No. 8 8 - 3 0 3
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
DONALD J. HARTMAN,
Claimant and Respondent,
-VS-
STALEY CONTINENTAL, Employer,
and
NATIONAL UNION FIRE INSURANCE,
Defendant and Appellant.
APPEAL FROM: The Workers' Compensation Court, The Honorable ~ i m o t h y
Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Marra, Wenz, Johnson & Hopkins; Gary L. Green, Great
Falls, Montana
For Respondent:
Erik B. Thueson, Helena, Montana
Submitted on Briefs: Nov. 3 , 1 9 8 8
. J -
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. Decided: February 16, 1989
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3. Clerk
Mr. Justice William E. Hunt, Sr. , delivered the Opinion of
the Court.
Staley Continental and National Union Fire Insurance
appeal the decision of the Workers' Compensation Court,
awarding Donald J. Hartman, the claimant, $36,625.00 in
permanent partial disability benefits, $13,690.60 in attorney
fees and $1,915.29 in costs. We affirm and remand this case
to assess reasonable attorney fees and costs in connection
with this appeal and in accordance with S 39-71-611, MCA
(1985).
The two issues raised on appeal are:
(1) Whether substantial, credible evidence supports the
klorkers' Compensation Court's award to the claimant of
$36,625.00;
(2) Whether the Workers' Compensation Court erred in
awarding the claimant $13,690.60 in attorney fees and
$1,915.29 in costs.
Staley Continental, a company that sells food, paper
products and other supplies to restaurants, hospitals and
nursing homes, hired Donald J. Hartman, the claimant, in 1980
as a sales representative. Hartman's responsibilities for
Staley Continental include developing and servicing new
accounts in the Hi-Line area. Hartman drives over 750 miles
a week in the course of his employment and works 12 to 15
hours a day, four days a week. Half of his time is spent
driving and seeing his clients and the other half is spent
doing the necessary paper and computer work to ensure that
the clients receive their orders.
Hartman's starting salary with Staley Continental in
1980 was approximately $1,100 per month. His income has
gradually increased, and in 1987 he made approximately
$63,000 plus substantial frjnqe benefits. Hartman
contributes the majority of his success to the Hi-Line area,
stating that the area is sparsely populated and generally
ignored by food service industry people and therefore he is
not faced with competition. He also contributes his success
to his relationship with his customers which he has developed
over many years.
On September 22, 1980, while performing his duties for
Staley Continental, Hartman was involved in an automobile
accident. This accident resulted in lasting, but not
disabling injuries. As a result of the 1980 accident,
Hartman suffered injuries to his lower back and neck, hut
Hartman testified that the accident caused no problems
"whatsoe~rer"in his job performance for Staley Continental.
Hartman filed a workerst compensation claim for this
accident. This claim has been settled and is not at issue
in this appeal.
On October 28, 1985, Hartman was involved in a second
automobile accident within the course and scope of his
employment. This accident exacerbated Hartman's previous
existing neck injury. A physician, Dr. Swift, examined
Hartman after the 1985 accident and found that Hartman
sustained a musculoligamentous sprain to his neck. As a
result of this 1985 accident, Hartman claims that he is
entitled, under §§ 39-71-705 through -708, MCA (1985), to 500
weeks of permanent partial disability.
On May 10, 1988, the Worker's Compensation Court issued
its findings of fact and conclusions of law and concluded
that Hartman was entitled to 250 weeks of permanent partial
disability benefits at a rate of $146.50 per week, beginning
on the date of injury. The court also concluded that Hartman
was entitled to an award of reasonable costs and attorney
fees pursuant to S 39-71-611, MCA (1985). On May 24, 1988,
the court concluded that Hartman was entitled to reasonable
attorney fees of $13,690.60 and $1,915.29 in costs. National
Union Fire Insurance, the defendant, appeals.
The first issue raised on appeal is whether substantial,
credible evidence supports the Workers' Compensation Court's
award to Hartman of $36,625.00.
The court's findings, which are clearly set forth in the
record, are based upon testimonies from Hartman, Dr. Swift,
and two vocational rehabilitative counselors. At the October
13, 1987 proceedings, Hartman testified that as a result of
the 1985 accident the pain in his neck has increased; his
daily work schedule exacerbates his neck injury; his driving
has been hampered to the point that it has become dangerous
for him to drive at times; and he has practically given up
his hobbies and recreational activities because of the pain
that such activities cause. In an attempt to alleviate his
neck condition, Hartman testified that he has taken several
different medications, undergone cervical traction and
chiropractic manipulations, and has gone weekly, when allowed
by his work schedule, to a physical therapist.
None of the above treatments have been successful for
Hartman in providing permanent relief for his neck condition.
The physical therapist stated, in a letter to Dr. Swift, that
" [p]rogress has been slow and variable, and it appears to he
related to his work and the inconsistency of his therapv
attendance which is because of his work schedule as well."
Dr. Swift testified that, based on a reasonable degree of
medical certainty, Hartman has one of three options if he is
to qet some relief: (1) quit his present job and take on new
employment that might not exacerbate his condition; (2) cut
down on the number of hours that he works and the physical
driving distances that he is presently required to do; or (3)
transfer to some other job within his current company that
would not require driving. Hartman testified that as a
result of the detrimental emotional and physical consequences
he suffers from the 1985 accident, he is not going to
continue working at his present job. He also testified that
the reason he has continued working after this accident,
despite his injuries, is because of his financial obligations
and because he did not become half-vested in his company's
profit-sharing and retirement programs until May 20, 1988.
In light of the above, the court found that Hartman cannot
emotionally or physically continue with his present
employment much longer.
The Workers' Compensation Court appropriately applied
the law in effect at the time of Hartman's accident. Trusty
v. Consolidated Freightways (1984), 210 Mont. 148, 151, 681
P. 2d 1085, 1087. The court then determined, based upon the
information above, that Hartman was entitled to an award of
permanent partial disability benefits pursuant to
S § 39-71-705 through -708, MCA (1985). The court first noted
that permanent partial disability is defined in
S 39-71-116(12) as:
a condition resulting from injury as defined in
this chapter that results in the actual loss of
earnings or earning capability less than total that
exists after the injured worker is as far restored
as the permanent character of the injuries will
permit. Disability shall be supported by a
preponderance of medical evidence.
The court then noted that in Montana a partially disabled
claimant, injured prior to the enactment of the 1987
amendments, may elect benefits under either § 39-71-703, MCA,
to recover actual loss of earning capacity, or §§ 39-71-705
through -708, MCA, which purportedly indemnifies a claimant
for possible loss of future earning capacity, regardless of
whether an actual loss in earning capacity is demonstrable.
McDanold v. R.M. Transport, Inc. (1984), 208 Mont. 470,
476-77, 679 P.2d 1188, 1191. The court recognized that in
this case Hartman proceeded under S S 39-71-705 through -708,
MCA .
The specific statute pertaining to Hartman's type of
permanent partial injury is S 39-71-706, MCA (1985). This
statute provides in pertinent part that
Ciln all other cases of permanent injury less than
total not included in the schedule provided for in
39-71-705, the compensation for partial disability
shall bear such relation to the periods stated in
the schedule provided for in 39-71-705 as the
disabilities bear to those produced by the injuries
named in the schedule or to partial disability (500
weeks).
The court recognized that the maximum allowable entitlement
that a claimant could receive under this section for an
injury occurring on October 28, 1985 is $146.50 per week for
500 weeks which would total $73,250.
In determining the degree to which Hartman's earning
capacity has been impaired, the court appropriatelv
considered Hartman's age, education, work experience, pain
and disability, actual wage loss and possible loss of future
earning capacity. Holton v. F.H. Stoltze Land and Lumber Co.
(1981), 195 Mont. 263, 266, 637 P.2d 10, 12; Flake v. Aetna
Life & Casualty Co. (1977), 175 Mont. 127, 129, 572 P.2d go?,
909. The court recognized that at the time of the trial,
Hartman was 39 years of age and had been a traveling salesman
since 1979 and continues to work in that capacity. The court
also recognized that he has a high school diploma and two
years of college.
The court then recognized that Hartman's 1987 salary
recorded on his W-2 form was $68,000 plus. The court relied
upon the testimonies of the two rehabilitative vocational
counselors--Mark Williams, who was called by Hartman, and
Jeanne Dussault, who was called by National Union Fire
Insurance--to determine Martman's possible loss of future
earning capacity. Dussault testified that one business she
contacted expressed a possible interest in hiring Hartman and
that one salesman for that company had made in excess of
$100,000 a year. Hartman was subsequently called as a
rebuttal witness and testified that he was familiar with the
company referenced to by Dussault and that in his opinion, it
would be an "absolute impossibility" for a sales
representative to make over $100,000 for that company. In
addition, Dussault testified on cross-exam that she has never
placed an injured worker, with or without a college degree,
in a position that pays over $60,000 a year. Dussault also
testified that a management level position with Hartman's
current employer, a possible alternative to Hartman's current
position, has a base salary of $36,000 a year plus benefits
or $45,000 a year if fringe benefits are included. Williams
conducted an employers' survey, and based upon the responses,
he testified that the average salesman earned approximately
$25,000 to $26,000 per year and that in a best case scenario
this figure would equal $38,000. In light of the above, the
court found that Hartman will likely take a fifty percent
reduction in his current income upon leaving his present
position.
When reviewing a decision by the Workers' Compensation
Court, this Court's function is to determine whether
substantial evidence exists to support the Workers'
Compensation Court's findings of fact and conclusions of law.
Coles v. Seven Eleven Stores (Mont. 1985), 704 P.2d 1048,
1050, 42 St.Rep. 1238, 1240, Davis v. Jones (Mont. 19851, 701
P.2d 351, 353, 42 St.Rep. 840, 843. In this case, the court
found that although Hartman returned to work immediately
after the 1985 accident and has not presentlv sustained
actual loss of wages as a result of his injuries, he has
nonetheless suffered pain and difficulties in his employment
because of the accident. The court also found that Dr.
Swift's testimony and Hartman's own testimony indicates that
Hartman will have to make a change in his employment if he
ever expects to he relieved of some of his pain and symptoms.
Upon leaving his present position, the court found that
Hartman will likely take a fifty percent reduction in his
current income. The court then concluded that fifty percent
was an appropriate disability factor on which to base
Hartman's benefits for possible loss of earning capacity. In
applying this figure, the court awarded Hartman 250 weeks of
permanent partial disability benefits at a weekly rate of
$146.50, beginning from the date of Hartman's 1985 accident.
In view of the Workers' Compensation Court's findings of fact
and conclusions of law, we hold that substantial credible
evidence supports the Workers' Compensation Court's
determination of Hartman's permanent partial disability
benefits.
The defendant, in an attempt to attack the basis of the
court's findings, argues that the court "erroneously relied"
on the deposition testimony from Hartman's two expert
witnesses and then "misunderstood" oral testimony from its
expert witness. We disagree. This Court is in as good a
position as the Workers' Compensation Court to assess the
weight given to deposition testimonv, Shupert v. Anaconda
Aluminum Co. (Mont. 1985), 696 P.2d 436, 439, 42 St.Rep. 277,
281-82, but this Court will defer to the Workers'
Compensation Court's findings as to the weight and
credibility of oral testimony. Frost v. Anaconda Co. (Mont.
1985), 701 P.2d 987, 988, 42 St.Rep. 889, 891. In light of
the evidence presented at the trial and discussed above, we
hold that the Workers' Compensation Court did not erroneously
rely on the deposition testimonies of Hartman's two expert
witnesses--Dr. Swift and Mark Williams, the rehabilitative
vocational counselor,--nor did the court misunderstand the
defendant's expert witness's oral testimony. We conclude
that the court properly considered and weighed all of the
testimonies in determining Hartman's permanent partial
disability benefits.
The defendant also argues that substantial credible
evidence presented at the trial supports its contentions that
Hartman's salary will not decrease as a result of his 1985
accident. However, as previously stated, this Court's
function on review is to determine whether substantial
credible evidence supports the lower court, and not, as the
defendant argues, to determine whether substantial credible
evidence exists to support contrary findings. Davis, 701
P.2d at 353, 42 St.Rep. at 843.
The second issue raised on appeal is whether the
Workers' Compensation Court erred in awarding Hartman
$13,690.60 in attorney fees and $1,915.29 in costs.
On June 8, 1988, the Workers' Compensation Court issued
an order awarding Hartman $13,690.60 in attorney fees and
$1,915.29 in costs. In determining these amounts, the court
relied upon 39-71-611, MCA (1985), the law in effect at the
time of Hartman's accident.
In asserting that the Workers' Compensation Court erred
in awarding Hartman attorney fees, the defendant sets forth a
series of novel "arguments." The defendant recognizes that
successful claimants are entitled to attorney fees but argues
that Hartman was not a "successful" claimant. Specifical-ly,
the defendant argues that Hartman was not successful because
Hartman contended he was entitled to $73,250.00 and the court
awarded him only $36,625.00. The defendant further
"supports" this "argument" by stating that its initial $5,000
settlement offer more close1.y approximated the court's award
of $36,625.00 than Hartman's request of $73,250.00, and
therefore indicates that Hartman was not successful.
We hold that defendant's argument set forth above lacks
merit. The statute applied by the Workers' Compensation
Court, 5 39-71-611, MCA (1985), merely states that a claimant
who is "adjudged compensable by the workers' compensation
judge or on appeal" is entitled to reasonable costs and
attorney fees. In the present case, the Workers'
Compensation Court found that Hartman was entitled to
compensation under § 39-71-706, MCA (1985), and therefore
entitled to reasonable attorney fees and costs. In Wight v.
Hughes Livestock Co. (1983), 204 Mont. 98, 664 P.2d 303, this
Court stated that the "objective of the statutes allowing
attorney fees in compensation cases [is] to preserve in tact
the eventual award recovered by the claimant for his
impairment, by assessing in addition his attorney fees and
costs against the insurer or employer." 204 Mont. at 108,
664 P.2d at 309. By engaging in subjective evaluations of
whether a claimant, who was awarded benefits by the Workers'
Compensation Court, is "successful" according to defendant's
definition would go against the objective of preserving the
eventual award the claimant recovers, regardless of the
actual amount recovered. We therefore disagree with
defendant's definition of "successful" and hold that the
plain meaning of S 39-71-611, MCA (1985), clearly allows a
claimant, who is "adjudged compensable by the workers'
compensation judge or on appeal," to recover reasonable costs
and attorney fees.
The defendant next argues that the Workers' Compensation
Court incorrectly applied 39-71-611, MCA (1985), when
assessing Hartman's attorney fees and costs. Section
39-71-611, MCA (1985), applies when an insurer denies
liability. The defendant argues that the appropriate statute
in this case is S 39-71-612, MCA (1985), which applies when
an insurer acknowledges liability but disputes the amount of
compensation due the claimant. The defendant thus argues
that they did not deny liability, but merely disputed the
amount of compensation sought by Hartman and therefore the
applicable statute in this case to determine attorney fees
and costs is S 39-71-612, MCA (1985). The record does not
support the defendant's factual assertions. In both the
pretrial order and the defendant's proposed conclusions of
law, the defendant asserts that the claimant is not entitled
to any compensation. In addition, the defendant fails to
argue how the application of § 39-71-612, MCA (1985), would
cause a different assessment of attorney fees and costs in
this case. We therefore hold that the Workers' Compensation
Court properly applied § 39-7'1-611, MCA (1985), in assessing
Hartman's attorney fees and costs.
The defendant also argues that the court should have
used the contingency fee agreement between Hartman and his
attorney to assess the attorney Fees. In assessing the
amount of reasonable attorney fees and costs, the court
relied upon 5 39-71-614, MCA (1985). This statute does not
state that a contingency fee agreement between a claimant and
the attorney limits a court's determination of the amount of
reasonable attorney fees awarded to a claimant. To the
contrary, the statute requires that the attorney's fee "must
be based exclusively on the time spent by the attorney in
representing the claimant on the issues brouqht before the
workers' compensation judge." Although the statute does not
restrict the claimant and the attorney from entering into a
contingency fee arrangement, the statute also does not tie a
judae's hand by stating that a contingency fee agreement
determines the upper limit of what constitutes reasonable
attorney fees in a workers1 compensation case.
The defendant also relies upon McHinley v. American
Dental Manufacturing Co. (Mont. 1988), 754 P.2d 831, 45
St.Rep. 892, to assert that a court must pay attorney fees
based upon the difference between a settlement offer and the
amount awarded by the court. The reliance by the defendant
on McKinley is misplaced. In McKinley, this Court
interpreted language in S; 39-71-612, MCA (1983), that the
legislature subsequently repealed in 1985. Hartman' s
accident occurred in 1985, therefore, the 1985 amendments
apply in this case. We therefore hold that the Workers'
Compensation Court properly assessed the attorney fees and
costs awarded to Hartman.
We affirm and remand this case, pursuant to Hartman1s
request and in accordance with S 39-71-611, MCA, to the
Workers' Compensation Court to award attorney fees and costs
associated with this appeal.
We Concur:
Chief Justice
/ -\
Justices
- 12 -
Mr. Justice L. C. Gul-brandson,dissenting.
T respectfully dissent.
In mv opinion, the permanent partial benefit award of
$146.50 per week for 250 weeks is, at best, premature, and is
based on a flawed computation methodologv.
The record discloses that the claimant was injured on
October 28, 1985, when he lost control of his car, received
emergency medical treatment consisting of a muscle relaxant
and a pain medication, was released from the hospital the
same date, returned to work the following day, has had no
wage loss, and has increased his gross wage income each year
from $56,318.30 in 1985 to $68,000 in 1987.
The Workers ' Compensation Court Judge, in his Findings
and Conclusions of Law, included the following:
The Court finds that the medical
testimony and credible vocational
evidence indicates that Mr. Hartman has a
potential loss of future earning
capacity. . .
This testimony clearly indicates that
claimant is going to have to make a
change in his employment if he ever
expects to be relieved of some of his
pain and symptoms.
The question, then, is: Can
claimant make a change in his employment
without experiencing a decline in his
income? ...
Given the above facts, this Court
finds that should claimant leave his
current employment, it is likely that it
would be for a position paying $36,000.00
a year, or approximately 50 percent. of
his 1987 income of $68,000.00.
Furthermore, this Court holds that fifty
percent is an appropriate disability
factor on which to base claimant's
benefits for potential loss of earning
capacity. In applying this figure,
claimant is entitled to 250 weeks of
permanent partial disability benefits at
a weekly rate of $146.50. These benefits
are to be paid from the date o f
claimant's industrial accident.
(Emphasis added)
In my opinion, based on the deposition testimony,
uncontroverted facts and pertinent statutes, the above quoted
excerpts from the Findings and Conclusions are not legallv
supportable.
The medical record, in deposition form, is replete with
references to the failure of the claimant to comply with the
medically recommended exercise regime, which was based upon
the knowledge that claimant would be driving long distances
and working long hours durinq his four day work week.
Testimony at trial indicated that claimant had six to eight
weeks of paid sick leave available to him which he did not
utilize for phvsical therapv purposes. Further, evidence
disclosed that claimant took extended vacations to Seattle,
Washington and Edmonton, Canada by motor vehicle when less
strenuous activity might have aided his recovery. I find.
erroneous the court's conclusion that "Claimant is going to
have to make a change in his employment if he ever expects to
be relieved of some of his pain and symptoms."
Regarding the possible change of jobs in the future,
the claimant stated: "I'm just trying to delay it until my
very expensive teenagers get out of the home, and then I'm
going to do something else."
The claimant having remained on the job for the past
three years, with increased earnings each year, and with the
possibility of the claimant remaining in that same position
for the next several years, it could only be through
conjecture and speculation that the court found a fifty
percent disability factor "on which to base claimant's
benefits for potential loss of earning capacity."
It is therefore my opinion that the award is premature
and, as the court correctly stated: "Should claimant
experience an actual diminution of his income for which he
has not been compensated, he may withdraw his Sectior, 705
election in favor of Section 703, for loss of a
\
Mr. Chief Justice J. A. Turnage:
I concur in the foregoing dissent of Mr. Justice Gulbrandson.
: 8 Chief Justice