NO. 85-418
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
KYLE W. YEAROUT,
Claimant and Appellant,
-vs-
RAINBOW PAINTING, Employer,
and
STATE COMPENSATION INSURANCE FUND,
Defendant and Respondent.
APPEAL FROM: The Workers' Compensation Court, The Honorable
Timothy Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Law Offices of John C. Hoyt; Kurt M. Jackson, Great
Falls, Montana
For Respondent :
Allen B. Chronister, Assistant Attorney General,
Helena, Montana
Submitted on Briefs: March 6, 1986
Decided: June 12, 1986
* ~ U i1 2 ~ 1 8 6
Filed:
i
E r Justice William E. Hunt, Sr., delivered the Opinion of
l.
the Court.
Kyle Yearout appeals the ord-er of the Workers'
Compensation Court denying his claim for attorney's fees. We
affirm.
The sole issue on appeal is whether the Workers'
Compensation Court erred by refusing to assess attorney's
fees and costs against the State Compensa.tion Insurance Fund
pursuant to § 39-71-611, MCA?
In 1984, Yearout was employed by Rainbow Painting, a
Great Falls based company. At the time of his injury, he was
working at a radar base north of Havre. Yearout and his
foreman drove from Great Falls on Monday and Thursday
mornings; Monday, Tuesday and Thursday evenings they stayed
at on-site housing. The foreman was reimbursed by the
company for his gasoline expense, and his pickup generally
had work tools in it and was used at the site.
On November 21, 1984, Yearout and his foreman had worked
an early eight hour shift in order to get back to Great Falls
for the Thanksgiving holiday weekend. About 33 miles north
of Havre, the pickup slid out of control on the ice and
rolled several times. Yearout was severely injured. Yearout
filed a report of the accident with Rainbow, but continued to
work until his doctor told him to quit on December 21, 1984.
On December 27, 1984, he filed a claim with the State Fund.
A State Fund claims examiner investigated the claim and
denied it, finding that Yearout was off duty at the time of
the accident. At that time, no information was given the
examiner that Rainbow supplied the fuel for the foreman's
pickup. The claim was denied January 28, 1985. Yearout
hired an attorney on February 4, 1985.
Discovery was conducted and depositions taken. The
matter was scheduled for trial June 11, 1985. At the
commencement of the hearing, State Fund legal counsel
announced that it was conceding liability, that it would pay
medical and compensation benefits as well as a 20 percent
penalty pursuant to § 39-71-2907, MCA, for unreasonable delay
or refusal to pay benefits. Yearout's counsel argued that
Yearout was also entitled to attorney's fees pursuant to S
39-71-611, MCA. The parties briefed the issue. By order
dated August 9, 1985, Judge Reardon denied the claim for
attorney's fees finding that the matter had not been
adjudicated, and that Cosgrove v. Industrial Indemnity Co.
(19761, 170 Mont. 249, 552 P.2d 622, barred recovery in this
instance. This appeal followed.
It has long been the rule in Montana that attorney's
fees are not recoverable absent some special agreement
between the parties or statutory authorization. FJilson v.
Department of Natural Resources and Conservation (Mont.
1982), 648 P.2d 766, 39 St.Rep. 1294; Nikles v. Barnes
(1969), 153 Mont. 113, 454 P.2d 608. The statutory
authorization for attorney's fees claimed by appellant is
found at § 39-71-611, MCA. That section states:
In the event an insurer denies liability for a
claim for compensation or terminates compensation
benefits and the claim is later adjudged
compensable by the workers' compensation judge or
on appeal, the insurer shall pay reasonable costs
and attorneys' fees as established by the workers'
compensation judge.
Yearout argues that he wa.s forced to file a petition for
hearing and invoke the power of the Workers' Compensation
judge to award attorney's fees. State Fund argues that the
statute is clear on its face and no attorney's fees may be
awarded until the claim is "adjudged compensable by the
Workers' Compensation judge or on appeal," and in this case,
there was no adjudication as State Fund conceded liability at
the commencement of the hearing.
In its order denying Yearout's request for attorney's
fees, the Workers' Compensation Court declared:
[Tlhe claimant herein argues that but for counsel's
efforts, the defendant would not have accepted
liability. The record in this proceeding supports
that conclusion. It is clear to the Court that but
for counsel's efforts the insurer would not have
pursued investigation of this claim. The necessary
depositions would not have been taken and the
defendant's denial likely would have been
unchanged. Yet, reluctantly the Court must agree
with the defendant that there has been no
adjudication which would allow this Court to assess
an attorney fee against the insurer.
We agree with the Workers' Compensation Court.
The rules of statutory construction were discussed by
this Court in Montana Contractors' Association v. Department
of Highways (Mont. 1986), 715 P.2d 1056, 43 St.Rep. 470. One
function of this Court is to construe legislation. The first
step in such construction is to look to the language used.
If the language of the statute is clear and unambiguous, the
statute speaks for itself and there is nothing for the Court
to construe.
In this case, the statute authorizing attorney's fees, §
39-71-611, MCA, is clear and unambiguous. If an insurer
denies liability for a claim for compensation, the insurer is
liable for attorney's fees if the claim is later adjudged
compensable by the Workers' Compensation judge. It is clear
from the language of the statute that there must be an
adjudication of cornpensability before an award of attorney's
fees is authorized.
We addressed this issue before in Cosgrove v. Industrial
Indemnity Co. (1976), 170 Mont. 249, wherein we stated:
Plaintiff argues that under the rule of liberal
construction section 92-616 [presently § 39-71-611,
MCA] should be interpreted as requiring the payment
of attorneys' fees when the insurer has attempted
to circumvent the statutory provision by agreeing
to pay compensation before there has been an
adjudication of compensability.. ..
While we must and do agree that the Workmens'
Compensation Act should be construed liberally and
in favor of the working man, the language of the
statute must first allow some room for
construction. It is obvious that section 92-616
... requires that the claim be "adjudged
compensable, by the division or on appeal" before
the insurer can be required to pay attorney fees.
There has been no finding or adjudication of
compensability by the Division or by the Worker's
Compensation Court in this case.
We must rule on the law as it is and not what some
may desire it to be.
Cosgrove, 170 Mont. 254-255.
Our reasoning in Cosgrove is equally applicable to and
dispositive of this case, and Yearout's attempts to
distinguish Cosgrove from the instant case are not
persuasive. There was no a-djudication of compensability by
the Workers1 Compensation Court in this case, hence no award
of attorney's fees is justified under S 39-71-611, MCA. We
agree that there are equitable arguments favoring payment of
attorney's fees by an insurer who denies a claim and then
accepts liability after judicial proceedings have begun.
However, such arguments must be presented to the Legislature.
This Court must follow the law as written, and no award of
attorney's fees is justified by 5 39-71-611, MCA, under the
facts of this case.
For the foregoing reasons, we affirm the order of the
Workers' Compensation Court.
We Concur:
Justices
Mr. Justice John C. Sheehy, dissenting:
It is merely coincidental that Justice Hunt, who authors
the majority opinion, was the Workers' Compensation Judge
whose decision not to award attorneys fees was affirmed in
Cosgrove v. Industrial Indemnity Company (1976), 170 Mont.
249, 552 P.2d 622.
For my part I think we construe 5 39-71-611, MCA, too
narrowly under the facts of this case. When the claimant,
whose benefits had been refused by the State Fund, had to
resort to the Workers' Compensation Court for relief, he did
so under 5 39-71-2905, MCA. Under that statute, the Workers'
Compensation Judge has exclusive jurisdiction to make
determinations concerning disputes for workers' compensation.
When a claim has been unreasonably delayed or refused by the
insurer, either prior to or subsequent to the issuance of an
order by the Workers' Compensation Judge, the claimant is
entitled to a penalty of 20 percent of the benefits under 5
39-71-2907, MCA.
A pretrial order in this case was entered by the
Workerst Compensation Court, agreed to be the parties on June
11, 1985. Under Section F, entitled "Issues to be Determined
by the Court" the three issues listed were: (1) whether
claimant was injured within the course and scope of his
employment, (2) whether he was entitled to costs and
attorneys fees pursuant to 5 39-71-611, MCA ,
and (3) whether he was entitled to the 20 percent penalty
under 5 39-71-2907, MCA.
On the same day however, June 11, 1985, both counsel
appeared before the Workers' Compensation Court and there
counsel for the State Fund confessed to the Court that the
claim was compensable, and that the claimant was entitled to
the 20 percent penalty for unreasonable delay. The question
of claimant's right to attorneys fees was reserved for
briefing and the further order of the Court.
Although the Workers' Compensation Court had exclusive
jurisdiction of the claim at that point, it did not enter an
order based on the stipulated liability of the State Fund.
Since the Court had exclusive jurisdiction of all the issues
under S 39-71-2905, MCA, it should of course had entered an
order making binding the stipulated liability. The claimant
in this case was entitled to a binding order from the
Workers' Compensation Court, which would have the effect of
an ajudication for the purpose of attorneys fees under S
39-71-611, MCA.
There is an important reason why attorneys fees as well
as the penalty should be exacted in this case. Under S
39-71-2905, MCA, it is provided that "the penalties and
assessments allowed against an insurer under Chapter 71 are
the exclusive penalties and assessments that can be assessed
against an insurer for disputes arising under Chapters 71."
Here there is admission by the State Fund that it acted
unreasonably in delaying refusing benefits to the claimant.
If its actions were not in good faith, it is not liable for
punitive damages. Birkenbuel v. Montana State Comp. Ins.
Fund (1984), - Mont . -, 687 P.2d 700 It is the obvious
intention of the legislature that penalties and assessments
against the State Fund in particular are the weapons
available to the Workers1 Compensation Court to ensure fair
dealing with claimants. We should interpret the penalties
and assessments to make the legislative intent effective.
I therefore dissent and would award in this case
attorneys fees and costs, in addition to the 20 percent
penalty.