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13-P-402                                                Appeals Court

 JAMES ELLIS1       vs.   COMMISSIONER OF THE DEPARTMENT OF INDUSTRIAL
                            ACCIDENTS & another.2


                                No. 13-P-402.

         Suffolk.         October 10, 2013. - September 18, 2015.

                Present:     Berry, Green, & Trainor, JJ.


Workers' Compensation Act, Lump-sum settlement, Attorney's fees.
     Administrative Law, Judicial review. Practice, Civil,
     Frivolous action.



     Civil action commenced in the Superior Court Department on
May 28, 2008.

     The case was heard by Geraldine S. Hines, J., on a motion
for summary judgment.


     Teresa Brooks Benoit for the plaintiff.
     Timothy J. Casey, Assistant Attorney General, for
Commissioner of the Department of Industrial Accidents.
     Michael K. Landman, for Landman, Akashian & White, P.C.,
was present but did not argue.




     1
         Doing business as Ellis & Associates.
     2
       Landman, Akashian & White, P.C., as a reach and apply
defendant.
                                                                     2


    BERRY, J.    Reduced to essentials, in this latest appellate

foray, the plaintiff, James Ellis, contends that, in considering

whether to approve a lump sum agreement under § 48 of G. L.

c. 152, the Workers' Compensation Act (act), for injuries to a

worker, an administrative judge of the Department of Industrial

Accidents (department) or a law judge on the department's

reviewing board (reviewing board) (hereinafter collectively

referred to as administrative judge) is absolutely foreclosed

from reviewing the authenticity of the legal expenses and from

adjusting those expenses downward, leaving more money for the

injured worker under the lump sum settlement payment.

    We reject Ellis's contentions regarding total

unreviewability of the claimed legal expenses.     Ellis offers no

precedent, i.e., no caselaw or statutory authority, for this

proposition.    See note 8, infra.   We conclude that an

administrative judge -- in review of a proposed lump sum awarded

and to be paid in settlement to an injured worker -- does have

the authority to review and adjust downward unsubstantiated or

unreasonably excessive attorney's fees and expenses.       Put

another way, it is within the purview of an administrative judge

to modify the amount allocated in the lump sum settlement to an

employee's attorney for attorney's fees and necessary expenses

where the fees and expenses, upon review, are insufficiently

supported or deemed not necessary, and the administrative judge,
                                                                   3


by such an adjustment, neither increases the burden on the

insurer nor decreases the net sum to be paid to the employee.

     In the past five years alone, Ellis or his legal assistants

(collectively, Ellis) have filed over one hundred and fifty

workers' compensation appeals in this court.   In a substantial

number of these appeals, Ellis also sought further appellate

review in the Supreme Judicial Court where this court decided

the appeals adversely to the contentions advanced.   Ellis's

attorney's fees and expenses frequently have been the main

subject in these appeals.3   In a series of these cases, Ellis has


     3
       See, e.g., Ellis v. OneBeacon Ins. Group, 76 Mass. App.
Ct. 1115 (2010) (taking frivolous position that Ellis's attorney
lien supersedes Division of Medical Assistance lien); Cordeiro's
Case, 76 Mass. App. Ct. 1117 (2010) (challenging entitlement of
predecessor attorney to fees even though Ellis had segregated
fee for counsel in settlement); Ryder's Case, 80 Mass. App. Ct.
1102 (2011) (affirming denial of attorney's fees where Ellis's
motion to recuse was denied and thereafter Ellis refused to
submit evidence to support his claim for portion of fees
allocated in lump sum settlement); Derosiers's Case, 81 Mass.
App. 1130 (2012) (sole issue is denial of attorney's fees);
Stepien's Case, 81 Mass. App. Ct. 1132 (2012) (challenging
reduction of attorney's fees that was done in accordance with
statutory factors); Perry's Case, 82 Mass. App. Ct. 1102 (2012)
(arguing attorney's fees and costs due even though insurer made
settlement offer upon receipt of impartial medical examiner's
report but Ellis did not accept it until day before rescheduled
§ 36 hearing).

     In addition, Ellis has filed a spate of appeals in which he
refused insurers' offers of full payment in the apparent hopes
of getting attorney's fees and then pursued the fee issue on
appeal even when the insurer was ordered to pay only the amount
offered. See, e.g., Packard's Case, 76 Mass. App. Ct. 1115
(2010); Txicanji's Case, 76 Mass. App. Ct. 1123 (2010); Wong's
Case, 76 Mass. App. Ct. 1126 (2010); Derosiers's Case, supra;
                                                                   4


been sanctioned for filing frivolous appeals and, similarly, for

presenting frivolous claims involving fees and expenses before

the department.4,5

     Against this backdrop, this appeal from a Superior Court

judgment -- again rejecting Ellis's makeshift contentions



Mahoney's Case (No. 1), 81 Mass. App. Ct. 1135 (2012); Perry's
Case, supra.
     4
       See, e.g., Santelli's Case, 78 Mass. App. Ct. 1119 (2011)
(Ellis sanctioned for filing baseless claim against another
attorney in division of attorney's fee dispute between them);
Neal's Case, 80 Mass. App. Ct. 1108 (2011) (affirming
department's assessment of costs against Ellis for advancing
frivolous claim where Ellis unreasonably refused offer of full
payment because insurer would not send check directly to Ellis
without authorization from employee); AIM Mut. Ins. Co. v.
Okraska, 81 Mass. App. Ct. 1106 (2011) (frivolous appeal of
denial of attorney's fees resulted in claimant Ellis being
ordered to pay insurer's appellate attorney's fees); McCarty's
Case, 81 Mass. App. Ct. 1114 (2012) (awarding double costs of
appeal for frivolous appeal by Ellis where claims had already
been adjudicated and were barred by res judicata); Vasilenko's
Case, 83 Mass. App. Ct. 1124 (2013) (insurer's award of
appellate attorney's fees taxed on Ellis where there could be no
reasonable expectation of reversal on appeal).
     5
       In Ellis v. Travelers Indem. Co., 77 Mass. App. Ct. 1104
(2010), a decision issued pursuant to our rule 1:28, we observed
that a Superior Court judge noted twenty-seven cases filed in
Superior Court in 2008 in which Ellis failed to exhaust his
administrative remedies and brought actions in an effort to
recover costs, demonstrating "a wilful design to circumvent the
[department] primary jurisdiction, to procure payment for
unsubstantiated expenses (which usually exceed the attorney's
fee ordered), and to obtain begrudging capitalization from the
insurers, who are apt to settle the vexatious cases rather than
incur additional attorney's fees." We affirmed the judgment
awarding the insurer attorney's fees and costs pursuant to G. L.
c. 231, § 6F, and awarded appellate attorney's fees and costs.
In addition, we referred the matter to the Board of Bar
Overseers where disciplinary proceedings are now pending.
                                                                   5


regarding "necessary expenses" -- presents yet another

unsustainable effort by Ellis to manipulate the workers'

compensation system to Ellis's financial advantage vis-à-vis

legal expenses.

     Ellis's contention that attorney's fees and expenses are

nonreviewable -- even if unnecessary or unsubstantiated -- is

contrary to best interests of injured employees, and is at odds

to the very purposes served by the act.   "It has long been

recognized that the [a]ct 'was enacted as a "humanitarian

measure" in response to strong public sentiment that the

remedies afforded by actions of tort at common law did not

provide adequate protection to workers.'"   Spaniol's Case, 466

Mass. 102, 106 (2013), quoting from Neff v. Commissioner of the

Dept. of Industrial Accs., 421 Mass. 70, 73 (1995).

     We are mindful that legal representation of injured

employees is an important part of the workers' compensation

statutory and regulatory scheme, and that payment of attorney's

fees and expenses are specifically provided for at various

stages of proceedings before the department and the courts.6

However, fees and expenses for appropriate legal representation

is not a carte blanche to an open credit line for an attorney to

draw upon without validity.   Particularly is this so where, as

     6
       As to the framework for review of a lump sum settlement
and necessary attorney's fees and expenses, see part 2, infra.
                                                                     6


here, the attorney-related expenses have not been shown to be

reasonable or actually incurred.     Indeed, in this case, Ellis

failed to provide to the department and the lower court

appropriate documentation for these expenses, certain of which

were deemed unreasonable and excessive.7

     Oversight of the allocation to an attorney of attorney's

fees and necessary expenses is an important part of the task of

an administrative judge in approving a lump sum settlement

agreement.     Particularly is this so because the fees and

expenses in a lump sum settlement differ in allocation from

other, necessary fees and expenses awardable in other contexts,

which under the act may be payable to an attorney directly by

the insurer.    See G. L. c. 152, § 13A(1)-(7).   In contrast, in a

lump sum settlement agreement, attorney's fees and expenses are

paid from the very lump sum settlement deemed due to the injured

worker.   It is illustrative to view the legal setting of a lump

sum settlement arrangement.     Once the insurer agrees to payment

of a sum certain lump sum settlement, the insurer has little

incentive to scrutinize the attorney's fees and expenses

submitted by the employee's attorney.     Further, the injured

employee would be placed in an awkward position, if called upon

     7
       Ellis does not contend on appeal that he submitted
documentation sufficient to support the amount of "necessary
expenses" allocated to him in the Michael X. Smith and Brian
Tape settlements. The record is devoid of any such
documentation.
                                                                       7


to contest the fees and expenses of the attorney who has

represented that employee through the settlement process.       Thus,

it is the impartial administrative judge who stands as the

overseer to the fairness and propriety of the lump sum

settlement and the fees and expenses incorporated therein.       See

G. L. c. 152, § 48.

    1.   Procedural background.     The appeal involves prior

proceedings in two workers' compensation cases litigated during

2008, in which Ellis represented employees seeking workers'

compensation for injuries sustained at work.

    The first case involves Michael X. Smith.      Smith and the

insurance company reached agreement as to a lump sum of $50,000

after Smith had reached maximum medical improvement to

compensate him for lingering effects of a tibia-fibula fracture,

including persistent pain and limitation.     The agreement

provided for attorney's fees of $7,500, and expenses of

$3,574.31.   The agreement was submitted to an administrative

judge for approval pursuant to G. L. c. 152, § 48.     The

administrative judge approved the agreement but modified it by

withholding payment of the expenses pending documentation, and

ultimately approved only $1844.31 in expenses and awarded the

balance of $1730 to the employee.    The administrative judge

denied expenses that were related to pursuing a psychological

injury that was not part of the settlement.     The record does not
                                                                    8


contain the documentation or other evidence provided to the

administrative judge related to the expenses incurred.

     The second case involves Brian Tape, who had injured his

right ankle at work.   The parties entered an agreement for a

lump sum of $15,000 and future medical expenses, from which

attorney's fees of $3,000 and expenses of $3,484.73 were to be

paid.   The administrative judge approved the settlement pursuant

to § 48, but modified the expenses arrangement by releasing the

full amount of the expenses to the employee to disburse "to his

counsel as he deems appropriate."

     Of note in both cases, neither the injured employees nor

the compensation insurers filed appeals concerning the lump sum

settlement with the adjusted fees.   "Once the department gives

its approval of the parties' lump sum agreement pursuant to

§ 48, 'further inquiry' of the merits of the controversy must be

had in Superior Court."   Opare's Case, 77 Mass. App. Ct. 539,

541 (2010), quoting from Perkins's Case, 278 Mass. 294, 299

(1932).

     Ellis did not seek any such "further inquiry" or direct

appellate review in either case.    Instead, acting solely on his

own behalf and in his interests -- and without joining either

the insurer or injured employee -- Ellis filed an independent

declaratory judgment lawsuit in the Superior Court.

Specifically, Ellis, acting in his own name and doing business
                                                                    9


as Ellis & Associates, commenced in the Superior Court a G. L.

c. 231A declaratory judgment complaint coupled with a claim in

equity to reach and apply against insurer's counsel.   The

declaration sought in the Superior Court -- tracking the

position Ellis continues to advance in this appeal -- is that an

administrative judge is prohibited from considering attorney's

fees and expenses embedded in a lump sum settlement; and that

under G. L. c. 152, § 19, the administrative judge's only

recourse in the event that he finds that a lump sum agreement is

not in the best interests of the employee is to reject the

settlement as a whole.

     A Superior Court judge rejected Ellis's contentions.     The

judge correctly reasoned -- a rationale which we adopt in this

appeal -- that administrative judges "have the power to adjust

Lump Sum Agreements in favor of claimants pursuant to their

responsibility under G. L. c. 152, § 48[] to ensure that

settlement is in the claimant's 'best interests,'"8 provided that

the administrative judge may neither increase the amount due

from the insurer, nor reduce the amount due to the employee.9


     8
       Ellis also argued that the department denied his property
right to reimbursement for expenses without due process of law.
Ellis does not pursue this dubious argument on appeal, and in
any event, it is waived.
     9
       At the outset there is also a patent flaw in Ellis being
the sole plaintiff seeking such a declaratory judgment. General
Laws c. 231A, § 8, inserted by St. 1945, c. 582, § 1, provides,
                                                                  10


    2.    The framework for a lump sum settlement and

administrative review.    The act allows an employee and an

employer or insurer to settle part or all of a claim for

workers' compensation through a lump sum settlement, which, when

presented to an administrative judge, as was done here, is not

perfected "until and unless approved by an administrative judge

or administrative law judge as being in the claimant's best

interest."   G. L. c. 152, § 48(1), as amended by St. 1991,

c. 398, § 74.   "Central to c. 152's statutory scheme is the

Legislature's command that the department have oversight

responsibility over lump sum settlements in order to ensure that

any such settlement is 'in the claimant's best interest.'"

Opare's Case, 77 Mass. App. Ct. at 541, quoting from G. L.

c. 152, § 48.   "'The determination of a lump sum [settlement]

calls for a careful scrutiny of the evidence, the exercise of

sound judgment and good practical sense, so that the amount will

be as near as possible to the present value of all the

compensation payments which the employee would be entitled to

receive in the future.'   Paltsios's Case, 329 Mass. 526, 529

(1952).   The approval process under § 48 is designed to serve




"When declaratory relief is sought, all persons shall be made
parties who have or claim any interest which would be affected
by the declaration, and no declaration shall prejudice the
rights of persons not parties to the proceeding."
                                                                    11


that exacting inquiry."    Opare's Case, 77 Mass. App. Ct. at 542

n.6.

       There is no provision in the act that the "necessary

expenses" allocated to an employee's attorney as part of a lump

sum settlement, once submitted to an administrative judge for

approval, are exempt from this scrutiny.    General Laws c. 152,

§ 13A(8)(b), provides that once a lump sum settlement is

reached, attorney's fees, which are to be paid from the

settlement, may not exceed twenty percent of the lump sum

settlement.   Twenty percent is an upper limit, not a lock box

that bars review into the box.    While the act does not refer to

costs, § 13A(10), inserted by St. 1991, c. 398, § 35, states

that the department "shall provide by rule the necessary

expenses that are reimbursable under this section," and

reasonably necessary expenses have traditionally been allowed.

Pursuant to 452 Code Mass. Regs. § 1.19(2) (2013), any

employee's attorney entitled to a fee under G. L. c. 152, § 13A,

shall submit to the administrative judge or reviewing board an

itemization of reasonable and necessary expenses and

disbursements, and the insurer shall pay those expenses approved

by the administrative judge or reviewing board.    See 452 Code

Mass. Regs. § 1.02 (2008) (defining "necessary expenses").

       In an alternative approach, Ellis advances an "all or

nothing" proposal as follows.    Ellis contends that, even if an
                                                                   12


administrative judge is authorized to review the "necessary

expenses," § 19 of the act requires the administrative judge to

reject the settlement as a whole, if the judge finds that the

allocation for "necessary expenses" is not necessary, not

supported, or excessive.    We are aware of no authority to

support this all-or-nothing approach.    Furthermore, Ellis has

not cited authority by caselaw or statute that suggests that an

employee's counsel is a "party" to a lump sum settlement

agreement pursuant to § 48 and § 19 such that the reduction of

the "necessary expenses" component of the lump sum settlement

requires an administrative judge to reject the agreement as a

whole.   See Pinto v. Aberthaw Constr. Co., 418 Mass. 494, 497

n.2 (1994) (attorneys signing third-party settlement agreement

in capacities as counsel for insurer and employee not "parties"

to settlement agreement).   Section 19, applicable to agreements

in general, is incorporated by reference into § 48.    See

Bertocchi's Case, 58 Mass. App. Ct. 561, 563-564 (2003).

    3.   The thrust of Ellis's frivolous litigation.    As

previously noted, and as the host of Ellis's litigated cases

compiled by citation in the beginning of this opinion show, this

appeal is just one small part of a pattern of Ellis's frivolous

litigation in advancing legally unfounded claims on appeal.

    "[W]e will not hesitate to award attorney's fees and costs

against counsel in appropriate cases."    Hough's Case, 82 Mass.
                                                                     13


App. Ct. 1121 (2012).     See Donovan's Case, 81 Mass. App. Ct.

1108 (2012).10     In Donovan, we described the appeal as

"meritless, redundant of the prior appeal, assaultive upon the

integrity of the participants in the underlying administrative

scheme, and wasteful of the private resources of the opposing

party and of the public resources of the [department] and of the

Appeals Court.     It qualifies as thoroughly frivolous within the

meaning of Mass.R.A.P. 25, as appearing in 376 Mass. 949

(1979)."   Ibid.

     Under this standard, this appeal is frivolous and worthy of

sanctions.   As with Ellis v. Travelers Indem. Co., 77 Mass. App.

Ct. 1104 (2010), see note 3, supra, we refer this case to the

Board of Bar Overseers.

                                      Judgment affirmed.




     10
       Although our rule 1:28 decisions are not precedent, they
may be cited for their persuasive value. See Chace v. Curran,
71 Mass. App. Ct. 258, 260 n.4 (2008). We cite the 1:28
decisions here as part of the Ellis litigation history.
