No. 88-583 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

JAMES P. HEDEGAARD, 

Claimant and Appellant, 

-vsKNIFE RIVER COAL MINING CO., 

Employer, 

and 

STATE COMPENSATION INSURANCE FUND, 

Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, The Honorable ~imothy 

Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Lloyd E. Hartford, ~illings, Montana 

For Respondent: 

~atricia Bell; Crowley Law Firm, ~illings, Montana 

Filed: 

,. Submitted on Briefs: ~pril 27, 1989 

Decided: July 25, 1989 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

Claimant James P. Hedegaard appeals from the workers' 

Compensation Court's limited conversion of his biweekly 

benefits to a lump sum award. We affirm in part, reverse in 

part and remand for proceedings consistent with this opinion. 

Claimant is permanently totally disabled as the result 

of a back injury he suffered in 1980 and for which he has 

been receiving biweekly disability benefits. In May of 1986, 

claimant petitioned the Workers' Compensation Court for a 

partial lump sum award of $9,181.27 to enable him to pay off 

the loan on his 1984 Ford LTD. Before the petition was 

heard, the 1984 Ford was repossessed. 

Claimant and his wife were left without reliable 

transportation when their 1980 Ford Pinto was destroyed by 

fire. In December, 1987, claimant financed the purchase of a 

new Buick automobile for approximately $12,900. 

Additionally, during this time claimant retained new counsel. 

Claimant's new attorney failed to amend the petition request 

of $9,181.27 for an amount sufficient to pay off the new 

Buick. During the hearing, the Workers' Compensation Court 

refused to allow any amendment of the $9,181.27 petition 

request. However, the court concluded that the claimant was 

entitled to a lump sum award for the purchase of the 1987 

Buick: 

[Finding of Fact] 

8. If the claimant is not awarded 

the requested lump sum, the 1987 Buick 

will be repossessed. Claimant and his 

wife need reliable transportation. 

. . . 

[Conclusion of Law] 
2. Claimant is entitled to receive 

an advance on his compensation in the 

amount of $9,181.27. The insurer may 

recover the advance by reducing his 

weekly compensation by $20.00 per week. 

Claimant requested attorney's fees based upon an hourly 

fee of $225 multiplied by 171.05 hours which his attorney 

claims were spent in pursuit of the lump sum award, 

notwithstanding that his attorney missed at least three 

deadlines for exchanging exhibits, preparing a final pretrial 

order and following the court's orders relative to the issues 

to be tried. The court denied the request of $38,486.25 in 

attorney's fees and awarded an attorney fee based upon the 

33% contingent fee agreement. 

Claimant presents the following issues for our review: 

1. Did the Workers' Compensation Court abuse its 

discretion by awarding a partial lump sum advance of 

$9,181.27, rather than the $12,900 needed to pay off the 1987 

Buick? 

2. Did the Workers' Compensation Court abuse its 

discretion by granting respondent a weekly recoupment of $20 

per week from the claimant's disability benefits? 

3. Did the Workers' Compensation Court abuse its 

discretion by refusing to award attorney's fees without 

considering the documentation at an evidentiary hearing? 

Issue No. 1 

Did the court abuse its discretion by refusing to award 

sufficient funds to pay off the 1987 Buick? We conclude it 

did. The amount awarded, $9,181.27, was initially requested 

by claimant's original counsel to pay off the 1984 Ford LTD 

which was subsequently repossessed. This sum originally 

included $1,836.25 in attorney's fees. 

Claimant financed the purchase of a new automobile for 

an amount the court concluded was not unreasonable. The 
court also concluded claimant was entitled to a lump sum 

award because the claimant needed reliable transportation. 

Additionally, the court awarded the full $9,181.27 for the 

purchase of the automobile, and made a separate award of 

attorney's fees, even though the court earlier refused to 

allow any amendment of the petition request. 

While we recognize the court's need to require 

adherence to pretrial orders, the facts of this case do not 

justify a denial of funds sufficient to pay off the 

automobile loan. This purpose of the lump sum request was 

known to the respondent since May of 1986, and no prejudice 

would have resulted had the court allowed the claimant to 

amend his petition. Additionally, the court did amend the 

petition, without objection by respondent, when it awarded 

the full $9,181.27 toward payment of the automobile loan. 

The parties agree that, under these facts, the "best 

interest" of the claimant test determines whether the lump 

sum award is proper. In light of the court's determination 

that the claimant's best interests dictate that he is 

entitled to a lump sum award to pay off his automobile loan, 

we conclude it was unreasonable and an abuse of discretion to 

limit the award to an amount which is insufficient to meet 

that need. 

Issue No. 2 

Did the Workers' Compensation Court abuse its 

discretion in granting respondent a weekly recoupment of $20 

per week from the claimant's disability benefits? 

Claimant argues the insurer is only entitled to recoup 

advances at the distal end of the claim or at the time of 

full and final settlement. We disagree. 

The Workers' Compensation Court concluded the insurer 

should be able to recover the advance through a reduction of 

the biweekly payments. This same conclusion was reached 
earlier by the Workers' Compensation Court in Lecher v. 

Montana Physician's Service and Fireman's Fund, WWC No. 

8503-2956, Volume VI, No. 325 (filed August 21, 1985). There 

the court reasoned at Conclusion of Law No. 5: 

It is not sufficient for a claimant 

to simply request a lump sum with credit 

to the defendant from the distal end of 

the claimant's entitlement. There may be 

factual situations in the past and in the 

future where that is an appropriate Court 

ordered award. However, most claimants 

are already on an extremely tight budget 

and simply planning on having a greatly 

reduced income or no income at some point 

in the distant future is not debt 

management nor is it a plan. Generally, 

claimant should anticipate a biweekly 

repayment to the defendant over their 

estimated lifetime entitlement. 

A claimant is not entitled to double recovery of both a 

lump sum advance and the biweekly payments. Since a lump sum 

advance is merely the whole or partial conversion of a 

claimant's biweekly payments, the insurer is entitled to 

recover the advance. Additionally, the Workers' Compensation 

Judge considered the claimant's best interests, including his 

present and future income, and concluded the lump sum 

advance, offset by a $20 per week recoupment would meet the 

claimant's best interests. The Workers' Compensation Court, 

quoted Willoughby v. Arthur G. McKee and Co. (19801, 187 

Mont. 253, 257, 609 P.2d 700, 702: 

"The criteria determinative of the 

advisability of conversion to a total or 

partial lump sum award have generally 

been held to be ' . . . the best 

interests of the claimant, his family and 

for the best interests of the 

public. . . ' [Citations omitted.] The 

existence of a 'pressing need' and/or 

'outstanding indebtedness' has likewise 
been held to be relevant criterion. . . [Citation omitted.]" 

We conclude the court's decision was supported by 

substantial evidence and did not constitute an abuse of 

discretion when it allowed the insurer a weekly recoupment of 

the lump sum advance prior to a final settlement. 

Issue No. 3 

Did the Workers' Compensation Court abuse its 

discretion by refusing to award attorney's fees without 

considering the documentation at an evidentiary hearing? 

On November 3, 1988, the court entered its findings of 

fact, conclusions of law, and judgment in which it awarded 

claimant reasonable costs and attorney's fees pursuant to 

§ 39-71-612, MCA. The order read in part: 

If the defendant or the claimant 

believes the amount due the claimant's 

attorney is unreasonable, then each has 

30 days from the date of this Order to 

file a Motion for Evidentiary Hearing 

Regarding Reasonableness of Attorney Fees 

Thus, unless counsel can convince the 

Court otherwise, we are inclined to award 

the 33 percent contingency fee . . . 

On November 23, 1988, claimant's attorney filed a 

Memorandum of Time and Costs in which he requested $38,486.25 

in attorney's fees and $993.50 in costs, but he did not 

request an evidentiary hearing. Respondent filed an 

objection to the Memorandum and requested an evidentiary 

hearing. On December 8, 1988, the court awarded attorney's 

fees based upon the contingency fee agreement and stated that 

the claimant had not convinced him that any greater fee 

should be awarded. 

Claimant now argues the court abused its discretion 

because it did not hold an evidentiary hearing on the 
requested attorney fees. Claimant relies on our recent 

decision in Honey v. Stoltze Land and Lumber Co. (Mont. 

1989), 769 P.2d 42, 46 St.Rep. 202, as requiring an 

evidentiary hearing before attorney's fees above the 

contingency agreement may be denied. We disagree. 

The requested attorney's fees in Honey were denied by 

the Workers' Compensation Court, without any consideration, 

simply because the attorney did not request an evidentiary 

hearing. We reversed because we concluded the claimant's 

attorney was not required to request an evidentiary hearing 

before the court could consider the evidence under the Wight 

guidelines. Wight v. Hughes Livestock Co., Inc. (1983) , 204 

Mont. 98, 664 P. 2d 303. In the present case, however, the 

evidence was considered and the court determined the 

requested fees were unreasonable. There was no abuse of 

discretion in denying the requested attorney's fees. 

Affirmed in part, reversed in part and remanded for 

proceedings consistent with this opinion. 

I. 

We concur: /,Istice