NO. 90-192 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

JOHN H. ALLEN, 

-vClaimant and Respondent, FILFD ?. 0. $ t. : 

TREASURE STATE PLUMBING, n .-c .,&red - 

Employer, 0: 19 1990 

and fl> # f -E =*/ 

EMPLOYERS COMMERCIAL UNION, Cd -5 .:grit 

Insurer-Defendant and Appellant, CLERK OFSSC;~.; :RI: catr~~ 

-v- STA-~=E c'- (.A .-ru i',i,,a 

CHARTER OAK FIRE INSURANCE COMPANY, 

Insurer-Defendant and Respondent. 

APPEAL FROM: Workers' Compensation Court 

The Honorable Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

C. J. Seifert; Gough, Shanahan, Johnson & Waterman; 

Helena, Montana 

For Respondent: 

Donald D. Sommerfeld; Towe, Ball, Enright & Mackey; 

Billings, Montana 

Terry G. Spear; Matovich, Addy & Keller; Billings, 

Montana 

Submitted on Briefs: October 11, 1990 

Filed: 

Decided: December 19, 1990 iY 
Justice R. C. McDonough delivered the Opinion of the Court. 

Employers1 Commercial Union appeals from the judgment of the 

Workers' Compensation Court which held that Employers' Commercial 

Union must pay permanent partial disability benefits and attorney's 

fees to claimant, John Allen. We affirm. 

The issues we find necessary for review are: 

1. Whether the Workers' Compensation Court properly allocated 

John Allen's benefit payments among insurers; 

2. Whether the Workers' Compensation Court properly awarded 

John Allen attorney's fees. 

At time of trial, John Allen (Mr. Allen) was a 48 year old 

married man who worked for his father as a laborer at Treasure 

State Plumbing and Heating since the age of 14. Since that time, 

Mr. Allen has worked as a plumber, laborer and as a backhoe 

operator. 

In July of 1973, he began to experience low back pain. In an 

effort to alleviate the pain, Mr. Allen sought treatment from Dr. 

Sterling R. Hayward, a Billings orthopedic surgeon. According to 

Dr. Hayward, Mr. Allen's back condition had existed for at least 

five years and was aggravated by his work as a backhoe operator. 

As a result of this diagnosis, Dr. Hayward recommended that Mr. 

Allen change jobs and discontinue his work as a backhoe operator. 

Apparently, Mr. Allen did not heed this advice and on October 

25, 1974 he suffered a second back injury while operating a 

backhoe. Following this injury, he did not return to work until 

March 12, 1976. Mr. Allen sought workers1 compensation benefits 

2 
and Employers Commercial Union accepted liability and paid medical 

benefits as well as temporary total and partial disability 

benefits. 

Following this accident, Mr. Allen again sought treatment from 

Dr. Hayward. Following several examinations, the doctor 

determined that Mr. Allen's back condition may have been the 

result of a herniated nucleus pulposus. This unconfirmed, yet 

suspected diagnosis, matched his conclusions of a year earlier, 

when Mr. Allen first sought treatment. Once again, Dr. Hayward 

recommended that Mr. Allen seek different employment. 

In May of 1976, the doctor again examined Mr. Allen and noted 

that his back condition was I1staying about the same.'' Following 

this examination, Dr. Hayward rendered his opinion that Mr. Allen 

had reached a condition of maximum medical improvement. 

After returning to work, Mr. Allen decreased his amount of 

time operating the backhoe. In fact, the only time he did any 

backhoe work was when there was no light work available. He 

noticed that even a small amount of time on the backhoe aggravated 

his back injury. 

On September 12, 1977, Mr. Allen, while working for Treasure 

State Plumbing, again injured his back. Apparently, this injury 

occurred while he as helping a co-worker lift a ten inch clay sewer 

pipe, which weighed approximately 230 pounds. The insurer at risk 

at the time of this accident was Charter Oak Fire Insurance Company 

(Charter Oak), however Mr. Allen did not pursue any claim against 

it at this time. 
Fearing that Dr. Hayward would recommend he undergo surgery, 

Mr. Allen decided to seek chiropractic care. Therefore, instead 

of returning to Dr. Hayward, he sought treatment from Dr. Cromwell, 

a Billings chiropractor. While in Dr. Cromwellls care, he returned 

to work where he reinjured his back while lifting some bathtubs. 

Once again, Mr. Allen did not report this accident, nor did he file 

a claim. 

Following these accidents, Mr. Allen discontinued working in 

the field and began working in the office. Finally, in 1987, he 

filed a petition before the Workers1 Compensation Court alleging 

that he had suffered an injury on October 24, 1974 and further that 

he was entitled to 500 weeks of permanent partial disability 

payments, attorney's fees, costs and penalties. This petition was 

filed against his employer, Treasure State Plumbing and Heating and 

the appellant Employers Commercial Union Insurance Company (ECU). 

Discovery conducted after this petition was filed, revealed 

job related injuries occurring in 1977. It further revealed Dr. 

Hayward1s opinion that Mr. Allen's back injury reached maximum 

medical improvement in May of 1976. Based upon these facts ECU 

determined that it was not the insurer on risk at the time of the 

1977 injuries. It therefore entered into a partial settlement with 

Mr. Allen and joined with him in an amended petition before the 

Workers1 Compensation Court. In this amended petition, ECU sought 

a judgment holding Charter Oaks liable for all permanent partial 

disability payments occurring after September 12, 1977, the date 

of Mr. Allen's subsequent injury. It based its arguments on the 
fact that Charter Oaks was the insurer on risk at the time of this 

injury and that Mr. Allen had reached maximum healing in 1976- 

-before the 1977 accident. 

Following trial, the Workers' Compensation Court held that 

Charter Oaks was responsible for all compensation benefits 

reasonable related to the temporary aggravation of Mr. Allen's back 

condition resulting from his accident of 1977. However, it further 

found that the 1974 injury was the cause of Mr. Allen's present 

permanent partial disability and related diminution in earning 

capacity. It therefore held that ECU was liable for the full 

extent of Mr Allen's permanent partial disability payments. It 

further held that ECU was liable for costs and attorney's fees. 

ECU filed a notice of appeal and eventually, following an 

order of this Court, Mr. Allen was dismissed as a party. 

Therefore, the only issues submitted for our review concern the 

disputed liability between ECU and Charter Oaks and the resultant 

attorney's fees. 

Initially, we note the standard of review applicable to 

appeals from the Workers' Compensation Court. When reviewing 

questions of fact, we limit our examination of the record to 

determine if substantial credible evidence exists to support the 

lower court s findings. 0' Brien v. Central Feeds (1990) , 241 Mont . 

267, 786 P.2d 1169. In reviewing questions of law, we merely 

determine whether the lower court's interpretation of the law is 

correct. Schaub v. Vita Rich Dairy (1989), 236 Mont. 389, 770 P.2d 

522. 
The lower court extensively reviewed all of the evidence 

surrounding Mr. Allen's back injuries. It noted that he began 

having problems with his back at least as early as 1972, when he 

first sought medical treatment. At that time, the examining 

physician advised him to discontinue backhoe work. Apparently, 

this condition progressed and Mr. Allen suffered additional 

compensable injuries in 1974 and 1977. 

Following the 1974 injury, Dr. Hayward noted that Mr. Allen 

had reached a condition of maximum medical improvement. 

Particularly, in May of 1976 he noted that Mr. Allen's back 

condition was "staying about the same." 

In 1975, Dr. Hayward conducted a physical examination of Mr. 

Allen. During this examination, Dr. Hayward made numerous findings 

concerning Mr. Allens' flexibility, extension and sensations of 

pain. The doctor did not, however, attempt to extrapolate any 

impairment rating from these findings. 

Approximately ten years later, at the request of Mr. Allen's 

counsel, Dr. Hayward performed another physical examination. The 

doctor was asked to determine an impairment rating. Consequently, 

this examination was much more detailed than that given in 1976. 

Following the examination, Dr. Hayward determined that Mr. Allen's 

condition was probably worse in 1986 than in 1976. However, he in 

no way attributed the worsening of Mr. Allen's condition to any 

injury suffered in 1977. To the contrary, the doctor testified 

that ongoing deterioration was natural for a person with Mr. 

Allen's condition. 
Finally, the Workers' Compensation Court heard testimony from 

Mr. Allen, his father and employer, and Mr. Allen's co-workers, 

that indicated that Mr. Allen's back condition significantly 

worsened after the 1977 injury. According to this testimony, Mr. 

Allen's ability to perform on the worksite was greatly impaired 

following these accidents. However, the lower court also took into 

consideration testimony which indicated that Mr. Allen had problems 

doing heavy labor and running a backhoe prior to the 1977 

incidents, as well as Dr. Hayward's testimony indicating that these 

incidents did not cause further deterioration to his back. Based 

upon this testimony, the court determined that although the 

injuries may have temporarily aggravated Mr. Allen's pre-existing 

condition, they did not cause his permanent partial disability. 

The evidence, when viewed as a whole supports the Workers' 

Compensation Court's conclusion that Mr. Allen' s 1974 injury was 

the cause of his current disability. This Court will not reverse 

the Workers' Compensation Court unless its findings of fact are 

clearly erroneous. See Tenderhold v. Travel Lodge Itnl. (1985), 

218 Mont. 523, 709 P.2d 1011. 

Furthermore, we find no error of law warranting reversal. 

ECU maintains that our decision in Belton v. Hartford Accident and 

Indemnity Co. (1983), 202 Mont. 384, 658 P.2d 405, controls the 

outcome of this case. In Belton, we held that once a claimant has 

reached maximum healing or a medically stable condition, the 

insurer at risk is no longer responsible for any subsequent 

injuries or conditions. Using this rule of law, ECU argues that 
because Mr. Allen had attained a condition of maximum healing in 

1976, it should not be liable for the permanent partial benefits 

claimed in 1987. 

We disagree with ECU's application of Belton to the facts in 

this case. In Belton, it was undisputed that an injury suffered 

by the claimant in 1979 aggravated a prior injury sustained in 

1977. Belton, 202 Mont. at 386. The 1979 injury rendered the 

claimant permanently, totally disabled. In the case now before us, 

however, Mr. Allen's doctor testified that his back condition was 

not permanently aggravated by his second injury. Rather, as stated 

by the Workers' Compensation Court, this second injury only 

temporarily aggravated his pre-existing injury. 

In harmony with Belton, the Workers' Compensation Court 

required Charter Oak to pay temporary benefits for the temporary 

aggravation to Mr. Allen' back caused by the 1977 injury. However, 

because it found that his permanent partial disability was caused 

by the 1974 injury, the court correctly held that ECU was 

responsible for payment of those benefits. We hold this was a 

correct interpretation and application of Belton and accordingly 

the Workers' Compensation Court is affirmed on this issue. 

Finally, ECU argues that the lower court erred in awarding Mr. 

Allen attorney's fees. According to ECU, the statute in effect at 

the time of the 1974 injury determines the manner and extent of Mr. 

Allen's attorney's fees award. See Gullett v. Stanley Structures 

(1986), 222 Mont. 365, 722 P.2d 619. The statute in effect at the 

time of Mr. Allen's injury was 5 92-616 RCM, which states: 
92-616. Costs and attorneys! fees payable on denial 

of claim later found compensable. In the event the 

insurer denies the claim for compensation or terminates 

compensation benefits, and the claim is later adjudged 

compensable, by the division or on appeal, the insurer 

shall pay reasonable costs and attorneys1 fees as 

established by the division. However, under rules 

adopted by the division and in the discretion of the 

division, an insurer may suspend compensation payments 

for not more than thirty (30) days pending the receipt 

of medical information. 

ECU maintains that it did not deny "the claim for compensation 

or terminate compensation benefits." Rather, it merely contested 

the extent of its obligation to Mr. Allen. Therefore, it maintains 

that 5 92-616 RCM, does not provide any authority to support the 

lower court's award of attorney's fees and costs. 

We disagree. ECU paid medical costs, and disability benefits 

up until September 12, 1977, the date of Mr. Allen's second injury. 

It refused, however, to pay any benefits due after that date. We 

hold that this refusal was tantamount to a "termination of 

compensation benefits." Therefore, the lower court's award of 

attorney's fees and costs is clearly justified under 3 92-616 RCM. 

Affirmed. 

We Concur: F- 
Justices