### 140. 81-228 

### INTHE SUPREME COURT OF THE STATE OF MONTANA 1982

JOHN C. 

### VAN DAVEER, Claimant and Respondent,

STAUFFER CHEMICAL COMPANY,Employer, and NATIONAL UNION 

### FIRE INSURANCE COMPANY OF PITTSBUHG, Insurer, Defendantsand Appellants.

Appeal from: Workers' CompensationCourt Honorable William Hunt, Judgepresiding Counsel of Record: For Appellants: James P. 

### Harrington argued, Butte,Montana For Respondent: 

### Keefer and Roybal, Biilings,Montana Neil 

### S. Keefer argued,Biliings,Montana

Submitted: June 21, 1982 Decided: September 

### 9, 1982 Filed:"Ski-' 

## .I ~982Mr. Justice John C. Harrison delivered the Opinion of the Court.

Thls appeal arises from a July 25, 1980 judgment of theWorkers' Compensation Court in which John C. Van Daveer, the claimant, was awarded additional temporary total disabilitybenefits, an indemnity award fordiminished earning capacity, penalty for late payment, and attorney fees. The employer's request for rehearing was denied by order of Aprll 16, 1981. On September 24, 1978, Van Daveer, while working a

summer job as a switchman for Stauffer Chemical Company, fellfrom a railroad car and was crushed between the car and

a brick wall. Van Daveer sustained a collapsed lung, six fractured ribs, and numerous other internal injuries. He underwent surgery and was hospitalized in intensive care for atleast a week. After the injury, Van Daveer did not intend toreturn to Stauffer but rather planned to return to school to complete his degree. He discussed this intention with Dr. Bartlett, the only medical expert testifying in the case. On January 4, 1979, Dr. Bartlett released Van Daveer to

resume "full, normal activitiesand duties." Van Daveer returned to school in January 1979 for wlnter quarter and testified that he continued to suff6r irom extreme pain. In mid-February Van Daveer developed a hernia at the site of the original incision. Corrective surgery was performed March 23, 1979, and Bartlett again released Van Daveer for full activity asof May 1, 1979. Van Daveer graduated from Montana StateUniversity in civil engineering in August 1979 and currently is employedwit.h the Mont.ana Power Company asan engineer. At the time of the accident, Van Daveer was paid $7.53 per hour for fort-y hours per week. His temporary total rate was $188 per week and his maximum permanent partial rat.e was $94 per week. Van Daveer properly gave Stauffernotice of hisclaim and filed for compensation. National Union Fire Insurance Company accept-edliability forVan Daveer's injury, paid all medical payments due, and paid weekly temporary t-otal disability benefits t-hrough February 25, 1979. National then terminated all compensation and claimed an overpayment of $966.86 forpayments made between January 3 and February 25, 1979. National reinst.i tuted temporary tot.al disability payments on March 21, 1979, at the time of the hernia problem. It continued payments through Flay 1, 1979, deducting the claimed overpayment and making payment of $161.14 on September 28, 1979. Van Daveer claimed he was entitled to temporary total payments from the dat.e of his injury toAugust. 1, 1979, and toa further I1indemnit.yaward." The case was submit-ted t-o the Workers

## ' Compensation Court on the pretrial order and briefs of counsel. The court concluded that Van Daveer would not have been physically fit to return to his old job with St.auffer on January 3, 1979, and t.hat he was entit-ledto temporary tot-a1 disability benefit-s from the date of injury to August 1, 1979. The court. further concluded that residual effects of Van Daveer's injury limited his abi1it.y to obtain certaineinployment as an engineer in the open labor market., and, therefore, he was ent.itled to an "indemnit.~ award" of 100 weeks. The court computed temporary total compensation benefits from September 24, 1978, to August 1, 1979, at$188 per week, less the amount already paid, for a total of $4,162.86. To that figure, the court added a 20 percent penalty for delay or refusal t.o pay compensation which amounted to $832.57. In addition, the "indemnity award" of 100 weeks at $94 per week totaled $9,400. Each of these amounts was tobe paid in a lump sum. Stauffer and National petitioned for rehearing. The petition was denied April 16, 1981, and this appeal ensued. Four issues arebefore thisCourt on review: 1. Whether the court's award of additional temporary total compensation benefits was supported by substantial evidence? 2. Whether the court's indemnity award was supported by substantial evidence? 3. Whet.her the court's imposition of a penalty was supported by substantial evidence? 4. Whether the court erred in awarding attorney fees? AODITIOhAL BENEFITS The first issue to be considered is whether there is substantial evidence t.o support the award of additional disability benefits. If there is substantial evidence to support the Workers' Compensation Court, t~his Court cannot overturn that decision. Holton v. Stoltze (1981), -Mont

# .National argues the court's award of additional disability benefits was arbitrary and unsupported by substantial evidence. National points to t.he pretrial stipulation which states: "Thereafter, defendant.-insurer reinstituted temporary total disability payments on March 21, 1979 when Claimant again became disabled because of a hernia problem

# ..." (Emphasisadded.) National argues t-hatthis stipulation, in addition to Dr. Bartlett-lsfullmedical release of Van Daveer on January 4, 1979, precludes a finding of disability bet-ween January and March 21, 1979. The court concluded t-hat since a hernia is caused by exertion, if the original surgery incision was herniating from the daily activities associated with attending school, it could not have been sufficiently healed t.o have allowed Van Daveer to return tohisjob at Stauffer inJanuary. Dr. Bartlett testified that he knew, at the time he released Van Daveer for return t.o work, that Van Daveer did not intend to ret-urnto his job at Stauffer. Bartlett also stat-edhe was not familiar with the American Medical Associat-ion Rating Guides because he did not often make those det-errninationsand his examination of Van Daveer was of the nature of a follow-up:



# . So, basically, Doctor, would it be fair to state that, really, at no time did you ever sit down with him and go through the job that he had at Stauffer- and say, 'All right, you can go do this today or you can do it next week'? "A. I didn't do that and had no intention of doing that. What I mean by t.he physical fitness of him was he was able to perform normal activities as stated in my lett-er. I did not go through and do a disability examination on him. I wasn't requested to. I was giving a follow-up."Van Daveer testified he experienced pain in his hips and chest afterJanuary 1979which impaired hismovement and would have prevented his return to work at Stauffer. He stated he believed he could not have returned to Stauffer, ifhe had ever intended todo so, untilAugust 1, 1979. We find the court's determination of temporary total disability payments due Van Daveer from the date of injury toAugust 1, 1979, tobe supported by substantial evidence. INDEMNITY AWARD In hispetition for a hearing Van Daveer requested an "indemnity award," but did not specify the statute under which hisrequest was made. The Workers' Compensation Court found that he suffers from residual effects of his injury which would "limit his ability to obtain certain employment

as an engineer in the open labor market" and, therefore, made an "indemnity award of 100 weeks." This Court recently upheld a finding of 40 percent disability of the whole man by the Workers' Compensation Court. Holton v. Stoltze, supra. There, two physicians gave the claimant disabilityratings--one 10percent and the other 15 percent. The court, after considering the claimant's age, education, work experience, pain and disability, actual wage loss and loss of future earning capacity, found a 40 percent disability. Based on that determination, the court awarded claimant 200 weeks of benefits at $45per week. Here, the court made no finding of a percentage of disability of the whole man or of any member of the body. In fact, it did not specify any basis for its 100-week determination, nor did it specify the statute under whichthe award 

### was made. We find such an unexplained det-erminat.ion to be arbitrary, and we return this question to the Workers

## ' Compensation Court formore complete findings. PENALTYThe next issue on review is whether a 20 percent penalty for unreasonable delay authorized by section 39-71- 2907, MCA, was warranted here. National paid Van Daveer temporary total payments from the date of injury through February 25, 1979, stopping the payments after receiving Dr. Bartlet.tlsmedical release. Van Daveer's hernia surgery and subsequent recovery required additional temporary t-otal payments. National made the payments from March 1, 1979 through May 1, 1979, when Dr. Bartlett again gave Van Daveer a medical release. Since Dr. Bart1et.t had originally released Van Daveer for work on January 5, 1979, National claimed an overpayment. of $966.86 for payments made into February. It subtracted this overpayment from payments due from March through May and on September 28, 1979, paid Van Daveer t.he $161.14 remainder. Robert W. Keene, branch manager for the General Adjustment Bureau, testified via deposition that after the September payment, Van Daveer was owed nothing further

# . The court subsequentlymade Finding of Fact No. 20: "The posit-ion of the insurance carrier that claimant is entitled to absolut-ely nothing constitutesa delayor refusal topay compensat.ion benefits so as to entit-leclaimant t.o a 20%penalty as provided by section 39-71- 2907, MCA." In his deposition, Keene stated that he based his position that Van Daveer was not entitled t.o further payments on Dr. Bartlett's medical release. The penalty is authorized for "unreasonable delay orrefusal to pay." Section 39-71-2907, MCA. The pendlty is not, however, intended to eliminate the right of an insurer to assert a legitimate defense. Steffes v. 93 Leasing Co., Inc. (1978), 177Mont. 83, 580 P.2d 450. Based on the facts in this case, we find the court's imposition of the 20 percent penalty unsupported by substantlal evidence. "The triggering event for the purpose of awarding penalties for unreasonable delay or refusal to pay compensatlon is the insurer's receipt of medical verification of a compensable injury." Holton v. Stoltze(l981), - Mont

# .

, 637 P.2d 10, 13, 38 St.Rep. 1835, 1838. - Here, rather than a verification of compensable injury, the insurer received medical verification that Van Daveer was recovered and capable of returning to fullduty

asof May 1, 1979. Although, based on depositions taken nearly a year later, the court determined Van Daveer's temporary total disability payments should have extended beyond that date,

we find it was not unreasonable for the insurer to rely on the med~calreleases. We therefore reverse the court's imposition of a 20 percent penalty. ATTORNEY FEES Insurer1 s entire argument that attorney fees were improperly awarded is based on the premise that Van Daveer should not prevail on the other issues before the Court. The court awarded attorney fees. Section 39-71-611, MCA, provides for such an award: "In the event an insurer denies liability for a claim for compensation or terminates compensation benefits and the claim is later adjudgedcompensable by the workers' compensation judge oron appeal, the insurer shall pay reasonable costs and at-torneys' fees

as established by the workers' compensation court." Here, the insurer did not deny 1iabilit.y but did terminate cornpensat-ionbenefits on a claim which has been upheld as compensable. We, therefore, affinn the court's award of reasonable costs and attorney fees. We remand this case to the Workers' Compensation Court for action in accordance with thisopinion.

JusticesMr. Justice Frank B. Morrison concurring: I concur inpart, and dissent inpart. This case need not be remanded as claimant is not entitled to an impaired earning capacity award. The record contains a 

### total lackof evidence 

### to support a finding thatclaimant suffered a 20%lossof earning capacity. The following evidence bears upon that question. DEPOSITION OF CLAIMANT: (PP*16, 17, 18) "Q. Now, what type of work do you do allday now atthe present time? "A. Like I said, 

### most of the week, atleast 35 hours 

### is desk work, is design work. And 5 hours a week is fieldwork, which involves traveling and inspecting

# . "Q. Your degree fromBozeman is in Civil Engineering, is that 

### correct? "A. 

### Correct. "Q. You 

### are employed by the Montana Power Company asan engineer? "A. 

### Correct. "Q. And you 

### are familiar, 

### are you John, with the type of work thatcivil engineers do? "A. Yes, I 

### am. "Q. You 

### are able, I take it, 

### to do your present job, 

### is thatcorrect? "A. That's 

### correct. "Q. Are there some civilengineering jobs that you feel thatyou would be unable to do? "A. The area I would limitmyself 

### to would be, infact, if I was 

### to have a job thatrequired a greatdeal of traveling possiblyheavy construction

# . "Q. Can you tell the reason for thatopinion? "A. I would say that I would be hesitant to do something like thatbecause I reallyhaven't tried to test the fullcapabilities of my physical wellbeing as far as complete healing from the injuries. And I wouldnlt want to jeopardize myself 

### or anybody 

### else in such 

### a situationwhereI might gethurt say if I was to be in the proximity of heavy construction and something did happen and I 

### was called on to do something that required some heavy physical response

# . "Q. Are there any activities thatyou can't do now thatyou could do before your injury? "A. Not that I know of. I haven1 

### t tried 

### alot of things afterwards." Atpage 36 of the deposition the claimant gave the following responses 

### to questions propounded on cross-examination: Q. I mean in the field of civil engineering itself. Okay, putting aside the question of whether there 

### was an accident involving heavy equipment and you being around and called to lifta vehicle off of somebody 

### or something like that, but just inyour field aloneof civil engineering, there is nothing thatrequires any functions thatyou can't perform, is there? "A. The only

### area I would question myself in doing is possibly if I was on a large inspecting job which would require

### me to do alot of climbing for a long period of 

### time. "Q. Other than that, the performance, there is nothing you could conceive of thatyou couldn't do, is there?

The deposition of the treating physician 

### was admitted. Dr. John D. Bartlett gave the following testimony: "Q. Okay, at the time thatyou examined him on January4, 1979, did you form an opinion, based upon 

### a reasonable degree of medical certainty, as towhether he had any impairment 

### or disabilityfrom thisaccident 

### at StaufferChemical Company? "A. I feltthathe 

### was physically fitforduty, yes. "Q. You feltthathe waswithout any impairment ordisability? "A. Yes

# ." The onlytestimony in the record to support a permanent disabilityaward is claimant's testimony thathe might limithimself in hiswork from having to do a "great deal of traveling and possiblyheavy construction." There is not even self-serving testimonyby the claimant that such a limitation would in any way affecthis ability

### to earn in the future. Although it is preferable 

### to call an employer, a supervisor, 

### or some expert witness

### to establish thatphysicial limitations affect earning capacity,



### some "substantial credibileevidence" could be provided by the claimant himself. In thisrecord, even that support 

### for the award 

### is lacking. In fact, the onlymedical evidence in the record suggests that claimant has neitherphysical impairment nor disability. I do not agreewith the suggestion in the majority opinion that a medical finding of percentage of "disability of the whole man 

### or of anymember of the body" 

### is determinative of

an issue involving impaired earning capacity

# . Nevertheless, the medical testimony in thisrecord, when viewed inconjunction with claimant's testimony, does not support the finding of a 20% impaired earning capacity and therefore the finding should be 

### set aside. I differwith the majority inremanding this 

### case. The claimant simply failed in hiseffort 

### to provide any evidence of impaired earning capacity and therefore that aspect of claimant's

case must fail. The result of the majority opinion is to give claimant a second opportunity 

### to provide evidence not produced initially. I know of no legal support for such action. I agreewith the majority's position on the balance of issues. Based upon claimant's testimony there is 

### some "substantial credible evidence" to support an award of temporary 

### total disabilitypayments 

### to claimant untilAugust 1, 1979. However, in lightof the treating physician's finding that claimant could return to work inFebruary of 1979, and notice thereof to the insurer, a penalty should not have been assessed against insurer for suspending temporary total payments. I would affirm the Court's award of additional temporary 

### total compensation benefits, affirm the award of costs and attorney fees, and modify the judgment to exclude therefrom the award for loss of future earning capacity and penalty. 

# .--,

### Mr. Justice John C. Sheehy concurring in part and dissenting inpart:

I concurwith themajority in the resolutionof the issues of temporary total disability payments, and attorney fees. I disagree with and dissent from the majority opinion insofar as it remands the indemnity award, and denies the worker's right to a penalty in this case. Itdistorts the record to say that there is no basis in the evidence and in the findingsand conclusions for the indemnity award. (Theindemnityaward is forpermanent partial loss of earning capacity.) At the outset, it is stated here as reinforcement that when theWorkers' Compensation Court is considering an indemnityaward, itneed not consider as a determinative fact that the employee is earning as much ormoremoney as he did before the injury. Fermov. Superline Products

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

### course, if loss of earning capacity canbe proven through an actual,post-injury loss of earnings, that is an item for the Workers' Compensation Court to consider. Walker 

### v. H. 

### F. Johnson, Inc. (1978),180 Mont. 405, 591 P.2d 181. Itwas settled in Shafferv. Midland Empire Packing Co. (1953), 127Mont. 211, 213-214, 259 P.2d 340, 342, that the test ofwhether an injuredworker is entitled to an indemnity award is not whether there has been a loss of earnings or income caused by the injury, but ratherwhether there has been a loss of earning capacity--a loss of ability to earn in the open labormarket. The evidence in this casediscloses that this injured worker has sustained a loss of ability to earn in the open labormarket. This injury occurred when the employee, working as a switchman,was crushed between a brick wall

### and a moving train car. His injurieswere found by the Workers' Compensation Court to be: "blunttrauma to the chest and abdomen;abrasion right lobe of liver;hemoperitoneum; contusion to left kidneywith hematoma at base of gallbladder;hemopneumothoraxof right lung; [and] fractured ribs 5 through 11on the left." He was substantiallyand seriously injured. With respect to theworker's residualpost-injury difficulties, theWorkers' Compensation Court made findings that theworkerhas occasional discomfort on the left side of his chest due to the nature of the healing of his ribs; that when he sits for a long period of time,he experiences tiredness in his back and pain in his legs. The court also found that afterhis injury theworker received a degree in civil engineering from Montana State University and is employed as a civil engineer by the Montana Power Company. However, theworker's opportunity towork as a civil engineer is limited in that he can not accept a job that requires

a great deal of traveling or that is involved with heavy construction. The claimant stated the reason for this limitation is that hewould notwant to jeopardize himself or anybody else in a 

### situation where

# ".

.. I

### might get hurt, say if I



### was to be in theproximity of heavy construction and something did happen and Iwas called on to do something that required

some heavy physical response." The pain and "bothersomeness" in his rib cage is due to the fact that a couple of the ribshave healed a 

### little out of 

### place and they protrude farther fromhis chest than the other ribs. He has a continuing dull pain in the chest.

### On these findings, the Workers1Compensation Court concluded: "Theevidence clearly establishes that claimant still suffers some residual effects fromhis injury thatwould limit his ability to obtain certain employment -- 

### as an engineer in the open labormarket. It appears that an indemnity award of 100 weeks would be an appropriate award inhis case." (Emphasisadded.) We are required to view the evidence on appeal of a case of this kind in the light most favorable to the prevailing party. Hellicksonv. Barrett Mobile Home Transport, Inc. (1973), 161Mont. 455, 507 P.2d 523, 525. In considering such evidence

we should bear in mind these rules: 

# ".

. .Wewill not substituteour judgment for that of the trier of fact,but ratherwill only 

### consiclc-rwhether substantial credible evidence supports the findings and conclusions. Those findingswill not be overturnedby this court unless there is a clearpreponderance of t.vidcnceagainst them. We will view the evidence in a lightmost favorable to theprevailing party, recognizing that substantial evidencemay beweak or conflictingwith other evidence, yet still support the findings 

# .

# .." Cameronv. Cameron (1978),179Mont. 219, 228, 587 P.2d 939, 945. We owe a good deal of respect to the findings and conclusions adopted by theWorkers' Compensation judge. Under section 39-71-2905,MCA, he is given the power to fix and determine any benefits to be paid and to specify the manner of payment to a claimant. The Workers1Compensation judge is required in that same statute tomake his determinations in accordancewith the law as set forth in Ch. 71of Title 39, MCA. Indemnity awards arise by virtue of the provisions of sections 39-71-705 and -706, PICA. 

### The latter section provides that in all cases of permanent injury less than total, the compensation forpermanent partial disability shallbear such relation as the disability bears, in this case, to 500weeks. By determining here that the claimant

### was entitled to 100 weeks forhis indemnity award, the Workers1Compensation Court impliedly found that he had suffered a loss of 20 percent of earning capacity. The record bears this out. Although an estimate from a medical person as to the percentage of total disability of an injured worker is undoubtedly helpful to theWorkers1Compensation Court, I 

### find nothing in the lawwhich requires the testimony of a medicalperson as an absolute requisite for such an award. There is no reasonwhy the Workers' Compensation Court cannot rely on the uncontroverted evidence of the claimant as to the amount and character of his disability, fromwhich theWorkers1Compensation Courtmay draw a conclusion as to the amount of indemnity award towhich the claimant is entitled. Section 39-71-706,MCA. Taking into account that there is a different Workers' Compensation judgenow sitting than the onewho heard and determined this case, itappears quite unnecessary to me to remand this case to theWorkers1Compensation judge forwhat will be a ministerial act: his determination that the injuries shownby the claimant amount to 20 percent of his earning capacity. Ialso disagreewith themajority conclusion that this claimant isnot entitled to a penalty award based on the actions of the insurer in connectionwith his claim. The majority is substituting its opinion for that of theWorkers1 Compensation judgeupon entirelywrong factors. This isnot

a casewhere the employer-insurer had a right to rely onmedical evidence so as to refuse 

### - all further compensation. Section 39-71-2907,MCA,

### provides:

# ".

. .The question of unreasonable delay or refusal shall be determined by the workers' compensation judge, and such a finding constitutes good cause to rescind,alter, or amend any order, decision,or award previously made in the cause for the purpose ofmaking the increaseprovided herein.

### " TheWorkers' Compensation Court concluded that "[tlhe position of the insurance carrier that claimant - 

### is entitled to absolutelynothing constitutes a delay or refusal to pay - 

### compensationbenefits

# .. ." (Emphasisadded.) The record supports this finding and conclusion. A 

### review of the whole record,not shown to have been made by themajority, would indicate that therewas an unreasonable delay or refusal topay compensation to theworker. On March 9, 1979,Mr. Keene,branch manager of the adjustment firm handling this case, wrote to the worker stating that he had been overpaid for 36 days fora total of $966.86, and demanding that Van Daveer repay that amount. This

was during the period of theworker's disability, which the majority concurs is correctly computed. On March 21, 1979, counsel for theworker wrote to Mr. Keene advising him of the development of a hernia in the long abdominal incision. In that letter, counsel advised Keene that the overpayment could be deducted from the eventual entitlement to the worker, and that thiswas a case where therewould be a claim over and above the temporary total disabilitybenefits. On March 30, 

### 1979,Keene wrote to counsel for the worker stating that they were going to deny further compensation by relying on themedical reportof Dr. Bartlett that the worker sufferedno residual disability, although at that time Keene had been advised that an operation for the hernia had occurred. -17-

### On June 8, 

### 1979,Dr. Bartlett wrote to Keene, stating that he had last seen the worker on March 29, 1979,and that he had released theworker for full duty as of May 1, 1979. Dr. Rartlett also indicated that since he had not seen the worker lately, he could give no further information at that time.On July 2, 1979, the worker's counselwrote to the adjustment firm stating that a claim would be made for an indemnityaward, and setting forth the amount of partial disability then owed to the worker. The letter invited any offer that the firmmight make with respect to settling the

case. The insurerdid not respond. OnAugust 23, 1979,Keene wrote to the Workers' Compensation Division, asking forpermission to pay theworker a temporary total disability of 6 weeks, and to deduct therefrom the overpayment of $966.86, leaving a net payment to the employee of $161.14. On September 28, 1979,Keene addressed a letter to counsel for the worker stating that he had received a letter from theWorkers' Compensation Division authorizing the deduction of the overpayment and that Reene had surrendered

a check in the sum 

### of $161.14 "as final payment of compensation benefits owing." On February 7, 1980, the employee filed his petition for a hearing to determine the compensation benefits to which he was entitled. In that petition, he asked for an indemnity award for prospective loss of earning capacity. OnApril 30, 

### 1980, the Workers' Compensation judge entered

a pretrial order, in which he noted theworker contended 

### he

### was entitled to an indemnity award for prospective loss

### of earning capacity, and in which the employer contended that the claimant had been paid all medical and compensation benefits towhich he was entitled. The case was tried on depositions, all taken on the

same day. The claimant testified to his continuing disability. Keene testified thatbased onmedical reports and the further testimony that day of the worker,he would still contend that theworker was not entitled to one furtherpenny 

### as compensationbenefits. Thus,nonths after the letter of September 

### 28, 1979, itwas apparent that Keene still refused to changehis mind, and was relying onmedical reports that obviouslywere not pertinent to the present claimed condition of theworker. The Workers' Compensation Court saw this as an unreasonable delay or denial of compensationbenefits. The record sustains the court. When there is substantial evidence to support the court's findings and conclusions, it is the duty of this Court to affirm those findings. Walker 

### v. H. F. Johnson, supra. 

### Iwould affirm the Workers' compensationCourt in toto.



# ., Mr. Chief Justice Frank I. 

### Haswell: I 

### concur in the foregoing opinion of Mr. Justice Sheehy.

Chief Justice