No. 86-387 

IN THE SUPRENE COURT OF THE STATE OF MONTANA 

1987 

LAVERN GARMANN, 

Claimant and Appellant, 

-vsE.R. FEGERT CO., Employer, 

and 

EMPLOYERS INSURANCE COMPANY OF WAUSAU, 

Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Lloyd E. Hartford, Billings, Montana 

For Respondent: 

L. Randall Bishop, Billings, Montana 

- - 

Submitted on Briefs: Feb. 19, 1987 

Decided: April 21, 1987 

Filed: APR ' 1-87 . A 

iii; 

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

Court. 

Claimant appeals a Workers' Compensation Court decision 

denying a lump sum award of benefits and refusing to impose a 

20% penalty on the insurance company. Two issues are 

presented on appeal: 

(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 

refusing to impose the statutory 20% penalty on the insurance 

company for its actions. 

We affirm. 

On March 21, 1981, claimant suffered multiple 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. 

Claimant was 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 

alignment mechanic. Upon receiving notice that claimant was 

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 

sum advances on five separate occasions from December 1981 to 
August 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 

fo r 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 construction vehicle." 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. 

Claimant did not attempt to find other work. 

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 restrictions required future job placement in 

"light duty work," defined as "frequent lifting of ten pounds 

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 its actions. 

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 he worked 

as a mechanic. However, the court said claimant was not 

entitled to a lump sum award because the record was virtually 

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 claimant worked as a mechanic was not 

unreasonable. The court said a valid dispute existed as to 

whether claimant was permanently totally disabled. 

As to the lump sum award issue, 5 39-71-741, MCA, 

provides that such an award is within 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 the best 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 

settlement will not be interfered with 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. [Citations omitted.] Wide 

discretion will be afforded the Workers ' 

Compensation Court in its determination. 

(Citations omitted. ) " 

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 following passa.ge from Buckman: 

[clase law has required claimants to 

submit financial plans when outstanding 

or delinquent debt is the basis for a 
conversion request. Kuehn v. National 

Farmers Union Property and Cas. Co. 

(1974), 164 Mont. 303, 521 P.2d 921. 

Furthermore where 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 is directly 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, 641 P.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 conversion was in her best 

interests other than by showing strict 

financial necessity. Prior case law has 

held a conversion to be in the best 

interests of a claimant where medical 

considerations required that the claimant 

and his family move to a different 

climate. Polich v. Whalen's O.K. Tire 

Warehouse (1983), 203 Mont. 280, 661 P.2d 

38. Prior case law has 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 abnormal anxiety. 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 that 
S 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 

conversion of biweekly benefits. 

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 the best interests of the claimant." (Emphasis 

added. ) This is the standard by which the Workers' 

Compensation Court must adjudge a claimant's request for a 

lump sum award. 

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), 634 P.2d 1162, 38 

St.Rep. 1572. Lump sum settlements are an exception to the 

usual mode of payment contemplated by the Workers' 

Compensation Act. Utick v. Utick (1979), 181 Mont. 351, 593 

P.2d 739. 

Claimant requested a lump sum award of future benefits 

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 statute at 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 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%. 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 previously made 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' Compensation Court. Steffes v. 93 Leasing Co., Inc. 

/1978), 177 Mont. 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 that any liability exists. Holton v. 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 claimant received partial 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 

consideration of a penalty. 
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 1984 and 

on all future total permanent disability benefits. This 

position is untenable in light of 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 a mechanic. A valid dispute existed as 

to whether claimant was permanently totally disabled 

therefore justifying the suspension of benefits 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 of permanent partial benefits 

and upgraded payment to permanent total benefits. We agree 

with the lower court that there is no evidence of 

unreasonable delay or refusal to pay compensation on the part 

of the insurance company. The Workers' Compensation Court 

found claimant to be permanently totally disabled from the 

date of injury excluding the nine months claimant worked as a 

front-end mechanic. We find substantial evidence to support 

the ruling of the Workers' Compensation Court. 

Affirmed. 

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