Benefits: Lump Sums: Best Interests


Barnard v. Liberty Northwest Ins. Corp., 2008 MT 254, 345 Mont. 81, 189 P.3d 1196 The Montana Supreme Court upheld the WCC’s determination that the best interests of a claimant were served by permitting the claimant to receive a lump sum payment of his PTD benefits where the WCC found that the claimant could not comfortably and safely move around his home, needed a new vehicle and driveway improvements, and would benefit from expanding his cattle business, and that the claimant would use the lump sum payment to make these purchases.

Barnard v. Liberty Northwest Ins. Corp., 2008 MT 254, 345 Mont. 81, 189 P.3d 1196 In reviewing the WCC’s determination regarding whether a lump sum conversion is appropriate, the Montana Supreme Court accords wide latitude to the WCC and will not substitute its judgment for that of the WCC.

Martin v. The Hartford, 2004 MT 57 Although claimant’s desire for a lump sum settlement in order to pay off his mortgage, invest the remainder, and provide for his family in the event of his death represented reasonable goals, investment and estate building do not provide justification for lump sum distributions where neither the statutory nor the best interests standards have been met.
Martin v. The Hartford, 2004 MT 57 Courts applying the best interests test may consider all aspects of a claimant’s personal situation, including his physical and mental health, family situation, level of maturity, and financial condition. The review may encompass the claimant’s outstanding indebtedness and any pressing financial needs. The court may also consider the needs and abilities of claimant’s spouse because to do otherwise allows for absurd treatment of the realities of a marital or family association.
Martin v. The Hartford, 2004 MT 57 Where Workers’ Compensation Court properly determined that claimant had not demonstrated financial need related to (1) the necessities of life; (2) a pre-injury accumulation of debt; or (3) a feasible self-employment venture, claimant did not satisfy criteria under section 39-71-741, MCA (1997) for court-ordered lump sum settlement. Evidence indicated that claimant had more assets than debt, was doing well financially on bi-weekly benefits, that monthly income exceeded expenses, that he had other sources of income to pay for extraordinary expenses, that he was financially able to assist his adult children from time to time, that he had invested in gold and annuities, and that he was still able to take periodic vacations.
Martin v. The Hartford, 2004 MT 57 Claimant seeking order of Court for lump summing of permanent total disability benefits has the burden of proving that the lump sum conversion is in his best interest.
Murphy v. Montana State Fund [03/09/10] 2010 MTWCC 6 The Court concluded a lump sum conversion of PTD benefits was in a claimant’s best interests where the Court was persuaded that the claimant could successfully operate the business he wished to purchase and that the claimant would not only earn more annually than he currently received in bi-weekly benefits, but would also have a saleable asset upon retirement.
Murphy v. Montana State Fund [03/09/10] 2010 MTWCC 6 The Court granted a lump sum conversion of PTD benefits to a claimant who planned to use the funds to purchase a feedlot.  The Court found that the claimant came to trial fully prepared, having identified a specific business to purchase, sought financial backing, and formulated a reasonable business plan.  The Court further found that the claimant had the expertise and ability to run the business he sought to purchase, that the claimant had provided sufficient information to satisfy the requirements of ARM 24.29.1202, and that the lump sum conversion would be in the claimant’s best interests.
Benhart v. Liberty Northwest [01/25/08] 2008 MTWCC 6 Although Petitioner asserted that a lump-sum payment of his PTD benefits would be in his best interests because the rental property where he resides has changed ownership and may be sold, the new property owner testified that he has no immediate plans to sell the property. Where Petitioner’s search for a suitable home to purchase consisted only of looking through real estate flyers at the urging of his counsel, the Court was unconvinced that Petitioner would actually purchase a home with a lump-sum payment if one were granted.
Benhart v. Liberty Northwest [01/25/08] 2008 MTWCC 6 Where Petitioner’s debts consist of monthly payments on a truck, boat, and 4-wheeler which were all purchased subsequent to his industrial injury, and where the monthly payment on the boat alone exceeds his household budget’s monthly shortfall, Petitioner does not meet the statutory criteria of § 39-71-741(1)(c), MCA, which would entitle him to convert his PTD benefits to a lump-sum payment.
Sanchez v. Montana State Fund [06/22/07] 2007 MTWCC 25 Where Petitioner spent previous lump-sum advances on discretionary items and entertainment without paying his outstanding debts, and where Petitioner cannot account for how he spends a significant portion of his income, it would not be in Petitioner’s best interests to convert his PTD benefits to a lump sum.
Barnard v. Liberty Northwest [10/20/06] 2006 MTWCC 35 The claimant testified that he intended to use a lump-sum conversion of his PTD benefits to purchase a wheelchair-accessible mobile home, a motor vehicle which would be easier for him to drive, additional cattle for his ongoing business buying and selling cattle at which he has made from $0 to $3,000 per year, and to pay the attorney fees which he incurred in litigating this issue. The Court determined that such a lump sum would be in the claimant’s best interests.
Siaperas v. State Fund [1/15/04] 2004 MTWCC 4 Lump summing is restricted by statutes in effect at the time of a claimant's injury. Even if prior law governing lump summing were applicable, the facts in this case fail satisfy the old law criteria. Claimant failed to show that there is such a hostile relationship between herself and the insurer that benefits should be paid out in a lump sum. Lump summing merely to purchase an annuity does not overcome the presumption favoring biweekly payment of benefits.
Martin v. Hartford [4/4/03] 2003 MTWCC 25 Assuming the law in effect in 1999 permits full lump-sum conversion of all future permanent total disability benefits, where claimant is doing well financially on his biweekly benefits in that his monthly income exceeds his expenses; where he has money coming in which will pay for extraordinary expenses; and where he is still able to financially assist his adult children and take vacations, he has failed to show that a lump-sum conversion of his permanent total disability benefits satisfies either the traditional best interests test.
Kendall v. St. Regis Paper Co. [11/6/02] 2002 MTWCC 55 Where the claimant has received two prior lump-sum advances on account of indebtedness incurred primarily because of irresponsible expenditures on behalf of adult children and unnecessary purchases; where he now applies for a lump-sum conversion after running up debts in excess of $100,000 in large part due to similar irresponsible expenditures; and where his average monthly family income exceeds his regular, necessary monthly expenses and debt service, the lump-sum request is denied since it is unnecessary and since it would lead to further irresponsible spending and ultimately to financial disaster.

Bennett v. State Fund [4/22/98] 1998 MTWCC 33 37-year old claimant sought conversion of her future PTD benefits on the allegation of financial need. Under section 39-71-741, MCA (1991), the conversion of PTD benefits to a lump sum on the basis of financial need "must be the exception," which the WCC interprets to incorporate the historical best-interests test applicable to lump-sums. See, Sullivan v. Aetna Life & Cas. , 271 Mont. 12, 16, 894 P.2d 278, 280 (1995). Lump-summing is not in claimant's best interest be because her monthly PTD benefits are the only income she has in her own right; she has twenty-years before she reaches retirement age; she and her husband have proven themselves unable to wisely manage their finances; and they have other means to extricate themselves from their current monthly shortfall.

Blowers v. Montana Insurance Guaranty Association [4/25/97] Under Willoughby v. Arthur G. McKee & Co., 187 Mont. 253, 257, 609 P.2d 700, 702 (1980), lump-sum settlements may be granted in cases of outstanding indebtedness or pressing need, or where the best interests of petitioner, her family, and the general public will be served. The best interest component is the "primary criterion." Sullivan. V. Aetna Life & Cas., 271 Mont. 12, 16, 894 P.2d 278, 280 (1995). While the best interests of a claimant are ordinarily served by regular periodic installments, making lump-sums the exception rather than the rule, lump-sum advances are not looked upon with disfavor and will be awarded without hesitancy in appropriate cases. In this case, while the Court has approved the modest advance to which the employer/insurer has already agreed, widow with 11-year old child did not convince the Court that an additional lump-sum is warranted where her income is presently more than her family would be receiving if her husband had not been killed and had continued in his same job and where she has not shown that her present situation is not adequate or that the problems of which she complains would be best served by the requested lump-sum advance.

Evans v. State Fund [5/30/96] WCC No. 9512-7453 In this old law case, guidance on lump sum conversion comes from Sullivan v. Aetna Life & Casualty, 271 Mont. 12, 894 P.2d 278 (1995), wherein the Supreme Court reiterated that biweekly benefits are the general rule, but a lump sum conversion may be done when in the claimant's best interests. A lump sum advance for payment of debts may be in a claimant's best interests but the mere fact that the claimant has indebtedness is not sufficient grounds. Here, claimant's explanations regarding his indebtedness were not satisfactory and he appears simply unable or unwilling to manage his money. Claimant did not provide the Court with a credible accounting of income and expenses, nor a reasonable plan for the future. Note: this decision was affirmed by the Montana Supreme Court in Evans v. State Compensation Ins. Fund, No. 96-329 (1996), an unpublished, non-citeable opinion.