No. 80-282
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981
RICHARD J. HOLTON,
Claimark and Cross-Appellant,& Respondent,
F. H. STOLTZE LAND AND LUMBER COMPANY,
Employer and SCOTT WETZEL SERVICES, INC.,
Defendants and Appellants.
Appeal from: Workers' Compensation Court
Honorable William E. Hunt, Judge presiding
Counsel of Record:
For Appellants:
Poore, Roth, Robischon and Robinson, Butte,
Montana
James P. Harrington, Butte, Montana
For Respondent:
Goetz and Madden, Bozeman, Montana
Submitted on briefs: April 23, 1981
Filed $ ' jtjl
Mr. Justice John Conway Harrison delivered the Opinion of
the Court.
In this action the claimant, Richard J. Holton, the
employer, F.H. Stoltze Land & Lumber Company, and the
insurer, Scott Wetzel Services, Inc., appeal the decision of
the Workers' Compensation Court awarding 40% disability of
the whole man, refusing to admit an economist's expert
testimony, denying imposition of a 20% penalty, and awarding
attorney fees from the claimant's benefits.
Richard J. Holton injured his back while "pulling on
the green chain" at the Stoltze sawmill on November 8, 1972.
In January 1973 claimant's physician, Dr. Burton, performed
a laminectomy and disc removal. Claimant recuperated until
June 1973, when Dr. Burton cleared him for work of a less
physically demanding nature. Claimant then returned to the
sawmill and did work considerably less strenuous than his
former job but left in one month for an even less strenuous
job, with better pay, as an equipment operator for the Union
Pacific Railroad. After five months he was laid off due to
a reduction in force. Claimant then returned to his career
of choice, ranch work, for eighteen months, but had to give
it up for less strenuous work. He has been primarily
engaged in managing a bar since that time.
During post-surgery employment, claimant has regu-
larly experienced a dull ache in his lower back, general
stiffness and pain in his left leg, and, at times, a "sharp
shooting pain" in his left leg that lays him up for several
days. As a result, the claimant is physically unable to do
many activities he did before the injury and works much
slower than he had in the past.
On January 4, 1974, claimant's physician, Dr. Burton,
gave him a 5% total body impairment rating, advised him to
avoid heavy lifting and warned him of the increased possi-
bility of future back problems.
The insurer was notified of Dr. Burton's report on
March 29, 1974. More than a year later, after the insurer's
own physician, Dr. Davidson, gave the claimant a 10%
impairment rating, the insurer offered to settle on the
basis of a 10% disability rating. Claimant refused and made
a counteroffer on April 4, 1975, but did not hear from the
insurer until August 1979 when the claimant filed a petition
for hear ing .
Meanwhile the claimant's back problems were exacer-
bated by injuries on May 20, 1975, and July 3, 1975. On
September 21, 1976, a third physician, Dr. Robbins, gave the
claimant a permanent, partial impairment rating of 15% of
the whole body. Dr. Robbins noted that the 1975 injuries
were symptoms of the 1972 injury and did not constitute new
injuries.
A workers' compensation trial was held on October 23,
1979, at which claimant tried to introduce the deposition of
Harry Goghen, an associate professor of economics at Eastern
Montana College, as expert testimony on the issue of loss of
earning capacity. The workers' compensation judge refused
to admit the deposition because he questioned the facts upon
which the economist based his testimony.
In a May 7, 1980, decision the Workers' Compensation
Court ruled that the claimant suffered 40% disability of the
whole man and is therefore entitled to receive 200 weeks of
benefits at $45 per week for a total of $9,000 to be paid in
one lump sum. The court denied imposition of a 20% penalty
for unreasonable delay of compensation and directed the suc-
cessful claimant to pay his attorney $1,000 from the $9,000
lump sum.
Four issues are raised on appeal: (1) Whether there
is substantial evidence to support a finding of 40%
disability; (2) whether an economist's expert testimony
should be admitted to determine loss of earning capacity;
(3) whether the facts warrant imposition of a 20% penalty
for unreasonable delay; and (4) whether assessing a portion
of the attorney fees against a successful claimant is
permissible.
FORTY PERCENT DISABILITY
The first issue presented on appeal is whether there
is substantial evidence to support a finding of 40%
disabililty of the whole man. "We cannot substitute our
judgment for that of the trial court as to the weight of the
evidence on questions of fact. Where there is substantial
evidence to support the Workers' Compensation Court, this
Court cannot overturn the decision. . ." Steffes v. 93
Leasing Co., Inc. (1978), 177 Mont. 83, 86-87, 580 P.2d 450,
453.
We find that there is substantial evidence to support
the trial court's determination of 40% disability of the
whole man, and we affirm.
In determining disability, the court should consider
the claimant's age, education, work experience, pain and
disability, actual wage loss, and loss of future earning
capacity. Flake v. Aetna Life & Cas. Co. (1977), 175 Mont.
127, 129, 572 P.2d 907, 909.
After the claimant's injury, he was repeatedly told
by doctors to avoid strenuous work. Thus, the claimant
cannot return to his career choice, ranching. Claimant has
experience working in a sawmill, as an equipment operator,
and as a truck driver; but these are also strenuous jobs.
Finally, claimant has studied English and acting in college
but has not found employment in these fields. Consequently,
claimant's choice of careers has been significantly limited
by the injury he received at the age of twenty-five.
Medical testimony of Dr. Robbins indicated that as of
1976 the claimant suffered 15% impairment of the whole body.
Claimant testified that his physical movements have been
constricted and that he continues to experience pain and
stiffness. Claimant has been compensated for wage loss
immediately following his injuries, but the injury also
adversely affects his future earning capacity, for which he
has not been compensated. Therefore, we conclude that there
is substantial evidence supporting the trial court's finding
of 40% disability of the whole man.
ECONOMIST 'S EXPERT TESTIMONY
The second issue raised on appeal is whether the
Workers' Compensation Court erred in refusing to admit the
deposed expert testimony of an economist in determining loss
of earning capacity. The deposition was objected to at
trial on several grounds. First, there were other adequate
methods of determining loss of earning capacity; thus, the
testimony was redundant. Second, the economist's opinion
was based on facts taken from one vague letter written to
the economist by claimant's attorney. Third, the economist
based his estimated "ranch salary forgone" on the free room
and board benefits a married ranch employee would receive,
when actually the claimant was single.
Since we have already held that there is substantial
evidence in the record, without the economist's testimony,
to support the court's finding of 40% disability of the
whole man, we need not address whether the economist's
testimony should have been admitted.
PENALTY
The third issue presented for review is whether the
facts of this case warrant a 20% penalty for unreasonable
delay as provided by section 39-71-2907, MCA. We hold that
a penalty is justified. Section 39-71-2907, MCA, provides:
"Increase in award for unreasonable delay or
refusal to pay. When payment of compensation
has been unreasonably delayed or refused by
an insurer, either prior or subsequent to the
issuance of an order by the workers' compen-
sation judge granting a claimant compensation
benefits, the full amount of the compensation
benefits due a claimant, between the time
compensation benefits were delayed or refused
and the date of the order granting a claimant
compensation benefits, may be increased by
the workers' compensation judge by 20%. The
question of unreasonable delay or refusal
shall be determined by the workers' compensa-
tion judge, and such a finding constitutes
good cause to rescind, alter, or amend any
order, decision, or award previously made in
the cause for the purpose of making the
increase provided herein."
Although the penalties provision of section 92-849,
R.C.M. 1947, was effective at the time of the 1972 injury,
section 39-71-2907, MCA, was effective when the underlying
action was litigated, and therefore the current penalties
provision, section 39-71-2907, MCA, controls. State,
Department of Highways v. Olsen (1975), 166 Mont. 139, 146,
531 P.2d 1330, 1333-1334; City of Bellingham v. Eiford
Construction Company (1974), 10 Wash.App. 606, 519 P.2d
1330, 1331-1332.
The triggering event for the purpose of awarding
penalties for unreasonable delay or refusal to pay compen-
sation is the insurer's receipt of medical verification of a
compensable injury. Unless such verification contradicts
other evidence sufficient to make the verification inher-
ently incredible, the insurer's duty to pay commences and
failure to pay (or deny a claim) will expose the carrier to
the possibility of penalties after thirty days. Silsby v.
State Acc. Ins. Fund (0r.App. 1979), 592 P.2d 1074, 1078;
section 39-71-606, MCA.
Here the claimant's physician reported to the insurer
on March 29, 1974, that claimant suffered a 5% impairment of
the whole body. Sometime prior to March 31, 1975, the
insurer's own physician estimated a 10% impairment of the
whole body. Yet, the insurer took no action between April
4, 1975, when the claimant rejected a 10% settlement offer,
and August 13, 1979, when the claimant petitioned for a
hearing .
The language of the statute makes it clear that the
insurer has no absolute right to delay the payment of com-
pensation until a formal hearing. See, Kerley v. Workmen's
Compensation Appeals Board (1971), 4 Cal.3d 223, 227, 93
Cal.Rptr. 192, 195, 481 P.2d 200, 203; Gallamore v. Workers'
Compensation Appeals Board (1979), 23 Cal.3d 815, 822, 153
Cal.Rptr. 590, 593, 591 P.2d 1242, 1245. Although the total
amount of compensation may be in dispute, the insurer has a
duty to promptly pay any undisputed compensation. See ,
-
Kerley, supra, 481 P.2d at 205; Berry v. Workmen's
Compensation Appeals Board (1969), 81 Cal .Rptr. 65, 68, 2+67 b w
Cal.2d 381; -
cf., Fermo v. Superline Products (1978), 175
3 9.5'
Mont. M I 574 P.2d 251, 253; Steffes, supra, 580 P.2d at
455; Gene Wight v. Hughes Livestock, Inc. (1981), Mont.
I P.2d , 38 St.Rep. 1632. Thus, the insurer
in the instant case was at least responsible for payment of
a 10% disability claim prior to the formal hearing. The
balance of the claim shall be paid when the disability issue
is finally resolved.
Once the claimant has shown there is a delay in pay-
ment of compensation, the insurer has the burden of justi-
fying the delay. Berry, supra, 81 Cal.Rptr. at 67; Kerley,
supra, 481 P.2d at 203. However, the only legitimate excuse
for delay of compensation is the existence of genuine doubt,
from a medical or legal standpoint, that any liability
exists. Berry, supra, 81 Cal.Rptr. at 68; Kerley, supra,
481 P.2d at 203; Pascoe v. Workmen's Compensation Appeals
Board (1975), 120 Ca1.Rptr. 199, 206, 46 Cal.App.3d 146;
Norgard v. Ra~l~nsons
& New System Laundry (1977), 30p
Or .App. 999, 569 P.2d 49, 52.
Here, although there was a dispute as to the total
compensation due, as of March 31, 1975, both parties agreed
that at least a 10% disability claim should be paid. Thus,
there was no legitimate excuse for delay in paying the 10%
disability claim prior to the hearing. The penalty for
unreasonable delay, as provided by section 39-71-2907, MCA,
is justified.
ATTORNEY FEES
The fourth issue presented on appeal is whether the
workers' compensation judge has authority to assess a
portion of the attorney fees against a successful claimant.
The workers' compensation judge awarded the claimant 40%
disability of the whole man, totaling $9,000, to be paid in
one lump sum. The workers' compensation judge then directed
the successful claimant to pay his attorney $1,000 from that
lump sum. We hold that the workers' compensation judge has
no authority to assess a successful claimant for attorney
fees.
Section 39-71-612, MCA, provides:
"Costs and attorneys' fees payable based on
difference between amount paid by insurer and
amount later found compensable. (1) If an
employer or insurer pays or tenders payment
of compensation under chapter 71 or 72 of
this title, but controversy relates to the
amount of compensation due and the settlement
or award is greater than the amount paid or
tendered by the employer or insurer, a
reasonable attorney's fee as established by
the division or the workers ' compensation
judge if the case has gone to a hearing,
based solely upon the difference between the
amount settled for or awarded and the amount
tendered or paid, may be awarded in addition
to the amount of compensation.
"(2) When an attorney's fee is awarded
against an employer or insurer under this
section there may be further assessed against
the employer or insurer reasonable costs,
fees, and mileage for necessary witnesses
attending a hearing on the claimant's behalf.
Both the necessity for the witness and the
reasonableness of the fees must be approved
by the division or the workers' compensation
judge. " (Emphasis added. )
While the workers ' compensation judge may determine
which attorney fees are reasonable, the clear meaning of the
statute is to provide attorney fees above and beyond the
compensation awarded to a successful claimant. Assessing a
successful claimant $1,000 for attorney fees clearly reduces
his net compensation and thus cannot be allowed. Smith v.
Pierce Packing Co. (1978), 177 Mont. 267, 273, 581 P.2d 834,
838; %yers v. 4 B 1 s Restaurant, Inc. (1977). 172 Mont. 159,
161, 561 P.2d 1331, 1333.
In summary, (1) we affirm the trial court's finding
of 40% disability of the whole man; (2) we impose a 20%
penalty for unreasonable delay; and (3) we hold that a
Workers1 Compensation Court cannot assess a successful
claimant for attorney fees. To the extent that there is
already substantial evidence to support a finding of 40%
disability, we do not address the issue of whether the
economist's expert testimony should be admitted. We remand
so that the trial court may award appropriate attorney fees
and assess the 20% penalty.
I
We concur:
Chief Justice