No. 81-188 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1982 

KERRY K. HAFER, 

Claimant and Appellant, 

vs. 

ANACONDA ALUMINUM COMPANY, 

Employer, 

and 

ANACONDA ALUMINUM COMPANY, 

Defendant and Respondent. 

Appeal from: Workers' Compensation Court 

Counsel of Record: 

For Appellant: 

Hoyt and Trieweiler, Whitefish, Montana 

Terry N. Trieweiler argued, Whitefish, Montana 

For Respondent: 

Utick and Grosfield, Helena, Montana 

Norman Grosfield argued, Helena, Montana 

Submitted: March 3, 1982 

Decided: April 29, 1982 

Filed: APR 2 9 19821 

U d - - Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the 

Court. 

Claimant Kerry Hafer (Hafer) appeals from the judgment 

of the Workers' Compensation Court. Hafer questions the 

method used by the court to compute his award. He presents 

the following issues for review: 

(1) Whether there was substantial evidence to support 

the hearing examiner's finding that Hafer's injury affects 

only his elbow, rather than his whole arm. 

(2) Whether the limitations of 39-71-705 through 39- 

71-708, MCA, apply to a worker who has elected to seek 

benefits for lost earning capacity under 39-71-703, MCA. 

We vacate and remand. 

This action was commenced on November 26, 1979, by 

Hafer's petition for hearing in the Workers' Compensation 

Court. In his petition, Hafer alleged that he was injured 

on June 17, 1977, during the course of his employment with 

respondent, Anaconda Aluminum Company (Anaconda). He alleged 

that he fractured his elbow in an industrial accident on 

that day, that as a result of that industrial injury he 

sustained a permanent partial disability, and that Anaconda 

refused to compensate him for the full extent of his partial 

disability. 

As a result of the injury, it was necessary for a 

surgeon to surgically implant a silastic prothesis in Hafer's 

elbow on August 21, 1978. The manufacturer of the device 

disclaims its effectiveness for people who engage in strenuous 

physical activity. The orthopedic surgeon who performed the 

surgery on the elbow evaluated Hafer's permanent partial 

impairment at 20% of his left upper extremity at the shoulder. 
Hafer was 24 years old and had been working for Anaconda 

three years at the time of the trial. He did not graduate 

from high school and prior to working for Anaconda, his 

primary job experience included mostly physical labor. 

Since the surgery, Hafer has resumed his old job with Anaconda 

as an iron worker and earns approximately $10.00 per hour. 

At the time of the accident, he was earning approximately 

$7.00 per hour. 

Robert Redinger, employee relations manager for Anaconda, 

testified that if Hafer were unable to perform the duties of 

an iron worker, Anaconda would attempt to find a position 

which Hafer could perform. Entry level clerical workers 

earn about $6.00 per hour while iron workers earn about 

$10.00 per hour. An employee of the Montana State Job 

Service, testified as to the employment prospects of Hafer 

if he were not working for Anaconda. A person who has no 

specialized training other than as a heavy laborer who had 

an injury which prohibited him from performing strenuous 

physical labor was eliminated from about 90% of the work 

force in Flathead County and could expect to earn less than 

$700.00 per month. 

The hearing examiner's conclusions of law included in 

part: 

"4. Claimant was entitled, under 39-71-709, 

M.C.A., to elect whether to pursue a disability award under 39-71-703 or an indemnity award 

under 39-71-705 through 39-71-708, M.C.A. 

Plaintiff elected to proceed under 39-71-703, 

M.C.A. 

"5. Even though his actual earnings have not 

been diminished since his return to work, his 

ability to compete in the open labor market 

has been impaired by a factor of 40 percent, 

i.e., if he had to find another job, it would 

probably pay 60% of what he could earn before -- he - iniured - his elbow. Finding of fact no. 20, 

supra; Fermo v. Superline ~roducts, 574 P. 2d 

251, 253 (1978). 
"10. If claimant had elected to pursue an 

indemnity award the 240 weeks would have been 

reduced in accordance with this formula in 39- 

71-706, M.C.A.: ' . . . indemnity benefits 

for permanent disability to a member or members 

shall be proportionate to loss or loss of use 

of the member. . .' As the record is lacking 

in evidence relating the severity of claimant's 

injury to the severity of an amputation at the 

elbow, the median of the impairment rating 

(20%) and the earning capacity diminution (40%) 

will be taken. This yields a factor of 30% 

for the comparison of claimant's injury to a 

total loss of the arm at the elbow. 30% of 240 

weeks equals 72 weeks." (As subsequently appears 

in this opinion, the correct total is 280 weeks 

for injury to the arm from the shoulder.) 

"11. The significance of calculating an indemnity award is this proviso in the selection 

governing election of benefits, M.C.A. 39-71- 

709 in subsection (3): 'A worker who has elected to proceed under 39-71-703 . . . shall not 

be entitled to a greater benefit, including 

compensation paid under 39-71-703, than he 

would have received if he had proceeded exclusively under 39-71-705 through 39-71-708. . .' 

This sets a limitation on claimant's award of 

$81.00 times 72 weeks, or $5,832.00." (As subsequently appears in this opinion, this computation is not applicable.) 

"12. While the foregoing analysis has assumed 

that claimant's case does not come under the 

unscheduled or 'whole man' sorts of disabilities discussed in the Fermo and Walker cases, 

a discussion of how the law there would have 

applied to the instant facts if claimant had 

demonstrated a whole man injury may not be amiss. The same 30% of complete loss factor 

should be applied to the 500-week maximum to 

yield a durational limit of 150 weeks. This 

would have been multiplied by the earning 

capacity loss of $74.35 a week to make an award 

of $11,152.50. 

"13. However, this is not a whole man injury. 

Pursuant to 39-71-703, which sets claimant's 

weekly benefit at $74.35, and 39-71-709(3), 

which has the effect of limitating the duration of his benefit to slightly over 78 weeks, 

claimant is entitled to $5,832.00." (As subsequently appears in this opinion, this conclusion is not applicable in the present case.) 

The Workers' Compensation Court adopted the hearing examiner's 

findings and conclusions. The court entered a judgment and 

order on behalf of Hafer finding that he was entitled to a 
partial disability award of $81.00 times 72 weeks for $5,832.00, 

plus reasonable attorney's fees and his costs. 

Whether there was substantial evidence to support the 

hearing examiner's finding that Hafer's injury affects only 

his elbow, rather than his whole arm? 

Both parties agreed before the trial that the injury 

affected Hafer's whole arm. Anaconda concedes this issue. 

Hafer's injury shall be considered an injury of the arm from 

the shoulder which allows benefits to be paid for a maximum 

of 280 weeks under 39-71-705, MCA, rather than an injury of 

the arm from the elbow which allows a maximum of 240 weeks 

of benefits. 

Whether the limitations of 39-71-705 through 39-71-708, 

MCA, apply to a worker who has elected to seek benefits for 

lost earning capacity under 39-71-703? 

"[A] worker whose injury results in partial disability 

is entitled to receive compensation under 39-71-703 or 

indemnity benefits under 39-71-705 through 39-71-708." 

Section 39-71-709(1), MCA. Hafer elected compensation under 

39-71-703, which provides: 

" (1) Weekly compensation benefits for injury 

producing partial disability shall be 66 2/3% 

of the actual diminution in the worker's earning capacity measured in dollars, subject to a 

maximum weekly compensation of one-half the 

state's average weekly wage. 

"(2) The compensation shall be paid during 

the period of disability, not exceeding, however, 500 weeks in cases of partial disability. 

However, compensation for partial disability 

resulting from the loss of or injury to any 

member shall not be payable for a greater number of weeks than is specified in 39-71-705 

for the loss of the member." 
Hafer's income was greater when he filed his petition 

than at the time of the accident. However, evidence was 

presented that Hafer's capacity to earn in the open labor 

market had been diminished because of the accident. 

"Actual post injury earnings are but one item 

of evidence to be considered in the determination of future earning capacity. This Court 

in Shaffer v. Midland Empire Packing Co. (1953), 

127 Mont. 211, 213, 259 P.2d 340, 342, set out 

the test for loss of earning capacity: 

"'The test . . . is not whether there has been 

a loss of earnings or income caused by the injury, but rather has there been a loss of earning capacity -- a loss of ability to earn in the 

open labor market.'" Fermo v. Superline Products 

(1978), 175 Mont. 345, 348, 574 P.2d 251, 253. 

In Fermo, the claimant injured his wrist and elected to 

receive compensation under the loss of earning capacity 

provision. Fermo had returned to his old job and was earning 

a greater income than he was at the time of the accident. 

The record disclosed that although he was doing the same 

work, pain from the injury did not allow him to work with 

the speed and efficiency that he had before the accident. 

This Court allowed Fermo to elect and to receive compensation under the loss of earning capacity statute. 

Anaconda contends that a claimant whose earnings are 

not actually decreased cannot elect between 39-71-703 (loss 

of earning capacity) and 39-71-705 (indemnity). In support 

of their position, Anaconda cites Walker v. H. F. Johnson, 

Inc. (1978), 180 Mont. 405, 591 P.2d 181. Anaconda relies 

on an example used by this Court in the Walker order on 

rehearing. 

"An example may clarify the distinction. 

Assume two workers earning the same salary 

suffer identical injuries during the course 

of their employment. The injuries result 

in the amputation of each worker's right leg 

at the knee. Assume further that Worker A's 

job at the time of his injury required him 
to stand and be mobile. As a result of his 

injury, he is unable to return to this job 

and is not trained for any others available 

at comparable wages. Assume worker B's job 

at the time of his injury was a sitting job 

not requiring mobility. As a result of his 

injury, he misses only a short time and is 

able to return to his job ---- with no loss of 

efficiency - or wages. [Emphasis added.] 

"Under the election doctrine, worker A could 

elect between compensation based on actual 

loss of earning capacity under section 92-703.1, 

R.C.M. 1947, now section 39-71-703 MCA, or indemnity benefits for possible future loss of 

earning capacity under section 92-709, R.C.M. 

1947, now section 39-71-705 MCA, for his enumerated injury. 

"Worker B, however, has suffered no actual loss 

of earning capacity. He, therefore, would be 

compelled to apply for indemnity benefits under 

section 92-709 for his enumerated injury to 

compensate for possible loss of earning capacity 

in the future." Walker, Mont. at 

P.2d at , 35 St.Rep. at 1673~-1673r 

In the example, worker B, although losing his leg, lost 

no ability to perform his work. From the limited facts 

given, it appears that if worker B had been required to seek 

another job on the open labor market, he would have been 

able to compete for a job with similar earnings. That was 

not the situation in Fermo. Although Fermo returned to his 

old job and was earning more, he could not perform his 

duties with the same ease and speed. If he had been required 

to seek a new job in the open labor market, he would have 

been unable to compete because of his injury. 

Hafer's situation resembles that of Fermo. Hafer 

returned to his old job and is earning more. He has an 

implant in his elbow and is unable to straighten his arm; 

the turning of his arm is limited. During the hearing, 

Hafer testified that although he could perform his duties as 

an iron worker, he could not perform them with the same 

ease. He also indicated that his arm was weaker and that 
it hurt his elbow and wrist when he was bolting a shell 

together. In addition, Hafer's elbow prosthesis may fail 

and require replacement, adding the risk of inability to 

continue his work at an unknown future date. Unlike worker 

B, Hafer did lose some efficiency. If Hafer were required 

to go out in the open labor market in search of a job, an 

employee of the State Job Service testified that because of 

the injury, his earning capacity would be greatly diminished. 

This Court in Walker, 180 Mont. at 411, 591 P.2d at 184, 

held that this sort of testimony is sufficient to establish 

a loss of earning capacity. We therefore hold that Hafer 

has established a sufficient factual basis so that he can 

properly elect to receive compensation under section 39-71- 

703, MCA, for loss of earning capacity. 

The hearing examiner limited the amount of Hafer's 

compensation to the amount that he could have received if he 

had elected compensation under 39-71-705. In conclusion of 

law no. 11, the hearing examiner bases this limitation on 

39-71-709(3), which provides: 

"A worker who -- has elected to proceed under 

39-71-703 may withdraw hiselection at any 

time and is entitled to receive indemnity 

benefits under 39-71-705 through 39-71-708; 

provided, however, that he shall --- not be entitled -- to a greater benefit, including compensation paid under 39-71-703, -- than he 

would have received --- if he had proceeded 

exclusively under 39-71-705 through 39-71-7 

and provided further that he shall not be 

entitled to receive benefits under both 39- 

71-703 and 39-71-705 through 39-71-708 during 

any month." (Emphasis added.) 

The hearing examiner relied on the parts of 39-71- 

709(3) which have been emphasized. This Court does not find 

that to be a proper reading of the statute. The limitation 

on the benefit paid does not apply any time a worker proceeds 

under 39-71-703 but only when that worker withdraws his 
election under 39-71-703 and claims indemnity benefits under 

39-71-705 through 39-71-708. Hafer did not change his 

election from 39-71-703 to 39-71-705 and therefore the 

amount of his compensation is not limited by 39-71-709(3). 

If the Workers' Compensation Court concludes again that 

a factor of 30% should be applied for the impairment rating, 

and that the earning capacity loss is $74.35 per week, as 

set forth in the original conclusions, then the computations 

in this case would be as follows: 30% times the 500 week 

maximum yields a durational limit of 150 weeks for compensation. Such 150 weeks need not be reduced because that falls 

within the 280 weeks allowed for one arm at or near the 

shoulder under section 39-71-705. 150 weeks times the 

earning capacity loss of $74.35 per week yields an award of 

$11,152.50. 

The judgment of the Workers' Compensation Court is 

vacated, and the cause is remanded for further proceedings 

We Concur: 

>A&J $!-iLLd W.QQJ, 

Chief Justice