Selley v. Liberty Northwest Ins. Corp., No. 99-035.

• Docket Nº: No. 99-035.
• Citation: 299 Mont. 127, 998 P.2d 156, 2000 MT 76
• Case Date: March 23, 2000

998 P.2d 156
2000 MT 76
299 Mont. 127

Darci SELLEY, Petitioner and Appellant,
v.
LIBERTY NORTHWEST INSURANCE CORPORATION, Respondent and Respondent/Insurer for Turn of The Century, Inc., Employer

No. 99-035.

Supreme Court of Montana.

Submitted on Briefs September 2, 1999.

Decided March 23, 2000.

998 P.2d 157

Don Edgar Burris, Billings, Montana, For Appellant

Larry W. Jones, Liberty Northwest Insurance Corporation, Missoula, Montana, For Respondent.

Justice WILLIAM E. HUNT, Sr. delivered the Opinion of the Court.

¶ 1 From the Decision and Judgment of the Workers' Compensation Court (WCC), State of Montana, Darci Selley (Selley) appeals. The WCC held that Liberty Northwest Insurance Corporation (Liberty) was not estopped from refusing to recognize and reimburse Selley's treating physician notwithstanding the fact that Liberty had been reimbursing that physician for a period of two years. We reverse and remand.

¶ 2 The dispositive question on appeal is whether the WCC erred in holding that Liberty was not estopped from asserting § 39-71-116(30), MCA (1993), as a defense?

Factual and Procedural Background

¶ 3 This case was submitted to the WCC for decision based on a stipulated set of uncontested facts and exhibits which reveal the following. On January 7, 1995, Selley was injured while working for Turn of the Century, Inc., which was insured at that time by Liberty. Upon submission of Selley's claim, Liberty accepted liability and began to pay both wage loss and medical benefits. When her claim was approved by Liberty, Selley selected Richard A. Nelson, M.D. (Dr. Nelson), a neurology and psychiatry specialist, as her treating physician. Liberty then fully reimbursed Dr. Nelson for his care and

998 P.2d 158

treatment of Selley through the first quarter of 1997. Liberty's claims examiner, Jim Belknap, first learned on January 9, 1997, that Dr. Nelson does not have admitting privileges at any hospital near his medical practice

¶ 4 Up until approximately seven years prior to this case, Dr. Nelson had admitting privileges at both St. Vincent Hospital and Deaconess Hospital in Billings. However, at that time, he resigned his privileges at both hospitals because he had moved his residence to a location near Columbus, Montana. Columbus lies approximately fifty miles, one way, from his Billings office. Because both hospitals required that a doctor reside within a prescribed number of miles of the hospital or be able to reach it within a specified time-limit, Dr. Nelson's new residence precluded him from meeting these requirements. Therefore, he resigned.

¶ 5 Upon discovering in 1997 that Dr. Nelson did not have admitting privileges at any hospital near his practice, Liberty provided notice to Selley that it would refuse further reimbursement to Dr. Nelson on the basis that he did not qualify as Selley's "treating physician" pursuant to § 39-71-116, MCA. Liberty's refusal affected only prospective reimbursement of Dr. Nelson, and Liberty did not refuse payment of any of Dr. Nelson's bills incurred prior to its notice of refusal.

Discussion

¶ 6 Did the WCC err in concluding that Liberty was not estopped from refusing Selley further coverage because Dr. Nelson does not qualify as a treating physician under § 39-71-116(30), MCA (1993)?

¶ 7 We review a workers' compensation decision to determine whether there is substantial evidence to support the court's findings of fact. Houts v. Kare-Mor, Inc. (1993), 257 Mont. 65, 68, 847 P.2d 701, 703. Regarding questions of law, this Court must determine whether the Workers' Compensation Court's interpretation of the law is correct. Dilling v. Buttrey Foods (1991), 251 Mont. 286, 289, 825 P.2d 1193, 1195. Since the facts are not in dispute, the resolution of this appeal turns upon an interpretation of the law.

¶ 8 The disputed statute reads in relevant part:

(30) "Treating physician" means a person who is primarily responsible for the treatment of a worker's compensable injury and is:

(a) a physician licensed by the state of Montana under Title 37, chapter 3, and has admitting privileges to practice in one or more hospitals, if any, in the area where the physician is located.. . . [Emphasis added.]

Section 39-71-116(30), MCA (1993).

¶ 9 As a general matter, estoppel arises when a party through its acts, conduct, or acquiescence, has caused another party in good faith to change its position for the worse. Smith v. Krutar (1969), 153 Mont. 325, 332, 457 P.2d 459, 463. The doctrine of equitable estoppel is grounded in both statute and case law. By statute, the following presumption is deemed conclusive:

the truth of a declaration, act, or omission of a party, as against that party in any litigation arising out of such declaration, act, or omission, whenever he [or she] has, by such declaration, act, or omission, intentionally led another to believe a particular thing true and to act upon such belief. . . .

Section 26-1-601(1), MCA.

¶ 10 Furthermore, we have held that six elements are necessary in order to establish an equitable estoppel claim: (1) the existence of conduct, acts, language, or silence amounting to a representation or concealment of material facts; (2) the party estopped must have knowledge of these facts at the time of the representation or concealment, or the circumstances must be such that knowledge is necessarily imputed to that party; (3) the truth concerning these facts must be unknown to the other party at the time it was acted upon; (4) the conduct must be done with the intention or expectation that it will be acted upon by the other party, or have occurred under circumstances showing it to be both natural and probable that it will be acted upon; (5) the conduct must be relied upon by the other party and lead that

998 P.2d 159

party to act; and (6) the other party must in fact act upon the conduct in such a manner as to change its position for the worse. See Dagel v. City of Great Falls (1991), 250 Mont. 224, 234-35, 819 P.2d 186, 192-93; Elk Park Ranch, Inc. v. Park County (1997), 282 Mont. 154, 165, 935 P.2d 1131, 1137-38. A party must establish all six elements before the doctrine can be invoked. Billings Post No. 1634 v. Montana Dep't of Revenue (1997), 284 Mont. 84, 90, 943 P.2d 517, 520. Equitable estoppel must be established by clear and convincing evidence. Beery v. Grace Drilling (1993), 260 Mont. 157, 163, 859 P.2d 429, 433

¶ 11 The doctrine of equitable estoppel is designed to prevent one party from unconscionably taking advantage of a wrong while asserting a strict legal right, and will be invoked where "justice, honesty, and fair dealing" are promoted. In re Marriage of K.E.V. (1994), 267 Mont. 323, 331, 883 P.2d 1246, 1251. At this point, it is necessary to address Liberty's view that the doctrine of equitable estoppel has no application to the facts of this case because it engaged in no "wrongful conduct." The WCC took a similar position:

The doctrine of equitable estoppel precludes a

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