Putnam v. Castle Mountain Corp.

702 P.2d 333, 216 Mont. 306, 1985 Mont. LEXIS 801
Montana Supreme Court·Decided June 13, 1985·No. No. 84-323·Published·Cited by 1 cases

Opinion

MR. JUSTICE WEBER

delivered the Opinion of the Court.

This is an appeal from the order of the Workers’ Compensation Court granting partial summary judgment. The appeal challenges the court’s refusal to apply the statutory penalty to medical benefits and a portion of the weekly temporary total disability benefits. We [308]*308modify a portion of the order and remand the cause for further proceedings.

The issues are:

1. Does the penalty portion of Sec. 39-71-2907, MCA, apply to medical benefits?

2. How should the penalty provisions of Sec. 39-71-2907, MCA, be applied to the following:

(a) Temporary total disability benefits from the date of injury on October 6, 1981 to July 25, 1983, which were due on July 25, 1983 and not paid until after October 11, 1983.

(b) Medical benefits due on July 25, 1983 and not paid until after October 11, 1983.

3. Did the temporary total disability rate awarded the claimant properly include all wages earned at the time of his injury?

There is a dispute as to the identity of the employer of the claimant. The Workers’ Compensation Court found that claimant ‘was the employee of either Nielsen or the defendant Castle Mountain Corporation.’ The respondent in this proceeding is State Compensation Insurance Fund (State Fund), which has agreed to accept liability for the claimant’s claim with a reservation of rights against Castle Mountain Corporation and its insurance carrier. We do not rule upon which party was the employer of the claimant.

Claimant suffered injuries in two different unrelated accidents. He was injured on January 16, 1981, while employed by a different employer as a truck driver, receiving weekly wages of $340 based upon a rate of $8.50 per hour. As a result of that unrelated accident, claimant received temporary total compensation benefits of $219 per week from January 16, 1981 to on or about November 10, 1981. On October 6,1981, while employed for a few days by Leonard Nielsen, claimant was severely injured when a dump truck ran over him.

Initially, the State Fund denied the claim for the October 6, 1981 accident. The undisputed findings of fact by the Workers’ Compensation Court include the following:

1. In July 1981, the State Fund sent Nielsen (employer) a premium statement for April 1 to June 30, 1981. That statement notified Nielsen that payment of the amount due was to be made within 30 days of the statement or coverage would be cancelled.

2. On September 2, 1981, following non-payment by Nielsen, the State Fund sent Nielsen a “courtesy notice” stating that his coverage was scheduled for cancellation on October 1, 1981.

[309]*3093. On October 8, 1981 (2 days after claimant’s injury), Nielsen’s payment was received by the State Fund.

4. Through some type of a mix-up within the State Fund, the payment was not properly noted and Nielsen’s coverage was cancelled.

5. At the time of the claimant’s accident, it was the policy of the State Fund to allow an employer a ten day grace period from the date of cancellation. (Nielsen’s payment on October 8 was made within the ten day period from the cancellation date of October 1, 1981.)

6. On October 26, 1981, the claimant’s attorney forwarded a claim for compensation in which Nielsen was listed as employer.

7. By letter dated October 19, 1981, the Workers’ Compensation Division advised claimant’s attorney that Nielsen was uninsured.

The Workers’ Compensation Court also found that there was no further communication between the Division or the State Fund and claimant for approximately 17 months. Claimant’s attorney called State Fund on March 18, 1983, and received a letter advising that the Nielsen’s policy was cancelled by State Fund on October 1, 1981 for failure to pay the premiums. Claimant filed a petition for emergency hearing. At that point, the State Fund started an inquiry into its prior determination on the question of coverage. On July 25, 1983, the Bureau Chief of the State Fund was advised that Nielsen’s coverage was in effect on October 6, 1981. The State Fund determined that it should accept liability for the claimant’s claim. Various procedural steps followed, and the State Fund gave a number of assurances regarding acceptance of liability and its willingness to pay both compensation and medical benefits.

On October 11, 1983, the Workers’ Compensation Court heard oral argument on the case and ordered the State Fund to make payments of both medical benefits and temporary total disability benefits. The court then concluded that the 1981 denial of liability for claimant’s claim was not unreasonable within the meaning of the penalty statute, section 39-71-2907, MCA. However, the court also reached the following conclusions:

“Despite its continued agreement to do so, the State Fund had not paid compensation and medical benefits to the claimant as of the date of oral argument. This delay was unreasonable, and invites a penalty. The difficulty lies in determining at what point the State Fund should have reasonably realized its error and promptly tendered these benefits ....
[310]*310“The Fund acted promptly to ascertain the truth of the improper cancellation allegation found in the Petition, but its delay from July 25,1983, to the order of benefits (October 11, 1983) was unreasonable. Therefore a 20% penalty shall be assessed to temporary total benefits due the claimant during that period.”

The Court then adjudged that claimant was entitled to a 20% increase in his temporary total disability benefits from July 25, 1983 until October 11, 1983.

I

Does the penalty portion of section 39-71-2907, MCA apply to medical benefits?

The pertinent portion of section 39-71-2907, MCA is:

“When payment of compensation has been unreasonably delayed or refused by an insurer, either prior or subsequent to the issuance of an order by the workers’ compensation judge granting a claimant compensation benefits, the full amount of the compensation benefits due a claimant, between the time compensation benefits were delayed or refused and the date of the order granting a claimant compensation benefits, may be increased by the workers’ compensation judge by 20%.”

The issue has just been resolved by the case of Carlson v. Cain (Mont. 1985), [216 Mont. 129,] 700 P.2d 607, 42 St.Rep. 695. In that case, we concluded that an award for medical payments may be increased by the Workers’ Compensation Court pursuant to the foregoing statute.

II

How should the penalty provisions of section 39-71-2907, MCA be applied to the following:

(a) Temporary total disability benefits from the date of injury on October 6, 1981 to July 25, 1983, which were due on July 25, 1983 and not paid until after October 11, 1983.

(b) Medical benefits due on July 25, 1983 and not paid until after October 11, 1983.

As to (a) weekly benefits from October 6,1981 to July 25, 1983, the lower court found a reasonable explanation for the failure to pay. It therefore concluded that the delay in payment up to July 25, 1983 was not a proper basis for penalty. In its order of partial summary [311]

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Putnam v. Castle Mountain Corp., 702 P.2d 333, 216 Mont. 306, 1985 Mont. LEXIS 801 (Mo. 1985).

702 P.2d 333 (Putnam v. Castle Mountain Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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