NO. 95-390

IN THE SUPREME COURT OF THE STATE OF MONTANA

1996

CINDY MINTYALA,

Claimant and Appellant,

v.

STATE COMPENSATION INSURANCE FUND,

Defendant and Respondent,

and

CENTRAL MONTANA MEDICAL CENTER,

Employer.

APPEAL FROM: Workers' Compensation Court, State of Montana

The Honorable Mike McCarter, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Andrew J. Utick, Utick & Grosfield, Helena, Montana

For Respondent:

Daniel J. Whyte, State Compensation Insurance Fund,

Helena, Montana

Filed:

Submitted on Briefs: March 14, 1996

Decided: May 10, 1996
Justice William E. Hunt, Sr., delivered the Opinion of the Court.

Cindy Mintyala petitioned the Workers' Compensation Court for

a hearing after the State Compensation Insurance Fund terminated

her temporary total disability benefits. Prior to trial, the Fund

filed a motion to dismiss, which the Workers' Compensation Court

granted. Mintyala appeals.

We reverse and remand.

Appellant raises the following issue: Did the Workers'

Compensation Court err in granting the State Fund's motion to

dismiss Mintyala's petition for a hearing?

FACTS

In Mintyala's petition for hearing, she alleges that in August

1991 she injured her back and neck in the course and scope of her

employment as a certified nurses assistant while employed with the

Central Montana Medical Center. At the time of injury, her

employer was insured by the State Compensation Insurance Fund (the

Fund). Initially, the Fund accepted liability and paid out

temporary total disability and various medical benefits.

Three years later, the Fund notified Mintyala that it would be

terminating her benefits as of September 21, 1994. Mintyala filed

a petition for mediation pursuant to § 39-71-2401, MCA, but the

matter was not resolved. Following surgery on her back, Mintyala

submitted a petition for a hearing to the Workers' Compensation

Court in February 1995.

The petition alleges; (1) the Fund had unreasonably terminated

Mintyala's temporary total disability benefits based upon illegally

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obtained medical reports; (2) the Fund had unreasonably refused to

reinstate Mintyala's temporary total disability benefits, even

though she had undergone surgery on her back January 31, 1995, and

the Fund had accepted liability for the surgery; and (3) the Fund's

conduct had been unreasonable in that when the Fund terminated

Mintyala's benefits, it did not pay out permanent partial

disability that the "illegally obtained medical reports indicated

she was entitled to." The petition then requested an award of

temporary total disability benefits, (retroactive to the date of

termination), a penalty and reasonable costs and attorney fees.

Following discovery, the Fund notified Mintyala that she would

be placed back on temporary total disability benefits retroactive

to the date such benefits were terminated. On April 12, 1995, the

Fund made payment for the period between September 23, 1994 through

April 17, 1995. The Fund then filed a motion to dismiss Mintyala's

petition because it had accepted liability.

The Workers' Compensation Court held a hearing on the Fund's

motion to dismiss in June 1995. At that hearing, the Fund

acknowledged liability for medical benefits and temporary total

disability, and represented that it was current in the payment of

benefits and that benefits would continue to be paid. At that

point claimant's counsel, Andrew Utick, stated his belief that

attorney fees and penalty were still at issue.

The court disagreed and ruled that a recent decision from the

Workers' Compensation Court controlled, thus precluding attorney

fees or a penalty. Paulsen v. Entech Inc. WCC. No. 9209-6591

3
(February 22, 1994). That decision was later appealed and affirmed

by this Court but Paulsen had been decided pursuant to Section I,

Paragraph 3 (c), of the Montana Supreme Court 1988 Internal

Operating rules, meaning the case is not available for future

precedent. Paulsen V. Entech Inc. (1994), 888 P.2d 432.

After the hearing on the Fund's motion to dismiss, the

Workers' Compensation Court issued a written order reflecting it's

decision. According to the written order, the court decided

Mintyala's entitlement to temporary total benefits and medicals was

moot because of the representations of the Fund, leaving only

Mintyala's claims for attorney fees and a penalty. The court then

decided "as a matter of law" Mintyala was not entitled to either

attorney fees or a penalty based on the Fund's acceptance of

liability for benefits prior to trial or judgments.

Mintyala appeals the Workers' Compensation Court's order

dismissing her petition.

STANDARD OF REVIEW

The procedural history of this case presents a threshold issue

regarding the appropriate standard of review.

The Fund contends that its motion to dismiss was filed

pursuant to the administrative rules that govern the Workers'

Compensation Court and therefore the correct standard of review is

whether the court abused its discretion in deciding to dismiss the

petition citing Doug John's Real Estate V. Banta (1990), 246 Mont.

295, 298, 805 P.2d 1301, 1303.

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The Fund contends that Rule 24.5.316, ARM, controls motions to

dismiss. The portion of that rule that specifically mentions

"motion to dismiss" reads as follows:

Unless a different time is specified in these rules, the

time for filing any motion to amend a pleading, to

dismiss, to quash, for summary ruling, to compel, for a

protective order, in limine, or for other relief shall be

fixed by the court in a scheduling or other order.

Rule 24.5.316(l), ARM. Read in its entirety, the rule deals with

motions in general. The rule does not mention a standard of

review, discretionary or otherwise, to be used by the court in the

disposition of motions to dismiss. Furthermore, the case cited by

the Fund, Douq John's Real Estate, deals with Rule 41(b),

M.R.Civ.P. That case involves a cause of action that was

involuntarily dismissed for failure to prosecute or comply with a

court order. The issue presented in this case does not involve

Rule 41(b), M.R.Civ.P., therefore the Doug John's Real Estate case

is not applicable.

The administrative rules do provide the Workers' Compensation

Court with the discretionary power to dismiss petitions. The

relevant regulation reads as follows:

(I) In the discretion of the court, informal disposition

may be made of a dispute or controversy by stipulation,

agreed settlement, consent order, or default.

Rule 24.5.333, ARM. The question of informal disposition was

raised in this matter but, counsel argued that under the

circumstances of this case, informal deposition was not applicable:

MR. UTICK: My argument, I said I had an argument in the

brief with respect to the rules. Under your rules it

provides the methods by which you can make an informal

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disposition of the case and it doesn't provide for

unilateral concession barring the other party from

proceeding. . . For example, in the district court, in

order to dismiss, you can dismiss the case unilaterally

until a Response of Pleading is filed....

THE COURT: . . . The informal disposition as I see it is

where there's still something in controversy; but if - -

MR. UTICK: Well, there is

THE COURT: What?

MR.UTICK: Penalty and attorneys' fees.

THE COURT: Okay, as a matter of law you're not entitled

to it under the Paulsen ruling, and I'm not going to

reverse myself on Paulsen. That's an appealable order.

MR. UTICK: Well, then you've ruled.

THE COURT: Right, I'm ruling on that. I'll rule on that

as a matter of law; and that can be appealable.

Pursuant to the language of the rule, an informal disposition of a

motion would be reviewed under an abuse of discretion standard. In

this case, however, the parties did not stipulate to the motion,

nor was there an agreed settlement, consent order or default as

required under the regulation. Therefore, the motion could not be

dismissed informally.

The Workers' Compensation Court order in this matter expressly

concluded that a previous case controlled and that as a “matter of

law" the court was dismissing the petition. Because this was not

an informal disposition, we will not review this matter for an

abuse of discretion. Rather, this Court will review the Workers'

Compensation Court's conclusions of law to determine if the court's

determination of the law is correct. Glaude v. State Comp. Ins.

Fund (1995), 271 Mont. 136, 137, 894 P.2d 940, 941.

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DISCUSSION

In the Workers' Compensation Court order dismissing Mintyala's

petition, the court found that based on the representation of the

attorney for the Fund that the claimant's claim for temporary total

disability benefits was moot. Leaving only the remaining claims

for attorney fees and a penalty, the court then decided "as a

matter of law," the claimant was not entitled to either since the

Fund had accepted liability for benefits prior to trial or

judgment, again citing Paulsen v. Entech. However, because that

decision was classified as non-citable, that case is not binding on

this Court.

We must therefore look to other cases for guidance in deciding

whether the Workers' Compensation Court improperly granted the

Fund's motion to dismiss, thereby dismissing the additional issues

of attorney fees and a penalty.

First we turn our attention to the issue of a penalty. It has

long been held that the statutes in effect on the date of the

claimant's injury must be applied when determining benefits.

Buckman v. Montana Deaconess Hosp. (1986), 224 Mont. 318, 321, 730

P.2d 380, 382. In this case, Mintyala was injured in August 1991,

therefore the 1989 penalty applies. The applicable statute reads

as follows:

increase in award for unreasonable delay or refusal to

pay. (1) 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

workers' compensation judge granting a claimant

compensation benefits, the full amount of the

compensation benefits due a claimant between the time of

compensation benefits were delayed or refused and the

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date of the order granting a claimant compensation

benefits may be increased by the workers' compensation

judge by 20%. 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.

Section 39-71-2907, MCA (1989).

On appeal, Mintyala argues that the rule of law in Handlos v.

Cyprus Industrial Minerals (1990), 243 Mont. 314, 794 P.2d 702

applies. In Handlos, the claimant appealed an order of the

Workers' Compensation Court declining the imposition of a penalty.

The insurer initially denied liability for claimant's 1987 injury,

but then accepted liability five months later. Insurer attributed

the delay to concerns that the claimant’s injury was not workrelated. A trial was held to dispose of the issue of payment of

certain medical bills for treatment, as well as the issue of

whether the delays in payment were unreasonable. The Workers'

Compensation Court concluded that because the insurer had accepted

liability for treatment before any court order was issued, the

court was barred from awarding a penalty.

On appeal, this Court disagreed. We held that the lower

court's interpretation of § 39-71-2907, MCA, rendered the statutory

reference to "unreasonable delay" as mere surplusage. Handlos, 794

P.2d at 703. This Court then stated that such an interpretation

would create a situation where an insurer was capable of avoiding

a penalty if it accepted liability at any time prior to the

issuance of an order by the court because "there would be no order

8
for benefits making possible consideration of a penalty."

Consequently, the words "unreasonably delayed" would become

meaningless in the statute.

This Court then looked to other provisions in the Workers'

Compensation Act regarding the purpose of the Workers' Compensation

Court system. The system was designed to enable claimants to

"speedily obtain benefits" and to "minimize the reliance on

lawyers." Section 39-71-105(3), MCA (1989). The Court then held

that "[iln light of that purpose and in order to give effect to all

provisions of the statute, we conclude that the penalty is

available where an insurer unreasonably delays payment until the

claimant takes the case to trial." Handlos, 794 P.2d at 703. In

other words, the penalty provision is available to the claimant

from the moment the insurer's delay in payment becomes

unreasonable.

The Fund also refers to the Handlos case. However, the Fund

relies on this case as authority for the proposition that the

Workers' Compensation Court has limited authority to award a

penalty. In Handlos, this Court stated that a penalty could be

awarded when payment of benefits has been "unreasonably delayed

until mid-trial." Handlos, 794 P.2d at 704. The Fund argues that

since it paid out benefits before "mid-trial," the court could not

award a penalty. This may be the language of the opinion, but to

literally limit the Workers' Compensation Court's authority to

award a penalty, would ignore the intent of the Handles opinion.

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The wording "mid-trial" is to be used as a guide not as a

prerequisite.

Moreover, subsequent to the Handlos decision, this Court has

stated that "[playment of unreasonably withheld benefits 'on the

courthouse steps' does not negate the insurer's potential liability

for a penalty for unreasonable delay of benefits. To conclude

otherwise would render the penalty statute moot." Love11 v. State

Comp. Mut. Ins. Fund (1993), 260 Mont. 279, 289, 860 P.2d 95, 102.

The Fund asserts that this Court has held that the Workers'

Compensation Court cannot award a penalty if the insurer concedes

liability prior to trial, citing to Field v. Sears Roebuck (1993),

257 Mont. 81, 847 P.2d 306. In that case, the court did not award

a penalty because no award of permanent total disability was

ordered "that would serve as a basis for a penalty under Section

39-71-2907, MCA." - I Field 847 P.2d at 310. The Field case,

however, is factually distinguishable. There, the court held a

trial in which it was given the opportunity to decide if

unreasonable delay occurred. In Field this Court concluded that

"[ulnreasonable delay is a question of fact to be determined by the

trier of fact; we will not reverse the Workers' Compensation

Court's decision on awarding a penalty if the decision is supported

by substantial credible evidence." Field, 047 P.2d at 310.

Throughout the many revisions to the penalty statute, the

language regarding "unreasonable delay II has remained basically the

same. Regardless of what version of the statute this Court has

interpreted we have concluded that the penalty statute should be

10
made available "where an insurer acts unreasonably to deny benefits

to which a claimant is legally entitled the statutory penalty

should be imposed." Plooster v. Pierce Packing Co. (1993), 256

Mont. 287, 291, 846 P.2d 976, 978 (citing Holton v. F.H. Stoltze

Land & Lumber Co. (1981), 195 Mont. 263, 267-68, 637 P.2d 10, 13).

Furthermore, this Court consistently held that the determination of

whether there was an unreasonable delay in payments of benefits by

the insurer is a factual question. Handlos, 794 P.2d at 704;

Lovell, 860 P.2d 95.

As a factual question, we conclude that the question of a

penalty in this matter is not amenable to dismissal by conclusion

of law, and remand the matter for a factual determination of

reasonableness. On remand, the court should also reconsider

whether an award of attorney fees and costs is warranted under 5

39-71-611, MCA.

Remanded for further proceedings consistent with this opinion.

We Concur: /Y11