No. 86-338 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

WILLIAM PERRY, 

Claimant and Respondent, 

-vsTOMAHAWK TRANSPORTATION, Employer, 

and 

ROCKWOOD SERVICES, INC., 

Defendants and Appellants. 

and 

TRAVELERS INSURANCE COMPANY, 

Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Anderson, Brown, Gerbase, Cebull & Jones; Stephen J. 

Harman, Billings, Montana 

For Respondent: 

Kelly & Halverson, P.C., William T. Kelly, Billings, 

Montana (Perry) 

Marra, Wenz, Johnson & Hopkins; Dan L. Spoon, Great 

Falls, Montana (Travelers Ins) 

Submitted on Briefs: Dec. 4, 1986 

~ecided: APR 7 - 1987 

Filed: APR 7 - 1987 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Tomahawk Transportation (the employer and hereinafter 

referred to as Tomahawk) and Rockwood Services, Inc. (the 

insurer and hereinafter referred to as Rockwood) appeal a 

Workers' Compensation Court order which (1) holds Rockwood 

liable for a work-related injury to claimant William Perry 

and (2) imposes a 20% penalty upon Rockwood for unreasonable 

denial or delay of benefits. The issues on appeal are 

(1) whether the court properly held Rockwood liable for 

claimant's left arm injury, and (2) whether the court 

properly imposed a 20% penalty upon temporary total benefits 

paid by Rockwood pursuant to an interim court order and prior 

to the court's final judgment. We affirm in part and reverse 

in part. 

The point of contention in the instant case is which of 

Tomahawk's insurers is liable for claimant's left arm injury. 

It is undisputed that claimant suffered two compensable 

work-related injuries. While working for Tomahawk in May 

1984, claimant suffered an injury to his left arm. At that 

time, respondent Travelers Insurance Company (Travelers) was 

the workers1 compensation insurer for Tomahawk and Travelers 

accepted liability for the injury. In September 1984, again 

while working for Tomahawk, claimant was injured when the 

wind blew the truck he was driving over onto its side. The 

truck landed on the driver's side causing a blow to the left 

side of claimant's body. Rockwood was Tomahawk's workers' 

compensation insurer at the time of this second accident. 

Claimant alleges, and the lower court found, that the 

September 1984 accident aggravated the injury to claimant's 

left arm. 
Rockwood voluntarily paid temporary total disability 

benefits to claimant from September 1984 until approximately 

six months later. On March 27, 1985, Rockwood terminated the 

disability payments to claimant. On May 8, 1985, the 

Workers1 Compensation Court ordered Rockwood to pay interim 

benefits to claimant pending resolution of the question of 

which insurer was liable for claimant's left arm injury. 

Rockwood made those payments up until the court's June 1986 

final judgment and apparently still continues to pay claimant 

temporary total disability benefits. 

In March 1985, claimant filed a petition for hearing 

with the Workers' Compensation Court to resolve several 

disputes he had with Rockwood. Rockwood moved to join 

Travelers as a third party, which motion was granted. In 

June 1986, the court filed its final judgment in the case. 

The court held that Rockwood was liable for claimant's left 

arm injury and imposed a 20% penalty on all temporary total 

benefits claimant was entitled to from March 27, 1985, the 

date that Rockwood temporarily terminated the benefits, until 

the date of the judgment. This appeal followed. 

To escape liability for the left arm injury, Rockwood 

had to prove by a preponderance of the evidence that the 

second injury did not aggravate the preexisting left arm 

condition and/or that claimant's left arm had not reached a 

medically stable condition prior to the second injury. 

Belton v. Carlson Transport (1983), 202 Mont. 384, 658 P.2d 

405. Rockwood had the burden of proof under Belton, 658 P.2d 

at 409, 410, wherein we stated, 

[Tlhe burden of proof is properly placed 

on the insurance company which is on risk 

at the time of the accident in which a 

compensable injury is claimed. 
The lower court found that the second injury did aggravate 

the preexisting left arm condition and that Rockwood failed 

to prove by a preponderance of the evidence that claimant's 

left arm had not reached a medically stable condition. 

Therefore, the court held Rockwood liable for the left arm 

injury. Rockwood attacks both the above findings. 

The standard of review is well settled. 

"Our function in reviewing a decision of 

the Workers' Compensation Court is to 

determine whether there is substantial 

evidence to support the findings and 

conclusions of that Court. We cannot 

substitute our judgment for that of the 

trial court as to the weight of the 

evidence on questions of fact. Where 

there is substantial evidence to support 

the findings of the Workers' Compensation 

Court, this Court cannot overturn the 

decision." (Citing cases.) 

Denend v. Bradford Roofing & Insulation (Mont. 1985), 710 

P.2d 61, 63, 42 St.Rep. 1778, 1780. Rockwood, citing Jones 

v. St. Regis Paper Co. (1981), 196 Mont. 138, 639 P.2d 1140, 

argues that this Court can determine what weight to assign 

the testimony because much of the testimony was submitted by 

way of deposition. We decline to do so since the court 

specifically relied upon a substantial amount of live 

testimony as critical evidence. 

We find that there is substantial credible evidence to 

support the lower court's finding that the September 1984 

accident did aggravate claimant's left arm injury. Dr. Gary 

Ray, who had treated or examined claimant numerous times over 

several years, testified repeatedly and unequivocally that 

the September 1984 accident aggravated the condition. We do 

not agree with Rockwood's characterization of Dr. Ray's 

testimony as incredible and unbelievable. Dr. Ray testified, 
and the record demonstrates, that he was quite familiar with 

both of claimant's accidents and the resulting problems. 

Moreover, claimant also testified that his left arm was 

substantially worse after the September 1984 accident. 

Therefore, we uphold the court's finding on this point. 

Further, we uphold the court's determination that 

Rockwood did not prove by a preponderance of the evidence 

that claimant's left arm had not reached a medically stable 

condition prior to the September 1984 accident. We agree 

that the evidence on this point was simply inconclusive. 

Claimant testified that prior to the September 1984 accident 

he could tolerate his left arm condition and continue with 

his job. He also testified that his left arm was not 

improving prior to that accident. Dr. Frankel, who treated 

claimant over a substantial period of time, was asked in 

deposition how long he would expect claimant's healing period 

to be after the May 1984 accident. He replied that the 

injury "may have quieted down in a week, and it may have 

taken two or three years. There is just no way to answer 

that question." Dr. Frankel also testified that he would 

defer to the claimant's statements on whether the second 

accident aggravated the left arm injury. We find credible 

evidence tending to show that claimant had reached a 

medically stable position. We also find credible evidence 

that it was impossible to tell in this particular case, given 

the peculiar circumstances of the injury and the timing of 

claimant's medical examinations, whether claimant had reached 

a medically stable condition. Thus, we sustain the ruling 

that Rockwood did not carry its burden of proving that 

claimant had - not reached a medically stable condition. 
The second issue is whether the lower court properly 

imposed the 20% penalty for insurer unreasonableness upon 

benefits paid by Rockwood. Only part of the 20% penalty 

imposed on Rockwood is at issue. On March 27, 1985, Rockwood 

terminated the temporary total disability benefits being made 

to claimant. Rockwood began making the payments again on 

about May 8, 1985, pursuant to a court order directing them 

to do so. Rockwood does not appeal the 20% penalty as it is 

imposed upon the benefits later awarded for this six week 

period from March 27, 1985 to May 8, 1985. 

Rockwood paid temporary total disability benefits to 

claimant from May 8, 1985, until the lower court's final 

judgment in June 1986. The court also imposed the 20% 

penalty upon the benefits paid during this period. Rockwood 

argues that the Montana statute governing the 20% penalty, 

S 39-71-2907, MCA, does not authorize the imposition of the 

penalty in this situation. Section 39-71-2907, MCA, provides 

in part: 

When payment of compensation has been 

unreasonably delayed or refused by an 

insurer, either prior or subsequent to 

the issuance of an order by the workers' 

compensation judge granting a claimant 

compensation benefits, the full amount of 

the compensation benefits - due a claimant, 

between the time compensation benefits 

were delayed or refused and the date of 

the order granting a claimant 

compensation benefits, may be increased 

by the workers' compensation judge by 

20%. (Emphasis added.) 

Those benefits which Rockwood paid from May 1985 until the 

final judgment in June 1986 were not - due at the time the 

court imposed the penalty. The statute clearly allows the 

imposition of the penalty only upon those benefits which are 
due, that is, owed and payable. Therefore, the court 

erroneously imposed the penalty on those benefits already 

paid. 

Remanded for entry of 

opinion. 

t 

We concur: ~9' 

Justices 

Justice John C. Sheehy did not pa.rt.icipate in this 

decision, deeming himself disqualified.