Buckman v. Montana Deaconess Hosp.

• Decision Date: 12 December 1986
• Docket Number: No. 85-530,85-530
• Citation: 224 Mont. 318,43 St.Rep. 2216,730 P.2d 380
• Parties: Rose N. BUCKMAN, Claimant and Appellant, v. MONTANA DEACONESS HOSPITAL, Employer, and State Compensation Insurance Fund, Defendant and Respondent.
• Court: Montana Supreme Court

Page 380

730 P.2d 380

224 Mont. 318

Rose N. BUCKMAN, Claimant and Appellant, v. MONTANA DEACONESS HOSPITAL, Employer, and State Compensation Insurance Fund, Defendant and Respondent.

No. 85-530.

Supreme Court of Montana.

Submitted July 24, 1986.

Decided Dec. 12, 1986.

Lloyd E. Hartford (argued), Billings, for claimant and appellant.

Hughes, Kellner, Sullivan & Alke, Mike McCarter (argued), Helena, for defendant and respondent.

HUNT, Justice.

Rose Buckman appeals the judgment of the Workers' Compensation Court denying her a conversion of her bi-weekly Workers' Compensation benefits to a lump-sum payment. Buckman's employer, Montana Deaconess Hospital and its insurer, the State Compensation Insurance Fund appealed a portion of the same judgment wherein the trial court concluded that insurers could not discount lump-sum conversions awarded for injuries which occurred prior to April 15, 1985.

We affirm the Workers' Compensation Court in part, reverse in part, and remand for proceedings pursuant to this opinion.

The issues presented to us concern constitutional challenges to the 1985 legislative amendment to Sec. 39-71-741, MCA, first presented to the legislature as S.B. 281. Specifically, we are asked to decide:

1. Whether the procedure outlined in Sec. 39-71-741(2), MCA (1985), to guide the Workers' Compensation judge in determining whether lump-sum conversion of biweekly payments for permanent total injury will be awarded, as applied to conversions for injuries occurring before April 15, 1985, is constitutionally prohibited.

2. Whether the prospective application of the procedure outlined in Sec. 39-71-741(2), MCA (1985), violates the equal protection guarantees of the Montana and United States Constitutions.

3. Whether the directions contained in Sec. 39-71-741(1), MCA (1985), to discount to present value all conversions of lump sums as applied to conversions for injuries occurring prior to April 15, 1985, are constitutionally prohibited.

4. Whether the Workers' Compensation Court erred in denying Buckman a lump-sum conversion of her biweekly benefits.

In September, 1985, the Workers' Compensation Court entered its findings of fact and conclusions of law and judgment determining that the appellant Buckman, was permanently totally disabled and that she was entitled to disability benefits. The Court denied her request for a lump-sum conversion based upon her failure to meet the requirements set out in Sec. 39-71-741(2), MCA. The court said the amendments found in Sec. 39-71-741(2), MCA were procedural in nature and could therefore be applied in Buckman's case without offense to either constitution. Buckman had challenged the constitutionality of Sec. 39-71-741, MCA, as applied to her case on the grounds that her injury predated the effective date of the amendments. The Workers' Compensation Court, relying on its earlier opinion in Stelling v. Rivercrest Ranches, Inc., WCC No. 8412-2757 (1985), concluded that the discounting provision, found in Sec. 39-71-741(1), MCA, if applied retroactively to Buckman's award, would violate the contract clauses of both the United States and Montana Constitutions. Buckman appeals the judgment as it concerns Sec. 39-71-741(2), MCA, and the Hospital and State Fund appeal the judgment as it concerns Sec. 39-71-741(1), MCA.

For the reasons stated below, we hold that: As to the first issue the application of Sec. 39-71-741(2), MCA is constitutionally prohibited as applied to injuries that occurred prior to April 15, 1985. As to the second issue we hold that the prospective application of the procedure does not violate the equal protection guarantees of the Montana and United States Constitutions. As to the third issue, we hold that discounting to present value conversions of lump-sums for injuries that occurred prior to April 15, 1985 is constitutionally prohibited. Finally, as to the lump-sum conversion of claimant's biweekly benefits we remand for a determination of whether claimant is entitled to a conversion of her benefits in light of our construction of Sec. 39-71-741, MCA.

As to the first issue, Buckman challenges the retroactive application of the procedure contained in Sec. 39-71-741(2) MCA. That statute as amended states that it "must be used by the division and workers' compensation judge in determining whether a lump-sum conversion of permanent total biweekly payments will be approved or awarded ..." Before discussing any constitutional questions, it is important that we consider the statutes which are to be applied to an injured worker with regard to lump-sum conversions or to normal benefits.

Workers' compensation benefits are determined by the statutes in effect as of the date of injury. Trusty v. Consolidated Freightways (Mont.1984), 681 P.2d 1085, 41 St.Rep. 973; Iverson v. Argonaut Insurance Co. (1982), 198 Mont. 340, 645 P.2d 1366.

In Trusty, we held that the standards for computations of benefits for the claimant are fixed by the statutes in effect as of the date of injury and concluded that the legislature could not enact a statute reducing the benefits to an injured worker by reason of social security benefits paid. We further stated:

The statute in effect on the date of injury determines the benefits to be received ... (Citations omitted). That sets the contractual rights and debts of the parties. In the instant case, once the 100% offset statute was found constitutionally unenforceable, that portion of the statute became void. This Court cannot come back and change the statute to a 50% offset. Once we found the statute constitutionally unenforceable, then no offset remains in effect.

We hold that the benefits due to the appellant under his Workers' Compensation award shall not be reduced by an offset for Social Security benefits.

681 P.2d at 1088, 41 St.Rep. at 976.

The reasoning of the foregoing cases properly controls in the present case where we are involved with an application for a lump-sum conversion of permanent biweekly payments. We specifically hold that where an injured worker seeks a lump-sum conversion of biweekly benefits, the statutes in effect at the time of injury set the standards for either the award or refusal of a lump-sum conversion.

We therefore conclude that the amendments made in 1985 to Sec. 39-71-741(2), MCA, cannot be applied in considering the Buckman application for a lump-sum conversion. We note this is consistent with the 1985 amendments as there is no provision in those amendments stating that any portion should be applied retroactively, with a single exception of the discount provision.

The second issue is whether the prospective application of the procedure set out in Sec. 39-71-741(2), MCA violates the equal protection guarantees of the Montana and United States Constitutions. We hold that it does not.

After careful consideration of the language of the procedure set out in Sec. 39-71-741(2) and (3) and after reference to the legislative history we are convinced that those subsections merely codify, in detailed form, the prior case law which allowed a conversion of biweekly benefits when it was in the best interests of the claimant.

During the hearings leading to the enactment of S.B. 281 there was considerable discussion of more specific statutory language concerning the award of lump sums. The record of the February 14, 1985 meeting of the senate subcommittee is representative of the intent of the legislature when considering the specific language. Senator Haffey asked the administrator of the Workers' Compensation Division whether "if what he is talking about is language based on the experience of the last couple of years, under which lump sum payments are called for ... Mr. Blewett replied yes."

Our estimate that the legislative intent was to codify existing law, rather than altering the law, is borne out by examination of the procedure contained in Sec. 39-71-741(2) and (3).

Subsection 2 directs the Workers' Compensation Court to award conversions "only if the worker or his beneficiary demonstrates that his ability to sustain himself financially is more probable with a whole or partial lump-sum conversion than the biweekly payments and his other available resources." The statute then goes on to lay out separate criteria to indicate what is meant by "sustain himself financially." We note here that the criteria in subsection 2(a), that the difference between the discounted value of a conversion and the future value of biweekly benefits cannot be the only grounds for a conversion, directly codifies the prior law of Kent v. Sievert (1971), 158 Mont. 79, 489 P.2d 104. The language contained in subsection 2(b) states that the improvement of a claimant's financial position should not be the basis of an award unless it can be awarded at the price of an annuity. This would cost the insurer the same as if it had purchased an annuity under the option contained in Sec. 39-71-2207, MCA, and merely states the same rule as our holdings in Kent and in LaVe v. School Dist. # 2 (Mont.1986), 713 P.2d 546, 43 St.Rep. 165.

Similarly, case law has required claimants to submit financial plans when outstanding or delinquent debt is the basis for a conversion request. Kuehn v. National Farmers Union Property and Cas. Co. (1974), 164 Mont. 303, 521 P.2d 921. Furthermore where the court has found the outstanding debt was not so significant as to necessitate a lump-sum conversion, it has been denied. Ruple v. Bob Peterson Logging Co. (Mont.1984), 679 P.2d 1252, 41 St.Rep. 704. This prior law is directly reflected in the language of Sec. 39-71-741(2)(c).

Subsection 2(d) of that same statute likewise codifies prior case law requiring that a claimant show the worthiness of her business venture plan and the adequacy of her business acumen. See Bundtrock v. Duff Chevrolet (1982), 199 Mont. 128, 647 P.2d 856; Krause v. Sears, Roebuck and Co. (1982), 197 Mont. 102, 641 P.2d 458.

Finally, Sec. 39-71-741(3) allows the...