McNeel v. Holy Rosary Hospital , 228 Mont. 424 ( 1987 )

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, 1 9 8 7
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 : 0 0 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.