No. 86-254 TN THF SUPREME COURT OF THE STATE OF MONTANA 1987

FREDRTCCADWELL, ClaimantandAppellant,

-vsBECHTEL POF7ER CORPORATION, Employer

### , and INDUSTRIALTNDEMNITYCOMPANY, Defendantand Respondent.

APPEAL FROM: TheWorkers' Compensation Court,The Honorable Timothy Reardon,Judgepresiding.

COTJNSEL OF RECORD:

ForAppellant: Bottomly & Gabriel;R. V. Bottomly, Great Falls, Manta-na For Respondent: Marra,Wenz, Johnson & Hopkins;David E. Bauer, GreatFalls,Montana ForAmicus Curiae: Jeffrey T. Renz forACLU, Billings,Montana

Submitted onBriefs: Sept. 25, 1986 Decided: 

### February 26, 1987

ClerkMr. Justice William 

### E. Hunt, Sr.

### , delivered the Opinion of the Court.

Claimant Cadwell was awarded permanent partial disability benefits 

### by the Montana Workers' Compensation Court. We are asked to decide if attorney fees awarded to this successful WorkersYompensation claimant whose injury occurred in 1981 should be based on standards in effect on the date of the injury or on the standards ~doptedin 1985 and set forth in § 39-71-614,MCA. 

### We reverse theWorkers' CompensationCourt's decision to apply the later 1985 standards and remand with instructions to use the law in effect at the time of claimant's injury. On November 30, 1981, claimant injured his back while working as a carpenter erecting scaffolding at Colstrip, Montana. Claimant filed for compensation with the Workers

### ' Compensation Court and trial was held on September 24, 1984. The court ordered proposed findings of fact and conclusions of law by November 30, 1984. Defendants moved and were granted an open-ended extension based on thejr desire to have a transcript of the proceedings prepared. Appellant objected to the extension being open-ended. The transcript was completed five months later and the parties" findings of fact and conclusions of law were submitted May I@, 1985. The Workers' Compensation Court adjudged claimant's injury to be compensable and awarded the claimant 500 weeks of permanent partial disability benefits at the rate of $120.50 per week. Claimantand his attorneyhad entered intoa contingency fee aareement to cover claimant's attorney fees for the case.On April 19, 1985,H.R. 778 became effective as S 39-71-614, MCA amending SS 39-71-611; 612, MCA. The statute required attorney fees be paid to successful claimants based exclusively on an hourly rate. Itrequired the hourly fee to be based on the attorney's customary hourly fee for legal work performed in the State. Gullett v. Stanley Structures

(1986),722 P.2d 619,43 St.Rep. 1335. The Workers' Compensation Court found that § 39-7'1-614, MCA (1985),applied to this case since the casewas submitted to that court after April 19, 1985 and found that the claimant's right to an award of attorney fees did not attach until the court ordered a fee award. Itheld that claimant's attorney fees were to be determined by an hourly rate using the attorney's customary and currenthourly feepursuant to S 39-71-614(2), MCA. Counsel's affidavit indicates he did not have a set hourly rate because he worked on a contingency fee basis. The Workers' Compensation Court requested counsel supply additional information as to the reasonableness of the requested $200 per hour attorney fee for this attorney. Claimant appeals the order finding S 39-71-614, MCA, applicable to his case. Although the amicus curiae brief thoroughly addresses the issue of how to determine reasonable attorney fees 

### in Workers' Compensation cases, this issue is not before this Court and thereforewill notbe addressed here. We limit our opinion to the issue of the attorney fee standards to be applied. The effective date of S 39-71-61.4,MCA (1985),wasApril 19, 1985. Claimant's injury occurred on November 18, 1981. He contends that the law in effect on the date of the injuryis the applicable law for this case and argues that use of the amended statute would 

### be an impermissible retroactive application. This Court has held that Workers' Compensation benefits

a.redetermined by the statutes in effect as of the date 

### of injury. Trustyv. Consolidated Freiqhtways (Yont. 1984), 681

In Trusty,we held that: "The statute in effect on the date 

### of the injury determines the benefits to be received



# ... (Citationsomitted.) That sets the contractual rights and debts of the parties." - Id. at 1088, 976. The basis for Worker's Compensation is a contractofhire either express or implied. Sections 39-71-117, -118,MCA. This Court, as well

as courts of other states, have held that Workers' Compensation isbased on contract theory. Ruckman v. Montana Deaconess Hospital and State Compensation Insurance Fund

(19861, 

### -P.2d 

### - 

## , 43 St.Fep. 2216. The Buckman Court approved theholding of the Kansas Supreme Court in Esta-teof Baker (Kan. 1977), 563 P.2d 431which reads as follows: The liability of an employer to an injured or deceased employee arises out of the contract between them; the terms of the workmens' compensation statute are embodied in the contract. The substantive rights between the parties are determined by the law in effect on the date of the injury. (Citationomitted.) However, the rights under the contract vest when the cause of action accrues, and the cause of action accrues on the date 

### of iniury or death. (Citations omitted.) Id. at 436. - In the instant case, claimant's cause of action accrued on November 18, 1981. His substantive contract rightsvested at this time. Further, a statute should not be applied retroactively unless the legislature clearly expressed an intention to soapply it. First National Bank in Billings v. First I?a.nlc Stock Corporation 

### (D.C. Mont. 1961), 197 F.Supp. 417; Yurkovich v. 1ndustria.lAccident Board (1957),132Mont. 77, 314 P.2d 866. Here there is no indication that the legislature intended the amendments to apply retroactively andwewill not make those amendmentsretroactive. Section 39-71-614, MCA, does not apply to cases where the injury occurred prior toApril 19, 1985. Ra-ther,the law in effectonNovember 18, 1981,the date of claimant's injury is the applicable law. This Court interpreted the 1983 attorney's fee statutes which are the same 

### as the 1981 statutes applicable to this

case inWightv. Hughes Livestock Company et a1 (Mont. 1983), 664P.2d 303, 40 St-Rep.696. The net award concept, as articulated by this Court in Wight, allowed a claimant to recover the full value of lost earnings or earning capacity benefits. It did this by awarding the claimant attorney fees in an amount sufficient to cover the actual attorney feeswhether the attorney-client agreement was based on a contingent fee or hourly fee. In most cases, this meant an award of attorney fees based on a contingency fee. These were substantive provisions which granted substantive rights from thedate of the injury. The 1985 amendments were meant to change this arrangement. Section 39-71-614,MCA, (1985)recognized the necessity of contingency fee contractsand allowed a claimant and her attorney to enter into such contracts. However, the statute was changed so the insurer is now exempted from paying fees based on this contract. The claimant must now 

### pay any difference between an agreed upon contingency fee and

### the hourly rate orderedby the court. This is a substantive change from the 

### law in effect at the time this claimant was injured. Because the applicable lawhere is the law in effect on the date of claimant's injury, the date his contract rights vested, theWight interpretation applies to this case and the 1985

### amendmentsdonot apply. We therefore reverse and remand this case with instructions to determine attorney fees in accordance with this Opinion.

F!e Concur: 

### ,-,9'

Justices

### Mr. Justice L. 

### C. 

### Gulbrandson,dissenting.

I

### respectfullydissent. The Workers' Compensation Court Judge in his order awarding attorney fees relied upon Castles v. State ex rel. Mont. Dept. of Highways (1980),187Mont. 356, 609 P.2d 1223, and stated: An analogous situation is presented by the dispute over the recently enacted attorney fee amendments which are at issue in the instant case. Under a 

### Castles analysis, those amendments are procedural in nature since claimants are still entitled to an award of attorney fees, but the means of calculating the attorney fee has been legislatively modified

# . Since claimants are still entitled to an award of attorney fees, the substantiverightwasnot impactedby the House Bill 778 

### amendments. Instead, those amendments only affect the method of calculating the attorney fee to be awarded,and are therefore, procedural in nature.

While it is apparent that the claimant's right to an award of attorney fees does not, in fact, attach until this Court orders an award of 

### attorney fees, this Court finds it appropriate to look beyond the date a case is decided, and instead focus on its date of submission. This legal fiction serves the interests of justice for if this Court were to apply the law in effect at the time a case is decided, instead of the law in effect at the time the case was submitted, a claimant could conceivably be penalized by a backlog on this Court's calendar. Such a result would be patently unfair, and that is the reason that this Court. will look to the date of submission. ThisCourt inYearoutv. Rainbow Painting (Mont. 1986), 719 P.2d 1.258,43 St.Rep. 1063,reaffirmed the rule that no attorney's fees may be awarded until the claim is adjudged compensahle by the Workers' CompensationCourt Judge. Based upon that reasoning, the FJorkers' Compensation Judge

### properly, in my opinion, applied the law in effect at the date of submission of the case. By so doing, the Judge avoided penalizing a claimantdue to abacklog on the court's calendar. Themajority seem to justify the classificationof the amendments as substantive, rather than procedural, by the statement that claimants must nowpay any differencebetween

an agreed contingency fee and the hourly fee determined by the court. As a practical matter, few, if any, attorneys would attempt to collect any such difference, if they intend to continue a workers' compensation practice. In fact, the amendments provide that an attorney, with a contingent fee agreement,may be awarded a 

### larger sum in feescomputed under the hourly fee requirement thanhe would have received under the contingent fee agreement. See Paulsen v. Bonanza Steak House (Mont. 1987), P.2d 

## , 44 

### St.Rep. 159, where counsel for claimantwas awarded an hourly fee approximately three times greater than he would have earned under his contingent fee contract. I

### would affirm the order of the 

### Workers' compensation Court Judge.

I 

### Justicg