No. 93-259

IN THE SUPREME COURT OF THE STATE OF MONTANA

1993

ELOISE SIMONS,

Claimant, Respondent and

Cross-Appellant,

STATE COMPENSATION MUTUAL

INSURANCE FUND and RESERVE STREET

PET & FOOD SUPPLY,

Defendant, Appellant and

Cross-Respondent.

APPEAL FROM: State of Montana

Workers ' Compensation Court

The Honorable Timothy Reardon, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Kristi Blazer, Assistant Attorney General Agency

Legal Services Bureau, Helena, Montana

For Respondent:

Morgan M. Modine, Modine & Thompson, Missoula,

Montana

Filed:

Submitted on Briefs: October 21, 1993

Decided: December 16, 1993

/

Clerk
Justice Fred J. Weber delivered the Opinion of the Court.

The State Compensation Mutual Insurance Fund (State Fund)

appeals the decision of the Workers' Compensation Court which found

in favor of claimant. Claimant cross-appeals the denial of

attorney fees, costs and a 20% penalty. We affirm.

The issues presented for our review are:

1 . Did the Workers' Compensation Court err in excluding a

previously undisclosed surveillance tape from evidence at trial?

2 . Did the Workers' Compensation Court err in giving greater

weight to the testimony of the treating physician than to the

testimony of the State Fund's expert?

3 . Did the Workers' Compensation Court err in denying

attorney fees, costs and a 20% penalty?

At the time of the injury involved in this appeal, Eloise B.

Simons (Simons) worked as a dog groomer for Reserve Street Pet and

Food Supply/A-l Grooming in Missoula, Montana. She had been a dog

groomer for approximately twenty years, at times self-employed and

at times working for others.

On June 20, 1991, Simons was grooming a standard poodle which

weighed over fifty pounds. As she carried the poodle from the

grooming table to the bathing tub, her left arm gave way and she

dropped the dog to the floor. Simons finished grooming the dog

with another worker's assistance and then sought medical attention

for an injury to her left arm and left shoulder.

Two separate claims arose from that accident. Simons was

treated for carpal tunnel syndrome and she received benefits under

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the Occupational Disease Act relative to that injury. She also was

treated for an injury to her left shoulder area which involved the

rhomboid and trapezius musculature. The shoulder injury is the

subject of this appeal.

On the day of injury, Simons sought treatment from Dr.

Woltanski at the Western Montana Clinic Now Care facility. On June

25, 1991, Simons saw Dr. Moseley, an orthopedic surgeon. Dr.

RUSSO, a neurologist, also examined Simons on that day and

confirmed Dr. Moseley's diagnoses. Dr. Moseley became Simons'

treating physician for both injuries. Dr. Moseley diagnosed

bilateral carpal tunnel syndrome and a strain of the left rhomboid

muscle group sustained by lifting the dog. He recommended surgical

treatment for the carpal tunnel syndrome and physical therapy for

the rhomboid strain. Dr. Moseley later testified that his

diagnosis and the injury were compatible with the description of

the accident supplied to him by Simons.

Dr. Moseley performed carpal tunnel surgery on both wrists.

Simons' claim for the injury to her wrists was settled prior to

trial under the Occupational Disease Act. The State Fund accepted

liability for Simons' shoulder injury under the Workers'

Compensation Act.

On August 30, 1991, after recovery from the carpal tunnel

surgeries, Dr. Moseley noted that Simons was asymptomatic in both

hands and the neck and released her to return to work without

restrictions. Simons returned to work at Reserve Street Pet and

Food Supply/A-l Grooming for a period of about five weeks, resuming

a normal workload and work activities.
On October 2, 1991, after working in her previous occupation

for four or five weeks, Simons saw Dr. Moseley for pain in her

wrists. On January 17, 1992, Simons again saw Dr. Moseley, this

time complaining of intermittent pain in the left trapezius and

upper rhomboid muscles. Dr. Moseley concluded that Simons suffered

from a mild chronic strain syndrome in the upper left trapezius and

that the injury should not preclude her from working in an

occupation that would not involve vigorous overhead lifting. He

further concluded that her condition was medically stationary and

was unlikely to improve. Dr. Moseley assessed a 3% whole person

impairment, attributing 1% to the left shoulder and 1% to each

wrist. Dr. Moseley also restricted Simons from doing work which

involved vigorous overhead lifting.

After that determination by Dr. Moseley, Simons asked for and

received successive work restrictions. On April 21, 1992, Dr.

Moseley restricted Simons to lifting no more than 15 pounds

overhead and no more than 30 pounds to chest level and restricted

Simons from working overhead and at shoulder level. The State Fund

then retained a vocational rehabilitation consultant to perform an

employability assessment. Relying primarily on information

supplied by the time-of-injury employer, the consultant concluded

that Simons was employable at Reserve Street Pet and Food Supply/Al Grooming.

Dr. Burton performed an independent medical examination of

Simons on behalf of the State Fund on August 12, 1992. He

concluded that Simons' left shoulder was impaired and the

disability caused by the injury would make it difficult for her to

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work as a dog groomer. He later recanted that conclusion based on

evidence that the Workers' Compensation Court found inadmissible.

The Workers' Compensation Court excluded certain portions of Dr.

Burton's deposition testimony because he was shown a tape of Simons

grooming her horses which had not been disclosed to the claimant

and because he based a portion of his testimony on a tape of

someone--whom he incorrectly assumed Was Simons--grooming a

standard poodle. The court stated its belief that "reliance upon

Dr. Burton's changed assessment . . . would be unfair" and that it

was proper to give greater weight to the physician with the greater

knowledge of the claimant's condition--in this case, the treating

physician.

The parties stipulated that Simons injured her left arm and

shoulder on June 20, 1991, while lifting a fifty-pound poodle while

at work. The State Fund has paid medical expenses and $747.50 in

permanent partial disability benefits to Simons for her left

shoulder. It contested the amount of temporary benefits, contended

that Simons was not entitled to permanent and rehabilitative

benefits, argued that a preexisting left shoulder problem was the

cause of the problem and contended that the injury had not resulted

in any disability that prevented a return to dog grooming as an

occupation.

The Workers' Compensation Court found in favor of Simons. The

findings and conclusions referred to both the dog grooming and

horse exercising videotapes as admissible. After that decision,

the State Fund requested the Workers' Compensation Court to amend

all findings and conclusions that were based on the inadmissibility

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of the dog grooming videotapes and requested additional findings

and conclusions that allowed for the consideration of Dr. Burton's

testimony based on the dog grooming videotape. The court denied

the request because it involved the videotape that led to Dr.

Burton's mistaken assumption that the claimant was the dog groomer

depicted in the videotape. The court amended certain findings and

conclusions which incorrectly labeled the dog grooming tape as

"inadmissible" in its findings.

The court reviewed the record and amended several findings and

conclusions, but again determined that Simons had met her burden of

proof by establishing by a preponderance of the probative, credible

evidence that she suffers a disability due to her shoulder injury.

Further facts will be provided as necessary throughout the

remainder of this opinion.

1.

Did the Workers' Compensation Court err in excluding a

previously undisclosed surveillance tape from evidence at trial?

The State Fund contends that the Workers' Compensation Court

erred when it excluded videotapes and the expert testimony which

was based on the videotapes. The videotapes excluded from evidence

showed Simons performing various grooming and exercising activities

with her horses. One of the videotapes was a lengthy surveillance

tape filmed by her former employer without her knowledge. The

other tape was an edited version of the first surveillance tape

which also showed Simons performing activities. The second

surveillance tape excluded the time periods in the first tape when

Simons was performing no physical activity and is substantially

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shorter than the unedited version.

Dr. Burton, the independent medical examiner, had initially

concurred with Dr. Moseley, Simons' treating physician. He later

changed his mind after viewing a surveillance videotape and a dog

grooming videotape provided by the State Fund for purposes of his

expert medical opinion.

Dr. Burton was deposed during the one-day recess of the trial.

The Workers' Compensation Court refused to admit the surveillance

videotape and portions of Dr. Burton's testimony which related to

that videotape because the videotape had not been listed as an

exhibit in the Pretrial Order pursuant to the requirements of §

24.5.318(5)(g), ARM.

Section 24.5.318(5)(g), ARM, requires disclosure of

substantive exhibits intended to prove a material point in issue.

Although the court refused to allow the videotape into evidence

because the State Fund had not disclosed it prior to the trial, it

did allow the testimony of a former co-employee who testified to

the contents of the videotape in a manner unfavorable to Simons.

The Workers' Compensation Court stated:

I frankly am not an advocate of surveillance tapes unless

they can document that a claimant is essentially giving

inconsistent stories [or verbal claims] which are

inconsistent with what he or she is doing physically.

The State Fund contends that the videotape demonstrates such

inconsistencies between Simons' stories and her physical actions.

It contends that the surveillance videotape was to be used as

proper impeachment evidence and, thus, did not require disclosure.

It further contends that the desired effect of impeaching the
credibility of the witness requires nondisclosure of such evidence.

According to the State Fund, the fact that impeachment evidence

focuses on substantive issues--as is the case here--does not change

its impeachment character: the primary purpose of the videotape was

to demonstrate Simons' abi,lity to do tasks which she claimed an

inability to perform.

The State Fund further argues that the outcome of this case

was entirely dependent on expert medical testimony to determine

whether Simons' shoulder condition precludes her from employment as

a dog groomer and that the medical testimony is entirely dependent

on Simons' statements to the medical providers. The State Fund

asserts that Simons' credibility should be the main focus on appeal

and, thus, the impeachment evidence was crucial. We disagree.

The record contains substantial evidence specifically

supporting the objective nature of certain medical findings. In

this case, the Workers' Compensation Court excluded the videotape

because it portrayed Simons engaged in activities which she said

she could perform on a limited basis. It did not impeach her

credibility as is argued by the State Fund; rather, it verified

portions of her testimony. We conclude that the surveillance

videotape was intended to contradict other testimony and, thus, was

direct evidence and subject to the requirements of 5

24.5.318(5)(g), ARM. We conclude that the State Fund's failure to

list the evidence in the pretrial order resulted in the proper

exclusion of the evidence.

Counsel for State Fund argued at trial that in addition to its

character as impeachment evidence, the surveillance videotape was

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also rebuttal evidence. On appeal, she concedes that the tape was

not proper rebuttal evidence. She states that she was unable to

lay the foundation for the introduction of the surveillance

videotape because medical depositions were taken during a one-day

recess of the trial. Counsel further states that the order of

presentation of evidence should be relaxed in workers' compensation

cases as procedural irregularities often occur (like the one-day

postponement here). However, that is not within this Court's

purview. The legislature has spoken to this issue and has directed

that the Workers' Compensation Court is bound by the common law and

the statutory rules of evidence. See 5 39-71-2903, MCA.

Decisions on the admission of evidence are discretionary trial

administration issues and, as such, are subject to review for abuse

of discretion. Steer Inc. v. Department of Revenue (1990), 245

Mont. 470, 475, 803 P.2d 601, 603. We conclude that, without prior

disclosure, the substantive nature of the surveillance videotape

required the Workers' Compensation Court to deny its admission at

trial.

We hold the Workers' Compensation Court properly exercised its

discretion when it excluded the surveillance videotape from

evidence because it was undisclosed direct evidence and not

impeachment evidence.

II.

Did the Workers' Compensation Court err in giving greater

weight to the testimony of the treating physician than to the

testimony of the State Fund's expert?

The Workers' Compensation Court concluded that the testimony

of Simons' treating physician, Dr. Moseley, merited greater weight

9
than that of Dr. Burton who performed an independent medical

examination of Simons. The court concluded that Dr. Moseley had

the greater knowledge of Simons' condition and, accordingly, his

testimony carried greater weight.

Dr. Moseley was Simons' treating physician for the June 20,

1991 injuries. State Fund contends on appeal that fairness

requires that Dr. Burton's testimony be given more weight than Dr.

Moseley's opinions because Dr. Burton has greater knowledge about

Simons' physical condition and abilities, about her medical

history, and about the physical requirements of dog grooming. Dr.

Burton had been Simons' treating physician at a previous time when

Simons had suffered prior injury in her left shoulder and neck in

an automobile accident.

This Court reviews the findings and conclusions of the

Workers' Compensation Court by determining whether there exists

substantial credible evidence to support them. Hash v. Montana

Silversmith (1993), 256 Mont. 252, 257, 846 P.2d 981, 984.

However, where medical testimony is offered by deposition, this

Court may review and reweigh the medical deposition testimony.

McIntyre v. Glen Lake Irr. Dist. (1991), 249 Mont. 63, 67, 813 P.2d

451, 454.

Dr. Burton's initial assessment agreed with Dr. Moseley's

opinion. This was based on both his prior treatment of Simons and

his independent medical examination conducted subsequent to the

June 20, 1991 shoulder injury on August 12, 1992. It was only

after State Fund showed Dr. Burton additional videotapes that Dr.

Burton revised his opinion.

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One of the videotapes was the shortened version of the

inadmissible surveillance videotape of Simons grooming her horse

discussed in Issue I above . The other tape was a demonstration of

a woman grooming a standard poodle which had been prepared by

Simons' counsel. This videotape depicted the woman carrying a

fifty-pound poodle around a grooming shop. Dr. Burton mistakenly

believed that the woman demonstrating the grooming of the standard

poodle in that tape was the claimant. After viewing these tapes

and after having a discussion with State Funds's vocational

rehabilitation consultant, Dr. Burton revised his opinion of

Simons' abilities.

After the State Fund filed its petition for a rehearing, the

Workers' Compensation Court issued its Order on Defendant's Motion

for Rehearing, stating as follows:

The claimant has met her burden of proof by

establishing by a preponderance of the probative,

credible evidence that she does in fact suffer a

disability due to her shoulder injury. This Court

generally gives deference to the opinion of the treating

physician. In the present case, the treating physician

was Dr. Moseley and he concluded that the claimant's

shoulder condition was compatible with her accident.

Further, that opinion is consistent with Dr. Burton's

initial conclusion reached after he conducted an

independent medical examination. Dr. Burton initially

concluded that the claimant suffers a disability due to

her shoulder injury.

The Court still believes that it is proper to give

the most weight to the opinion of the treating physician

in circumstances of the present case. Dr. Burton's

initial assessment change[d] after viewing the horse

lunging tape and two dog grooming tapes. In one of the

dog grooming tapes, Dr. Burton incorrectly assumed that

the person doing the grooming was the claimant. Under

such circumstances, the Court does not find sufficient

justification for departing from the standard of

deferring to the treating physician. . . .

11
. . .

Conclusion of Law No. 2, paragraph number 7 on page

12 is amended to read as follows:

. . . The vocational rehabilitation counselor's

opinion was based on the limited information

provided by the claimant's time-of-injury employer.

Conclusion of Law No. 2, paragraph 10 on pages 12-13

is amended to read as follows:

The Court is somewhat limited in its

consideration of the medical evidence. Given the

fact that the independent medical examiner, Dr.

Burton, initiallv concluded that the claimant has

an impairment or disabilitv due to her shoulder

iniurv and later recanted that conclusion based on

an inadmissible videotaoe and an incorrect

assumption as to the identity of a doq groomer in a

separate videotape, the Court believes that it

would not be proper to qive Dr. Burton's second

assessment more weiqht than that of the treatinq

phvsician. (Emphasis supplied.)

We agree with the determination of the Workers' Compensation

Court that it would be improper to apportion greater weight to Dr.

Burton's testimony under the circumstances of this case. Although

the Workers' Compensation Court noted that the evidence

preponderated in favor of Simons by the "narrowest of margins," we

conclude that the record contains substantial credible evidence to

support that conclusion.

We hold the Workers' Compensation Court did not err in giving

greater weight to the testimony of the treating physician than to

the testimony of the State Fund's expert.

III.

Did the Workers' Compensation Court err in denying attorney

fees, costs and a 20% penalty?

On cross-appeal, Simons contends that she is entitled to

attorney fees and costs under §§ 39-71-611 and 612, MCA, and that

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she is entitled to a 20% penalty under § 39-71-2907, MCA. At a

minimum, according to Simons, costs should be awarded in this

action as costs can be awarded without a finding of

unreasonableness.

Section 39-71-611, MCA, mandates an award of costs if the

insurer denies liability and the claim is later adjudged

compensable. Costs are not mandated in a case such as this one

where the insurer accepts liability. Attorney fees are also

awarded if the Workers' Compensation Court determines that the

insurer's conduct was "unreasonable."

Section 39-71-612, MCA, allows discretionary awards of

attorney fees and costs when the amount of an award is controverted

and the Workers' Compensation Court later grants a larger award

than that paid or offered by the insurer. Like § 39-71-611, MCA,

attorney fees may not be awarded to the claimant unless the court

has determined that the insurer's actions were "unreasonable."

Section 39-71-2907, MCA, allows the Workers' Compensation

Court to penalize the insurer by awarding 20% more than the full

amount of benefits due a claimant when the court determines that

there has been unreasonable delay or refusal to make payments.

For an award of a 20% penalty, unreasonable conduct refers and

is limited to delay or refusal to make payments. Simons contends

that the State Fund did in fact act unreasonably in denying her

benefits as the court's final judgment awarded permanent partial

disability benefits of $747.50, wage supplement benefits of $91.39

per week for 495 weeks, temporary total disability benefits of

$4,974.10 which covers 24.29 weeks, and total rehabilitation

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benefits of $2,574.09 which covers 12.57 weeks.

A threshold finding of "unreasonable" conduct on the part of

the insurer is necessary in this case for an award of costs and

attorney fees. This is not limited to delay or refusal to make

payments. The State Fund characterizes this as hinging on whether

appellants have acted reasonably in defending Simons' claim for

workers' compensation benefits.

State Fund argues that a defense in this case was both

reasonable and essential because Simons had asked for much more

than she was awarded and because her claim was "overreaching."

Simons counters that argument by contending that the question of

whether the State Fund acted unreasonably has nothing to do with

the amount of benefits which were asked for and the amount

subsequently awarded to the claimant by the Workers' Compensation

Court. We agree and also note that a defense is not reasonable

merely because the insurer deems it is necessary to defend a claim.

Unreasonable conduct on the part of the insurer also refers to the

manner of conducting that defense.

As set forth above, factual findings made by the Workers'

Compensation Court are reviewed to determine whether there is

substantial credible evidence in the record to support them.

Simons contends that the State Fund has acted unfairly and

unreasonably throughout this action. In addition to delay and

refusal to make payments, she points out numerous particular

examples of alleged unreasonable conduct. This includes the State

Fund's refusal to acknowledge that cash payments were made to

Simons by her employer on a weekly basis which would raise the

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amount of temporary total disability payments and failure to

investigate Simons' claim that she was receiving the incorrect

amount of temporary total disability benefits. Simons contends

that defense counsel set up an elaborate "stingl' operation so that

the employer could film her preparing her horse to show to a

purported buyer and then attempted to improperly use the evidence

at trial. She also cites the State Fund's refusal to refer her to

the rehabilitation panel after she was given a permanent impairment

rating and had reached maximum healing. Simons emphasizes the

insurer's refusal to pay wage supplement benefits when she went

back to work at a minimum wage job, despite the fact that the

treating physician determined Simons had suffered permanent injury

and gave her an impairment rating. She also stresses defense

counsel's conduct in conjunction with Dr. Burton's examination and

concurrence with Dr. Moseley and the State Fund's continued denial

of benefits despite the fact that Dr. Burton agreed with Dr.

Moseley.

The State Fund objects to Simons' reference to matters outside

the record--the "sting" operation--and contends that a defense was

necessary and reasonable.

The court's Conclusions of Law contain the following

statement:

The Court has been hindered throughout this case by the

convenient forgetfulness of the parties, disappearance of

key bits of evidence and the self-serving testimony by

the parties. The Court reaches the conclusion that

neither party is credible and both parties have been less

than candid with the Court. The present case epitomizes

Webster's definition of a dog-and-pony show.

We conclude that there is substantial credible evidence in the

15
record to support this conclusion and the Workers' Compensation

Court's further conclusion that the insurer's conduct in this case

was not unreasonable.

A finding of "not unreasonable" is not the equivalent of

reasonable conduct which should serve as an example for future

cases. This case is an unfortunate example of questionable conduct

on the part of the employer, the claimant and counsel for the

insurer. Unfortunately, this conduct did not cease after the

Workers' Compensation Court issued its judgment. The less than

straightforward presentation and occasional distortion of facts in

the record--which was characteristic of the State Fund's brief's on

appeal--is inappropriate and does not facilitate the appellate

process.

We hold the Workers' Compensation Court did not err in denying

the claimant an award of attorney fees, costs and a 20% penalty.

Affirmed.

We Concur:

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