No. 86-387
INTHE SUPRENE COURT OF THE STATE OFMONTANA
1987

LAVERN GARMANN, Claimantand Appellant,-vsE.R. FEGERT CO., Employer,
and
EMPLOYERS INSURANCE COMPANY OF WAUSAU,
Defendantand Respondent.

APPEAL FROM: TheWorkers' CompensationCourt, TheHonorable TimothyReardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant: LloydE. Hartford, Billings, Montana
ForRespondent:
L. RandallBishop, Billings, Montana

- - Submittedon Briefs: Feb. 19, 1987
Decided: April 21, 1987
Filed: 

### APR '

## 1-87

.A 

# iii; ClerkMr. Justice L. C. Gulbrandson delivered the Opinion of the Court.

Claimantappeals aWorkers' Compensation Court decision denying a lump sum award ofbenefits and refusingto impose a 20% penalty on the insurance company. Two issues are presented onappeal: (1) whether the Workers' Compensation Court erred in refusing to order a lump sum award of future benefits to claimant; (2) whether the Workers' Compensation Court erred in refusingto impose the statutory 20% penalty on the insurance company for itsactions. We affirm. On March 21, 1981, claimant sufferedmultiple injuries while working for E. R. Fegert Co. in Zortman, Montana, including fractures of the pelvis, ribs and lumbar spine. Claimant also suffered nerve injury to the upper right extremity. Employer's Insurance Company of Wausau

(hereinafter insurance company), the workers' compensation insurer, paid claimant temporary total disability benefits from the date of injury, March 21, 1981 to September 10, 1982,and again from September 11, 1982 to December 6,1982. Claimantwas paid permanent partial disability benefits from December 7, 1982 through April 28, 1983, whereupon the insurance company suspended the payment of benefits after learning that claimant had been working as a front-end alignmentmechanic. Upon receiving notice that claimantwas not physically able to continue the work, the insurance company on January 27, 1984 reinstated permanent partial disability benefits and then upgraded payments to permanent total disability in December 1984. Claimant was paid lump

sumadvances on five separate occasions fromDecember 1981 toAugust 1984. Claimant's treating physician opined that maximum healing was achieved by April 1982. An orthopedic surgeon rated claimant's impairment at 25% of the lower extremity, and a neurologist added a 20% impairment rating for the upper extremities and cervical region. Rehabilitation tests revealed that claimant's optimal work setting would be a gross manual task requiring only light lifting. The rehabilitation counselor recommended that claimant find work as a driver/operator of some type of "smooth riding constructionvehicle." Claimant subsequently received three and one-half days of training and worked as a front-end alignment mechanic, but as was previously stated, claimant elected to quit because of back and leg problems. Claimantdid not attempt to find otherwork. Further assessment of claimant's limitations in August 1983 revealed that claimant could only lift 10-15 pounds and

was restricted to occasional squatting and no climbing or bending. A vocational specialist concluded that claimant's severe physical restrictionsrequired future job placement in "light duty work,"defined as "frequent lifting of tenpounds with no bending, lifting, pushing, stooping, or climbing." Claimant requested a lump sum award of future benefits for the purchase of a home, automobile and furniture. With any remaining award, claimant proposed to purchase an annuity. Claimant also requested that a 20% statutory penalty be imposed on the insurer for itsactions. The Workers1 Compensation Court reviewed the evidence and found claimant to be permanently totally disabled from the date of injury, exclusive of the time in which heworked

as a mechanic. However, the court said claimant was not entitled to a lump sumaward because the recordwasvirtually barren of any evidence to support such an award under the "best interests" test or the "financial sustenance" test.The court also refused to impose the statutory 20% penalty on the insurance company, holding that the suspension of benefits for the time claimantworked as a mechanic was not unreasonable. The court said a valid dispute existed as to whether claimantwaspermanently totally disabled. As to the lump sum award issue, 

### 5 39-71-741, MCA, provides that such an award iswithin the discretion of the Workers' Compensation Court. The standard of review is clear: "Lump sum settlements are granted in exceptional circumstances. Outstanding indebtedness, pressing need, or circumstances in which thebest interests of the claimant, his family and the general public are served justify such a settlement. [Citations omitted.] The decision to award or deny a lump sum settlementwillnotbe interferedwith on appeal unless there has been an abuse of discretion. The Workers' Compensation Court will be presumed correct and affirmed if supported by substantial evidence, and reversed only if the evidence clearly preponderates against its findings. [Citationsomitted.] Wide discretion will be afforded the Workers

## ' Compensation Court in its determination.

(Citationsomitted.)

### "

Lave 

### v. School Dist. No. 2 (Mont. 1986), 713 P.2d 546, 547, 43 St.Rep. 165, 167; Hock v. Lienco Cedar Products (Mont.

Section 39-71-741 was amended by the 1985 legislature and we interpreted the legislative action as a means of codifying existing law. See Buckman v. Montana Deaconess Hosp. (Mont. 1986), 730 P.2d 380, 43 St.Rep. 2216. We quote the followingpassa.gefromBuckman: [clase law has required claimants to submit financial plans when outstanding or delinquent debt is the basis for aconversion request. Kuehn 

### v. National Farmers Union Property and Cas. Co.

(1974), 164 Mont. 303, 521 P.2d 921. Furthermorewhere the court has found the outstanding debt was not so significant as to necessitate a lump-sum conversion, it has been denied. Ruple v. Bob Peterson Logging Co. (Mont. 1984), 679 P.2d 1252, 41 St.Rep. 704. This prior law isdirectly reflected in the language of S 39-71-741(2)(c)

# . Subsection 2(d) of that same statute likewise codifies prior case law requiring that a claimant show the worthiness of her business venture plan and the adequacy of her business acumen. See Bundtrock v. Duff Chevrolet (1982)

## , 199 Mont. 128, 647 P.2d 856; Krause v. Sears,Roebuck and Co. (1982), 197 Mont. 102,641P.2d 458. Finally, 39-71-741(3) allows the division to order "financial, medical, vocational, rehabilitation, educational or other evaluative studies to determine whether a lump-sum conversion is in the best interest of the worker or his beneficiary.

### " These tests reflect the historical ways in which a claimant could assert that a conversionwas in her best interests other than by showing strict financialnecessity. Prior case law has held a conversion to be in the best interests of a claimant where medical considerationsrequired that the claimant and his family move to a different climate. Polich 

### v. Whalen's O.K. Tire Warehouse (1983),203 Mont. 280, 661P.2d 38. Prior case lawhas held it to be in the best interest of the claimant where diagnosed mental instability made the award of a lump sum necessary to relieve the claimant's abnormalanxiety. Legowik v. Montgomery Ward and Co. (1971), 157 Mont. 436,486 P.2d 867.
The legislative use of the term "best interest" further convinces us thatS 39-71-741(3), MCA, reflects the intent of the legislature to make explicit in the statutory language the previously used best interest test for the conversionofbiweeklybenefits. Buckman, 730 P.2d at 383. Stelling v. Rivercrest Ranches, Inc. (Mont. 1986), 730 P.2d 388, 390, 43 St.Rep. 2212, 2214,decided the same day as Buckman, states that the 1985 amendments to 5 39-71-741 "merely expand the methods by which a claimant proves entitlement to a lump-sum award. The threshold test remains that of thebest interestsof the claimant." (Emphasis added.) This is the standard by which the Workers' Compensation Court must adjudge a claimant's request for a lump sumaward. The claimant bears the burden of justifying departure from periodic payments. Legowik v. Montgomery Ward & Co. (1971), 157 Mont. 436, 486 P.2d 867. The purpose of the periodic payment method is to preclude the possibility of an imprudent employee or dependent wasting the means of support and thereby becoming a burden upon society. Polich 

### v. Whalen's O.K. Tire Warehouse (Mont. 1981), 634P.2d 1162, 38 St.Rep. 1572. Lump sum settlements are an exception to the usual mode of payment contemplated by the Workers' CompensationAct. Utick v. Utick (1979), 181Mont. 351, 593 P.2d 739. Claimant requested a lump sum award of futurebenefits for the purchase of a home, automobile and furniture. The problem with claimant's argument is that age, health, or other pressing needs have not been shown to necessitate the purchase of the requested items. See Belton v. Carlson Transport (Mont. 1986), 714 P.2d 148, 43 St.Rep. 286. We find no abuse of discretion by the Workers' Compensation Court.The second issue is whether the Workers' Compensation Court erred in refusing to impose the statutory 20% penalty

on the insurance company for its actions. Section 39-71-2907,MCA, is the statuteat issue: When payment of compensation has been unreasonably delayed or refused by an insurer, either prior or subsequent to the issuance of an order by theworkers' 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%. The question of unreasonable delay or refusal shall be determined by the workers compensation judge, and such a finding constitutes good cause to rescind, alter, or amend any order, decision, or award previouslymade in the cause for the purpose of making the increase provided herein.
The standard of review is whether there is substantial evidence to support the findings and conclusions of the Workers' CompensationCourt. Steffesv. 93LeasingCo., Inc.

/1978),177Mont. 83,580 P.2d 450. There are several reasons justifying the delayed payment of compensation such as the existence of a bonafide controversy or genuine doubt from a medical or legal standpoint thatany liability exists. Holtonv. F.H. Stoltze Land & Lumber Co. (1981), 195 Mont. 263, 637 P.2d 10. In Metzger v. Chemetron Corp. (Mont. 1984), 687 P.2d 1033, 41 St.Rep. 1788,the claimantreceivedpartial lump sum advances of $6,000 plus overpayments of $7,287.97. The lower court found, and we agreed, that no basis existed for the considerationof apenalty.Here claimant is arguing that the insurance company's suspension of benefits in April 1983 was unreasonable and therefore justifies the imposition of the statutory penalty
on all accrued benefits from April 1983 to December 1984and

on all future total permanent disability benefits. This position is untenable in lightof the fact that an insurance company may terminate benefits if it has knowledge that a claimant has returned to work. See S 39-71-609,MCA. Here the insurance company had knowledge that claimant had returned to work as amechanic. A valid dispute existed as to whether claimant was permanently totally disabled therefore justifying the suspension ofbenefits for the time claimant worked as a mechanic. Once the insurance company

was notified that claimant could no longer work in that capacity,it reinstated payment ofpermanentpartial benefits and upgraded payment to permanent total benefits. We agree with the lower court that there is no evidence of unreasonabledelay or refusal topay compensationon thepart of the insurance company. The Workers' Compensation Court found claimant to be permanently totally disabled from the date of injury excluding theninemonths claimant worked as a front-endmechanic. We find substantial evidence to support the rulingof the Workers' CompensationCourt. Affirmed.

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