Plooster v. Pierce Packing Co.

• Decision Date: 02 February 1993
• Docket Number: No. 91-551,91-551
• Citation: 846 P.2d 976,256 Mont. 287
• Parties: Joan PLOOSTER, Claimant and Appellant, v. PIERCE PACKING COMPANY and State Compensation Mutual Insurance Fund, Respondents and Respondents.
• Court: Montana Supreme Court

Page 976

846 P.2d 976

256 Mont. 287

Joan PLOOSTER, Claimant and Appellant, v. PIERCE PACKING COMPANY and State Compensation Mutual

Insurance Fund, Respondents and Respondents.

No. 91-551.

Supreme Court of Montana.

Submitted on Briefs June 4, 1992.

Decided Feb. 2, 1993.

Don Edgar Burris, Billings, for claimant and appellant.

Elizabeth A. Horsman-Wiitala, State Compensation Mut. Ins. Fund, Helena, for respondents and respondents.

McDONOUGH, Justice.

The claimant, Joan Plooster, filed a petition in the Workers' Compensation Court alleging that the respondent, State Compensation Mutual Insurance Fund (State Fund), was responsible for payment of certain medical bills which it had refused to pay. Shortly before trial, the State Fund conceded liability for payment of the medical bills. At trial, the issues decided were whether claimant was entitled to a statutory penalty, attorney fees, and costs. The Honorable Nat Allen, substituting for Judge Timothy Reardon, found that respondent had acted unreasonably when it delayed payment of claimant's medical bills and awarded attorney fees and costs. However, he found that claimant was not entitled to statutory penalty. At a subsequent hearing, the Workers' Compensation Court found that $32 per hour was a reasonable rate for claimant's attorney fees and entered judgment awarding fees at that rate, plus the costs incurred by claimant. From that judgment, claimant appeals. The State Fund has not appealed the trial court's finding that it acted unreasonably, nor its conclusion that claimant is entitled to an award of attorney fees and costs. We reverse and remand for further proceedings in the Workers' Compensation Court.

The issues are:

1. Did the Workers' Compensation Court err when it refused to impose a penalty under Sec. 39-71-2907, MCA (1978), even though it found that respondent had acted unreasonably?

2. Was there substantial evidence to support the Workers' Compensation Court's award of attorney fees in favor of the claimant in the amount of $32 per hour?

On December 20, 1990, claimant filed her petition for hearing in the Workers' Compensation Court. She alleged that while working for Pierce Packing Company on November 7, 1978, she had fallen and injured her neck, back, and arms. Respondent, the State Fund, insured Pierce Packing against workers' compensation claims at that time. Claimant alleged that although respondent was paying her disability benefits, it had refused to pay for certain medication which had been prescribed for her treatment. The medications included Benadryl and Vistaril which were apparently prescribed for hives and other skin disorders which resulted from anxiety attacks and were, in the opinion of her treating physician, at least partially attributable to her physical condition or her disability.

The State Fund filed an answer denying that claimant's use of Benadryl or Vistaril were causally related to claimant's industrial injuries and denied that she was entitled to recover attorney fees, costs, or any statutory penalty.

By June 13, 1991, eight days prior to trial, the State Fund conceded liability for the payment of prescription medication and agreed to pay the bills for Benadryl and Vistaril which had been prescribed. The Workers' Compensation Court found, and neither party disagrees, that the amount in controversy was approximately $300.

Later at trial, the only issues identified in the pretrial order were whether claimant was entitled to recover attorney fees, costs, and the statutory penalty. The only witnesses who testified were the claimant and John Gneckow, a claims examiner employed by the State Fund, who handled claimant's claim.

On August 25, 1991, the court entered Findings of Fact and Conclusions of Law. It found that the State Fund acted unreasonably by ignoring the opinion of claimant's treating physician, and refusing to pay for medicine which he prescribed. On that basis, it concluded that claimant was entitled to costs and a reasonable attorney fee. However, the court concluded that claimant was not entitled to the statutory penalty that can be awarded when payments have been unreasonably delayed or refused.

On September 19, 1991, the court held an additional hearing to determine what would be a reasonable attorney fee award. At that hearing, the only witness who testified was claimant's attorney. No evidence was offered by the State Fund. As a result of that hearing, the court entered its judgment awarding attorney fees. In that judgment, the court acknowledged that claimant's attorney's time was worth $150 an hour, but stated that it could not award that amount "in a $300 fight." On the other hand, the court concluded that the fee should not be the contingent fee provided for in the fee agreement entered into between claimant and her attorney because awarding that amount would make it impossible for claimants to be represented in disputes of this nature. The court found that "$32 an hour will keep the Fund's power in check, and will at the same time not force the attorney into pro bono work."

On appeal, claimant contends that the Workers' Compensation Court erred by failing to award the statutory penalty, and further argues that the trial court's award of attorney fees was unsupported by the evidence and contrary to the law.

The following standards of review apply in this case: "Findings of the Workers' Compensation Court will not be overturned if there is substantial evidence in the record to support them." Kraft v. Flathead Valley Labor and Contractors (1990), 243 Mont. 363, 365, 792 P.2d 1094, 1095. Conclusions of law, "whether the conclusions are made by an agency, workers' compensation court, or trial court," will be upheld if the tribunal's interpretation of the law is correct. Steer, Inc. v. Dep't of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.

The law in effect at the time of claimant's injury establishes her substantive right to benefits under the Workers' Compensation Act. Buckman v. Montana Deaconess Hospital (1986), 224 Mont. 318, 321, 730 P.2d 380, 382. The statute which provided for the imposition of a penalty at the time of claimant's injury was Sec. 39-71-2907, MCA (1978). It provided as follows:

When payment of compensation has been unreasonably delayed or refused, either prior or subsequent to the issuance of an award, the full amount of the order, decision, or award may be increased by 10% of the weekly award. The question of unreasonable delay or refusal shall be determined by the workers' compensation judge, and such a finding constitutes good cause to rescind, alter, or amend any order, decision, or award previously made in the cause for the purpose of making the increase provided herein.

We have previously held that where an insurer acts unreasonably to deny benefits to which a claimant is legally entitled, the statutory penalty should be imposed. Holton v. F.H. Stoltze Land & Lumber Co. (1981), 195 Mont. 263, 267-68, 637 P.2d 10, 13. In this case, the trial court found that the State Fund acted unreasonably. That finding has not been appealed by the State Fund. Therefore, we conclude that claimant was entitled to an award of a penalty of ten percent of one weekly award as provided for in Sec. 39-71-2907, MCA (1978).

The State Fund conceded in its proposed findings and conclusions that claimant's entitlement to attorney fees is based on Sec. 39-71-612, MCA (1978). That statute provided that:

(1) If an employer or insurer pays or tenders payment of compensation under Chapter 71 or 72 of this title, but controversy relates to the amount of compensation due and the settlement or award is greater than the amount paid or tendered by the employer or insurer, a reasonable attorney's fee as established by the division or the workers' compensation judge if the case has gone to hearing, based solely upon the difference between the amount settled for or awarded and the amount tendered or paid, may be awarded in addition to the amount of compensation.

There is a strong presumption in the Workers' Compensation Court that fees awarded to a successful claimant should be in accordance with the approved contract between the attorney and his client. Wight v. Hughes Livestock Co. (1983), 204 Mont. 98, 664 P.2d 303. But,

[i]f the judge does not set a fee in accordance with the contingent fee contract, he shall state with particularity his reasons in writing, based upon...