### 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, Judgepresiding. 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:

# SEP29 

## 19811Mr. JusticeFred J. Weber delivered the Opinion of the Court.

Defendant StateCompensation Insurance Fund appeals from the order of theWorkers' Compensation Court granting claimantDawn 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 infantbeneficiary, should the court have made the child a party and appointed a guardian ad litem? 2. 

### Is itproper for theWorkers' 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 inthe amount of $19,622.72 constitute an abuse of discretion inlightof evidence of expenses aggregating only $14,039.25? 4. Does the failure to filean attorney fee agreement prior to trial forfeit the right to collect attorney fees? We affirm the award of theWorkers' Compensation Court, butwith some instructions tobe followed in similar cases inthe future. Dawn Hock 

### is eighteen years old, and has a two-year-old child. She isnot employed, having completed only the tenth grade and having no prospects of employment. She presently draws $186.68 per week inworkersr 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 (hisgross 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 StateCompensation Insurance Fund. Under the statutes, Dawn 

### is entitled toreceive biweekly payments forthe restof her life; however, if she ever remarries, then she willreceive a final, single payment equal to two-years' benefits, and compensation 

### willthen be stopped. Section 39-71-721, MCA. Dawn's daughter, Dusty Rae, 

### is alsoa beneficiary under the workers' compensation statutes. Section 39-71-116 

### (2)

## , MCA. Allpayments arepresently made toDawn alone, but if she should die orremarry, then the child

### willreceive the

same amount of benefits until age 18, or age 25 if a full

### time student. In considering the lump 

### sum award toDawn, 

### we must determine the extent towhich the child's contingent futurerights are tobe protected. Dawn initiallyrequested a $6,000 advance on her benefits from the Division of Workers' Compensation. She alleged certain debts were causing hardship forher 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 inthe event she remarries. When the claims supervisor submitted the plan for approval to the division administrator, it

### was rejected. The administrator required "positiveprotection 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 todeduct $25per week from Dawn's benefits until fullrecovery or remarriage. The new plan was rejected by Dawn's attorney. Dawn petitioned theWorkers' Compensation Court for an emergency hearing on the lump sum dispute. Inher petition, she asked, for the firsttime, for an advance of $19,622.72, which amount isequal to the two-years' worth of benefits she would receive ina single payment upon remarriage. The Fund moved to strikethe $19,000 figure and insert theoriginal $6,000 figure, on the ground that the larger sum had never been presented tothe division and so

### was not a "dispute" the court could hear, citing section 39-71-2905, MCA. The Fund paid the $6,000 

### sum tothe clerk of the court, and filed an offer of judgment which 

### sets forththe Fund's second proposal forrecovery of the advance. The motion tostrikewas never ruled upon by the court. In

### its trialbrief and inthe pretrial order, theFund raised the issueof possible prejudice tothe child's contingent futureright toreceive benefits. The Fund asked the court tojoin the child as

### a party and toappoint a guardian ad 

### litemtoprotect the child's interests inregard toany scheme torecover a lump sum advance. The court did neither. At

### trial, Dawn testified tothe following debts which total slightlyover $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 tothese debts, Dawn testified that her old mobile home was inneed of substantial repair, necessitating the purchase of a new one. Ina similarmanner, she testified that she had no usable automobile and had arranged topurchase

a satisfactory used 1978 Plymouth. Dawn testified that she had no medical insurance coverage for herself or her daughter. The child 

### is susceptible toconvulsions.Dawn also testified that she and her child can liveon her $1,100 per month tax-free income, if her debts arepaid. The only other witness attrialwas the claims supervisor for the division. He testified the division acted ingood faith throughout the negotiations toprotect the interest of the child and the Fund from overpayment. He also stated that no attorney fee agreement had ever been filedwith the division by Dawn's attorney asrequired by statute, thus laying the foundation upon which the Fund argues that Dawn isnot entitled toreceive 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 inany eventbecause 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 aremore desirable than formerly was the case. The court ordered that 104weeks 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 isentitled 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 filedwith the division subsequent to the hearing, butwas objected to as not timely. Dawn's attorney subsequently offered to stipulate to a change in themethod of recovery ordered by the court. Thestipulation would have called forrecovery of the advance out of Dawn's remarriage benefits or, if she did not remarry, out of her weekly benefits after the child ceased tobe a beneficiary. The Fund did not choose toconsider this stipulation, preferring toproceed 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, orunder 25 if a full-time student. Section 39- 71-723, MCA, provides that compensation due tobeneficiaries shallbe paid tothe surviving spouse. This Court, in interpreting thepredecessor of the above section, has stated: "It

### istrue that for the purpose of saving trouble and expense of guardianship proceedings the 

### lawpermits the payment of the fullamount tothe widow 

# ... but an undivided portion thereof belongs absolutely tothe child and 

### is dedicated to

### its support." Cogdill v. Aetna Life Ins. Co. (1931), 90 Mont. 244, 257, 2 P.2d 292, 296. The courtwent

on tohold that childrenreceive firstconsideration under the act, that their interestsmust always be carefully guarded, and that "[tlheact gives tothe children such an interest 

### in the compensation as can be laid hold of by the courts, and 

### its ultimate disposition controlled; particularly 

### isthis sowhen such compensation assumes the shape of 

### a commuted payment." (Citationomitted.) Cogdill v. Aetna Life Ins. Co., supra. The Workers' Compensation statutes have undergone substantial amendment since 1931, but the above quoted principles stillapply because children are still named 

### as separatebeneficiaries and payments are 

### stillmade only tothe surviving parent.The court's order could result in a substantial reduction inbenefits to the child because of the termination of payment of benefits atthe 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 interestmay conflict with themother's atthatpoint, and that a guardian ad 

### litem would be required toprotect the child's interest. The parties agree that Rule 17(c),M.R.c~v.P., is the only present authority inMontana for appointment of a guardian ad litem. The rules of civilprocedure are not directly applicable to the Workers' Compensation Court, because the court isexpressly made subject to the provisions of the Montana Administrative Procedure Act (section 39-71- 2903, MCA) and MAPA allows each agency topromulgate itsown rules. Federal Rule 17(c) 

### is substantially the same asMontana 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 courtsmust find that the interests of the minor are adequately protected. M.S. 

### v. Wermers (8thCir. 1977), 557 F.2d 170, 174. This court has adopted a similar discretionary approach to appointment of independent counsel indivorce/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." (Citationomitted.) Matter of Guardianship of Gullette (1977), 173Mont. 132, 140, 566 P.2d 396, 400. See also 

### In Mont. 

### re Marriage of Bartmess (1981), 

## - - 631 P.2d 299, 300, 38 St.Rep. 1097, 1098.The Workers' Compensation Court should have appointed a guardian ad litem ormade a finding stating the reasons why an appointment was unnecessary; but because of the facts contained inthe record inthis case, we find that the failure to appoint

a guardian ad litem does not constitute reversible error. In this case therewas a mutual benefit to the child and themother inthe payment of the described debts. In addition, because of the change of the method of repayment as 

### set forth inthis opinion, there isa 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 infuture cases, where a child's interestmay be effected by any lump sum award, the court shall appoint a guardian ad 

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

The Fund argues thatno claim for any amount over $6,000 should have been heard by the Workers' Compensation Court, because only the $6,000 claimwas ever presented to the division. The Fund argues (1)there 

### isno established "dispute" as to the excessmoney that could givejurisdiction to the court under section 39-71-2905, MCA, and (2) the court hearing constitutes an appeal from an agency, requiring

a claimant toraise allissues before the agency, toexhaust the administrativeremedies, before he can be heard incourt. The claims supervisor testified that the "dispute" did not concern the amount of the advance asmuch as themethod tobe used for recovery. He stated that the $19,000 claim would certainly have been denied if presented. Therefore, a dispute as tomethod 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 inany event. The Workers' Compensation Court 

### is not a full-blown DistrictCourt acting inreview of an agency decision. It is an administrative law court, having limited jurisdiction todecide disputes relating tobenefits ina de novo proceeding. See State ex 

### rel. Uninsured Employer's Mont

# . Fund v. Hunt (1981), 

### - 

## - , 625 P.2d 539, 542, 38 St.Rep. 421, 424-425. It should be sufficient topresent issues atany time before the division or the Workers' Compensation Court inorder 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 isnot persuasive. Its principal

case was handed down before theWorkers' Compensation Court

was established. Atthe time of thatcase, the division conducted itsown contested case hearings like allother agencies. The issues there were not even presented atthe hearing. DeLeary v. Anaconda Aluminum Co. (1975), 168Mont. 208, 541 P.2d 788. By claimant's raising of allissues inher original petition before the Workers

## ' Compensation Court, the Fund

was a£ forded adequate notice and opportunity todefend. The Fund fears a waste of judicial resources if a resolvable controversy 

### isnot firstpresented 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 firsttime atthe hearing 

### isinkeeping 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 settlementsare granted in exceptional circumstances. Outstanding indebtedness, pressing need, or circumstances in which the best interests of the claimant, his family and the generalpublic 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), 164Mont. 303, 307, 521 P.2d 921, 924. The decision to award or deny a lump sum settlementwill not be interferedwith on appeal unless there has been an abuse of discretion. The Workers1 CompensationCourt 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' CompensationCourt 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 Mont. v. St. Regis Paper Co. (1980),

### - - 

## , 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 statuteor division ruleprescribes the time for filing fee agreements. Section 39-71-613,MCA, and Rule 24.29.3801, ARM, setmaximum 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 Mont. (1979) - 

### - 

## , 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 appellateproceedings.

### 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: 

# 24Chief 

# -~?$~Pd~4.e~ Justice