No. 79-10 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

- 1980 

CLARENCE WILLOUGHBY, 

Claimant and Respondent, 

VS . 

ARTHUR G. McKEE & CO., 

Employer, 

and 

GENERAL ACCIDENT FIRE & LIFE, 

Defendant and Appellant. 

Appeal from: Workers' Compensation Court 

Counsel of Record: 

For Appellant: 

Henningsen, Purcell & Genzberger, Butte, Montana 

For Respondent: 

Burgess, Joyce and Whelan, Butte, Montana 

Submitted on briefs: February 27, 1980 

Decided: APR 1 - 

li-" 7 ,. Filed: 1.' !. , 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

This is an appeal from an order of the Workers' Compensation Court granting claimant, Clarence Willoughby, a 

partial lump sum settlement of benefits due. 

Claimant is a fifty-eight year old man whose work 

history consists of holding jobs in heavy labor. He has 

been employed as a miner, concrete finisher, and bricklayer. 

In November 1974 claimant was employed as a bricklayer for 

the Arthur G. McKee Company. During that month he suffered 

an industrial accident injury while performing construction 

work for his employer at the Anaconda smelter in Anaconda, 

Montana. He fell off a scaffold which was located approximately six feet above a concrete floor and sustained injuries 

to his neck, left arm and left thumb. He has not worked 

since the accident. Claimant underwent a spinal fusion and 

surgery to his left elbow and thumb. 

At the time of the injury, claimant was earning approximately $9.50 per hour or $380 weekly. He had no education 

or work experience in any other type of employment, and his 

formal education consisted of completing grades one through 

eight. 

A petition for compensation was filed with the Workers' 

Compensation Court to determine what benefits, if any, to 

which claimant was entitled. A hearings examiner, Robert B. 

Sherman, was appointed by the court, and a hearing was held 

with respect to the petition on April 19, 1978. After the 

hearing, the examiner entered findings of fact and conclusions of law. The examiner found that claimant was entitled 

to compensation, as a totally and permanently disabled 

person under the Workers' Compensation Act, and that claimant 
was entitled to compensation for all medical expenses incurred with respect to injuries which were causally related 

to the accident in November. On September 21, 1978, the 

Workers' Compensation Court adopted the examiner's findings 

of fact and conclusions of law. 

During the settlement of the workers' compensation 

claim and following the Workers' Compensation Court's order, 

McKee Company's insurance carrier, General Accident Fire and 

Life, made payments to claimant. Claimant also received 

benefits under the Social Security Disability Act. Pursuant 

to section 39-71-702, MCA, the carrier reduced claimant's 

workers' compensation benefits by one-half of the benefits 

received under the Social Security Act. On August 8, 1978, 

it was discovered that General Accident had overpaid claimant 

by approximately $8,180.38. The Workers' Compensation Court 

ordered claimant to make repayment of that amount at a 

weekly rate of $25. 

Including his liability for repayment, claimant presently 

receives individual weekly benefits of $96.29 from Social 

Security and $23.26 from Workers' Compensation, or $518.85 

in total individual monthly benefits. This compares to his 

monthly salary of approximately $1,650 while he was working 

as a bricklayer. Claimant also receives two auxiliary 

benefits for his minor children, who live in Seattle with 

claimant's first wife. Claimant was divorced and has since 

remarried. 

On May 13, 1979, claimant petitioned the Workers' 

Compensation Court for a partial lump sum settlement. 

Attached to the petition was a list of expenses to which the 

settlement, if granted, was to be applied. The expenses 

were the following: 
House Trailer 

Refrigerator and TV 

Lot Rental 

Phone 

Power 

Water 

Hospital 

Bernie's Pharmacy 

Dr. Rotar 

Durritts 

Bill Willoughby--personal loan--brother 

Walnut St. Grocery 

Taxes on House Trailer 

Trailer Insurance 

A-1 Ambulance 

Car--monthly payments 

New Roof on Trailer 

Monthly Reserve 

TOTAL 

A hearing was held on August 30, 1979, with respect to 

the petition. The only evidence presented at the hearing 

was claimant's testimony. On September 10, 1979, the Workers' 

Compensation Court ordered that the petition be granted in 

the amount requested. From this order, appellant in this 

action, General Accident Fire and Life, appeals. 

A single issue is presented for review: Did the Workers' 

Compensation Court abuse its discretion in granting claimant's 

petition for a partial lump sum settlement? 

Statutory authority for the conversion of regular 

periodic benefits payable under the Workers' Compensation 

Act to a total or partial lump sum settlement is found in 

section 39-71-741, MCA. In 1979, section 39-71-741, MCA, 

was amended to give the Workers' Compensation Court the 

authority to settle disputes concerning lump sum settlements 

where an insurer and a claimant disagreed. Prior to 1979 

the sole discretion for determining the amount and advisability of lump sum settlements was vested in either the 

Workers' Compensation Division or the Industrial Accident 

Board. 
The general rule concerning the award or denial of lump 

sum settlements under the Workers' Compensation Act is well 

settled in this state. Lump sum settlements are only granted 

in exceptional circumstances. Where the best interests of 

the claimant are generally served by paying compensation in 

regular periodic installments, the conversion of benefits to 

a lump sum settlement has ecognized as the exception 

rather than the rule. Comp. Ins. Fund) (1979) , 

Mont. , 593 P.2d 739, 741, 36 St.Rep. 799, 801; 

Kuehn v. Nat. Farmers Union Co. (1974), 164 Mont. 303, 307, 

521 P.2d 921, 923; Legowik v. Montgomery Ward (1971), 157 

Mont. 436, 440, 486 P.2d 867, 869; Kent v. Sievert (1971), 

158 Mont. 79, 81, 489 P.2d 104, 105. 

"The fundamental basis of workmen's compensation 

laws is that there is a large element of public 

interest in accidents occurring from modern industrial conditions, and that the economic loss 

caused by such accidents shall not necessarily 

rest upon the public but that the industry in 

which the accident occurred shall pay, in the 

first instance, for the accident. [Citation omitted.] Generally, the best interests of the disabled workman or his dependents will be best 

served by paying the compensation in regular installments as wages are paid. Such payments 

supply in a measure the loss of the regular paycheck. [Citation omitted. ] 

"'Commutation being a departure from the normal 

method of payment is to be allowed only when it 

clearly appears that the condition of the beneficiaries warrants such a departure, but there 

should be no hesitancy in permitting such departure where the best interests of the parties 

demand it. [Citation omitted.]'" Laukaitis v. 

Sisters of Charity (1959), 135 Mont. 469, 472- 

73, 342 P.2d 752, 755. 

Lump sum 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." 
"The criteria determinative of the advisability 

of conversion to a total or partial lump sum 

award have generally been held to be I* * *the 

best interests of the claimant, his family and 

for the best interests of the public * * *.' 

Kustudia v. Ind. Acc. Brd., 127 Mont. 115, 123, 

258 P.2d 965, 969. See also Legowik v. Montgomery Ward, 157 Mont. 436, 486 P.2d 867. The 

existence of a 'pressing need' and/or 'outstanding indebtedness' has likewise been held to be 

relevant criterion, Kent v. Sievert, supra." 

Kuehn v. Nat. Farmers Union Co., supra, 164 

Mont. at 307, 521 P.2d at 924. 

In this case, we are faced with reviewing whether the 

Workers' Compensation Court should have awarded a lump sum 

settlement to claimant. Where we have considered this issue 

in other cases, we have stated that the decision to award or 

deny a lump sum settlement will not be interfered with on 

appeal unless there has been an abuse of discretion. Utick 

v. State Comp. Ins. Fund, supra; Sullivan v. Anselmo Mining 

Corp. (1928), 82 Mont. 543, 557-58, 268 P. 495, 501; Landeen 

v. Toole County Refining Co. (1929), 85 Mont. 41, 47, 277 P. 

515, 617. The findings of the lower tribunal or board will 

be presumed correct and affirmed if supported by substantial 

evidence. Newman v. Kamp (1962), 140 Mont. 487, 490, 374 

P.2d 100, 102. The decision will be reversed, however, if 

the evidence clearly preponderates against it. Legowik, 

supra. 

Here, the Workers' Compensation Court based its decision to award claimant a partial lump sum settlement on the 

basis of evidence adduced at a hearing. Claimant, the only 

witness testifying, presented evidence of several outstanding debts. He testified, for example, that he owed an 

outstanding balance on a TV and refrigerator he had purchased 

and that he was "behind" on his grocery, phone, water and 

power bills. A letter from the Montana Power Company was 

introduced with respect to his power bill. It stated that 
services would be terminated if claimant's account was not 

paid in full. Claimant also presented evidence that payments remained on his trailer house, that additional sums 

were owed for taxes and insurances, and that expenses had 

been incurred for the rental of his trailer house lot. 

In addition to these debts, claimant testified that he 

needed money for future expenses. His trailer house roof 

needed repair, he needed a new washing machine, and he 

wanted to buy an economy car that was fuel-efficient. He 

also stated, though it was not specifically mentioned on his 

list of debts, that he expected to incur a $1,500 dental 

bill for a set of false teeth for his wife, who did not work 

because she had heart trouble. 

Appellant contends upon this appeal that the court 

abused its discretion in awarding claimant compensation to 

pay these ordinary debts and anticipated future expenses. 

Appellant objects particularly to the court awarding sums 

for the purchase of a fuel-efficient economy car and the 

payment of dental bills for his wife's false teeth. Appellant submits, with reference to these future expenses, that 

there was no demonstration of "outstanding indebtedness" or 

"pressing need. " 

In considering appellant's argument, we note, first of 

all, that several courts have allowed a claimant to pay his 

past debts with proceeds from a total or partial lump sum 

settlement. Employers Mut. Liability Ins. Co. v. Hood 

(1976), 137 Ga.App. 555, 224 S.E.2d 460; Texas ~mployers 

Ins. Ass'n v. Trapp (Tex.Civ.App. 1953)r 258 S.W.2d 112; 

U.S. Fid. & Guar. Ins. Co. v. Bradley (1977), 142 Ga.App. 

572, 236 S.E.2d 543. Courts have also allowed claimants to 
use lump sum settlement proceeds to pay installments on 

automobiles or to pay bills for future medical expenses. 

See, Bethlehem Steel Co. v. Taylor (1952), 199 Md. 648, 87 

A.2d 844; Simpson Lumber Co., Inc. v. Brown (Ky. 1975), 520 

Other jurisdictions have denied claimants lump sum 

settlements to pay past debts. See, Johnson v. General 

Motors Corp. (1967), 199 Kan. 720, 433 P.2d 585; Gill v. 

Ozark Forest Prods., Inc. (1974), 255 Ark. 951, 504 S.W.2d 

357; Woods v. Sumter Stress-Crete Inc. (1976), 266 S.C. 245, 

222 S.E.2d 760. At least one authority has criticized the 

practice on the following basis: 

". . . If a partially or totally disabled worker 

gives up these reliable periodic payments in exchange for a large sum of cash immediately in 

hand, experience has shown that in many cases 

the lump sum is soon dissipated and the workman 

is right back where he would have been if workmen's compensation had never existed. One reason for the persistence of this problem is that 

practically everyone associated with the system 

has an incentive--at least a highly-visible 

short-term incentive--to resort to lump-summing ... 

"The only solution lies in conscientious administration, with unrelenting insistence that lumpsumming be restricted to those exceptional cases 

in which it can be demonstrated that the purpose 

of the - - Act will be best served by a lump-sum 

award." Larson, Workmen's compensation - Law, 

882.71 at 15-572, 573. 

This Court has had at least two occasions to review 

cases where lump sum settlements and past debts were concerned. In Kuehn, 164 Mont. at 307-08, 521 P.2d at 924, we 

approved of a lump sum settlement where proceeds would be 

applied to remaining installments on a home, a pickup truck 

and other miscellaneous bills, including attorney fees. In 

Kustudia, 127 Mont. at 123-24, 258 P.2d at 969, we affirmed 

the granting of a lump sum settlement where claimant intended 
to use the proceeds to pay past debts and attorney fees and 

apply the remaining balance toward future expenses he would 

incur inhks and his family's move to a more desirable location. The move was necessitated because of his mental and 

physical health problems. 

Apart from this precedent, however, we have stated 

previously, and reaffirm here, that each case for a lump sum 

payment stands or falls on its own merits. Utick, 593 P.2d 

at 741, 36 St.Rep. at 802. With regard to the particular 

facts and circumstances of this case, we find that there was 

no abuse of discretion. The Workers' Compensation Court 

properly awarded claimant a lump sum settlement. Prior to 

the award, the claimant demonstrated both "pressing need" 

and "outstanding indebtedness." The award was made in the 

best interests of the claimant, his family and the general 

public. The compensation sought here was not, as in some 

cases, for pursuing a choice in a different lifestyle. See 

Laukaitis, supra; Malmedal v. Ind. Acc. Bd. (1959), 135 

Mont. 554, 342 P.2d 745. Rather, it was sought to satisfy 

debts which had been or would be incurred for basic necessities. At stake was claimant's need for shelter, groceries, 

water, power, medical treatment, and transportation. None 

of these things may be called luxuries. Claimant presented 

virtually uncontroverted evidence of his need at the hearing, and we find that the court acted with proper discretion. 

As an appellate court of review, we have consistently 

recognized in cases of this kind that a tribunal or board 

will be afforded wide discretion in determining whether a 

lump sum settlement should or should not be granted. Kuehn, 

164 Mont. at 307, 521 P.2d at 923; Kent, 158 Mont. at 81, 
489 P.2d at 105. Where the Industrial Accident Board 

awarded a lump sum settlement in Legowik, 157 Mont. at 440, 

486 P.2d at 869, we stated: 

"'The determination of this question requires 

the exercise of sound discretion. The board is 

more favorably situated than the court to familiarize itself with the circumstances surrounding 

the applicant, to consider his needs, and the 

results which probably will follow action granting or denying the application; the power "must 

be exercised in conformity with the law and so 

as to best promote the ends of justice."'" 

In this instance, the Workers' Compensation Court was 

in the best position to judge the needs of the claimant. 

There was no abuse of discretion. Where the solution to the 

lump-summing problem lies in conscientious administration, 

we find that the court acted properly. 

Accordingly, we affirm the judgment of the court. 

We concur: 

sMv Chief Justice 6?dd&&Q