NO. 92-050 IN THE SUPREME COURT OF THE STATE OF MONTANA

MICHAEL H. TEHLE, Claimant and Respondent,

.

# .. . ,...f:<l:. i-vsALPINE PLUMBING, Employer, and STATE COMPENSATION MUTUAL INSURANCE FUND, T Defendant and Appellant.

APPEAL FROM: The Workers' Compensation Court, The Honorable Timothy Reardon, Judge presiding.

COUNSEL OF RECORD: For Appellant: CharlesG. Adams, Legal Counsel, StateCompensation Mutual Insurance Fund, Helena, Montana For Respondent: PatrickR. Sheehy,Halverson, Sheehy & Plath,P.C., Billings, Montana

Filed: Submitted on Briefs: June 4, 1992 ~ecided: July 9, 1992 r 'a

I ClerkJusticeJohn Conway Harrison delivered the Opinion of the Court.



### State CompensationMutual Insurance Fund (StateFund) appeals from an order and judgment of the Montana Workersr Compensation Court. The court held that Michael Tehle (Mike) suffered a total loss 

### of wages due to work-related injuries, despite the fact that his plumbing business actually increased gross income receipts. The court determined that Mike was entitled to temporary total disability benefits. We affirm. We review the following dispositive issue: Whether the Workers1 Compensation Court erred in determining that Mike suffered a total loss of wages. Sometime in 1985,Mike and his wife Cheryl, opened aplumbing business, Alpine Plumbing and Heating, in Billings,Montana. Mike performed all the physical plumbing work himself, while Cheryl handled all the financial aspects of the business including clerical and scheduling duties. In approximately October of 1986, Mike obtained Workers' Compensation insurance coverage from State Fund. The policy covered Mike as 

### an individual 

### owner doing plumbing work. On July 30, 1987, Mike suffered severe injuries when a ditch in which he was installing sewer lines collapsed upon him. Mike

was buried in dirt almost to the top of his head. While Mike was rescued by 

### his son and 

### a backhoe operatorwho dug him out of the collapsed ditch, he was crushed by the weight of the dirt. As 

### a result of the severe compression, Mike suffered a basal skull fractureandwas treatedwith steroidswhich later producedvariouscomplications. He received damage to cranial nerves in his face which resulted in his inability to close his right eyelid for a period of two months. He also sustained a hearing loss and suffered a fractured left clavicle, fractured ribs, a dislocated 

### arm, a fractured jawand related dental problems. Throughout this period State Fund paid Mike temporary total disability benefits. During theperiod of Mike's convalescence,his son, fatherandwife continued to operate Alpine Plumbing and Heating. After returning to work onMarch 25, 1988, Mike began tohave problems with his hips which resulted from the use of steroids to treat his other injuries. These complications resulted in the complete replacement of Mike's left hip joint and a core decompression of his right hip. In approximately September of 1988,Mike and Cherylwere forcedtohire employee plumbers to keep thebusiness in operationdue toMike's physical limitations. When not in severepain and recovering fromhis injuries and surgeries, Mike contributed minimally to the operation of the plumbing business. He sometimesanswered thephone and gave recommendations and directions to his employee plumbers. Cheryl's involvement in the business increased and she continued to schedule the plumbing jobs for the recently hired employees and complete all necessary paper work. Mike has not performed any plumbing activities since approximately November 1989. On December 10, 1990, the State Fund discontinued Mike's Workers' Compensation benefitsdue to the fact thatAlpine Plumbing and Heating remained profitable and actually increased its incomesince Mike's injuries. Mike challenged the discontinuance of his benefits and the Workers1 Compensation Court reinstated Mike's temporary total disability benefits. State Fund appeals and we affirm. Two recent cases of this Court have set forth the appropriate standard of review in Workersq Compensation cases. The Workers' Compensation Court's conclusions of law will be upheld if the interpretation of the law is correct. Grenz v. Fire and Casualty of Connecticut (1991), 250 Mont. 373, 378, 820 P.2d 742, 745; citing Steer, Inc. 

### v. Dept. of Revenue (1990),245 Mont. 470, 474- 475,803 P.2d 601, 603, TheWorkers1CompensationCourt's findings of fact will be upheld if supported by substantial credible evidence. Nelson

### v. Semitool,Inc. (Mont. 1992)

## , 829 P.2d 1, 3, 49 St.Rep. 253, 254. This case hinges upon the distinction between two important concepts: ttwagesrt and "incomefromprofits.tt Mike asserts that due to his injuries he sustained a total loss of wages. While he performs minor duties for the business, he is not involved in any of thephysical plumbing activities inwhichhepreviously engaged. Further,he hasnot takena salarydraw 

### from thebusiness sincehis injuries. Consequently, he has earned no wages and 

### is therefore entitled to continued temporary total disability benefits under 5 39-71-701,MCA (1987). State Fund contends that theprofits and subsequent income 

### to Mike from Alpine Plumbing and Heating has increased since Mike's 

### injuries,therefore,Mikehas not suffereda

### total lossof wages asrequired by the statutes. We disagree. Section 39-71-118(2), MCA (1987),provides: If the employer is a partnership or sole proprietorship, such employermay elect to include as an employee withintheprovisions of this chapteranymember of such partnership or the owner of the sole proprietorship devoting full time to the partnership or proprietorship business 

# . . .Forpremium ratemaking and for the determination of weekly wage for weekly compensationbenefits, the insurance carriershall assume a salary or wage of such electing employee tobe not less than $900 amonth and not more than 1 

### 5 times the average weekly wage as defined in this chapter. Pursuant to the aforementioned statute, Mike elected coverage and complied with the requirements of the statute. State Fund processed his application and promised coverage that insured Mike against injury that affected his wages. We acknowledge that the concepts of wages and income from profits are often used interchangeablybut they are not the same, and it is error to use them synonymously. In the case at bar, State Fund made such an error. A review of the record indicates that the success of Alpine Plumbing and Heating and its subsequent increase in profitability was not attributed to the ongoing efforts of Mike in his capacity

as a plumber. In fact, the record illustrates the determination and tenacity of Mike's wife Cheryl and the rest of his family as they faced and survivedthe circumstancesthatbefell them. During Mike's initial infirmityperiod,Mike's son and father carried out the physical aspects of the business while Cheryl continued to scheduleplumbing jobs and prepare all necessary paperwork. When Mike was further unable to work due to his hip surgeries, Cheryland Mike decided to hire employee plumbers to carry on their business. This business decision apparently enabled Alpine Plumbing and Heating to not only remain operational, but increase in popularity and success, resulting in increased profits. It is clear that these increased profits have not come as a result of Mike's involvement inthebusinesspost-injury. Therefore, wewill not allow State Fund to escape responsibility under the valid contract of insurancewhich they negotiated with Mike. This Court does not dispute that Mike is now in a better financial position than he was prior to his injury, however, that does not establish grounds on which to deny him coverage under a valid insurance contract. State Fund attempts to support its position by stating that the income received from the business is currently being derived partly fromtheTehles' initial investmentand theirreputationfor good work. Consequently,Mike is still receiving wages from the business. Again, we cannot agree. Section 39-71-123,MCA (1987), defines wages as: [Tlhe gross remuneration paid in money, or in a substitute for money, for services rendered by an employee. Wages include but are not limited to: (a) commissions, bonuses, and remuneration at the regular hourly rate for overtime work, holidays, vacations, and sicknessperiods; (b) board, lodging, rent, or housing if it constitutesapart of the employee's remunerationand is based on its actual value; and (c)payments made to an employee on any basis other thantime worked, includingbut not limitedtopiecework, an incentive plan, or profit-sharing arrangement.Although the statute does not contain an all-inclusive list of what constitutes wages in Montana, we do not find any similarity with the terms listed therein. Certainly, we do not find that income from profits are contained in the definition of "wages.' Previously, we addressedtheproblem of whether the ability to acquire incomewas equal to the ability to work. In Chatfieldv. Industrial Accident Board (1962), 140 Mont. 516, 374 P.2d 226,we answered in the negative. We said: Finally, itwould seem that the board correlatesability to acquire incomewith ability towork. Any income which the claimant has received from the ranch is a result of his capital investment and not from the sweat of his brow. The fact that claimant was able to "boss"his own ranch does not indicate an ability to compete on the labor market for a similar position elsewhere. Chatfield, 140 Mont. at 520, 374 P.2d at 228. Chatfield is analogous to the case at bar in thatboth claimantsobtained income from a business they previously operated. The point of both the Chatfield case and the case at bar is not that the individual is able, through alternative business arrangements, to make a profit from their business, but that they can no longer perform the activities which State Fund insured. After a review of the record in the case at bar, we find that the Workers1 Compensation Court possessed the requisite evidence and testimony to support its findings and conclusions. The Workers' Compensation Court supported its findings of fact with substantial credible evidence and it made correct conclusions of law. Therefore, we will not overturn the Workers Compensation Court's ruling. Accordingly, Mike is entitled to temporary totalbenefits from November 14, 1989, until there is a change in his medical status that would require compensation or denial thereof according to relevant Montana statutes.

We concur:

+ Chief Justice