No. 86-338

INTHE SUPREME COURT OF THE STATEOF MONTANA
1987

WILLIAM PERRY, Claimant and Respondent,-vsTOMAHAWK TRANSPORTATION, Employer, and ROCKWOOD SERVICES,INC., DefendantsandAppellants. and TRAVELERS INSURANCECOMPANY, Defendant and Respondent.

APPEAL FROM: TheWorkers' CompensationCourt,TheHonorable TimothyReardon,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant: Anderson, Brown,Gerbase,Cebull & Jones; StephenJ. Harman,Billings,Montana

ForRespondent: Kelly & Halverson,P.C., William T. Kelly, Billings, Montana (Perry) Marra,Wenz, Johnson & Hopkins;Dan L. Spoon,Great Falls,Montana (Travelers Ins)

Submitted onBriefs: Dec. 4, 1986 ~ecided: 

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Filed: 

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# -1987Mr. 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 forunreasonable 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 Rockwoodpursuant toan interim court orderandprior to the court's final judgment. We affirm inpart and reverse inpart. Thepoint of contention in the instant case iswhich 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 leftarm.Rockwood voluntarily paid temporary total disability benefits to claimant from September 1984until approximately six months later. OnMarch 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 continuesto pay claimant temporary total disabilitybenefits. 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 temporarilyterminated 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 ofproof under Belton, 658P.2d at 409, 410,whereinwe stated, [Tlheburden of proof is properly placed on the insurancecompanywhich ison 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 standardof review iswell 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 findingsof theWorkers' Compensation Court, this Court cannot overturn the decision." (Citingcases.)
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 testimonywas submittedby way of deposition. We decline to do so since the court specifically relied upon a substantial amount of live testimonyas criticalevidence. 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 claimantnumerous 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 testimonyas incredibleand unbelievable. Dr. Ray testified,and the record demonstrates,that he was quite familiarwith 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,weuphold the court's finding on thispoint. 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 1984accident 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 depositionhow long hewould expect claimant's healingperiod 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 itwas impossibleto tell in thisparticular case,given the peculiar circumstances of the injury and the timing of claimant'smedical examinations, whether claimanthad reached

a medically stable condition. Thus, we sustain the ruling that Rockwood did not carry its burden of proving that claimanthad - not reached amedically stablecondition.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. OnMarch 27, 1985,Rockwood terminated the temporary totaldisability 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 toMay 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 thisperiod. 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 fullamount of the compensationbenefits - 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%. (Emphasisadded.)
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 aredue, that is, owed and payable. Therefore, the court erroneously imposed the penalty on those benefits already paid. Remanded for entry of opinion.



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We concur: 

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Justices

Justice John C. Sheehy did not pa.rt.icipate in this decision, deeming himself disqualified.