No. 90-181 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

JERRY STAHL, 

Petitioner and Appellant, 

-vsRAMSEY CONSTRUCTION CO. , Employer, 

and 

STATE COMPENSATION MUTUAL INSURANCE FUND, 

Insurer, Defendant and Respondent. 

APPEAL FROM: The Workers1 Compensation 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 

hO4Y 1 6 1991 Decided: May 16, 1991 
Justice Fred J. Weber ~elivered the opinion of the Court. 

Claimant, Jerry Stahl, appeals from an order of the Workers1 

Compensation Court granting summary judgment to State Compensation 

Mutual Insurance Fund (State Fund) . We affirm. 

The issues are: 

1. Is State Fund entitled to offset auxiliary social security 

disability benefits paid to Mr. Stahl's minor child when the 

benefits are paid directly to the minor child's mother? 

2. Is State Fund entitled to offset a portion of Mr. Stahl Is 

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? 

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 workers1 compensation benefits. Subsequently 

he filed an application for social security disability benefits. 

The social security claim was denied, and Mr. Stahl retained legal 

counsel to pursue his claim. Following litigation, the Social 

Security Administration 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 for direct 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 

2 
child's mother and $3,968.00 withheld for direct payment of 

attorney's fees. 

State Fund determined that it was entitled under 5 39-71-701, 

MCA, to an offset against the retroactive social security payments 

as well as future weekly social security benefits. Mr. Stahl 

challenges State Fund's right to offset for the auxiliary benefits 

that go directly to his minor child's mother, and to the portion 

of the retroactive benefits that go directly to the attorney who 

litigated the social security claim. In addition, Mr. Stahl 

asserts that since State Fund receives an offset benefit 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. Stahlls minor child when the 

benefits are paid directly to the minor child's mother? 

Section 39-71-701(2), MCA, provides: 

In cases where it is determined that periodic disability 

benefits granted by the Social Security Act are payable 

because of the injury, the weekly benefits payable 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 funds 
there is no duplication of benefits and therefore no basis for the 

offset. Mr. Stahl acknowledges that McClanathan affirms the 

insurer's right to offset auxiliary benefits; 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 from auxiliary 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 to Mr. Stahl 's minor child when the benefits are paid directly 

to the minor child's mother, even though they reside 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 personally 
receive those funds. This argument is without merit. Mr. Stahl 

cannot reasonably assert that he received no economic benefit from 

the services of the attorney in his litigation against Social 

Security. 

Mr. Stahl also asserts that by allowing State Fund to offset 

the portion of the retroactive social security disability benefits 

that were paid directly to the attorney, it unfairly 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 

''payable because of the injury1' without consideration of attorney'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 the Summary Judgment Order of the Workers1 Compensation 

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 son will be divided as follows: $8,328.00 

as offset to State Fund, $ 3,968.00 directly to the attorney, and 
$4,360.00 to Mr. Stahlls son. 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 

the claimant as compared to the State Fund. While it may 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 

security benefits which are paid to his attorney as an authorized 

attorney's fee for legal services rendered in obtaining those 

benefits. 

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? 

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: /