IN THE SUPREME COURT OF THE STATE OF MONTANA 

R. GAIL HERNANDEZ, 

Claimant and Appellant, 

-vsLELAND JENSEM, d/b/a ACME PRESS, 

Employer, 

and 

STATE COMPENSATION INSURANCE FUND, 

Defendant and Respondent. 

APPEAL FROM: The Workers' Compensation Court, The Honorabl-e ~imothy 

Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

James Park Taylor; Geiszler, Taylor, Newcomer & Mc~lain, 

Missoula, Montana 

For Respondent: 

Oliver H. Goe, Helena, Montana 

Filed: 

Submitted on Briefs: Jan. 5, 1989 

Decided: February 22, 1989 

J Clerk 
Mr. Justice R. C. McDonough delivered the Opinion of the 

Court. 

This appeal from the Montana Workers' Compensation Court 

concerns the court's denial of a request to lump sum 

benefits. Claimant, R. Gail Hernandez, petitioned to lump 

sum the majority of her entitlement alleging that financial 

hardship had created a pressing need for more household 

income. By placing the lump sum of benefits in various types 

of mutual funds and one real estate limited partnership, 

Hernandez hoped to increase her income by drawing a monthly 

rate of return from the investments. She also proposed that 

a portion of the lump sum benefits be used to establish funds 

generating a rate of return for her children's post secondary 

education, emergencies, protection from inflation, and a down 

payment for the purchase of a house. The increase in income 

from her various investments would in part be used to make 

house payments. The lower court held that the proposal 

failed to overcome the presumption in the Montana Workers' 

Compensation Act against lump summing benefits. We affirm. 

Hernandez's monthly income from bi-weekly payments 

totals $579.00. Hernandez also receives food stamps and 

lives in federally subsidized housing. Her food stamp 

entitlement fluctuates between $150.00 and $190.00 per month, 

and monthly rent for her four bedroom apartment totals $104. 

Hernandez does not qualify for Aid to Families with Dependent 

Children or Social Security Disability benefits. Her 

attorney will begin collecting a portion of her benefits each 

month to pay her agreed attorney fees. Hernandez's husband 

lives in Peru and contributes little to the family income. 

Hernandez attempts to support five children and her 

sister-in-law using her benefits. The family income places 

the household well below the federal poverty line. 
The Fund also contends Hernandez exaggerated her budget 

needs for medical expenses, and failed to pursue available 

programs for help in meeting her medical needs. The Fund 

also argues that the decision of the lower court may he 

justified by the negative impacts of Hernandez's plan. 

Hernandez's rent subsidy and food stamps would likely 

decrease with an increase in income. The Fund further 

asserts that an award of a lump sum to provide for 

educational expenses for Hernandez's children fails to 

overcome the presumption favoring periodic benefit payments. 

There exists a high probability that in inflationary 

times the rate of return from investments purchased with a 

discounted lump sum of benefits will exceed the income 

generated by bi-weekly payments. 3 A. Larsen, The Law of 

Workmen's Compensation S 82.72 (d) (1988) . However, Montana 

law requires more than a showing of increased income through 

a feasible investment plan. LaVe v. School District No. 2 

(1986), 713 P.2d 546, 548, 43 St.Rep. 165, 168. Otherwise, 

bi-weekly benefits would become the exception and lump sums 

the rule. LaVe, 713 P.2d at 548. 

In passing on any lump sum proposal, the lower court 

must consider the best interests of the claimant, the 

claimant's family, and the public. Komeotis v. Williamson 

Fencing (Mont. 1988), 756 P. 1153, 1155-56, 45 St.Rep. 1098, 

1101. In weighing these interests, the presumption favors 

bi-weekly payments. Komeotis, 756 P.2d at 1156. This Court 

affords the lower court with wide discretion in reviewing 

lump sum decisions because the lower court occupies the best 

position to familiarize itself with the needs of the claimant 

and the results which would probably follow granting or 

denying the petition for a lump sum. Komeotis, 756 F.7d at 

1156. 
Evidence in the record established that lack of funds 

adversely affects Hernandez and her family. Hernandez must 

borrow money to provide for adequate medical care. Her 

eldest son works to provide money to attend college 

part-time. Hernandez testified she could not afford to 

provide high school graduation expenses for her eldest 

daughter. 

Hernandez also testified to housing problems due to low 

income. Her third story apartment is too small and makes 

coming and going difficult because she suffers from a bad 

back. Hernandez believes that some of her neighbors exert a 

bad influence on her children. She has investigated the 

feasibility of obtaining better housing using the proposed 

fund for making a down payment on a home. However, she 

revealed no definite plan for obtaining the financing needed 

to complete a home purchase. 

Hernandez contends on appeal that she demonstrated that 

a lump sum entitlement satisfied a pressing need and served 

her best interest. Thus, according to Hernandez, the lower 

court erred in denying her request. Hernandez also contends 

that the lower court's decision is not supported b!7 

substantial evidence, and that the lower court denied her 

equal protection of the laws through its erroneous reasoning. 

The State Compensation Insurance Fund (Fund) responds 

that Hernandez failed to make a showing sufficient to 

overcome the presumption favoring bi-weekly payments. For 

example, the Fund contends that evidence in the record 

demonstrates Hernandez exaggerated her financial problems. 

The Fund points out that Hernandez pays $20.00 per month for 

cable T.V., spends another $50.00 per month renting video 

tapes, and has already received lump sums to provide for 

medical debts and future medical expenses. 
In this case, an investment plan accompanies a strong 

showing of financial need. However, the increase in income 

would probably be accompanied by loss of subsidies. The 

proposed investment plan has an element of risk. The house 

purchase plan necessitates a large debt which will further 

increase the claimant's expenses. The lower court considered 

the advantages and disadvantages of the plan and decided the 

presumption against lump summing controlled. Under these 

circumstances, we hold that the lower court acted within its 

discretion and that substantial evidence supports its 

decision. 

Claimant's equal protection argument also fails. 

Hernandez contends that the lower court's decision rests on 

the classification of individuals. According to Hernandez, 

under the lower court's reasoning, individuals with business 

acumen may receive lump sum benefits, and individuals without 

business acumen may not. Hernandez argues that this 

classification improperly infringes on the "fundamental" 

right to receive workers' compensation benefits. 

First, a review of the decision of the Workers' 

Compensation Court reveals that the decision rested on the 

particular facts of this case. Most importantly, the 1.ower 

court considered the interests of Hernandez, her familv, and. 

the public. The lower court concluded that in light of the 

particular facts of this case, the legal presumption favorinq 

bi-weekly benefits controlled. Thus, there exists no issue 

here on whether or not a classification based on possession 

of business acumen may survive equal protection analysis. 

AFFIRMED. 

We Concur: 

@PBP~ Justice 
u Justices 

Mr. Justice Fred J. Weber did not participate in this matter. 
Mr. Justice John C. Sheehy, dissenting: 

Under this incredible Opinion, it is the decision of the 

Court that it is better to keep this woman on public 

assistance and food stamps than to invest the monies - to which 

-- she is entitled to give her an adequate living income. 

Dear reader, look at the background of exploitation and 

carelessness that we sanction in the Workers' Compensation 

system. 

On September 21, 1984, R. Gail Hernandez suffered an 

injury arising out of her employment with Acme Press in 

Missoula County. The Fund, as the insurer, accepted 

liability for her injury and has paid her weekly disability 

benefits from April 22, 1985 through the present. In her 

employment with Acme, she was receiving on-the- job training 

but in the ten months she worked there, her pay never 

increased from $5.00 an hour for a 40 hour week. She learned 

no skill while on the job, her employment having confined her 

to menial tasks in the printing shop. 

Following her injury, her condition gradually 

deterioriated so that she was unable to continue her work 

with Acme. She reached maximum healing in the fall of 1986. 

The Compensation Fund refused to acknowledge that she was 

permanently totally disabled. She requested a determination 

of her permanent disability from the Workers' Compensation 

Court, as well as a lump sum distribution of a portion of her 

Workers' Compensation benefits. On September 22, 1987, a 

pretrial conference before the Workers' Compensation Court 

was held. There the Fund denied that she was permanently 

totally disabled and denied that it should pay any amount to 

the appellant in a lump sum. Three days before the trial., 
however, which took place on November 2, 1987, the Fund 

finally admitted that her disability was permanent and total. 

For the dispute as to her permanent disability, she has 

received no attorney fees as far as I can determine. Her 

monthly benefits of $579.00 per month are apparently now 

reduced by 25% because of her attorney fees to the sum of 

$434.25 per month. Why the Fund should not bear the attorney 

fees, I am unable to determine from the record. 

At the time of the hearing, Mrs. Hernandez was a 41 year 

old married female. She is a high school graduate and an 

honorably discharged veteran who served in the United States 

Navy. She is married, hut her husband lives in Peru, and 

does not send support on any regular basis. She has four 

children, ages 20, 18, 7 and 6, all of them live with her in 

federally-subsidized housing. She is their sole support and 

also the sole support for her sister-in-law and her 

sister-in-law's infant baby. 

The children have dental problems, and a daughter is 

having medical problems involving fainting and stomachaches, 

but all dental and health care must be postponed because she 

is unable to provide medical insurance for herself or her 

children nor can she afford the deductible for Medicaid. 

Her oldest son is 20 years old. He is presently 

attending the University of Montana on a part-time basis and 

is working part-time. All of the income which he earns goes 

toward his education and he cannot afford to go to school on 

a full-time basis. The oldest daughter is 18, and hopes to 

go either to a trade school or to college but she has no 

funds with which to pursue her education beyond high school. 

The position of the Fund is that she ought to go out and 

borrow the money. 

This family's income places it at 53% of the poverty 

level established for a family of that size. Janet L. Finn, 
a licensed social worker testified in detail about the 

problems that face low income families. Extended poverty 

leads to feelings of hopelessness and helplessness with 

little opportunity for future progress because the focus has 

to be on day-to-day survival. Such families experience a 

high drop-out rate in high school, are more likely to face 

educational difficulties in school and are also more likely 

to suffer from health problems. The apartment in which this 

family lives is a third floor apartment, with no elevator, in 

a neighborhood where frequent vandalism occurs. 

The Workers1 Compensation Court found that her lifetime 

benefits entitlement if she lived through her life expectancy 

is $246,050.99, less $23,651.82 which she has received in the 

past. Before the Workers1 Compensation Court, she requested 

a lump sum advance of $170,065.00, of which $123,065.00 would 

be used to fund a monthly income for her of $1,500.00. There 

were other proposals for a downpayment on a modest home, a 

reserve fund, a minimal education fund for the children and 

protection against inflation. Two expert witnesses testified 

that the money could be invested and provide such benefits if 

the request were granted by the court. 

Even deducting the amounts objected to by the Fund in 

this cause, her monthly budget approximates $600.00 per 

month, which obviously she is unable to meet with the income 

now provided her from her compensation benefits. 

Why did the Workers1 Compensation Court refuse her 

request which might give her at least an approach to the 

federal poverty income level? It said: 

The lump sum requested by the claimant not only 

seeks to ensure her of an income that she enjoyed 

prior to her injury, but in fact will increase her 

earnings by 50 percent and double her budget. The 

proposal of claimant here does not merely seek to 

allow her to sustain herself financially or return 

her to her asset situation as prior to her injury, 
but will completely alter her economic status above 

that which she was enjoying at the time of her 

injury. 

If this claimant had not been injured in the course of 

her employment, if that employment had not given her a 

degenerative disc condition at several levels, if she had not 

traded her lifetime working ability for the paltry benefits 

of the Workers' Compensation system, the foregoing statement 

of the Court might he tolerated. Her injury denied her every 

possibility of ever improving her situation and reduced her 

to grinding poverty. When she presents a plan that could 

offer some relief, she is denied because she might improve 

her income from a menial job and because of the policy of the 

Court and of the legislature respecting "passive income." 

As I dictate this dissent, three-month treasury bills 

backed by the United States Government are yielding 8.5% 

interest per year. Two-year notes are yielding approximately 

9% per year. By simply taking $100,000.00 of her 

entitlements and placing it under supervised investment in 

government securities, her present income could easily be 

doubled, and the whole principal saved. In the guise of 

preserving the "best interests of the claimant", this Court, 

hemmed in by prior caselaw that cannot logically he supported 

is actually adverse to her best interests. 

Years ago, when much of the cash of the state was 

languishing around the country in no-interest bank accounts, 

it was decided to take advantage of investment of these 

monies through the Board of Investments. I suggest that 

section 39-71-2324, in cases such as this, 

allows funds to be transferred to the Board of Investments, 

supervised by that Board, and used to produce income from 

investments which would relieve the payments due from the 

fund. I see no legal reason why we could not order, in the 
best interests of this claimant, that the Fund itself invest 

these monies on behalf of this claimant to provide her a 

living income. 

Things have come to a pretty pass when this Court 

decides that it is better to keep a person on food stamps and 

public assistance than to relieve her situation through the 

proper use of her benefits. There is a hollow echo of Marie 

Antoinette in this Opinion: LetAem eat foodstamps. 
Mr. Justice William E. Hunt, Sr., specially concurring: 

I concur in the result reached by the majority here for 

the reasons that it has long been the policy (albeit a policy 

without a purpose) for the State of Montana to refuse its 

injured workers a lump sum that can be invested for their 

benefit. The proposals set forth in the dissent of Mr. 

Justice Sheehy are well worth consideration by the 

legislature. 

The plight of this claimant demonstrates that being an 

injured worker in Montana is no big financial deal. To those 

who assume that there is rocking chair money in Workers' 

Compensation benefits, I recommend reading the facts of this 

case. 

' L' 

Justice