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Stevens v. National Union Fire Insurance Company of Pittsburgh

Court of Workers Compensation of Montana

July 17, 1997

PENNY STEVENS Petitioner
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH Respondent/Insurer for KING'S TABLE Employer.

          FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT

          Mike McCarter Judge

         Summary: Insurer accepted liability for claimant's arm and neck injury, but denied medical benefits following exacerbation of cervical condition. Prior to trial, insurer reversed position, authorized surgery, and paid related medical benefits. Claimant refused to drop claims for attorneys fees and penalty.

         Held: Insurer's persistent denial of medical benefits was unreasonable. Three doctors consistently opined her condition was related to the injury. While the claims adjuster suspected another accident caused the exacerbation, she took no affirmative steps to investigate that possibility. Despite the finding of unreasonable conduct, claimant was not entitled to attorneys fees or costs under sections 39-71-611 or -612, MCA (1989) where the claim for benefits was settled without an order of the workers' compensation court. See, Lasar v. E.H. Oftedal & Sons, 222 Mont. 251, 252, 721 P.2d 352 (1986); Yearout v. Rainbow Painting, 222 Mont. 65, 68, 719 P.2d 1258 (1986). Claimant was entitled to a twenty-percent penalty on medical benefits under section 39-71-2907, MCA (1989). Although that statute refers to "an order by the workers' compensation judge" granting benefits, the Supreme Court has found the section ambiguous and construed it to allow penalty in cases where the insurer unreasonably denies benefits even if a claim is settled prior to trial. Mintyala v. State Compensation Insurance Fund, 276 Mont. 521, 527, 917 P.2d 442, 445-446 (1996); Handlos v. Cyprus Industrial Minerals, 243 Mont. 314, 3794 P.2d 702');">17794 P.2d 702, 703-704 (1990).

         Topics:

Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-71-611 and -612, MCA (1989). Despite the finding of unreasonable conduct, claimant was not entitled to attorneys fees or costs under sections 39-71-611 or -612, MCA (1989) where the claim for benefits was settled without an order of the workers' compensation court. See, Lasar v. E.H. Oftedal & Sons, 222 Mont. 251, 252, 721 P.2d 352 (1986); Yearout v. Rainbow Painting, 222 Mont. 65, 68, 719 P.2d 1258 (1986).
Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-71-2907, MCA (1989). Insurer's persistent denial of medical benefits was unreasonable. Three doctors consistently opined her condition was related to the injury. While the claims adjuster suspected another accident caused the exacerbation, she took no affirmative steps to investigate that possibility. Claimant was entitled to a twenty-percent penalty on medical benefits under section 39-71-2907, MCA (1989), even though the insurer acknowledged liability prior to trial. Although the statute refers to "an order by the workers' compensation judge" granting benefits, the Supreme Court has found the section ambiguous and construed it to allow penalty in cases where the insurer unreasonably denies benefits, even if the claim is settled prior to trial. Mintyala v. State Compensation Insurance Fund, 276 Mont. 521, 527, 917 P.2d 442, 445-446 (1996); Handlos v. Cyprus Industrial Minerals, 243 Mont. 314, 3794 P.2d 702');">17794 P.2d 702, 703-704 (1990).
Attorney Fees: Cases Denied. Despite the finding of unreasonable conduct, claimant was not entitled to attorneys fees or costs under sections 39-71-611 or -612, MCA (1989) where the claim for benefits was settled without an order of the workers' compensation court. See, Lasar v. E.H. Oftedal & Sons, 222 Mont. 251, 252, 721 P.2d 352 (1986); Yearout v. Rainbow Painting, 222 Mont. 65, 68, 719 P.2d 1258 (1986).
Penalties: Insurers. Insurer's persistent denial of medical benefits was unreasonable. Three doctors consistently opined her condition was related to the injury. While the claims adjuster suspected another accident caused the exacerbation, she took no affirmative steps to investigate that possibility. Claimant was entitled to a twenty-percent penalty on medical benefits under section 39-71-2907, MCA (1989), even though the insurer acknowledged liability prior to trial. Although the statute refers to "an order by the workers' compensation judge" granting benefits, the Supreme Court has found the section ambiguous and construed it to allow penalty in cases where the insurer unreasonably denies benefits, even if the claim is settled prior to trial. Mintyala v. State Compensation Insurance Fund, 276 Mont. 521, 527, 917 P.2d 442, 445-446 (1996); Handlos v. Cyprus Industrial Minerals, 243 Mont. 314, 3794 P.2d 702');">17794 P.2d 702, 703-704 (1990).

         The trial in this matter was held in Great Falls, Montana, on June 16, 1997. Petitioner, Penny Stevens (claimant), was present and represented by Mr. Richard J. Martin. Respondent, National Union Fire Insurance Company of Pittsburgh (National Union), was represented by Mr. Oliver H. Goe. No transcript of this trial has been prepared.

         Disposition of Motion for Partial Summary Judgment: At the commencement of trial, the Court granted respondent's Motion for Partial Summary Judgment as to the issue of attorney fees and costs. The Court ruled that claimant is not entitled to an award of attorney fees or costs, as a matter of law, pursuant to sections 39-71-611 and -612, MCA (1989). The ruling is reflected in the conclusions of law.

         Exhibits: Exhibits 1, 3 through 12, 16, 17, 19, 22 through 26 and 28 through 35 were admitted without objection. Exhibits 2, 13 through 15, 18, and 27 were admitted over objections. Exhibits 20 and 21 were refused.

         Witnesses and Depositions: Claimant and Paula Vidrine were sworn and testified. In addition, the parties submitted the depositions of claimant and Paula Vidrine for the Court's consideration.

         Issues Presented: The sole issue before the Court is whether National Union unreasonably delayed the payment of medical benefits for claimant thereby entitling her to a penalty pursuant to section 39-71-2907, MCA (1989).

         Having considered the Pretrial Order, the testimony presented at trial, the demeanor and credibility of the witnesses, the depositions, the exhibits, and the arguments of the parties, the Court makes the following:

         FINDINGS OF FACT

         1. Claimant is 36 years old and resides in Great Falls, Montana. She is a high school graduate and has one year of technical college.

         2. Claimant worked in the restaurant sector from age sixteen until her industrial injury in 1991. She is currently employed as a medical secretary at the Gateway Recovery Center.

         3. Claimant suffered a compensable injury in the course and scope of her employment as a cook at King's Table restaurant on February 16, 1991. (Pretrial Order at 1.) Claimant slipped and fell, hitting her arm on a grill and twisting her neck. (Ex. 15.)

         4. At the time of claimant's injury, King's Table was insured by National Union. National Union accepted liability for her claim and paid temporary wage-loss and medical benefits.

         5. Dr. Gary Jimmerson, a chiropractor, initially treated claimant following her injury. (Stevens Dep. at 18.)

         6. Dr. Terry L. Jackson, a physiatrist, began treating claimant in March or April of 1992. (Id. at 18.)

         7. On referral from Dr. Jackson, Dr. D.R. Alzheimer performed an MRI of claimant's cervical spine on April 29, 1992, reporting:

FINDINGS: The discs show no evidence of significant desiccation. There is loss of normal cervical lordosis. The axial images show no evidence of encroachment upon the discs, neural foramina and/or central canal. There is no evidence of a laterally herniated disc identified. The cord itself is unremarkable. I see nothing to suggest Chiari's malformation at this time.
IMPRESSION: 1. Loss of the normal cervical lordosis as described.
2. Otherwise unremarkable cervical spine.

(Ex. 34 at 1.)

         8. In an office note dated July 2, 1992, Dr. Jackson reported the following:

Plain X-rays and MRI of the cervical spine have not demonstrated any significant abnormal findings. There is no evidence of disc herniation on her cervical images.

(Ex. 35 at 1.)

         9. Dr. Jackson determined claimant to be at maximum medical improvement on July 2, 1992. (Id. at 2.)

         10. The Department of Labor and Industry approved the settlement of claimant's workers' compensation claim on November 16, 1992. (Ex. 1.) Claimant reserved medical and hospital benefits in the settlement. (Id.)

         11. Claimant continued chiropractic treatment with Dr. Jimmerson until July 20, 1995. (Ex. 24.) However, in November of 1992, National Union advised claimant and Dr. Jimmerson that it would no longer pay for chiropractic treatment. (Vidrine Dep. at 6-7.) Claimant did not protest National Union's termination of chiropractic benefits and, as a consequence, Dr. Jimmerson did not thereafter provide National Union with his treatment reports.

         12. In 1994 claimant's condition worsened. She contacted Paula Vidrine (Vidrine), the claims adjuster for National Union, on December 15, 1994. (Id. at 9.) Vidrine testified that she told claimant in a telephone conversation that she should provide her with Dr. Jimmerson's records for her review. (Id. at 11.) Claimant did not recall having a telephone conversation with Vidrine in December of 1994 (Stevens Dep. at 23-24) and Dr. Jimmerson's records were not provided to Vidrine at that time. (Vidrine Dep. at 12.) Vidrine did not contact Dr. Jimmerson or make any written request for the records.

         13.Claimant returned to Dr. Jackson on February 1, 1995, complaining of recent "difficulty with increased neck as well as arm pain and numbness in her upper extremities." (Stevens Dep. Ex. 1.) Dr. Jackson noted claimant "has not had any intervening trauma." (Id.) National Union paid for claimant's office visit with Dr. Jackson.

         14.Vidrine received Dr. Jackson's office report in May of 1995, and subsequently requested Dr. Jackson's opinion regarding the relationship between claimant's original injury in 1991 and claimant's current condition. On June 15, 1995, Dr. Jackson responded, stating:

I do think the problems that Ms. Stevens is having at the present time are probably more likely than not related to her previous work related injury. During her visit in February, she was not able to relay to me any difficulty with trauma or any new activities that she was doing, either vocationally or recreationally, that would necessarily account for her development of symptoms.

(Stevens Dep. Ex. 2.)

         15.Following this letter, National Union authorized a new EMG and MRI. Dr. Russell performed an MRI on July 13, 1995, noting:

1. Straightening of the normal cervical lordosis which is unchanged from the last exam.
2. Minimal new disc bulge at C5-6 which is central in location. This does not compress the cord or significantly narrow the spinal canal at the present time.

(Ex. 34 at 2; emphasis added.)

         16. In an office note dated July 31, ...


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