NO. 90-077 IN THE SUPREME COURT OF THE STATE OF MONTANA 1991

JAMES GREG HIGGINBOTHOM, Claimant and Appellant, -vs- 

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### 1996 STOLTZE-CONNOR LUMBER CO., 

# &d SmitL Employer/Insurer and Respondent. CLERK OF SUPREMECOURl STATEOFMONTANA APPEAL FROM: District Court of the Workers' Compensation Court, In and for theArea 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, 1991Justice Fred J. Weber delivered the Opinion of the Court.

TheWorkers1Compensation Court denied rehabilitation benefits under § 39-71-1023, MCA (1987), to James Greg Higginbotham, claimant. Claimant appeals, contending that he was entitled to rehabilitationbenefits 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 gavehim a permanent impairment rating of 10percent 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 returnto the jobheheld at the time of injury, but that claimant's age, education, work experience, and physicalcondition 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 reducedhis 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 tobe retrained. Claimant argued that hewas 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 rehabilitationpanel review and a Department determination prior to termination of total rehabilitation benefits, and ordered thepayment of total rehabilitation benefits to the claimant pending the completion of that review. Upon appeal, the Workers' Compensation Court affirmed the determination thatthereviewprocedureby therehabilitationpanel and the Departmentwas requiredunder 5 39-71-1015(3)

### ,MCA (1987)

## . The court reversed the order which required payment of total rehabilitationbenefits, and in part stated: We findnothing inany sectionof therehabilitation provisions which imposes on an insurer any total disabilityortotal rehabilitation benefit liability once maximum healing isreached and a jobmarket is identified for a claimantby 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 identifiedby 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 I1eligibilityI1to 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' CompensationAct were substantially revised in 1987. A review of those sectionspertinent to this case follows. Under § 39-71-1011, MCA (1987), a disabled worker isdefined 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 theworker 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)Thegoal of rehabilitationservices is to return a disabledworker towork,with aminimum of retraining, as soon as possible after an injury occurs. (2)The firstappropriate 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-job 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 statewidepool 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)

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# . . . (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 rehabilitationpanel asprovided 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 insurerwas required to notify the Department. Section 39-71-1016, MCA, provides the following with regard to rehabilitationpanels: (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 39-71-1017requirespanel reviewand a report,stating: (1)The rehabilitationpanel 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 reportmust: (a) identify the first appropriate rehabilitation option by following the priorities set forth in 39-71- 1012;

# . . .Theprocedurerequiredunder 1017was not followed in thepresent

case. The rehabilitationpanel 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 

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# . (2)Within 10working days fromthedate the initial order of determination ismailed, 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 10working daysafter thedate of mailing of thedivision's final order ofdetermination,anappeal may be taken to the workers1compensation court. None of the foregoingwas followed. TheDepartmentdid not conduct a hearing or issue its order of determination based upon the rehabilitationpanel 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 ofmaximum 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 thissection terminatewhen: (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.



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

### , must an insurer pay total rehabilitation benefits to a worker during the review by the rehabilitationpanel and the Department? Claimant contendsthat ashewas a disabledworkerwhohad 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 tomeet 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 shouldhavereceived total rehabilitation benefits (equalinamount to his temporary total disability benefits) from the date of his maximum healing until the completion of the rehabilitationreview 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 allworkers areentitled to receivetotal rehabilitation benefitsunder 5 39-71-1023, MCA (1987)

## . The amicus curiae points out that it takes severalmonths for the rehabilitationprovider to complete an assessment and several more months tocompletetherehabilitation review. Amicus contends that instead of receivinghispermanent disabilityaward 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 rehabilitationbenefits. We conclude that under 5 39-71-1023,MCA

(1987), claimant became eligible for total rehabilitationbenefits

on September 16, 1988, as he had not returned to work. Under the provisions of that statuteclaimantwas entitled to a continuation of total rehabilitationbenefits until he received a decision from theDepartmentregardinghispotential forrehabilitation. No such decisionwas ever rendered. Under the statutoryprovisions, 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 thatthe 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 theDepartment's finalorder of determinationon 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 insurerwill be required topay $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 thatdate asprovided 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 reversetheWorkers1CompensationCourt'sorder 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.