No. 5 4 - 3 3 2
IN THE SUPREME COURT OF THE STATE OF MONTANA
1985
DEBF@= L. CARLSON,
Claimant and Appellant,
JERRY CAIN,
Employer,
and
UZIJINSUFLED EPlPLOYERS FUND,
and
LEE ENTERPRISES, d/b/a THE BILLINGS
GAZETTE I
Employer,
and
HARTFORD ACCIDENT AND INDEMNITY
COMPANY I
Defendant and Respondent.
APPEAL FROM: The Workers' Compensation Court, The Honorable Timothy
Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Keefer, Roybal, Hanson, Stacey & Jarussi; Neil S. Keefer
argued, Billings, Montana
For Respondent:
b m$sek.
ham L A Mat wers ; '
&a k killiam Forsythe
and Bradley Anderson argued, Billings, Montana
Submitted: March 12, 1985
Decided: May 2 3 1 1985
Filed: "IIUY ;? S !Y85
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
In an earlier case between these same parties, Carlson
v. Cain and Lee Enterprises and Hartford Accident and
Indemnity Company (Mont. 1983), 664 P.2d 913, 40 St.Rep. 865,
we affirmed a decision of the Workers' Compensation Court
awarding benefits to Debra Carlson following injuries
incurred in an automobile accident while she was delivering
newspapers for her fiance, a carrier who had contracted with
- Billings
The Gazette to deliver its newspaper. On
remittitur, we remanded the case to the Workers' Compensation
Court for a determination of reasonable costs and attorney
fees pursuant to 5 39-71-611, MCA.
The cause returns to us on appeal by claimant Carlson
from certain portions of the findings of fact, conclusions of
law and judgment of the Workers' Compensation Court, dated
July 23, 1984, entered after remand from us. Carlson's
appeal raises the following issues:
1. A final judgment of the Workers' Compensation Court
upon a dispute concerning past-due benefits is a judgment for
money entitled to interest under S 25-9-205, MCA, and Rule
31, M.R.App.Civ.P.
2. The terms "compensation" and "compensation benefits"
as used in 5 39-71-2907, MCA, include medical benefits so as
to entitle Carlson to the 20 percent penalty for unreasonable
delay in payment of medical benefits.
3. Under 5 39-71-2905, MCA, the Workers' Compensation
Court has jurisdiction to award and should have awarded a
dollar amount for domiciliary care as a medical expense.
4. The out-of-pocket expenses of Ebert Ebert,
claimant's mother, in the sum of $6,497.53 from June 28, 1980
to October 15, 1980 are a reasonable and necessary medical
expense under § 39-71-704, MCA, to be reimbursed by Hartford.
5. An insurer liable under S 39-71-405, MCA, is not
entitled to subrogation under 5 39-71-414, MCA.
We will set forth the relevant facts as they pertain to
each issue discussed herein.
Interest - Judgments - - Workers' Compensation Court.
on of the
On June 29, 1980, appellant was severely injured in an
automobile accident and suffered severe and irreversible
brain damage. Hartford denied her Workers' Compensation
claim. Within a year her med-ical bills approximated $70,000.
Her Workers' Compensation claim was denied by Hartford.
Carlson did not qualify for disability Social Security
because she lacked the necessary qualifying quarters. The
case was tried to the Workers' Compensation Court on November
20, 1981, on the issue of liability. On April 23, 1982, the
Workers' Compensation Court ruled in favor of Carlson,
finding her to be entitled to temporary total disability
benefits and to medical benefits. Hartford. appealed. On
June 8, 1983, the Montana Supreme Court affirmed the Workers'
Compensation Court in the decision referred to above, and
remanded for a determination of reasonable costs and attorney
fees.
After remittitur, when Hartford still hadn't paid,
claimant's counsel threatened a proceeding before the
Division of Workers' Compensation to sell. Hartford's security
bonds. A second hearing wa.s held before the Workers'
Compensation Court on October 5, 1983. On July 3, 1984, the
Workers' Compensation Court entered its judgment upon the
second hearing. In conclusion of law no. 6, the Workers'
Compensation Court found Hartford's actions to be
unreasonable and subject to penalty.
On July 14, 1983, Hartford paid the past-due
compensation benefits from June 28, 1-980 to July 12, 1983 in
the total sum of $5,267. On August 12, 1983, Hartford paid
past-due medical bills of $17,067.48, and on September 16,
1983, paid additional past-due medical bills of $17,430.02.
These amounts had been awarded by the April 23, 1982 judgment
of the Workers' Compensation Court. Hartford, however,
refused to pay interest on the April 23, 1982 judgment at the
time of payment. In its conclusion of law no. 2, the
Workers' Compensation Court determined that claimant Carlson
was not entitled to interest based on compensation and
medical benefits awarded by its earlier judgment.
Under this issue, Carlson points to § 39-71-2904, MCA,
which provides that an appeal from a final decision of the
Workersq Compensation judge shall he filed directly with the
Supreme Court of Montana in the manner provided by law for
appeals from the District Court in civil cases. Carlson
argues that 25-9-205, MCA, provides that interest is
payable on judgments "recovered in the courts of this State"
at a rate of 10 percent per annum. Further, Rule 31,
M.R.App.Civ.P. provides that if a judgment for money in a
civil case is affirmed, whatever interest is allowed by law
shall be payable from the date of the judgment "in the
District Court."
Carlson's position is that she is entitled to interest
on the amounts contained in the judgment of the Workers'
Compensation Court of April 23, 1982, until the past due
benefits were in fact paid in July, August and September
Respondents argue that the Workers1 Compensation judge
was correct in adopting conclusion of law no. 2, by relying
on the provisions of S 39-71-2905, MCA, which includes in
pertinent part:
"The penalties and assessments allowed against an
insurer under chapter 71 are the exclusive
penalties and assessments that can be assessed
against an insurer for disputes arising under
chapter 71. "
(For the information of the reader, "Chapter 71" refers to
Chapter 71 of Title 39 of the Montana Code Annotated, in
which chapter are contained all of the statutory provisions
relating to the subject of Workers' Compensation.)
On this issue, the Workers1 Compensation Court relied on
our decision in Gaffney v. Industrial Accident Board (1958),
133 Mont. 448, 324 P.2d 1063. In Gaffney, this Court said:
"It should be remembered that the Workers1
Compensation Act is a special act designed solely
to meet the situations and conditions therein
particularly dealt with, and that the industrial
accident fund is a trust fund to be administered by
the board as trustees and as directed by the act.
The schedule of payments set forth in the act are
the maximum payments that are authorized and
therefore allowable under the act.
"In the absence of a specific statute authorizing
the charging of interest on accrued compensation
payments against this trust fund, no interest may
be assessed or cha-rged. This is a matter that, if
deemed of sufficient importance, should be called
to the attention of the legislature for proper
amendment. The courts may not legislate thereon. "
133 Mont. at 454, 324 P.2d at 1066.
Carlson argues that Gaffney should not apply here,
because it was a case decided long before the Workers1
Compensation Court was established by legislation in 1975.
Section 39-71-2901, et seq., MCA. Indeed, it is §
39-71-2905, MCA that gives to the Workers1 Compensat.ion judge
exclusive jurisdiction to make determinations concerning
disputes under Ch. 71.
Prior to 1975, a claimant dissatisfied with a decision
of the then existing Industrial Accident Board could appeal
to the District Court where the claimant resided for an
appellate review of the Board's decision. Section 92-833,
R.C.M. (1947). The trial before the District Court was
considered - -
de novo. Section 93-834, R.C.M. (1947). Anyone
dissatisfied with the decision of the District Court could
then appeal to the Supreme Court, S 92-836, R.C.M. (1947).
The former act included a provision that a 10 percent penalty
could be levied on the weekly awa.rd of benefits for
unreasonable delay or refusal to pay. Section 92-824.1,
R.C.M. (1947). The penalty provision however was enacted in
1961, after the decision in Gaffney.
We hold that on this issue we are bound by the
provisions of S 39-71-2905, MCA. The penalties and
assessments allowed against an insurer under the Workers'
Compensation chapter are the exclusive penalties and
assessments that can be assessed against an insurer. In the
27 years since Gaffney flagged the legislature that the
Workers' Compensation laws did not provide for interest on
claimant's judgments, the legislature has not acted to
include such a provision, though the Workers' Compensation
provisions relating to benefits have been amended several
times and the procedures revamped in 1975. Gaffney reminds
us that "the courts may not legislate thereon."
- Application - - - Percent Penalty - Unreasonable
The of the 20 For
Delay in Payment - Medical Benefits.
of
In its finding of fact no. 6 , the Workers' Compensation
Court found that under S 39-71-2907, MCA, claimant Carlson
was entitled to a 20 percent increase for unreasonable delay
in the payment to her of compensation benefits due between
June 8, 1983 and July 14, 1983. The Workers' Compensation
Court, however, refused to assess a penalty on the delayed
payment of the medical expenses, saying:
"The claimant further requests the penalty on the
carrier's refusal to promptly and completely pay
'
the claima.nt s medical expenses. While this Court
specifically finds that Hartford's actions on this
matter are unreasonable, the Court lacks
jurisdiction to impose penalties on delayed medical
reimbursements. Section 39-71-2907 above provides
a penalty on delayed or refused 'compensation
benefits' only; these are separate and distinct
from medical benefits (See 5 39-71-704, MCA).
"In light of Hartford's continuous unreasonable
actions, it is regrettable that ad.ditiona1
penalties cannot be awarded. However, liability
for actual payment of accrued and future
compensation benefits was tolled until order of the
Montana Supreme Court on June 8, 1983. Penalties
on delay of medical benefits are warranted, but are
not included in the Workers' Compensation Act and
the provisions therein are exclusive. Some
consolation may be found, little though it may be,
in an award of reasonable attorney fees."
Thus, the Workers' Compensation Court decided that it
could consider medical expenses for the purpose of
determining attorney fees allowable to the claimant, but that
it could not a.ssess a penalty for unreasonable delay in the
payment of the medical expenses.
Section 39-71-2907, MCA, provides in pertinent part:
"39-71-2907. Increase - award for unreasonable
in
delay or refusal to pay. WE payment of
compensation has been unreasonably delayed or
refused by the insurer, either prior or subsequent
to the issuance of a,n 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
workers' compensation judge by 20 percent."
The claimant argues that the intent of S 39-71-2907,
MCA, is to penalize the insurer who refuses to pay claims
within a reasonable time and. to encourage prompt payment of
all Workers' Compensation claims. There is no reason to
exclude medical benefits from the penalty statute. Jledical
expenses have not been specifically excluded; the generic
term "compensation" is used in the same all-encompassing
manner as it was used in. "Workers' Compensation Act" an.d
"Workers' Compensation judge."
Hartford argues that S 39-71-704, EICA, which defines
medical expenses under the act makes it clear that weekly
compensation and medical expenses are separate and distinct
from medical payments.
Section 39-71-704, MCA, provides:
"39-71-704. Payment of medical, hospital and
related services. )1
( In addition to the
compensation provided by this chapter and as an
additional benefit separate & apart from
compensation, the following shall be furnished:
" (a) After the happening of the injury, the
employer or insurer shall furnish, without
limitation as t.o the length of time or dollar
amount, reasonable services by a physician or
surgeon, reasonable hospital services and medicines
when needed and such other treatment as may be
approved by the division for the injuries sustained
. . ." (Emphasis added.)
We hold that the Workers' Compensation Court erred on
this point. Although several statutes in the Workers'
Compensation Act use the words "compensation" and "benefits"
interchangeably, the Workers' Compensation judge relied on
one statute, S 39-71-704, MCA, to determine that medical
payments are not included in the term "compensation" as it is
used in § 39-71-2907, MCA.
To begin with, the penalty statute itself, S 39-71-2907,
--
MCA, provides that in the event of delay, "the full amount of
the compensation benefits due a claimant . . . may be
increased by the Workers' Compensation judge by 20 percent."
The legislature d.id not limit the penalty to just the word
"compensation;" it used instead the term "compensation
benefits." There should be no argument that the compensation
benefits which an injured worker receives under the Act
includes compensation for time off the job, for disability
and for medical payments. The Act itself makes the term
"compensation" universally applicable to all of the sections
of the Act. Section 39-71-103, MCA, provides:
"39-71-103. Compensation provisions. The
compensation provisions of this chapter, whenever
referred to, shall be held to include the
provisions of compensation plan no. 1, 2 or 3, and
all other sections of this chapter applicable to
the same or any part thereof."
The following statute requires the Workers' Compensation
Court to give a liberal construction to the chapter:
"39-71-104. The court to give liberal construction
to chapter. Whenever this chapter or any part or
-
section hereof is interpreted by a court, it shall
be liberally construed by such court."
The holding of the Workers' Compensation judge that
medical benefits are not subject to penalty conflicts with
its holding that the claimant could recover attorney fees
relating to the medical benefits. Section 39-71-611, MCA,
provides for costs and attorney fees:
"39-71-611. In the event an insurer denies
liability for a claim for compensation or
terminates compensation benefits, and the claim is
later adjudged compensable by the workers'
compensation judge or on appeal, the insurer shall
pay reasonable costs and attorney fees as
established by the workers ' compensation judge. "
It is evident that the statute relating to costs and
a.ttorney fees uses the term "compensation benefits," and the
Workers' Compensation Court construed that term to include
medical benefits in determining attorney fees. Yet, the use
of the same term, "compensation benefits" in the penalty
clause is distinguished by the Workers' Compensation judge as
not allowing a penalty to be assessed.
As an example of the pl-aces in the Workers' Compensation
Act where the word "benefits" is used interchangeably with
"compensation" see 5 39-71-709, MCA, relating to partial
disability benefits and indemnity benefits. Subdivision (1)
of that statute provides:
"39-71-709 (1) . In addition to temporary total
disability benefits allowed in this chapter, 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."
In the foregoing statute, the legislature used the word
"compensation" and "benefits" interchangeably. This Court
would not tolerate an argument that refusal of an insurer to
pay indemnity benefits for partial permanent disability or
for sched-uled losses is not subject to the 20 percent
penalty.
The Workers1 Compensation judge failed to take into
consideration the legislative history of S 39-71-2907, MCA.
The penalty provisions for delay of payment in compensation
were first enacted in Ch. 227, Laws of Montana (1961). The
enactment was codified as section 92-824.1, R.C.M. (1947).
It provided:
"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 ten
percent (10) of the weekly award. "
There is no question that this wording would relate the
penalty to the weekly benefits that were paid to the injured
employee. When the office of the Workers' Compensation judge
was created, the same provision was carried forward as
section 92-849, R.C.M. (1947), except that the new statute
provided that the Workers1 Compensation judge would make the
determination. However, in 1979, in Ch. 63, S 5, Laws of
Monta.na (1.979),the penalty provision was amended as follows,
with the underlined words showing the amendments:
"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
workers1 compensation judge granting a claim on
compensation benefits, - - amount - -
the full of the
compensation benefits - - a claimant, between the
due
time compensation benefits are d.elayed - refused
or
and - -date - the order granting a claimant
- the - of
compensation benefits, may - increased by -
be the
Workers1 Compensation judge & - percent."
20
The amendment of Ch. 63, S 5, Laws of Montana (19791,
became what is now 5 39-71-2907, MCA, the section relied on
by the Workers1 Compensation judge.
It is clear then from the legislative history of the Act
that before 1979 the penalty did not apply to medical
benefits since the penalty was limited to "the weekly award."
After the amendment in 1979, the penalty applied to "the full
amount of the compensation benefits."
Hartford also contends in this appeal that because the
payments were made to the medical providers and not to the
claimant herself, that the penalty provision should not
apply. This argument is specious. It was met by the Kansas
Court in Farm Bureau Mutual Insurance Company v. Commercial
St-andard Insurance Company (1980), 5 Kan.App. 127, 612 P.2d
1265, where the insurer paid a death benefit of $1,000 to the
funeral home, and sought to subrogate for the payment against
a third-party insurer. The third-party insurer contended
that because the payment was not made directly to the
decedent, it was not "compensation." The Kansas Court
stated:
"Pursuant to this statute, plaintiff paid $1,000.00
to the funeral home. Unlike the $5,000.00 payment
to the fund, this sum confers a benefit on the
decedent's representatives and is compensation
under the Act. By virtue of the plaintiff's paying
for the services rendered by the funeral home,
decedent's parents were compensated to the extent
that they were relieved of assuming an unavoidable
expense (citing authority). The funeral bill is
analogous to medical expenses which have been held
to be compensation. Owen v. Ready-Made Buildings,
Inc. 180 Kan. 286, 303 P.2d 168 (1956). Finally
the fact that the payment is made directly to the
provider of services does not affect its status as
compensation. KSA 1979 Supp. 44-504(b) permits
subrogation for compensation paid by the employer
regardless of who receives the actual payment. We
hold therefore that the employer or his insurance
carrier is entitled to be subrogated for the amount
of the funeral bill and reverse the trial court on
this point." 612 P.2d at1268.
In this case, Hartford claims subrogation against a
third-party insurer, and by order of October 25, 1983, the
Workers' Compensation Court determined that Hartford here
could reduce its future obligations to the claimant by 50
percent until it has pa.id $74,327. Thus Hartford has been
subrogated to the extent of $74,327 against recovery made
against a responsible third party. That sum includes the
approximate $35,000 that it paid in medical benefits. Its
right to include medical payments in its subrogation claim is
found in S 39-71-414, MCA, which provides: "The insurer is
entitled to subrogation for all compensation - benefits paid
or
under the act. 'I (Emphasis add-ed.
) Thus, medical payments
under the act for the purposes of subrogation are treated as
a compensation benefit; for the same reason, medical payments
should be treated as a compensation benefit when a penalty is
considered for wrongful refusal or delay in payment.
The Workers' Compensation Court had Jurisdiction - Award -
to a.nd
Should. Have Awarded - Dollar Amount for Domiciliary - - - as a
a Care
Medical Expense.
Claimant's mother, Edith Ebert, has cared for the
claimant since she was discharged from the hospital in
October 1980. After a hearing in October 1983, the Workers1
Compensation Court ruled on July 3, ,-984in conclusion of law
no. 4 that the claimant was entitled to the reasonable value
of domiciliary care by her mother from the date of discharge
to the present and continuing so long as the care is needed.
In arriving at its decision, the court discussed the
difference between home nursing services and household tasks.
The court adopted a slightly modified version of the factors
set forth in Warren Trucking v. Chandler (1981), 221 Va.
1108, 227 S.E.2d 448 to test whether services provided in the
home are compensable.
The factors are:
"(1) The employer knows of the employee's need for
medical services at home resulting from the
industrial injury; (2) the preponderance of
credible medical evidence demonstrates that home
nursing care is necessary as a result of accident,
and describes with a reasonable degree of
particularity the nature and extent of duties to be
performed by the family members; (3) the services
are performed under the direction of a physician;
(4) the services rendered are of the type normally
rendered by trained attendants and beyond the scope
of normal household duties; and (5) there is a
means to determine with reasonable certainty the
approximate value of the services performed."
The Court found and the parties agree that the services
Mrs. Ebert provided for her daughter passed the above test.
The Workers' Compensation Court, however, ruled that it
did not have jurisdiction to set a value on the services
performed by Mrs. Ebert. The court ruled that the services
constituted "such other treatment" und-er S 39-71-704, MCA,
which we have quoted above, and as such the services must be
approved by the Division of Workers' Compensation. The court
left the decision of how much should be paid to Mrs. Ehert to
the Division upon presentation to the Division of additional
evidence.
Claimant contends that the Workers' Compensation Court
has the power to evaluate the services and make an award.
Hartford claims that the amount of each award for domiciliary
services in each case must be determined by the Division.
The portion of S 39-71-704, MCA, which is applicable is
that the employer must pay medical benefits for doctors,
surgeons and hospitals and for "such other treatment as may
he approved by the Division for the injuries sustained." A
literal reading of that portion of the Act would indicate
that the "other treatment" to be compensable must be approved
by the Division. Yet, in this case, the Workers'
Compensation Court determined that the "other treatment" was
necessary as a medical expense but declined to set the dollar
amount .
Section 39-71-2905, MCA, relates to the jurisdiction of
the Workers ' Compensation judge. In pertinent part, it
provides:
". . . If the dispute relates to benefits due a
claimant under chapter 71, the judge shall fix and
determine any benefits to be paid and specify the
manner of payment. The workers' compensation judge
has exclusive jurisdiction to make determinations
concerning disputes under chapter 71.. . ."
The foregoing portion of S 39-71-2905, MCA is an
excellent example of the legislature using interchangeably
the term "compensation" and "benefits." It is also an
affirmation of the legislative purpose to grant to the
Workers' Compensation judge "exclusive jurisdiction" in all
matters relating to benefits recoverable under the Workers'
Compensation Act. Medical payments constitute one form of
such benefits. It is the policy of the law to avoid
multifariousness in litigation. All issues involved in
lawsuits should be tried in one trial-. We, therefore, hold
that once the Workers' Compensation Court has acquired
jurisdiction of a dispute under the Act, it has jurisdiction
to try and decide all of the issues that arise between the
parties before him. In this case, the Workers' Compensation
Court should have fixed a dollar amount of the domiciliary
care to which the Workers' Compensation judge found that
claimant Carlson was entitled.
We do not know from the record before us the exact
status of the claim for Carlson's claim for domiciliary care.
If, following the Workers' Compensation order in this case,
the Division is now considering that issue, then we order
that the Division continue to consider and make a decision as
to the dollar amount due Carlson subject to Carlson's right
of appeal to the Workers' Compensation Court on that issue.
If, however, the matter has not been referred to the
Division, or is not being considered by the Division, then we
remand the issue to the Workers' Compensation Court for the
fixing of the doll-ar amount of domiciliary ca.re.
IV.
Whether the Out-of-Pocket Expenses - Edith Ebert - - -
of In the Sum
- $6,497.53 - - a Necessary Medical Expense.
of are
After the accident, Edith Ebert, claimant's mother,
traveled to Billings, and remained at the bedside of her
daughter for about 3 1/2 months. She helped feed, bathe and
generally assist claimant Carlson while she was in the
hospital. Dr. Wood, who cared for the claimant during this
period testified at the hearing that Mrs. Ebert's presence
and the services she performed benefited the claimant
intellectually and shortened her stay in the hospital. When
Mrs. Ebert took the claimant home and cared for her there,
the expense of a nursing home was eliminated. During her
stay in Billings, Mrs. Ehert incurred various expenses for
food, lodging and transportation which totaled $6,497.53.
Claimant Carlson seeks to recoup these out-of-pocket monies
as medical expenses. The Workers' Compensation Court denied
the request.
The Workers' Compensation judge, finding that the
actions of the mother were praiseworthy and indicative of her
concern for the daughter, nevertheless denied the claim for
out-of-pocket expenses on the ground that no medical need for
the services performed had been demonstrated by the claimant.
It found that while the expert testimony established that the
mother's actions may have been beneficial, there was no need
for physical therapy beyond that rendered by the hospital
staff. Therefore, reimbursement for the mother's travel and
per diem costs while the claimant was hospitalized was
denied. Here, the Workers' Compensation Court has decided an
issue of fact, determining that medical need was not
established. by the evidence. Substantial support for the
verdict exists and we may not set aside the findings of the
Workers ' Compensation Court unless it is clearly erroneous.
Rule 52 (a), M.R.Civ.P.
v.
Whether - Insurer
the 5
Entitled - Subrogation Under -
to
39-71-414, MCA.
The Workers' Compensation iudge held in this case that
Hartford was entitled to the proceeds of subrogation under S
39-71-414, MCA. Claimant Carlson contends that in this case
Hartford should be denied the right of subrogation.
Carlson's contention on this issue demonstrates what may
be an inequity that exists in the Workers' Compensation
statutes. Here, claimant Carlson had no memory of the
accident. An investigation by her attorney developed the
possibility that she had been run off the road by a vehic1.e
operated by National Trailer Convoy, Inc. This company
denied that they were present at the scene of the accident.
Plaintiff's attorney formulated a case against National
Trailer Convoy, Inc. that was based solely on circumstantial
evidence described. at best as very marginal. Nonetheless,
National Trailer Convoy, Inc. entered into a settlement with
Carlson that her attorney claims was settled for a greatly
reduced value in view of Carlson's injuries. At the time of
the settlement, the attorney for Carlson faced the dilemma
that plaintiffs' counsel face many times in these situations.
There were outstanding at that time medical bills of $70,000
and her condition of disability threatened to be permanent.
The Workers' Compensation carrier had denied her compensation
claim. These factors brought about the necessity, as it
appeared. to Carlson's counsel, to settle the National Trailer
Convoy, Inc. case at a substantially reduced value.
After the settlement, Hartford demanded its right to
subrogation und.er S 39-71-414, MCA. Carlson contends that
because of the circumstances in this case, Hartford is not
entitled to subrogation. The argument against subrogation
follows this line: Hartford insured The Billings Gazette for
Workers' Compensation coverage. - Bill-ings Gazette
The
contracted with Jerry Cain for the delivery of its
newspapers. Carlson was not a direct employee of The Billing
Gazette, but rather was a direct employee of Jerry Cain.
Hartford became liable under S 39-71-405, MCA, when it was
determined that Jerry Cain failed to provide Workers'
Compensation coverage for his employee, Carlson. This is the
established law of the case under Carlson v. Cain and Lee
Enterprises and Hartford Accident and Indemnity Company,
supra, 664 P.2d 913, 40 St.Rep. 865. Carlson contends that
The Billings Gazette had not elected to cover claimant
Carlson under 39-71-411, MCA, but was required to provide
compensation pursuant to § 39-71-405, MCA.
Section 39-71-405, MCA, gives Hartford a cause of action
over and against Jerry Cain because the statute provides that
any insurer who becomes liable for benefits may recover the
amount of benefits paid from the contractor (Cain) who was
primarily liable. Carlson, therefore, claims that 5
39-71-405, MCA, deals with a specific situation, provides a
specific remedy and is to be distinguished from the ordinary
case where a.n employer, whose employee is injured by a third
party, has a right of subrogation against the third party for
the compensation benefits it pays under the subrogation
provisions of S 39-71-414, MCA. Since Carlson was not the
employee of The Billings Gazette, and therefore of its
insurer, Hartford, Carlson claims that Hartford may not take
advantage of the subrogation provisions of S 39-71-414, MCA,
to proceed against the proceeds of settlement she made with
National Trailer Convoy, Inc.
Carlson's contention presents us with a case where in
view of her injuries, a presentation of her claim in a trial-
against National Trailer Convoy, Inc. might have resulted in
a judgment much larger than any possible recovery under the
Workers' Compensation Act. As it was, she entered into a
compromi-se settlement for $80,000, barely larger than the
medical expenses which she had incurred. We have held in a
fire insurance company subrogation case that when the sum
recovered from the responsible third party is less than the
total loss suffered by the insured, and either the insured or
the insurer must to some extent go unpaid, the loss should be
borne by the insurer for that is the risk the insurer has
been paid to assume. Skauge v. Mountain States Tel. & Tel.
(1977), 172 Mont. 521, 528, 565 P.2d 628, 632.
Statutorily, however, Carlson's claim here cannot be
sustained. Section 39-71-411, MCA, provides that the
Workers' Compensation Act binds the employee himself, his
personal representatives and any persons having any right or
claim to compensation for his injury or death as well as the
employer and the employer's representatives. Section
39-71-414, MCA, provides that "the insurer is entitled to
subrogation for all compensation and benefits paid or to be
paid under the Workers "ompensation Act." It presents us
with a case in which the Court would. have to legislate where
the legislature has failed to act to accomplish an equitable
result. We therefore hold that Hartford is entitled to its
subrogation in this cause.
The judgment of the Workers' Compensation Court in this
cause is affirmed in part and reversed in part, and remanded
to the Workers' Compensation Court. @'---'.
,
We Concur:
Justices