No. 81-188
IN THE SUPREME COURT OF THE STATE OF MONTANA
1982
KERRY K. HAFER,
Claimant and Appellant,
vs.
ANACONDA ALUMINUM COMPANY,
Employer,
and
ANACONDA ALUMINUM COMPANY,
Defendant and Respondent.
Appeal from: Workers' Compensation Court
Counsel of Record:
For Appellant:
Hoyt and Trieweiler, Whitefish, Montana
Terry N. Trieweiler argued, Whitefish, Montana
For Respondent:
Utick and Grosfield, Helena, Montana
Norman Grosfield argued, Helena, Montana
Submitted: March 3, 1982
Decided: April 29, 1982
Filed: APR 2 9 19821
-
U -
d
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the
Court.
Claimant Kerry Hafer (Hafer) appeals from the judgment
of the Workers' Compensation Court. Hafer questions the
method used by the court to compute his award. He presents
the following issues for review:
(1) Whether there was substantial evidence to support
the hearing examiner's finding that Hafer's injury affects
only his elbow, rather than his whole arm.
(2) Whether the limitations of 39-71-705 through 39-
71-708, MCA, apply to a worker who has elected to seek
benefits for lost earning capacity under 39-71-703, MCA.
We vacate and remand.
This action was commenced on November 26, 1979, by
Hafer's petition for hearing in the Workers' Compensation
Court. In his petition, Hafer alleged that he was injured
on June 17, 1977, during the course of his employment with
respondent, Anaconda Aluminum Company (Anaconda). He alleged
that he fractured his elbow in an industrial accident on
that day, that as a result of that industrial injury he
sustained a permanent partial disability, and that Anaconda
refused to compensate him for the full extent of his partial
disability.
As a result of the injury, it was necessary for a
surgeon to surgically implant a silastic prothesis in Hafer's
elbow on August 21, 1978. The manufacturer of the device
disclaims its effectiveness for people who engage in strenuous
physical activity. The orthopedic surgeon who performed the
surgery on the elbow evaluated Hafer's permanent partial
impairment at 20% of his left upper extremity at the shoulder.
Hafer was 24 years old and had been working for Anaconda
three years at the time of the trial. He did not graduate
from high school and prior to working for Anaconda, his
primary job experience included mostly physical labor.
Since the surgery, Hafer has resumed his old job with Anaconda
as an iron worker and earns approximately $10.00 per hour.
At the time of the accident, he was earning approximately
$7.00 per hour.
Robert Redinger, employee relations manager for Anaconda,
testified that if Hafer were unable to perform the duties of
an iron worker, Anaconda would attempt to find a position
which Hafer could perform. Entry level clerical workers
earn about $6.00 per hour while iron workers earn about
$10.00 per hour. An employee of the Montana State Job
Service, testified as to the employment prospects of Hafer
if he were not working for Anaconda. A person who has no
specialized training other than as a heavy laborer who had
an injury which prohibited him from performing strenuous
physical labor was eliminated from about 90% of the work
force in Flathead County and could expect to earn less than
$700.00 per month.
The hearing examiner's conclusions of law included in
part:
"4. Claimant was entitled, under 39-71-709,
M.C.A., to elect whether to pursue a disabili-
ty award under 39-71-703 or an indemnity award
under 39-71-705 through 39-71-708, M.C.A.
Plaintiff elected to proceed under 39-71-703,
M.C.A.
"5. Even though his actual earnings have not
been diminished since his return to work, his
ability to compete in the open labor market
has been impaired by a factor of 40 percent,
i.e., if he had to find another job, it would
probably pay 60% of what he could earn before
he iniured his elbow. Finding of fact no. 20,
-- --
supra; Fermo v. Superline ~roducts,574 P.2d
251, 253 (1978).
"10. If claimant had elected to pursue an
indemnity award the 240 weeks would have been
reduced in accordance with this formula in 39-
71-706, M.C.A.: ' ..
. indemnity benefits
for permanent disability to a member or members
shall be proportionate to loss or loss of use
of the member. .
. ' As the record is lacking
in evidence relating the severity of claimant's
injury to the severity of an amputation at the
elbow, the median of the impairment rating
(20%) and the earning capacity diminution (40%)
will be taken. This yields a factor of 30%
for the comparison of claimant's injury to a
total loss of the arm at the elbow. 30% of 240
weeks equals 72 weeks." (As subsequently appears
in this opinion, the correct total is 280 weeks
for injury to the arm from the shoulder.)
"11. The significance of calculating an indem-
nity award is this proviso in the selection
governing election of benefits, M.C.A. 39-71-
709 in subsection (3): 'A worker who has elec-
ted to proceed under 39-71-703 . .
. shall not
be entitled to a greater benefit, including
compensation paid under 39-71-703, than he
would have received if he had proceeded exclu-
sively under 39-71-705 through 39-71-708. .'.
This sets a limitation on claimant's award of
$81.00 times 72 weeks, or $5,832.00." (As sub-
sequently appears in this opinion, this compu-
tation is not applicable.)
"12. While the foregoing analysis has assumed
that claimant's case does not come under the
unscheduled or 'whole man' sorts of disabili-
ties discussed in the Fermo and Walker cases,
a discussion of how the law there would have
applied to the instant facts if claimant had
demonstrated a whole man injury may not be a-
miss. The same 30% of complete loss factor
should be applied to the 500-week maximum to
yield a durational limit of 150 weeks. This
would have been multiplied by the earning
capacity loss of $74.35 a week to make an award
of $11,152.50.
"13. However, this is not a whole man injury.
Pursuant to 39-71-703, which sets claimant's
weekly benefit at $74.35, and 39-71-709(3),
which has the effect of limitating the dura-
tion of his benefit to slightly over 78 weeks,
claimant is entitled to $5,832.00." (As sub-
sequently appears in this opinion, this con-
clusion is not applicable in the present case.)
The Workers' Compensation Court adopted the hearing examiner's
findings and conclusions. The court entered a judgment and
order on behalf of Hafer finding that he was entitled to a
partial disability award of $81.00 times 72 weeks for $5,832.00,
plus reasonable attorney's fees and his costs.
Whether there was substantial evidence to support the
hearing examiner's finding that Hafer's injury affects only
his elbow, rather than his whole arm?
Both parties agreed before the trial that the injury
affected Hafer's whole arm. Anaconda concedes this issue.
Hafer's injury shall be considered an injury of the arm from
the shoulder which allows benefits to be paid for a maximum
of 280 weeks under 39-71-705, MCA, rather than an injury of
the arm from the elbow which allows a maximum of 240 weeks
of benefits.
Whether the limitations of 39-71-705 through 39-71-708,
MCA, apply to a worker who has elected to seek benefits for
lost earning capacity under 39-71-703?
"[A] worker whose injury results in partial disability
is entitled to receive compensation under 39-71-703 or
indemnity benefits under 39-71-705 through 39-71-708."
Section 39-71-709(1), MCA. Hafer elected compensation under
39-71-703, which provides:
" (1) Weekly compensation benefits for injury
producing partial disability shall be 66 2/3%
of the actual diminution in the worker's earn-
ing capacity measured in dollars, subject to a
maximum weekly compensation of one-half the
state's average weekly wage.
"(2) The compensation shall be paid during
the period of disability, not exceeding, how-
ever, 500 weeks in cases of partial disability.
However, compensation for partial disability
resulting from the loss of or injury to any
member shall not be payable for a greater num-
ber of weeks than is specified in 39-71-705
for the loss of the member."
Hafer's income was greater when he filed his petition
than at the time of the accident. However, evidence was
presented that Hafer's capacity to earn in the open labor
market had been diminished because of the accident.
"Actual post injury earnings are but one item
of evidence to be considered in the determina-
tion of future earning capacity. This Court
in Shaffer v. Midland Empire Packing Co. (1953),
127 Mont. 211, 213, 259 P.2d 340, 342, set out
the test for loss of earning capacity:
"'The test ... is not whether there has been
a loss of earnings or income caused by the in-
jury, but rather has there been a loss of earn-
ing capacity -- a loss of ability to earn in the
open labor market.'" Fermo v. Superline Products
(1978), 175 Mont. 345, 348, 574 P.2d 251, 253.
In Fermo, the claimant injured his wrist and elected to
receive compensation under the loss of earning capacity
provision. Fermo had returned to his old job and was earning
a greater income than he was at the time of the accident.
The record disclosed that although he was doing the same
work, pain from the injury did not allow him to work with
the speed and efficiency that he had before the accident.
This Court allowed Fermo to elect and to receive compensa-
tion under the loss of earning capacity statute.
Anaconda contends that a claimant whose earnings are
not actually decreased cannot elect between 39-71-703 (loss
of earning capacity) and 39-71-705 (indemnity). In support
of their position, Anaconda cites Walker v. H. F. Johnson,
Inc. (1978), 180 Mont. 405, 591 P.2d 181. Anaconda relies
on an example used by this Court in the Walker order on
rehearing.
"An example may clarify the distinction.
Assume two workers earning the same salary
suffer identical injuries during the course
of their employment. The injuries result
in the amputation of each worker's right leg
at the knee. Assume further that Worker A's
job at the time of his injury required him
to stand and be mobile. As a result of his
injury, he is unable to return to this job
and is not trained for any others available
at comparable wages. Assume worker B's job
at the time of his injury was a sitting job
not requiring mobility. As a result of his
injury, he misses only a short time and is
able to return to his job - -no loss of
with - -
efficiency - wages. [Emphasis added.]
or
"Under the election doctrine, worker A could
elect between compensation based on actual
loss of earning capacity under section 92-703.1,
R.C.M. 1947, now section 39-71-703 MCA, or in-
demnity benefits for possible future loss of
earning capacity under section 92-709, R.C.M.
1947, now section 39-71-705 MCA, for his enum-
erated injury.
"Worker B, however, has suffered no actual loss
of earning capacity. He, therefore, would be
compelled to apply for indemnity benefits under
section 92-709 for his enumerated injury to
compensate for possible loss of earning capacity
in the future." Walker, Mont. at
P.2d at , 35 St.Rep. at 1 6 7 3 ~ - 1 6 7 3 r
In the example, worker B, although losing his leg, lost
no ability to perform his work. From the limited facts
given, it appears that if worker B had been required to seek
another job on the open labor market, he would have been
able to compete for a job with similar earnings. That was
not the situation in Fermo. Although Fermo returned to his
old job and was earning more, he could not perform his
duties with the same ease and speed. If he had been required
to seek a new job in the open labor market, he would have
been unable to compete because of his injury.
Hafer's situation resembles that of Fermo. Hafer
returned to his old job and is earning more. He has an
implant in his elbow and is unable to straighten his arm;
the turning of his arm is limited. During the hearing,
Hafer testified that although he could perform his duties as
an iron worker, he could not perform them with the same
ease. He also indicated that his arm was weaker and that
it hurt his elbow and wrist when he was bolting a shell
together. In addition, Hafer's elbow prosthesis may fail
and require replacement, adding the risk of inability to
continue his work at an unknown future date. Unlike worker
B, Hafer did lose some efficiency. If Hafer were required
to go out in the open labor market in search of a job, an
employee of the State Job Service testified that because of
the injury, his earning capacity would be greatly diminished.
This Court in Walker, 180 Mont. at 411, 591 P.2d at 184,
held that this sort of testimony is sufficient to establish
a loss of earning capacity. We therefore hold that Hafer
has established a sufficient factual basis so that he can
properly elect to receive compensation under section 39-71-
703, MCA, for loss of earning capacity.
The hearing examiner limited the amount of Hafer's
compensation to the amount that he could have received if he
had elected compensation under 39-71-705. In conclusion of
law no. 11, the hearing examiner bases this limitation on
39-71-709(3), which provides:
"A worker who - elected to proceed under
- has
39-71-703 may withdraw hiselection at any
time and is entitled to receive indemnity
benefits under 39-71-705 through 39-71-708;
provided, however, that he shall - - -
not be en-
titled - -a greater benefit, including com-
to
pensation paid under 39-71-703, - -he
than
would have received - - - proceeded
if he had
exclusively under 39-71-705 through 39-71-7
and provided further that he shall not be
entitled to receive benefits under both 39-
71-703 and 39-71-705 through 39-71-708 during
any month." (Emphasis added.)
The hearing examiner relied on the parts of 39-71-
709(3) which have been emphasized. This Court does not find
that to be a proper reading of the statute. The limitation
on the benefit paid does not apply any time a worker proceeds
under 39-71-703 but only when that worker withdraws his
election under 39-71-703 and claims indemnity benefits under
39-71-705 through 39-71-708. Hafer did not change his
election from 39-71-703 to 39-71-705 and therefore the
amount of his compensation is not limited by 39-71-709(3).
If the Workers' Compensation Court concludes again that
a factor of 30% should be applied for the impairment rating,
and that the earning capacity loss is $74.35 per week, as
set forth in the original conclusions, then the computations
in this case would be as follows: 30% times the 500 week
maximum yields a durational limit of 150 weeks for compensa-
tion. Such 150 weeks need not be reduced because that falls
within the 280 weeks allowed for one arm at or near the
shoulder under section 39-71-705. 150 weeks times the
earning capacity loss of $74.35 per week yields an award of
$11,152.50.
The judgment of the Workers' Compensation Court is
vacated, and the cause is remanded for further proceedings
We Concur:
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.
Chief Justice