714 Fees, What Are They And How Do We Collect Them? Part 1

When my curiosity was sufficiently piqued, I asked what these mysterious fees were. The explanation I was given at the time was 714 fees were granted to a claimant’s attorney who was successful in persuading the Commission that the claimant’s healthcare providers (HCP) were paid for their treatment of the claimant through the efforts of claimant’s counsel. Due to those efforts, the Commission had ordered the employer/carrier to pay the claimant’s medical expenses. The reasoning for such fees being that the HCP would have had to pay a fee to any attorney who undertook to collect the unpaid bills through civil action in the courts.
“So what kind of fee do you get for this service to the medical profession?” I asked. The answer was that the final fee award was subject to the scrutiny of the Commission, just like all fees paid to the claimant’s attorney, but sometimes they were awarded a 1/3rd fee based on the reasoning that a 1/3rd contingency fee was standard in civil collections practice. “What if the HCP wanted to hire his/her own attorney, or for whatever reason does not want to take collections efforts to collect on these accounts?” I continued in my effort to comprehend this totally foreign (to me) concept. The response was the active participation of the HCP in the collections portion of these actions was not required and that there was caselaw to the effect that the claimant’s attorney was entitled to the 714 fees with or without the consent of the HCP.
I have to admit that this whole question of collecting a fee for what seemed to me, doing your ethical duty to be zealous in your representation of the client was heady stuff. I had had sufficient success in the tort arena to believe that, had something existed in tort law that was roughly equivalent to 714 fees, those fees would have amounted to thousands of dollars over the years. How had claimant’s attorneys in comp managed to come up with this sweet arrangement, and how did these mystical fees work in reality? Now that I have been practicing almost exclusively in the workers’ comp field for the last several years, I have a more matured view of 714 fees, the public policy arguments that underpin the creation of 714 fees, and how those fees are awarded. At the risk of being publicly wrong about the topic of these fees, I thought I might share some conclusions with you, the reader.
First of all is the question of the name. These fees are called “7-14 fees” after the statute number that created them, Virginia Code section 65.2-714(b). That section reads in pertinent part, “If a contested claim is held to be compensable under this title and, after a hearing on this claim on its merits or after abandonment of a defense by the employer or insurance carrier, benefits for medical services are awarded and inure to the benefit of a third-party insurance carrier or health-care provider, the Commission shall award to the employee’s attorney a reasonable fee and other pro rata costs as are appropriate.” Code section 65.2-714 (b), emphasis added. As the highlighted language states, the claimant’s attorney must show to the Commission that he/she has met all of the conditions set out in the statute before asserting an entitlement to 714 fees. Specifically, the claim must be contested, at least initially, by the employer or insurance carrier. Next, the claimant must be successful in his/her argument to the Commission at an evidentiary hearing or other proceeding which results in an award to the claimant of the very same medical expenses as are owed to the HCP, either by the claimant personally or by his health insurance carrier, or that have been previously paid by either the claimant or his/ her health insurer such that either the claimant or the health insurance company would be entitled to a refund of the payments they have made upon payment of those accounts by the workers’ comp carrier pursuant to the order of the Commission. The statute also considers the situation where, after initially contesting the employee’s claim for payment of his/her medical expenses, the defendant abandons that defense at the hearing stage.to be the equivalent to a victory on the merits. Finally, the payment of the medical expenses must inure to the benefit of the third-party insurer that had previously paid some or all of the contested medical bills or to the claimant himself or herself.
Assuming that all of those requirements have been satisfied, the statute uses mandatory language by stating that the Commission shall award to the employee’s/claimant’s attorney a reasonable fee as well as a pro rata share of the attorney’s costs expended in representing the claimant in the proceeding. The statute states that the Commission shall not award an attorneys’ fee “unless and until” the attorney complies with Rule 6.2 of the Commission’s Rules. That Rule sets out certain procedural requirements that an attorney must meet, including an obligation to confer with the carrier or provider in good faith in an attempt to resolve any disagreements concerning the amount of the medical charges recovered and the amount of the fee, before the claimant’s attorney can request the Commission to enter an Award Order for payment of the fee to the attorney. The Rule also sets out the obligations of the attorney to provide each HCP, and insurance carrier with a statement detailing the specifics of the attorney’s claim for fees and notice of any evidentiary hearing should such a hearing be necessary. The statute also makes clear that the amount of the fees awarded will be limited by the amount actually paid by the employer or insurance carrier to the third-party insurer or provider pursuant to the claimant’s efforts in gaining an award from the Commission and shall not include payments made previously to the third-party insurer or provider.
That is the “nuts and bolts” of 714 fees. Due to the length of this blog, I think I will pause for now; however, please check this space for more on 714 fees, including constitutional challenges to the validity of the statutory fee structure, and some case decisions which help round out my bare-bones presentation of Code section 65.2-714(b).