NO. 89-51 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

LLOYD E. HARTFORD, 

Appellant, 

-vsFLORENCE YOUNG, 

Claimant and Respondent, 

BILLINGS PUBLIC SCHOOL DISTRICT, #2, 

Employer, 

EBI/ORION GROUP, 

Insurer. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Vernon E. Woodward argued; Woodward Law Office, 

Billings, Montana 

For Respondent: 

Mike McCarter argued; Hughes, Kellner, ~ullivan & 

Alke, Helena, Montana 

Filed: 

submitted: September 25, 1989 

~ecided : November 14, 1989 
Chief Justice J. A. Turnage delivered the Opinion of the Court. 

Attorney Lloyd E. Hartford appeals the Workers1 Compensation 

Court's affirmation of an order by the Division of Workers1 

Compensation directing the appellant to forfeit all attorney fees 

related to his representation of claimant Florence Young. We 

affirm. 

ISSUES 

1. Are section 24.29.3801, ARM (1985), and the administrative 

hearings held thereunder invalid because they are inconsistent with 

section 39-3-613, MCA, and the rule of Wight v. Hughes Livestock 

Co. (1983), 204 Mont. 98, 664 P.2d 303? 

2. Did attorney Hartford's actions violate either section 39- 

3-613, MCA, or section 24.29.3801, ARM (1985), and thereby justify 

total forfeiture of attorney fees? 

FACTS 

Florence Young submitted a claim for workers1 compensation 

following an injury incurred during her employment as a housekeeper 

at Meadowlark Elementary School in Billings, Montana. In November 

of 1985, insurer EBI/Orion Group paid the claimant a lump sum 

advance of $2,500 and in December of 1985, paid a further advance 

of $1,000. 

In February of 1986, Mrs. Young retained Lloyd E. Hartford 

agreeing to pay the attorney, 

(a) For cases that have not gone to a hearing 

before the Workers1 Compensation Court, 

twenty-five percent (25%) of the amount of 

compensation payments the Client received due 

to the efforts of the attorney . . . . 

The agreement also stated, 

3. That as of the date of this Agreement, the 

Client has received benefits as follows: Arnt. 

unknown and that no attorney's fees will be 

charged on the aforesaid amount. 
The administrator of the Division of Workers1 Compensation approved 

the agreement in compliance with section 24.29.3801, ARM (1985). 

On April 24, 1986, with Hartford's assistance, Mrs. Young 

received an advance of $12,466.65 which included $2,493.33 for 

attorney fees. The following April, the insurer notified Mrs. 

Young that she had received $4,312.05 in overpayments because she 

was receiving Social Security benefits which the insurer was 

entitled to offset. Thereafter, Hartford negotiated a full and 

final compromise settlement which provided that, 'Ithe Claimant 

agrees to accept the sum of $58,275.00 . . . plus insurer's waiver 

of recovery of $20,278.70 overpayment and advance, for a total 

settlement of $78,553.70 . . . . I' 

Hartford calculated his attorney fees at $19,638.43, twentyfive percent of the final settlement, and submitted his claim to 

the Insurance Compliance Bureau. The claims examiner advised 

Hartford that it was inappropriate to charge for Mrs. Young's 

overpayments and advances, and ordered the insurer to retain the 

attorney fees until the matter was settled. 

During the subsequent contested case on the attorney fees, 

Hartford argued that the overpayment and advances were debts which 

the insurer agreed to waive only because of his negotiation 

efforts. The hearing examiner rejected this contention and awarded 

$14,568.75 in attorney fees, twenty-five percent of the $58,275.00 

in "new moneyw obtained in the final settlement. 

The hearing examiner deducted $1,000 from the attorney fees 

after determining that Hartford violated section 39-71-613, MCA, 

and section 24.29.3801, ARM (1985). The hearing examiner found 

that Hartford charged the claimant fees based on benefits he had 

not obtained--specifically, the $1,000 and $2,500 advances, and 

the $4,312.05 overpayment. The examiner also found that Hartford 

charged the claimant twice on the $12,466.65 lump sum advance. 
Hartford appealed this decision to the administrator of the 

Division of Workers1 Compensation. The administrator agreed with 

the examinerls findings and conclusions with the exception of the 

$1,000 forfeiture. The administrator held that Hartford had 

blatantly overcharged his client and made an example of him by 

requiring forfeiture of all fees. 

Hartford then requested judicial review by the Workers' 

Compensation Court. The court agreed with the administrator's 

decision noting that forfeiture of fees is mandatory under section 

39-71-613, MCA. Hartford now appeals the Workers1 Compensation 

Court's decision. 

VALIDITY OF THE REGULATION AND HEARINGS 

The appellant argues that the workers1 compensation regulation 

governing attorney fees is invalid because it is inconsistent with 

the statute under which it was promulgated and the factors set out 

by this Court in Wight v. Hughes Livestock Co. (1983), 204 Mont. 

98, 114, 664 P.2d 303, 312. 

Consideration of this issue is precluded by the appellant's 

failure to raise it at the trial court level. Both parties fully 

briefed and argued this case before the lower court, but the record 

shows no indication that the appellant attacked the validity of the 

regulation. As a general rule, this Court will not review issues 

not raised before the Workers' Compensation Court. Martinez v. 

Montana Power Co. (Mont. 1989) , - P.2d , , 46 St.Rep. 

1684, 1687. 

FORFEITURE OF FEES 

We note at the outset that this Court is guided by the purpose 

of the workers' compensation statutes. That purpose is protection 

of the interests of the injured worker. North American Van Lines 

v. Evans Transfer and Storage (Mont. 1988), 766 P.2d 220, 223, 45 

St.Rep. 1848, 1852. 
The Montana workers' compensation statute on attorney fees 

provides : 

If an attorney violates a provision of this 

section, a rule adopted under this section, or 

an order fixing an attorney's fee under this 

section, he shall forfeit the right to any fee 

which he may have collected or been entitled 

to collect. 

5 39-71-613 (3), MCA. 

The workers1 compensation regulation in effect when this case 

arose provided that an attorney may not charge: 

(a) for cases that have not gone to a hearing 

before the workers1 compensation judge, a fee 

above twenty-five percent (25%) of the amount 

of compensation payments the claimant receives 

due to the efforts of the attorney. 

5 24.29.3801, ARM (1985). 

Appellant Hartford argues that the Workers1 Compensation Court 

erred in relying on the current version of the regulation, section 

24.29.3802, ARM (1987), instead of the version which controlled at 

the time the dispute arose, section 24.29.3801, ARM (1985). The 

appellant is correct, but the error is harmless. For the purposes 

of this case, the regulations are essentially identical in wording 

and meaning. 

Prior to reaching the Supreme Court, appellant Hartford argued 

that he did not violate the attorney fees regulation by charging 

Mrs. Young for the advances and overpayment. He asserted that they 

were debts which the insurer waived due to his negotiating efforts. 

We agree that in workers1 compensation cases, an attorney may 

bill for debts waived through the attorney's efforts. A waiver of 

debt is a benefit to the claimant obtained by the attorney and is 

fully compensable within the limitations of the attorney fees 

regulation. 
The regulation limits compensation in at least two aspects. 

First, an attorney may not charge more than twenty-five percent of 

the compensation "the claimant receives. 5 24.29.3801, ARM 

(1985). The regulation looks first to the claimant's recovery in 

capping attorney fees. Undoubtedly, an attorney may become 

involved in several distinguishable efforts in securing a single 

recovery for the client. In such cases, agency approval of 

increased fees may be appropriate. See 5 24.29.3801(4), ARM 

(1985). However, absent such approval, the attorney may not bill 

more than twenty-five percent on each amount received by the 

client. 

Second, the recovery must be "due to the efforts of the 

attorney." 5 24.29.3801, ARM (1985). Whether the attorney's 

efforts brought about the waiver, as opposed to a voluntary waiver 

by the insurer, is a question of fact to be determined by the 

hearing examiner. See 55 2-4-621(2), 2-4-623, MCA. 

Appellant Hartford also argues that he made a mistake in 

calculating his fees and is being excessively punished for pursuing 

a good faith claim. We agree that a simple mistake in calculation 

should not result in total forfeiture of attorney fees. However, 

we do not agree that his is a good faith claim. 

Hartford consistently and vehemently argued that he was 

entitled to additional attorney fees for Mrs. Young's advances and 

overpayments because they were debts the insurer waived through 

Hartford's negotiating efforts. He made this argument in a series 

of letters to Judge Reardon of the Workers' Compensation Court 

after Mrs. Young complained to the judge about Hartford's excessive 

fees. He maintained the same inflexible position before the 

hearing examiner, the administrator, and the Workers' compensation 

Court. 
Now before this Court, Hartford admits for the first time that 

he was not entitled to those fees, and asserts that he was merely 

mistaken in his calculations. If Hartford's former argument is 

incorrect at this appellate level, he should have known that it was 

incorrect at the agency level. We cannot credit Hartford with good 

faith in pursuing attorney fees under a theory which even he admits 

is without legal merit. 

We agree with the Workers1 Compensation Court that Hartford 

violated the regulation in at least two instances. First, Mrs. 

Young received the two advances totaling $3,500 prior to retaining 

Hartford. Those advances were settlements of future benefits owing 

to Mrs. Young and not debts she was required to repay. Charging 

for those benefits violates the regulation because, as appellant 

now admits, the claimant received those advances due to her own 

efforts and not Hartford's. Furthermore, the parties1 agreement 

stated that the attorney would not charge for amounts previously 

received. To now label these advances debts waived through the 

attorney's efforts is at least a violation of their agreement. 

Second, Mrs. Young received a $12,466.65 advance through 

Hartford's efforts, but he was paid $2,493.33 for those efforts. 

To now call this advance a waived debt would allow the attorney to 

charge a twenty-five percent fee in addition to the twenty percent 

fee already received. 

We hold that attorney Hartford's attempts to overcharge the 

claimant are in violation of the attorney fees regulation and the 

purposes of the workers1 compensation statutes. Total forfeiture 

of fees is required by section 39-71-613(3), MCA. As the Workers' 

Compensation Court noted, this is a harsh result considering that 

Mrs. Young received more than $58,000 through Hartford's efforts. 

However, the statute is clear and it is mandatory. Affirmed. 

'Chief 'Justice 
We concur: 

Justices 

Hon. Frank I .'I asw well , Retired 

Chief Justice, sitting in place 

of Justice R. C. McDonough 
Justice John C. Sheehy, dissenting: 

This is indeed a harsh result. The biblical avouchment 

that the laborer is worthy of his hire applies even to 

lawyers. 

I don't understand the majority opinion. It affirms 

that waiver of a debt owed by the worker to another, where 

the waiver is gained through the attorney's effort, is a 

benefit to the claimant for which the attorney should receive 

compensation. Then the majority assert that his compensation 

is limited to moneys "the claimant receives." The majority 

derive that clause from a regulation adopted by the 

Department. However the regulation itself is a departure 

from the language of the statute on which the regulation must 

depend. Section 39-71-613(2) provides the Department may 

regulate attorneys fees, but in so regulating, says the 

statute, the Department shall consider: "(a) the benefits 

the claimant gained due to the efforts of the attorney." 

According to my dictionary (Webster's New Collegiate 

Dictionary (1981)) "receive" means "to come into possession 

of"; on the other hand, "gain" refers to "resources or 

advantage acquired or increased"; or again, "to cause to be 

obtained or given." Here, Mrs. Young did not receive money 

when the debts were forgiven; she gained an advantage in not 

having to pay the debts. 

In Board of Barbers v. ~ig Sky College , Etc. (1981), 

- Mont . - , 626 P.2d 1269, 1271, an administrative rule 

that required a year's apprenticeship in "a commercial 

babershop" prior to examination, when the statute required a 

year's apprenticeship served "under the immediate personal 

supervision of a licensed barber" was held invalid. In State 

ex rel. Swart v. Casne (1977), 172 Mont. 302, 308-309, 564 
P.2d 983, 986, this Court struck down a rule of the 

Department of Health that defined "Occasional sale" in 

conflict with the statute on the same subject. Those cases 

should lead us here to say that the regulation, B 24.29.3801 

(ARM (1985)) is an invalid restriction on the right of an 

attorney to be paid for his work under B 39-71-613(2), MCA. 

Hartford, of course, is not entitled to attorney fees 

for the two advances totaling $3,000.00, nor for the advance 

of $12,466.65 for which he was paid. He was mistaken as to 

those items, but against those items must be weighed the 

threat, now actuality, that he should get - no fees for his 

successful representation of his client. The positions of 

the Department and Hartford hardened, and vengeance set in. 

He gained for his client, according to my calculations, 

$63,087.05, for which he was entitled to $15,771.76 in 

attorney fees. A loss of that amount is a very severe jolt 

to an attorney whose livelihood depends on success, and 

losers are loss items. Hartford is being punished for daring 

to stand up to the Department and to insist on his rights. 

I can't think of a criminal case in our state where a 

fine exceeding $15,000.00 was ever assessed. Hartford is 

being treated worse than a criminal. 

I would order payment to Hartford of his rightfully 

earned attorney fees.