Case Title: CHANEY v U S FIDELITY GUARANTY

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1996-05-30T00:00:00Z

Document:
No. 95-239
IN THE SUPREME COURT OF THE STATE OF MONTANA

 

       

1996
LARRY D. CHANEY, PS'e gory
Petitioner and Appellant, Be TD
ve MAY 30 696
U.S. FIDELITY & GUARANTY, Sa
Respondent and Insurer for fare ST aouiAige

OWENS-HURST LUMBER COMPANY,

Employer,
STATE COMPENSATION INSURANCE FUND,
Intervenor.
APPEAL FROM: Workers’ Compensation Court of the State of Montana

‘The Honorable Mike Mccarter, Judge presiding

COUNSEL OF RECORD:
For Appellant:

Randall 0. Skorheim, Skorheim Law Office,
Great Falis, Montana

Robert C. Melcher, Attorney at Law,
Billings, Montana

For Respondent :

Paul C. Meismer, Garlington, Lohn &
Robinson, Missoula, Montana

For Intervenor:
Charles G. Adams, Legal Counsel, state
Compensation Insurance Fund, Helena, Montana

Submitted on Briefs: February 29, 1996

Decided: May 30, 1996
Filed:

 
Justice Terry N. Trieweiler delivered the opinion of the court.

‘The petitioner, Larry D. Chaney, filed a petition in the
Workers’ Compensation Court of the State of Montana in which he
sought benefits for disability which he alleged wae caused by an
injury that occurred in the course and scope of his employment with
Owens-Hurst Lumber Company in 1963. United States Fidelity «
Guaranty, Owens-Hurst's insurer, denied all liability. The state
Compensation Insurance Fund, which had paid benefits to Chaney,
intervened and sought indemnification from USFéG. After a trial,
the Workers’ Compensation Court entered an order and judgment in
which it denied Chaney's and the Fund's claims. Both Chaney and
the Fund appeal the order and judgment. We reverse the order and
judgment of the Workers’ Compensation Court.

We restate the issues on appeal as follows:

1. Did the Workers! Compensation Court err when it concluded
that Chaney was not entitled to benefite?

2. Did the Workers’ Compensation Court err when it concluded
that the State Fund wae not entitled to indemnification from USFEG?

3. Te Chaney entitled to attorney fees and costa?

FACTUAL BACKGROUND

Petitioner Larry Chaney suffers from carpal tunnel syndrome
(TS), He alleges that his CTS, which required surgery in 1992,
was caused by a Novenber 3, 1983, injury he suffered while working
on the green chain at Owens-Hurst Lumber Company which was insured
at that time by United states Fidelity & Guaranty (USFéG). Chaney

2
 

alleges that while working on the green chain, he slipped on ice,
fell from the green chain platform, and broke his fall with his
forearms and wrists. He alleges that his injury was caused by
either that incident or the repetitive gripping and lifting
activity involved in his work
On November 11, 1983, Chaney filed a claim for workers!

compensation. The Employer's First Report, which was signed by
claimant, describes the accident as follows:

Arms and [hJands started to go to sleep and

get num (sic) while working and after work.

Stacking 2 x 6's and Tye's [sic].
Chaney did not specifically mention the fall in the First Report,
but he did note the date of the fall and testified that he reported
the fall to Owens' office. Chaney also listed his ‘arm, wrist,
hand and fingers" as the parts of the body affected. Chaney's
treatment immediately after the alleged injury in 1983 consisted of
two visits to Dr. Forest F. Schroeder who diagnosed Chaney's injury
as "Myalgia and tendon/ligaments strains secondary to archaic
working conditions and long shifts". Chaney continued to work for
Owens after his injury until Owens laid him off in late December
sea.

Scott Hall, a claims supervisor with USF&G, testified that no

payment was made by USF&G to Chaney. When asked whether USF&G ever

 

accepted the claim, Hall replied, "I have no records at all. 1 see

nothing to indicate that it was accepted." When asked whether
anything in his file indicated that the claim was denied, Hall
replied, "No, I do not."

In 1989 Chaney again consulted a physician and complained of

 

paresthesia of his thigh, left hand, forearm, and right finger
‘That physician referred Chaney to Dr. John Stephens who performed
nerve conduction tests on Chaney. Dr. Stephens interpreted those
tests as suggestive of bilateral cts.

on September 17, 1991, Chaney reported hand numbness to Dr.
Michael Nolan who then referred Chaney to a surgeon, Dr. Stuart
Reynolds, who referred Chaney to Dr. Patrick J. Cahill for nezve

conduction studies. Dr. Cahill found that Chaney had mild CTS and

 

Dr. Reynolds then returned Chaney to Dr. Nolan's care. Chaney did
not complain about CTS symptoms again until September 1992. In
October 1992, he returned to Dr. Reynolds who again asked Dr.
cahill to perform nerve conduction studies. Dr. Cahill reported
that the study showed evidence of moderately severe cTs and
suggested surgery, which Dr. Reynolds performed in 1992.

Chaney quit his work as a mechanic for Olson Ford on
Novenber 17, 1992, to have the CTS surgery performed on his right
wrist and has not worked since that time. In December 1992, he had
the surgery performed on his left wrist. Since his surgery, the
Fund, which insured Olson Ford, has paid Chaney temporary total and
medical benefits while reserving rights and defenses against Chaney

and USFEG.
On November 9, 1993, Chaney petitioned the Workers!
Compensation Court for a determination that USF&G is liable for
temporary total, permanent total, permanent partial, rehabilitation
and medical benefits, as well as attorney fees, and a penalty. The
Fund intervened and sought indemnification for compensation and
medical benefits it has paid Chaney since 1993

After a trial, the Workers' Compensation Court concluded that
Chaney was not entitled to benefits from USF&G because hie 1983
injury did not proximately cause his permanent damage. The court
based its conclusion on its findings that Chaney suffered no acute
injury due to a fall and that, in fact, the fall did not occur;
that he did not have consistent symptoms since 1983; that his
accounts of his symptoms since 1983 were contradictory; and that
“[dJuring those years he engaged in provocative activities at
various times" and "{i]t appears likely that claimant's cTs
developed over a period of several years." The court also
concluded that the Fund was not entitled to indemnification from
USF&G for the benefits it paid to Chaney and that Chaney was not
entitled to attorney fees, costs or a penalty.

ISSUE 1

Did the Workers! Compensation Court err when it concluded that
Chaney was not entitled to benefits?

We review the Workers’ Compensation Court's conclusions of law

to determine whether they are correct. CNA Ins. Cos. v. Dunn (1995), 273
 

Mont. 295, 298, 902 P.2d 1014, 1016; Stordalen v. Rict's Food Farm (1993) ,
261 Mont. 256, 258, 862 P.2d 393, 394.

In its order, the Workers' Compensation Court found that
"(lacking any evidence that the claim was timely denied, the Court
finds that the claim was accepted by USF&G." The court then
concluded that Chaney was not entitled to benefits from USF&G
because his 1983 injury did not proximately cause permanent damage
‘Therefore, the court, without finding a subsequent intervening
injury, concluded that USF&G's failure to deny Chaney's claim
within thirty days did not preclude it from denying liability for
Chaney's present disability. This conclusion is inconsistent with
both statutory and case law.

Section 39-71-606(1), MCA (1983), provides:

Every insurer . . . shall, within 30 days of receipt of

a claim for compensation, either accept or deny the

claim, and if denied shall inform the claimant and the

department in writing of such denial.
An insurance carrier's failure to comply with § 39-71-606(1), MCA,
and either accept or deny a claim within thirty days constitutes an
acceptance of the claim as a matter of law. Haag v. Montana School Group
Ins. Auth. (Mont. 1995), 906 P.2d 693, 52 St. Rep. 1146.

Here, in accordance with our decision in Haag, the Workers’
Compensation Court found that USF&¢ accepted liability because it
failed to timely accept or deny the claim; however, the court then
went on to find that no fall occurred and that "(mlore probably he
(chaney) experienced a gradual onset of numbness in his hands, arms

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and shoulders due to the repetitive nature of his work on the green

chain.* Finally, the court concluded that Chaney’

 

1983 injury
(which, based on the only medical evidence offered, was consistent
with CTS) did not cause his current CTS condition and need for
surgery and that he was not entitled to benefits from USF&G
Before reaching its ultimate conclusion, the court found neither an
intervening accident nor a point of maximum healing. The court's
Jump from USF6G's acceptance of liability, which is not contested
by USP&G on appeal, to the lack of causation and the ultimate
denial of benefits to Chaney is contrary to our decisions in Haag
and Walker v. United Parcel Serv. (1993), 262 Mont. 450, 865 P.2d 1113.

In Haag, where we held that the failure to accept or deny a
claim pursuant to statute is deemed an acceptance of the claim, the
employer contended that the claimant did not sustain an injury
caused by an accident as the statute requires. Haag, 906 P.24 at
695. The insurer did not timely deny the claim, but instead denied
the claim more than two months after receiving it. Haag, 906 P.2d
at 696. The Workers’ Compensation Court concluded that the
claimant was not injured in a work-related accident and, on that
basis, denied him benefits. Haag, 906 P.2d at 694. We reversed
the court and held that the insurer's failure to accept or deny the
claim as required by § 39-71-606(1), MCA, is deemed an acceptance
of the claim. Haag, 906 P.24 at 697. Because of the automatic
acceptance of a claim, causation issues were irrelevant.

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Likewise in this case, to qualify for benefits Chaney
initially needed to prove by a preponderance of the evidence that
he sustained a compensable injury, § 39-71-119, MCA; Gerlach». Champion
Incl (1992), 254 Mont. 137, 140, 636 P.2d 35, 37, and that a causal
connection existed between his injury and his current condition.
Brown v. Ament (1988), 231 Mont. 158, 162-63, 752 P.2d 171, 174
Chaney showed that his original injury was the same kind of injury
to the sane parts of his body for which he now seeks benefite and
that USPAG failed to either accept or deny his claim within thirty
days.once a claimant shows a failure to timely accept or deny the
claim, his initial burden of proof is satisfied. See generally Haag,
906 P.24 693.

Because Chaney's claim was accepted and his initial burden of
proof satisfied, the burden of proof shifted to USF&G to show that
other injuries caused the extent of his current condition. Walker
United Parcel Serv. (1993), 262 Mont. 450, 456, 865 P.2d 1123, 1117
To avoid further liability, USFéc was required to show that Chaney
had attained a condition of maximum healing and that Chaney
sustained an injury after he reached maximum healing. See Cackaerv
Stare Comp. Mut. ns. Fund (1994), 268 Mont. 105, 115, 885 P.2d 495,
500-01; Lapp v. WR. Grace/Bomac Driling (1992), 254 Mont. 237, 240, 836
P.24 602, 604; EB/Orion Group v State Comp. Mut Ins. Fund (1991), 249 ont.

449, 452-53, 816 P.2d 1070, 1072; Bellon v. Hartford Accident & Indem. Co.
(2983), 202 Mont. 384, 392, 658 P.2d 405, 409-10. USF&G made no
effort to meet its burden.

At trial, USFEG offered no evidence that claimant reached
maximum healing following his 1983 injury or that he suffered any
subsequent injury. USF&G presented no competent medical evidence
to suggest another cause for Chaney's CTS other than the incident
in 1983. Moreover, the Workers’ Compensation Court specifically
found that no date for maximum healing could be established and
failed to find that any other injury caused Chaney's CTS. The
court did list under other injuries that claimant cut a tendon of
his left hand, suffered a back injury, cut his foot, and suffered
a strain of hie arm and neck after 1983, but it did not find any
causal connection between any post-1983 injury and Chaney's current
condition. Therefore, USF&G has not met its burden pursuant to
Walker». United Parcel Ser.

For these reasons, we conclude that USF&G accepted the clain
when it failed to timely deny it, and after accepting the claim, it
failed to meet its burden to prove maximim healing and an
intervening event. Therefore, the Workers! Compensation Court
erred when it denied Chaney benefits from USF&G and concluded that
his 1983 injury did not proximately cause his current condition.

ISSUE 2

 

Did the Workers’ Compensation Court err when it concluded that

the State Fund was not entitled to indemnification from USF&G?
We have recognized a workers! compensation insurer's right to
recover benefits that should have been paid by another carrier

For example, in EBY/Orion Group». State Comp. Ins. Fund (1989), 240 Mont. 99,
104, 782 P.24 1276, 1279, we stated that "(t]he right of indemnity
is that where one is compelled to pay money which, in justice,
another ought to pay, the former may receive from the latter the
eum so paid." We have also stated:

If it is later determined that the insurance company on

risk at the time of the accident should not pay the

benefits, this insurance company, of course, has a right

to seek indemnity from the insurance company responsible

for the benefits already paid out to the claimant.

Belton ¥. Harford Accident & Indem. Co. (1983), 202 Mont. 384, 392, 658 P.2d
405, 409-10.

‘The Fund is a subsequent workers! compensation insurer. It
insured Olson Ford at the time Chaney filed his 1992 claim and has
paid Chaney temporary total benefite as well as medical benefite
pertaining to Chaney's wrist and hand problems. As discussed
above, we have held that to shift responsibility to a subsequent
inourer, a prior insurer must show that the claimant suffered an
injury during subsequent employment after he or she reached maximum
healing from the initial injury. OBrien v Central Feeds (1990), 242
Mont. 267, 272, 786 P.2d 1169, 1172; Bellon, 202 Mont. at 392, 658
P.2d at 409-10. USF&G failed to present evidence that Chaney
suffered an injury during subsequent employment after he reached
maximum healing from the 1963 injury. Therefore, we conclude that
the Fund is entitled to indemnification from UsFEG for all
compensation and medical benefits paid to Chaney by the Fund.

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1ssuE 3
Is Chaney entitled to attorney fees and coste?
Chaney contends that he is entitled to reasonable attorney
fees and costs pursuant to § 39-71-6112, MCA (1983), which provides:
In the event an insurer denies Liability for a claim
for compensation... . and the clain is later adjudged
compensable by the workers! compensation judge or on
appeal, the insurer shall pay reasonable costs and
attornéys' fees as established by the workers!
compensation judge.
In thie case, Owens! insurer, USF&G, denied liability for benefits
which have now been adjudged compensable. Therefore, we conclude
that Chaney is entitled to attorney fees and costs and we remand to
the Workers’ Compensation Court for a determination of reasonable
attorney fees and costs.

For these reasons, we reverse the order and judgment of the

Workers’ Compensation Court.

 

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