Continental Ins. Co. v. Horton

No. 79-112 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980

CONTINENTAL INSURANCE COMPANY and RAYMOND CORCORAN TRUCKING, Employer, Defendant and Appellant,

RICHARD B. HORTON, Claimant and Respondent.

Appeal from: Workers' Compensation Court Honorable William E. Hunt, Judge presiding. Counsel of Record: For Appellant: Pedersen, Herndon, Harper & Munro, Billings, Montana For Respondent: William T. Kelly, Billings, Montana

Submitted on briefs: April 24, 1980 Decided : JUL 2 2 1~ Filed: JUL 2 2 I Y B ~

Mr. C h i e f J u s t i c e F r a n k I. Haswell d e l i v e r e d t h e O p i n i o n of the Court.

C o n t i n e n t a l I n s u r a n c e Company a p p e a l s f r o m a n o r d e r o f the Workers' C o m p e n s a t i o n C o u r t d e n y i n g t h e I n s u r a n c e Company's motion f o r an evidentiary hearing p r i o r t o a j u d i c i a l determination of a n award of a t t o r n e y f e e s and c o s t s .

R i c h a r d B. H o r t o n ( c l a i m a n t ) was i n j u r e d i n a n i n d u s t r i a l a c c i d e n t o n May 2 8 , 1975. H i s i n j u r y a r o s e o u t of and i n t h e c o u r s e of h i s employment. Initially, t h e I n s u r a n c e Company p a i d c l a i m a n t h i s p r o p e r d i s a b i l i t y r a t e and c e r t a i n m e d i c a l expenses. During approximately t h e next 18 months t h e claimant sought addit i o n a l m e d i c a l a s s i s t a n c e f o r h i s i n j u r y and u n d e r w e n t two operations. By J u n e , 1 9 7 7 , t h e I n s u r a n c e Company w a s r e f u s i n g t o pay c e r t a i n m e d i c a l e x p e n s e s i n c u r r e d by c l a i m a n t . They a l s o r e f u s e d t o pay c l a i m a n t ' s full disability rate. As a r e s u l t , claimant f i l e d a p e t i t i o n f o r an emergency h e a r i n g b e f o r e t h e Workers' Compensation Court. That Court e n t e r e d f i n d i n g s of fact, c o n c l u s i o n s of law and judgment in claimant's favor.

The judgment awarded a t t o r n e y f e e s and c o s t s t o c l a i m a n t p u r s u a n t t o s e c t i o n 92-616, R.C.M. 1947 [now s e c t i o n 39-71-611, MCA]. Claimant's attorney submitted a statement t o t h e Workers' Compensation Court c l a i m i n g a t t o r n e y f e e s and c o s t s i n c u r r e d i n t h e c a s e t o t a l i n g $3,355.19. Subsequently, the I n s u r a n c e Company f i l e d a p e t i t i o n r e q u e s t i n g a h e a r i n g o n t h e question of attorney fees.

A h e a r i n g was h e l d b e f o r e t h e W o r k e r s ' Compensation Court f o r t h e l i m i t e d p u r p o s e o f h e a r i n g a r g u m e n t s on w h e t h e r a h e a r i n g on a t t o r n e y f e e s should be g r a n t e d . The Workers' Compensation Court entered an order granting Horton's motion f o r leave t o verify h i s previously filed statement for attorney fees and c o s t s , and d e n i e d t h e I n s u r a n c e Company's m o t i o n f o r a n e v i -d e n t i a r y h e a r i n g p r i o r t o a n award of a t t o r n e y f e e s and c o s t s . This appeal followed.

The s o l e i s s u e , a s f r a m e d b y a p p e l l a n t I n s u r a n c e Company, i s w h e t h e r t h e 1979 amendment t o s e c t i o n 39-71-611, MCA, prov i d i n g t h a t a t t o r n e y f e e s s h a l l b e e s t a b l i s h e d by t h e W o r k e r s ' Compensation judge i n s t e a d of t h e D i v i s i o n of Workers' Compensation r e q u i r e s t h e o p p o r t u n i t y f o r an e v i d e n t i a r y h e a r i n g , i n c l u d i n g sworn t e s t i m o n y and c r o s s - e x a m i n a t i o n prior t o the j u d i c i a l d e t e r m i n a t i o n and award of attorney fees.

I n 1 9 7 9 , s e c t i o n 39-71-611, MCA, was amended. Prior to t h e amendment t h i s s t a t u t e read:

"In the event the insurer denies the claim for compensation o r terminates compensation b e n e f i t s , and t h e c l a i m is l a t e r adjudged c o m p e n s a b l e , b y t h e d i v i s i o n o r o n a p p e a l , the insurer shall reasonable & attor- - n e y s ' - -a s e s t a b l i s h e d by t h e d i v i s i o n . . . " fees (Emphasis added.)

A f t e r t h e amendment t h i s s t a t u t e read:

"In the event an insurer denies l i a b i l i t y for a c l a i m f o r c o m p e n s a t i o n o r t e r m i n a t e s compen- s a t i o n b e n e f i t s and t h e c l a i m i s l a t e r a d j u d g e d c o m p e n s a b l e b y t h e w o r k e r s ' compen- s a t i o n j u d g e o r o n a p p e a l , the i n s u r e r s h a l l pay r e a s o n a b l e c o s t s & a t t o r n e y s ' -e-a s fe s e s t a b l i s h e d by the w o r k e r s ' c o m p e n s a t i o n judge." (Emphasis added.)

For t h e purposes of this case, the only pertinent distinct i o n between t h i s s t a t u t e as i t e x i s t e d p r i o r t o t h e amendment a n d a f t e r t h e amendment is t h e s u b s t i t u t i o n of "workers' compens a t i o n judge" for "division."

I n 1 9 7 8 , p r i o r t o t h e amendment, t h i s Court decided t h e c a s e of Smith v. P i e r c e P a c k i n g Co. (19781, M o n t . -9 58 1 P.2d 8 3 4 , 35 St.Rep. 979. I n Smith, as i n the present case, the a p p e l l a n t contended t h a t an award of a t t o r n e y f e e s was improper f o r t h e r e a s o n t h a t no e v i d e n c e o f s u c h f e e s was a d d u c e d b e f o r e t h e Workers' Compensation Court. I n Smith, as in the present case, t h e a p p e l l a n t c i t e d C r n c e v i c h v. Georgetown R e c r e a t i o n Corp. (1975), 1 6 8 Mont. 1 1 3 , 5 4 1 P.2d 56, for the proposition t h a t e v i d e n c e must be i n t r o d u c e d i n t h e D i s t r i c t Court to d e m o n s t r a t e t h e p r o p e r amount o f attorney fees. This Court's response t o the appellant's c o n t e n t i o n i n S m i t h was a s f o l l o w s :

" F u r t h e r , c l a i m a n t a r g u e s t h a t no e v i d e n c e p e r s e of a t t o r n e y f e e s need be p r e s e n t e d i n a workers' compensation case, as the procedure e n t a i l s submission of a v e r i f i e d p e t i t i o n t o t h e d i v i s i o n , s e t t i n g f o r t h t h e number of h o u r s s p e n t and s e r v i c e s performed. The d i v i s i o n a d m i n i s t r a t o r t h e n reviews t h e p e t i t i o n and s e t s a 'reasonable fee'. W concur." e M o n t . -9 5 8 1 P.2d a t 8 3 8 , 3 5 S t . R e p . a t 9 8 4 .

I n o t h e r words, the rules pertaining to attorney fees as e n u n c i a t e d i n C r n c e v i c h do n o t a p p l y i n w o r k e r s ' compensation cases. I n the present case, the appellant contends that the amendment t o s e c t i o n 39-71-611, MCA, r e q u i r e s us to overrule Smith and a p p l y t h e Crncevich r u l e t o w o r k e r s ' compensation

cases. W decline t o s o hold. e

The amendment, n o t e d a b o v e , m e r e l y c h a n g e s t h e p a r t y who s e t s the reasonable fee. The amendment t o s e c t i o n 39-71-611, MCA, does not change t h e Smith d e c i s i o n . The s t a t u t e b o t h b e f o r e a n d a f t e r t h e amendment d o e s n o t r e q u i r e a n e v i d e n t i a r y h e a r i n g t o determine attorney fees i n workers' compensation cases. The method used t o f i x a t t o r n e y f e e s i s d i s c r e t i o n a r y w i t h t h e Workers' Compensation judge, and t h e m a t t e r of allowing a hearing concerning attorney fees is also discretionary. The f a i l u r e t o a l l o w such a h e a r i n g i s not p e r s e a n abuse of discretion. In the present case, the appellant's only a l l e g a t i o n of abuse of d i s c r e t i o n i s t h e f a i l u r e t o p r o v i d e a h e a r i n g on a t t o r n e y f e e s . S i n c e we h o l d t h a t s u c h a h e a r i n g i s n o t required f o r workers' compensation cases, t h e Workers' Compensation Court is affirmed.

Affirmed.

Chief J u s t i c e