NO. 90-077 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

JAMES GREG HIGGINBOTHOM, 

Claimant and Appellant, 

-vs- APR 2 3 1996 

STOLTZE-CONNOR LUMBER CO., &d SmitL 

Employer/Insurer and Respondent. CLERK OF SUPREME COURl 

STATE OF MONTANA 

APPEAL FROM: District Court of the Workers' Compensation Court, 

In and for the Area of Missoula, 

The Honorable Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Janice S. VanRiper, Helena, Montana. 

For Respondent: 

Bradley J. Luck, Missoula, Montana; Todd A. Hammer, 

Kalispell, Montana. 

For Amicus Curiae: 

Monte Beck, Bozeman, Montana. 

Filed: 

Submitted: February 7, 1991 

Decided : April 23, 1991 
Justice Fred J. Weber delivered the Opinion of the Court. 

The Workers1 Compensation Court denied rehabilitation benefits 

under § 39-71-1023, MCA (1987), to James Greg Higginbotham, 

claimant. Claimant appeals, contending that he was entitled to 

rehabilitation benefits during the course of the review procedure 

provided by statute. We reverse. 

The principal issue is whether, under 39-71-1023, MCA 

(1987), an insurer must pay total rehabilitation benefits to a 

worker during the review by the rehabilitation panel and the 

Department. 

On September 14, 1987, claimant injured his back in a 

compensable work-related injury. Liability was accepted by 

Stoltze-Connor Lumber Co., his self-insured employer, herein 

referred to as insurer. In December 1987, claimant underwent a 

laminectomy and required subsequent surgical intervention. 

Claimant's physician concluded that claimant had reached maximum 

healing on September 16, 1988, and gave him a permanent impairment 

rating of 10 percent of the whole man. 

The insurer notified the Division of Workers' Compensation 

that it had chosen Crawford Rehabilitation Services (Crawford) as 

its designated rehabilitation provider on March 17, 1989. The 

rehabilitation counselor selected by Crawford prepared a 

rehabilitation evaluation report in which he determined that 

claimant could not return to the job he held at the time of injury, 

but that claimant's age, education, work experience, and physical 
condition made him vocationally capable of entering the job market 

without retraining as a surveyor's assistant or electronics 

technician. Claimant did not return to work in any capacity. 

As a result of the determination that claimant had reached 

medical stability and was released to return to the open labor 

market by his treating physician, the insurer reduced his benefits 

from temporary total disability benefits to permanent partial 

disability benefits. Claimant's permanent partial disability 

benefits were equal to one-half of his temporary total disability 

benefits. 

Claimant wrote the Division stating that he thought the 

reduced benefits were inadequate, that he was not qualified for 

return to work in the options designated by the rehabilitation 

counselor, that he was not guaranteed future gainful employment, 

and that he desired to be retrained. Claimant argued that he was 

entitled to have a rehabilitation panel review the determination 

and requested a contested case hearing. 

In the contested case hearing, the hearing examiner for the 

Department of Labor and Industry described the issue as: 

The issue to be determined is whether the return to 

work options identified by Claimant's rehabilitation 

counselor are appropriate, and whether he is entitled 

to total compensation benefits. 

The hearing examiner concluded that the mandatory rehabilitation 

process had not been followed, that the statutes mandated a 

rehabilitation panel review and a Department determination prior 

to termination of total rehabilitation benefits, and ordered the 
payment of total rehabilitation benefits to the claimant pending 

the completion of that review. 

Upon appeal, the Workers' Compensation Court affirmed the 

determination that the review procedure by the rehabilitation panel 

and the Department was required under 5 39-71-1015 (3) , MCA (1987) . 

The court reversed the order which required payment of total 

rehabilitation benefits, and in part stated: 

We find nothing in any section of the rehabilitation 

provisions which imposes on an insurer any total 

disability or total rehabilitation benefit liability once 

maximum healing is reached and a job market is identified 

for a claimant by a designated rehabilitation provider. 

The only risk to an insurer under these circumstances 

is that, on appeal or at a hearing, the labor market or 

jobs identified by the rehabilitation provider are found 

to be in error. Unfortunately for a disabled worker, 

that requires proof which can only be obtained at 

additional expense, which if claimant is receiving no 

benefits will be difficult to obtain. 

Unfortunately, the result is that the Hearing 

Examiner abused his discretion, and indeed established 

a nonexistent standard to transform I1eligibilityI1 to 

Itentitlement" for purposes of benefit payments . . . . We reverse that portion of the Order directing the 

payment of total rehabilitation benefits because the 

Hearing Examiner abused his discretion and erred as a 

matter of law, given the evidence presented at the 

hearing. 

The claimant appeals from that order. 

The Vocational Rehabilitation Provisions of the Workers' 

Compensation Act were substantially revised in 1987. A review of 

those sections pertinent to this case follows. 

Under § 39-71-1011, MCA (1987), a disabled worker is 
defined as follows: 

(2) "Disabled workeru means one who has a medically 

determined restriction resulting from a work-related 

injury that precludes the worker from returning to the 

work the worker held at the time of the injury. 

Both parties agree that claimant meets this statutory definition 

of a "disabled worker." 

Section 39-71-1012, MCA, sets forth the rehabilitation goal 

and options: 

(1) The goal of rehabilitation services is to return 

a disabled worker to work, with a minimum of retraining, 

as soon as possible after an injury occurs. 

(2) The first appropriate option among the following 

must be chosen for the worker: 

(a) return to the same position; 

(b) return to a modified position; 

(c) return to a related occupation suited to the 

claimant's education and marketable skills; 

(d) on-the-j ob training; 

(e) short-term retraining program (less than 24 

months) ; 

(f) long-term retraining program (48 months 

maximum) ; or 

(g) self -employment. 

(3) Whenever possible, employment in a worker's 

local job pool must be considered and selected prior to 

consideration of employment in a worker's statewide job 

pool. 

This section emphasizes that a minimum of retraining is desired, 

with the primary aim being the return of the disabled worker to 

work as soon as possible. It also allows consideration of 

employment in a statewide pool as well as a local job pool. 

Section 39-71-1014, MCA, in pertinent part states: 

(1) Rehabilitation services are required for 

disabled workers and may be initiated by: 

(a) an insurer by designating a rehabilitation 

provider and notifying the division; . . . 
In this case, the insurer notified the Division of its choice of 

a rehabilitation provider on March 17, 1989, 6 months after 

claimant reached maximum healing. 

Section 39-71-1015, MCA, with regard to evaluation and 

return to work provides: 

(1) If a disabled worker is capable of returning to 

work, the designated rehabilitation provider shall 

evaluate and determine the return-to-work capabilities 

of the disabled worker pursuant to 39-71-1012 (2) (a) 

through (2) (d) . . . . (3) If the worker has not returned to work as 

provided in subsection (2), the insurer shall notify the 

division. The division shall then designate a 

rehabilitation panel as provided in 39-71-1016 and refer 

the worker to the panel. 

Here, the insurer concluded that the claimant was capable of 

returning to work. However, claimant did not return to work and 

the insurer was required to notify the Department. 

Section 39-71-1016, MCA, provides the following with regard 

to rehabilitation panels: 

(1) The division shall designate and administer 

rehabilitation panels. The purpose of a panel is to 

advise the division on a worker's eligibility for 

rehabilitation services. Each panel shall issue to the 

division a report as provided in 39-71-1017. 

Secion 39-71-1017 requires panel review and a report, stating: 

(1) The rehabilitation panel shall: 

(a) review all records, statements, and other 

pertinent information; and 

(b) prepare a report to the division with copies 

to the insurer and worker. 

(2) The report must: 

(a) identify the first appropriate rehabilitation 

option by following the priorities set forth in 39-71- 

1012; . . . 
The procedure required under 1017 was not followed in the present 

case. The rehabilitation panel did not complete its report to the 

Department. 

Section 39-71-1018 requires the Department to make its order 

of determination, stating: 

(1) The division shall issue an initial order of 

determination within 10 working days of receipt of a 

report from a rehabilitation panel . . . (2) Within 10 working days from the date the initial 

order of determination is mailed, a party may submit a 

written exception to the order. On its own motion or at 

the request of any party, the division shall conduct a 

hearing. The division shall issue a final order of 

determination within 20 working days of the hearing. ... 

(4) Within 10 working days after the date of mailing 

of the division's final order of determination, an appeal 

may be taken to the workers1 compensation court. 

None of the foregoing was followed. The Department did not conduct 

a hearing or issue its order of determination based upon the 

rehabilitation panel report. 

A key provision on the issue before us is § 39-71-1023, MCA, 

which provides for total rehabilitation benefits during various 

periods and states: 

(1) A worker who no longer is temporarily totally 

disabled but meets the definition of a disabled worker 

may be eligible for total rehabilitation benefits. 

(2) Eligibility for total rehabilitation benefits 

begins on the date of maximum healing or the date notice 

is given to the division by the insurer that a 

rehabilitation provider has been designated, whichever 

is later. 

(3) Benefits must be paid at the disabled worker's 

temporary total disability rate for a period not 

exceeding 26 weeks from the date of eligibility, except 

that the division may extend the period for good cause. ... (4) Total rehabilitation benefits under this 
section terminate when: 

(a) a worker returns to work; 

(b) a worker is qualified to return to work under 

the priorities in 39-71-1012 pursuant to a division 

order; or 

(c) an I.W.R.P. is submitted to the department by 

the department of social and rehabilitation services. . . . 

Under 5 39-71-1023, MCA (1987) , must an insurer pay total 

rehabilitation benefits to a worker during the review by the 

rehabilitation panel and the Department? 

Claimant contends that as he was a disabled worker who had not 

returned to work, the insurer was required to notify the 

Department, the Department was required to designate a 

rehabilitation panel, the panel was required to meet and make its 

report, and ultimately the Department was required to issue its 

final order of determination. 

Claimant contends that under 5 39-71-1023, MCA (1987), he 

should have received total rehabilitation benefits (equal in amount 

to his temporary total disability benefits) from the date of his 

maximum healing until the completion of the rehabilitation review 

procedure. He therefore contends it was improper to give him 

permanent partial disability benefits from the date of maximum 

healing. 

The insurer contends that under Coles v. Seven Eleven Stores 

(1985), 217 Mont. 343, 704 P.2d 1048, an insurer is allowed to 

terminate benefits prior to completion of the mandatory 

rehabilitation procedure. The insurer contends that not all 
workers are entitled to receive total rehabilitation benefits under 

5 39-71-1023, MCA (1987) . 

The amicus curiae points out that it takes several months for 

the rehabilitation provider to complete an assessment and several 

more months to complete the rehabilitation review. Amicus contends 

that instead of receiving his permanent disability award of $149.50 

per week from the date of maximum healing, claimant was entitled 

to total rehabilitation benefits of $299 per week under 5 39-71- 

1023, MCA (1987). 

On September 16, 1988, claimant was no longer temporarily 

totally disabled and was therefore ineligible for temporary total 

disability benefits. However, claimant then did meet the 

definition of a disabled worker and became eligible for total 

rehabilitation benefits. We conclude that under 5 39-71-1023, MCA 

(1987), claimant became eligible for total rehabilitation benefits 

on September 16, 1988, as he had not returned to work. Under the 

provisions of that statute claimant was entitled to a continuation 

of total rehabilitation benefits until he received a decision from 

the Department regarding his potential for rehabilitation. No such 

decision was ever rendered. Under the statutory provisions, after 

the insurer gave notice to the Department that Crawford had been 

designated as its rehabilitation provider, claimant was entitled 

to total rehabilitation benefits for a period not to exceed 26 

weeks, unless extended by the Department. All of the foregoing is 

required under 5 39-71-1023, MCA (1987), which also provides that 
the total rehabilitation benefits must be paid at the disabled 

worker's temporary total disability rate. 

We conclude that claimant was denied the rehabilitation 

procedure required under the foregoing statutes. He did not 

receive a rehabilitation panel report or a Department order of 

determination. He did not receive the opportunity to have a 

hearing before the Department's final order of determination on the 

issue of rehabilitation. We hold that claimant is entitled to 

total rehabilitation benefits at the rate of $299 per week from 

September 16, 1988, to the date of remand of this opinion. We 

further hold that the permanent partial disability benefits which 

have been paid to claimant since September 16, 1988, shall be 

reclassified as a partial payment of his total rehabilitation 

benefits, so that the insurer will be required to pay $149.50 from 

September 16, 1988, to the date of remand, to the claimant in a 

lump sum as the balance due of total rehabilitation benefits. 

We further hold that the date of remand shall constitute the 

date notice is given to the Department by the insurer that a 

rehabilitation provider has been designated under the foregoing 

statutes, so that additional total rehabilitation benefits shall 

be paid from that date as provided under the statutes for a period 

not to exceed 26 weeks unless otherwise extended by the Department 

under the statutory provisions. From the date of remand the 

statutory procedures in the rehabilitation sections shall be 

followed. 
We reverse the Workers1 Compensation Court's order with regard 

to total rehabilitation benefits, and hold that claimant is 

entitled to total rehabilitation benefits as previously described 

and that claimant also is entitled to the rehabilitation panel 

review and Departmental review provided in the statutes. 

Because of our holdings with regard to total rehabilitation 

benefits, we do not find it necessary to address the issue of 

unconstitutionality raised by the claimant.