No. 87-366 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

WILLIAM F. SHARKEY, 

Claimant and Appellant, 

-vsATLANTIC RICHFIELD COMPANY, 

operating as ANACONDA MINERALS 

COMPANY, a/k/a, THE ANACONDA 

COMPANY, 

Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, 

In and for the Area of Helena, MT, 

The Honorable Timothy W. Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Gene B. Daly, Helena, Montana 

For Respondent: 

Andrew J. Utick, Helena, Montana 

Submitted on Briefs: May 4, 1989 

c ' .-z 'I 

. " 

Decided: July 13, 1989 

- - 3 

t,- -3 9 

Filed:._ I a " - '- - 2 

fJ . . < " t > . . 

'Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

This appeal arises from an order by the Workers' Compensation Court, concluding that the claimant did not incur a 

new industrial injury in 1981 and that claimant is properly 

receiving permanent partial benefits according to rates 

applicable to a 1978 injury. From this order, the claimant 

appeals. We affirm. 

The issues are: 

1. Did the Workers' Compensation Court err in concluding that the claimant did not sustain an industrial injury in 

1981? 

2. Did the Workers' Compensation Court err in concluding that the statute of limitations was not tolled on the 

basis of equitable estoppel? 

3. Did the Workers' Compensation Court err in concluding that the statute of limitations was not tolled because 

the employer made payments in lieu of compensation? 

4. Did the Workers' Compensation Court err in concluding that the reduction in benefits was not unreasonable? 

5. Did the District Court err in awarding attorney fees 

and costs pursuant to S 39-71-612, MCA (1978)? 

Mr. William Sharkey suffered an industrial accident on 

September 10, 1978, while employed by the Atlantic Richfield 

Company (ARCO) , when he fell from a ladder approximately 

twelve feet to the ground. His left arm hooked into the 

ladder as he fell, and he sustained injuries to his left 

shoulder. Mr. Sharkey was treated by Dr. Losee for this 

injury. This treatment included surgery on the shoulder in 

December of 1978. Mr. Sharkey returned to work for ARCO in 

May of 1979 with no physical restrictions. 

ARC@ accepted liability for this injury and paid temporary total disability benefits while Mr. Sharkey was unable 
to work. ARC0 also paid medical expenses. In December of 

1979 the parties negotiated a final settlement for this 

injury for the sum of $3,948.00, which represented 42 weeks 

of permanent partial disability benefits at the rate of 

$94.00 per week. 

In late 1981, Mr. Sharkey began experiencing problems 

with his left shoulder again. He contends that these problems stemmed from a new work-related injury which occurred on 

December 16, 1981. Mr. Sharkey claims that on that date he 

was lifting the hood on a fuel truck when his left shoulder 

"gave out," causing the hood to fall on him. He claims that 

his left shoulder was re-injured in this accident. 

Mr. Sharkey testified that he reported the accident to 

his supervisor, Mr. Johnson, who made out a written report in 

Mr. Sharkey's presence. Mr. Sharkey also testified that he 

told Mr. Bugni, ARCO's Workers' Compensation Coordinator, 

that he hurt his shoulder. 

Also, in December of 1981, Mr. Sharkey obtained authorization to see Dr. Losee for his shoulder problem. This 

authorization was obtained from Ms. Nelson, a claims adjuster 

for the insurer, E.S.I.S., Inc. Dr. Losee referred Mr. 

Sharkey to Dr. Matsen at the University Hospital in Seattle, 

Washington, who performed surgery on Mr. Sharkey ' s shoulder 

in March of 1982. 

Ms. Nelson reopened Mr. Sharkey's 1978 injury claim 

following the January 1982 examination by Dr. Losee. Beginning in February 1982 Mr. Sharkey began receiving Workers' 

Compensation temporary total benefits at the same rate he had 

received for his 1978 injury. These benefits amounted to 

$188 per week and continued until they were reduced to permanent partial benefits of $94 per week, in February 1983. 
I 

Did the Workers' Compensation Court err in concluding 

that claimant did not sustain an industrial injury in December of 1981? 

In reviewing a decision of the Workers' Compensation 

Court, the standard of review is whether substantial credible 

evidence exists to support the findings and conclusions of 

the Workers' Compensation Court. Stangler v. Anderson Meyers 

Drilling Co. (Mont. 1987), 746 P.2d 99, 101, 44 St.Rep. 1944, 

1947. Findings of fact are not clearly erroneous if they are 

supported by substantial credible evidence. Tenderholt v. 

Travel Lodge Intern. (Mont. 1985), 709 P.2d 1011, 1013, 42 

St.Rep. 1792, 1794. 

Additionally, in Wight v. Hughes Livestock Co., Inc. 

(1981), 634 P.2d 1189, 1191, 38 St.Rep. 1632, 1635, rev'd on 

other grounds, 204 Mont. 98, 664 P.2d 303 (19831, this Court 

stated: 

"If the Workers' Compensation Court's findings are 

based on conflicting evidence . . . this Court's 

function on review is confined to determining 

whether there is substantial evidence on the whole 

record supporting such findings." Harmon v. 

Deaconess Hospital (1981), Mont., 623 P.2d 1372, 

1374, 38 St.Rep. 65, 67-68, and cases cited 

therein. 

The Workers' Compensation Court found that Mr. Sharkey 

did not sustain a new industrial injury on December 16, 1981. 

Although Mr. Sharkey claims that he injured his left shoulder 

when the hood fell on him in December of 1981, there is no 

evidence in the record from either written documents or oral 

testimony, to corroborate Mr. Sharkey's assertion. At trial, 

aside from Mr. Sharkey's assertion, the evidence indicated 

that the 1981 shoulder problem stemmed from the 1978 injury. 
While Mr. Sharkey testified that he reported this injury 

to his supervisor, Mr. Johnson, who filled out a written 

report, Mr. Johnson did not testify at trial and no accident 

report was ever filed. Mr. Sharkey claims that he reported 

his shoulder injury to Mr. Bugni in person on the day of the 

accident. However, Mr. Sharkey could not remember if he told 

Mr. Bugni how he hurt his shoulder. 

In testifying at trial, Mr. Bugni referred to notes he 

had taken during his conversation with Mr. Sharkey. According to those notes, the conversation occurred the day after 

the accident, and was over the telephone. Mr. Bugni testified that Mr. Sharkey did not mention a new accident or 

injury; rather, Mr. Sharkey told him he was having more 

problems with his shoulder from his previous 1978 injury. 

There is no evidence indicating that Mr. Sharkey informed either Dr. Losee or Ms. Nelson of a new accident; 

instead, the evidence indicated that both Dr. Losee and Ms. 

Nelson understood that his 1981 shoulder problems had developed over a period of months. Dr. Losee, in his letter to 

Dr. Matsen, indicated that the shoulder problems had developed over a period of several months. He testified that he 

had no record or recollection that Mr. Sharkey informed him 

of a new injury to his shoulder. Ms. Nelson stated that she 

had no knowledge that Mr. Sharkey was claiming a new injury 

until 1985. Both Mr. Bugni and Ms. Nelson testified regarding the records which would have been made, had Mr. Sharkey 

reported a new and separate injury in 1981. Their files, 

however, contained no records to corroborate Mr. Sharkey's 

claim. 

Mr. Sharkey contends that ARCO has made a judicial 

admission in this case, admitting that Mr. Sharkey indeed 

sustained a new injury in 1981. It is true that at trial, 

ARCO also argued for a determination that Mr. Sharkey had 
sustained a work-related injury in 1981. Such a finding, 

combined with a determination that no notice was given of the 

injury, would have meant the statute of limitations had run 

for this claim, thereby preventing a recovery. In fact, the 

Workers1 Compensation Division might have been entitled to a 

reimbursement from Mr. Sharkey for benefits already paid. 

The Workers' Compensation Court properly considered the 

actual facts which were presented at trial through witnesses 

and exhibits. What ARC0 may have contended is irrelevant to 

the factual determination made by the court. When the testimony is conflicting, it is the trial court which judges the 

credibility of the witnesses and this Court defers to that 

assessment. "Ordinarily, this Court will not substitute its 

judgment for that of the Workers1 Compensation Court in 

determining the weight and credibility to be given testimony " Rule 52(a), M.R.Civ.P.; Jones v. St. Regis Paper Co. 

(1981), 196 Mont. 138, 146, 639 P.2d 1140, 1144. The court 

found the facts to compel a conclusion that Mr. Sharkey did 

not sustain a new injury in 1981. 

Our review of the record demonstrates that there is 

substantial credible evidence to support the findings of the 

Workers1 Compensation Court. We conclude that the court was 

correct in determining that no new injury occurred in 1981. 

We affirm the holding of the Workers' Compensation Court. 

11 

Did the Workers1 Compensation Court err in concluding 

that the statute of limitations was not tolled on the basis 

of equitable estoppel? 

The elements of equitable estoppel were enunciated in 

1,indblom v. Employers Liability Assur. Corp. , (1930) , 88 

Mont. 488, 494, 295 P. 1007, 1009 as follows: 
Generally speaking, the following are the 

essential elements which must enter into and form a 

part of an equitable estoppel in all of its applications: "1. There must be conduct--acts, language, or silence--amounting to a representation or 

a concealment of material facts. 2. These facts 

must be known to the party estopped at the time of 

his said conduct, or at least the circumstances 

must be such that knowledge of them is necessarily 

imputed to him. 3. The truth concerning these 

facts must be unknown to the other party claiming 

the benefit of the estoppel, at the time when it 

was acted upon by him. 4. The conduct must be 

done with the intention, or a least with the expectation, that it will be acted upon by the other 

party, or under such circumstances that it is both 

natural and probable that it will be so acted upon. * * * 5. The conduct must be relied upon by the 

other party, and, thus relying, he must be led to 

act upon it. 6. He must in fact act upon it in 

such a manner as to change his position for the 

worse; in other words, he must so act that he would 

suffer a loss if he were compelled to surrender or 

forego or alter what he has done by reason of the 

first party being permitted to repudiate his conduct and to assert rights inconsistent with it. 

Mr. Sharkey contends that ARCO is equitably estopped 

from asserting the statute of limitations defense. He contends that the employer's silence in not notifying Mr. 

Sharkey that he was being paid according to 1978 rates meets 

the first element of equitable estoppel. Our holding in the 

first issue, however, resolves this dispute. To constitute 

an estoppel, it would be necessary for ARCO to have knowledge 

or imputed knowledge of material facts entitling Mr. Sharkey 

to 1981 benefits. ARCO would then have to conceal these 

facts. As in Devlin v. Galusha, Higgins and Galusha (1982) , 

202 Mont. 134, 138-39, 655 P.2d 979, 981, neither the employer in the present case nor the insurer engaged in any conduct 

which would amount to a representation or concealment of a 

material fact. It was the claimant's omission which brought 

about a failure to file a claim. This court has previously 
held that estoppel does not apply where the omissions of the 

party claiming estoppel caused the problem. 

Additionally, the third element of estoppel, that the 

claimant was unaware of the truth, is questionable. Mr. 

Sharkey had previously been paid benefits based on his 1978 

wages. These benefits were reinstated and were still based 

on the 1978 rates. Mr. Sharkey must be imputed with knowledge that his benefits should reflect the alleged 1981 date 

of injury. However, he accepted benefits based on the 1978 

rates. Thus equitable estoppel is inapplicable because the 

first three elements are not met. We affirm the holding of 

the Workers' Compensation Court in concluding that equitable 

estoppel does not apply. 

Mr. Sharkey also contends that ARC0 violated S 

39-71-204, MCA (1978), by reinstating Mr. Sharkey's 1978 

benefits after a final settlement without obtaining a written 

order from the Workers' Compensation Division, and without 

notifying the claimant in writing. This contention fails 

because S 39-71-204, MCA (1978), does not require that the 

Division approve in writing of the reopening of a claim, or 

that it notify the claimant in writing. 

Did the Workers' Compensation Court err in concluding 

that the statute of limitations should not be tolled because 

the employer made payments in lieu of compensation? 

Mr. Sharkey contends that the payments he received 

through the reinstatement of 1978 benefits tolled the statute 

of limitations on filing a workers ' compensation claim. 

According to this theory, the statute may be tolled where an 

employer makes voluntary payments which are substantially 

comparable to or greater than benefits available through 

workers' compensation. See generally 3 A. Larson, The Law of 
Workers' Compensation § 78.43 (1987). The concern is that an 

employer may lull the claimant into a "false sense of security by apparently acknowledging the validity of his claim, 

paying remuneration in lieu of compensation, and then invoking the statute after the lapse of one year." Frost v. 

Anaconda Co. (1982), 198 Mont. 216, 221, 645 P.2d 419, 422, 

citing Cupit v. Dancu Chemical Co. (Okla. 1957), 316 P.2d 593 

at 595. In Frost we also stated that to toll the statute 

under this theory, the employer should have some knowledge of 

the effect of what he is doing. Frost, 645 P.2d at 423, 

quoting Buxbaum v. Cumberland Provision Co. (1961), 14 A.D.2d 

425, 221 N.Y.S.2d 339, at page 342. 

Claimant relies on Frost to support his contention but 

the cases are not comparable. In Frost, the employer paid 

compensation from an employee benefit plan, which was totally 

separate from workers' compensation benefits. The payments 

were comparable to or greater than workers' compensation 

benefits. This created a false sense of security in the 

employee, leading him to believe it was unnecessary to file a 

workers' compensation claim. 

Tn the present case the payments were clearly workers' 

compensation disability benefits, and the amounts were based 

on 1978 rates. Neither the payments nor the conduct of the 

employer would mislead Mr. Sharkey into believing he did not 

need to file a claim for the alleged new injury. We conclude 

that the payments made to Mr. Sharkey did not toll the statute of limitations. We affirm the ruling of the Workers' 

Compensation Court on this issue. 

IV 

Did the Workers' Compensation Court err in concluding 

that a reduction in benefiks to the claimant was not 

unreasonable? 
In 1983, Ms. Nelson reduced Mr. Sharkey's benefits from 

temporary total benefits of $188 per week to permanent partial benefits of $94 per week. Mr. Sharkey contends that 

this reduction was "unreasonable." He further contends that 

if the reduction was unreasonable, he is entitled to an 

increased award pursuant to 5 39-71-2907, MCA (1978) , which 

provides for a 108 penalty when benefits are unreasonably 

refused or delayed. 

Mr. Sharkey contends that the reduction was unreasonable, apparently because he was enrolled in a rehabilitation 

program through Social Rehabilitation Services with a goal of 

obtaining certification as a vo-tech teacher. Mr. Sharkey's 

contention may be attributable to the fact that $ 

39-71-116 (19) , MCA, the statute defining temporary total 

benefits, was amended in 1985 to state that temporary total 

benefits were appropriate during a period of retraining. 

However, this amendment was not in effect when Mr. Sharkey 

was injured, and we have previously stated that the statute 

in effect on the date of injury controls. Homme v. 

Rauenhorst (Mont. 1987), 740 P.2d 1110, 1113, 44 St.Rep. 

1261, 1265. We also point out that this amendment has subsequently been deleted. Thus, the Workers' Compensation Court 

is not obligated to reach a finding of total disability 

simply because the claimant is in a retraining program. 

Homrne, 740 P.2d at 1113; Phillips v. Spectrum ~nterprises 

(Mont. 1986), 730 P.2d 1131, 1135, 43 St.Rep. 2288, 2292. 

Temporary total disability is defined in § 

39-71-116 (19), MCA (1978), as follows: 

"Temporary total disability" means a condition 

resulting from an injury as defined in this chapter 

that results in total loss of wages and exists 

until the injured worker is as far restored as the 

permanent character of the injuries will permit. 
Permanent partial disability is defined in 

5 39-71-116(12) , MCA (19781, as follows: 

"permanent partial disability" means a condition 

resulting from injury as defined in this chapter 

that results in the actual loss of earnings or 

earning capability less than total that exists 

after the injured workman is as far restored as the 

permanent character of the injuries will permit. 

Additionally, in Anderson v. Carlsons Transport (1978) , 

178 Mont. 290, 294, 583 P.2d 440, 442, we stated: 

"'[Tlemporary total disability ceases when the 

workman's physical condition is as far restored as 

the permanent character of the injuries will permit. When the claimant has reached this stage in 

his healing process temporary total disability 

ceases, and partial disability begins if there is 

permanent partial impairment.'" (Quoting McAlear 

v. McKee (1976), Mont., 558 P.2d 1134, 1137, 33 

St.Rep. 1337, 1340.) 

At trial, Ms. Nelson testified that she made the decision to reduce Mr. Sharkey's benefits to permanent partial 

based on a medical report and a Work Capacity form from Dr. 

Losee, a medical report from Dr. Baggenstos, and rehabilitation reports. These reports indicated that Mr. Sharkey was 

medically stable and that there was work available for him. 

A review of the record demonstrates that claimant was as far 

restored as the permanent character of his injuries would 

permit. The record also demonstrates that work was available 

which Mr. Sharkey could perform. This evidence fulfills the 

definitional requirements of permanent partial disability and 

indicates that the change was properly made. See, McDanold 

v. B.N. Transport, Inc. (1984), 208 Mont. 470, 475, 679 P.2d 

1188, 1191. Mr. Sharkey cannot properly contend that permanent partial benefits are not appropriate merely because he 

was involved in a rehabilitation program. 
To prevail under § 39-71-2907, MCA (1981), the claimant 

must show unreasonableness. Paulson v. Bozeman Deaconess 

Foundation Hosp. (1984), 207 Mont. 440, 444, 673 P.2d 1281, 

1283. Additionally, whether the insurer's conduct was unreasonable is a factual question and this ruling by the Workers' 

Compensation Court will not be overturned if supported by 

substantial credible evidence. Coles v. Seven Eleven Stores 

(1985), 704 P.2d 1048, 1052, 42 St.Rep. 1238, 1242. The 

Workers' Compensation Court determined that the reduction was 

not unreasonable and we conclude that there is substantial 

credible evidence to support that determination. We therefore affirm this ruling. 

v 

Did the District Court err in awarding attorney fees and 

costs pursuant to § 39-71-612, MCA (1978)? 

The Workers' Compensation Court allowed attorney fees 

and costs pursuant to § 39-71-612, MCA (1978), which allows 

fees when the amount of benefits is in controversy. Mr. 

Sharkey contends that attorney fees and costs should have 

been allowed pursuant to 39-71-611, MCA (1978), which 

allows fees when benefits are denied or terminated. 

The record demonstrates that the Workers' Compensation 

Fund paid temporary total benefits of $188 per week until 

February of 1983, at which time the award was reduced to 

permanent partial benefits of $94 per week. As a result, it 

is clear that attorney fees cannot be awarded under § 

39-71-611, MCA (1978), which applies only where benefits are 

denied or terminated. Mr. Sharkey was awarded 500 weeks of 

permanent partial benefits by the Workers' Compensation 

Court. The Division had argued for an award of only 280 

weeks of permanent partial, or in the alternative, for no 

benefits based on a statute of limitations defense. Clearly 
the amount of benefits was in controversy, and Mr. Sharkey 

received an award in excess of what the Division offered. We 

therefore conclude that attorney fees and costs were properly 

awarded pursuant to 5 39-71-612, MCA (1978). 

Affirmed. 

We Concur: 

- ' . Chief Jug