No. 90-181 IN THE SUPREME COURT OF THE STATE OF MONTANA 1991

JERRY STAHL, Petitioner and Appellant,-vsRAMSEY CONSTRUCTION CO.

## , Employer, and STATE COMPENSATIONMUTUAL INSURANCE FUND, Insurer,Defendant and Respondent.

APPEAL FROM: The Workers1Compensation Court, The Honorable Timothy Reardon, Judge presiding.

COUNSEL OF RECORD: For Appellant: Lloyd E. Hartford, Billings,Montana For Respondent: Laurence Hubbard, State Comp. Mutual Ins. Fund, Helena,Montana

Submitted on Briefs: March 28, 1991 

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### 1991 Decided: May 16, 1991Justice Fred J. Weber ~elivered the opinion of the Court. Claimant, Jerry Stahl, appeals from an order of the Workers1 CompensationCourt granting summary judgmentto State Compensation Mutual Insurance Fund (StateFund)

# . We affirm. The issues are: 1. IsStateFund entitledtooffset auxiliary social security disability benefits paid to Mr. Stahl's minor child when the benefits are paid directly to the minor child'smother? 2. Is StateFund entitled to offset a portion of Mr. StahlIs retroactive social security disability benefits which are paid to his attorney as an authorized attorney's fee for legal services rendered in obtaining thosebenefits? 3. Should State Fund be required to bear an equal share of costs and attorney's fees incurred by Mr. Stahl to establish his social security claim? In 1985,Mr. Stahl suffered a compensable injury to his back and began receiving workers1compensationbenefits. Subsequently he filed an application for social security disability benefits. The social security claimwas denied, and Mr. Stahl retained legal counsel to pursue his claim. Following litigation, the Social SecurityAdministration determined that Mr. Stahl was entitled to retroactive social security disability benefits in the amount of $31,744.00 with $23,800.03 paid directly to him and $7,943.97 withheld fordirect payment of attorney's fees. Mr. Stahl's minor

son was determined to be entitled to retroactive benefits in the amount of $16,656.00 with $12,668.00 paid directly to the minor 2child's mother and $3,968.00 withheld for direct payment of attorney's fees. State Fund determined that itwas entitledunder 5 39-71-701, MCA, to an offset against the retroactive social securitypayments

as well as future weekly social security benefits. Mr. Stahl challenges State Fund's right to offset for theauxiliary benefits that go directly to his minor child's mother, and to the portion of the retroactivebenefits that go directly to the attorney who litigated the social security claim. In addition, Mr. Stahl asserts that since State Fund receives an offsetbenefit from the litigation against Social Security, State Fund should be required to help pay for the costs of litigation.

Is State Fund entitled to offset auxiliary social security disability benefits paid to Mr. Stahllsminor child when the benefits are paid directly to the minor child'smother? Section 39-71-701(2), MCA, provides: Incaseswhere it isdetermined thatperiodic disability benefits granted by the Social SecurityAct arepayable because of the injury, theweekly benefitspayable under this section are reduced, but not below zero, by an amount equal, as nearly as practical, to one-half the federal periodic benefits for such week,which amount is to be calculated from the date of the disability social security entitlement. (~mphasis added.) Mr. Stahl argues that since the social security disability benefits for his child go directly to the child's mother, he receives no economic benefit from those payments. He cites McClanathan v. Smith (1980), 186 Mont. 56, 606 P.2d 507, for the proposition that because he does not personally receive the fundsthere is no duplication of benefits and thereforenobasis for the offset. Mr. Stahl acknowledges that McClanathan affirms the insurer's right to offset auxiliarybenefits; however he attempts to distinguish McClanathan because the opinion does not directly address whether 5 39-71-701(2)

### , MCA, entitles the State Fund to take an offset where auxiliary benefits are payable to the dependent at a different address than the claimant's. Section 39-71-701(2), MCA, does not distinguish between primary and auxiliary benefits. The statute applies to 

### all benefits "payable because of the injury1'. In McClanathan, the claimant's dependents also lived with someone other than the claimant. Mr. Stahl cannot reasonably argue that he receives no economic benefit fromauxiliary benefits that go to a dependent for whom he is legally responsible. We hold that the State Fund is entitled to offset auxiliary social security disability benefits paid toMr. Stahl'sminor child when thebenefits arepaid directly to theminor child'smother, even though theyreside at a different address.

Is State Fund entitled to offset a portion of Mr. Stahlls retroactive social security disability benefits which are paid to his attorney as an authorized attorney's fee for legal services rendered in obtaining those benefits? Mr. Stahl asserts that he received no economic benefit from the amount of the retroactive social security disability benefits that go directly to the attorney because he did not personallyreceive those funds. This argument is without merit. Mr. Stahl cannot reasonably assert that he receivedno economicbenefit from the services of the attorney in his litigation against Social Security. Mr. Stahl also asserts that by allowing State Fund to offset theportion of the retroactivesocial security disability benefits that were paid directly to the attorney, itunfairly placed on him the entire burden of attorney's fees and costs for the social security claim because State Fund was also benefited by the right to an offset. Section 39-71-701(2), MCA, specifically gives the State Fund the right to offset an amount equal to one half the benefits ''payablebecause ofthe injury1' without consideration ofattorney's fees or costs of collection. In the absence of statutory or contractual authority for the claimant's position, we conclude there is no basis to deny the State Fund's right to offset that portion of the social security benefits that are paid to the attorney. Under theSummaryJudgment Order of theWorkers1Compensation Court the retroactive primary social security benefits in the amount of $31,744.00 payable to Mr. Stahl will be divided as follows: $15,872.00 as offset to State Fund, $7,943.97 directly to the attorney, and $7,928.03 to Mr. Stahl. The retroactive auxiliary social security benefits in the amount of $16,656.00 payable to Mr. Stahl's sonwill be divided as follows: $8,328.00 as offset to State Fund, $ 3,968.00 directly to the attorney,and$4,360.00 toMr. Stahllsson. On its face such division does not

seem entirely fair. However, it is the legislature which determines what portion of social security benefits are to go to theclaimantas compared to the StateFund. While itmay be argued it is unfair to the claimant, the statute clearly establishes the division of the funds. We hold that under 39-71-701(2)

### , MCA, the State Fund is entitled to offset a portion of Mr. Stahl's retroactive social securitybenefits which arepaid to his attorney as an authorized attorney's fee for legal services rendered in obtaining those benefits.

Should StateFund be required tobear an equal share of costs and attorney's fees incurred by Mr. Stahl to establish his social security claim? This issue is an alternative argument to issue 11. Absent statutory or contractual authority to support Mr. Stahl's claim, this issue fails for the same reasons discussed under issue 11. Affirmed.

We Concur: 

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