No. 90-587
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
JAY ANDERSON,
Claimant, Respondent,
and Cross-Appellant,
JERRY D. HAMMER and
STATE COMPENSATION MUTUAL
INSURANCE FUND,
Defendant, Appellant,
and Cross-Respondent.
APPEAL FROM: Workers8 Compensation Court,
The Honorable Timothy W. Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant and Cross-Respondent:
Kelly M. OfSullivan, Agency Legal Services
Bureau, Helena, Montana.
For Respondent and Cross-Appellant:
Chris J. Ragar, Beck Law Offices,
Bozeman, Montana.
Submitted: J a n u a r y 14, 1992
Decided: F e b r u a r y 21, 1992
Filed:
Clerk
Justice William E. Hunt, Sr., delivered the opinion of the Court.
The original opinion in this case, dated September 16, 1991,
and filed that same date, was withdrawn on November 22, 1991. We
hereby clarify that original opinion.
The Workers1 Compensation Court awarded claimant 500 weeks of
permanent partial disability benefits at the rate of $57.86 per
week. Both claimant and the State Fund appeal.
We reverse and remand as to issues one and three. We affirm
issue two.
Claimant raises the following issue:
1. Whether in computing lost earning capacity, the Workers1
compensation Court erroneously compared 1981 "old dollarsw to 1990
l1new dollars9I without updating the 1981 figures.
The State Fund raises two additional issues:
2. Whether the Workers1 Compensation Court erred in finding
that claimant suffered a whole person injury and therefore was
entitled to 500 weeks of benefits.
3. Whether the Workers1 Compensation Court erred in failing
to include the value of room and board provided to claimant by his
employer as part of his compensation in the calculation of his
post-injury wages.
Claimant Jay Anderson, a cowboy, maintained a sporadic and
short term pre-injury work history. He worked as a laborer in the
summer months for his uncles as a block layer and carpenter. He was
not fully apprenticed in either occupation. He sheared sheep for
his father for approximately two months a year. In 1979, claimant
began working for the Peavey Company as a feed plant operator. He
worked in that position for about two and one-half years. His
ending salary was $5.35 per hour.
In 1981, claimant began working as a ranch hand for Mr.
Hammer. His typical duties included fencing, calving, herding
cattle, and repairing bridges. On July 23, 1986, while trying to
round up a stray calf, claimant fell from his horse. The horse
rolled on top of him, fracturing his left upper arm. At the time
of the injury, claimant was earning $650 per month. In addition to
a monthly salary, Hammer provided claimant with fringe benefits
which included a mobile home, lunches, one-half of a beef per year,
and some pasturage for claimant's horse.
Claimant's x-rays revealed a comminuted fracture through the
mid-shaft of the left humerus. Dr. Frank Humberger, an orthopedic
surgeon, noted radial nerve palsy of the left arm. On July 24,
1986, Dr. Humberger performed surgery on claimant's left humerus to
stabilize the bone. Claimant's arm failed to heal properly. In
April 1988, Dr. Humberger performed a successful bone graft to
stimulate healing. Subsequently, claimant's humerus healed.
However, claimant developed significant problems with the radial
nerve. He experienced numbness and considerable pain in the left
upper extremity. Claimant continued to work for Hammer but has had
significant pain when performing his tasks.
Dr. Humberger stated that claimant has residual problems in
his shoulder consisting of bicipital tendonitis, significant
symptoms of rotator cuff tendonitis, and symptoms of subacromial
bursitis. He also testified that claimant will continue to have
permanent residual problems from the arm injury and that claimant
has reached maximum healing with regard to his injury.
The State Fund's witness, Dr. Canty, assigned an impairment
rating of 15 percent permanent partial impairment of the upper left
extremity. This represented a nine percent permanent partial
impairment of the whole person. Based on this conclusion, the
State Fund paid a Holton award of 45 weeks at claimant's permanent
partial disability rate of $149.50 per week. Dr. Canty did not
disagree with Dr. Humberger's deposition and he agreed that the
orthopedic surgeon should ultimately decide what the claimant could
and could not do for employment activities.
Gary Lusin, a licensed physical therapist, examined claimant
on November 3 and December 13, 1989, to prepare a Functional
Capabilities Assessment (FCA). The FCA qualified claimant for the
medium physical demand level. The medium range required lifting
50 to 75 pounds on an occasional basis, 20 pounds frequently, and
10 pounds constantly. Claimant just met the lower threshold
requirement of the medium physical demand level. In Mr. Lusints
opinion, claimant had a limited range of motion of combination
shoulder flexion and abduction, and limited external rotation of
the left shoulder. He found visible and palpable atrophy over the
infraspinatus, teres minor, trapezius, and pectoralis, and weakness
throughout the rotator cuff muscles.
Norm Johnson, an employment counselor, met with claimant and
reviewed the depositions of claimant, Drs. Humberger and Canty,
Jerry Hammer, Gary Lusin, and Karen Black. Johnson administered
the General ~ptitudeTest Battery to claimant. The results of the
test demonstrated that claimant would be slow in jobs requiring
numerical skills and hearing skills, as well as general learning
skills and reasoning ability. Johnson concluded claimant has a
pre-injury earning capacity at Peavey in Miles City of $7.10 per
hour, plus $1.56 per hour in fringe benefits, with seven years
experience. Johnson's contact with an individual at Peavey (now
Con Agra) indicated that entry level employees started at $5.00 per
hour and went up to $5.50 per hour after 60 days.
Karen Black, a vocational expert, contacted a personnel
officer who stated that a feed plant operator earned from $6.00 per
hour to $6.50 per hour at the entry level. Black testified she did
not know what claimant Is pre-injury earning capacity was. She also
did not estimate claimant 's decrease of access to the labor market.
She concurred that claimant's current employment should be limited
within the range of the FCA.
On August 27, 1990, the Workers ' Compensation Court issued its
findings. The court concluded that as a result of his injury,
claimant's ability to earn in the open labor market had been
substantially reduced. The court concluded claimant was entitled
to 500 weeks of permanent partial disability benefits at the rate
of $31.00 per week because he suffered an injury to the whole
person and not just to his left arm. The court rejected claimant ' s
lost earning capacity based upon jobs as a construction laborer or
hod carrier because claimant lacked experience in those areas.
In the original order, the court made a mathematical error
with regard to claimant's pre-injury wage. The claimant moved to
amend the decision and requested a rehearing, asking the court to
reconcile its finding of Peavey pre-injury wages of $5.35 per hour,
with its later conclusion that claimant earned $5.25 per hour to
correct a mathematical error, and to update the claimant's 1981
Peavey wages to the present time for the purposes of pre-injury
earning capacity. The court amended its earlier decision by
finding that claimant's Peavey wages were $5.35 per hour and that
claimant's lost earning capacity is $2.15 per hour. The court
granted claimant 500 weeks of benefits at $57.36 per week, but
refused to update claimant's 1981 wages to 1990 and denied the
rehearing. Both claimant and the State Fund appealed from the
original and amended order.
On September 16, 1991, this Court issued an opinion which
reversed and remanded on issue one and affirmed as to issues two
and three. In the original opinion, we held that the value of room
and board provided by the employer should not be included in the
calculation of claimant s post-injury wages. On September 30,
1991, the State Fund petitioned this Court for a rehearing on this
issue. On November 22, 1991, this Court granted the petition for
rehearing and classified this case for oral argument. Oral
argument was limited to discussion of whether the value of room and
board provided by the employer should be included in the
calculation of claimant's post-injury wages. On January 9, 1992,
this Court, sitting en banc, heard oral argument. We now issue the
following opinion.
Whether in computing lost earning capacity, the Workers1
Compensation Court erroneously compared 1981 "old dollarsw to 1990
"new dollarsw without updating the 1981 figures.
Because the injury occurred prior to 1987, pre-1987 statutory
and case law applies. Watson v. Seeking (1988), 234 Mont. 309,
We will not disturb a decision by the Workers1 Compensation
Court where there is substantial credible evidence to support the
findings of the court. Dunn v. Champion International Corp.
(1986), 222 Mont. 142, 147, 720 P.2d 1186, 1189. Claimant argues
that the court failed to bring his pre-injury earning capacity of
$5.35 per hour in 1981 to 1990 wage levels. We agree. As we have
previously stated:
"The ultimate objective of the disability test is by
discounting the above variables to determine the wage
that would have been paid in the open labor market under
normal employment conditions to claimant as injured,
taking wage levels, hours of work, and claimant I s age and
state of training as of exactly the same period used for
calculating actual wages earned before the injury.I1
McDanold v. B.N. Transport, Inc. (1984), 208 Mont. 470, 480, 679
P.2d 1188, 1193 (quoting Fermo v. Superline Products (1978), 175
Mont. 345, 349, 574 P.2d 251, 253).
The court found claimantls pre-injury earning capacity at
Peavey to be $5.35 per hour and his post-injury earning capacity to
be $3.20 per hour. The court then subtracted the 1990 post-injury
earning capacity from the 1981 pre-injury earning capacity to find
claimant's lost earning capacity. "This method is a misapplication
of the law in Olson [v. Manion's Inc. (1973), 162 Mont. 197, 510
P.2d 61 and directly contradicts later holdings of this Court that
pre-injury and post-injury wages must be compared for the same
period of time." McDanold, 679 P.2d at 1193. It is patently
unfair to compare wages in 1990 to wages in 1981. McDanold, 679
P.2d at 1193. The court should take into account increases in
wages during the periods of pre-injury earning capacity and
post-injury earning capacity.
[Elarning capacity must be measured by comparing
pre-injury earning capacity with post-injury earning
capacity i the same time frame.
n So, in order to properly
calculate claimant's permanent partial disability rate,
we would need to know what the job claimant held in
September of 1978 would pay today. No evidence was
presented as to that pay rate.
Lamb v. Missoula Imports, Inc. (1988), 230 Mont. 183, 198, 748 P.2d
965, 967.
Here evidence indicated that claimant's wages increased over
the last nine years. Norm Johnson testified by deposition that
Peavey would pay $7.10 per hour, plus fringe benefits, after seven
years of experience. He also testified that his contacts with
Peavey indicated entry level employees started at $5.00 per hour
and increased to $5.50 per hour after 60 days. Karen Black
testified that entry level jobs at Peavey would pay between $6.00
and $6.50 per hour. In addition, claimant testified he received
pay raises over his two and one-half years of working at Peavey.
There is no evidence that Peavey wages have remained static over
nine years. Therefore, the court must determine what claimant
would have earned in 1990 as a plant operator.
Claimant requested that this Court issue a finding regarding
claimant's pre-injury wage because the evidence comes from
deposition testimony. Dunn, 720 P.2d at 1189. We decline to do so
because of the conflicting nature of the testimony regarding
claimant's pre-injury wage. Instead, we remand to the Workers'
Compensation Court to determine claimant's pre-injury earning
capacity.
Whether the Workers' Compensation Court erred in finding that
claimant suffered a whole person injury and therefore was entitled
to 500 weeks of benefits.
The State Fund relied primarily on 5 39-71-705(1), MCA (1985),
which reads as follows:
(1) In addition to temporary total disability benefits
allowed in this chapter, indemnity benefits for loss of
a member shall be paid at the weekly rate provided in
39-71-703 and shall be paid for the following periods:
one arm at or near shoulder. ..................
280 weeks
. . . .
The court held that claimant was permanently partially
disabled and entitled to 500 weeks of permanent partial disability
benefits because the injury was not limited to the arm and shoulder
area, but to the "whole person." There is substantial credible
evidence to support the court's finding. Dr. Humberger stated that
claimant continued to experience intermittent problems of pain
associated with the radial nerve injury. The radial nerve is
easily reinjured whenever claimant bumps the arm. Claimant
complained of pain over the apex of the shoulder and over the
shoulder blade. He complained of pain in and about the shoulder
when lifting and carrying. The soft tissue injuries claimant
suffered are permanent. The doctor stated claimant has had
symptoms of bicipital tendonitis, rotator cuff tendonitis, and
symptoms suggestive of subacromial bursitis. Claimant would
continue to have residual problems. The doctor stated that these
symptoms were a result of the accident in 1986.
Mr. Lusin testified that claimant suffered from atrophy in the
infraspinatus, teres minor, upper trapezius, and pectoralis.
Claimant's FCA report confirmed claimant's weakness in the left
shoulder and upper extremity which appear to be a result from the
injury. The State Fund's witness, Dr. Canty, did not disagree with
Dr. Hurnberger's opinion with regard to claimant's injury.
Claimant's testimony was consistent with the conclusions of
the doctor and physical therapist. He stated his chest muscles
would start tightening up and aching. He had pain in and around
the shoulder area.
The State Fund argued that Obie v. Obie Sons, Inc. (1963), 143
Mont. 1, 386 P.2d 68, was controlling. In that case, we overturned
a district court's finding on appeal from the Industrial Accident
Board that claimant was entitled to 500 weeks of benefits because
the court did not have any additional evidence relating to the
physical condition of the claimant. In this case, we will not
disturb the Workers1 Compensation Court's findings where there is
substantial evidence to support those findings. Dunn, 720 P.2d at
1189. We conclude that there is substantial evidence to uphold the
Workers' Compensation Court's finding of a whole person injury.
I11
Whether the Workersf Compensation Court erred in failing to
include the value of room and board provided to claimant by his
employer as part of his compensation in the calculation of his
post-injury wages.
In determining claimant's post-injury earning capacity, the
Workers' Compensation Court used claimant's $750 monthly salary and
did not include room and board. The court arrived at $3.20 per
hour as claimant's post-injury earning capacity.
The relevant statute is 5 39-71-116(20), MCA (1985), which
defines wages as:
[Tlhe average gross earnings received by the employee at
the time of the injury for the usual hours of employment
in a week, and overtime is not to be considered. Sick
leave benefits accrued by employees of public
corporations, as defined by subsection (16) of this
section, are considered wages.
Previously, we have interpreted this definition of Nwages'las
simply meaning gross earnings. Scyphers v. H & H Lumber (1988),
237 Mont. 424, 426, 774 P.2d 393, 394. In Scvphers, this Court
adopted the economic gain standard in determining what constituted
gross income. Scvphers, 774 P.2d at 394. The distinction rested
upon whether the payment was actually a reimbursement for
employment-related expenses, or whether the payment consisted of a
real economic gain to the employee. Scvphers, 774 P.2d at 394. We
approved of the analysis as described by Professor Larson in his
treatise on workersr compensation:
In computing actual earnings as the beginning point of
wage-basis calculations, there should be included not
only wages and salary but any thing of value received as
consideration for the work, as, for example, tips,
bonuses, commissions and room and board, constituting
real economic gain to the employee. [Emphasis added.]
2 Larson, The Law of Workmenst Compensation, 5 60.12(a) (1989).
In Scvwhers, the claimant, a long haul truck driver, was
compensated by the employer at a rate of $0.14 per mile, plus $0.03
per mile "per diem." The claimant was not required to keep records
of expenses for meals and lodging. Instead, the employer simply
paid the I1perdiem" amount. We concluded that the three-cents-per
mile "per diemM was not a reimbursement to the injured employee for
out of pocket expenses, but instead constituted real economic gain.
Scvwhers, 774 P.2d at 394-95.
The Court notes that in 1987 the legislature enacted
5 39-71-123, MCA, providing that ll[w]ages include but are not
limited to . . . (b) board, lodging, rent, or housing if it
constitutes a part of the employee's remuneration and is based on
its actual value .... II
In this instance, room and board was provided to claimant as
partial compensation for working on the ranch. The room and board
was not a reimbursement to the claimant for out-of-pocket expenses,
rather it constituted a real economic gain to the claimant. We
hold that the value of the room and board constituted gross
earnings and that it be included in claimant's post-injury wages.
We affirm as to issue two. We reverse and remand issues one and
three to the Workerst Compensation Court to determine claimant's
pre-injury earning capacity, and if possible on the record before
it, the value of the room and board.
We concur:
4 w < w ~
Chief Justice
Justice Terry N. Trieweiler specially concurring.
I concur with the result of the majority opinion, but do not
agree with all that is said in part I11 of that opinion.
Specifically, I disagree that 5 39-71-116(20), MCA (1985), is
the relevant statute under which to analyze claimant's disability
benefits pursuant to 1 39-71-703, MCA (1985). partial disability
benefits, pursuant to § 703, are based upon the difference between
pre-injury and post-injury "earning capacity." Wages are only one
factor to be considered and are not determinative of either pre-
injury or post-injury capacity. However, I agree that the value of
claimant's room and board were relevant to a determination of
claimant's post-injury earning capacity, just as it is relevant to
a determination of his pre-injury earning capacity.
I also fully agree with the Court's decision in Issues I
and I1 of its opinion.