No. 86-486 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

JEROME JOHNSON, 

Claimant and Respondent, 

-vsJ.W. GIBSON, Employer, 

and 

FIDELITY & CASUALTY COMPANY OF NEW YORK, 

Defendants and Appellants. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Herndon, Harper & Munro; Donald R. Herndon, Billings, 

Montana 

For Respondent: 

Keefer Law Firm; Gene R. Jarussi, Billings, Montana 

Filed: 

2 3 

- 

Submitted on Briefs: April 3, 1987 

Decided: July 23, 1987 

Clerk 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Fidelity & Casualty Company of New York (the insurer) 

appeals a Workers' Compensation Court order which grants a 

lump sum advance to the claimant, Jerome Johnson. Johnson 

cross-appeals contending the court should have increased his 

award by 20% for insurer unreasonableness. The issues on 

appeal are (1) whether the court erred in granting a lump 

sum advance to claimant to pay a debt which he had incurred 

in anticipation of a settlement of his claim, which 

settlement did not occur; (2) whether the court erred in 

awarding attorney's fees and costs to claimant; and (3) 

whether the court erred in refusing to impose a 20% penalty 

upon the insurer for unreasonably refusing the lump sum 

advance. We affirm. 

In April 1981, claimant. suffered a severe injury while 

working for J.W. Gibson. The injury was compensable for 

workers' compensation purposes. As a result of the injury, 

claimant is a paraplegic and is confined to a wheelchair. 

The insurer accepted liability for claimant's injury and has 

paid, and apparently continues to pay, temporary total 

disability benefits to claimant. 

In the fall of 1982, claimant bought a new vehicle as 

his old car was unreliable on snow and ice. The insurer 

provided claimant with a $9,100 lump sum advance settlement 

to enable him to buy a new two-door car, a Dodge 400. 

Because of his disability, claimant had difficulties with his 

new vehicle. To get in and out of the car, he had to 

disassemble his wheelchair, place it on the seat next to him 

and assemble the chair again to get out. In taking the 

wheelchair in and out of the car, claimant tore up the car's 

interior with the chair's frame. Moreover the chair was very 

difficult to disassemble in cold wea-ther. The car was also 
unsatisfactory in that claimant could not effectively strap 

his legs down to the car seat. Claimant suffers occasionally 

from leg spasms. Without being able to strap his legs down, 

claimant suffered bruises on his legs from having leg spasms 

while driving. 

Beginning at least in 1984, claimant was aware that his 

attorney was conducting settlement negotiations with the 

insurer. Claimant's attorney informed him of at least one 

settlement proposal whereby the insurer would pay claimant 

$50,000 "upfront" and monthly payments. Claimant had regular 

discussions with his attorney about a possible settlement of 

the workers' compensation claim. The parties apparently 

exchanged several different proposals. 

In July 1984, claimant traded his Dodge 400 car in on a 

new 1984 GMC van because of his difficulties with the car. 

He could enter and exit the van without disassembling his 

wheelchair. He could also strap his legs down in the van so 

as to avoid bruising his legs when he suffered leg spasms. 

Prior to the purchase, claimant made no request to the 

insurer to provide him with a lump sum advance to pay for the 

van nor did he notify the insurer of his intentions of 

purchasing the van. Claimant received trade-in value for his 

car and signed a one year promissory note obligating him to 

make one approximately $21,000 payment in July 1985 in full 

payment for the van. Claimant testified that he signed the 

promissory note with the idea that his attorney and the 

insurer were close to a settlement agreement and would settle 

his claim within one year. 

Eventually, the settlement negotiations broke down and 

no final settlement was reached. Claimant requested that the 

insurer provide him with a lump sum advance sufficient to pay 

off his debt on the van. The insurer refused to make that 

lump sum advance. In March 1985, however, the insurer did 
make a lump sum advance of $1,285 to claimant for tuition for 

a correspondence course in gemology. In June 1986, claimant 

filed a petition with the Workers' Compensation Court 

requesting a lump sum advance to pay off the debt on his van. 

In September 1986, the court filed its judgment ordering the 

insurer to pay to claimant a lump sum advance sufficient to 

pay off the debt plus accrued interest. The court refused to 

impose the 20% penalty upon the insurer but did award 

claimant his costs and attorney's fees. This appeal 

followed. 

The first issue is whether the court erred in granting 

the lump sum award to claimant. Section 39-71-741, MCA, 

provides the Workers' Compensation Court with general 

authority to grant lump sum awards. The date of claimant's 

injury predates the 1985 amendments to § 39-71-741, MCA, and, 

therefore, those amendments are not applicable to this case. 

Buckman v. Montana Deaconess Hosp. (Mont. 19861, 730 P.2d 

380, 43 St.Rep. 2216; Odenbach v. Buffalo Rapids Project 

(Mont. 1987), 731 P.2d 1297, 44 St.Rep. 67. The applicable 

law was stated in Byrd v. Ramsey Engineering (Mont. 19851, 

701 P.2d 1385, 1387, 42 St.Rep. 991, 993-994; quoting in part 

from Willoughby v. Arthur G. McKee & Co. (19801, 187 Mont. 

253, 256-257, 609 P.2d 700, 701-702; 

"The general rule concerning the award or 

denial of lump sum settlements under the 

Workers' Compensation Act is well settled 

in this state. Lump sum settlements are 

only granted in exceptional 

circumstances. Where the best interests 

of the claimant are generally served by 

paying compensation in regular periodic 

installments, the conversion of benefits 

to a lump sum settlement has been 

recognized as the exception rather than 

the rule." (Citations omitted) . . . 

"Lump sum settlements are only granted 

where there is 'outstanding 
indebtedness,' 'pressing need,' or where 

'the best interests of the claimant, his 

family and the general public will be 

served. ' " . . . 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. 

(Citations omitted. ) 

The Byrd case is similar to the situation presented by this 

appeal. There, the claimant purchased a house in 

anticipation of his workers' compensation award. The 

Workers' Compensation Court declined to award Byrd a lump sum 

advance to pay off his house loan. We reversed and held that 

Byrd was entitled to receive the remainder of his benefits in 

a lump sum. 

Similarly, we now hold that the court did not abuse its 

discretion in awarding claimant Johnson a lump sum award to 

pay for his van. Claimant has shown a pressing need for the 

van. The bank will repossess the van if claimant does not 

receive a lump sum advance to pay for it and he could also be 

liable for a deficiency judgment. It is his only automobile 

and he lives seven miles out of town. We also note the 

severe difficulties which claimant had with his previous 

vehicle and handling his wheelchair. Finally, it appears 

that claimant sincerely believed that a settlement would be 

reached enabling him to pay for the van. The best interests 

of claimant, his family and the general public will be served 

by a lump sum award sufficient to pay off this outstanding 

indebtedness. 

The second issue is whether the lower court erred in 

refusing to impose the $ 39-71-2907, MCA, 20% penalty upon 

the insurer for unreasonable delay or refusal to pay. 

Whether an action is "unreasonable" under 

this statute is a question of fact which 

is subject on appeal to the limited 

review of the substantial evidence test. 

(Citation omitted. ) If there is 
substantial evidence to support a finding 

of "unreasonableness," this Court cannot 

overturn the finding. 

Wight v. Hughes Livestock Co., Inc. (Mont. 1981), 634 P.2d 

1189, 1192, 38 St.Rep. 1632, 1636. The Workers' Compensation 

Court held that the insurer was not unreasonable and, as part 

of its reasoning behind that holding stated; 

The Court is aware of the defendant's 

predicament and agrees in principal. 

This debt was incurred by the claimant 

without any authorization or approval by 

the defendant. Defendant had no voice in 

the making of a debt for which it is now 

held responsible . . . The claimant has acted irresponsibly. 

Yet given the claimant's earnings when 

injured, his age and the severity of his 

injury, it is no surprise that he has 

little expressed appreciation for the 

financial predicament he has created. . . . We caution counsel to advise their 

clients to not spend money that does not 

exist . . . In fairness to all parties, 

it is appropriate that the repayment of 

the advance begin immediately by reducing 

the current biweekly benefits being paid 

to the claimant. 

Substantial evidence supports the court's determination that 

the insurer was not unreasonable and we defer to that 

finding. We note that previously the insurer had freely 

provided two lump sum advances to claimant, one of those 

being for the purchase of a vehicle. 

The last issue is whether the court erred in awarding 

attorney's fees and costs to the claimant under § 39-71-612, 

MCA . Appellant argues that this section is not authority 

for a grant of attorney's fees where the sole controversy is 

the propriety of a lump sum advance. We disagree. In Polich 

v. Whalen's O.K. Tire Warehouse (Mont. 1981), 634 P.2d 1162, 

38 St.Rep. 1572, we held that attorney's fees may be awarded 
under this section where a dispute over a lump sum advance is 

resolved in the claimant's favor. Appellant also argues that 

Lasar v. Oftedal & Sons (Mont. 1986), 721 P.2d 352, 43 

St.Rep. 1239, mandates that no attorney's fees can be 

awarded. That case is inapplicable. There, the insurer 

conceded permanent total disability three weeks before trial 

and, therefore, "no controversy existed at trial and the 

amount awarded was the same as that agreed upon as due." 

Lasar, 721 P.2d at 354. Here, there was a controversy at 

trial which was resolved in claimant's favor and, therefore, 

the award was proper. 

Affirmed. i .,/ 

. . Justice 

We concur: A 

/chief Justice 

e~e-1 Justices