No. 91-551
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
JOAN PLOOSTER,
Claimant and Appellant,
-v-
PIERCE PACKING COMPANY and STATE
COMPENSATION MUTUAL INSURANCE FUND,
Respondent and Respondent.
APPEAL FROM: The Workers' Compensation Court
The Honorable Nat Allen, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Don Edgar Burris, Billings, Montana
For Respondent:
Elizabeth A. Horsman-Wiitala, State Compensation
Mutual Insurance Fund, Helena, Montana
Submitted on Briefs: June 4, 1992
- 2 - > n . A " ?
Justice R, C. McDonough delivered the opinion of the Court.
The claimant, Joan Plooster, filed a petition in the Workerst
Compensation Court a l l e g i n g t h a t t h e respondent, S t a t e compensation
Mutual Insurance Fund (State Fund), was responsible for payment 0 5
certain medical bills which it had refused to pay. Shortly before
trial, the State Fund conceded liability for payment of the medical
bills. At trial, the issues decided were whether claimant was
entitled to a statutory penalty, attorney fees, and costs. The
Honorable Nat Allen, substituting for Judge Timothy Reardon, found
that respondent had acted unreasonably when it delayed payment of
claimantls medical bills and awarded attorney fees and costs.
However, he found that claimant was not entitled to statutory
penalty. At a subsequent hearing, the Workersr Compensation Court
found that $32 per hour was a reasonable rate for claimantrs
attorney fees and entered judgment awarding fees at that rate, plus
the costs incurred by claimant. From that judgment, claimant
appeals. The State Fund has not appealed the trial court's finding
that it acted unreasonably, nor its conclusion that claimant is
entitled to an award of attorney fees and costs. We reverse and
remand for further proceedings in the Workersg Compensation Court.
The issues are:
1. Did the Workers' Compensation Court err when it refused
to impose a penalty under 5 39-71-2907, MCA (19781, even though it
found that respondent had acted unreasonably?
2. Was there substantial evidence to support the Workers'
Compensation Court's award of attorney fees in favor of the
claimant in the amount of $32 per hour?
On December 20, 1990, claimant filed her petition for hearing
in the Workers' Compensation Court. She alleged that while working
for pierce Packing Company on November 7, 1978, she had fallen and
injured her neck, back, and arms. Respondent, the State Fund,
insured Pierce Packing against workers' compensation claims at that
time. Claimant alleged that although respondent was paying her
disability benefits, it had refused to pay for certain medication
which had been prescribed for her treatment. The medications
included Benadryl and Vistaril which were apparently prescribed for
hives and other skin disorders which resulted from anxiety attacks
and were, in the opinion of her treating physician, at least
partially attributable to her physical condition or her disability.
The State Fund filed an answer denying that claimant's use of
Benadryl or Vistaril were causally related to claimant's industrial
injuries and denied that she was entitled to recover attorney fees,
costs, or any statutory penalty.
By June 13, 1991, eight days prior to trial, the State Fund
conceded liability for the payment of prescription medication and
agreed to pay the bills for Benadryl and Vistaril which had been
prescribed. The Workers' Compensation Court found, and neither
party disagrees, that the amount in controversy was approximately
$300.
Later at trial, the only issues identified in the pretrial
order were whether claimant was entitled to recover attorney fees,
costs, and the statutory penalty. The only witnesses who testified
were the claimant and John Gneckow, a claims examiner employed by
the State Fund, who handled claimant's claim.
On August 25, 1991, the court entered Findings of Fact and
Conclusions of Law. It found that the State Fund acted
unreasonably by ignoring the opinion of claimant's treating
physician, and refusing to pay for medicine which he prescribed.
On that basis, it concluded that claimant was entitled to costs and
a reasonable attorney fee. However, the court concluded that
claimant was not entitled to the statutory penalty that can be
awarded when payments have been unreasonably delayed or refused.
On September 19, 1991, the court held an additional hearing to
determine what would be a reasonable attorney fee award. At that
hearing, the only witness who testified was claimant's attorney.
No evidence was offered by the State Fund. As a result of that
hearing, the court entered its judgment awarding attorney fees. In
that judgment, the court acknowledged that claimant's attorney's
time was worth $150 an hour, but stated that it could not award
that amount "in a $300 fight.'' On the other hand, the court
concluded that the fee should not be the contingent fee provided
for in the fee agreement entered. into between claimant and her
attorney because awarding that amount would make it impossible for
claimants to be represented in disputes of this nature. The court
found that "$32 an hour will keep the Fund's power in check, and
will at the same time not force the attorney into pro bono work."
On appeal, claimant contends that the Workers' Compensation
Court erred by failing to award the statutory penalty, and further
argues that the trial court's award of attorney fees was
unsupported by the evidence and contrary to the law.
The following standards of review apply in this case:
"Findings of the Workers' Compensation Court will not be overturned
if there is substantial evidence in the record to support them."
Kraft v. Flathead Valley Labor and Contractors (1990), 243 Mont.
363, 365, 792 P.2d 1094, 1095. Conclusions of law, "whether the
conclusions are made by an agency, workers1 compensation court, or
trial court," will be upheld if the tribunal's interpretation of
the law is correct. Steer, Inc. v. Dep't of Revenue (lggo), 245
Mont. 470, 474-75, 803 P.2d 601, 603.
The law in effect at the time of claimant's injury establishes
her substantive right to benefits under the Workers' Compensation
Act. Buckman v. Montana Deaconess Hospital (1986), 224 Mont. 318,
321, 730 P.2d 380, 382. The statute which provided for the
imposition of a penalty at the time of claimant's injury was g 39-
71-2907, MCA (1978). It provided as follows:
When payment of compensation has been
unreasonably delayed or refused, either prior or
subsequent to the issuance of an award, the full amount
of the order, decision, or award may be increased by 10%
of the weekly award. 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.
We have previously held that where an insurer acts
unreasonably to deny benefits to which a claimant is legally
entitled, the statutory penalty should be imposed. Holton v. F.H.
Stoltze Land & Lumber Co. (1981), 195 Mont. 263, 267-68, 637 P.2d
10, 13. In this case, the trial court found that the State Fund
acted unreasonably. That finding has not been appealed by the
State Fund. Therefore, we conclude that claimant was entitled to
an award of a penalty of ten percent of one weekly award as
provided for in 5 39-71-2907, MCA (1978).
The State Fund conceded in its proposed findings and
conclusions that claimant's entitlement to attorney fees is based
on § 39-71-612, MCA (1978). That statute provided that:
(1) 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 workers1 compensation judge if the
case has gone to 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.
There is a strong presumption in the Workers1 Compensation
Court that fees awarded to a successful claimant should be in
accordance with the approved contract between the attorney and his
client. Wight v. Hughes Livestock Co. (1983), 204 Mont. 98, 664
P.2d 303. But,
[i]f the judge does not set a fee in accordance with
the contingent fee contract, he shall state with
particularity his reasons in writing, based upon strong
countervailing evidence, why the contingent fee contract
is not followed by him, and precisely what weight he
accorded to the contingent fee contract.
Wiqht, 664 P.2d at 312. Whether fees are awarded based on the
contingent fee agreement or on some other basis, we held that the
Workers1 Compensation Court had to base the attorney fee on ten
factors set forth in the Wiaht decision. wight, 664 P.2d at 312.
In this case, the Workers1 Compensation Judge did state with
particularity his reason for awarding a fee on an hourly basis,
rather than based on the contingent fee agreement. His finding
that it would be unreasonable to award a fee based on the
contingent fee agreement where the amount in controversy was only
$300 was supported by substantial evidence and is affirmed.
However, the trial court's finding that claimant was entitled
to reimbursement for her attorney's services at the rate of $32 per
hour was not supported by substantial evidence, nor was it properly
articulated based upon the applicable ten-point criteria set forth
in the Wiaht decision. The Wisht criteria are as follows:
1. The anticipated time and labor required to
perform the legal service properly.
2. The novelty and difficulty of legal issues
involved in the matter.
3. The fees customarily charged for similar legal
services.
4. The possible total recovery if successful.
5. The time limitations imposed by the client or
circumstances of the case.
6. The nature and length of the attorney-client
relationship.
7. The experience, skill and reputation of the
attorney.
8. The ability of the client to pay for the legal
services rendered.
9. The risk of no recovery.
10. The market value of the lawyer's services at the
time and place involved.
Wiaht, 664 P.2d at 312.
The only evidence offered on any of the ten-point criteria was
the claimant's attorney's testimony that his services were worth
$150 an hour. State Fund's attorney conceded that attorneys doing
similar work were reimbursed at rates between $85 and $125 per
hour.
However, the trial court is not constrained by only the
evidence introduced in considering the ten-point criteria. A court
sitting as a fact finder in the determination of reasonable
attorney fees can take into consideration the facts of the services
performed and attending circumstances; such as the file,
transcript, and the various hearings; as well as attorney's opinion
of the value of the services. The court is also not required to
lay aside its general knowledge, experience and ideas of such
service and the value thereof, and it can apply such knowledge,
experience and ideas in weighing the attorney's opinion and
determining reasonable fees. 7 Am.Jur.2d Attorneys at Law, S 312,
St. Louis-San Francisco Ry. v. Hurst (Ark. 1939), 129 S.W.2d 970,
975.
The trial court should articulate the evidence and its
consideration of the applicable ten factors in its findings and
conclusions, before awarding an amount, especially if a different
amount is opined by the attorney.
For these reasons, the judgment of the Workers1 Compensation
Court is reversed and remanded to trial court to award the penalty
and to reconsider and enter findings and conclusions on the basis
of the applicable ten factors from the evidence submitted and its
general knowledge and experience.
We Concur:
Chief Justice
Justices
Justice Terry N. Trieweiler, concurring in part and dissenting in
part.
I concur with the majority's conclusion that this case should
be reversed and remanded to the trial court for the imposition of
a statutory penalty pursuant to 5 39-71-2907, MCA (1978). I also
concur with the majority's conclusion that the attorney fee award
should be reversed and that this case should be remanded for
further consideration of an appropriate attorney fee award with
proper consideration given to the factors articulated in Wight v.
HughesLivestock Co., Inc. (1983), 204 Mont. 98, 6 6 4 P.2d 303.
However, I conclude that the trial court should have awarded
fees at the only sate which was in evidence, or listed specific
factors f r o m the Wight test which were supported by evidence. On
remand I would direct that it do so.
I specifically dissent from that part of the majority opinion
which holds that:
The court is also not required to lay aside its general
knowledge, experience and ideas of such service and the
value thereof, and it can apply such knowledge,
experience and ideas in weighing the attorney's opinion
and determining reasonable fees.
This part of the majority opinion gives the trier of fact authority
to base his decision on his own experience rather than the
evidence. This process is the antithesis of our adversary system
and gives trial judges carte blanche authority to impose their own
arbitrary opinions on litigants rather than binding them to
decisions in conformity with the evidence presented. This result
is contrary to every notion of fairness that this Court has
attempted to impose over the years it has existed to review
appeals.
Because of this decision, no litigant in the Workers'
Compensation Court in the future will be able to predict the
outcome of any case with certainty based on the evidence that was
presented. Not only is this an unfortunate result for litigants,
it will present an impossible standard of review. Instead of
considering whether there was substantial evidence to support the
trial court's findings of fact regarding the reasonableness of
attorney fees, the new standard of review will have to be whether
each of the Supreme Court Justices, as individuals, shares the same
"knowledge, experience and ideas" as the finder of fact.
Otherwise, it is going to be difficult to agree with that person's
findings and conclusions.
For these reasons, I concur in part and dissent in part from
the majority opinion.
Justice William E. Hunt, Sr.:
I join in the dissent of Justice Trieweiler.
February 2, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
Don Edgar Burris
Attorney at Law
P.O. Box 2344
Billings, MT 59103
Elizabeth A. Horsrnan-Wiitala, Esq.
State Cornpenation Mutual Ins. Fund
5 So. Last Chance Gulch
Helena, MT 59601
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA