No. 89-286 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

FRANK EDWARD GETTEN, S 

Claimant and Appellant, 

-vsLIBERTY MUTUAL INSURANCE COMPANY, 

Defendant and Respondent. 

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

Timothy Reardon, Judge Presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Jack E. Sands argued, Billings, Montana 

For Respondent : 

Robert E. Sheridan argued, Garlington, Lohn & Robinson, 

Missoula, Montana 

Filed: 

Submitted: October 31, 1989 

Decided: November 28, 1989 

Clerk 
Justice John Conway Harrison delivered the Opinion of the 

Court. 

This case presents an appeal from the Workers' 

Compensation Court which affirmed a determination by the 

Division of Workers' Compensation regarding subrogation 

rights. The Division determined that respondent was entitled 

to a subrogation right in tort claim proceeds recovered in a 

wrongful death action brought by appellant. We affirm. 

Appellant raises the following issues for review: 

1. Does the Division of Workers' Compensation have 

jurisdiction over this subrogation claim? 

2. Did Liberty Mutual Insurance establish that the 

claimant was provided full legal redress in its third party 

claim so that Liberty's subrogation claim extends to the 

settlement award? 

3. Did Liberty Mutual Insurance establish that the 

insurer responded to claimant's invitation to participate in 

the lawsuit in a manner that was "explicit, immediate and 

without reservation," so as to be entitled to the full 

subrogation amount authorized by the Workersf Compensation 

Act? 

4. Did Liberty Mutua, Insurance establish that fifty 

percent of the amount of the settlement was related to 

economic damages or to damages which had their source in the 

earnings of the decedent, and thus subject to its claim for 

subrogation? 

a. Was Getten's settlement brochure in the third-party 

action protected by the attorney work product rule? 

b. Should deposition testimony of two adjustors for 

insurers in the third-party action have been admitted 

in evidence? 
c. Did Liberty Mutual Insurance establish the amount 

of economic damages that represents reasonable 

contributions to the heirs derived from the earnings of 

the decedent? 

5. Was the subrogation entitlement computed correctly? 

6. Did the Division fail to make findings of fact 

essential to the question to be decided? 

Frank Getten worked as a truck driver for Ryan 

Wholesale Foods. On December 18, 1984, he was killed in a 

truck accident in Utah. He died instantly during a head-on 

collision with another semi-truck owned by Zip Trucking. The 

driver of the other semi, Terry Osborne, an employee of Zip 

Trucking, was later convicted of automobile homicide because 

his negligence caused the accident. Mr. Getten was survived 

by two children from a prior marriage. 

Liberty accepted liability for Getten's death and began 

payment of death benefits to Getten's children. 

Subsequently, Getten's estate initiated a wrongful 

death action against Osborne and Zip Trucking. The wrongful 

death action resulted in a structured settlement which 

included a cash payment and an annuity for the surviving 

children. The settlement was well within the available 

policy limits. 

When claimant's counsel initiated the third-party suit, 

he wrote to the adjuster for Liberty and requested that 

Liberty share costs and attorney's fees for the third-party 

suit. The adjuster wrote to counsel and requested some 

information about the third-party suit and estimated costs. 

Claimant's counsel did not reply to this letter. The 

adjuster then wrote to claimant's counsel and informed him 

that Liberty would participate in the third-party suit. 

Liberty agreed to pay its share of attorney's fees at the 

time the third-party claim settled in accord with claimant's 
counsel's contingency fee agreement. Later, claimant's 

counsel forwarded a bill to respondent's adjustor for costs 

which Liberty paid minus some costs the adjuster decided were 

not related to the third-party suit. 

Liberty demanded that it be subrogated to the 

third-party claim. Appellant disputed Liberty's claim, 

contending that Liberty had no subrogation right or 

alternatively only a right to 50% subrogation because Liberty 

did not participate in the third-party suit. 

Issue I 

Appellant contends that jurisdiction of the subrogation 

claim properly lies with Workers' Compensation Court for two 

reasons. First, appellant contends that 5 39-71-414, MCA, 

does not give the Division jurisdiction because respondent's 

liability was fully determined prior to the third-party 

settlement. Secondly, the Division lacked jurisdiction, the 

appellant claims, because the third-party action was a 

wrongful death suit. We disagree. 

The statute at issue is 5 39-71-414, MCA (1985), which 

sets out an insurer's subrogation rights. The disputed 

language appears in subparagraph (5) which states: 

If the amount of compensation and 

other benefits payable under the Workers' 

Compensation Act have not been fully 

determined at the time the employee, the 

employee ' s heirs or personal 

representatives, or the insurer have 

settled in any manner the action as 

provided for in this section, the 

division shall determine what proportion 

of the settlement shall be allocated 

under subrogation. The division ' s 

determination may be appealed to the 

workers' compensation judge. (Emphasis 

added. ) 
Appellant interprets S 39-71-414 (5) , MCA, to require 

only that a final determination of benefits have been made 

prior to the third-party settlement. In the instant case, 

the Division entered its order awarding the beneficiaries 

compensation on March 20, 1985, prior to the third-party 

settlement. 

We addressed S 39-71-414(5), MCA, and the Division's 

jurisdiction in subrogation claims, in First Interstate Bank 

of Missoula v. Tom Sherry Tire, Inc. (Mont. 1988), 764 P.2d 

1287, 1289, 45 St.Rep. 2150, 2152. We stated the following: 

Third, only in those cases where the 

benefits are not determined at the time 

the third-party action is settled does 

the Division resolve the question of 

subrogation . . . 

However, the total amount of benefits and 

compensation payable by the insurer must 

be known to specify the amount of 

subrogation to which the insurer is 

entitled. Where the total amount of 

benefits and compensation are not known, 

the Montana legislature delegated to the 

Division the power of determining what 

proportion of the settlement is to be 

allocated under subrogation. (Emphasis 

added. ) 

This language clearly requires the Division to assume 

jurisdiction of subrogation claims when the total dollar 

amount of benefits is not determined prior to the third-party 

settlement. In the instant case, respondent's total 

liability could not have been determined on March 20, 1985, 

because of contingencies that affect the duration of benefits 

to the minor children. These contingencies, which relate to 

the effect of marriage and school on the duration of the 

benefits, necessarily cannot he resolved until the future. 

Therefore because its total liability was not fully 

determined prior to the third-party settlement, 
§ 39-71-414(5), MCA, gives the Division jurisdiction to 

compute the amount of subrogation. We affirm the Workers' 

Compensation Court's decision that the Division had 

jurisdiction over the subrogation claim. 

Appellant's second ground for attacking the Division's 

jurisdiction is that because the third-party action was a 

wrongful death action, neither the action nor the subrogation 

right arises under the Workers' Compensation Act. Our 

hol-ding in Swanson v. Champion Internat'l Corp. (1982), 197 

Mont. 509, 646 P.2d 1166, confirms that an insurer has a 

subrogation right in the economic portion of wrongful death 

recoveries. We reject appellant's argument. 

Issue I1 

Appellant contends that respondent is not entitled to 

subrogation because the third-party settlement did not 

provide appellant with full legal redress and argues that 

Hall v. State Compensation Ins. Fund (1985), 218 Mont. 180, 

708 P.2d 234 is analogous to this case. We disagree. 

In Hall this Court held that when "a claimant is forced 

to settle for the limits of an insurance policy which, 

together with claimant's workers' compensation award, do not 

grant full legal redress to claimant, the insurer is not 

entitled to subrogation rights under S 39-71-414, MCA." 

Hall, 708 P.2d at 237. The Hall opinion distinguishes the 

Hall case from Brandner v. Travelers Ins. Co. (1978), 179 

Mont. 208, 587 P.2d 933. This Court, in Brandner, found that 

the claimant was made whole by "a voluntary settlement in 

satisfaction of all claims" for an amount "not dictated by 

the upper limits of the insurance policy." Hall, 708 P.2d at 

236. The instant case presents a voluntary settlement 

(approximately 1.5 million dollars) for less than the upper 

limits of the applicable insurance policy (six million 
dollars). We hold that appellant received full legal 

redress. 

Issue I11 

Appellant contends that the Workers' Compensation Court 

erred in finding that Liberty adequately responded to 

appellant's invitation to participate in the lawsuit. 

This Court's task in reviewing a Workers' Compensation 

Court decision is to determine whether substantial evidence 

supports the Workers ' Compensation Court's findings of fact 

and conclusions of law. Coles v. Seven Eleven Stores (1985), 

217 Mont. 343, 347, 704 P.2d 1048, 1050. 

Although appellant acknowledges that respondent did 

agree to participate in the lawsuit, appellant argues that 

respondent's participation was not "explicit, immediate, and 

without reservation" because respondent refused to advance 

attorney's fees despite a clear request to do so. Section 

39-71-414(2) (b), MCA, does not require that the insurer 

advance attorney's fees. 

While § 39-71-414 (2) (b) , MCA, does not specifically 

require the insurer to advance attorney's fees, it does not 

prohibit insurers from either advancing attorney's fees or 

sharing attorney's fees in losing cases. Under proper 

circumstances and supported by a clear record, a request to 

"pay a proportionate share of the reasonable cost of the 

action, including attorney's fees" could require an insurer 

to advance attorney's fees. 

Appellant's counsel pursued the third-party claim on a 

contingency fee basis. There is no advance of attorney's 

fees on a contingency fee contract. Further, the record 

contains conflicting evidence regarding when and how 

claimant's counsel requested advance payment of attorney's 

fees. We find that the Workers' Compensation Court's 
decision that respondent adequately responded to appellant's 

request that it participate in the lawsuit is supported by 

substantial evidence. 

Issue IV 

Appellant contends that the evidence does not establish 

that fifty percent of the settlement amount was related to 

economic damages and thus subject to subrogation. As well, 

appellant claims that the evidence does not establish the 

amount of economic damages that represents reasonable 

contributions to the heirs derived from the decedent's 

earnings. A review of the record discloses that the 

Division's finding that $750,000 of the third-party 

settlement was subject to subrogation is supported by 

substantial evidence. 

Appellant also objects to the admission into evidence 

of the settlement brochure and the depositions which she 

contends are hearsay. Section 39-71-2903, MCA (1985), 

provides that workers' compensation proceedings are not bound 

by formal rules of evidence. Regarding appellant's 

evidentiary objections, the Workers' Compensation Court held 

them to be without merit. The Workers' Compensation Court 

found that the deposition testimony was properly noticed and 

that the deponents lived beyond the jurisdictional limits. 

As to the settlement brochure, both the Division and the 

Workers' Compensation Court found that it was not privileged. 

The Division noted that the appellants had not reserved any 

rights regarding the settlement brochure in disseminating it. 

to the third-party insurer. We affirm the Workers' 

Compensation Court's decisions regardinq appellant's 

evidentiary objections. 
Issue V 

Appellant contends that the Division incorrectly 

calculated the subrogation amount and that the Workers' 

Compensation Court used the wrong formula to review the 

Hearing Examiner's calculations. The Workers' Compensation 

Court used the formula found in Tuttle v. Morrison-Knudsen 

Co., Inc. (Mont. 1978), 177 Mont. 166, 580 P.2d 1379. 

Appellant asserts the formula in Swanson v. Champion 

Internat'l Corp. (1982), 197 Mont. 509, 646 P.2d 1166, should 

have been used. Further, the appellant asserts that no basis 

exists in 5 39-71-414, MCA, for respondent to be reimbursed 

for its mandatory $1,000 payment to the uninsured fund. 

Although appellant implies that the Swanson and --- Tuttle 

formulas are different, the formulas are identical. The 

Division did calculate the subrogation amount in accordance 

with Swanson and Tuttle. 

Section 39-71-414 (1) , MCA, provides for "subrogation 

for all compensation and benefits paid or to be paid or to be 

paid under the Workers' Compensation Act." Appellant argues 

that the $1,000 contribution to the uninsured fund required 

by statute is neither compensation nor a benefit to the 

estate of the deceased. However, because the workers' 

compensation statute requires the $1,000 payment, it falls 

.under 5 39-71-414, MCA. We hold that the Division computed 

the subrogation amount correctly. 

Issue VI 

Appellant's main contention regarding the Division's 

findings of fact appears to be that the Division essentially 

adopted the respondent's proposed findings of fact. 

Appellant offers no real argument beyond this contention. 

The standard of review for findings of fact is whether there 

is credible evidence to support the finding. Further, this 
Court holds that reliance on counsel's proposed findings of 

fact is not automatic error. Moore v. Hardy (Mont. 19881 , 

748 P.2d 477, 45 St.Rep. 108. We reject appellant's 

contention. 

We affirm the Workers' Compensation Court. 

We concur: 

Justice John C. Sheehy did not participate in this decision.