Watson v. Seekins, 88-98

• Citation: 763 P.2d 328,234 Mont. 309
• Decision Date: 17 October 1988
• Docket Number: No. 88-98,88-98
• Parties: Cyrus Orville WATSON, Claimant and Appellant, v. Kirk SEEKINS, Employer, and State Compensation Insurance Fund, Defendant and Respondent.
• Court: United States State Supreme Court of Montana

Page 328

763 P.2d 328

234 Mont. 309

Cyrus Orville WATSON, Claimant and Appellant, v. Kirk SEEKINS, Employer, and State Compensation Insurance Fund, Defendant and Respondent.

No. 88-98.

Supreme Court of Montana.

Submitted on Briefs Aug. 4, 1988.

Decided Oct. 17, 1988.

Robert W. Gabriel, Great Falls, for claimant and appellant.

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

TURNAGE, Chief Justice.

Claimant appeals an order of the Workers' Compensation Court offsetting his state workers' compensation disability pay by 50 percent of his entire weekly federal disability pay. The issues on appeal are (1) whether the lower court erred in determining that the workers' compensation offset statute, Sec. 39-71-702(2), MCA (1981), was clear and unambiguous on its face; (2) whether the lower court erred in denying Watson attorney fees and costs; (3) whether Watson is entitled to have the statutory penalty of 20 percent assessed against defendant State Fund for unreasonable delay or failure to pay a claim; and (4) whether Watson can argue on appeal that the lower court's construction of the offset statute is unconstitutional when he did not advance that argument at the trial level. We affirm.

On August 31, 1979, appellant, age fifty-six, suffered an industrial accident while working for defendant Seekins which rendered him totally permanently disabled. He then began receiving state disability benefits from the Workers' Compensation State Fund. He was receiving $198.00 per week from the State Fund in 1985. On January 30, 1985, appellant Watson turned sixty-two years old and shortly thereafter applied for early retirement benefits from the Social Security Administration. These monthly benefits, payable at $261.00 per month were lower than full retirement benefits available from Social Security had he chosen to postpone retirement until age sixty-five.

After receiving early retirement benefits for about six months, Watson changed his mind and applied for disability benefits instead. The disability pay was a larger monthly amount but was also subject to the state setoff statute, Sec. 39-71-702(2), MCA (1981). Watson's election of disability pay was accepted by the Social Security Administration, and he began receiving $372.00 per month, an increase of $111.00 per month over the early retirement pay. He also received a lump sum payment of back benefits for disability dating back to the date when he actually turned sixty-two. This back payment effectively made his election to take disability retroactive and eliminated his election to retire early.

In a letter dated August 4, 1986, the Workers' Compensation Division notified Watson that it would be applying the setoff allowed by statute to his weekly disability benefits received from the state government. The setoff (50 percent of his weekly federal benefits) would be deducted from his weekly state disability benefits in order to eliminate the duplication of disability pay. The Division also claimed an overpayment in the amount of $3,461.62, which it wished to recover from Watson.

The result was that Watson suffered a reduction of $42.81 per week from his state disability pay and actually received less monthly money overall due to the setoff than he would have had he stuck with his original election of early retirement.

The Division's computations were as follows:

Watson challenged those computations. He argued that the entire amount of $372.00 disability pay should not be subject to setoff. Rather, he argued, only the $111.00 difference between retirement pay and disability pay should be subject to setoff. Watson argued that he was entitled to retirement pay of $261.00 in his own right which was not subject to setoff and, therefore, only the increased amount of $111.00 could be used in the setoff computations. Under Watson's theory, he would suffer a weekly reduction in state money of only $12.78.

Defendant State Fund argued that the election was a choice entitling Watson to one benefit or the other, but not both. If Watson chose to take disability pay, that pay (the entire amount) was subject to the state statute allowing setoff. State Fund found the statute in question to be plain and unambiguous, stating that where disability pay is given by the federal government it is subject to setoff by the state government.

The Workers' Compensation Court adopted the findings of fact and conclusions of law as determined by the Hearing Examiner and entered its judgment and order on December 21, 1987. The court determined the statute to be clear and unambiguous on its face, affecting the entire amount of federal benefits. Its order provided that the defendant was entitled to an offset in the amount of $42.81 per week based on the entire weekly disability benefits paid to Watson under the Social Security Act. It further found that such an offset would continue for as long as Watson received federal disability pay and that he was neither entitled to the requested attorney fees and costs, nor a 20 percent penalty against the Division for unreasonable refusal or delay in payment. Watson's January 7, 1988, motion for a new trial was denied, and this appeal followed.

Watson's primary issue on appeal is that of statutory construction and legislative intent. Appellant argues that the court misinterpreted the statute; that the statute is ambiguous in that it is susceptible of two interpretations; that where a genuine doubt exists, the ambiguity should be resolved in favor of the injured claimant; and finally that accepting the court's interpretation of the statute would be an unconstitutional violation of the Supremacy Clause, in that it would nullify the effect of the federal disability provisions of the Social Security Act for persons such as Watson.

This Court finds the statute to be clear and unambiguous, affirming the Workers' Compensation Court judgment. Affirmation of the lower court on the merits of the first issue renders the remaining issues of the attorney fees, costs and penalty moot.

I. INTERPRETATION OF THE STATUTE

The offset statute is Sec. 39-71-702(2), MCA (1981). This statute was amended in 1987 and its successor is Sec. 39-71-702(4). However, it is the statute in effect at the time of the injury that sets the standard by which the benefits to the claimant are to be computed. Trusty v. Consolidated Freightways (Mont.1984), 681 P.2d 1085, 41 St.Rep. 973. That statute reads in pertinent part as follows:

In cases where it is determined that periodic disability benefits granted by the Social Security Act are payable because of the injury, the weekly benefits payable under this section [under the state Workers' Compensation Act] are reduced, but not below zero, by an amount equal, as nearly as practical, to one-half the federal periodic benefits for such week, which amount is to be calculated from the date of the disability social security entitlement.

Watson argues that the language, payable because of the injury, refers only to the increased amount of $111.00 per month, which is the difference between the early retirement amount and the disability amount. It is his statutory construction that this is the only "fair" way to read the statute and that any other interpretation is perverse. We disagree.

All statutory construction by courts is an attempt to search out the intent of the legislature. Johnson v. Marias River Electrical Cooperative, Inc. (Mont.1984), 687 P.2d 668, 41 St.Rep. 1528. This Court's role, then is to let the legislative intent control whenever possible. Darby Spar, Ltd. v. Dept. of Revenue (Mont.1985), 705 P.2d 111, 42 St.Rep. 1262.

Watson argues his interpretation is the only fair one because it is the one construed consistently with the legislative intent. According to Watson, the legislative intent is to benefit disabled workers more than merely retired workers. Watson cites Freeman v. Harris (5th Cir.1980), 625 F.2d 1303, and Lindquist v. Brown (8th Cir.1987), 813 F.2d 884, as authority for construing a statute in favor of the claimant by using legislative intent. However, these cases are of little help in determining the legislative intent for the Montana statute in question.

The Freeman case is not dispositive on this issue and is only similar to the case at bar in that the Freeman court interpreted the legislative intent espoused in two federal offset statutes. In Freeman the claimant received benefits from three sources: federal Social Security, state workers' compensation and federal Black Lung benefits. Because both the workers' compensation and Social Security were offset against the Black Lung award, the claimant ultimately received less under the three programs than he would have under only two programs not so heavily offset.

However, the distinction here is that the federal black lung statute required the claimant to simultaneously pursue state workers' compensation funds which triggered the double offset. The court found the congressional intent expressed in the Social Security Act was that the states would be the primary providers of disability benefits to workers and that the federal government would only assist where state programs were inadequate. The result under double offset was to discourage injured miners from seeking state workers' compensation benefits. That result contravened the congressional intent. Additionally, the court found the corresponding legislative intent behind the Black Lung statute was to replace income for injured workers. These two legislative goals could not be met simultaneously in the Freeman case. Thus, the court resolved the tension by letting both offsets stand as authorized by statute but not so as to exceed 100 percent of the state workers' compensation benefits payable to claimant.

These facts do not help us resolve the question of legislative intent for our statute. The required double offset in Freeman is not analogous to the elective single...