Attorneys: Sanctions

S.L.H. v. State Fund [12/28/00] 2000 MT 362 An insurer's claim for subrogation not supported in fact or law warrants imposition of sanctions under section 39-71-2914, MCA (1991) against the represented party, the attorney, or both. Although the statute permits the judge discretion to choose appropriate sanctions, the imposition of sanctions is not discretionary where the judge finds that section 39-71-2914, MCA (1991) has been violated.

Where counsel for an insurer admits the insurer had no legal authority or factual theory to support its claim for subrogation, and that it had completed no investigation whatsoever to support its subrogation claim, the workers' compensation court, upon its own initiative, should impose sanctions for violation of section 39-71-2914, MCA (1991).

O'Brien v. State Fund [2/10/98] 1998 MTWCC 6 Where section 39-71-2907, MCA, refers to unreasonable delay in payment of "benefits," insurer's conduct in causing delay in release of third-party settlement proceeds does not give rise to a statutory penalty. However, sanctions under section 39-71-2914, MCA (1991), a statutory version of Rule 11, are available in workers' compensation proceedings. Claimant may be entitled to sanctions where State Fund's assertion of "equittable subrogation" in claimant's recovery in a third-party malpractice case, maintained in its response to petition, but abruptly dropped prior to trial, raises a prima facie issue as to whether the assertion was well founded and in good faith. Because the facts on that issue are insufficiently developed, a briefing schedule and hearing on sanctions was set.