No. 84-393 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

FREDERICK CONWAY, 

Claimant and Respondent, 

-vsBLACKFEET INDIAN DEVELOPERS, INC., 

Employer, 

and 

MISSOULA SERVICE COMPANY, 

Defendant and Appellant. 

APPEAL FROM: The Workers' Compensation Court, the Honorable Timothy 

Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Jardine, Stephenson, Blewett & Weaver; K. Dale 

Schwanke argued, Great Falls, Montana 

For Respondent : 

Donald Marble argued, Chester, Montana 

Norman Grosfield, co-counsel, Helena, Montana 

Filed: JUL L i9BS 

Clerk 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Defendant, Missoula Service Company, appeals from two 

orders of the Workers' Compensation Court awarding attorneys' 

fees and costs. The first order, entered after an evidentiary 

hearing, awarded claimant's attorneys $44,533.78 in fees on a 

forty percent contingency fee agreement applied to the 

discounted value of periodic disability benefits due the 

claimant, together with costs of $1,641. The second order 

awarded claimant's attorneys $941 in costs for pursuing the 

attorneys' fees issue. 

Claimant was injured in an industrial accident on July 

30, 1976. He suffered trauma to his right arm, shoulder and 

neck. By December, 1976, he could no longer work and in 

early 1977 he was diagnosed as having multiple sclerosis. He 

filed for benefits with the insurer and was denied. He then 

filed a petition with the Workers' Compensation Court, and 

the court held the claimant was entitled to permanent total 

disability benefits. The insurer appealed to this Court, and 

in Conway v. Blackfeet Indian Developers, Inc. (Mont. 1983), 

669 P.2d 225, 40 St.Rep. 1427, we affirmed. 

After this Court's decision in the previous appeal, the 

only remaining issue was the amount of attorneys' fees and 

costs to be awarded the claimant, and the manner of their 

payment. On remand of the case to the Workers' Compensation 

Court, claimant filed a motion for an order determining 

attorneys' fees. The insurer responded to the motion by 

asking for an evidentiary hearing. Over claimant's 

objection, a hearing was held. At the hearing, claimant's 

attorneys presented the testimony of two expert witnesses, 

Bruce Finnie, an economist and Tom Keegan, an attorney. One 
of the claimant's attorneys also testified. The insurer's 

attorney testified and, subsequent to the hearing, the 

insurer submitted the deposition testimony of Bob James, a 

Great Falls attorney. 

The primary issue before the Workers' Compensation 

Court was the method of calculation and payment of attorneys' 

fees in Workers' Compensation cases where the claimant has a 

contingent fee arrangement with his attorney, and is to 

receive benefits in periodic payments. Claimant requested 

fees of approximately $45,000. This request, supported by 

the experts' testimony, was reached by taking claimant's life 

expectancy times his weekly rate, yielding a sum of $195,948, 

and discounting this at six percent to reach a present value 

of $76,268. Past benefits total $35,066. Claimant's total 

entitlement is $111,334. The contingency fee arrangement 

provides for fees of forty percent of net recovery if 

successfully litigated through the Supreme Court. Forty 

percent of $111,334 is $44,533.78. The Workers' Compensation 

Court awarded this amount to the claimant, plus $1,641 in 

costs. Subsequently, the Workers' Compensation Court awarded 

claimant $941 for costs in the attorneys' fees action. 

Appellant-defendant raises the following issues on 

appea 1 : 

(1) Whether the Workers' Compensation Court erred in 

ruling that attorneys' fees should be payable in a lump sum. 

(2) Whether there was substantial evidence to support 

the Workers' Compensation Court's determination of fees? 

(3) Whether the Workers' Compensation Court erred in 

awarding claimant's costs for the attorneys' fees proceeding? 

Claimant-respondent, pursuant to Rule 14, 

M.R.App.Civ.P., raises the following issues: 
(1.) Whether the present value discount of claimant's 

net award should be included in the calculation of attorneys' 

fees.? 

(2) Whether the Court should award claimant damages and 

impose a penalty on defendant pursuant to Rule 32, 

M.R.App.Civ.P.? 

This Court in Wight v. Hughes Livestock Co. (Mont. 

1983), 664 P.2d 303, 40 St.Rep. 696, approved contingent fee 

agreements in Workers ' Compensation cases. Wight did not, 

however, say how such arrangements were to be implemented. 

Section 39-71-611, MCA is the statute that provides for 

attorneys' fees in Workers' Compensation actions. It states 

in part that, "the insurer shall pay reasonable costs and 

attorneys' fees as established by the workers' compensation 

judge." 

Appellant contends that the above statute provides no 

guidance as to how attorneys' fees are to be awarded in 

workers' compensation actions and that, in the absence of 

express legislative intent, the Workers' Compensation Court 

does not have the authority to award attorneys' fees in a 

lump sum when the claimant is receiving periodic disability 

payments. 

We do not find appellant's argument to be persuasiv~. 

The Workers' Compensation Court's order simply effectuated 

the parties intent and met the criteria set out in Wight, 

supra. Secondly, section 39-71-611, MCA gives the lower 

court the discretionary authority to determine "reasonable 

fees." Reasonable is a term that can easily be interpreted, 

and we do so here, to comprehend both the amount, and the 

kind of fee--lump sum or periodic. A case appellant relies 

upon points out this distinction. In U.S.F. & G. v. Potter, 
(Ark. 1978), 567 S.W.2d 104, the Arkansas Supreme Court held 

that that state's statute did not contain implied authority 

for the workers' compensation division to award attorney's 

fees on a lump sum basis. The pertinent statute, 

Ark.Stat.Ann. S81-1332, provides that: 

"In determining the amount of fees, the 

Commission shall take into consideration 

the nature, length and complexity of the 

services performed, and the benefits 

resulting therefrom to the compensation 

beneficiaries." (Emphasis added.) 

Montana's statutory language is broader. It does not refer 

to the "amount" of fees, but rather that the court shall set 

a "reasonable" fee. As stated above, this includes the power 

to set the kind of fee that shall be paid claimant's 

attorneys. On this point we affirm the Workers' Compensation 

Court. 

Next, appellant contends that the Workers' Compensation 

Court did not have substantial credible evidence for its 

ruling. It argues that the court relied on evidence 

introduced at trial without a proper foundation, and 

therefore the order has no evidence to support it. 

Specifically, appellant contends that claimant's experts 

relied on an inaccurate mortality table in calculating the 

present value of the award. 

At the hearing, claimant's attorneys introduced and 

qualified Bruce Finnie as an expert economist. On voir dire 

of Finnie, insurer elicited testimony that his calculations 

were based on a standard mortality table that did not 

specifically account for claimant's American Indian 

genealogy, on-reservation status, and multiple sclerosis. 

Asked if these circumstances would substantially effect 

claimant's life expectancy, Finnie replied "yes. " At that 
point defendant objected to the admission of Finnie's 

computation because its "underlying basis" was "significantly 

off." The court noted insurers' objection, but admitted the 

evidence "for what it is worth." 

In its order, the Workers' Compensation Court noted: 

"The defendant objects to the claimant's 

calculated life expectancy, asserting 

that the claimant's physical condition 

and American Indian genealogy have not 

been accounted for. While these 

assertions may have merit, there was no 

evidence submitted either to support the 

contentions or to rebut Mr. Finny's [sic] 

ca l culations. Therefore, the life 

expectancy, as presented by the 

claimant's expert, shall be accepted." 

Insurer insists that this evidence was lacking a proper 

foundation, and that the court erred in relying thereupon, 

citing 32 C.J.S. Evidence S583, and Jones, --- The Law of 

Evidence, (6th Ed.) S4.59. While we note that strictly as a 

matter of evidence 'Law, insurer's argument has merit, it 

fails to account for section 39-71-2903, MCA, which 

specifically provides that " . . . the workers' compensation 

judge is not bound by common law and statutory rules of 

evidence." In the past, responding to similar arguments, we 

have upheld the admission of hearsay evidence, Stevens v. 

Glacier Gen. Assur. Co. (1978), 176 Mont. 61, 65, 575 P.2d 

1326, 1329, and "appraiser's conclusions . . . based upon 

only a cursory investigation" Krause v. Sears Roebuck & Co. 

(1981), 197 Mont. 102, 105, 641 P.2d 458, 460, before the 

Workers' Compensation Court. Although we specifically noted 

in Krause, supra, that "the court did not place any undue 

reliance on the appraiser's testimony." 197 Mont. at 106, 

641 P.2d at 460, which is not the case here; we find another 

factor that weighs against appellant. As noted by the 

Workers' Compensation Court, the insurer "submitted [no 
evidence] either to support the contentions or to rebut Mr. 

Finny's [sic] calculations." Though the claimant has the 

burden of making a prima facie case, if he does so, and if 

the defendant raises an issue, defendant then has the burden 

of going forward with evidence sufficient to rebut claimant. 

With the relaxed evidentiary rules in workers' compensation 

proceedings, there is an increased emphasis on the rights to 

cross-examine, Hart v. J. J. Newberry Co. (1978), 179 Mont. 

160, 587 P.2d 11, and to produce evidence. Here, the 

defendant did little more than raise the issue on voir dire, 

object, and then drop it. Defendant did not ask Finnie how 

much the claimant's circumstances would affect his life 

expectancy, or introduce any of its own evidence on that 

point. We do not find error on this point. 

Defendant also contends that the court erred in 

adopting the 6% discount figure proposed by the claimant. 

Our review of the record indicates that there is substantial 

credible evidence supporting this figure. Defendant's own 

expert, Robert James, testified that the discount process 

used in this case was accepted and reasonable. Claimant's 

experts, Bruce Finnie and Thomas Keegan, both testified that 

the fee arrangement and amount requested by claimant's 

attorneys were reasonable. The Workers' Compensation Court 

did not err on this point. 

As to issue number three, the Workers' Compensation 

Court, in its order awarding fees, reasoned: 

"The contingent fee contract in the 

present case provided attorney fees of 40 

percent of the claimant' s recovery upon 

successful appeal to the Montana Supreme 

Court, which was awarded by this Court's 

June 1, 1984 Order. Thp contract 

additionally provided that: 
"'The Law Office shall be reimbursed by 

client for all costs and disbursements 

incurred anr expended on behalf of 

client. (Emphasis added. ) ' 

"The claimant's attorney was forced to 

advance monies to recover attorney fees 

that the claimant was required to pay 

under the fee contract. In order to 

effectuate the 'net award' concept set 

forth in Wight, supra., these additional 

costs must be assessed against the 

insurer. Additional attorney fees for 

pursuing the underlying attorney fee 

award could not be assessed since the fee 

contract limits such fees to 40 percent." 

We find that the Workers' Compensation Court's 

reasoning, and order, is correct, and affirm on this point. 

We will not address claimant's issues on cross-appeal 

because they were not properly raised pursuant to Rule 1.4 

M.R.App.Civ.P. That Rule states in part: 

"Rule 14. Ruling against respondent may 

be reviewed. Whenever the record on 

appeal shall contain any order, ruling or 

proceeding of the trial court against the 

respondent, affecting his substantial 

rights on the appeal of said cause, 

together with any required objection or 

exception of such respondent, the supreme 

court on such appeal shall consider such 

orders, rulings, or proceedings, and the 

objections and exceptions thereto . . . " 

Rule 14 M.R..App.Civ.P. provides a specific procedure 

for the claimant to raise certain issues without the 

necessity of cross-appealing. Claimant neither objected nor 

was there any ruling against him on this point. Further, the 

type of issue claimant raises is not contemplated by Rule 14. 

The fact that the relief requested under this Rule 14 request 

would nearly double the insurer's exposure points to the 

conclusion that this issue is one that should be fully raised 

through normal procedure. Converse v. Converse (1982) , 198 

Mont. 227, 232, 645 P.2d 413, 416; Johnson v. Tindall (1981), 

195 Mont. 165, 169, 635 P.2d 266, 268. 
Finally, claimant argues that this Court should grant 

him damages and a penalty pursuant to Rule 32 M.R.App.Civ.P. 

We decline to do so. Insurer has been pursuing substantial 

and reasonable legal grounds throughout this protracted 

litigation. It did not intend to delay, but rather has 

diligently pursued the case at all times. A penalty pursuant 

to Rule 32 M.R.App.Civ.P is inappropriate. 

The order of the Workers' Compensation Court is 

affirmed. 

We concur: / 

Honorable Gordon R. Bennett, 

Judge of the District Court, 

sitting for Mr. Justice 

William E. Hunt, Sr.