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Washington v. State Compensation Insurance Fund

Court of Workers Compensation of Montana

June 23, 2000

ROBERT O. WASHINGTON Petitioner
v.
STATE COMPENSATION INSURANCE FUND Respondent/Insurer for HAROLD CHRISTELEIT Employer.

          Submitted: February 28, 2000

          FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT

          Mike McCarter, Judge.

         Summary: Claimant, who was seriously injured through electrocution in 1975, had recovered from a third party, leading to a 1977 Order Determining Subrogation Interest from the DOL. In 1998, claimant sought to set aside the Subrogation Order on the basis of the "made whole" doctrine articulated by the Supreme Court in cases decided after the original order. While that matter was pending before the DOL, State Fund acquiesced and agreed to reimburse claimant for $123, 014.73 it had collected in subrogation through withholding benefits and to pay full benefits in the future without deduction. The present petition was filed to resolve issues of attorneys' fees and penalty.

         Held: Attorneys fees not awarded where the DOL hearing officer's denial of the insurer's motion for summary judgment, after which the insurer acceded to claimant's position, was not an adjudication, a requirement for attorneys' fees under 92-616, RCM (1974). Under 92-824.1, RCM (1947), penalty awarded where insurer, between 1987 and 1994, paid medical expenses at rate of 34.15% despite DOL order that it pay 100% and later claim reimbursement. Conduct in derogation of DOL order was unreasonable. Penalty not awarded, however, on insurer's failure to reduce social security offset after cessation of social security auxiliary payments when claimant's children were grown where claimant had been notified of offset and could have informed insurer the auxiliary benefits had terminated.

         Topics:

Constitutions, Statutes, Regulations and Rules: Montana Code: 92-616, RCM (1974). Attorney fees not awarded where DOL hearing officer's denial of insurer's motion for summary judgment, after which insurer acceded to claimant's position, was not adjudication, a requirement for award of attorneys fees under 92-616, RCM (1974).
Constitutions, Statutes, Regulations and Rules: Montana Code: 92-824.1, RCM (1974). Under 92-824.1, RCM (1947), penalty awarded where insurer, between 1987 and 1994, paid TTD claimant's medical expenses at rate of 34.15% despite DOL order that it pay 100% and later claim reimbursement under subrogation order. Conduct in derogation of DOL order unreasonable. Even though insurer would later be entitled to reimbursement, claimant was deprived of immediate monies. Penalty not awarded, however, on insurer's failure to reduce social security offset after cessation of social security auxiliary payments when claimant's children were grown where claimant had been notified of offset and could have informed insurer the auxiliary benefits had terminated.
Penalties: Insurers. Under 92-824.1, RCM (1947), penalty awarded where insurer, between 1987 and 1994, paid TTD claimant's medical expenses at rate of 34.15% despite DOL order that it pay 100% and later claim reimbursement under subrogation order. Conduct in derogation of DOL order unreasonable. Even though insurer would later be entitled to reimbursement, claimant was deprived of immediate monies. Penalty not awarded, however, on insurer's failure to reduce social security offset after cessation of social security auxiliary payments when claimant's children were grown where claimant had been notified of offset and could have informed insurer the auxiliary benefits had terminated.

         ¶1 The trial in this matter was held on January 31, 2000, in Billings, Montana. Petitioner, Robert O. Washington (claimant), was present and represented by Mr. Patrick R. Sheehy. Respondent, State Compensation Insurance Fund (State Fund), was represented by Mr. Greg E. Overturf. A trial transcript has not been prepared.

         ¶2 Motion for Partial Summary Judgment and Post-trial Briefs: The parties filed cross-motions for partial summary judgment regarding the claimant's request for attorney fees. The matter was not decided before trial and the Court granted the parties additional time to submit post-trial briefs regarding both the attorney fees and penalty. The final brief was filed and the matter deemed submitted on February 28, 2000. The merits of the motion for summary judgment are addressed and decided in the present decision.

         ¶3 Exhibits: Exhibits 1 though 76 were admitted without objection.

         ¶4 Witnesses and Depositions: Patty Washington and Mike Welsh testified. No depositions were submitted.

         ¶5 Issues Presented: The issues as set forth in the Pretrial Order are:

• Whether Petitioner is entitled to an award of reasonable attorneys' fees and costs from the Respondent.
• Whether Petitioner is entitled to the 10% penalty from the Respondent.

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

         FINDINGS ...


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