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Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1986 

                        CHAPTER 377-S.F.No. 1848 
           An act relating to costs and attorney fees; providing 
          for recovery of costs and attorney fees by prevailing 
          parties in civil actions and contested case 
          proceedings involving the state; amending Minnesota 
          Statutes 1984, section 14.62, by adding a subdivision; 
          proposing coding for new law in Minnesota Statutes, 
          chapter 3. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [3.761] [DEFINITIONS.] 
    Subdivision 1.  [TERMS DEFINED.] For purposes of this 
section and sections 2 to 5, the terms defined in this section 
have the meanings given them.  
    Subd. 2.  [ADMINISTRATIVE LAW JUDGE.] "Administrative law 
judge" means the official assigned to conduct a contested case 
hearing under chapter 14. 
    Subd. 3.  [CONTESTED CASE.] "Contested case" means a 
proceeding defined in section 14.02, subdivision 3, in which the 
position of the state is represented by counsel, but excludes a 
contested case for the purpose of establishing or fixing a rate 
or for granting or renewing a license. 
    Subd. 4.  [EXPENSES.] "Expenses" means the costs incurred 
by the party in the litigation, including: 
    (1) filing fees; 
    (2) subpoena fees and mileage; 
    (3) transcript costs and court reporter fees; 
    (4) expert witness fees; 
    (5) photocopying and printing costs; 
    (6) postage and delivery costs; and 
    (7) service of process fees. 
    Subd. 5.  [FEES.] "Fees" means the reasonable attorney fees 
or reasonable fees by a person not an attorney who is authorized 
by law or rule to represent the party and may include reasonable 
charges by the party, the party's employee, or agent.  The 
amount of fees must be based upon prevailing market rates for 
the kind and quality of the services furnished, subject to the 
following limitations: 
    (a) In a court action, an expert witness may not be 
compensated at a rate in excess of the highest rate of 
compensation for expert witnesses paid by the United States. 
    (b) In a contested case proceeding, an expert witness may 
not be compensated at a rate in excess of the highest rate of 
compensation for expert witnesses paid by the state agency 
involved. 
    (c) Attorney or agent fees may not be awarded in excess of 
$100 per hour unless the court or administrative law judge 
determines that an increase in the cost of living or a special 
factor, such as the limited availability of qualified attorneys 
or agents for the proceedings involved, justifies a higher fee.  
    Subd. 6.  [PARTY.] (a) Except as modified by paragraph (b), 
"party" means a person named or admitted as a party, or seeking 
and entitled as of right to be admitted as a party, in a court 
action or contested case proceeding, or a person admitted by an 
administrative law judge for limited purposes, and who is: 
    (1) an unincorporated business, partnership, corporation, 
association, or organization, having not more than 50 employees 
at the time the civil action was filed or the contested case 
proceeding was initiated; and 
    (2) an unincorporated business, partnership, corporation, 
association, or organization whose annual revenues did not 
exceed $4,000,000 at the time the civil action was filed or the 
contested case proceeding was initiated. 
    (b) "Party" also includes a partner, officer, shareholder, 
member, or owner of an entity described in paragraph (a), 
clauses 1 and 2. 
    (c) "Party" does not include any person providing services 
pursuant to licensure or reimbursement on a cost basis by the 
department of health or the department of human services, when 
that person is named or admitted or seeking to be admitted as a 
party in any matter which involves the licensing or 
reimbursement rates, procedures, or methodology applicable to 
those services. 
    Subd. 7.  [STATE.] "State" means the state of Minnesota or 
an agency or official of the state of Minnesota acting in an 
official capacity. 
     Subd. 8.  [SUBSTANTIALLY JUSTIFIED.] "Substantially 
justified" means that the state's position had a reasonable 
basis in law and fact, based on the totality of the 
circumstances prior to and during the litigation or contested 
case proceeding. 
    Sec. 2.  [3.762] [FEES AND EXPENSES; CIVIL ACTION OR 
CONTESTED CASE PROCEEDING INVOLVING STATE.] 
    (a) If a prevailing party other than the state, in a civil 
action or contested case proceeding other than a tort action, 
brought by or against the state, shows that the position of the 
state was not substantially justified, the court or 
administrative law judge shall award fees and other expenses to 
the party unless special circumstances make an award unjust. 
    (b) The court or administrative law judge may reduce the 
amount to be awarded under this section, or deny an award, to 
the extent that the prevailing party during the course of the 
proceedings engaged in conduct that unduly and unreasonably 
protracted the final resolution of the matter in controversy.  
The decision of an administrative law judge under this section 
must be made a part of the record containing the final decision 
of the agency and must include written findings and conclusions. 
    (c) This section does not preclude a party from recovering 
costs, disbursements, fees, and expenses under other applicable 
law. 
    Sec. 3.  [3.763] [PAYMENT OF COSTS AND FEES.] 
    Subdivision 1.  [CIVIL ACTION.] A judgment against the 
state in a civil action for fees and expenses under section 2 
must be paid from funds of the agency. 
    Subd. 2.  [CONTESTED CASE PROCEEDING.] Fees and other 
expenses awarded in a contested case proceeding under section 2 
must be paid by the agency over which the party prevails from 
funds of the agency. 
    Sec. 4.  [3.764] [PROCEDURE FOR AWARD OF FEES; CONTESTED 
CASE.] 
    Subdivision 1.  [APPLICATIONS.] The chief administrative 
law judge shall by rule establish uniform procedures for the 
submission and consideration of applications for an award of 
fees and expenses in a contested case proceeding.  If a court 
reviews the underlying decision of the contested case under 
sections 14.63 to 14.68, an award for fees and expenses may be 
made only pursuant to subdivision 3. 
    Subd. 2.  [APPEAL.] A party dissatisfied with the fee 
determination made under subdivision 1 may petition for leave to 
appeal to the court having jurisdiction to review the merits of 
the underlying decision of the contested case.  If the court 
denies the petition for leave to appeal, no appeal may be taken 
from the denial.  If the court grants the petition, it may 
modify the determination only if it finds that the failure to 
make an award, or the calculation of the amount of the award, 
was an abuse of discretion.  
    Subd. 3.  [JUDICIAL REVIEW.] (a) In awarding fees and 
expenses under subdivision 1 to a prevailing party in an action 
for judicial review of a contested case under sections 14.63 to 
14.68, the court shall include in that award fees and expenses 
to the extent authorized in section 2. 
    (b) Fees and expenses awarded under this subdivision may be 
paid in accordance with section 3, subdivision 2. 
    Sec. 5.  [3.765] [REPORTS ON AWARDS.] 
    The state court administrator and the chief administrative 
law judge shall report annually to the legislature on the amount 
of fees and expenses awarded under section 2 during the 
preceding fiscal year in court actions and contested case 
proceedings.  The reports shall describe the number, nature, and 
amount of the awards, the claims involved in the controversy, 
and any other relevant information that may aid the legislature 
in evaluating the scope and impact of the awards.  State 
agencies shall provide the chief administrative law judge with 
information needed to comply with the requirements of this 
section.  
    Sec. 6.  Minnesota Statutes 1984, section 14.62, is amended 
by adding a subdivision to read:  
    Subd. 3.  [AWARD OF FEES AND OTHER EXPENSES.] Fees and 
expenses must be awarded as provided in sections 1 to 5. 
    Sec. 7.  [EFFECTIVE DATE.] 
    Sections 1 to 6 are effective August 1, 1986, and apply to 
any civil action or contested case which is pending on, or 
commenced on or after, that date. 
    Approved March 19, 1986

Official Publication of the State of Minnesota Revisor of Statutes