No. 14558
I N THE SUP^ COUHT O THE STATE O rnNTANA
F F
1979
ANDREW J. UTICK,
Claimant and Appellant,
-VS-
ANDFEW J. UTICK d/b/a CAPITAL MXEL AND
SEFWICE STATION, Drployer,
and
STATE COMPrnsATION INSuRANa FUND,
Defendant and Respondent.
Appeal £ram: Workers' Canpensation Court
Hon. William E. Hunt, Judge presiding.
Counsel of Record:
For Appellant:
Hoyt and Lewis, Great Falls, bbntana
John C. Hoyt argued, Great Falls, Wntana
For Respondent:
Tim Reardon argued, Helena, mntana
Submitted: March 1 4 , 1979
Decided: APR20 1979
~ild: APR E 0 1n
9
-.
Mr. Chief Justice Frank I. Haswell delivered the Opinion of
the Court.
Claimant Andrew J. Utick appeals from an order of the
Workers' Compensation Court denying his request for a lump sum
advance payment of total disability benefits due him from the
State Compensation Insurance Fund.
Andrew J. Utick was the owner of the Capital Motel &
Service Station in Helena, Montana, which he had operated and
managed for the past 30 years. He had elected coverage for
himself with the State Compensation Insurance Fund. Utick sus-
tained two separate industrial accidents; the first on July 11,
1974, and the second on August 26, 1975. In the first accident,
he sustained a fracture of the left ankle and foot. The second
accident occurred when his weak left ankle collapsed and he fell
and injured his back. At the time of the second accident, Utick
was 63 years old.
As to Utick's first injury, the State Fund accepted lia-
bility and medical benefits were paid. Disability payments,
however, were denied because Utick had allegedly lost no wages
due to that injury. On the second injury, the State Fund denied
the claim entirely on the grounds that Utick allegedly failed to
file some required forms.
On June 21, 1977, Utick filed a petition for hearing
with the Workers' Compensation Court, alleging that the State
Fund had wrongfully failed and refused to pay the compensation
due him. The petition asked that he be awarded temporary total
disability compensation for the appropriate periods of time as
a result of both industrial accidents; that his medical expenses
be paid; that he be awarded a permanent partial disability award
as a result of his injuries; that the award be paid in a lump
sum; that he be awarded reasonable attorney fees and costs; and
that the State Fund be assessed the statutory ten percent penalty
for unreasonable refusal to pay the claims.
A hearing was held on the petition on December 22, 1977,
at which time the State Fund acknowledged that it had accepted
payment of premiums from Utick in regard to the second accident
and that therefore coverage as to that accident would be con-
ceded despite his alleged failure to file the required forms.
Findings of fact, conclusions of law, and judgment subsequently
entered determined, among other things, that Utick was entitled
to temporary total benefits for only a portion of what he had
requested; that he was suffering a permanent partial disability
of 50%; and that he was entitled to the 10% penalty increase on
the award.
Utick filed notice of appeal from the judgment, but the
notice was subsequently withdrawn when the State Fund's petition
for rehearing was granted by the Workers' Compensation Court.
The petition for rehearing was based on the fact that the Work-
ers' Compensation Court's order was not clear as to whether
Utick's permanent partial 50% disability was to be paid biweekly
or in a lump sum, and on an alleged miscalculation of the rate of
compensation. Utick concurred in the petition for rehearing,
alleging that a new hearing was necessary because the court,
contrary to the evidence, had not found that he was totally per-
manently disabled.
Prior to the second hearing, Utick filed an affidavit
with the court again requesting that his benefits be converted
to a lump sum settlement. The affidavit showed that if he could
receive the present value of his future benefits in a lump sum,
he would lend the money to a family corporation which in turn
would finance expansion of a restaurant on property owned by the
corporation. By so doing, the affidavit alleged, Utick would be
guaranteed an income of $20,500 per year as his share of lease
payments to the corporation, whereas compensation benefits paid
to him on a weekly basis would amount to only $7,923.76 per year.
At the rehearing, the Division of Workers' Compensation
conceded the permanent total disability of Utick. The only
issue contested was whether his request for a lump sum settle-
ment should be granted. The Division resisted Utick's request
for a lump sum award, but stated no reasons in support of its
position. Both the Division and the Workers' Compensation Court
acknowledged that the investment plan submitted by Utick in his
affidavit in support of his request for a lump sum settlement
would work. Nonetheless, the court found that while a lump sum
settlement would be in Utick's best interests, the request would
be denied since there was no real need shown. In its order of
denial, the Workers' Compensation Court reasoned that payment
under the plan proposed by Utick was "not in keeping with the
spirit of the Act which is to pay compensation for loss of wages
rather than indemnity payments for establishment of a claim."
The court found that in Utick's case periodic payments best
complied with the purpose and intent of the law. From the order
denying his request for a lump sum settlement, Utick has brought
this appeal.
Statutory authority for the conversion into a lump sum
of biweekly payments provided for under the orkmen's Compensation
Act is found in section 92-715, R.C.M. 1947, now section 39-71-741
MCA. The grant or denial of a lump sum settlement will not be
interfered with on appeal unless there is an apparent abuse of
discretion. Kent v. Sievert (1971), 158 Mont. 79, 489 P.2d 104;
Kuehn v. National Farmers Union Property & Cas. Co. (1974), 164
Mont. 303, 521 P.2d 921. Thus, the only issue for our determin-
ation on this appeal is whether there was an apparent abuse of
discretion by the Workers' Compensation Division in resisting,
and the Workers' Compensation Court in denying appellant's re-
quest for a lump sum settlement under the circumstances present
here.
The general rule is that payments under the Workmen's
Compensation Act are periodic. Lump sum settlements are an
exception to the general rule. Malmedal v. Industrial Accident
Board (1959), 135 Mont. 554, 342 P.2d 745; Laukaitis v. Sisters
of Charity of Leavenworth (1959), 135 Mont. 469, 342 P.2d 752;
Legowik v. Montgomery Ward (1971), 157 Mont. 436, 486 P.2d 867;
Kent v. Sievert, supra; Kuehn v. Nat. Farmers Union Property &
Cas. Co., supra. This does not mean, however, that lump sum
awards are looked on with disfavor. They should be awarded with-
out hesitancy "where the best interests of the parties demand it."
Laukaitis, 135 Mont. at 474, 342 P.2d at 755, citing Landeen v.
Toole County Refining Co. (1929), 85 Mont. 41, 47, 277 P. 615,
617. Each case for a lump sum payment stands or falls on its
own merits. Codling v. Aztec Well Servicing Co. (1976), 89 N.M.
The most recent Montana case discussing the question of
lump sum settlements is Kuehn, supra, wherein the guiding prin-
ciples are summarized as follows:
"A review of the Montana precedent on this point
indicates that conversion . ..to ..
. lump sum
payments is the exception rather than the rule.
This is, as it should be, in the best interests of
the injured workman, whose paycheck is generally
better substituted for by a weekly benefit check
rather than a lump sum windfall. The criteria
determinative of the advisability of conversion to
... a lump sum award have generally been held to
be '. .. the best interests of the claimant, his
family, and for the best interests of the public
.. .'. (Citations omitted.) The existence of a
'pressing need' and/or 'outstanding indebtedness'
has likewise been held to be relevant criteria;
(Citation omitted.)" Kuehn, 164 Mont. at 307,
521 P.2d at 923-924.
This discussion in Kuehn recognizes what is adopted by
the authorities generally as the reasoning behind the rule that
payments under the Workmen's Compensation Acts should be made
periodically rather than in a lump sum; that is, that the average
workman for whose protection the acts are intended would be in-
capable of handling a single large sum of money, would soon
dissipate it, and would then be in as poor straits as if Work-
men's Compensation had never existed. See 3 ÿ arson's Workmen's
Compensation Law 582.71.
While this underlying rationale may hold true in the
majority of cases, it clearly does not apply here. On the con-
trary, it was demonstrated by Utick without dispute by the Work-
men's Compensation Division or the Workers' Compensation Court
that Utick could utilize a lump sum award to assure a substantial
source of regular income for himself. Applying the criteria
spelled out in Kuehn, supra, we hold that Utick's request for a
lump sum settlement should have been granted.
We recognize that in this case there is absent the "press-
ing need" or "outstanding indebtedness" factor customarily relied
on in lump sum settlement cases. Nonetheless, we find that be-
cause of the circumstances involved in this case the general
criteria of "the best interests of the claimant, his family, and
the best interests of the public" are better fulfilled if the lump
sum award is ordered.
The circumstances that influence our decision in this
case are not limited merely to the clear demonstration by Utick
of what his best interests were from the economic or financial
perspective. We are also persuaded by what appears to us as
arbitrary and unfair treatment of Utick by the Workmen's Compen-
sation Division from the very outset in handling his claim. Coun-
sel for Utick stated during oral argument of this appeal that at
no time during the pendency of the claim, including the time after
which the Workers' Compensation Court had specifically ordered
the Division to make certain payments to Utick, had the payments
due him been current. Counsel for the Division conceded that
tick's claim had been badly mishandled and offered an apology to
Utick for any resulting hardship or inconvenience. Because
Utick clearly demonstrated what his best interests were and
the Division established no countervailing interests, because
the Division gave no reasons for not allowing the lump sum
award but merely relied on its unbridled discretion, and because
a lump sum award here will finally put an end to the conflict
between Utick and the Division and allow him to "put behind
him" the arbitrary treatment he has suffered (see Legowik v.
Montgomery Ward, supra), we conclude that the denial of the lump
sum settlement was an abuse of discretion.
We do not by this decision alter in any way the general
rule or the principles established in our prior opinions regard-
ing that rule, viz. that lump sum settlements are an exception
to the usual mode of payment contemplated by the Workmen's Com-
pensation Act. We hold only that the circumstances of this case
give rise to an occasion on which the exception should be applied.
The order of the Workers' Compensation Court denying
appellant's request for a lump sum advance payment of benefits
due him from the State Compensation Insurance Fund is reversed.
As to the amount of the lump sum award, neither party to this
appeal has supplied us with sufficient information to calculate
the proper figure. The amounts appellant has already received
under the periodic payments being made to him up to the time of
oral argument of this appeal and the method of discounting to
present value the total due him for a lump sum settlement are
referred to obliquely in the briefs, but the record is insuffi-
cient for us to undertake the calculation ourselves. The claim
is therefore remanded to the Workmen's Compensation Division with
instructions to award appellant a lump sum settlement as it should
have been calculated according to the usual lawful procedures of
the Division as of October 2 3 , 1978, the date the Workers'
Compensation Court erroneously denied the lump sum award, tak-
ing into account and adjusting for whatever amounts appellant
was paid by the Division in periodic payments subsequent to
that date. The 10% penalty increase ordered by the Workers'
Compensation Court for the failure of the Division to pay Utick
at the time the money was due shall also apply to the lump sum
award ordered herein and the calculation shall be adjusted
accordingly. That portion of the Workers' Compensation Court's
order allowing reasonable attorney fees to Utick is affirmed.
Each party shall bear its own costs and attorney fees on appeal.
Reversed in part and remanded.
Chief Justice
.