In Rusch v. Southeast Alaska Regional Health Consortium,[1] the supreme court held when there is a dispute over the issues on which an employee prevailed for determining attorneys’ fees, the employer in a worker’s compensation settlement has the burden to show lack of merit in the employee’s claims. An attorney represented two injured employees of the Southeast Alaska Regional Health Consortium (SEARHC) who eventually resolved their claims and received substantial settlements. When they were unable to resolve the question of their attorneys’ fees, the Alaska Workers’ Compensation Board held hearings and awarded significantly reduced attorneys’ fees, based on findings that the employees had not prevailed on certain claims and thus should not be awarded fees for related work. The Alaska Workers’ Compensation Appeals Commission affirmed the decision, and the claimants appealed. The supreme court reversed and remanded, reasoning that the decisions contained multiple errors and awarded attorneys’ fees that were “manifestly unreasonable.” The court noted that fees must be adequate so that injured workers are able to access competent counsel. Additionally, the court held that the Board abused its discretion and denied due process when it failed to allow the claimants to call witnesses in determining reasonable attorneys’ fees. The court held that in determining worker’s compensation claimant’s success for awarding attorneys’ fees when other claims were settled, the employer has the burden of proving the worthlessness of a claim if it contends its conduct was a gratuitous response to a meritless claim.
[1] 453 P.3d 784 (Alaska 2019).
