No. 89-316 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

JOHN L. REINHARD, 

Claimant and Appellant, 

-vsMISSOULA SHEET METAL, Employer, 

and 

STATE COMPENSATION INSURANCE FUND, 

Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, The ~ono&ble Timothy 

Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Richard R. Buley; Tipp, Frizzell & Ruley, Missoula, 

Montana 

For Respondent : 

Oliver H. Goe; Browning, Kaleczyc, Berry & Hoven, 

Helena, Montana 

Submitted on Briefs: Nov. 2, 1989 

Decided: Decenber 22, 1989 a 

Filed: 

- Clerk 
Justice R. C. McDonough delivered the Opinion of the Court. 

Claimant, John L. Reinhard, appeals the May 31, 1989 

judgment of the Workers' Compensation Court which denied him 

a conversion of his biweekly workers' compensation benefits 

to a lump sum payment. We affirm. 

The sole issue on appeal is: 

Whether the Workers' Compensation Court abused its 

discretion when it denied John Reinhard's request to convert 

his biweekly payments to a lump sum award. 

The claimant, Mr. Reinhard, is a 41 year old, married 

man with two dependent children. On March 14, 1985, he 

suffered an on the job injury while employed at Missoula 

Sheet Metal in Missoula, Montana. This injury rendered Mr. 

Reinhard permanently and totally disabled. He must spend 

nineteen hours a day flat on his back and he can only walk 

with the aid of two canes. 

In addition to his physical ailments, Mr. Reinhard also 

suffers from rather substantial psychological problems. 

Since the injury, he has suffered severe depression. This 

depression has at times become so intense, that Mr. Reinhard 

has become suicidal. Examining physicians believe that the 

cause of Mr. Reinhard's depression is multi-faceted. They 

maintain that his psychological condition has its roots in 

the injury itself, chronic pain, loss of job, marital 

difficulties and pre-injury psychological problems arising 

from a chaotic social history. 

Despite his health problems, Mr. Reinhard has done a 

remarkable job managing his finances. His assets, which are 

estimated at approximately $200,000, include I.R.A.'s, an 

investment portfolio, and several pieces of real property. 

Mr. Reinhard's monthly income is approximately $4,000 and his 

monthly livinq expenses usually equal about $1000-$1200. By 
his own admission, his workers' compensation benefits are not 

needed to meet the family budget or any other expenses. 

In an effort to ease his psychological and physicalproblems, Mr. Reinhard presented a request to the Division of 

Workers' Compensation for a lump sum advance of his benefits. 

The advance, which is approximately $350,000, would be used 

for the purchase of an apartment complex and for the purchase 

of a one level home. The living area in Mr. Reinhard's 

present home is split by two sets of stairs and is heated 

primarily with wood. Due to his injuries, Mr. Reinhard 

cannot easily negotiate the stairs which run between the two 

levels in his home. He is, therefore, relegated to just half 

of the house much of the nineteen hours a day in which he 

must lie flat. Also, due to his injury, Mr. Reinhard can no 

longer split and saw the wood which is necessary to heat his 

house. He therefore desires to replace his home with one 

that suits his disabled condition. 

The remainder of the lump sum would be used to purchase 

an apartment complex. Mr. Reinhard maintains that this 

purchase would benefit him in a number of ways. First, the 

investment would give him some direction in life and would 

allow him to beneficially occupy his time by managing the 

finances and income realized from the apartments. This 

direction, he maintains, would restore lost self-esteem which 

has accompanied his job loss and loss of position as the 

family bread winner. Mr. Reinhard also asserts that his 

continual problems with the Workers' Compensation Division 

necessitate his separation from the "comp system." 

Apparently, the inadequacies and his perceived incompetence 

of the Division has been a never ending source of frustration 

to Mr. Reinhard. It has become a major source of his 

depression and anger. Finally, Mr. Reinhard maintains that 

this investment will allow him to increase his yearly income 
by almost $7,000.00. This increase, he argues, would serve 

to better meet his physical and psychological needs. 

The Workers' Compensation Court, following trial, denied 

Mr. Reinhard's request. It found that he had not overcome 

the presumption in favor of biweekly benefits, nor had he 

adequately established that a lump sum payment would be in 

his best interest. Following a denial of his request for a 

rehearing, Mr. Reinhard appealed to this Court. 

The decision to award or deny a lump sum settlement will 

not he interfered with on appeal unless there has been an 

abuse of discretion. The Workers' Compensation Court will be 

presumed correct and affirmed if supported by substantial 

evidence. It will be reversed only if the evidence clearly 

preponderates against its findings. Hock v. Lienco Cedar 

Products (1981), 634 P.2d 1174, 38 St.Rep. 1598. 

Mr. Reinhard maintains that the lower court abused its 

discretion by holding that there is a presumption in favor of 

biweekly payments. According to Reinhard, at the time the 

accident occurred, there was no such presumption stated in 

the workers' compensation statutes. Statutes which are in 

effect at the time of the accident control the outcome of any 

case brought before the Workers' Compensation Court. Buckman 

v. Montana Deaconess Hospital (1986), 224 Mont. 318, 730 P.2d 

380. Therefore, Mr. Reinhard argues, and we agree, that the 

law, as it existed on the date of his injury will control the 

outcome of the case. 

There was no statutory presumption against lump sum 

payments on March 14, 1985, which was the date of Mr. 

Reinhard's accident. See $5 39-71-740 and 741, MCA (1983). 

However, through case law, it has always been recognized that 

biweekly payment of compensation is the favored means of 

dispensation of benefits. Lump sum conversion is the 
exception. Laukatis v. Sisters of Charity of Leavenworth, 

(1959), 135 Mont. 469, 342 P.2d 752. The rationale behind 

this conclusion is that workers' compensation benefits are a 

substitution of wages and therefore should be paid in the 

same manner as wages, on a regular biweekly basis. In light 

of this rationale, it has been held that settlements are only 

granted where there is outstanding indebtedness, pressing 

need or where the best interests of the claimant, his family 

and the general public will be served. Willoughby v. GeneralAccident Fire and Life (1980), 187 Mont. 253, 257, 609 P.2d 

700, 702. 

The Workers' Compensation Court determined that a lump 

sum payment would not be in Mr. Reinhard's best interest. It 

based this determination on testimony from two doctors, Mr. 

Reinhard's accountant, his stockbroker and from testimony of 

Mr. Reinhard himself. 

Dr. Stratford, a psychiatrist who examined Mr. Reinhard, 

testified that a lump sum payment would not by itself 

alleviate Mr. Reinhard's problems with depression. Rather, 

according to Dr. Stratford's testimony, Mr. Reinhard's 

problems with the Workers' Compensation Division are not a 

cause of his mental health problems, but, instead, are the 

focus of his depression. He also expressed concern over Mr. 

Reinhard's ability to successfully manage large sums of money 

while he is in such a precarious mental state. 

Dr. Shea, Mr. Reinhard's treating clinical psychiatrist, 

testified that a lump sum would probably hasten his recovery 

from depression. However, he also stated that settlement of 

the case either way would probably decrease the claimant's 

depression and that continuation of biweekly benefits would 

not necessarily increase it. Both Dr. Shea and Dr. Stratford 

agreed that the most beneficial treatment for Mr. Reinhard is 

conti.nued treatment with anti-depressant medication and 
psychotherapy, and that a lump sum payment, by itself, would 

at the most have a very minimal affect upon Mr. Reinhard. 

The lower court also determined, based upon testimony 

from Mr. Reinhard's accountant, that the business proposal is 

fraught with potential risks. In particular the court found 

that the feasibility of the project was doubtful in light of 

the depressed real estate market in Missoula. It also found 

that Mr. Reinhard's health problems, would make it difficult 

for him to work with his tenants and withstand the stress 

which naturally accompanies apartment management. 

Finally, the court determined there was no "pressing 

need" which would entitle Mr. Reinhard to a lump sum 

conversion. The court pointed out that his monthly income of 

$4,000.00 exceeded his living expenses by nearly $3,000.00 a 

month. In addition, with a net worth of nearly $200,000.00, 

including his present home which is worth approximately 

$69,900.00, Mr. Reinhard has enough financial resources to 

purchase a new home. In short, the Workers' Compensation 

Court found that there was no "outstanding indebtedness or 

pressing need" which would necessitate a lump sum conversion. 

The lower court's findings of fact and conclusions of 

law are fifteen pages long, reasoned and thought out. 

Although its findings may be based upon conflicting evidence, 

this Court's function on review is confined to determining 

whether there is substantial evidence to support its 

findings. Kuenning v. Big Sky of Montana (1988), 750 P.2d 

1091, 45 St.Rep. 383. We find that the Workers' Compensation 

Court's decision is supported by substantial evidence, is not 

an abuse of discretion and its judgment is affirmed. 
.We Concur: 

Justices 
Justice John C. Sheehy, dissenting: 

The statute on lump-sum settlements as in existence at 

the time of the injury to this employee read as follows: 

39-71-741. Compromise Settlements and Lump-Sum 

payments-Division Approval Required. 

The biweekly payments provided for in this chapter 

may be converted, in whole or in part, into a 

lump-sum payment. Such conversion can only be made 

upon the written application of the injured worker 

or the worker's beneficiary, with the concurrence 

of the insurer, and shall rest in the discretion of 

the division, both as to the amount of such 

lump-sum payment and the advisability of such 

conversion. The division is hereby vested with 

full power, authority and jurisdiction to allow and 

approve compromises of claims under this chapter. 

All settlements and compromises of compensation 

provided in this chapter are void without the 

approval of the division. Approval of the division 

must be in writing. The division shall directly 

notify every claimant of any division order 

approving or denying a claimant's settlement or 

compromise of a claim. A controversy between a 

claimant and an insurer regarding the conversion of 

biweekly payments into a lump-sum is considered a 

dispute for which the Workers' compensation Judge 

has jurisdiction to make a determination. 

Nothing in the foregoing statute precludes the lump-sum 

settlement requested here by this employee, and the 

strictures which the Workers' Compensation Court placed upon 

the proposed lump-sum settlement are not based on any 

stat-ute. They are not based on decided cases in this Co.urt 

either. In Willoughby v. Arthur G. McKee and Company (1980), 

187 Mont. 253, 257, 609 P.2d 700, this Court said: 

Lump-sum settlements are only granted where there 

is "outstanding indebtedness," "pressing need," or 

where "the best interests or the claimant, his 

family and the general public will be served. ' 
The disjunctive "or" in the foregoing quotation shows 

that the Workers' Compensation Court need not have considered 

"pressing need," and the only question involved here is 

whether the proposal would serve the best interests of the 

claimant, his family and the general public. 

We have here a claimant of considerable business acumen. 

He manages a $200,000 estate well enough to produce a monthly 

income of $4,000. It is laughable that the business acumen 

of this claimant is disparaged by the State Compensation 

Insurance Fund, whose present cash flow problems are probably 

the reason for the refusal of this 1.ump-sum proposal, 

problems which in my judgment are the result of mismanagement 

and bungling through the past 15 years. 

It seems in this case that the public would be well 

served, as well as the claimant, by permitting him to take a 

commutation of his future payments in a lump-sum, so that the 

claimant could use his business sense to better himself and 

his community through prudent economic investment. He has 

demonstrated know-how, which is more than we can say of his 

opponents. 

<JZ~ -8 ,-+ 

Justice f 

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