No. 87-052 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

PATRICIA MC NEEL 

Appellant 

vs 

HOLY ROSARY HOSPITAL and E.B.I/ORION GROUP, INC., 

and GLACIER GENERAL ASSURANCE CO., 

Respondents 

APPEAL FROM: The Workers1 Compensation Court, The Honorable 

Timothy Reardon, Judge Presiding. 

COUNSEL OF RECORD: 

For Appellant: 

KELLEHER LAW OFFICE; Robert C. Kelleher, Sr., 

Billings, Montana, 

For Respondent: 

MULRONEY, DELANEY and SCOTT; P. Mars Scott, 

Missoula, Montana 

JAMES, GRAY and MC CAFFERTY; Charles S. Lucero, 

Great Falls, Montana 

Submitted on Briefs: July 23, 1987 

Decided: September 22, 1987 

Filed : SEP 2 2 1987 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

This is an appeal from the Workers' Compensation Court. 

The appellant, Patricia McNeel, moved for the payment of 

attorney fees and expenses following the settlement of a work 

related injury. Pursuant to S 39-71-611, MCA, the Workers' 

Compensation Court denied the payment of attorney fees 

because the claim was not adjudged compensable. We affirm. 

Patricia McNeel, claimant and appellant, was employed as 

a housekeeper by Holy Rosary Hospital in Miles City, Montana. 

While pulling heavy bags of garbage during a work shift on 

February 11, 1986, she suffered injury to her neck, back, and 

shoulder areas. McNeel was able to complete her work shift 

on that day as well as the following day. However, the 

injury later forced her to seek medical treatment. 

Subsequently, McNeel pursued a workers1 compensation claim 

and on April 30, 1986 McNeel's attorney petitioned the 

Workers' Compensation Court for an emergency hearing. 

Respondent, E.B.I. Companies (EBI), was the workers' 

compensation carrier for McNeel's employer on the date of the 

injury. 

A liability dispute arose because McNeel previously 

sustained a similar work related injury on November 3, 1983. 

McNeel received medical permission to return to her regular 

employment on May 7, 1984. At the time of the previous 

injury, Glacier General Assurance Company (Glacier) was the 

workers' compensation insurance carrier for McNeel's 

employer. Glacier accepted liability for this prior injury 

and paid certain disability and medical benefits. Glacier 

denied liability for the injury occurring on February 11, 

1986 on the basis that it was a new injury or an aggravation 

of a preexisting injury which had achieved a medically stable 
condition. EBI denied liability as well and on the basis 

that any current injury was a result of the earlier injury 

and therefore a responsibility of the former carrier. 

On May 22, 1986, EBI agreed to provisionally pay 

temporary total disability benefits and medical expenses. In 

doing so, EBI did not admit liability and reserved all 

defenses. After EBI agreed to pay these benefits on a 

nonacceptance basis, a June hearing date was postponed. A 

September hearing date was set, but was vacated to allow for 

continuing discovery. The hearing was then rescheduled for 

November. On the day before the hearing EBI advised McNeel's 

counsel it would accept liability for the claim. 

Following the above acceptance of liability, McNeel 

submitted a motion to the Workers' Compensation Court to 

grant reasonable attorney fees and expenses. The motion was 

denied based on § 39-71-611, MCA, and the fact that the claim 

was settled prior to the hearing and not adjudged 

compensable. 

The issue presented on appeal is whether the Workers' 

Compensation Court committed error in denying the motion for 

attorney fees and expenses when liability is admitted and 

settlement is achieved just prior to a hearing. 

Appellant's counsel contends that the payment of 

attorney fees and expenses is justified in this case for a 

variety of reasons. A significant amount of time and effort 

was devoted to preparing the case for a hearing. Settlement 

was not reached until EBI admitted liability on the day 

before the hearing at 5:00 p.m. or shortly thereafter. Due 

to the timing of the settlement, appellant's counsel contends 

he was required to extensively prepare for the hearing. 

Additionally, there was preparation on two prior occasions, 

but the hearing was postponed on each occasion. 
Appellant has a credible argument in that the payment of 

reasonable attorney fees and expenses would be equitable or 

fair. However, the applicable law simply does not allow for 

it. Generally, attorney fees are not recoverable without an 

agreement between the parties or some statutory 

authorization. Yearout v. Rainbow Painting (Mont. 1986), 719 

P.2d 1258, 1259, 43 St.Rep. 1063, 1064. The rule to be 

followed under the facts of this case is stated in 

5 39-71-611, MCA: 

Costs and attorneys' fees payable on 

denial of claim or termination of 

benefits later found cornpensable. In the 

event an insurer denies liability for a 

claim for compensation or terminates 

compensation benefits and the claim is 

later adjudged compensable by the 

workers' compensation judge or on appeal, 

the insurer shall pay reasonable costs 

and attorneys' fees as established by the 

workers1 compensation judge. 

The above section is specific and leaves no room for 

construction or interpretation. Appellant is not entitled to 

costs and attorney fees unless the insurer denies liability 

and the claim is later adjudged cornpensable. Under the facts 

presented, the claim was settled prior to the hearing and was 

therefore not adjudged compensable. 

This decision is in conformity with prior decisions on 

this issue. In Yearout v. Rainbow Painting (Mont. 1986), 719 

P.2d 1258, 1259, 43 St.Rep. 1063, 1065, we stated: 

In this case, the statute authorizing 

attorney's fees, 5 39-71-611, MCA, is 

clear and unambiguous. If an insurer 

denies liability for a claim for 

compensation, the insurer is liable for 

attorney's fees if the claim is later 

adjudged compensable by the Workers' 

Compensation judge. It is clear from the 

language of the statute that there must 

be an adjudication of compensability 
before an award of attorney's fees is 

authorized. (Emphasis in original.) 

Likewise, the issue was addressed in Cosgrove v. Industrial 

Indemnity Co. (1976), 170 Mont. 249, 255, 552 P.2d 622, 625, 

wherein we stated: 

It is obvious that section 92-616 [the 

forerunner to S 39-71-611, MCA] . . . requires that the claim be "adjudged 

compensable, by the division or on 

appeal" before the insurer can be 

required to pay attorney fees. 

We must rule on the law as it is and not 

what some may desire it to be. 

See also, Leikam v. Edson Express (Mont. 1987), P. 2d 

, 44 St.Rep. 1347; and, Lasar v. Oftedal and Sons (Mont. 

1986), 721 P.2d 352, 353, 43 St.Rep. 1239, 1240. 

While we agree that appellant has presented an equitable 

argument for the payment of costs and attorney fees, we must 

follow the law as it is written. Arguments to the contrary 

must be presented to the legislature. The law as it is 

currently written allows for costs and attorney fees only 

after a claim has been adjudged compensable. 

For the foregoing reasons, we affirm the order of the 

Workers' Compensation Court. 

Mr. Justice William E. Hunt, Sr., specially concurring: 

I concur with the result in the majority opinion in 

light of the statutory language and controlling precedent. I 

wish to emphasize, however, that this is a particularly 

unfortunate and harsh result. 

Section 39-71-611, MCA, must not become a weapon in the 

hands of the insurance companies operating in this state by 

forcing employees incur the cost of trial preparation and 

then settling at or just before trial. See Leikam v. Edson 

Express (Mont. 1987) , P.2d - , 44 St.Rep. 1347, 1350 

(Sheehy, J. , dissenting) . Under such circumstances an action for bad faith may 

lie. In Birkenbuel v. Montana State Comp. Ins. Fund (~ont. 

1984), 687 P.2d 700, 41 St.Rep. 1647, this Court held that 

independent actions against an insurer for bad faith are not 

barred by the exclusive nature of the Workers' Compensation 

remedy. Birkenbuel, 687 P.2d at 703. See generally, Hayes 

v. Aetna Fire Underwriters (1980), 187 Mont. 148, 609 P.2d 

257. Since the conduct complained of in third-party bad 

faith claims occurs outside the employment relationship and 

therefore is not compensated by the Workers' Compensation 

scheme, it would be inequitable to preclude recovery for such 

intentional conduct. As we stated in Birkenbuel, "Any 

contrary interpretation would result in the inequity whereby 

workers surrendered more protection than they received when 

our statutory system of compensation was adopted." 

Birkenbuel, 687 P.2d at 702. Insurers are under a duty to 

effectuate prompt and equitable settlement of claims in which 

liability is clear. Section 33-18-201(6), MCA; Gibson v. 

Western Fire Ins. Co. (Mont. 1984), 682 P.2d 725, 730, 41 

St.Rep. 1048, 1050. And where the duty is breached by 
actions intentionally meant to intimidate a claimant, he is 

entitled to a remedy outside the Workers' Compensation 

scheme. Hayes, 609 P.2d at 262. Here, E.B.I. and Glacier 

General Assurance both denied liability from the beginning. 

This in itself is not evidence of bad faith but when coupled 

with the fact that E.B.I. settled, as appellant terms it, at 

the eleventh hour, thus avoiding attorney fees and expenses, 

the insurer's good faith becomes less clear. In fairness to 

E.B.I. it must be pointed out as the majority has done, 

E.B.I. paid temporary total disability from May 22, 1986 to 

the claimant; but it also must be pointed out that the costs 

incurred by Patricia McNeel in pursuing her Workers' 

Compensation claim were directly and proximately caused by 

E.B.I. 's delay in making a final decesion that she was 

entitled to her benefits. 

It is within the realm of the legislature to change this 

easily abused law but it is up to the individual claimants to 

seek alternative remedies. /' 
Mr. Justice John C. Sheehy, dissenting: 

How long, oh how long, will this Court defer to the 

legislature to cure a practice of Workers1 Compensation 

insurers which forces employees to burden themselves with 

attorney fees to obtain their rightful compensation benefits? 

There is really no need to defer to the legislature to 

end this cruel-hearted practice. The F70rkers1 Compensation 

Court itself, could, upon receiving a stipulation from an 

insurer that agrees that a worker is entitled to benefits, 

adopt the stipulation and adjudicate the compensability. 

This Court could interpret a settlement arrived at in the 

Workers' Compensation Court which provides for benefits but 

gives rise to a dismissal in that Court to be itself an 

adjudication entitling the worker to his attorney fees. The 

legislature never intended that an insurer, without penalty, 

could deny a worker his compensation benefits until just 

short of his trial to recover such benefits. The practice 

persists because we lack the will to stop it. 

The number of cases on this point coming to us in recent 

times indicates how widespread the practice is. We can only 

guess the number of cases where attorney fees have been 

denied in similar circumstances and the denials have not been 

appealed. In just the last two years, we have had Yearout v. 

Rainbow Painting (Mont. 1986), 719 P.2d 1258, 43 St.Rep. 1063 

(Sheehy, J. dissenting); Lasar v. Oftedal and Sons (Mont. 

1986), 721 P.2d 352, 43 St.Fep. 1239 (Sheehy, J. not 

participating); Leikam v. Edson Express (Mont. 1987), - 

P.2d - , 44 St.Rep. 1347 (Sheehy, J. dissenting); and now 

this case. 

While I agree with Justice Hunt in his concurrence 

foregoing that a.n action for had faith may well lie against 
insurers for this practice, such an action would not lie 

against State Compensation Insurance Fund. Birkenbuel v. 

Montana State Comp. Ins. Fund (Mont. 1984), 687 P.2d 700, 41 

St.Rep. 1647. One decision by this Court would stop this 

unjustified practice.