No. 80-464 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

DAWN M. HOCK, 

Claimant and Respondent, 

VS. 

LIENCO CEDAR PRODUCTS, Employer, 

and STATE COMPENSATION INSURANCE FUND, 

Defendant and Appellant. 

Appeal from: Workers' Compensation Court 

Honorable William E. Hunt, Judge presiding. 

Counsel of Record: 

For Appellant: 

Hon. Mike Greely, Attorney General, Helena, Montana 

Roy Andes, Assistant Attorney General, argued, Helena, 

Montana 

J. David Slovak argued, Helena, Montana 

For Respondent: 

Hoyt and Trieweiler, Whitefish, Montana 

Terry N. Trieweiler argued, Whitefish, Montana 

Submitted: June 12, 1981 

Decided: September 28, 1.983. 

Filed : SEP 2 9 19811 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

Defendant State Compensation Insurance Fund appeals 

from the order of the Workers' Compensation Court granting 

claimant Dawn Hock's petition for a lump sum award of benefits. 

The Fund presents the following issues: 

1. In disposing of or prejudicing the future interests 

of the surviving infant beneficiary, should the court have made 

the child a party and appointed a guardian ad litem? 

2. Is it proper for the Workers' Compensation Court to 

entertain a petition for a $19,000 lump sum, where a $6,000 

claim was presented to the division? 

3. Does a lump sum award of benefits in the amount of 

$19,622.72 constitute an abuse of discretion in light of 

evidence of expenses aggregating only $14,039.25? 

4. Does the failure to file an attorney fee agreement 

prior to trial forfeit the right to collect attorney fees? 

We affirm the award of the Workers' Compensation Court, 

but with some instructions to be followed in similar cases 

in the future. 

Dawn Hock is eighteen years old, and has a two-year-old 

child. She is not employed, having completed only the tenth 

grade and having no prospects of employment. She presently 

draws $186.68 per week in workersr compensation payments by 

reason of the death of her husband, Warren, which occurred 

on May 23, 1980, while he was working for defendant/employer, 

Lienco Cedar Products (his gross salary was $279 per week). 

She also draws social security benefits, giving her a monthly, 

tax-free income of more than $1,100. 

The employer was insured under compensation plan no. 3, 

by defendant State Compensation Insurance Fund. Under the 

statutes, Dawn is entitled to receive biweekly payments for 
the rest of her life; however, if she ever remarries, then 

she will receive a final, single payment equal to two-years' 

benefits, and compensation will then be stopped. Section 

39-71-721, MCA. 

Dawn's daughter, Dusty Rae, is also a beneficiary under 

the workers' compensation statutes. Section 39-71-116 (2) , 

MCA. All payments are presently made to Dawn alone, but if 

she should die or remarry, then the child will receive the 

same amount of benefits until age 18, or age 25 if a fulltime student. In considering the lump sum award to Dawn, we 

must determine the extent to which the child's contingent 

future rights are to be protected. 

Dawn initially requested a $6,000 advance on her benefits 

from the Division of Workers' Compensation. She alleged 

certain debts were causing hardship for her and the child. 

The claims supervisor tentatively agreed to the advance, 

upon the condition that the $6,000 to be advanced be deducted 

from the payment Dawn would receive in the event she remarries. 

When the claims supervisor submitted the plan for approval 

to the division administrator, it was rejected. The administrator 

required "positive protection of recovery" of the advance, 

citing the possibility that should Dawn never remarry, then 

the advance would never be recovered. The Fund offered 

another plan, which proposed to deduct $25 per week from 

Dawn's benefits until full recovery or remarriage. The new 

plan was rejected by Dawn's attorney. 

Dawn petitioned the Workers' Compensation Court for an 

emergency hearing on the lump sum dispute. In her petition, 

she asked, for the first time, for an advance of $19,622.72, 

which amount is equal to the two-years' worth of benefits 

she would receive in a single payment upon remarriage. The 

Fund moved to strike the $19,000 figure and insert the 
original $6,000 figure, on the ground that the larger sum 

had never been presented to the division and so was not a 

"dispute" the court could hear, citing section 39-71-2905, 

MCA. The Fund paid the $6,000 sum to the clerk of the 

court, and filed an offer of judgment which sets forth the 

Fund's second proposal for recovery of the advance. The 

motion to strike was never ruled upon by the court. 

In its trial brief and in the pretrial order, the Fund 

raised the issue of possible prejudice to the child's contingent future right to receive benefits. The Fund asked 

the court to join the child as a party and to appoint a 

guardian ad litem to protect the child's interests in regard 

to any scheme to recover a lump sum advance. The court did 

neither. 

At trial, Dawn testified to the following debts which 

total slightly over $14,000: 

1. New Mobile Home $6,500 

2. Automobile $4,900 

3. Funeral Expenses $806 

4. Taxes $43.75 

5. Utility Installation $433 

6. Balance Due on Old Mobile Home $780 

7. Gambles Account $50 

8. Medical Bills approximately $500. 

With regard to these debts, Dawn testified that her old 

mobile home was in need of substantial repair, necessitating 

the purchase of a new one. In a similar manner, she testified 

that she had no usable automobile and had arranged to purchase 

a satisfactory used 1978 Plymouth. Dawn testified that she 

had no medical insurance coverage for herself or her daughter. 

The child is susceptible to convulsions. 
Dawn also testified that she and her child can live on 

her $1,100 per month tax-free income, if her debts are paid. 

The only other witness at trial was the claims supervisor 

for the division. He testified the division acted in good 

faith throughout the negotiations to protect the interest of 

the child and the Fund from overpayment. He also stated 

that no attorney fee agreement had ever been filed with the 

division by Dawn's attorney as required by statute, thus 

laying the foundation upon which the Fund argues that Dawn 

is not entitled to receive attorney fees. He stated that no 

claim for $19,000 had ever been made to the division, only a 

claim for $6,000, but that the $19,000 claim would have been 

denied in any event because the point of dispute concerned 

not the amount of advance but the method of recovering it. 

The Workers' Compensation Court pointed out that lump 

sum payments are more desirable than formerly was the case. 

The court ordered that 104 weeks of claimant's future weekly 

benefits be converted into a lump sum of $19,622.72. The 

order provided that the Fund can recover the amount of this 

lump sum benefit by terminating payment of biweekly benefits 

to the claimant on the sixteenth birthday of claimant's 

child, until an amount equal to the advance provided for has 

been recovered. The order also provided that the claimant's 

attorney is entitled to attorney fees and provided that the 

court would take under consideration the question of whether 

the defendant is responsible for the fees and costs. 

A fee agreement (1/3 of award) was filed with the 

division subsequent to the hearing, but was objected to as 

not timely. 

Dawn's attorney subsequently offered to stipulate to a 

change in the method of recovery ordered by the court. The 
stipulation would have called for recovery of the advance 

out of Dawn's remarriage benefits or, if she did not remarry, 

out of her weekly benefits after the child ceased to be a 

beneficiary. The Fund did not choose to consider this 

stipulation, preferring to proceed with the appeal. 

I. 

There can be no question that an infant child of a 

widow who draws compensation benefits has a separate interest 

therein. Section 39-71-116(2), MCA, defines "Beneficiary" as 

including (a) a surviving spouse, and (b) an unmarried child 

under 18, or under 25 if a full-time student. Section 39- 

71-723, MCA, provides that compensation due to beneficiaries 

shall be paid to the surviving spouse. This Court, in 

interpreting the predecessor of the above section, has 

stated: "It is true that for the purpose of saving trouble 

and expense of guardianship proceedings the law permits the 

payment of the full amount to the widow . . . but an undivided 

portion thereof belongs absolutely to the child and is 

dedicated to its support." Cogdill v. Aetna Life Ins. Co. 

(1931), 90 Mont. 244, 257, 2 P.2d 292, 296. The court went 

on to hold that children receive first consideration under 

the act, that their interests must always be carefully 

guarded, and that "[tlhe act gives to the children such an 

interest in the compensation as can be laid hold of by the 

courts, and its ultimate disposition controlled; particularly 

is this so when such compensation assumes the shape of a 

commuted payment." (Citation omitted.) Cogdill v. Aetna Life 

Ins. Co., supra. The Workers' Compensation statutes have 

undergone substantial amendment since 1931, but the above 

quoted principles still apply because children are still 

named as separate beneficiaries and payments are still made 

only to the surviving parent. 
The court's order could result in a substantial reduction 

in benefits to the child because of the termination of 

payment of benefits at the time the child reaches sixteen 

years of age. This requires that the court consider the 

benefit to the child of the present lump sum settlement as 

compared to the prospective loss of benefits. There is the 

real possibility that the child's interest may conflict with 

the mother's at that point, and that a guardian ad litem 

would be required to protect the child's interest. 

The parties agree that Rule 17(c), M.R.c~v.P., is the 

only present authority in Montana for appointment of a 

guardian ad litem. The rules of civil procedure are not 

directly applicable to the Workers' Compensation Court, 

because the court is expressly made subject to the provisions 

of the Montana Administrative Procedure Act (section 39-71- 

2903, MCA) and MAPA allows each agency to promulgate its own 

rules. 

Federal Rule 17 (c) is substantially the same as Montana 

Rule 17(c). The federal rule has been interpreted as being 

discretionary, granting to the federal district court the , 

power to choose whether or not to appoint a guardian ad 

litem, but the courts must find that the interests of the 

minor are adequately protected. M.S. v. Wermers (8th Cir. 

1977), 557 F. 2d 170, 174. 

This court has adopted a similar discretionary approach 

to appointment of independent counsel in divorce/custody 

cases. "[Tlhe court shall appoint independent counsel for 

the child [where custody is in serious dispute] or make a 

finding stating the reasons that such appointment was unnecessary." 

(Citation omitted. ) Matter of Guardianship of Gullette 

(1977), 173 Mont. 132, 140, 566 P.2d 396, 400. See also In 

re Marriage of Bartmess (1981), - Mont. - 631 P.2d 299, 300, 

38 St.Rep. 1097, 1098. 
The Workers' Compensation Court should have appointed a 

guardian ad litem or made a finding stating the reasons why an 

appointment was unnecessary; but because of the facts contained 

in the record in this case, we find that the failure to appoint 

a guardian ad litem does not constitute reversible error. In 

this case there was a mutual benefit to the child and the mother 

in the payment of the described debts. In addition, because of 

the change of the method of repayment as set forth in this opinion, there is a very limited probability of financial loss to 

the child. We, therefore, hold that the failure to appoint a 

guardian was not reversible error. 

However, we admonish the Workers' Compensation Court that 

in future cases, where a child's interest may be effected by any 

lump sum award, the court shall appoint a guardian ad litem for 

the child or make a finding stating the reasons that such appointment is unnecessary. 

The Fund argues that no claim for any amount over 

$6,000 should have been heard by the Workers' Compensation 

Court, because only the $6,000 claim was ever presented to 

the division. The Fund argues (1) there is no established 

"dispute" as to the excess money that could give jurisdiction 

to the court under section 39-71-2905, MCA, and (2) the 

court hearing constitutes an appeal from an agency, requiring 

a claimant to raise all issues before the agency, to exhaust 

the administrative remedies, before he can be heard in court. 

The claims supervisor testified that the "dispute" did 

not concern the amount of the advance as much as the method 

to be used for recovery. He stated that the $19,000 claim 

would certainly have been denied if presented. Therefore, a 

dispute as to method of repayment did exist; also, because 
"Etlhe law neither does nor requires idle acts", section 1- 

3-223, MCA, Dawn should not now be required to go back to 

the division and begin again only to have the same issues 

arise. 

Dawn has not failed to exhaust her administrative 

remedies in any event. The Workers' Compensation Court is 

not a full-blown District Court acting in review of an 

agency decision. It is an administrative law court, having 

limited jurisdiction to decide disputes relating to benefits 

in a de novo proceeding. See State ex rel. Uninsured Employer's 

Fund v. Hunt (1981), - Mont . - , 625 P.2d 539, 542, 38 

St.Rep. 421, 424-425. It should be sufficient to present 

issues at any time before the division or the Workers' 

Compensation Court in order to obtain review by this Court. 

Such an approach is supported by section 39-71-2903, MCA, 

which subjects the Workers' Compensation Court to the provisions 

of MAPA. The Fund's cited authority for requiring prior 

presentation to the division is not persuasive. Its principal 

case was handed down before the Workers' Compensation Court 

was established. At the time of that case, the division 

conducted its own contested case hearings like all other 

agencies. The issues there were not even presented at the 

hearing. DeLeary v. Anaconda Aluminum Co. (1975), 168 Mont. 

208, 541 P.2d 788. 

By claimant's raising of all issues in her original 

petition before the Workers ' Compensation Court, the Fund 

was a£ forded adequate notice and opportunity to defend. The 

Fund fears a waste of judicial resources if a resolvable 

controversy is not first presented to the division, but 

here, by the division's own admissions, no resolution could 

have been had. Allowing claimant to present issues raised 

for the first time at the hearing is in keeping with section 
39-71-104, MCA: the act should be liberally construed to 

effectuate its purposes. 

111. 

Dawn established debts of $14,039 at trial. The court 

awarded her a $19,622 lump sum advance. 

Lump sum settlements are granted in exceptional circumstances. Outstanding indebtedness, pressing need, or circumstances in which the best interests of the claimant, his 

family and the general public are served justify such a 

settlement. Willoughby v. Arthur G. McKee & Co. (1980), - 

Mont. - , 609 P.2d 700, 702, 37 St.Rep. 620, 623; Kuehn v. 

National Farmers Union Property & Cas. Co. (1974), 164 Mont. 

303, 307, 521 P.2d 921, 924. The decision to award or deny 

a lump sum settlement will not be interfered with on appeal 

unless there has been an abuse of discretion. The Workers1 

Compensation Court will be presumed correct and affirmed if 

supported by substantial evidence, and reversed only if the 

evidence clearly preponderates against its findings. Willoughby, 

609 P.2d at 702. Wide discretion will be afforded the 

Workers' Compensation Court in its determinations. Willoughby, 

609 P.2d at 704; Kuehn, 521 P.2d at 923. 

In determining whether or not there is subtantial 

evidence to support the Workers' Compensation Court's findings 

and conclusions, the Supreme Court is required to look to 

all of the evidence properly before the lower court. Hume 

v. St. Regis Paper Co. (1980), - Mont. - , 608 P.2d 1063, 

1066, 37 St.Rep. 378, 382. 

Evidence before the court showed existing debts for the 

purchase and maintenance of a home, living expenses, medical 

expenses, potential future medical expenses for the child, and 

the need for a fuel efficient car, in all of which the mutual 
interests of Dawn and her child are intertwined. In addition, 

we have the possibility of attorney fees being taken out of the 

award pursuant to the fee agreement. 

Considering all such factors, we find no abuse of discretion by the court and affirm the award. 

IV . 

The Fund argues that Dawn's attorney failed to file his 

fee agreement prior to the hearing, so has forfeited any 

claim for attorney fees. 

No statute or division rule prescribes the time for 

filing fee agreements. Section 39-71-613, MCA, and Rule 

24.29.3801, ARM, set maximum amounts of fees and simply 

require such filing. In the absence of any specified time, 

and in view of the court's call for a hearing on fees, the 

division's asserted desire to regulate fees and to protect 

the workman are not prevented. No rule has been violated 

under section 39-71-613(3), MCA, justifying forfeiture. The 

division and/or the court can certainly adopt their own 

rules as to time of filing if the question is as important 

as claimed. 

Claimant urges the award of attorney fees in connection 

with this appeal. 

When an appeal is entirely unfounded and causes delay, 

respondent is entitled to reasonable costs and attorney fees 

under Rule 32, M.R.App.Civ.P. Carbon County v. Schwend 

(1979) - Mont. - , 594 P.2d 1121, 1127, 36 St.Rep. 

917, 924-925. 

We find that the Fund in good faith raised significant 

issues on appeal. We, therefore, do not award attorney fees 

for the appellate proceedings. 
VI . 

We remand the case to the Workers' Compensation Court 

for the following action: 

(1) Modification of the order awarding lump sum advance 

to provide that recovery of the amount of the advance shall 

be repayable out of the advance to Dawn in the event of her 

remarriage, or if she does not remarry, out of her biweekly 

benefits received after her child ceases to be a beneficiary, 

or in the event that the claimant dies, that recovery be 

made out of the child's benefits commencing at her sixteenth 

birthday; all as agreed to by claimant. 

(2) Determination by the court of the amount of the 

attorney fees to be awarded to claimant's attorney and the 

party responsible for the payment of such fees and other 

costs. 

We Concur: 

24 Chief -~?$~Pd~4.e~ Justice