No. 87-157
IN THE SUPREME COURTOF THE STATEOF MONTANA

KENNETH REIL, Claimant and Respondent,-vsBILLINGS PROCESSORS, INC., Employer, and STATE COMPENSATION INSURANCEFUND,
DefendantandAppellant.

APPEAL FROM: TheWorkers' CompensationCourt,TheHonorable Timothy Reardon,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant:

JamesM. Scheier,Agency Legal Services, Helena, Montana Nancy Butler, StateComp. Insurance, Helena,Montana

ForRespondent: Lloyd Hartford, Billings,Montana

Submitted on Briefs: Aug. 

### 6, 1987 Decided: December 3, 1987 

# 111""- . *,- Filed: 

# ,v

ClerkMr. Justice L. C. Gulbrandson delivered the Opinion of the Court.

The State Compensation Insurance Fund appeals a Workers1Compensation Court judgment finding Kenneth Reil to be entitled to temporary total disability benefits and medical benefits. TheWorkers1CompensationCourt found that Mr. Reil had suffered a cornpensable injury arising out of and in the scope of his employment and that he had given his employer sufficient notice of the injury pursuant to S 39-71-603, MCA. We reverse the decision of the Workers' Compensation Court on the notice issue and remand with directions todismiss the case. Ken Reil suffers a congenital deformity in the radioulnar joints of his arms. At age fourteen, Reil underwent four surgeries in an attempt to correct these deformities. The deformities cause Reil a considerable amount ofpain in his hands,wrists and elbows. Thepain has bothered Reil foryears and his condition continues toworsen
over time. Reil underwent two later surgeries in 1980 and 1981 for

an injury to his left wrist suffered in an industrial accident while employed with a Billings meat packing plant. Reil received a $25,000 settlement of his workers1 compensation benefits for the February 1980 injury. Thereafter, Reil continued to experience pain both as a result of the 1980 accident and his congenital deformities. After the 1980 accident,Reil's doctor advised him to avoid heavywork. Pursuant to the doctor's suggestions,Reil enrolled in a computerprogram training course of instruction at Eastern Montana College. Reil quit school after one academic quarter to take a job as a computer operator with Yellowstone Processors of Billings. At his initial job

### interview, Reil informed Yellowstone Processors of his congenital deformities and progressive pain. Yellowstone Processors was the predecessor company of Billings Processors. Reil's initial position with Yellowstone Processors, and later with Billings Processors,required thathe load and unload computer tape reels from a computer. Sometime in 1982, Yellowstone Processors transferred Reil to a data storage position. Reil's responsibilities in data storage

were to pick-up and deliver client computer tapes, stack boxes of computer tapes, catalogue tapes, and file tapes. Reilworked with Yellowstone indata storage until the spring of 1984when he was laid-off. Reil experienced pain in his arms throughout his tenure with YellowstoneProcessors. Reil next ran a high pressure power spraywasher for a company called High Plains Power Wash. Operating the high pressure washer caused Reil pain in his elbows and wrists. Reil returned to Billings to work for Carey Data as a computer tape cataloger after one month with High Plains Power Wash. Reil experiencedpain in his elbows and wrists while lifting twenty to thirtypound boxes of computer tapes for Carey Data. In August of 1984, while with Carey Data, Reil began a second job as a computer operator with Billings Processors. With the exception of oneperson, the personnel and management at Billings Processors were the same people Reil had worked with at Yellowstone Processors. After a month of holding down two jobs, Reil's position with Carey Datawasdiscontinued. Reil loaded and unloaded one-pound computer tape reels, lifted twenty to thirtypound boxes to waist level,and typed for Billings Processors. Reil also performed light janitorial work on his own initiative. All of these activities caused Reil varying degrees of pain anddiscomfort. During slowerwork periods, Reil was allowed to watch a television he stored in a false ceiling above his desk. In addition, Reil played basketball with his supervisors and fellow employees on a weekly basis and went hunting in the fall. Lifting the television, playing basketball, and hunting also caused Reil pain in his arms as did most activities utilizing his arms orhands. Reil occasionally complained to his employers that his

arms and wrists hurt. However, Reil did not relate to his employers that thispain was as a result of his work related duties. Reil's employers assumed that his problems were merely the consequences of the congenitaldeformities. Reil did not ask to be reassigned to another position nor did he request that his employers modify his duties to reduce the necessity foruse ofhis arms and hands. Reil's congenital arm problems progressively worsened fromAugust to December of 1985. On January 

### 7, 1986,Reil's doctor advised him that he would have to undergo more surgeries to his left and right wrists on January 20, and March 24, 1986,respectively. These surgeries were to remove prosthetic devices that had been previously implanted into Reil's arms. At Reil's request, Billings Processors laid him off the job so that he could undergo surgery and collect unemployment compensationduring convalescence. Reil's last day on the jobwith Billings Processorswas January 16, 1986. Thereafter,Reil received sixmonths ofunemployment benefits and did not return towork forBillings Processors. On July 11, 1986,more than five months after leaving Billings Processors,Reil filed a claim for compensationwith the Division of Workers' Compensation. The State Insurance Fund denied compensation on the grounds that Reil failed to give his employer sufficient notice pursuant to § 39-71-603, MCA, and he had not suffered a compensable injury as definedby $ 39-71-119(I), MCA. The Workers' Compensation Court heard the matter and found that Reil suffered a compensable injury for which Billings Processors had sufficient actual knowledge. The State Compensation InsuranceFund appeals and. raises the following issues: (1) Did the claimant fail to comply with the notice requirement of S 39-71-603,MCA? (2) Is there insufficient evidence to establish that the claimant suffered a compensable in-juryunder theWorkers' CompensationAct? On cross-appeal, Reil asserts the following issues:

(1) Whether the Workers

### ' Compensation Court's failure to impose the 20% penalty against the insurer for its refusal to pay compensation and medical benefits is justified where substantial evidence of record fails to demonstrate the existence of abona fide controversy? (2) Whether theWorkers' Compensation Court erredwhen it ordered the insurer and claimant to apply accrued compensation benefits to repay the Unemployment insurance Division the unemployment benefits claimant received during theperiod in question where 

### 5 39-71-743,MCA,prohibits said funds being used to reduce suchdebts? (3) Whether the appellant's appeal is frivolous and therefore subject to the penalties set forth in Rule 32, M.R.App.P.? We find the State Insurance Fund's first issue to be dispositive of this appeal. The Workers' Compensation Court considered certain facts cumulatively and interpreted S 39-71-603, MCA, to impute constructive knowledge of an injury to theemployer, BillingsProcessors. The appropriate standard of review in this matter, therefore, is todetermine whether the lower court's interpretation of the law, as applied to the particular facts of this case, is correct.Wassberg v. Anaconda Copper Co. (Mont. 1985), 697 P.2d 909, 912, 42 St.Rep. 388, 391. Accordingly, we are free to examine the lower court's legal analysis and draw our own conclusions. Wassberg, supra. This Court consistently stresses the importance of employee compliance with the sixty day notice provision of Montana's workers' compensation laws. Masters v. Davis Logging (Mont

# . 198 7)

## , P.2d 

## , 44 St.Rep. 1664; Hunt

v. Sherwin Williams Co. (Mont. 19811, 624 P.2d 489, 38 St.Rep. 358. Under 

### 5 39-71-603,MCA,notice of an industrial accident is "mandatory and compliance with [therequirements of the statute] are indispensable to [maintaining] a claim for compensation

# .. . " Dean v. Anaconda Co. (19591, 135 Mont. 13, 16, 335 P.2d 854, 856. Section 39-71-603, MCA, provides the following: No claim to recover benefits under the Workers' Compensation Act, for injuries not resulting indeath,may be considered compensable unless, within 60 days after the occurrence of the accident which is claimed tohave caused the injury,notice of time and place where the accident occurred and the nature of the injury is given to the employer or the employer's insurer by the injured employee or someone on the employee's behalf. Actual knowledge of the accident and injury on the part of the employer or the employer's managing agent or superintendent in charge of thework upon which the injured employeewas engaged at the time of the injury is equivalent to notice.

It is undisputed that Reil did not give his employer written notice of a work related injury. The Workers' Compensation Court found,however, that Billings Processorshad sufficient actual knowledge to satisfy the statute. We disagree with

### the lower court

## 'sapplicationof the facts to the law of this

case. The Workers' Compensation Court made the following findingsof fact relevant to the issueofnotice: 28. 

### Claimant states thathe notifiedhis employers that he was having pain inhis arms and he was going to see his doctor onJanuary 7, 1986.
29. 

### After finding out he needed surgery, claimant asked his employers if 

### he could be laid off so that he could draw unemployment while he had his surgery. 30. 

### Claimant's initial request to be laid off was refused,butwithin amatter ofa few days (possiblythe nextday) the decision was made to grant claimant his requestand hewas laid off.
31. 

### Claimant states that he asked his employer ifhe would be able to return to work after his surgery and that he was told he could not come back untilhe was able to handle all of the duties of his job.
32. 

### John Smatla,who was Vice-President of Billings Processors at the time of claimant's employment, testified that he knew of claimant's congenital problems, prior to claimant coming to work for Billings Processors, but that claimant never told him that the difficulties he was havingwith his armswere a resultof his job duties. Mr. Smatla also testified that claimant's terminationwas voluntary, and that claimant wanted to leave because he wasn't getting enough hours, thathe wanted to go to school and that he wanted to look for a better job.
33. 

### Richard DeLanty

## , who was Vice-President of Operations at Billings Processors during claimant's employment, testified that he knew of claimant's congenital difficulties prior toclaimant's employment with Billings Processors. InJanuaryof 1986,claimant told Mr. DeLanty that he was having problems with his arms and constantpain in one arm and that he needed to have surgery done. Mr. DeLanty stated that claimant never told him that claimant's arm problems were related to his work, but he did know claimant had problems.
34. Gale Behm was claimant's supervisor during claimant's employment with Billings Processors. Mr. Behm and claimant are cousins and have known each other since childhood. Mr. Behm stated that the "sole reason"claimant wanted to be laid off was to have surgery on his arms. Mr. Behm knew of claimant's congenital problem, knew claimant was having constant pain and wanted to have surgery, but denied any knowledge that claimant's problems might be connected withwork.
35. Claimant's last day of work for Billings Processorswas January 16, 1986, a Thursday. Claimant filed for unemployment the nextday and had surgery performed on Monday, January 20, 1986. Claimant received his full six months of unemployment, the State finding that his post-operative disability occurred after his layoff. Claimant has not worked since January 16, 1986. Claimant filed a claim for compensation on July 11, 1986.
36. Claimant testified that he never told his employers at Billings Processors that he had suffered an on-the-job injury, but thathe did tell them thathe suffered pain from some of his duties.
The Workers' Compensation Court found that "[tlhe employer knew of the preexisting condition, knew claimant was having problems, knew claimant had to stopwork to have surgery for his problem, and knew claimant's work was aggravating claimant's symptoms" and concluded that this was sufficient

### actual knowledge of an injury under S 

### 39-71-603, MCA. All but the last finding are supported by the record of this

case.When deposed and questioned by counsel for the State InsuranceFund,Reil testified as followsregarding the issue of notice: Q: Now, did you ever tell either Dick Delanty or John Smatla or Gale Behm that you had a work related injury or series of injuries?

A: No, Ididn't. When questioned about the information he provided on his initial compensation claim form, Reil went on to testify as follows: Q: The second line up from the bottom [in the block entitled Accident Information] is: "Did you notify your employer of the accident?'' It says, "Yes." "Who did you notify?" It says, "Dick Delanty.

### " "HOW?I' "Told him of problems caused by work.

### " Now is that true?

A: 

### Well, really justkind of in a sense. I really never came right out and told Dick that I was having problems due to the job. I 

### said, "But I'm having a lot of problems with my arms lifting and carrying things, and I

### don't knowwhat's causing it so that's why I went and saw the doctor." As far as being specific and notifying him of an accident, no, I didn't. Q: So correctme if I'm wrong,but Dick knew that you had

## --were suffering pain and had some problems, but what you are saying is he didn't have any way of knowing if that was work related or you didn't tellhim if thatwaswork related.

### A: I didn't tell him it was work related,no.
In addition, the transcript of the Workers' Compensation hearing reveals the following exchange between Reil and his attorney: Q: Did you tell [youremployer] that it was the functions of your job, the physical requirements of your job, that caused thispan?
A: No, I

### didn't. I

### told them that I was having a lotofproblemswithmy arms and that when I lifted or carried something that they would botherme quite abit and I

### wanted to go to the doctor. After a short recess, and when questioned by the State Insurance Fund's attorney, Reil changed his testimony as reflectedby the following: Q: Okay. Now you didn't ever tell any of your supervisors at Billings Processors that you had suffered an on-the-job injury,did you?

A: No. Q: Did you ever tell your supervisors at Billings Processors that your job duties were causing pain or discomfort in your arms?
A: Yes, I did. I mentioned to them a few times that when I 

### lifted or carried things that itwould causepain. It was just kind of a

## -- itwasn't the topic of conversation but I had mentioned it to themquite a few times.
When confronted with his prior inconsistent statements,Reil

was asked whether he was now telling the court something different, towhich he answered: A: No, it is not anything different. I 

### told Dick Delanty that I

### was having pain

### because 

### Iwas lifting and carrying things and that's all 

### I told him. I 

### mean 

### I didn't come right out and say thatmy job is causing these pains, or causing my problems, but 

### I am having a lot of pain lifting and carrying things and I 

### left it at that.
Q: 

### Soyou told himyouwerehaving a lot of pain because of lifting and carrying things. If you didn't specify that it was because of the jobduties, for all he knew it could have been because of somethingyouwere doing at home, is that right?

A: 

### Well, yes, but my job entailed lifting and carrying things, so I

### guess I 

### more or less assumed that he knew that.
Q: 

### But you never told him that the pain was being caused by lifting and carrying things at the job, is that what you are sayingnow?


### A: Yes, I 

### guess in a sense. 

### I told him 

### I was having pain due to lifting and carrying things and I pretty much just left itat that. Reil's supervisors and fellow employees consistently told the same story: Reil did not mention that his job duties caused him pain. Reil's testimony on the subject is, at best, inconsistent. The lower court recognized and resolved these inconsistencies in Reil's favorby concluding that they "were caused

# . . .by the artful phrasing of questions

# .. . " Regardless of how the witnesses' answers were solicited, the facts of this case do not support a finding that Billings Processors had sufficient actual knowledge of an injury pursuant to S 39-71-603, MCA. 

### The lower court correctly recognized that "

### [a] ctual knowledge of the accident or injury, while equivalent of notice,must be more than simple knowledge that the claimantis ill, or that claimant is injured." See Dean v. Anaconda Co. (1959), 135 Mont. 13, 16, 335 P.2d 854, 856; State ex rel. Magelo 

### v. Industrial Accident Board (1936), 102 Mont. 455, 464, 59 P.2d 785, 789. The most that Billings Processors can be said to have known in this case is that Kenneth Reilhad congenitalproblems and these problems often caused him pain. Simple knowledge on the part of Billings Processors that Reil was experiencing pain does not satisfy the actual knowledge requirementof 

### B 39-71-603,MCA. "The purpose of the notice requirement or actual knowledge in lieu thereof is to enable the employer to protect himself by prompt investigation of the claimed accident

# . .. 'I Bender 

### v. Roundup Mining Co. (1960)

### , 138 Mont. 306, 313, 356 P.2d 469, 473. In the instant case, the notice or actual knowledge requirement serves the additional purpose of enabling the employer to reassign an employee with

a congenital defect to another position ormodify his duties to reduce the necessity foruse ofhis arms and hands. Reil's employers were aware that he suffered a congenital defect. They were also aware that Reil lifted a heavy television for his own entertainment while at work, played basketball, and hunted. It was incumbent upon Reil, therefore,to specifically advise Billings Processors that it was his job-related duties that exacerbated these congenital problems. As stated by Larson in his treatise on workers' compensation law: As a matter of common sense, the fact that claimant is known to have a preexisting occupational weakness increases the burden on the claimant to 

### -- show that the employer's knowledge of the 

### --- 

### --

articularmanifestationof injury should Ee taken as knowledge-that it was 

### - - 

### - work-connected 

# .

# .. [I - is not

--- - reasonable to expect an employer to - launch an investiaation-everv time aforeman hears someone complain

### - ofpain - or sees someone get a bump, and such 

### - - knowledge 

### -- does 

### not tFerefore satisfy the obiectives of the notice statute.

3 Larson, Workmans' Compensation Law, S 78.31(a), p. 15-113 (1983). Reil off-handedly related to his employers that he

was experiencing problems. To hold that this is sufficient actual knowledge of an injury would thwart the purposes of the statute. There is no substantial evidenceto support the lower court's decision on the notice issue. The Workers1 Compensation Court also erred in considering the cumulative effect of the facts in this particular case. "Actual knowledgeof an accident and injury



# .. . " or, as alleged in this case, actual knowledge of a job-induced aggravation of a preexisting condition, "on the part of

# . .. the employer's managing agent or superintendent



# . . . " can be imputed as notice to the employer. Section 39-71-603, MCA; Maki v. Anaconda Copper Co. (1930) 87Mont. 314, 322, 287 P. 170, 173. The Workers' Compensation Court imputed constructive knowledge of an injury to the employer, Billings Processors, on the basis of facts "considered cumulatively." However, in construing S 2933,R.C.M. (1947), the predecessor statute to S 39-71-603, MCA, we recognized that 

### "[i] t is clear from these provisions that any kind of knowledge, other than actual,or first-hand knowledge,would be insufficient, for the statutory equivalent of information required to be given in the notice is actual knowledge." Maki, 87 Mont. at 323, 287 P. at 173 (citing smith v. Industrial Acc. Com. (Cal. 1917), 162 P. 636, 637). Accordingly, constructive knowledge imputed to the employer

on the basis of facts taken cumulatively is insufficient to meet the requirements of S 39-71-603, MCA, under the particular circumstancesof this case.Reil also argues that his injury is "latent" and the sixty-day notice requirement should be tolled until such time

as he realized the alleged compensable nature of his pain. To support this argument, Reil relies on our decision in Bowerman v. Employment Security Commission (~ont. 1983)

## , 673 P.2d 476, 40 St.Rep. 2062. In Bowerman we held that the one-year notice of claim limitation of S 39-71-601, MCA, "does not begin to run until the claimant, as a reasonable man, should recognize the nature, seriousness and probable compensablenature ofhis latent injury." Bowerman, 673P.2d at 479, 40 St-Rep. at 2065. The basis of our holding in Bowermanwas a 1973 legislative addition to S 39-71-601,MCA, whereby 

### "[tlhedivision may, upon reasonable showing by the claimant of lack of knowledge of disability,waive the time requirement up to an additional 24 months." Section 39-71-601(2)

### , MCA. Bowerman, however, does not apply to § 39-71-603, MCA, for the simple reason that the legislature did not amend this statute to allow for waiver of the sixty-day notice of injury requirement. Compare 

### 55 39-71-601 and -603, MCA. We also note with approval that the lower court foundwith regard to Reil's latent injury argument that "simple ignorance of compensability, absent any evidence of estoppel by the employer or medical disinformation [is insufficient]to toll the notice requirement." Constructive knowledge is not enough to satisfy the requirements of S 39-71-603, MCA. An employer, or its managing agent or supervisor,must have actual knowledge of the accident and injury. The fact that Billings Processors knew Reil was experiencing pain, either taken alone or cumulatively with the other facts of this case, does not constitute actual knowledge. Accordingly, the lower court erred in finding that Billings Processors had actual knowledge of Reil's alleged injury. We find that Billinss

### Processors had no actual knowledge of either an injury or a 

### job-induced aggravation of a preexisting condition in this

case. Because of this finding we do not address the other issues presented on this appeal. The decision of the Workers' Compensation Court is reversed with directions to dismiss the case. Reversed.

We concur:

### Mr. Justice JohnC. Sheehy,dissenting:

The statement of the majority that "Billing Processors had no actual knowledge of either an injury or a job-induced aggravation of a preexisting condition in this case," is not founded on fact in the record, and is expressly adverse to the findings of theWorkers' CompensationCourt. The findings of the Workers

## ' Compensation judge include the following: Fourth, claimant testified that he told his supervisorsthat hisworkwas causing himproblems. Admittedly, there are some inconsistencies in claimant's testimony. There are conflicts between claimant's testimony and the testimony of the employers' representatives. However, the inconsistencies and conflicts are caused more by the artful phrasing of questions rather than by claimant's or his supervisors response. Claimant, may, indeed, have never been so specific as to say--"I have suffered an on-the-job industrial injury--to this part of my right arm--on this date--resulting in this condition."--but; claimant did impart sufficient information to his employers for them to have actual knowledge of injury

# ..."

Based on conflicting evidence of the record, the court resolved the matter of credibility and determined: The employer knew of the preexisting condition, knew claimant was having problems, knew claimant had to stop work to have surgery for his problem, and knewclaimant'swork was aggravatingclaimant's symptoms. This actual knowledge is sufficient to satisfy both the letter and the purpose of the notice requirementsof 5 39-71-603,MCA.
Formore than 50years,this Court hasbeen saying that the first duty of those who administer the Workers' Compensation Act is to give the employee the greatest possible protection consistentwith itspurposes. Miller v. Aetna Life Insurance Company (1936),101Montana 212,53 P.2d 704;

### in considering the Workers' Compensation Act, allof the

### sectionsas originallyenacted or amended,must be considered together in such manner as to give effect to the Act as a whole. State ex rel. Roundup Coal Mining Company v. Industrial Accident Board (1933), 94Mont. 386, 23 P.2d 253. The majority have not followed the standard of review applicable toworkers' compensationcases. Wehave said that the decisions of theWorkers' Courtwill not be disturbed if supported by substantial evidence. Skukrud v. Gallatin Laundry Company, Inc. and Employees Commercial Union Insurance Company (1976),171Mont. 217,557 P.2d 278. Where findings are based on conflicting evidence, the reviewing court's function is confined to determining whether there is substantial evidence supporting such findings. It isnot the court's function to determine whether there is sufficient evidence to support contrary findings. Wilson v. Glacier General Assurance Company (Mont. 19831, 670 P. 931, 40 

### St.Rep. 1509; Stamatis v. Bechtel Power Corporation (1979), 184 Mont. 64, 601 P.2d 403. We have always stated that we will not substitute our judgment for that of the Workers' Compensation Court as to the weight of evidenceon questions of fact. Robbins v. Anaconda Aluminum Company (19781, 175 Mont. 514, 575 P.2d 67; Brurud v. Judge Moving and Stora.ge Company (1977),172Mont. 249,516 P.2d 558. In the light of the findings made by the Workers' Compensation Court on disputed evidence, and the usual standards of review applied to such findings, the duty of this Court is to sustain the decision of the Workers' Compensation Court, and not set it aside on the dubious authorityof

### a 1917California case.

This Court has become the trier of both fact and law. 'i (--)riLri 

## Y~,L~ Justice

### Mr. JusticeWilliam E. 

### Hunt, Sr., 

### concurring:

I 

### concurwith the foregoing dissent. 

# /