer/Insurer from
18 assessing its potential liability. See id.~ 32. For these reasons, we conclude that the
19 	intent of Worker's offer was clear, unambiguous and provided sufficient notice to
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1 Employer/Insurer of its potential liability. Applying Baker, we conclude that Worker
2 made a valid offer of judgment.
3 2. 	The Offer of Judgment Was for an Amount Less Than the Award at
4 	Trial
5 {14} 	If Worker's offer was for "less than the amount awarded by the compensation
6 order, the Employer shall pay one hundred percent" of Worker's attorney fees.
7 Section 	52-1-54(F)(4). 	Here, 	the 	Worker 	received 	more 	pursuant 	to 	the
8 compensation order than he would have received if Employer/Insurer had accepted
9 his offer of judgment.
10 	{15} 	As Worker points out, his maximum compensation rate not only impacts the
11 	amount of TTD benefits he received, but also the amount of PPD benefits he was
12 eligible to receive. Worker's offer of judgment proposed a maximum compensation
13 	rate of $300 per week, however, the compensation order set Worker's maximum
14 compensation rate at $364.69 per week. The WCJ awarded Worker TTD benefits at
15 	his maximum compensation rate in the amount of $364.69 per week, which is $64.69
16 more than he would have received under his offer of judgment.
17 	{16} 	Further, the WCJ determined Worker reached MMI on December 29, 2015,
18 	and awarded weekly PPD benefits in the amount of $109.40, which is equivalent to
19 30 percent of his maximum compensation rate of $364.69. Had the Employer/Insurer
20 accepted the offer of judgment, Worker would have only received weekly PPD
21 	benefits in the amount of $90, which is equivalent to 30 percent of the $300
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1 maximum compensation rate, which again, was the amount specified in the offer of
2 judgment.
3 	{17} 	In addition, Worker received TTD benefits for a longer duration pursuant to
4 the compensation order than he would have received had the Employer/Insurer
5 accepted his offer of judgment. Worker's offer of judgment stated that TTD benefits
6 would commence on April 4, 2014, but the WCJ ordered that the TTD benefits
7 would commence almost seven months earlier on September 29, 2015.
8 	{18} 	Comparing the offer of judgment to the compensation order, Worker's offer
9 	of judgment was more favorable to Employer/Insurer than the determination made
10 by the WCJ. The total amount of indemnity (TTD & PPD) benefits awarded to the
11 	Worker by the WCJ exceeded the total amount of indemnity benefits he would have
12 received based on his offer of judgment. Consequently, the Employer/Insurer should
13 	have been required to pay one hundred percent of Worker's attorney fees pursuant
14 to the mandatory fee-shifting provision of the Act. Section 52-1-54(F)(4 ).
15 	CONCLUSION
16 	{19} 	We hold that Worker's offer of judgment was valid, that Worker was awarded
17 benefits that exceeded the amount he proposed in his offer, and the offer was
18 rejected. 	The 	fee 	~hifting 	provision 	of the 	Act 	was 	therefore 	triggered 	and
19 Employer/Insurer should have been ordered to pay 100 percent of Worker's attorney
20 fees. See Baker, 2018-NMSC-035,, 30 ("The plain language of the statute is clear
10

1 and unambiguous and requires attorney fees to be shifted to the rejecting party if the
2 	final compensation awarded to the offeror exceeds what was initially offered.").
3 	{20} 	We therefore reverse the WCJ's order denying Worker's request for fee
4 shifting and remand for further proceedings consistent with this opinion.
5 	{21} 	IT IS SO ORDERED.
6
7
8 WE CONCUR:
11
12 MEGXN P. DUFFY, Juel
11