Van Daveer v. Stauffer Chemical Co.

MR. JUSTICE HARRISON

delivered the opinion of the Court.

This appeal arises from a July 25, 1980, judgment of the Workers’ Compensation Court in which John C. Van Daveer, the claimant, was awarded additional temporary total disability benefits, an indemnity award for diminished earning capacity, penalty for late payment, and attorney fees. The employer’s request for rehearing was denied by order of April 16, 1981.

On September 24,1978, Van Daveer, while working a summer job as a switchman for Stauffer Chemical Company, fell from a railroad car and was crushed between the car and a brick wall. Van Daveer sustained a collapsed lung, six fractured ribs, and numerous other internal injuries. He underwent surgery and was hospitalized in intensive care for at least a week.

After the injury, Van Daveer did not intend to return to Stauffer but rather planned to return to school to complete his degree. He discussed this intention with Dr. Bartlett, the only medical expert testifying in the case. On January 4, 1979, Dr. Bartlett released Van Daveer to resume “full, normal activities and duties.”

Van Daveer returned to school in January 1979 for winter quarter and testified that he continued to suffer from extreme pain. In mid-February Van Daveer developed a hernia at the site of the original incision. Corrective surgery was performed March 23, 1979, and Bartlett again released Van Daveer for full activity as of May 1, 1979.

Van Daveer graduated from Montana State University in civil engineering in August 1979 and currently is employed with the Montana Power Company as an engineer.

At the time of the accident, Van Daveer was paid $7.53 per hour for forty hours per week. His temporary total rate was $188 per week and his maximum permanent partial rate was $94 per week.

Van Daveer properly gave Stauffer notice of his claim and filed for compensation. National Union Fire Insurance Company accepted liability for Van Daveer’s injury, paid all medical payments due, and paid weekly temporary total disability benefits through February 25,1979. National then terminated all compensation and claimed an overpayment of $966.86 for payments made between January 3 and February 25, 1979.

National reinstituted temporary total disability payments on March 21, 1979, at the time of the hernia problem. It continued payments through May 1, 1979, deducting the claimed overpayment and making payment of $161.14 on September 28, 1979.

Van Daveer claimed he was entitled to temporary total payments from the date of his injury to August 1, 1979, and to a further “indemnity award.”

The case was submitted to the Workers’ Compensation Court on the pretrial order and briefs of counsel. The court concluded that Van Daveer would not have been physically fit to return to his old job with Stauffer on January 3, 1979, and that he was entitled to temporary total disability benefits from the date of injury to August 1, 1979.

The court further concluded that residual effects of Van Daveer’s injury limited his ability to obtain certain employment as an engineer in the open labor market, and, therefore, he was entitled to an “indemnity award” of 100 weeks.

The court computed temporary total compensation benefits from September 24, 1978, to August 1, 1979, at $188 per week, less the amount already paid, for a total of $4,162.86. To that figure, the court added a 20 percent penalty for delay or refusal to pay compensation which amounted to $832.57. In addition, the “indemnity award” of 100 weeks at $94 per week totaled $9,400. Each of these amounts was to be paid in a lump sum.

Stauffer and National petitioned for rehearing. The petition was denied April 16, 1981, and this appeal ensued.

Four issues are before this Court on review:

1. Whether the court’s award of additional temporary total compensation benefits was supported by substantial evidence?

2. Whether the court’s indemnity award was supported by substantial evidence?

3. Whether the court’s imposition of a penalty was supported by substantial evidence?

4. Whether the court erred in awarding attorney fees?

ADDITIONAL BENEFITS

The first issue to be considered is whether there is substantial evidence to support the award of additional disability benefits. If there is substantial evidence to support the Workers’ Compensation Court, this Court cannot overturn that decision. Holton v. Stoltze (1981), Mont., 637 P.2d 10, 38 St.Rep. 1835.

National argues the court’s award of additional disability benefits was arbitrary and unsupported by substantial evidence. National points to the pretrial stipulation which states: “Thereafter, defendant-insurer reinstituted temporary total disability payments on March 21, 1979 when Claimant again became disabled because of a hernia problem. . .” (Emphasis added.)

National argues that this stipulation, in addition to Dr. Bartlett’s full medical release of Van Daveer on January 4, 1979, precludes a finding of disability between January and March 21, 1979.

The court concluded that since a hernia is caused by exertion, if the original surgery incision was herniating from the daily activities associated with attending school, it could not have been sufficiently healed to have allowed Van Daveer to return to his job at Stauffer in January.

Dr. Bartlett testified that he knew, at the time he released Van Daveer for return to work, that Van Daveer did not intend to return to his job at Stauffer. Bartlett also stated he was not familiar with the American Medical Association Rating Guides because he did not often make those determinations and his examination of Van Daveer was of the nature of a follow-up:

“Q. So, basically, Doctor, would it be fair to state that, really, at no time did you ever sit down with him and go through the job that he had at Stauffer and say, ‘All right, you can go do this today or you can do it next week?’

“A. I didn’t do that and had no intention of doing that. What I mean by the physical fitness of him was he was able to perform normal activities as stated in my letter. I did not go through and do a disability examination on him. I wasn’t requested to. I was giving a follow-up.”

Van Daveer testified he experienced pain in his hips and chest after January 1979 which impaired his movement and would have prevented his return to work at Stauffer. He stated he believed he could not have returned to Stauffer, if he had ever intended to do so, until August 1, 1979.

We find the court’s determination of temporary total disability payments due Van Daveer from the date of injury to August 1, 1979, to be supported by substantial evidence.

INDEMNITY AWARD

In his petition for a hearing Van Daveer requested an “indemnity award,” but did not specify the statute under which his request was made. The Workers’ Compensation Court found that he suffers from residual effects of his injury which would “limit his ability to obtain certain employment as an engineer in the open labor market” and, therefore, made an “indemnity award of 100 weeks.”

This Court recently upheld a finding of 40 percent disability of the whole man by the Workers’ Compensation Court. Holton v. Stoltze, supra. There, two physicians gave the claimant disability ratings — one 10 percent and the other 15 percent. The court, after considering the claimant’s age, education, work experience, pain and disability, actual wage loss and loss of future earning capacity, found a 40 percent disability. Based on that determination, the court awarded claimant 200 weeks of benefits at $45 per week.

Here, the court made no finding of a percentage of disability of the whole man or of any member of the body. In fact, it did not specify any basis for its 100-week determination, nor did it specify the statute under which the award was made. We find such an unexplained determination to be arbitrary, and we return this question to the Workers’ Compensation Court for more complete findings.

PENALTY

The next issue on review is whether a 20 percent penalty for unreasonable delay authorized by section 39-71-2907, MCA, was warranted here.

National paid Van Daveer temporary total payments from the date of injury through February 25, 1979, stopping the payments after receiving Dr. Bartlett’s medical release. Van Daveer’s hernia surgery and subsequent recovery required additional temporary total payments. National made the payments from March 1, 1979, through May 1, 1979, when Dr. Bartlett again gave Van Daveer a medical release. Since Dr. Bartlett had originally released Van Daveer for work on January 5, 1979, National claimed an overpayment of $966.86 for payments made into February. It subtracted this overpayment from payments due from March through May and on September 28, 1979, paid Van Daveer the $161.14 remainder.

Robert W. Keene, branch manager for the General Adjustment Bureau, testified via deposition that after the September payment, Van Daveer was owed nothing further.

The court subsequently made Finding of Fact No. 20:

“The position of the insurance carrier that claimant is entitled to absolutely nothing constitutes a delay or refusal to pay compensation benefits so as to entitle claimant to a 20% penalty as provided by section 39-71-2907, MCA.”

In his deposition, Keene stated that he based his position that Van Daveer was not entitled to further payments on Dr. Bartlett’s medical release.

The penalty is authorized for “unreasonable delay or refusal to pay.” Section 39-71-2907, MCA. The penalty is not, however, intended to eliminate the right of an insurer to assert a legitimate defense. Steffes v. 93 Leasing Co., Inc. (1978), 177 Mont. 83, 580 P.2d 450.

Based on the facts in this case, we find the court’s imposition of the 20 percent penalty unsupported by substantial evidence.

“The triggering event for the purpose of awarding penalties for unreasonable delay or refusal to pay compensation is the insurer’s receipt of medical verification of a compensable injury.” Holton v. Stoltze (1981), Mont., 637 P.2d 10, 13, 38 St.Rep. 1835, 1838.

Here, rather than a verification of compensable injury, the insurer received medical verification that Van Daveer was recovered and capable of returning to full duty as of May 1, 1979.

Although, based on depositions taken nearly a year later, the court determined Van Daveer’s temporary total disability payments should have extended beyond that date, we find it was not unreasonable for the insurer to rely on the medical releases. We therefore reverse the court’s imposition of a 20 percent penalty.

ATTORNEY FEES

Insurer’s entire argument that attorney fees were improperly awarded is based on the premise that Van Daveer should not prevail on the other issues before the Court.

The court awarded attorney fees. Section 39-71-611, MCA, provides for such an award: “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 workers’ compensation court.”

Here, the insurer did not deny liability but did terminate compensation benefits on a claim which has been upheld as compensable. We, therefore, affirm the court’s award of reasonable costs and attorney fees.

We remand this case to the Workers’ Compensation Court for action in accordance with this opinion.

MR. JUSTICES DALY, WEBER and SHEA concur.