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McCrary v. Liberty Mutual Fire Insurance Co.

Court of Workers Compensation of Montana

March 2, 2018


          Submitted: November 17, 2015





         ¶ 1 Issues Presented: The parties presented two stipulated issues[1] for determination, which the Court restates as follows:

Issue One: Does McCrary satisfy the applicable criteria for entitlement to PTD benefits after the age of retirement as the result of his October 17, 1977, industrial injury to his back?
Issue Two: Do equitable doctrines of estoppel and/or waiver bar McCrary from receiving PTD benefits after the age of retirement for his October 17, 1977, industrial injury to his back?

         ¶ 2 Because this Court's resolution of Issue Two is dispositive of McCrary's entitlement to permanent total disability (PTD) benefits, Issue One is not addressed.


         ¶ 3 On October 17, 1977, Petitioner Robert McCrary sustained an industrial injury to his back in the course and scope of his employment at Missoula White Pine Sash Company (White Pine). McCrary was working at the trim saw "pulling green chain" when he was hit on the right side of his back with a board. His position was a heavy duty position.

         ¶ 4 At the time of the 1977 back injury, White Pine was enrolled in Compensation Plan Number II under the Workers' Compensation Act (WCA) and its insurer was Liberty Mutual Fire Insurance Company (Liberty).

         ¶ 5 Liberty accepted liability for McCrary's October 17, 1977, back injury.

         ¶ 6 At the time of his October 17, 1977, injury, McCrary earned $7.02 per hour and his temporary total disability (TTD) and PTD rate were $174 per week.

         ¶ 7 In 1977, Dr. N.S. Green diagnosed a lumbosacral strain after x-rays of McCrary's lumbar spine were taken.

         ¶ 8 Following the 1977 injury, McCrary returned to work at White Pine. However, as a result of the injury, he was unable to perform his time-of-injury position, and as a consequence suffered actual wage loss and actual loss of earning capacity. Liberty ultimately paid McCrary the maximum permanent partial disability (PPD) award for this injury.

         ¶ 9 White Pine provided McCrary with a "sheltered" work environment. This employment did not reflect McCrary's ability to hold a job in the normal open labor market at any time after his back injury precluded him from all but sedentary to light-lifting job duties.

         ¶ 10 McCrary alleges that because of physical limitations caused by his back injury, he was unable to return to his job of injury and had no prospect of finding regular employment of any kind in the normal open labor market.

         ¶ 11 Since the 1977 back injury, no doctor has released McCrary to return to work at regular employment in the normal open labor market.

         ¶ 12 Liberty has never identified regular employment of any kind in the normal open labor market which McCrary could perform after his 1977 back injury.

         ¶ 13 On November 29, 1983, McCrary suffered a work-related injury when he slipped and fell on an icy road and sustained a right patellar fracture. At that time, McCrary worked for White Pine as a night driver.

         ¶ 14 Liberty accepted liability for the November 29, 1983, right knee injury.

         ¶ 15 At the time of the 1983 injury, McCrary earned $10.43 per hour. McCrary's 1983 TTD and PTD total rate were $277 per week.

         ¶ 16 After both the 1977 and 1983 industrial injuries, McCrary continued his employment with White Pine.

         ¶ 17 At some point in the 1980s, Liberty began adjusting McCrary's claim for his 1977 back injury and his 1983 knee injury out of the same file.

         ¶ 18 On May 11, 1984, Dr. Sterling noted that there was "no evidence per permanent partial impairment" concerning McCrary's knee.

         ¶ 19 By 1989, McCrary's patellar fracture had healed.

          ¶ 20 On November 12, 1996, McCrary's employment with White Pine ended because White Pine ceased operations and terminated all employees. This was McCrary's last day of employment of any kind.

         ¶ 21 After White Pine ceased operation, McCrary stated in response to discovery requests:

Missoula White Pine Sash terminated its operations in Missoula on or about November 12, 1996. Irrespective of the plant closure, Petitioner had (prior to closure) undertaken treatment for his back and knee condition and could not have continued this work in any event due to his back and knee symptoms and limitations. Petitioner could not have continued to tolerate the standing, walking, lifting, turning and other physical requirements of his job.

         Within those discovery responses, McCrary asserted that he considered his back or knee symptoms and limitations a reason for his permanent total disability.

         ¶ 22 McCrary has borderline intellectual functioning, performing better than 4% of the general population on standardized testing. He also suffers from an anxious adjustment disorder and chronic avoidant personality disorder together with stuttering and speech articulation problems which profoundly interfere with his ability to interact with others.

         ¶ 23 McCrary is only able to read single words and short phrases. He has difficulty: reading anything involving sentences or paragraphs; performing arithmetic involving fractions, decimals or percentages; following verbal instructions; performing tasks with problem solving; and learning a more complex task. He has a slow work speed; he is slow to learn a new task and is anxious and fearful when confronted with a new task.

         ¶ 24 McCrary also has difficulty hearing, and difficulty tolerating sitting and standing. He can lift only in the sedentary to light physical demand level with limited endurance and stamina.

         ¶ 25 On July 22, 1997, McCrary requested that Liberty pay PTD benefits retroactive to November 13, 1996. He alleged that he had not worked since November 12, 1996, and that he was unable to work. Specifically, McCrary's attorney wrote:

As you are aware, Mr. McCrary suffered knee and back injuries while employed by White Pine Sash Company. Dr. Robins has reported that knee symptoms aggravate Mr. McCrary's back. Mr. McCrary has not worked since November 12, 1996, and is currently unable to work. We believe he suffers permanent total disability. In any event, he is entitled to permanent partial disability benefits since the date of injury. We believe this entitlement is the maximum permissible and that it is presently past due and payable. Please acknowledge and pay permanent total disability benefits retroactive to and including November 13, 1996.

         ¶ 26 On July 28, 1997, McCrary filed a Petition for Hearing[3] regarding his October 17, [4] 1977, back injury and November 29, 1983, right knee injury. McCrary contended: "due to the above described industrial injuries, he became permanently totally disabled as of November 13, 1996." In his prayer for relief, McCrary sought, "[a]n Order stating the nature and extent of Petitioner's disability and entitlement through the time of hearing on this petition, " and his attorney fees and costs.

         ¶ 27 In its Response to the July 28, 1997, Petition for Hearing, Liberty contended that McCrary was not permanently totally disabled as a result of any work-related injuries, and that he was not entitled to any PTD or PPD benefits. Liberty also raised the affirmative defenses of laches and equitable estoppel.

         ¶ 28 In the fall of 1997, before any hearing on the Petition, Liberty agreed to pay McCrary TTD benefits under a reservation of rights while awaiting the result of McCrary's claim for Social Security disability benefits. Thereafter, on October 15, 1997, McCrary's attorney Rex Palmer wrote to Liberty's attorney, Larry Jones, stating: "[McCrary's] wages at the time of his injury were $10.43 per hour, 40 hours per week. Sixty-six percent of this exceeds the $277 per week total disability rate."

         ¶ 29 On December 12, 1997, Dr. Sterling assessed McCrary at his attorney's request. Dr. Sterling restricted McCrary from frequent kneeling, squatting, heavy lifting, and carrying. He restricted lifting to 10 pounds infrequently and carrying to 20 pounds occasionally. Dr. Sterling also rated McCrary's impairment:

It is considered that the patient has 5% permanent partial impairment of the lower extremity which is equivalent to 3% permanent partial impairment of the whole person as regards his patella fracture and his early patellofemoral arthritis. Patient has had a documented lumbar strain as evidence by his injury reports. There would not appear to be any impairment related to such injury. It is felt that he has DRE impairment category II as regards his multilevel degenerative disc disease of the lumbar spine which qualifies for 5% permanent partial impairment of the whole person. There is not a clear cut connection in the clinical record to connect this to a work injury per se. I have listed . . . additional restrictions as regards climbing and jumping and repetitive carrying as regards his work restrictions over and above the functional capacities evaluation at the work center.

         At all times since McCrary's 1977 back injury, Liberty has accepted liability for and paid for all the medical care for McCrary's back including his ongoing multilevel degenerative disk disease and related chronic pain.

         ¶ 30 On December 19, 1997, Margot Hart, Rehabilitation Consultant, asked Dr. Sterling whether McCrary was permanently and totally disabled from gainful employment of any kind due to his physical condition. Dr. Sterling wrote, "No-[b]ut, considering all conditions, the answer would be yes." Hart also asked Dr. Sterling whether McCrary's back condition was related to his knee condition. Dr. Sterling wrote, "Yes, insofar as knee pain & resulting limp has the potential to aggravate a back problem."

         ¶ 31 On October 9, 1998, Dr. Sterling opined that McCrary was not employable.

         ¶ 32 On June 29, 1999, Psychologist Patricia L. Webber, PhD, completed a psychological evaluation of McCrary. In her Evaluation Summary, Dr. Webber stated:

Work activities will be limited to simple, routine tasks. He would not be expected to comprehend and follow through on complex, detailed, or abstract instructions. He would not be expected to be able for [sic] understand complex social situations and therefore be limited in his ability to interact with co-workers and supervisors. He requires simplified verbal instructions and longer than average amount of time to process information.

         ¶ 33 On August 11, 1999, McCrary returned to Dr. Sterling for a check-up. Dr. Sterling's impressions were: "healed patella fracture right knee with patellofemoral arthritis; bipartite patella."

         ¶ 34 McCrary filed for Social Security disability benefits and alleged he was entitled to SSDI benefits as a result of both his back and knee injuries. On September 20, 1999, McCrary was found to be disabled pursuant to Social Security rules retroactive to February 28, 1998. His benefit rate was $1, 079.50 per month.

         ¶ 35 Until October 12, 1999, Liberty paid McCrary's TTD benefits under a reservation of rights. Effective October 13, 1999, Liberty withdrew its reservation of rights and continued to pay McCrary TTD benefits.

         ¶ 36 On October 13, 1999, Liberty's attorney wrote to McCrary's attorney concerning the Social Security benefits awarded the previous month. The purpose was to clarify whether McCrary disputed Liberty's entitlement to an offset as the result of the Social Security award. Specifically, Liberty would be entitled to an offset only if the award was based on either McCrary's knee injury or his back injury, or both. Liberty's letter references McCrary's claim WC687-00704, which is the claim file within which Liberty adjusted and continues to adjust McCrary's claims for both his back and knee.

         ¶ 37 Effective September 27, 2000, Liberty began to pay McCrary PTD benefits at the rate of $277 per week.

         ¶ 38 On September 19, 2001, McCrary began treatment with Dr. James R. Burton, an orthopedic surgeon, for low-back problems. On February 14, 2005, in response to written questions by Liberty, Dr. Burton wrote that McCrary: suffers from "[s]ignificant" degenerative disk disease at multiple levels, spondylolisthesis and chronic pain; should see his doctor every 6 months for life; may require surgery although it is not expected; requires pain medication for his back (Hydrocodone and Bextra), muscle spasm medication (Flurazepan), and sleep medication (Dalmane) for life; TENS Unit permanently; and a back brace for the rest of his life.

         ¶ 39 On July 10, 2006, McCrary filed a Petition for Hearing.[5] McCrary contended that the parties resolved their dispute over his PTD status and that he was now entitled to his attorney fees on those benefits paid and to be paid in the future pursuant to Madill v. State Comp. Ins. Fund.[6] Specifically, McCrary stated:

[T]he parties resolved that particular controversy (re: Petitioner's status as PTD) and Respondent has paid Petitioner total disability benefits continuously since that time. As a result of settling this controversy, Petitioner is entitled to his attorney fees on those benefits paid and to be paid in the future.

         In his prayer for relief, McCrary sought his attorney fees on his benefits, and his attorney fees incurred in obtaining his attorney fees.

         ¶ 40 In its Response to the July 10, 2006, Petition for Hearing, Liberty contended that McCrary was not entitled to attorney fees on benefits paid to date nor in the future, and that he was not entitled to attorney fees or costs for the present petition.

         ¶ 41 In early 2007, a question arose about various gaps during which Liberty had not paid McCrary total disability benefits while the evidence demonstrated that McCrary had been unemployed and totally disabled. On February 8, 2007, Palmer wrote Jones a letter identifying the gaps and applying the weekly rate of $277 which Liberty had been paying to McCrary since before it withdrew its reservation of rights effective October 13, 1999. Concerning the first "gap, " November 13, 1996, through October 5, 1997, Palmer's letter states that the rate for PTD was $277 per week because Social Security did not begin until August 1998. The total amount of PTD requested was then $13, 333.70. The associated attorney fees were said to be $3, 333.70 pursuant to Madill, and associated costs with the underlying claim were about $1, 500.

         ¶ 42 Liberty paid PTD benefits at the rate of $277 per week, less SSDI offset, until McCrary reached his age of retirement.

         ¶ 43 On March 23, 2007, Palmer wrote to Debbie Daniels at Liberty regarding the PTD payments. The letter provides, in part, as follows:

Dear Debbie:
I am writing to follow up on your recent discussions. Since we spoke, I have received your payment of $13, 334 to Mr. McCrary and $3, 333 to myself. As you know, this covers permanent total disability benefits between November 12, 1996, and October 15, 1997, a total of 48 weeks. Thank you for your assistance on this portion of the adjustments required by Madill (1997).
. . . .
Next, Liberty has not paid fees on the benefits which it paid (and will pay) on total disability benefits from October 15, 1997, through retirement age of age 66 which is June 17, 2009. This can be broken down into two time frames:
I. $11, 476.11 From 10/15/97 until 8/1/98 @ $277/week when the social security offset began (a total of 41.43 weeks). [Referring to the weekly rate of $277 which Liberty had been paying to Petitioner for years.]
II. $86, 631.93 From 8/1/98 until retirement age of 66 on 6/17/09 ...

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