Stewart v. Liberty Nw. Ins. Corp.

• Decision Date: 23 April 2013
• Docket Number: No. DA 12–0273.,DA 12–0273.
• Citation: 370 Mont. 19,299 P.3d 820
• Parties: Sharon STEWART, Petitioner, Appellee, and Cross–Appellant, v. LIBERTY NORTHWEST INSURANCE CORPORATION, Respondent/Insurer and Appellant.
• Court: Montana Supreme Court

370 Mont. 19

299 P.3d 820

Sharon STEWART, Petitioner, Appellee, and Cross–Appellant,

v.LIBERTY NORTHWEST INSURANCE CORPORATION, Respondent/Insurer and Appellant.

No. DA 12–0273.

Supreme Court of Montana.

Submitted on Briefs Feb. 20, 2013.

Decided April 23, 2013.

For Appellant: Kelly M. Wills, Kathleen L. DeSoto, Garlington, Lohn & Robinson, PLLP, Missoula, Montana.

For Appellee and Cross–Appellant: Michael J. San Souci, Attorney at Law, Bozeman, Montana.

Justice LAURIE McKINNON delivered the Opinion of the Court.

[370 Mont. 20]¶ 1 Liberty Northwest Insurance Corporation (Liberty) appeals an order of the Workers' Compensation Court (WCC) determining that Sharon Stewart is entitled to continued payment for her pain medication. Stewart cross-appeals the WCC's determination that she is not entitled to attorneys' fees or the statutory penalty.

¶ 2 We have consolidated the appeal and cross-appeal issues into the following three issues:

¶ 3 1. Whether the WCC erred when it determined that Stewart was entitled to continued payment for the pain patches prescribed by her treating physician.

¶ 4 2. Whether the WCC erred when it determined that Stewart was not entitled to reimbursement for her attorneys' fees.

¶ 5 3. Whether the WCC erred when it failed to impose the statutory penalty on Liberty, pursuant to § 39–71–2907, MCA.¹

Factual and Procedural Background

¶ 6 On August 26, 2002, Stewart suffered an injury in the course and scope of her employment with Gallatin Laundry Company, Inc. (Gallatin). Liberty, which insured Gallatin, accepted liability for Stewart's injury and paid wage loss and medical benefits with an 18% whole person impairment rating.

¶ 7 Stewart's initial treating physician, Dr. John Campbell, diagnosed her injury as a “probable medial meniscal tear” of the right knee. Stewart underwent two arthroscopic surgeries over the next few months, but she continued to have issues with pain and range of motion in her knee.

¶ 8 In 2003, Dr. Lowell Anderson examined Stewart. He noted that she continued to have right knee pain with an “unknown etiology.” Dr. Anderson listed several possible causes for her pain including a “possible saphenous nerve neuroma.” Dr. Anderson assigned Stewart a 35% impairment rating based on his opinion that Stewart's physical findings “most closely resemble the diagnostic findings in reflex sympathetic dystrophy.” Based on Dr. Anderson's diagnosis, Stewart filed a petition with the WCC for an increased impairment rating.

¶ 9 An evidentiary hearing on Stewart's petition was held on August 9, 2006. Despite his earlier statements, Dr. Anderson testified in his deposition in preparation for the hearing, that he did not know how Stewart's saphenous nerve could have been injured during her surgeries, and that, while there was a good chance that Stewart suffered from a pain complex, he could not point to any medical evidence supporting the conclusion that there was a relationship between Stewart's surgeries and her pain symptoms.

¶ 10 The WCC, in a decision entered September 14, 2007, determined that Stewart failed to carry her burden of proving causation, thus the court denied her request for an increased impairment rating. Stewart did not appeal the WCC's decision.

¶ 11 On March 12, 2008, Stewart was informed by her pharmacist that Liberty would no longer approve or cover the expense of the pain patches that she had been using for the past several years. This determination was initiated without any advance notice or warning to Stewart or her counsel.

¶ 12 On March 26, 2008, Stewart filed her Petition for Emergency or Expedited Declaratory Relief to Reinstate Medical Benefits. In her petition, Stewart sought reinstatement of medical benefits for the Lidoderm pain patches for her knee as well as for attorneys' fees and penalties for Liberty's failure to provide benefits to cover the patches.² In support of her request for reinstatement of these benefits, Stewart had her medical records reviewed by Dr. Clifford Wheeless, an orthopedic surgeon licensed in North Carolina. Dr. Wheeless opined that more probably than not, either Stewart's original knee injury or her resulting surgery were “absolutely” the cause of the chronic pain condition from which Stewart now suffers.

¶ 13 After the WCC denied Liberty's Motion for Judgment on the Pleadings or Alternatively Rule 12(b)(6) Motion to Dismiss as well as Liberty's Motion for Summary Judgment, the parties submitted the case to the WCC on a stipulated record. The WCC issued its Findings of Fact, Conclusions of Law and Judgment on April 11, 2012, wherein the court determined that Stewart had met her burden of showing that her knee pain and her need for medication for that pain, was causally related to her industrial injury and subsequent knee surgery, and that she was entitled to payment for her pain medication. The WCC also determined that Stewart was not entitled to her attorneys' fees or to the statutory 20% penalty pursuant to § 39–71–2907, MCA.

¶ 14 In addition, the WCC noted in its judgment that in Stewart's original proceeding, although Dr. Anderson believed there was a causal connection between the knee surgery and the pain, he could not provide a definite opinion as to how that connection existed. In contrast, Dr. Wheeless testified in the current proceeding that in his medical opinion either Stewart's original knee injury or her resulting surgery were “absolutely” the cause of the chronic pain condition from which she now suffers.

¶ 15 Liberty appeals the WCC's determination that Stewart is entitled to continued payment of benefits for the pain patches. Stewart cross-appeals the WCC's decision denying Stewart's request for attorneys' fees and for payment of the statutory penalty.

Standard of Review

¶ 16 We review the WCC's conclusions of law to determine whether they are correct. Keller v. Liberty Northwest, Inc., 2010 MT 279, ¶ 20, 358 Mont. 448, 246 P.3d 434 (citing Schmill v. Liberty Northwest Ins. Corp., 2009 MT 430, ¶ 8, 354 Mont. 88, 223 P.3d 842;Lanes v. Mont. State Fund, 2008 MT 306, ¶ 16, 346 Mont. 10, 192 P.3d 1145). In addition, we review the WCC's findings of fact to determine whether they are supported by substantial credible evidence. Keller, ¶ 20 (citing Schmill, ¶ 8;Lanes, ¶ 16, 192 P.3d 1145;Van Vleet v. Mont. Ass'n of Counties Workers' Comp. Trust, 2004 MT 367, ¶ 9, 324 Mont. 517, 103 P.3d 544).

Issue 1.

¶ 17 Whether the WCC erred when it determined that Stewart was entitled to continued payment for the pain patches prescribed by her treating physician.

¶ 18 Liberty maintains that Stewart's petition in this case focused on whether her knee pain was causally connected to her industrial injury. Liberty contends that the issue of causation of Stewart's knee pain was already litigated and decided in a prior proceeding, thus Stewart is collaterally estopped from challenging the WCC's prior conclusion on causation. Conversely, Stewart argues that Liberty's collateral estoppel defense fails because, contrary to Liberty's contentions, the identical issue was not litigated in the prior proceeding.

¶ 19 The doctrine of collateral estoppel, “which embodies the concept of ‘issue preclusion,’ ” bars a party from re-litigating an issue where that issue has been litigated and determined in a prior suit. Lorang v. Fortis Ins. Co., 2008 MT 252, ¶ 65, 345 Mont. 12, 192 P.3d 186 (citing Baltrusch v. Baltrusch, 2006 MT 51, ¶ 15, 331 Mont. 281, 130 P.3d 1267;State v. Ditton, 2006 MT 235, ¶ 40, 333 Mont. 483, 144 P.3d 783). Collateral estoppel “favors a definite end to litigation” and prevents parties “from incessantly waging piecemeal, collateral attacks against judgments.” Baltrusch, ¶ 15 (citing Kullick v. Skyline Homeowners Ass'n, Inc., 2003 MT 137, ¶ 17, 316 Mont. 146, 69 P.3d 225;Olympic Coast Inv., Inc. v. Wright, 2005 MT 4, ¶ 26, 325 Mont. 307, 105 P.3d 743). Moreover, collateral estoppel “deter[s] plaintiffs from splitting a single cause of action into more than one lawsuit, thereby conserving judicial resources and encouraging reliance on adjudication by preventing inconsistent judgments.” Baltrusch, ¶ 15 (citing Smith v. Schweigert, 241 Mont. 54, 59, 785 P.2d 195, 198 (1990); Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 415, 66 L.Ed.2d 308 (1980)).

¶ 20 We apply the following four-part test to determine whether collateral estoppel bars relitigation of an issue: (1) the identical issue raised was previously decided in a prior adjudication; (2) a final judgment on the merits was issued in the prior adjudication; (3) the party against whom collateral estoppel is now asserted was a party or in privity with a party to the prior adjudication; and (4) the party against whom preclusion is asserted must have been afforded a full and fair opportunity to litigate any issues which may be barred. Baltrusch, ¶ 18.

¶ 21 We have held that the most crucial element of collateral estoppel is the identity of issues. Watkins Trust v. Lacosta, 2004 MT 144, ¶ 28, 321 Mont. 432, 92 P.3d 620 (citing Fadness v. Cody, 287 Mont. 89, 96–97, 951 P.2d 584, 588–89 (1997)). In order to satisfy this element, the identical issue or “precise question” must have been litigated in the prior action. Watkins Trust, ¶ 28 (citing Fadness, 287 Mont. at 96–97, 951 P.2d at 588–89). The mere fact that each action arises from the same transaction does not necessarily mean that they each involve the same issues. Watkins Trust, ¶ 28 (citing Fadness, 287 Mont. at 96–97, 951 P.2d at 588–89).

¶ 22 To determine whether the issues decided in the prior adjudication are identical to those presented in the present case, “we compare the pleadings, evidence and circumstances surrounding the two actions.” Baltrusch, ¶ 25 (quoting Holtman v. 4–G's Plumbing & Heating, Inc., 264 Mont. 432, 439, 872 P.2d 318, 322 (1994)).

¶ 23 In Lund v. State Compensation Mut. Ins. Fund, 263 Mont. 346, 868 P.2d 611 (1994), we held that because the question of petitioner's entitlement to...