IN THE SUPREME COURT OF THE STATE O F MONTANA
1993
ROBERT D. FIELD,
petitioner and Appellant,
-vs-
SEARS, ROEBUCK & COMPANY,
Defendant and Respondent.
GLL. .n t F S;IPHEME COURT
55 ATE. OF MONTANA
APPEAL FROM: The Workers1 Compensation Court,
The Honorable Timothy W. Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Geoffrey R. Keller, Matovich, Addy & Keller,
Billings, Montana
For Respondent:
J. Michael Young and Steven T. P o t t s , ~ a r d i n e ,
Stephenson, Blewett and Weaver, Great Falls, Montana
Submitted on Briefs: August 6, 1992
~ e c i d e d : February 25, 1993
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
Robert D. Field appeals from the Findings of Fact, Conclusions
of Law and Judgment of the Workers' Compensation Court denying
attorney's fees and costs for pursuit of permanent total disability
benefits, and refusing to impose a penalty against Sears, Roebuck
& Company. We affirm.
We restate the issues on appeal as follows:
1. Did the Workers' Compensation Court err in denying
claimant's request for attorney's fees and costs for pursuit of
permanent total disability benefits?
2. Did the Workers' Compensation Court err by failing to
impose a penalty for unreasonable delay in conceding permanent
total disability?
On December 22, 1980, claimant Robert D Field was injured
.
while driving a repair truck for Sears, Roebuck & Company (Sears),
his employer. Sears paid temporary total disability benefits from
the date of the accident until claimant returned to work.
Claimant's employment with Sears terminated on July 19, 1984.
At that time, claimant requested reinstatement of temporary total
disability benefits. Sears refused. On March 13, 1985, Sears
offered claimant $15,000 as a full and final compromise settlement.
Claimant rejected this offer and demanded that Sears place him on
temporary total disability retroactive to July, 1984. Sears agreed
to make the payments under a reservation of rights.
On March 1, 1991, claimant requested that Sears formally
accept his claim as a claim for permanent total disability. Sears
responded that it was not prepared to concede permanent total
disability and requested additional vocational testing. The
results of that testing were received on June 5. On June 18, Sears
asked claimant to make a settlement offer; claimant responded on
July 10 with a demand for $15,000, $72,000 in attorney's fees and
an annuity paying $700 per month for twenty years.
Nine days later, on July 19, claimant filed a petition for
hearing with the Workerst Compensation Court on the issues of
permanent total disability; a lump sum advance for home repairs,
vehicle replacement and debts; attorney's fees; and penalty. Sears
responded, in part, by denying that claimant was permanently
totally disabled. At the pretrial conference on August 22, Sears
continued to deny permanent total disability benefits; the hearing
was set for September 23. Sears conceded permanent total
disability on August 29 and filed an amended response reflecting
the concession. The hearing was continued to, and held on, October
7, 1991.
The Workerst Compensation Court heard testimony regarding the
lump sum advance and the events leading to Sears' concession of the
permanent total disability issue. The Workers' Compensation Court
awarded claimant a lump sum conversion and attorney's fees relative
to the lump sum issue. It denied attorney's fees and costs for
claimant's pursuit of permanent total disability benefits under
5 39-71-612, MCA (1979), and declined to award a penalty for
unreasonable delay under 5 39-71-2907, MCA (1979).
Did the Workers' Compensation Court err in denying claimant's
request for attorney's fees and costs for pursuit of permanent
total disability benefits?
In its Conclusions of Law, the Workers' Compensation Court
determined that claimant was not entitled to attorney's fees and
costs for pursuit of permanent total disability benefits under
5 39-71-612, MCA (1979). Section 39-71-612, MCA (1979), provides:
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.
Although the legislature has amended fr 39-71-612, MCA, since 1979,
we determine whether a claimant is entitled to attorney's fees
under the statute in effect on the date of injury. Hilbig v.
Central Glass Co. (1991), 249 Mont. 396, 399, 816 P.2d 1037, 1039.
The Workers' Compensation Court determined that this case was
factually similar to Lasar v. E.H. Oftedal & Sons (1986), 222 Mont.
251, 721 P.2d 352, and applied the Lasar reasoning in concluding
that claimant was not entitled to attorney's fees and costs based
on pursuit of permanent total disability benefits under fr 39-71-
612, MCA (1979). The Workers' Compensation Court correctly applied
Lasar .
In Lasar, we stated that the attorney fee statute at issue,
identical to that before us, requires a claimant to satisfy two
conditions before recovering attorney's fees: (1) the amount of
compensation must be in controversy; and (2) the amount awarded
must exceed the amount paid or tendered. m, 222 Mont. at 253,
721 P.2d at 354. In Lasar, the insurer conceded permanent total
disability approximately three weeks prior to trial. We concluded
that "[s]ince the insurer agreed on the amount of compensation due,
no controversy existed at trial and the amount awarded was the same
as that agreed upon as due." Lasar, 222 Mont. at 253, 721 P.2d at
354. Like the insurer in Lasar, Sears conceded claimant's
permanent total disability and corresponding compensation due
approximately three weeks prior to the original trial date (and
five weeks before the hearing actually occurred). Neither the
extent of claimant's disability nor the amount of compensation due
him for that disability was in issue at any time thereafter or when
claimant's petition proceeded to hearing. Therefore, claimant
failed to satisfy the first condition to attorney's fees required
by 5 39-71-612, MCA (l979), and Lasar, that the amount of
compensation be in controversy.
Claimant offered several theories to show that the amount
awarded exceeded the amount paid or tendered--the second condition
required by 5 39-71-612, MCA (1979), and Lasar. Claimant contended
he was entitled to attorney's fees based on the difference between
the $15,000 settlement offer and the permanent total disability.
Alternatively, claimant contended he was entitled to attorney's
fees based on the difference between "permanent partial disability"
he alleges Sears paid between June 5 and August 29 and the
permanent total disability. Because claimant fails to meet the
first condition of 5 39-71-612, MCA (1979), we do not address the
second condition.
Claimant attempts to distinguish Lasar by focusing on the
interval of time between discovery of the information on which
concession subsequently was based and actual concession of the
issue. In Lasar, the insurer conceded benefits within two weeks of
deposing claimant. Here, Sears had all the information it later
relied on to concede total permanent disability benefits on June 5,
when it obtained the results of the vocational testing; it conceded
the issue on August 29. According to claimant, this is the pivotal
time period which distinguishes the present case from Lasar.
It is true that, here, Sears had possession of the information
upon which it ultimately conceded the permanent total disability
issue longer than the insurer in Lasar. The time period between
completion of discovery upon which concession was made and the
concession itself was not the basis of our decision in Lasar,
however. We focused in Lasar on the three week period remaining
after the concession and before trial and on the fact that the
concession occurred before additional discovery or new
documentation on the conceded issue was undertaken. The facts
which formed the basis for our decision in Lasar are similar to
those in the case before us; if anything, the facts before us are
more compelling. Here, the concession occurred some five weeks
before the hearing and no discovery was undertaken by either party
on the permanent total disability issue between June 5 and Sears'
concession on August 29. Subsequent to Lasar, we have reiterated
that there must be a controversy concerning disability that is
later judged compensable before attorney's fees can be awarded
under 5 39-71-612, MCA. Komeotis v Williamson Fencing (1988), 232
.
Mont. 340, 345, 756 P.2d 1153, 1156. As in Lasar, the insurer in
Komeotis conceded disability benefits prior to the hearing. We
affirmed the Workers1 Compensation Court's denial of attorney's
fees because disability benefits did not remain at issue for
adjudication by the court.
Claimant relies on Krause v. Sears Roebuck & Company (1981),
197 Mont. 102, 641 P.2d 458, for the proposition that attorney's
fees properly are awarded absent an adjudication of permanent total
disability. Claimant misreads Krause.
In Krause, claimant was receiving temporary total disability
benefits from Sears. He petitionedthe Workers' Compensation Court
for permanent total disability benefits converted into a lump sum
award. Sears denied permanent total disability. Discovery was
completed on all issues and the case proceeded to hearing. Only
after the hearing had begun did Sears concede permanent total
disability. Notwithstanding the concession, claimant presented
proof on his permanent total disability in conjunction with his
lump sum conversion request. The disability issue having remained
in controversy into the adjudication phase of the proceedings and
proof having been submitted on the issue, the Workers1 Compensation
Court entered a conclusion of law on claimant's permanent total
disability. It denied the lump sum conversion, relying on evidence
of claimant's disability which would prevent him from making a
success of the project for which the lump sum was sought. It also
refusedto award attorney's fees on the disability issue. Claimant
appealed the denial of attorney's fees, contending that he
prevailed on the issue.
We held on appeal that, because the court concluded that the
claimant was suffering from a permanent total disability, he was
entitled to attorney's fees under 5 39-71-612, MCA, in relation to
his proof that he was permanently totally disabled. While our
holding was not explicit, it was premised on the Workers'
Compensation Court's reliance on claimant's proof and its
conclusion that claimant was permanently totally disabled; the
issue was, in fact, adjudicated.
Here, Sears conceded permanent total disability benefits three
weeks before the original hearing date and some five weeks before
the actual hearing. Neither discovery nor proof was required on
the issue. No controversy over claimant's disability or
corresponding compensation was adjudicated at the hearing. Thus,
the facts which formed the basis for our decision in Krause are not
present here. We hold that the Workers' Compensation Court did not
err in denying claimant's request for attorney's fees on the
permanent total disability issue.
Did the Workers1 Compensation Court err by failing to impose
a penalty for delay in conceding permanent total disability?
The Workers' Compensation Court refused to impose a penalty
against Sears for unreasonable delay under 5 39-71-2907, MCA
(1979), which 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'
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 workers9 compensation judge by 20%. ..
Claimant argues that Sears had all the information it used to
concede permanent total disability benefits on June 5, when it
received the results of the vocational testing. Thus, according to
claimant, its delay in conceding the issue until August 29 was
unreasonable.
Unreasonable delay is a question of fact to be determined by
the trier of fact; we will not reverse the Workers' Compensation
Court's decision on awarding a penalty if the decision is supported
by substantial, credible evidence. Jaenish v. Super 8 Motel
(1991), 248 Mont. 383, 389-90, 812 P.2d 1241, 1243. In addition,
the penalty statute requires unreasonable delay or refusal in
payment of compensation prior or subsequent to an order granting
compensation benefits.
The Workers' Compensation Court found that Sears opened
negotiations toward final resolution shortly after it obtained the
vocational test results on June 5. Claimant made a settlement
demand on July 10, and filed his petition for hearing on July 19.
Sears conceded claimant's permanent total disability on August 29,
1991. Substantial evidence exists to support the Workers9
Compensation Court9sdetermination that the facts of this case do
not warrant a penalty under 3 39-71-2907, MCA (1979). Furthermore,
compensation was being paid throughout the period from June 5 to
August 29; no delay or refusal in pavment, as required by the
statute to support a penalty award, occurred. Additionally, no
award of permanent total disability benefits was made by order of
the Workerst Compensation Court that would serve as a basis for a
penalty under 3 39-71-2907, MCA (1979). We hold that the Workerst
Compensation Court did not err in refusing to award a penalty
pursuant to 5 39-71-2907, MCA (1979).
1
Affirmed.
Chief Justice
Justices
Justice Terry N. Trieweiler dissenting.
I dissent from the opinion of the majority.
In Lasarv. E H. Oftedal&Solls (l986), 222 Mont. 251, 721 P.2d 352,
.
and again in Komeocisv. WilliamsonFencing (1988), 232 Mont. 340, 756 P.2d
1153, this Court blatantly ignored the plain language of
§ 39-71-612, MCA (1979), to conclude that a court award of benefits
is a condition to an award of attorney fees. In this case, the
majority blindly follows its prior decisions without any analysis
of the plain terms of the attorney fee statute.
Section 612 does not simply provide that when the court's
award is greater than the amount offered, the claimant is entitled
to an attorney fee. It clearly provides that when the ultimate
settlement is greater than the amount originally offered, the
claimant is entitled to recover his attorney fees which were
incurred to pursue his claim for the full amount of his benefits.
That section states:
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. [Emphasis added.]
Section 39-71-612(1), MCA (1979) .
In this case, claimant demanded that he be paid permanent
total disability benefits on March 1, 1991. That demand was
rejected by defendant on ~ p r i l 4, 1991. Claimant filed his
petition for permanent total disability benefits on July 19, 1991,
and in its answer dated August 7, 1991, defendant denied that
claimant was permanently totally disabled. Defendant continued in
that denial as late as the pretrial conference on August 22, 1991,
Therefore, according to our prior case law, there was a controversy
over the amount of compensation due.
We held, in Kraltsev. SearsRoebuck& Company (1982), 197 Mont, 102,
641 P.2d 458, that:
The basic controversy between the parties was one
dealing with the difference between the amount of
benefits tendered and the amount of benefits awarded, and
the issue of whether the claimant's disabifity was
permanent was the foundation for that controversy.
Because the court concluded that the claimant was
suffering from a permanent total disability, we hold that
under section 39-71-612, MCA, the claimant is entitled to
attorney fees and costs in relation only to his proof
that he was permanently totally disabled.
In other words, we have previously held that when the
controversy is whether claimant is permanently or temporarily
disabled, that is a controversy relating "to the amount of
compensation due1' within the contemplation of 5 39-71-612, MCA
(1979), As of August 22, 1991, there was such a controversy in
this case.
On August 29, 1991, that issue was settled when defendant
conceded that claimant was permanently totally disabled. On that
date, then, there was a settlement for benefits greater in value
than the benefits that had been previously tendered, and according
to the plain language of 39-71-612, MCA (1979), claimant was
entitled to an award of attorney fees that were incurred to recover
the full amount of his benefits.
The majority opinion completely ignores the language in the
attoxney fee statute which provides that when a settlement is
greater than the amount originally offered, claimant is entitled to
recover an attorney fee. This Court ignored that language in the
Lasar case; it ignored it in the Komeofis case; and like an ostrich
with its head buried in the sand, the majority continues to ignore
that language in this case for the apparent reason that its
erroneous precedent is more important than the plain language of
the statute.
I would reverse this Court's decisions in Lasar and Komeotis and
reverse the trial court's refusal to grant attorney fees in this
case.
I would also reverse the Workerst Compensation Court's refusal
to award the statutory penalty to claimant pursuant to
5 39-71-2907, MCA (1979). That statute provides that when payment
of compensation has been unreasonably delayed or refused by an
insurer, a penalty equal to 20 percent of those benefits may be
awarded. In this case, the insurer's conduct was unreasonable in
two respects.
According to the testimony of claimant's claims representative
who handled this claim, she had all of the vocational and medical
information with which to make an evaluation of claimant's
disability by June 5, 1991. Cathy Andersen testified that she had
a medical report concluding that claimant was unable to work in any
capacity as early as April 19, 1991. She acknowledged that she had
vocational evaluations and psychological reports by June 5, 1991,
which indicated that claimant has the equivalency of a sixth grade
education, that he has a learning disability, and that he was not
a candidate for retraining. Furthermore, she admitted that she
received no additional medical or vocational information from that
date until Sears conceded permanent total disability on August 29,
1991, And yet, defendant's attorney continued to take the position
in his answer to claimant's petition, and again at the time of the
pretrial conference, that claimant was not permanently totally
disabled. Obviously, defendant continued to deny liability for the
full extent of claimant's disability, even though it was fully
aware of claimant's condition, in order to strengthen its
bargaining position for purposes of settling claimant's claim. In
doing so, I conclude that it acted unreasonably.
Furthermore, defendant acted unreasonably when, without any
basis in fact, it refused to convert a portion of claimant's future
disability benefits to a lump sum pursuant to § 39-71-741, MCA.
This is apparent from the following finding entered by the trial
court:
Defendant has designated Cathy Andersen as its
claims adjuster in Montana relative to this case.
However, Andersen testified that she was not privy to
petitioner's affidavit regarding a lump sum, nor had she
seen petitioner's discovery responses, nor had she read
petitioner's deposition. Hence, she knew of no reasons
why petitioner's lump sum request had not been granted,
and she had absolutely no information as to whether
payment of the lump sum request was in petitioner's best
interest. Moreover, Andersen had no explanation
regarding Sears9 refusal to concede permanent total
disability until three weeks before the original trial
setting. It was apparent at trial that only defense
counsel and an adjuster in Linwood, Washington, were
making the decisions and denying petitioner's requests.
Andersen had little, if any, authority regarding
petitioner's file. [Emphasis added.]
As pointed out by the Workers1 Compensation Court,
24.29.804(1) ARM, provides as follows:
Every insurer is required to designate at least one
adjuster, maintaining an office in Montana, which shall
pay compensation when due and which shall have authority
to settle claims.
The adjuster for defendant who had the responsibility to pay
compensation which was due with regard to this claim was Cathy
Andersen, and yet, defendant's attorney did not even provide her
with the information that formed the basis for claimant's claim.
There is no way she could have acted reasonably. The fact that she
did not is evident by the last minute concession regarding the
nature of claimant's disability and the Workers' Compensation
Court's decision to convert a part of claimantqs disability
benefits to a lump sum, in spite of defendant's refusal to do so.
Insurers wha force claimants to incur the expenses of
litigation and who clog Montana's Workers' Compensation Court
because of this kind of conduct are the exact parties for whom
§ 39-71-2907, MCA, was intended.
In this decision, this Court has ignored the plain language of
the Workers' Compensation Court in two respects. It has refused to
award attorney fees, and it has refused to impose the statutory
penalty when both were clearly warranted.
Apparently, the principles of "strict constru~tion~~
about
which "conservative" jurists so proudly pound their chests, don't
apply to the statutory rights of injured workers.
For these reasons, I dissent from both conclusions in the
majority opinion.
Justice William E. Hunt, Sr., concurs in the foregoing dissent
of Justice Trieweiler.
I
1 February 25, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
I
Geoffrey R. Keller, Esq.
MATOVICH, ADDY & KELLER, P.C.
225 Petroleum Building
2812 First Ave. North
Billings, MT 59101
J. Michael Young, Esq.
Steven T. Potts, Esq.
JARDINE, STEPHENSON, BLEWETT Sr WEAVER, P.C.
P.O. Box 2269
Great Falls, MT 59403-2269
ED SMITH
CLERK OF THE SUPREME COURT
STATE O F MONTANA