No. 86-387
I N THE SUPRENE COURT OF THE STATE O F MONTANA
1987
LAVERN GARMANN,
C l a i m a n t and A p p e l l a n t ,
-vs-
E.R. FEGERT C O . , Employer,
and
EMPLOYERS INSURANCE COMPANY OF WAUSAU,
D e f e n d a n t and R e s p o n d e n t .
APPEAL FROM: T h e Workers' C o m p e n s a t i o n C o u r t , T h e H o n o r a b l e
T i m o t h y R e a r d o n , Judge p r e s i d i n g .
COUNSEL OF RECORD:
For A p p e l l a n t :
L l o y d E. H a r t f o r d , B i l l i n g s , Montana
F o r Respondent:
L. R a n d a l l B i s h o p , B i l l i n g s , Montana
- -
S u b m i t t e d on B r i e f s : Feb. 19, 1987
Decided: April 21, 1987
F i l e d : APR '
.1-87
A
iii;
Clerk
Mr. Justice L. C. Gulbrandson delivered the Opinion of the
Court.
Claimant appeals a Workers' Compensation Court decision
denying a lump sum award of benefits and refusing to impose a
20% penalty on the insurance company. Two issues are
presented on appeal:
(1) whether the Workers' Compensation Court erred in
refusing to order a lump sum award of future benefits to
claimant;
(2) whether the Workers' Compensation Court erred in
refusing to impose the statutory 20% penalty on the insurance
company for its actions.
We affirm.
On March 21, 1981, claimant suffered multiple injuries
while working for E. R. Fegert Co. in Zortman, Montana,
including fractures of the pelvis, ribs and lumbar spine.
Claimant also suffered nerve injury to the upper right
extremity. Employer's Insurance Company of Wausau
(hereinafter insurance company), the workers' compensation
insurer, paid claimant temporary total disability benefits
from the date of injury, March 21, 1981 to September 10,
1982, and again from September 11, 1982 to December 6, 1982.
Claimant was paid permanent partial disability benefits from
December 7, 1982 through April 28, 1983, whereupon the
insurance company suspended the payment of benefits after
learning that claimant had been working as a front-end
alignment mechanic. Upon receiving notice that claimant was
not physically able to continue the work, the insurance
company on January 27, 1984 reinstated permanent partial
disability benefits and then upgraded payments to permanent
total disability in December 1984. Claimant was paid lump
sum advances on five separate occasions from December 1981 to
August 1 9 8 4 . Claimant's treating physician opined that
maximum healing was achieved by April 1 9 8 2 . An orthopedic
surgeon rated claimant's impairment at 2 5 % of the lower
extremity, and a neurologist added a 2 0 % impairment rating
for the upper extremities and cervical region.
Rehabilitation tests revealed that claimant's optimal work
setting would be a gross manual task requiring only light
lifting. The rehabilitation counselor recommended that
claimant find work as a driver/operator of some type of
"smooth riding construction vehicle." Claimant subsequently
received three and one-half days of training and worked as a
front-end alignment mechanic, but as was previously stated,
claimant elected to quit because of back and leg problems.
Claimant did not attempt to find other work.
Further assessment of claimant's limitations in August
1 9 8 3 revealed that claimant could only lift 1 0 - 1 5 pounds and
was restricted to occasional squatting and no climbing or
bending. A vocational specialist concluded that claimant's
severe physical restrictions required future job placement in
"light duty work," defined as "frequent lifting of ten pounds
with no bending, lifting, pushing, stooping, or climbing."
Claimant requested a lump sum award of future benefits for
the purchase of a home, automobile and furniture. With any
remaining award, claimant proposed to purchase an annuity.
Claimant also requested that a 2 0 % statutory penalty be
imposed on the insurer for its actions.
The Workers1 Compensation Court reviewed the evidence
and found claimant to be permanently totally disabled from
the date of injury, exclusive of the time in which he worked
as a mechanic. However, the court said claimant was not
entitled to a lump sum award because the record was virtually
barren of any evidence to support such an award under the
"best interests" test or the "financial sustenance" test.
The court also refused to impose the statutory 20% penalty on
the insurance company, holding that the suspension of
benefits for the time claimant worked as a mechanic was not
unreasonable. The court said a valid dispute existed as to
whether claimant was permanently totally disabled.
As to the lump sum award issue, 5 39-71-741, MCA,
provides that such an award is within the discretion of the
Workers' Compensation Court. The standard of review is
clear:
"Lump sum settlements are granted in
exceptional circumstances. Outstanding
indebtedness, pressing need, or
circumstances in which the best interests
of the claimant, his family and the
general public are served justify such a
settlement. [Citations omitted.] The
decision to award or deny a lump sum
settlement will not be interfered with on
appeal unless there has been an abuse of
discretion. The Workers' Compensation
Court will be presumed correct and
affirmed if supported by substantial
evidence, and reversed only if the
evidence clearly preponderates against
its findings. [Citations omitted.] Wide
discretion will be afforded the Workers '
Compensation Court in its determination.
(Citations omitted. ) "
Lave v. School Dist. No. 2 (Mont. 1986), 713 P.2d 546, 547,
43 St.Rep. 165, 167; Hock v. Lienco Cedar Products (Mont.
Section 39-71-741 was amended by the 1985 legislature
and we interpreted the legislative action as a means of
codifying existing law. See Buckman v. Montana Deaconess
Hosp. (Mont. 1986), 730 P.2d 380, 43 St.Rep. 2216. We quote
the following passa.ge from Buckman:
[clase law has required claimants to
submit financial plans when outstanding
or delinquent debt is the basis for a
conversion request. Kuehn v. National
Farmers Union Property and Cas. Co.
(1974), 164 Mont. 303, 521 P.2d 921.
Furthermore where the court has found the
outstanding debt was not so significant
as to necessitate a lump-sum conversion,
it has been denied. Ruple v. Bob
Peterson Logging Co. (Mont. 1984), 679
P.2d 1252, 41 St.Rep. 704. This prior
law is directly reflected in the language
.
of S 39-71-741 (2)(c)
Subsection 2 (d) of that same statute
likewise codifies prior case law
requiring that a claimant show the
worthiness of her business venture plan
and the adequacy of her business acumen.
See Bundtrock v. Duff Chevrolet (1982),
199 Mont. 128, 647 P.2d 856; Krause v.
Sears, Roebuck and Co. (1982), 197 Mont.
102, 641 P.2d 458.
Finally, 39-71-741 (3) allows the
division to order "financial, medical,
vocational, rehabilitation, educational
or other evaluative studies to determine
whether a lump-sum conversion is in the
best interest of the worker or his
beneficiary. " These tests reflect the
historical ways in which a claimant could
assert that a conversion was in her best
interests other than by showing strict
financial necessity. Prior case law has
held a conversion to be in the best
interests of a claimant where medical
considerations required that the claimant
and his family move to a different
climate. Polich v. Whalen's O.K. Tire
Warehouse (1983), 203 Mont. 280, 661 P.2d
38. Prior case law has held it to be in
the best interest of the claimant where
diagnosed mental instability made the
award of a lump sum necessary to relieve
the claimant's abnormal anxiety. Legowik
v. Montgomery Ward and Co. (1971), 157
Mont. 436, 486 P.2d 867.
The legislative use of the term "best
interest" further convinces us that
S 39-71-741(3), MCA, reflects the intent
of the legislature to make explicit in
the statutory language the previously
used best interest test for the
conversion of biweekly benefits.
Buckman, 730 P.2d at 383.
Stelling v. Rivercrest Ranches, Inc. (Mont. 1986), 730
P.2d 388, 390, 43 St.Rep. 2212, 2214, decided the same day as
Buckman, states that the 1985 amendments to 5 39-71-741
"merely expand the methods by which a claimant proves
entitlement to a lump-sum award. The threshold test remains
that of the best interests of the claimant." (Emphasis
added. ) This is the standard by which the Workers'
Compensation Court must adjudge a claimant's request for a
lump sum award.
The claimant bears the burden of justifying departure
from periodic payments. Legowik v. Montgomery Ward & Co.
(1971), 157 Mont. 436, 486 P.2d 867. The purpose of the
periodic payment method is to preclude the possibility of an
imprudent employee or dependent wasting the means of support
and thereby becoming a burden upon society. Polich v.
Whalen's O.K. Tire Warehouse (Mont. 1981), 634 P.2d 1162, 38
St.Rep. 1572. Lump sum settlements are an exception to the
usual mode of payment contemplated by the Workers'
Compensation Act. Utick v. Utick (1979), 181 Mont. 351, 593
P.2d 739.
Claimant requested a lump sum award of future benefits
for the purchase of a home, automobile and furniture. The
problem with claimant's argument is that age, health, or
other pressing needs have not been shown to necessitate the
purchase of the requested items. See Belton v. Carlson
Transport (Mont. 1986), 714 P.2d 148, 43 St.Rep. 286. We
find no abuse of discretion by the Workers' Compensation
Court.
The second issue is whether the Workers' Compensation
Court erred in refusing to impose the statutory 20% penalty
on the insurance company for its actions. Section
39-71-2907, MCA, is the statute at issue:
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'
compensation 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 compensation 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.
The standard of review is whether there is substantial
evidence to support the findings and conclusions of the
Workers' Compensation Court. Steffes v. 93 Leasing Co., Inc.
/1978), 177 Mont. 83, 580 P.2d 450.
There are several reasons justifying the delayed
payment of compensation such as the existence of a bonafide
controversy or genuine doubt from a medical or legal
standpoint that any liability exists. Holton v. F.H. Stoltze
Land & Lumber Co. (1981), 195 Mont. 263, 637 P.2d 10. In
Metzger v. Chemetron Corp. (Mont. 1984), 687 P.2d 1033, 41
St.Rep. 1788, the claimant received partial lump sum advances
of $6,000 plus overpayments of $7,287.97. The lower court
found, and we agreed, that no basis existed for the
consideration of a penalty.
Here claimant is arguing that the insurance company's
suspension of benefits in April 1983 was unreasonable and
therefore justifies the imposition of the statutory penalty
on all accrued benefits from April 1983 to December 1984 and
on all future total permanent disability benefits. This
position is untenable in light of the fact that an insurance
company may terminate benefits if it has knowledge that a
claimant has returned to work. See S 39-71-609, MCA. Here
the insurance company had knowledge that claimant had
returned to work as a mechanic. A valid dispute existed as
to whether claimant was permanently totally disabled
therefore justifying the suspension of benefits for the time
claimant worked as a mechanic. Once the insurance company
was notified that claimant could no longer work in that
capacity, it reinstated payment of permanent partial benefits
and upgraded payment to permanent total benefits. We agree
with the lower court that there is no evidence of
unreasonable delay or refusal to pay compensation on the part
of the insurance company. The Workers' Compensation Court
found claimant to be permanently totally disabled from the
date of injury excluding the nine months claimant worked as a
front-end mechanic. We find substantial evidence to support
the ruling of the Workers' Compensation Court.
Affirmed.
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