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).

Montana State Fund v. Simms [08/04/08] 2008 MTWCC 39 Petitioner is entitled to a $300 sanction from Respondent’s counsel where counsel pursued the case, demanded the Court’s time, and required parties to submit to depositions and produce discovery when he knew that he had a conflict of interest and would be forced to withdraw as counsel. Counsel further misrepresented his reasons for withdrawing his representation when he pled that it was based on “newly discovered evidence” when he later admitted that he knew of the potential conflict of interest at the outset of the case and chose to remain counsel because he thought he could get the matter dismissed. While I agree withdrawing his representation based on the potential conflict was a judgment call, counsel continued to pursue the case for several weeks after I denied the motion to dismiss, causing Petitioner, Petitioner’s counsel and this Court to expend time and resources needlessly and a sanction is thereby warranted.
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.