Attorney Fees: Unreasonable Denial or Delay of Benefits

MONTANA SUPREME COURT DECISIONS
Narum v. Liberty Northwest Ins. Corp. [04/14/09] 2009 MT 127 The WCC’s finding of reasonableness or unreasonableness in regard to an insurer’s denial of benefits is an issue of fact, subject to the substantial evidence standard of review. Substantial evidence supported the WCC’s determination that an insurer was unreasonable when it refused to pay for hip surgery which it had agreed to pay for in settling the claimant’s claim, and when it suddenly stopped paying for injections after it accepted liability for the claimant’s hip condition.
 
WORKERS' COMPENSATION COURT DECISIONS

Greer v. Liberty Northwest Ins. Corp. [02/03/16] 2016 MTWCC 2 Although the Court agreed with Petitioners that the case fell squarely under the exception to the going and coming rule in § 39-71-407(3)(a)(i), MCA, and that the case was indistinguishable from earlier case law, the Court concluded that the insurer’s arguments to the contrary were reasonable in light of the legislative history, particularly since the case was already pending when this Court issued a similar decision in this area of law.

Koch v. Employers Ins. Group [05/19/14] 2014 MTWCC 14 Once Petitioner’s claim was adjudged compensable, Respondent became liable for it.  After Respondent refused to authorize treatment and terminated liability without clear justification, the Court found its actions unreasonable and held Petitioner to be entitled to her attorney fees.

Baker v. Fireman's Fund Ins. Co. [03/22/12] 2012 MTWCC 9 In order to award attorney fees and costs pursuant to § 39-71-611, MCA, there must be an adjudication of compensability.  At trial, the Court bench ruled on the issue of compensability of certain medical bills, but neither party could advise the Court whether the bills remained unpaid.  The Court reserved ruling on the issue of fees and costs until the parties conferred and determined whether the medical bills were paid before or after the bench ruling.

Brown v. Hartford Ins. Co. [12/16/09] 2009 MTWCC 38 The Court concluded that Petitioner was entitled to her attorney fees due to the unreasonable actions of an insurer in denying liability where the insurer presented no evidence that Petitioner was not suffering from an occupational disease, but argued solely that its adjuster’s “confusion” as to Petitioner’s diagnoses denying her claim. The Court noted that claim’s first adjuster reviewed Petitioner’s medical records and noted that her condition was not work-related when the medical notes explicitly stated that it was, and that the file sat for four months with no adjuster assigned to it. The Court further noted that both medical providers recorded objective medical findings to support their diagnoses, and the claim’s second adjuster sat on the file for seven months without seeking clarification regarding her “confusion” about the diagnoses, and later continued to deny liability and again failed to seek clarification after the physician again examined Petitioner and found her to be suffering from an occupational disease.
Long v. New Hampshire Ins. Co. [04/10/09] 2009 MTWCC 14 Respondent’s actions in denying liability were unreasonable where a claims adjuster authorized Petitioner to receive ongoing TTD benefits after Petitioner returned to work at his alternate employment, and when another claims adjuster took over the claim, rather than reevaluating the previous adjuster’s authorization, she simply denied that the authorization existed, and threatened Petitioner with garnishment of his wages to recoup the alleged overpayment. Additionally, the claims adjuster attempted to dissuade Petitioner’s counsel from obtaining a complete copy of his claims file by answering her inquiries in a misleading fashion. Furthermore, the claims adjuster acknowledged that for a period of time, the previous adjuster’s notes were not accessible by anyone in Montana, in violation of § 39-71-103(3), MCA.
Arneson v. Travelers Property Casualty [02/28/06] 2006 MTWC 7 While the Court recognizes that it is inequitable not to award Petitioner his attorney fees when Respondent failed to pay medical bills for which it was indisputably liable for six months, similar situations have previously been adjudicated by this Court and the Montana Supreme Court, and it is clear this is the legally correct result.
Arneson v. Travelers Property Casualty [02/28/06] 2006 MTWC 7 The law does not recognize a “de facto denial,” or inexplicable delay, in the payment of medical benefits, as illustrated by Galetti v. Montana Power Co., 2000 MT 234, 301 Mont. 314, 8 P.3d 821; McNeel v. Holy Rosary Hosp., 228 Mont. 424, 427, 742 P.2d 1020, 1022 (1987); Cosgrove v. Industrial Indem. Co., 170 Mont. 249, 552 P.2d 622 (1976); and Yearout v. Rainbow Painting, 222 Mont. 65, 719 P.2d 1258 (1986). Respondent’s delay of over six months in paying medical bills for which it was liable nothwithstanding, Petitioner’s situation is factually similar to the aforementioned cases and he is not entitled to attorneys’ fees.
Miller v. Sears [12/12/05] 2005 MTWCC 54 Pursuant to the fourth factor set forth in section 39-71-612, MCA (1989), a petitioner must demonstrate that the award from the Workers’ Compensation Court exceeded the offer made to him pretrial in order to recover attorney fees. When the record does not establish the value of the settlement offer, the Court cannot speculate as to whether the pretrial offer exceeded the award in making its determination as to whether an award of attorney fees is appropriate pursuant to section 39-71-612, MCA (1989).
Mosca v. American Home Assurance [2/13/04] 2004 MTWCC 6 Where within thirty days the claimant reported his belief that his herniated disk was job related and the only medical opinions in evidence were that his condition was in fact job related, liability was reasonably clear and it was unreasonable for the insurer to deny the claim and take the case to trial. Attorney's fees are therefore awarded under section 39-71-611, MCA (2001).
Hernandez v. ACE USA [4/24/03] 2003 MTWCC 32 An insurer acts unreasonably when it allows a settlement proposed by its Montana adjuster to be vetoed by the employer/insured. Where the claimant has to petition the Court to effectuate the proposed settlement, he is entitled to attorney fees under section 39-71-612, MCA (1995).
Siaperas v. Montana State Fund [8/20/02] 2002 MTWCC 40 While the prohibition against payment of concurrent benefits is inapplicable to impairment awards, § 39-71-737, MCA (1995), it was not unreasonable for an insurer to deny payment of an impairment award where the claimant was still recovering from elective surgery to remove instrumentation from a prior back surgery. Impairment by definition is not rateable until the claimant has reached maximum medical improvement, § 39-71-711, MCA (1995). Since attorney fees may be awarded only if the insurer acted unreasonably, §§ 39-71-611, -612, MCA (1995), and the insurer did not do so in this case, the claimant is not entitled to attorney fees.
Bustell v. Ins. Co. Of PA [5/15/02] 2002 MTWCC 26 Where the insurer denied liability based on the lack of an employer-employee relationship, the insurer's focus on claimant's qualifications to drive for its primary client, North American Van Lines (NAVL), rather than upon the employment agreement between claimant and NAVL's carrier, which it also insured, was unreasonable and entitles claimant to attorney fees.
Bustell v. Ins. Co. Of PA [5/15/02] 2002 MTWCC 26 Where the insurer caused the claim to be filed in Montana based solely on information from its insureds, and notified claimant that her remedies were in Montana, the insurer acted unreasonably when it later notified her that she should be pursuing her claim in Indiana and defended against her Montana claim based on a lack of Montana jurisdiction. Claimant is therefore entitled to attorney fees.
Kellberg v. Liberty NW Ins. Corp. [8/24/01] 2001 MTWCC 48 Where injured claimant is released to return to work in a modified position and does so, then quits the job, giving the employer reasons unrelated to his medical condition, and without a medical determination that he is unable to continue in the job, it is not unreasonable for the insurer to resist his later demands for reinstatement of temporary total disability benefits.
Schmill v. Liberty NW Ins. [6/22/01] 2001 MTWCC 36 Where insurer denied benefits based upon its reliance on a statute which the Court declares unconstitutional, the insurer's denial is not unreasonable and attorney fees will not be awarded. Statutes are presumed constitutional and ordinarily it is not unreasonable for a party to rely on that presumption.
Brodie v. Liberty NW Ins. Corp. [6/01/01] 2001 MTWCC 30 An insurer's refusal to approve a FCE was not unreasonable where the claimant had been released to work without restrictions, where the FCE was proposed for purposes of rendering an impairment rating, and where no justification for an FCE in connection with an impairment rating was provided.
Brodie v. Liberty NW Ins. Corp. [6/01/01] 2001 MTWCC 30 Where claimant was employed for several years on a seasonal basis, the insurer's use of her prior year's wages in determining benefits was not unreasonable. While the Court interprets section 39-71-123 (1997), as requiring use of wages from the claimant's last employment only, the insurer's application of the exception allowing the use of wages up to a year prior to the injury was not beyond the pale of arguable interpretation of the exception.
Stephenson v. CIGNA [3/29/01] 2001 MTWCC 12 Under 1985 law, which applies in this case, the claimant is entitled to attorney fees since the insurer denied his request for permanent total disability benefits and he prevailed in his request.
Lalum v. Safeco Ins. [3/19/01] 2001 MTWCC 11 Insurer=s failure to pay full impairment award was unreasonable since the law is clear that there is no apportionment under the Workers= Compensation Act.  Claimant is therefore entitled to attorney fees.  ' 39-71-612 (1995).
Delaney v. Hartford [3/1/01] 2001 MTWCC 10 Where the claims adjuster shows a callous disregard for benefits due claimant and for the facts of the case, her conduct is unreasonable and entitles the claimant to attorney fees if the conduct results in the denial of benefits due the claimant.
UEF v. Frank Helstowski [5/23/00] 2000 MTWCC 29 In absence of any statutory provision, WCC has no authority to order uninsured employer in WCC proceeding to pay attorneys fees of claimant.
Shepard v. Borden, Inc. [5/23/00] 2000 MTWCC 28 Although claimant found PTD, insurer did not act unreasonably where it kept claimant on TTD, without threatening to cut him off, pending resolution; diligently explored finding claimant productive employment; and relied on doctor's opinion claimant "can probably return to work in some capacity once he gets a better handle on his pain complaints."
Patrick v. State Fund [4/4/00] 2000 MTWCC 20 Attorneys Fees awarded where insurer unreasonably limited rehabilitation evaluation to the gathering of information to support the insurer's prior conclusion claimant suffered no wage loss. Facts suggesting unreasonable delay and denial of rehab benefits included adjuster's hiring of private investigator based only a computer generated "fraud flag," which in turn was based only on claimant's failure to return to work within a predicted period of time, and did not consider claimant's serious preexisting condition upon which work injury was imposed; adjuster's apparent communication to investigator, without any support, that there was no objective evidence of injury and treating physician was "making matters worse"; referral for neuropsychological evaluation without basis; provision of report unfavorable to claimant, but not report favorable to claimant, to expert; and general tendency to ignore evidence favorable to claimant while seeking opinions to support adjuster's conclusion. (After decision, parties settled and presented a Stipulated Judgment to the Court, which then issued its Order Nunc Pro Tunc For Entry of Judgement and Dismissal with Prejudice, Patrick v. State Compensation Insurance Fund, 2000 MTWCC 20A.)
Morrissette v. Zurich American Ins. Co. [1/12/00] 2000 MTWCC 2 Insurer's refusal to reopen settlement based on alleged material mistake of fact not unreasonable even though Court agreed material mistake existed. Insurer presented evidence that it expected claimant's condition to fail and that it had entered into settlement with the expectation claimant's condition would deteriorate. While this expectation of future problems was different from present knowledge claimant's lumbar vertebrae fusion had not worked and he was not at MMI, insurer's position was within the bounds of legitimate advocacy.
Thompson v. CIGNA [8/17/99] 1999 MTWCC 51 [aff'd in 2000 MT 306] PTD claimant receiving benefits on a biweekly benefits wanted lump sum settlement. His attorney was in negotiations with a claims adjuster who did not have final authority to approve settlement. An out-of-state bureaucratic maze caused lengthy delay and put the adjuster in the position of having to attempt to change agreed settlement terms. Although penalty not awarded because claimant was receiving biweekly benefits and was not entitled to a lump sum settlement as a matter of law, meaning there was no unreasonable delay of benefits due claimant, attorneys fees awarded where section 39-71-612, MCA (1981) does not contain that limitation.
Pattee v. Twin City Fire Ins. Co. [2/9/99] 1999 MTWCC 14 Where insurer agreed to send settlement checks within one week, but took three weeks, there was unreasonable delay. Claimant was not entitled to attorneys fees under section 39-71-611, MCA (1991), however, because that section requires unreasonable denial or termination of benefits, which did not occur in this matter. Claimant was also not entitled to attorneys fees under section 39-71-612, MCA (1991) because that section requires a dispute over the amount of compensation due.
Galetti v. Montana Power Company [2/4/99] 1999 MTWCC 11 . Self-insured employer accepted liability for claimant's 1983 back injury, but denied liability for 1994 flare-up. Although the employer accepted liability at the commencement of the hearing, trial proceeded on claims for attorneys fees and penalty. WCC found the self-insured employer's denial of the claim for medical benefits unreasonable where the adjuster had persisted in maintaining claimant's flare-up was not compensable despite medical information and legal precedent to the contrary in his files. Further evidence of unreasonable conduct claim came through evidence the employer ignored several requests by claimant for a copy of his entire file, failing even to provide a copy of the doctors' response to the self-insured employer's inquiries. Attorneys fees were not awarded, however, because the employer conceded liability at the commencement of the hearing and adjudication on the issue of liability was therefore unnecessary. (Note: the WCC was reversed on this point; see Galetti v. Montana Power Company, 2000 MT 234, ¶ 15-25, which held that fees were proper under section 39-71-612, MCA (1983)).
Leastman v. Liberty Mutual Fire Ins. Co. [1/6/99] 1999 MTWCC 2 After claimant refused to adhere to insurer's rehabilitation provider's advice, insurer refused any rehabilitation benefits. Coupled with the rehabilitation provider's inadequate job of evaluating claimant's realistic job prospects with and without retraining, the delay and denial of benefits caused by this position was unreasonable, giving rise to a penalty under section 39-71-2907, MCA (1995).
Pittsley v. State Fund [11/19/98] 1998 MTWCC 84 Where a claimant seeks penalty and attorneys fees following a grant of summary judgment turning interpretation of statutes, regulations, and case law, the question is whether the legal position taken by the insurer was unreasonable. In this case, important legal precedent was found by the Court's own research. It is difficult to find an insurer's legal position unreasonable when a claimant's attorney does not cite legal precedent to support his or her position. Attorneys fees and penalty denied.
Huffman v. Twin City Fire Ins. Co. [11/16/98] 1998 MTWCC 83 Claimant's physical restrictions post-injury established his entitlement to PPD benefits for lost lifting capacity; the insurer's refusal to pay these benefits was unreasonable and smacks of punishing claimant for failing to agree to settle all of his claims. Penalty is awarded on what was due claimant for physical restrictions, but attorneys fees are not awarded on that portion because that issue did not go to hearing, given the insurer's pretrial concession. See, section 39-71-612, MCA (1993.) Penalty and attorneys fees are not awarded on other benefits ordered where the insurer's denial was not unreasonable.
McGillis v. State Fund [11/2/98] 1998 MTWCC 79 Attorney fees and penalty were awarded only with respect to the 10% wage loss (PPD benefits) which the insurer conceded at trial and should have conceded earlier based on the evidence. Attorney fees and penalty were awarded only with respect to the 10% wage loss (PPD benefits) which the insurer conceded at trial and should have conceded earlier based on the evidence.
Ronemus v. Business Ins. Co. [7/28/98] 1998 MTWCC 59 Although Court found claimant credible and was not persuaded by insurer's witnesses on issues of occurrence of accident and reporting, insurer's conduct in resisting claim was not unreasonable where a legitimate credibility issue existed.
Wall v. National Union Fire Ins. Co. [2/24/98] 1998 MTWCC 11 Penalty and attorneys fees are warranted based on the insurer's unreasonable denial of the claim, reflected in its failure to ascertain the IME physician's qualifications for the condition at issue, continued reliance on the IME physician's opinions despite information suggesting the treating physician was more qualified, denial of an OD claim in its entirety despite the IME physician's opinion 50% of the condition was occupational, and disregard for some facts and for the opinions of the nurse manager and treating physician.
Ardesson v. Legion Ins. [1/15/98] 1998 MTWCC 2 Attorneys fees awarded to claimant litigating inclusion of actual value of meals in wages for purposes of TTD benefit rate. While insurer had conceded liability for $3.00 per meal, a concession of liability is not an "offer" within section 39-71-612 cutting off liability for attorney's fees where the insurer did not pay the amount conceded and the concession was not implemented within 30 days as contemplated by section 39-71-612(2), MCA (1995). Insurer's delay and failure to pay conceded liability were unreasonable.
Church v. Travelers [5/27/97] 1997 MTWCC 31 Insurer paid PPD claimant benefits corresponding to 17.5% of 350 weeks for the labor factor under section 39-71-703, MCA (1993), representing a "split" between 15% and 20% on the theory that claimant went from the ability to do heavy lifting to an ability falling somewhere between medium and light duty. WCC held there is no statutory or factual basis for "splitting" the labor factor portion of PPD benefits, making the insurer's position unreasonable. The fact that the insurer required trial over $1,631.88 in benefits magnifies its unreasonableness. Penalty and attorneys fees awarded.
Martinez v. State Fund [3/5/97] 1997 MTWCC 9 Insurer is liable for penalty on all accrued, unpaid benefits based on unreasonable delay. Where insurer has conceded it delayed unreasonably after a particular point, the delay impacted all benefits accrued to that date, not merely benefits accruing after that date. Indeed, the delay is more unreasonable as to earlier accrued benefits as they were past due for a longer period. Attorneys fees awarded as well.
(Evans) Brian v. State Fund [11/22/96] 1996 MTWCC 73 Attorneys fees awarded where insurer unreasonably refused to pay for back surgery although overwhelming evidence indicated claimant's accident caused increased, totally disabling back pain. Reliance on fact that pre- and post-accident MRIs were the same, and fact that surgery had been recommended prior to the accident, was not reasonable where claimant and physicians made clear her pain increased and total disability ensured, where she had previously been working.
McClanahan v. State Fund [7/5/96] 1996 MTWCC 50 Attorneys fees awarded where Insurer's conduct was unreasonable for failure to investigate. Insurer took employer's story that claimant did not injure his back at face-value, failing to interview witnesses, ignoring consistent medical records, and not facing conflicts within employer's version of events.
Larsen-English v. Lumbermens Mutual Casualty [6/14/96] 1996 MTWCC 43 Penalty awarded where insurer's denial of liability was unreasonable. When claimant, a waitress, slipped and aggravated her existing knee condition, she was following a cook who playfully stole a pan from her after tossing whipped cream on her. Insurer's contention claimant was acting outside the course and scope of employment was not only unreasonable, but also mean-spirited, where the clear facts show the incident was precipitated for a work-related reason, that claimant did not initiate the incident, and that some horseplay, in any event, was tolerated by the employer.
Caekaert v. State Compensation Ins. Fund [10/12/95] 1995 MTWCC 78 Insurer acted unreasonably where medical opinion did not provide affirmative proof of an aggravation by claimant’s post-injury work, but were equivocal. Proceeding to trial without independent medical support for the insurer’s position entitled claimant to attorney fees.
Caekaert v. State Compensation Ins. Fund [10/12/95] 1995 MTWCC 78 Claims examiners and attorneys are not qualified to make medical judgments; where medical questions are involved, it is unreasonable for the insurer to disregard uncontroverted medical opinion.