No. 86-254 

TN THF SUPREME COURT OF THE STATE OF MONTANA 

1987 

FREDRTC CADWELL, 

Claimant and Appellant, 

-vsBECHTEL POF7ER CORPORATION, Empl oyer , 

and 

INDUSTRIAL TNDEMNITY COMPANY, 

Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COTJNSEL OF RECORD: 

For Appellant: 

Bottomly & Gabriel; R. V. Bottomly, Great Falls, 

Manta-na 

For Respondent: 

Marra, Wenz, Johnson & Hopkins; David E. Bauer, 

Great Falls, Montana 

For Amicus Curiae: 

Jeffrey T. Renz for ACLU, Billings, Montana 

Submitted on Briefs: Sept. 25, 1986 

Decided: February 26, 1987 

Clerk 
Mr. 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 ~dopted in 1985 

and set forth in § 39-71-614, MCA. 

We reverse the Workers' Compensation Court'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. 

Claimant and his attorney had entered into a 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. It required 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 case was 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. It held that claimant's 

attorney fees were to be determined by an hourly rate using 

the attorney's customary and current hourly fee pursuant 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 therefore will not be 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), was April 

19, 1985. Claimant's injury occurred on November 18, 1981. 

He contends that the law in effect on the date of the injury 
is 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.re determined by the statutes in effect as of the date of 

injury. Trusty v. 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 

. . . (Citations omitted.) That sets the contractual rights 

and debts of the parties." - Id. at 1088, 976. The basis for 

Worker's Compensation is a contract of hire either express or 

implied. Sections 39-71-117, -118, MCA. This Court, as well 

as courts of other states, have held that Workers' 

Compensation is based on contract theory. Ruckman v. Montana 

Deaconess Hospital and State Compensation Insurance Fund 

(19861, - P. 2d - , 43 St.Fep. 2216. The Buckman Court 

approved the holding of the Kansas Supreme Court in Esta-te of 

Baker (Kan. 1977), 563 P.2d 431 which 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. (Citation omitted. ) 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 rights vested 

at this time. 

Further, a statute should not be applied retroactively 

unless the legislature clearly expressed an intention to so 
apply it. First National Bank in Billings v. First I?a.nlc 

Stock Corporation (D.C. Mont. 1961), 197 F.Supp. 417; 

Yurkovich v. 1ndustria.l Accident Board (1957), 132 Mont. 77, 

314 P.2d 866. Here there is no indication that the 

legislature intended the amendments to apply retroactively 

and we will not make those amendments retroactive. 

Section 39-71-614, MCA, does not apply to cases where 

the injury occurred prior to April 19, 1985. Ra-ther, the law 

in effect on November 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 in Wight v. Hughes Livestock Company et a1 (Mont. 1983), 

664 P.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 fees whether 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 the date of the injury. 

The 1985 amendments were meant to change this 

arrangement. Section 39-71-614, MCA, (1985) recognized the 

necessity of contingency fee contracts and 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 ordered by the court. This is a substantive 

change from the law in effect at the time this claimant was 

injured. 

Because the applicable law here is the law in effect on 

the date of claimant's injury, the date his contract rights 

vested, the Wight interpretation applies to this case and the 

1985 amendments do not 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 respectfully dissent. 

The Workers' Compensation Court Judge in his order 

awarding attorney fees relied upon Castles v. State ex rel. 

Mont. Dept. of Highways (1980), 187 Mont. 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 substantive right was not impacted by 

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. 

This Court in Yearout v. 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' Compensation Court 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 claimant due to a backlog on the court's 

calendar. 

The majority seem to justify the classification of the 

amendments as substantive, rather than procedural, by the 

statement that claimants must now pay any difference between 

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 fees computed under 

the hourly fee requirement than he 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 claimant was 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