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No. 99-521 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

2000 MT 216N 

RICK EASTMAN, 

Petitioner and Appellant,

v.

INSURANCE COMPANY OF NORTH AMERICA,

Respondent and Insurer for

FAMILIAN NORTHWEST,

Employer.

APPEAL FROM: Workers' Compensation Court, State of Montana 

The Honorable Mike McCarter, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

R. Russell Plath; Halverson, Sheehy & Plath, Billings, Montana

For Respondent:

Leo S. Ward; Browning, Kaleczyc, Berry & Hoven, Helena, Montana

Submitted on Briefs: January 13, 2000 

Decided: August 10, 2000

Filed:

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__________________________________________

Clerk

Justice W. William Leaphart delivered the Opinion of the Court. 

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal Operating 

Rules, the following decision shall not be cited as precedent but shall be filed as a public 

document with the Clerk of the Supreme Court and shall be reported by case title, 

Supreme Court cause number, and result to the State Reporter Publishing Company and to 

West Group in the quarterly table of noncitable cases issued by this Court.

¶2 Appellant Rick Eastman (Eastman) appeals from the judgment of the Workers' 

Compensation Court, determining that Eastman was not entitled to rehabilitation benefits 

for his vo-tech training and that he was not entitled to attorney fees and costs. We affirm.

¶3 The sole issue on appeal is whether the Workers' Compensation Court erred in 

determining that Eastman was not entitled to 104 weeks of rehabilitation benefits for a 

two-year Major Appliance Repair and HVAC vo-tech program when the insurer did not 

formulate a rehabilitation plan for Eastman and the court found Eastman's rehabilitation 

plan did not represent reasonable vocational goals and reemployment and wage potential 

pursuant to § 39-71-2001(1), MCA (1991).(1)

Standard of Review 

¶4 This Court employs two standards of review for Workers' Compensation Court 

decisions: Findings of Fact are reviewed to determine if they are supported by substantial, 

credible evidence, and conclusions of law are reviewed to determine if they are correct. 

See Turjan v. Valley View Estates (1995), 272 Mont. 386, 390, 901 P.2d 76, 79 (citation 

omitted).

Factual and Procedural Background

¶5 In 1992, Eastman suffered an employment-related back injury. His employer, Familian 

Northwest, was insured by Insurance Company of North America (North America). North 

America accepted liability and paid him medical and wage-loss benefits. In 1994, he 

underwent surgery for the injury and was subsequently rated at a 20% impairment level. 

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¶6 Eastman's time-of-injury job had been classified as heavy labor, and after his injury he 

was restricted to light to medium work, precluding him from returning to his time-ofinjury job. Eastman received temporary total disability benefits until December 1993, 

when he began receiving partial disability benefits. At that time, North America told 

Eastman to contact them if he was interested in retraining, but the issue of retraining or 

rehabilitation did not arise until 1996.

¶7 In August 1996, Eastman's attorney contacted a representative of North America, 

Michele Fairclough (Fairclough), requesting initiation of "temporary total rehab benefits." 

In November 1996, Eastman and his attorney spoke to Fairclough and informed her that 

Eastman was meeting with the State's vocational rehabilitation agency to develop a 

retraining plan for small appliance repair. Eastman's counsel memorialized the 

conversation in a letter to Fairclough dated November 4, 1996 as follows:

[Eastman] is meeting with SRS to develop a rehab plan for small appliance repair. 

He is going to provide the information to me which I will then forward to you. It is 

my understanding that CIGNA will initiate Total Rehab benefits once Rick is 

enrolled in a full-time retraining plan, and that the job he is retraining to has been 

approved by his treating physician.

In January 1997, Eastman began a two-year associate's degree program at the Billings Votech in Major Appliance Repair and heating, ventilation and air conditioning (HVAC) 

(hereinafter "vo-tech program"). The first year of the program was devoted to major 

appliance repair and the second year consisted of the HVAC program. He informed 

Fairclough of his intention of pursuing this program in December 1996.

¶8 In February 1997, Fairclough referred Eastman's file to Crawford and Company 

(Crawford), a rehabilitation provider, to determine whether major appliance and HVAC 

repair were consistent with Eastman's physical restrictions. Patricia Murray (Murray), a 

Crawford employee, prepared a job analysis for major appliance service technicians and 

forwarded it to Eastman's treating physician, who disapproved the position because 

Eastman could not tolerate the physical demands required of the service position.

¶9 When Eastman discovered his physician had disapproved the program, he asked his votech instructor Dave Foster (Foster) to help him convince Crawford that he would be 

employable in HVAC sales upon graduating from the program. In April 1997, Murray met 

with Eastman and Foster to discuss the type of employment Eastman could expect to find 

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upon graduation. Foster said that vo-tech graduates had a 100% placement rate and that 

20% of graduates found jobs in sales rather than service positions.

¶10 Eastman's physician approved the sales position because it required only light labor. 

Once the sales position was medically approved, Murray conducted labor market research 

to determine the availability of HVAC sales positions. She searched for positions only in 

Billings, because Eastman had indicated his unwillingness to relocate. She found that 

Foster's claim that 20% of vo-tech graduates found sales positions was not true in the 

Billings area. Based on Murray's findings, North America rejected the vo-tech program 

and provided no further rehabilitation services and did not pay rehabilitation benefits.

¶11 Eastman contested North America's denial of rehabilitation benefits and petitioned the 

Workers' Compensation Court for payment of the vo-tech program and also requested 

attorney fees and costs. The court held trial on the matter on February 2, 1998, after 

Eastman had completed his first year of training, and again on April 26, 1999, after 

Eastman had graduated from the vo-tech program. At the close of the first phase of the 

trial, the court ruled from the bench that under Eastman's rehabilitation plan-attending the 

vo-tech program-he would only be eligible for HVAC service jobs exceeding his physical 

abilities because sales positions were virtually nonexistent in Billings and that his plan 

was unreasonable in light of Eastman's physical restrictions. The judge encouraged the 

parties to work together to develop and implement a new plan and postponed a final 

decision until the parties had agreed upon a new plan.

¶12 In April 1998, the parties informed the court that Eastman had decided to go ahead 

with the vo-tech program and was unwilling to consider alternative options. The parties 

had agreed that rehabilitation assistance would cease at this point and that North America 

would offer Eastman rehabilitation assistance in finding employment upon graduation.

¶13 Eastman received his degree in December 1998. Upon graduation, he renewed his 

petition to the Workers' Compensation Court to retroactively award rehabilitation benefits 

for the vo-tech program. The court agreed to a hearing on the issue of benefits for his job 

search but ordered that "I do not intend to reopen or reconsider my . . . finding the HVAC 

program inappropriate."

¶14 At the second phase of the trial, Eastman testified that he had not been able to find 

employment in a sales position following graduation. Instead, in February 1999, he and his 

wife purchased a building and opened their own business-The Appliance Shack. Eastman 

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buys used appliances, reconditions them, and sells them. Eastman testified that this work 

does not exceed his physical restrictions.

¶15 The court found that Eastman's degree program did not assist him in opening this 

business and further that his rehabilitation plan had not been reasonable in any case. The 

court found that North America had not acted unreasonably in refusing to pay 

rehabilitation benefits. The court noted that Eastman had not been interested when North 

America initially approached him about a rehabilitation program. When Eastman decided 

he wanted retraining, the court found that North America acted reasonably in approving 

his plan subject to medical confirmation and that the potential job would be appropriate in 

light of his physical restrictions. The court also found that North America acted reasonably 

in conducting additional research when Eastman changed his plan from small appliance 

repair to major appliance/HVAC service/sales and ultimately concluding that this field 

was not vocationally appropriate.

¶16 The court concluded that Eastman was not entitled to 104 weeks of rehabilitation 

benefits for the vo-tech program. The court also denied Eastman's request for attorney fees 

and costs.

Discussion 

¶17 Did the Workers' Compensation Court err in determining that Eastman was not 

entitled to 104 weeks of rehabilitation benefits for a two-year Major Appliance Repair and 

HVAC vo-tech program when the insurer did not formulate a rehabilitation plan for 

Eastman and the court found Eastman's rehabilitation plan did not represent reasonable 

vocational goals and reemployment and wage potential pursuant to § 39-71-2001(1), MCA 

(1991)? 

¶18 Eastman argues that North America failed to prepare a rehabilitation plan, which is a 

prerequisite to obtaining rehabilitation benefits under § 39-71-2001(1), MCA. He urges 

that we adopt the rule that when a vocational consultant fails to prepare a rehabilitation 

plan, the injured worker should be allowed to present a plan to the court. Eastman argues 

that the worker's plan should be approved unless the insurer can establish by clear and 

convincing evidence that the worker's plan does not have a reasonable vocational goal that 

will provide for reemployment and wage potential. Eastman contends that the "clear and 

convincing" standard should be imposed as a penalty when the designated vocational 

consultant does not prepare a rehabilitation plan. 

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¶19 We agree with North America that Eastman's claim is disingenuous. The record 

clearly shows that Eastman was determined to pursue his rehabilitation plan-the vo-tech 

program-and showed no interest in an alternative rehabilitation plan. Even after the court 

found that Eastman's plan was unreasonable and ordered the parties to work out a new 

plan, Eastman continued with the vo-tech program and was unable to work out another 

plan with the rehabilitation provider. The insurer in this case did not attempt to prevent the 

rehabilitation provider from formulating a rehabilitation plan. Any attempt to formulate an 

alternative rehabilitation plan would have been futile in light of Eastman's determination 

to finish the vo-tech program. The need to "punish" the insurer for not formulating a 

rehabilitation plan by adopting a "clear and convincing" standard does not arise under 

these facts.

¶20 Further, Eastman's contention that the lack of a rehabilitation plan prepared by the 

rehabilitation provider was somehow attributable to North America's control and direction 

of Crawford lacks merit. The record reflects that Fairclough did not attempt to control 

Crawford's evaluation of Eastman's plan. 

¶21 We note that Eastman was allowed to present his rehabilitation plan to the Workers' 

Compensation Court, just as Eastman urges should be done when the rehabilitation 

provider does not prepare a rehabilitation plan. The parties operated under the defacto 

rehabilitation plan formulated by Eastman-the vo-tech program-and the court reviewed 

that plan as if it had been a plan prepared by a rehabilitation provider. Upon reviewing 

Eastman's rehabilitation plan, the court found the plan unreasonable because Eastman was 

physically unqualified for HVAC service and because no job market existed in Billings for 

HVAC sales. We decline Eastman's suggestion that we adopt the Leastman decision, a 

Workers' Compensation Court decision that was not appealed and was in fact followed in 

this case. Here, the Workers' Compensation Court engaged in judicial review of Eastman's 

rehabilitation plan despite the fact that the rehabilitation provider did not formulate a plan. 

¶22 We turn next to the issue of whether the Workers' Compensation Court's 

determination that Eastman's rehabilitation plan was not reasonable was supported by 

substantial and credible evidence. Eastman contends that it was not and that he had proven 

at trial that he had a reasonable vocational goal at the time he started the vo-tech program, 

that he proved that his earning capacity had been substantially reduced due to a job-related 

disability, that his earning capacity could be substantially improved by furthering his 

education, and that he was qualified by training for the program he enrolled in. North 

America counters that substantial and credible evidence was presented demonstrating that 

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Eastman's plan was unreasonable and would not result in reemployment and wage 

potential, and that Eastman's insistence on finishing the vo-tech program was unreasonable 

in light of the Workers' Compensation Court's disapproval of the program.

¶23 Section 39-71-2001(1)(c), MCA, states in relevant part that a rehabilitation plan must 

show that "the injured worker has reasonable vocational goals and a reemployment and 

wage potential with rehabilitation." When his physician disapproved the HVAC service 

position, Eastman changed his plan to HVAC sales even though he had no sales 

experience, no concept of the labor market, and the vo-tech program did not include any 

sales component. While Eastman's witness Walter Ware, a vo-tech instructor, agreed with 

Foster that approximately twenty percent of the vo-tech program's graduates found jobs in 

sales positions, he also testified that he was not aware of anyone with Eastman's physical 

restrictions working in a sales position and that the vo-tech currently had no listings for 

HVAC sales on its job board. Eastman also admitted that he was not aware of anyone with 

his physical restrictions working in HVAC sales. A review of the transcript shows that 

North America presented several industry witnesses who testified that HVAC sales 

positions were unavailable in Billings and that HVAC service jobs required lifting beyond 

Eastman's 50-pound limitation.

¶24 Eastman also contends that the Workers' Compensation Court's finding was not 

supported by substantial and credible evidence because he was working within his 

physical restrictions at the Appliance Shack and that the venture had been successful for 

him. The Workers' Compensation Court found that even if Eastman was working within 

his physical restrictions at the Appliance Shack, the vo-tech program was not a reasonable 

rehabilitation plan. We agree. Eastman had the training to repair major appliances from his 

year of vo-tech training in 1981 and testified that he had done such work in the past. He 

was not performing HVAC repair at the Appliance Shack. The record shows that Eastman 

could have opened the Appliance Shack without the vo-tech program, particularly without 

the second year of the program. 

¶25 Finally, we reject Eastman's equitable estoppel claim. The case cited by Eastman, 

Kuzura v. State Fund (1996), 279 Mont. 223, 231, 928 P.2d 136, 141, states that "[e]

quitable estoppel applies when an employer or insurer has taken some positive action 

which either prevents a claimant from filing a timely claim or leads the claimant 

reasonably to believe she need not file such a claim." In Turjan v. Valley View Estates 

(1995), 272 Mont. 386, 395, 901 P.2d 76, 82 (citation omitted), we further held that "'the 

party . . . to be estopped [must] have knowledge that he is misleading the claimant and an 

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intention to mislead the claimant to his detriment.'" Based on our finding that North 

America did not prevent the rehabilitation provider from formulating a rehabilitation plan 

for Eastman and that the denial of rehabilitation benefits for Eastman is attributable to his 

insistence on pursuing the vo-tech program despite the fact that the Workers' 

Compensation Court had found that plan unreasonable, the doctrine of equitable estoppel 

does not arise under these circumstances. North America neither prevented Eastman from 

pursuing any benefits nor misled Eastman to his detriment.

¶26 The judgment of the Workers' Compensation Court is affirmed.

/S/ W. WILLIAM LEAPHART

We concur: 

/S/ J. A. TURNAGE

/S/ JAMES C. NELSON

/S/ JIM REGNIER 

/S/ KARLA M. GRAY

Justice William E. Hunt, Sr. dissents from the majority opinion.

¶27 The majority opinion allows an insurer to wait and watch while an injured worker 

attempts on his own to rehabilitate himself and then pounce out at the last minute, just in 

time to avoid payment. Under the majority's decision, an insurer bears no risk but has 

everything to gain if the rehabilitation provider ignores its statutory obligations.

¶28 The Workers' Compensation Act provides no remedy for an injured worker who 

clearly is entitled to rehabilitation benefits, but the insurer refuses to allow a rehabilitation 

plan to be prepared. Whenever an insurer, or the rehabilitation provider it hires and pays 

for, fails to provide a rehabilitation plan for an injured worker, that injured worker must 

necessarily have the option of submitting his own rehabilitation plan. To hold otherwise 

would allow an insurer to effectively deny benefits to a deserving injured worker by 

simply not filing a rehabilitation plan. 

¶29 The majority's premise that Eastman's uncooperativeness justifies the rehabilitation 

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provider's failure to formulate a rehabilitation plan ignores statutory law. Section 39-71-

2001(6), MCA (1991), expressly provides that the rehabilitation provider "shall continue 

to work with and assist the injured worker until the rehabilitation plan is completed." The 

statutory obligation to prepare a rehabilitation plan rests squarely with the designated 

rehabilitation provider. Further, if at any point in this process the insurer feels the injured 

worker is uncooperative, it may give a 14-day notice to the worker prior to termination of 

rehabilitative benefits. Section 39-71-1032, MCA (1991). Non-cooperation does not 

relieve the rehabilitation provider of its duty to provide a rehabilitation plan.

¶30 Here, the rehabilitation provider has never provided Eastman with a rehabilitation 

plan. Rather, the insurance company is allowed to attack Eastman's proposed plan without 

providing any alternatives. The majority seems to find something deplorable in Eastman's 

determination to rehabilitate himself while ignoring the rehabilitation provider's failure to 

comply with its statutory obligations. This line of reasoning ignores that it is the obligation 

of the insurer and the rehabilitation provider it hires, not the injured worker, to provide 

rehabilitative services. 

¶31 I would reverse the Workers' Compensation Court's decision.

/S/ WILLIAM E. HUNT, SR.

1. Unless otherwise noted, the 1991 code is cited throughout this Opinion. 

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