No. 89-286
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
FRANK EDWARD GETTEN,
S
Claimant and Appellant,
-vs-
LIBERTY MUTUAL INSURANCE COMPANY,
Defendant and Respondent.
APPEAL, FROM: The Workers' Compensation Court, The Honorable
Timothy Reardon, Judge Presiding.
COUNSEL OF RECORD:
For Appellant:
Jack E. Sands argued, Billings, Montana
For Respondent :
Robert E. Sheridan argued, Garlington, Lohn & Robinson,
Missoula, Montana
Submitted: October 31, 1989
Decided: November 28, 1989
Filed:
Clerk
Justice John Conway Harrison delivered the Opinion of the
Court.
This case presents an appeal from the Workers'
Compensation Court which affirmed a determination by the
Division of Workers' Compensation regarding subrogation
rights. The Division determined that respondent was entitled
to a subrogation right in tort claim proceeds recovered in a
wrongful death action brought by appellant. We affirm.
Appellant raises the following issues for review:
1. Does the Division of Workers' Compensation have
jurisdiction over this subrogation claim?
2. Did Liberty Mutual Insurance establish that the
claimant was provided full legal redress in its third party
claim so that Liberty's subrogation claim extends to the
settlement award?
3. Did Liberty Mutual Insurance establish that the
insurer responded to claimant's invitation to participate in
the lawsuit in a manner that was "explicit, immediate and
without reservation," so as to be entitled to the full
subrogation amount authorized by the Workersf Compensation
Act?
4. Did Liberty Mutua, Insurance establish that fifty
percent of the amount of the settlement was related to
economic damages or to damages which had their source in the
earnings of the decedent, and thus subject to its claim for
subrogation?
a. Was Getten's settlement brochure in the third-party
action protected by the attorney work product rule?
b. Should deposition testimony of two adjustors for
insurers in the third-party action have been admitted
in evidence?
c. Did Liberty Mutual Insurance establish the amount
of economic damages that represents reasonable
contributions to the heirs derived from the earnings of
the decedent?
5. Was the subrogation entitlement computed correctly?
6. Did the Division fail to make findings of fact
essential to the question to be decided?
Frank Getten worked as a truck driver for Ryan
Wholesale Foods. On December 18, 1984, he was killed in a
truck accident in Utah. He died instantly during a head-on
collision with another semi-truck owned by Zip Trucking. The
driver of the other semi, Terry Osborne, an employee of Zip
Trucking, was later convicted of automobile homicide because
his negligence caused the accident. Mr. Getten was survived
by two children from a prior marriage.
Liberty accepted liability for Getten's death and began
payment of death benefits to Getten's children.
Subsequently, Getten's estate initiated a wrongful
death action against Osborne and Zip Trucking. The wrongful
death action resulted in a structured settlement which
included a cash payment and an annuity for the surviving
children. The settlement was well within the available
policy limits.
When claimant's counsel initiated the third-party suit,
he wrote to the adjuster for Liberty and requested that
Liberty share costs and attorney's fees for the third-party
suit. The adjuster wrote to counsel and requested some
information about the third-party suit and estimated costs.
Claimant's counsel did not reply to this letter. The
adjuster then wrote to claimant's counsel and informed him
that Liberty would participate in the third-party suit.
Liberty agreed to pay its share of attorney's fees at the
time the third-party claim settled in accord with claimant's
counsel's contingency fee agreement. Later, claimant's
counsel forwarded a bill to respondent's adjustor for costs
which Liberty paid minus some costs the adjuster decided were
not related to the third-party suit.
Liberty demanded that it be subrogated to the
third-party claim. Appellant disputed Liberty's claim,
contending that Liberty had no subrogation right or
alternatively only a right to 50% subrogation because Liberty
did not participate in the third-party suit.
Issue I
Appellant contends that jurisdiction of the subrogation
claim properly lies with Workers' Compensation Court for two
reasons. First, appellant contends that 5 39-71-414, MCA,
does not give the Division jurisdiction because respondent's
liability was fully determined prior to the third-party
settlement. Secondly, the Division lacked jurisdiction, the
appellant claims, because the third-party action was a
wrongful death suit. We disagree.
The statute at issue is 5 39-71-414, MCA (1985), which
sets out an insurer's subrogation rights. The disputed
language appears in subparagraph (5) which states:
If the amount of compensation and
other benefits payable under the Workers'
Compensation Act have not been fully
determined at the time the employee, the
employee ' s heirs or personal
representatives, or the insurer have
settled in any manner the action as
provided for in this section, the
division shall determine what proportion
of the settlement shall be allocated
under subrogation. The division ' s
determination may be appealed to the
workers' compensation judge. (Emphasis
added. )
Appellant interprets S 39-71-414 (5), MCA, to require
only that a final determination of benefits have been made
prior to the third-party settlement. In the instant case,
the Division entered its order awarding the beneficiaries
compensation on March 20, 1985, prior to the third-party
settlement.
We addressed S 39-71-414(5), MCA, and the Division's
jurisdiction in subrogation claims, in First Interstate Bank
of Missoula v. Tom Sherry Tire, Inc. (Mont. 1988), 764 P.2d
1287, 1289, 45 St.Rep. 2150, 2152. We stated the following:
Third, only in those cases where the
benefits are not determined at the time
the third-party action is settled does
the Division resolve the question of
subrogation...
However, the total amount of benefits and
compensation payable by the insurer must
be known to specify the amount of
subrogation to which the insurer is
entitled. Where the total amount of
benefits and compensation are not known,
the Montana legislature delegated to the
Division the power of determining what
proportion of the settlement is to be
allocated under subrogation. (Emphasis
added. )
This language clearly requires the Division to assume
jurisdiction of subrogation claims when the total dollar
amount of benefits is not determined prior to the third-party
settlement. In the instant case, respondent's total
liability could not have been determined on March 20, 1985,
because of contingencies that affect the duration of benefits
to the minor children. These contingencies, which relate to
the effect of marriage and school on the duration of the
benefits, necessarily cannot he resolved until the future.
Therefore because its total liability was not fully
determined prior to the third-party settlement,
§ 39-71-414(5), MCA, gives the Division jurisdiction to
compute the amount of subrogation. We affirm the Workers'
Compensation Court's decision that the Division had
jurisdiction over the subrogation claim.
Appellant's second ground for attacking the Division's
jurisdiction is that because the third-party action was a
wrongful death action, neither the action nor the subrogation
right arises under the Workers' Compensation Act. Our
hol-ding in Swanson v. Champion Internat'l Corp. (1982), 197
Mont. 509, 646 P.2d 1166, confirms that an insurer has a
subrogation right in the economic portion of wrongful death
recoveries. We reject appellant's argument.
Issue I1
Appellant contends that respondent is not entitled to
subrogation because the third-party settlement did not
provide appellant with full legal redress and argues that
Hall v. State Compensation Ins. Fund (1985), 218 Mont. 180,
708 P.2d 234 is analogous to this case. We disagree.
In Hall this Court held that when "a claimant is forced
to settle for the limits of an insurance policy which,
together with claimant's workers' compensation award, do not
grant full legal redress to claimant, the insurer is not
entitled to subrogation rights under S 39-71-414, MCA."
Hall, 708 P.2d at 237. The Hall opinion distinguishes the
Hall case from Brandner v. Travelers Ins. Co. (1978), 179
Mont. 208, 587 P.2d 933. This Court, in Brandner, found that
the claimant was made whole by "a voluntary settlement in
satisfaction of all claims" for an amount "not dictated by
the upper limits of the insurance policy." Hall, 708 P.2d at
236. The instant case presents a voluntary settlement
(approximately 1.5 million dollars) for less than the upper
limits of the applicable insurance policy (six million
dollars). We hold that appellant received full legal
redress.
Issue I11
Appellant contends that the Workers' Compensation Court
erred in finding that Liberty adequately responded to
appellant's invitation to participate in the lawsuit.
This Court's task in reviewing a Workers' Compensation
Court decision is to determine whether substantial evidence
supports the Workers ' Compensation Court's findings of fact
and conclusions of law. Coles v. Seven Eleven Stores (1985),
217 Mont. 343, 347, 704 P.2d 1048, 1050.
Although appellant acknowledges that respondent did
agree to participate in the lawsuit, appellant argues that
respondent's participation was not "explicit, immediate, and
without reservation" because respondent refused to advance
attorney's fees despite a clear request to do so. Section
39-71-414(2) (b), MCA, does not require that the insurer
advance attorney's fees.
While § 39-71-414 (2)(b), MCA, does not specifically
require the insurer to advance attorney's fees, it does not
prohibit insurers from either advancing attorney's fees or
sharing attorney's fees in losing cases. Under proper
circumstances and supported by a clear record, a request to
"pay a proportionate share of the reasonable cost of the
action, including attorney's fees" could require an insurer
to advance attorney's fees.
Appellant's counsel pursued the third-party claim on a
contingency fee basis. There is no advance of attorney's
fees on a contingency fee contract. Further, the record
contains conflicting evidence regarding when and how
claimant's counsel requested advance payment of attorney's
fees. We find that the Workers' Compensation Court's
decision that respondent adequately responded to appellant's
request that it participate in the lawsuit is supported by
substantial evidence.
Issue IV
Appellant contends that the evidence does not establish
that fifty percent of the settlement amount was related to
economic damages and thus subject to subrogation. As well,
appellant claims that the evidence does not establish the
amount of economic damages that represents reasonable
contributions to the heirs derived from the decedent's
earnings. A review of the record discloses that the
Division's finding that $750,000 of the third-party
settlement was subject to subrogation is supported by
substantial evidence.
Appellant also objects to the admission into evidence
of the settlement brochure and the depositions which she
contends are hearsay. Section 39-71-2903, MCA ( 1 9 8 5 ) ,
provides that workers' compensation proceedings are not bound
by formal rules of evidence. Regarding appellant's
evidentiary objections, the Workers' Compensation Court held
them to be without merit. The Workers' Compensation Court
found that the deposition testimony was properly noticed and
that the deponents lived beyond the jurisdictional limits.
As to the settlement brochure, both the Division and the
Workers' Compensation Court found that it was not privileged.
The Division noted that the appellants had not reserved any
rights regarding the settlement brochure in disseminating it.
to the third-party insurer. We affirm the Workers'
Compensation Court's decisions regardinq appellant's
evidentiary objections.
Issue V
Appellant contends that the Division incorrectly
calculated the subrogation amount and that the Workers'
Compensation Court used the wrong formula to review the
Hearing Examiner's calculations. The Workers' Compensation
Court used the formula found in Tuttle v. Morrison-Knudsen
Co., Inc. (Mont. 1978), 177 Mont. 166, 580 P.2d 1379.
Appellant asserts the formula in Swanson v. Champion
Internat'l Corp. (1982), 197 Mont. 509, 646 P.2d 1166, should
have been used. Further, the appellant asserts that no basis
exists in 5 39-71-414, MCA, for respondent to be reimbursed
for its mandatory $1,000 payment to the uninsured fund.
Although appellant implies that the Swanson and --
Tuttle
formulas are different, the formulas are identical. The
Division did calculate the subrogation amount in accordance
with Swanson and Tuttle.
Section 39-71-414 (1), MCA, provides for "subrogation
for all compensation and benefits paid or to be paid or to be
paid under the Workers' Compensation Act." Appellant argues
that the $1,000 contribution to the uninsured fund required
by statute is neither compensation nor a benefit to the
estate of the deceased. However, because the workers'
compensation statute requires the $1,000 payment, it falls
.under 5 39-71-414, MCA. We hold that the Division computed
the subrogation amount correctly.
Issue VI
Appellant's main contention regarding the Division's
findings of fact appears to be that the Division essentially
adopted the respondent's proposed findings of fact.
Appellant offers no real argument beyond this contention.
The standard of review for findings of fact is whether there
is credible evidence to support the finding. Further, this
Court holds that reliance on counsel's proposed findings of
fact is not automatic error. Moore v. Hardy (Mont. 19881 ,
748 P.2d 477, 45 St.Rep. 108. We reject appellant's
contention.
We affirm the Workers' Compensation Court.
We concur:
Justice John C. Sheehy did not participate in this decision.