No. 87-168 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

ELAINE A. SEDLACK, 

Claimant and Appellant, 

-vsBIGFORK CONVALESCENT CENTER, 

Employer, 

and 

CHURCH MUTUAL INSURANCE, 

Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Trieweiler Law Firm; Terry N. Trieweiler argued, 

Whitefish, Montana 

For Respondent : 

Keller, Reynolds, Drake, Sternhagen & Johnson; G. 

Curtis Drake argued, Helena, Montana 

Submitted: November 30, 1987 

Decided : February 10, 1988 

Filed: 0 1988 

- Clerk 
Mr. Justice John Conway Harrison delivered the Opinon of the 

Court. 

Elaine Sedlack, a registered nurse, appeals the Workers' 

Compensation Court's judgment denying her permanent partial 

disability benefits under 5 39-71-703, MCA (1983). ~e 

reverse the judgment and remand the matter to the Workers' 

Compensation Court. 

Sedlack worked four days per week at the Bigfork 

Convalescent Center in January, 1983; she chose not to work a 

full five-day work week. On January 14, 1983 she injured her 

back when she jumped away from a patient who tried to kick 

her. She saw a doctor about the injury and was told to rest 

her back. She got one week's worth of bedrest before 

returning to work at the convalescent center. She earned 

$8.05 per hour at the time she was injured. She continued to 

work at the convalescent center until January 1984, when she 

resigned so she could accept a job with the Flathead County 

Health Department as a nurse who visits homebound patients. 

In May, 1986, she earned $8.50 per hour in the new job and 

she would have liked to work a five-day work week because of 

the number of cases. 

Dr. George Ingham, an orthopedic surgeon, is treating 

her for her back injury, which he initially thought was an 

early onset of sciatica. When Sedlack's back pain flared in 

1 The cited section was amended by the 1987 Legislature. 

It now makes an award of permanent partial disability 

"66 2/3% of the difference between the worker's actual 

wages received at the time of the injury and the wages 

the worker is qualified to earn in the worker's job 

pool, subject to a maximum compensation rate of one-half 

the state's average weekly rate at the time of the 

injury." 
September, 1985, he ordered her to rest up. She did not work 

from September 23, 1985 to October 8, 1985, during which time 

the respondents paid temporary total disability benefits. 

Dr. Ingham advised Sedlack after this spell that she should 

not work more than four days per week. On March 13, 1986, 

Sedlack filed for permanent partial disability benefits of 

$102.78 per week for 500 weeks under 5 39-71-703, MCA. The 

parties later agreed that $110.72 per week was the proper 

disability rate. Dr. James Burton, also an orthopedic 

surgeon, examined Sedlack for the respondents. He testified 

via deposition that he believes Sedlack is suffering nerve 

damage from a slipped disk. Dr. Ingham testified by 

deposition that he believes the problem is degenerative disk 

disease compounded by the injury. Neither doctor submitted 

an impairment rating. 

Norm Johnson, a Job Service counselor, also testified 

via deposition on behalf of Sedlack. He said the injury has 

reduced the percentage of jobs she could compete for in 

Flathead County from 53 percent to 17 percent, a 68 percent 

reduction. He conceded, however, that he did not foresee 

that Sedlack would have to settle for a job paying less than 

her current situation. 

On May 21, 1986 a hearings officer heard testimony in 

the case. He subsequently filed "findings of facts and 

conclusions of law" that the Workers' Compensation Court 

adopted on March 6, 1987. However, the hearings officer did 

not make findings of fact, he only recited the testimony that 

had been presented. Thus, we have at least three possible 

"findings" as to the nature of the injury: 

11. Dr. Ingham's initial impression was 

that the claimant had early sciatica. 
17. Dr. James R. Burton . . . told her 

he thought she had a slipped disk that 

was pressing on the ligaments causing 

them to go into spasm and affecting the 

nerves . . . 

18. Her treating physician, Dr. Ingham, 

diagnosed her condition as being a 

combination of degenerative disk disease 

and the industrial injury. . . 

But we do not have an indication that one of these is to be 

accepted to the exclusion of the other two. Although it is 

vital that findings of fact be based on the evidence 

presented, it is equally crucial that the findings be 

consistent and support the same conclusions of law. Rules 

52 (a) , 53 (e) , M.R.Civ.P. These recitals of testimony fail 

that requirement. 

In the conclusions of law, the hearings officer stated: 

- The claimant - did establish - that - she 

suffered an injury arising - and occurring 

-- in the course -- of her em~lovment L L -- with the 

Bigfork Convalescent Center. The claim 

was accepted as compensable by the 

defendant Church Mutual Insurance Company 

who paid temporary total disability 

benefits from September 23, 1985 through 

October 8, 1985. There is no dispute 

that the claimant is as far restored as 

the permanent character of her injuries 

willTpermit. However, --- she has not proven 

by a preponderance of the credible 

evidence that she has an actual -- loss of 

earnings to support an award of permanent 

partial disability benefits under Section 

39-71-703, MCA. No evidence was 

presented as to the wage being paid the 

position she held with the Bigfork 

Convalescent Center as found necessary in 

McDanold v. B.N. Transport, Inc., - 

Mont . , 679 P.2d 1188 (1984). 

The trial in this case was held 

approximately one month prior to the 

Montana Supreme Court decision of -- Dunn v. 
Champion International Corporation, 43 

St.Rep. 1124 (1986) which held that a 

claimant in similar circumstances was not 

entitled to permanent partial disability 

benefits as an actual loss of earnings 

when in fact she was able to earn as much 

or more than she was earning at the time 

of the injury. (Emphasis added.) 

Thus, the Workers' Compensation Court entered judgment 

denying Sedlack permanent partial disability benefits on 

March 6, 1987. 

Sedlack presents two issues on appeal: Does 

§ 39-71-703, MCA, require her to prove an actual wage loss or 

only a reduction in her earning capacity? Is there 

substantial evidence to support the Workers' Compensation 

Court's conclusion that she had sustained no permanent 

partial disability when she had proven she was capable of 

working five days a week before the injury, but restricted to 

four days of work each week after the injury? 

The respondents, in turn, argue that the judgment should 

be affirmed since there was sufficient credible evidence to 

support the Workers' Compensation Court's conclusion that 

Sedlack had not suffered a wage loss. Resolution of 

Sedlack's first issue is dispositive of this case. 

Section 39-71-703(1), MCA, as it read before its 

amendment in 1987, controls since Sedlack's injury occurred 

in 1983. See, Buckman v. Montana Deaconess Hospital (Mont. 

1986), 730 P.2d 380, 382, 43 St.Rep. 2216, 2218. That 

section provided: 

(1) Weekly compensation benefits for 

injury producing partial disability shall 

be 66 2/3% of the actual diminution in 

the - -- worker's . earning capacity measured . in 

dollars, subject to a maximum weekly 

compensation of one-half the state's 

average weekly wage . . . (Emphasis 

added. ) 
This Court defined impairment of earning capacity in a 

personal injury context as "the permanent diminution of the 

ability to earn money in the future." Thomas v. Whiteside 

(1966), 148 Mont. 394, 397, 421 P.2d 449, 451. Earning 

capacity is not determined by comparing pre-injury wages with 

post-injury wages; it includes factors of age, occupation, 

skills and education, previous health, number of productive 

years remaining, and degree of physical or mental impairment. 

Thomas, 421 P.2d at 451. 

The correct test for loss of earning capacity, cited 

time and again, is whether the industrial accident has caused 

"a loss of ability to earn in the open labor market." 

Shaffer v. Midland Empire Packing Co. (1953), 127 Mont. 211, 

213-14, 259 P.2d 340, 342; Fermo v. Superline Products 

(1978), 175 Mont. 345, 348, 574 P.2d 251, 253; Hafer v. 

Anaconda Aluminum Co. (1982), 198 Mont. 105, 109-10, 643 P.2d 

1192, 1195, aff'd on remand 684 P.2d 1114, 41 St.Rep. 1403; 

Dunn v. Champion International Corp. (Mont. 1986), 720 P.2d 

1186, 1189, 43 St.Rep. 1124, 1128. Under this test, even the 

injured worker who earns more after his injury is eligible 

for permanent partial disability if certain conditions are 

met. Fermo, 574 P.2d at 254; Hafer, 643 P.2d at 1195-96. 

In Fermo, we noted that while claimant was earning more 

money after his injury, he also was suffering great pain that 

detracted from the speed and efficiency of his work. 

Claimant in that case worked as a loader of trucks and had 

suffered an injury to his wrist. He was further hindered 

because he was forced to compete against younger and 

healthier persons for the available work. Fermo, 574 P.2d at 

253. We affirmed an award of compensation under 92-703.1, 

RCM (1947), (later S 39-71-703(1), MCA) since there had been 

a loss of capacity to perform his work and a loss of the 

ability to compete in the open labor market. 
Respondents in the case at bar contend that because 

Sedlack was earning as much, if not more, after the accident, 

there was no credible evidence of lost earning capacity thus 

restricting her to indemnity benefits found in SS 39-71-705 

through 39-71-708, MCA.2 They argue that S 39-71-703, MCA, 

was intended to compensate the injured worker for actual, 

present loss of earning capacity, while S 39-71-705, MCA, was 

intended to compensate injured workers for possible future 

loss to their earning capacity. The respondents 

misunderstand the statutes and this Court's decisions 

concerning them. 

In McDanold v. B.N. Transport, Inc. (Mont. 1984), 679 

P.2d 1188, 41 St.Rep. 472, a truck driver suffered an ankle 

injury that prevented his return to work as a truck driver so 

he took a job at a liquor store. We held in that case that 

the claim could be filed under either $5 39-71-703, MCA, or 

S 39-71-705, MCA. McDanold, 679 P.2d at 1191, aff'd 701 P.2d 

1001, 42 St.Rep. 940. Such a claim under S 39-71-703, MCA, 

is proper so long as the compensation is proportional to the 

actual diminution of earning capacity. McDanold, 679 P.2d at 

1191. Similarly, in Hafer, we held that an ironworker who 

earned $7 an hour at the time he injured his elbow but $10 an 

hour when he filed his claim qualified for benefits under 

S 39-71-703, MCA. Hafer, 643 P.2d at 1196. The claimant's 

work was hampered by an elbow prosthesis, making him less 

efficient. This loss of efficiency in the claimant's work 

would decrease his chance of finding employment in the open 

labor market, according to his employment expert. We held 

2 Although this appeal deals with the statutes as they 

existed before July, 1987, it should be noted that 

SS 39-71-705, -706, and -707, MCA, have been repealed. 
that a diminished chance to gain employment translates into a 

reduced earning capacity and is sufficient for benefits under 

§ 39-71-703, MCA. Hafer, 643 P.2d at 1195-96. 

The decision in Dunn, cited by the hearings officer as 

authority for his conclusion that one must prove a reduction 

in earnings, does not change substantially either Hafer or 

McDanold and so is misconstrued by the Workers' Compensation 

Court. Dunn specifically acknowledges that a worker may 

receive permanent partial disability benefits despite an 

increase in pay: 

As can be seen from the recent case of 

Hafer v. Anaconda Aluminum Co. (Mont. 

1984), 684 P.2d 1114, 41 St.Rep. 1403, it 

is possible under this test for a worker 

to earn more after his injury and still 

collect disability benefits for loss - of 

earning capacity. In Hafer, the claimant 

earned more after his injury - - than before 

and yet we found that he had suffered a 

408 loss of earning capacity. (Emphasis 

supplied.) 

Dunn, 720 P.2d at 1190. 

Dunn is a case in which an injured millworker returned 

to work after surgery on her injured knees. She earned $8.38 

per hour when she injured her knees in May, 1980. She earned 

over $10 per hour at a different job in the mill in 1984. We 

reversed an award of benefits under § 39-71-703, MCA, because 

we concluded that the entirety of the evidence did not 

sustain the Workers' Compensation Court's determination that 

Dunn's injury reduced her ability to compete in the labor 

pool for jobs. The claimant testified that she felt pain, 

but could bear it; her doctor had not restricted her work 

activity. Her employment expert testified that she probably 

would face a pay cut of up to one-half if she left the mill, 

but did not allow for her ability to earn in the mill at any 

of seven jobs she was trained for. We held that the 
employment expert's refusal to consider her possible earnings 

at the mill showed that he had not analyzed her ability to 

earn in the entire, open labor market. Dunn, 720 P. 2d at 

1190. Therefore, we reversed. Dunn, 720 P.2d at 1191. 

Elaine Sedlack has suffered a diminution of her earning 

capacity, as defined by Thomas and Shaffer. Although she may 

earn more after the injury than before, the recent cases of 

Hafer, McDanold, and Dunn are consistent in saying that 

factor alone does not disqualify her for benefits under 

S 39-71-703, MCA, (1983). When coupled with her severe back 

pain, her attending doctor's recommendation that she work no 

more than four days in any given week, and the employment 

expert's statement that she now qualifies for only 17 percent 

of the jobs in the area, it is axiomatic that she has 

forfeited not only a portion of her ability to earn in her 

current situation but also her ability to find work in the 

open labor market as a whole. Section 39-71-104, MCA (1983) 

provided for a liberal interpretation of the Workers' 

Compensation Act. Therefore, we reverse and remand this case 

for more specific findings of fact, appropriate conclusions 

of law, and a judgment in keeping with this opinion. 

Furthermore, § 39-71-611, MCA (1983), provides that the 

Workers' Compensation Court make an award of reasonable 

attorney's fees to Sedlack upon a determination that her 

injuries are compensable. 
Mr. Justice L. C. Gulbrandson, dissenting. 

I respectfully dissent for the reason that the Workers' 

Compensation Court, in my opinion, had before it substantial, 

credible evidence to support its conclusion that appellant 

suffered no permanent partial disability under S 39-71-703, 

MCA . /