IN THE SUPREME COURT OF THE STATE OF MONTANA 1993

ROBERT D. FIELD, petitioner and Appellant,

-vsSEARS, ROEBUCK & COMPANY, Defendant and Respondent. GLL..n tF S;IPHEMECOURT 55ATE.OFMONTANA

APPEAL FROM: The Workers1 Compensation Court, The Honorable Timothy W. Reardon, Judge presiding.

COUNSEL OF RECORD: For Appellant: Geoffrey 

### R. Keller, Matovich, Addy & Keller, Billings, Montana For Respondent: J. Michael Young and Steven T. Potts, ~ardine, Stephenson, Blewett andWeaver, Great Falls,Montana

Filed: Submitted on Briefs: August 6, 1992 ~ecided:February 25, 1993Justice Karla M. Gray delivered the Opinion of the Court.

Robert D. Field appeals fromtheFindingsof Fact,Conclusions of Law and Judgment of the Workers' Compensation Court denying attorney's feesand costs forpursuit of permanent totaldisability benefits, and refusing to impose a penalty against Sears, Roebuck & Company. We affirm. We restate the issues on appeal as follows: 1. Did the Workers' Compensation Court err in denying claimant's request for attorney's fees and costs for pursuit of permanent total disability benefits? 2. Did the Workers' Compensation Court err by failing to impose a penalty for unreasonable delay in conceding permanent total disability? On December 22, 1980, claimant Robert 

### D. Field was injured while driving a repair truck for Sears,Roebuck & Company (Sears), his employer. Searspaid temporary total disability benefits from the date of the accident until claimant returned to work. Claimant's employment with Sears terminated on July 19, 1984. At that time, claimant requested reinstatement of temporary total disability benefits. Sears refused. On March 13, 1985, Sears offered claimant $15,000 as a full and final compromise settlement. Claimant rejected this offer and demanded that Searsplace him on temporary total disability retroactivetoJuly, 1984. Searsagreed to make the payments under a reservation of rights. On March 1, 1991, claimant requested that Sears formallyaccept his claim as a claim forpermanent total disability. Sears responded that it was not prepared to concede permanent total disability and requested additional vocational testing. The results of that testing were received onJune 5. On June 18, Sears asked claimant to make a settlement offer; claimant responded on July 10 with a demand for $15,000, $72,000 in attorney's fees and an annuity paying $700 per month for twenty years. Nine days later, on July 19, claimant filed a petition for hearing with the Workerst Compensation Court on the issues of permanent total disability; a lump sum advance for home repairs, vehicle replacementanddebts;attorney's fees;andpenalty. Sears responded, in part, by denying that claimant was permanently totally disabled. At the pretrial conference onAugust 22, Sears continued to deny permanent total disabilitybenefits; the hearing

was set for September 23. Sears conceded permanent total disability on August 29 and filed an amended response reflecting the concession. Thehearingwas continued to,andheld on,October 7, 1991. TheWorkerstCompensation Court heard testimony regarding the lump sum advance and the events leading to Sears' concessionof the permanent total disability issue. The Workers' CompensationCourt awarded claimanta lump sumconversionand attorney's fees relative to the lump sum issue. It denied attorney's fees and costs for claimant's pursuit of permanent total disability benefits under 

### 5 39-71-612, MCA (1979), and declined to award a penalty for unreasonable delay under 

### 5 39-71-2907, MCA (1979).Did theWorkers' Compensation Court err in denying claimant's request for attorney's fees and costs for pursuit of permanent total disability benefits? In its Conclusions of Law, the Workers' Compensation Court determined that claimant was not entitled to attorney's fees and costs for pursuit of permanent total disability benefits under 5 39-71-612,MCA (1979). Section 39-71-612,MCA (1979),provides: If an employer or insurer pays or tenders payment of compensation under chapter 71 or 72 of this title, but controversyrelatesto the amountof compensationdue and the settlement or award is greater than the amount paid or tendered by the employer or insurer, a reasonable attorney's fee as established by the division or the workers' compensation judge if the case has gone to a hearing, based solely upon the difference between the amount settled for or awarded and the amount tendered or paid, may be awarded in addition to the amount of compensation. Although the legislature has amended fr 39-71-612,MCA, since 1979, we determine whether a claimant is entitled to attorney's fees under the statute in effect on the date of injury. Hilbig v. Central Glass Co. (1991), 249 Mont. 396, 399, 816 P.2d 1037, 1039. TheWorkers' Compensation Court determined that this casewas factually similarto Lasarv. E.H. Oftedal & Sons (1986),222Mont. 251, 721 P.2d 352, and applied the Lasar reasoning in concluding that claimant was not entitled to attorney's fees and costs based on pursuit of permanent total disability benefits under fr 39-71- 612,MCA (1979). TheWorkers' Compensation Court correctlyapplied Lasar

# . In Lasar, we stated that the attorney fee statute at issue, identical to that before us, requires a claimant to satisfy two conditions before recovering attorney's fees: (1) the amount ofcompensation must be in controversy; and (2) the amount awarded must exceed the amount paid or tendered. 

## m,222 Mont. at 253, 721 P.2d at 354. In Lasar, the insurer conceded permanent total disability approximatelythree weeksprior to trial. We concluded that "[s]ince the insureragreed on theamount of compensationdue, no controversyexisted at trial and the amount awardedwas the same

as that agreed upon as due." Lasar, 222 Mont. at 253, 721 P.2d at 354. Like the insurer in Lasar, Sears conceded claimant's permanent total disability and corresponding compensation due approximately three weeks prior to the original trial date (and five weeks before the hearing actually occurred). Neither the extent of claimant's disability nor the amount of compensation due him for that disabilitywas in issue at any time thereafteror when claimant's petition proceeded to hearing. Therefore, claimant failed to satisfy the first condition to attorney's fees required by 5 39-71-612, MCA (l979), and Lasar, that the amount of compensation be in controversy. Claimant offered several theories to show that the amount awarded exceeded the amountpaid or tendered--the second condition requiredby 5 39-71-612,MCA (1979),and Lasar. Claimant contended he was entitled to attorney's feesbased on the differencebetween the $15,000 settlement offer and the permanent total disability. Alternatively, claimant contended he was entitled to attorney's feesbased onthedifference between "permanent partial disability" he alleges Sears paid between June 5 and August 29 and the permanent total disability. Because claimant fails to meet thefirst condition of 

### 5 39-71-612,MCA (1979),we do not address the second condition. Claimant attempts to distinguish Lasar by focusing on the interval of time between discovery of the information on which concession subsequently was based and actual concession of the issue. InLasar, the insurer concededbenefits within twoweeks of deposing claimant. Here, Sears had all the information it later relied on to concede total permanent disabilitybenefits onJune 5, when it obtained the results of thevocational testing; it conceded the issue on August 29. According to claimant, this is thepivotal time period which distinguishes the present case from Lasar. It is true that,here, Searshad possession of the information upon which it ultimately conceded the permanent total disability issue longer than the insurer in Lasar. The time period between completion of discovery upon which concession was made and the concession itself was not the basis of our decision in Lasar, however. We focused in Lasar on the three week period remaining after the concession and before trial and on the fact that the concession occurred before additional discovery or new documentation on the conceded issue was undertaken. The facts which formed the basis for our decision in Lasar are similar to those in the case before us; if anything, the facts before us are more compelling. Here, the concession occurred some five weeks before the hearing and no discovery was undertakenby either party

on the permanent total disability issue between June 5 and Sears' concession on August 29. Subsequent to Lasar, we have reiteratedthat there must be a controversy concerning disability that is later judged compensable before attorney's fees can be awarded under 5 39-71-612,MCA. Komeotisv. Williamson Fencing (1988), 232 Mont. 340, 345, 756 P.2d 1153, 1156. As in Lasar, the insurer in Komeotis conceded disability benefits prior to the hearing. We affirmed the Workers1 Compensation Court's denial of attorney's fees because disability benefits did not remain at issue for adjudication by the court. Claimant relies on Krause v. Sears Roebuck & Company (1981), 197 Mont. 102, 641 P.2d 458, for the proposition that attorney's feesproperly are awardedabsentan adjudication of permanent total disability. Claimant misreads Krause. In Krause, claimant was receiving temporary total disability benefits from Sears. HepetitionedtheWorkers' Compensation Court for permanent total disability benefits converted into a lump sum award. Sears denied permanent total disability. Discovery was completed on all issues and the case proceeded to hearing. Only after the hearing had begun did Sears concede permanent total disability. Notwithstanding the concession, claimant presented proof on his permanent total disability in conjunction with his lump sum conversion request. The disability issuehaving remained in controversy into the adjudication phase of the proceedings and proof havingbeen submitted on the issue, theWorkers1Compensation Court entered a conclusion of law on claimant's permanent total disability. Itdenied the lump sumconversion, relyingon evidence of claimant's disability which would prevent him from making asuccess of the project forwhich the lump sumwas sought. 

### It also refusedtoaward attorney's fees on thedisability issue. Claimant appealed the denial of attorney's fees, contending that he prevailed on the issue. We held on appeal that, because the court concluded that the claimant was suffering from a permanent total disability, he was entitled to attorney's fees under 5 39-71-612, MCA, in relation to his proof that he was permanently totally disabled. While our holding was not explicit, it was premised on the Workers' Compensation Court's reliance on claimant's proof and its conclusion that claimant was permanently totally disabled; the issue was, in fact, adjudicated. Here, Searsconceded permanent total disabilitybenefits three weeks before the original hearing date and some five weeks before the actual hearing. Neither discovery nor proof was required on the issue. No controversy over claimant's disability or corresponding compensationwas adjudicated at the hearing. Thus, the facts which formed the basis for ourdecision inKrause are not present here. We hold that theWorkers' Compensation Courtdid not

err in denying claimant's request for attorney's fees on the permanent total disability issue.

Did the Workers1Compensation Court err 

### by failing to impose a penalty for delay in concedingpermanent total disability? The Workers' Compensation Court refused to impose a penalty against Sears for unreasonable delay under 5 39-71-2907, MCA

(1979), which provides:Increase in award for unreasonable delay or refusal to pay. When payment of compensationhas 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 increasedby theworkers9compensation judgeby 20%. 

# .. Claimant argues that Sears had all the information it used to concede permanent total disability benefits on June 5, when it receivedthe resultsof thevocational testing. Thus,accordingto claimant, its delay in conceding the issue until August 29 was unreasonable. Unreasonable delay is a question of fact to be determined by the trier of fact; we will not reverse the Workers' Compensation Court's decisionon awarding apenalty if the decision is supported by substantial, credible evidence. Jaenish v. Super 8 Motel

(1991), 248 Mont. 383, 389-90, 812 P.2d 1241, 1243. In addition, the penalty statute requires unreasonable delay or refusal in payment of compensationprior or subsequent to an order granting compensationbenefits. The Workers' Compensation Court found that Sears opened negotiations toward final resolution shortly after it obtained the vocational test results on June 5. Claimant made a settlement demand on July 10, and filed his petition for hearing on July 19. Sears conceded claimant's permanent total disability on August 29, 1991. Substantial evidence exists to support the Workers9 Compensation Court9sdetermination that the facts of this case donotwarrant apenaltyunder 3 39-71-2907, MCA (1979). Furthermore, compensation was being paid throughout the period from June 5 to August 29; no delay or refusal in pavment, as required by the statute to support a penalty award, occurred. Additionally, no award of permanent total disability benefits was made by order of the WorkerstCompensation Court that would serve as a basis for a penalty under 3 39-71-2907, MCA (1979). We hold that the Workerst Compensation Court did not err in refusing 

### to award a penalty pursuant to 5 39-71-2907, MCA (1979). 1 Affirmed.

Chief Justice

JusticesJustice Terry N. Trieweiler dissenting. Idissent from the opinion of the majority. InLasarv.

### E.H.Oftedal&Solls (l986),222 Mont. 251, 721 P.2d 352, and again inKomeocisv. WilliamsonFencing (1988), 232Mont. 340, 756 P.2d 1153, this Court blatantly ignored the plain language of § 39-71-612,MCA (1979),to conclude that a court award of benefits is a condition to an award of attorney fees. In this case, the majority blindly follows its prior decisions without any analysis of the plain terms of the attorney fee statute. Section 612 does not simply provide that when the court's award is greater than the amount offered, the claimant is entitled to an attorney fee. It clearly provides that when the ultimate settlement is greater than the amount originally offered, the claimant is entitled to recover his attorney fees which were incurred to pursue his claim for the full amount of his benefits. That section states: If an employer or insurer pays or tenders payment of compensation under chapter 71 or 72 of this title, but controversy relates to the amount of compensation due and the settlement or award is greater than the amount paid or tendered by the employer or insurer, a reasonable attorney's fee as established by the division or the workers' compensation judge if the case has gone to a hearing, based solely upon the difference between 

### the amount settled for or awarded and the amount tendered or paid, may be awarded in addition to the amount of compensation. [Emphasis added.] Section 39-71-612(1)

## , MCA (1979)

# . In this case, claimant demanded that he be paid permanent total disability benefits on March 1, 1991. That demand wasrejected by defendant on ~pril4, 1991. Claimant filed his petition forpermanent total disability benefits on July 19, 1991, and in its answer dated August 7, 1991, defendant denied that claimantwas permanently totallydisabled. Defendant continued in that denial as late as the pretrial conference on August 22, 1991, Therefore,according to ourprior case law,there was a controversy

over the amount of compensation due. We held, inKraltsev.SearsRoebuck&

### Company (1982),197 Mont, 102, 641 P.2d 458, that: The basic controversy between the parties was one dealing with the difference between the amount of benefits tenderedand the amountof benefits awarded,and the issue of whether the claimant's disabifity was permanent was the foundation for that controversy. Because the court concluded that the claimant was suffering from apermanent total disability,we hold that under section 39-71-612,MCA, the claimant is entitled to attorney fees and costs in relation only to his proof that he was permanently totally disabled.

In other words, we have previously held that when the controversy is whether claimant is permanently or temporarily disabled, that is a controversy relating "to the amount of compensation due1'within the contemplation of 5 39-71-612, MCA (1979), As of August 22, 1991, there was such a controversy in this case. On August 29, 1991, that issue was settled when defendant conceded that claimant was permanently totally disabled. On that date, then, there was a settlement for benefits greater in value than the benefits that had been previously tendered,and accordingto the plain language of 39-71-612, MCA (1979)

### , claimant was entitled to an award of attorney fees thatwere incurred to recover the full amount of his benefits. The majority opinion completely ignores the language in the attoxney fee 

### statute which provides that when a settlement 

### is greater than the amount originally offered, claimant is entitled to

recover an attorney fee. This Court ignored that language in the Lasar case; it ignored it in the Komeofis case; and like an ostrich with its head buried in the sand,the majority continues to ignore that language 

### in this case for the apparent reason that its erroneous precedent is more important than the plain language of the statute. Iwould reversethis Court'sdecisions inLasar andKomeotis and reverse the trial court's refusal to grant attorney fees in this

case.Iwould also reverse theWorkerstCompensationCourt's refusal to 

### award the statutory penalty to claimant pursuant to 

### 5 39-71-2907, MCA (1979). That statute provides that when payment of compensation has been unreasonably delayed or refused by an insurer, 

### a penalty equal to 20 percent of those benefits may be awarded. 

### In this case, the insurer's conduct was unreasonable in two respects. According to thetestimonyof claimant's claims representative who handled this claim, she had all of the vocational and medical information with which to make an evaluation of claimant'sdisabilityby June 5, 1991. CathyAndersen testified that she had

amedical report concluding that claimantwas unable towork in any capacity as early asApril 19, 1991. She acknowledged that shehad vocational evaluations and psychological reports by June 5, 1991, which indicated that claimant has the equivalency of a sixth grade education, that he has a learning disability, and that he was not

a candidate for retraining. Furthermore, she admitted that she received no additionalmedical or vocational information from that date until Sears conceded permanent total disability onAugust 29, 1991, And yet,defendant's attorney continued to take theposition in his answer to claimant's petition, and again at the time of the pretrial conference, that claimant was not permanently totally disabled. Obviously,defendant continuedtodeny liability for the full extent of claimant's disability, even though it was fully

aware of claimant's condition, in order to strengthen its bargaining position forpurposes of settling claimant's claim. In doing so, 

### I conclude that it acted unreasonably. Furthermore, defendant acted unreasonably when, without any basis in fact, 

### it refused to convert a portion of claimant's future disability benefits to a lump sum pursuant to § 39-71-741, MCA. This is apparent from the following finding entered by 

### the trial court: Defendant has designated Cathy Andersen as its claims adjuster in Montana relative to this case. However, Andersen testified that she was not privy to petitioner's affidavit regarding a lump sum,nor had she seen petitioner's discovery responses, nor had she read petitioner's deposition. Hence, she knew of no reasons why petitioner's lump sum request had not been granted,and she had absolutely no information as to whether payment of the lump sum request was inpetitioner's best interest. Moreover, Andersen had no explanation regarding Sears9 refusal to concede permanent total disability until three weeks before the original trial setting. It was apparent at trial that only defense counsel and an adjuster in Linwood, Washington, were making the decisions and denying petitioner's requests. Andersen had little, if any, authority regarding petitioner's file. [Emphasisadded.] As pointed out by the Workers1 Compensation Court, 24.29.804(1) ARM, provides as follows: Every insurer is required to designate at least one adjuster,maintaining an office in Montana, which shall pay compensationwhen due and which shall have authority to settle claims. The adjuster for defendant who had the responsibility to pay compensation which was due with regard to this claim was Cathy Andersen, and yet, defendant's attorney did not even provide her with the information that formed the basis for claimant's claim. There is no way she could have acted reasonably. The fact that she did not 

### is evident by the last minute 

### concession regarding the nature of claimant's disability and the Workers' Compensation Court's decision 

### to convert a part of claimantqsdisability benefits to a lump sum, 

### in spite of defendant's refusal to do so. Insurers 

### wha force claimants to incur the expenses of litigation and who clog Montana's Workers' Compensation Court because of this kind of conduct are the exact parties 

### for whom § 39-71-2907, MCA, was intended. In this decision, this Courthas ignored theplain language of the Workers' Compensation Court 

### in two respects. Ithas refused toaward attorney fees, and it has refused to impose the statutory penalty when both were clearly warranted. Apparently, the principles of "strict constru~tion~~ about which "conservative" jurists so proudly pound their chests,don't apply to the statutory rights of injured workers. For these reasons, I dissent from both conclusions in the majority opinion.

JusticeWilliam E. Hunt, Sr., concurs in the foregoing dissent of Justice Trieweiler.I 1 February25, 1993 CERTIFICATEOFSERVICE 

### Iherebycertifythat thefollowingorderwas sentby United Statesmail, prepaid, tothe followingnamed:

I GeoffreyR.Keller,Esq. MATOVICH,ADDY&KELLER,P.C. 225PetroleumBuilding 2812FirstAve.North Billings,MT59101 J.MichaelYoung,Esq. StevenT.Potts,Esq. JARDINE,STEPHENSON, BLEWETT

### SrWEAVER,P.C. P.O. Box2269 GreatFalls, MT 59403-2269 EDSMITH CLERKOFTHESUPREMECOURT STATEOFMONTANA