Penalties: Insurers

MONTANA SUPREME COURT DECISIONS

Lamb v. District Court, 2010 MT 141 A bad faith claim accrues in an underlying workers’ compensation claim at the point where the particular dispute at issue giving rise to the allegation of bad faith conduct was resolved by the Workers’ Compensation Court.  The Montana Supreme Court rejected the insurer’s argument that the claimant’s ongoing receipt of medical benefits left the claim unresolved.  In this instance, the particular dispute which gave rise to the bad faith allegations was whether the insurer was liable for the claimant’s occupational disease claim, and that issue was fully resolved when the Workers’ Compensation Court entered its judgment in the claimant’s favor.
Marcott v. Louisiana Pacific Corp., 297 Mont. 197 (1996) Holton v. F. H. Stoltze Land & Lumber Co., 637 P.2d 10 (1981), requires that an insurer begin paying an impairment award if uncontroverted medical evidence indicates claimant’s entitlement, but does not require the employer to pay benefits where a reasonable dispute as to compensability of the injury exists, even if some doctors have opined the claimant’s condition is work-related.
Marcott v. Louisiana Pacific Corp., 297 Mont. 197 (1996) An insurer has a duty to make at least a minimal investigation of a claim’s validity in light of the relevant statutes; absent such an investigation, denial of a claim for benefits is unreasonable. The insurer, however, has no duty to make claimant’s case for him by discounting his initial statements to his employers and doctors and soliciting additional information different from that first provided.
Marcott v. Louisiana Pacific Corp., 297 Mont. 197 (1996) Where the compensability of a leg injury occurring while simply walking had not been so clearly decided as to negate the employer’s ability to reasonably raise the compensability issue, substantial evidence supported the Workers’ Compensation Court’s finding that the employer did not unreasonably deny benefits, though the injury was compensable under the law.
Ingebretson v. Louisiana-Pacific Corp., 272 Mont. 294 (1995) (No. 94-622) Although there is no penalty provision in the Occupational Disease Act, section 39-72-402(1), MCA (1993) of that Act provides that “practice and procedure prescribed in the Workers’ Compensation Act applies to all proceedings under this chapter,” allowing the Workers’ Compensation Court to award penalty in an appropriate occupational disease case on the authority of section 39-71-2907, MCA (1993), the penalty provision of the Workers’ Compensation Act.
 
WORKERS' COMPENSATION COURT DECISIONS

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 a penalty.

Engle v. Hartford Underwriters Ins. Co. [12/31/13] 2013 MTWCC 27 The Court awarded a penalty against an insurer after it found that the claims adjuster deemed a fall Petitioner suffered after her occupational disease claim to be a new injury without reviewing any medical records or seeking additional medical opinions.  While the adjuster determined that the subsequent fall severed liability and accelerated Petitioner’s condition, nothing in the medical records supports that theory.  Moreover, when Petitioner disputed the adjuster’s conclusions, the adjuster did not investigate further, did not reinstate Petitioner’s benefits, and did not conduct additional investigation after she received a medical opinion disputing the adjuster’s theory of liability.

Cornelius v. Lumbermen's Underwriting Alliance [08/07/12] 2012 MTWCC 29 While Respondent argued that it was not unreasonable for it to refuse to pay Petitioner’s benefits under § 39-71-407(5), MCA, Respondent cannot escape its duty to pay these benefits and seek indemnification from the other insurer by merely suggesting the possibility of raising an argument that Petitioner’s condition is not work-related.  The Court concluded that Respondent failed to escape its duty to pay benefits under the statute precisely because it raised no arguments to support its suggestion that Petitioner’s condition might be unrelated to work.

Clapham v. Twin City [08/01/12] 2012 MTWCC 27 The remedy for failure to comply with § 39-71-608, MCA, is found within § 39-71-606(5), MCA:  “[A]n insurer who fails to comply with 39-71-608 . . . may be assessed a penalty under 39-71-2907 if a claim is [found] compensable . . . .”

Taylor v. Montana State Fund [05/23/12] 2012 MTWCC 17 The Court concluded that a penalty was not warranted where it found that the insurer had a legitimate reason to believe that a new injury had occurred and therefore could deny liability for further benefits.

Stewart v. Liberty Northwest Ins. Corp. [04/11/12] 2012 MTWCC 11 An insurer’s reliance on an earlier ruling of this Court forms a reasonable basis to deny liability.  The insurer had a reasonable defense to liability after this Court concluded that Petitioner failed to prove a causal connection between her injury and her pain; however, the insurer continued to pay for the disputed medication under a reservation of rights.  The insurer’s actions were reasonable, and a penalty under these facts is inappropriate.

Baker v. Fireman's Fund Ins. Co. [03/22/12] 2012 MTWCC 9 The insurer agreed to pay certain medical bills in the settlement agreement, yet those bills remained unpaid for months after the agreement was reached despite repeated requests to pay them.  The inexplicable delay was unreasonable, and Petitioner is entitled to a penalty on the value of the medical bills pursuant to § 39-71-2907, MCA. 

Flynn and Miller v. Montana State Fund [07/14/10] 2010 MTWCC 26 Petitioners may amend their petition to include claims for a penalty where Petitioners alleged that they could not have raised the issue sooner because the insurers’ allegedly unreasonable actions only arose recently in the course of the litigation.
Brown v. Hartford Ins. Co. [12/16/09] 2009 MTWCC 38 The Court concluded that Petitioner was entitled to the statutory penalty 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 Petitioner’s diagnoses denying her claim. The Court noted that the first claims 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 second claims 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.
Kilgore v. Transportation Ins. Co. [12/04/08] 2008 MTWCC 51 Where Petitioner’s nurse practitioner noted that she had a long history of asthma and asbestosis, and a progress note from Partnership Health stated that Petitioner planned on obtaining documentation on possible asbestosis, Respondent reasonably relied upon the Workers’ Compensation Court’s ruling in Fleming v. International Paper Co., 2005 MTWCC 35 (reversed in Fleming, 2008 MT 327), in arguing that Petitioner’s claim was untimely filed pursuant to § 39-72-403, MCA (2001).
Kramer v. Montana Contractor Compensation Fund [10/27/08] 2008 MTWCC 48 The Court was troubled by some actions of the claims adjuster, including communications with the treating physician which, while ostensibly for the purpose of clarifying Petitioner’s physical restrictions, were also apparently intended to call Petitioner’s credibility into question with his treating physician. This behavior is inappropriate and is not consistent with reasonable claims handling. However, the contact did not result in an unreasonable delay or denial of benefits and therefore Petitioner is not entitled to a penalty.
Narum v. Liberty Northwest Ins. Corp. [06/04/08] 2008 MTWCC 30 In a case which was settled with medical benefits left open, Respondent stopped paying for ongoing medical treatment without notifying Petitioner, denied authorization for hip replacement surgery even though the possibility of this surgery was specifically identified in the settlement agreement, and provided no persuasive explanation that could justify stopping payment of Petitioner’s medical treatment. The Court concludes Respondent’s actions are unreasonable and Petitioner is entitled to reasonable attorney fees.
Driggers v. Liberty Northwest Ins. Co. [12/31/07] 2007 MTWCC 60 Where the Court failed to appreciate any notable distinctions between the present case involving an employee driving an employer furnished vehicle to work and the cases of McMillen, Ellison, and Gordon, which establish that an employee is usually entitled to compensation when injured during travel to or from his employment where he receives a specific allowance to get to and from his job, to the extent there is any distinction between the present case and the well-established case law, it may be only that the incident in the present case is even more squarely within the scope of the exception to the going and coming rule. Therefore, the Court finds Respondents denial of Petitioner’s claim unreasonable and he is entitled to attorney fees, costs, and a penalty.
Porter v. Liberty [10/19/07] 2007 MTWCC 42 Where the claims adjuster admitted during his deposition that he was aware that Petitioner’s treating physician had withdrawn his finding that Petitioner was at MMI, and further admitted that the withdrawal meant that Respondent would have to reinstate benefits, Respondent nonetheless took no action and did not reinstate Petitioner’s TTD benefits. The Court concluded this was an unreasonable refusal to pay benefits and that Petitioner was therefore entitled to a 20% increase of the full amount of benefits due, pursuant to § 39-71-2907, MCA.
Vanbouchaute v. Montana State Fund [08/23/07] 2007 MTWCC 37 Unlike attorney fees and costs, an adjudication of compensability is not a prerequisite for a penalty.
Mack v. Transportation Ins. Co. [05/22/07] 2007 MTWCC 16 Where the difference between two physicians’ impairment ratings was substantial and the Court found both physicians to be credible witnesses, Respondent’s conduct in paying the lower impairment rating was not unreasonable.
Popenoe v. Liberty Northwest [12/01/06] 2006 MTWCC 37 Penalty against insurer assessed where Court failed to appreciate how Respondent could favorably distinguish the facts in this case from the similar fact patterns of two Montana Supreme Court rulings regarding a case where a worker was injured on his employer's premises prior to the start of his shift.
Gamble v. Sears [01/30/06] 2006 MTWCC 5 Where most of the x-ray, MRI, and CT myelogram films taken shortly after Petitioner’s injury had been destroyed, and where doctors disagreed as to whether Petitioner’s newly-discovered neck fracture stemmed from her industrial accident several years earlier, Respondent did not act unreasonably in opposing reopening the settlement and thus no penalty is assessed.
Doubek v. CNA Ins. Co. [11/10/04] 2004 MTWCC 76 An insurer acts unreasonably and is liable for a penalty, § 39-71-2907, MCA (1989), with respect to denied medical benefits where the treating physician finds a causal relationship between the medical condition treated and the industrial injury or occupational disease and where the physician expressing a contrary opinion was hired by the insurer, was provided with only selected records regarding the claimant's treatment, is less qualified than the treating physician, and relies on a medical test of questionable quality and value.
Doubek v. CNA Ins. Co. [11/10/04] 2004 MTWCC 76 While conflicting medical opinions ordinarily raise issues of fact which are appropriately submitted to the Workers' Compensation Court for resolution, the fact that the insurer has obtained an IME opinion supporting its denial does not preclude a finding that its denial was unreasonable. An insurer must fairly and reasonably evaluate all facts and opinions with respect to medical issues.
Rice v. Liberty Northwest Insurance Corp. [11/04/04] 2004 MTWCC 73 The Workers' Compensation Court has indicated in past decisions that an insurer is entitled to rely on the opinion of an independent medical examiner. While the statement is generally true, the prior decisions should not be read as indicating that an insurer acts reasonably in every case in which a denial of liability is based on an IME opinion. The insurer has a duty to consider all facts and circumstances in determining liability. Other facts and circumstances may indicate that it cannot reasonably rely on an IME opinion.
Beaulieu v. Human Dynamics Corp. [9/22/04] 2004 MTWCC 65 Where an insurer, without notice or explanation, cuts off payment for prescription headache medications it has paid for several years, it is liable not only for the continued payment for the medications but for a twenty percent penalty.
Nielson v. State Fund [2/20/04] 2004 MTWCC 12 Where arguments of insurer in opposition to claimant's request for impairment award of fifty percent were not unreasonable, claimant is not entitled to a penalty. § 39-71-2907, MCA (1993). However, if the 42% has not been paid, claimant is entitled to a penalty on that portion.
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. A twenty percent penalty is therefore awarded under section 39-71-2907, MCA (2001).
Hernandez v. ACE USA [4/24/03] 2003 MTWCC 32 A permanently totally disabled claimant receiving biweekly benefits is not entitled to a penalty where awarded a lump sum even though the insurer's denial of the lump-sum request was unreasonable. The lump sum was not due until approved either by the Department of Labor and Industry or the Workers' Compensation Court, therefore there was no delay in benefits. Thompson v. CIGNA, 2000 MT 306, ¶¶ 24-25, 302 Mont. 399, 14 P.3d 1222.

Galetti v. MPC [12/03/02] 2002 MTWCC 60 Under the attorney fee provision, section 39-71-612, MCA (1983), fees apply only to "compensation" awarded to claimant. A "penalty" is not compensation.
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 a penalty may be awarded only if the insurer unreasonably delayed or denied benefits, § 39-71-2907, MCA (1995), and the insurer in this case did not do so, the claimant is not entitled to a penalty.
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 a penalty.
Galetti v. MPC [12/05/01] 2001 MTWCC 60 In a Subsequent Injury Fund case, an insurer or self-insured which fails to provide the notice required by section 39-71-908, MCA (1983), and denies a claim for further benefits, is liable for a penalty where the claim is subsequently submitted to the Subsequent Injury Fund and accepted by it.
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 a penalty will not be awarded. Statutes are presumed constitutional and ordinarily it is not unreasonable for a party to rely on that presumption.
Stephenson v. CIGNA [3/29/01] 2001 MTWCC 12 No penalty where the claim for permanent total disability is based upon pain and the insurer reasonably questioned the claimant's credibility as to his pain complaints.
Lalum v. Safeco Ins. [3/19/01] 2001 MTWCC 11 Insurer=s failure to pay full impairment award is unreasonable since the law is clear that there is no apportionment under the Workers= Compensation Act.  Claimant is therefore entitled to a penalty.  ' 39-71-2907 (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 a penalty where the conduct results in the denial or delay in payment of benefits due the claimant.
S.L.H. v. State Fund [12/28/00] 2000 MT 362 The determination whether an insurer unreasonably delayed or refused to make payment is a question of fact, which the Supreme Court will review to ascertain if it is supported by substantial evidence.

Insurers have an affirmative duty to investigate workers' compensation claims and in the absence of such an investigation, the denial of a claim for benefits is unreasonable.

An insurer's unfounded claim for subrogation with respect to benefits already paid does not constitute unreasonable denial or delay in paying benefits permitting an award of penalty under section 39-71-2907, MCA (1991). However, an insurer's claim for subrogation not well grounded in fact and law as required by section 39-71-2914, MCA (1991) warrants an award of sanctions under that statute against the represented party, the attorney, or both.

Where the Workers' Compensation Court found an insurer could not reasonably refuse to acknowledge a ten percent wages loss, but could reasonably refuse to acknowledge the twenty percent wage loss argued by claimant, the proper penalty under section 39-71-2901, MCA (1991) was based on failure to pay benefits relating to the ten percent wage loss only.

Twenty percent penalty upheld against insurer under section 39-71-2907, MCA (1991) for insurer's unreasonable refusal to pay for two diagnostic tests ordered by treating physician, to recognize ten percent wage loss, and to promptly determine claimant's physical restriction.
Thompson v. CIGNA [12/8/00] 2000 MT 306 Insurer's several-month delay in responding to attorney seeking lump-sum payment of claimant's future entitlement to PTD benefits, resulting from insurer's violation of ARM 24.29.804 requiring workers' compensation insurers to designate an in-state adjuster with authority to settle claims, was unreasonable, but did not give rise to penalty under section 39-71-2907, MCA (1981) where lump-sum payment was not benefit due and payable prior to approval by the Department of Labor.
Galetti v. Montana Power Company [8/29/00] 2000 MT 234 Twenty percent penalty under section 39-71-2907, MCA (1983) applied to entire amount of workers compensation medical benefits due claimant from self-insured employer's workers' compensation plan, even though employee had received some compensation for medical expenses from same employer's medical benefits plan.
Washington v. State Fund [6/23/00] 2000 MTWCC 38 Under 92-824.1, RCM (1947), penalty awarded where insurer, between 1987 and 1994, paid TTD claimant's medical expenses at rate of 34.15% despite DOL order that it pay 100% and later claim reimbursement under subrogation order. Conduct in derogation of DOL order unreasonable. Even though insurer would later be entitled to reimbursement, claimant was deprived of immediate monies. Penalty not awarded, however, on insurer's failure to reduce social security offset after cessation of social security auxiliary payments when claimant's children were grown where claimant had been notified of offset and could have informed insurer the auxiliary benefits had terminated.
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 Penalty under 39-71-2907, MCA (1997) 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 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 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. 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.
Lyons v. Montana Power Company [2/11/99] 1999 MTWCC 15 Claimant awarded ten-percent penalty under R.C.M. 92-849 (1975) for insurer's unreasonable delay in paying benefits where insurer told claimant that her file was closed and could not be reopened for payment of medical benefits without any legal basis or investigation and chose to litigate rather than take steps to determine the amounts due claimant.
Pattee v. Twin City Fire Ins. Co. [2/9/99] 1999 MTWCC 14 Where insurer agreed to send settlement checks within one week, and adjuster knew claimant was already emotionally distraught over delays in receiving benefits, the insurer's failure to get settlement checks to claimant's attorney until two weeks after due date constituted unreasonable delay. Twenty-percent penalty imposed on $20,000 insurer check insurer was to pay jointly to claimant and her attorney and $13,250 check insurer was to pay to claimant's attorney where money to attorney was still benefits, not attorneys fees ordered by the Court.
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. A penalty was imposed on the amount of medical benefits claimant paid out of pocket, but not on the amount paid by the employer's self-insured health plan. (Note: the WCC was reversed on its conclusion penalty was not appropriate on amounts paid by the employer's health plan; see Galetti v. Montana Power Company, 2000 MT 234, ¶ 26-32.)
S.L.H. v. State Fund [1/14/99] 1999 MTWCC 6 Penalty was awarded with respect to (1) a 10% award for physical restrictions, (2) one half of a 20% wage loss award; and (3) the amounts due for an MRI and EMG the insurer had refused to cover. Penalty was not awarded with regard to (1) insurer's assertion of a subrogation interest in a third-party recovery, which assertion was dropped and was not, in any event, relating to benefits due; (2) claimant's request for further impairment award; and (3) a prescription the insurer had denied.
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 and attorneys fees.
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 not awarded on other benefits ordered where the insurer's denial of those benefits was reasonable given the status of the facts and applicable law.
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.
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 As a general rule, the testimony of a treating physician is entitled to greater evidentiary weight, although it is not conclusive. At minimum, the treating physician is the tie breaker where there is evenly balanced, conflicting medical testimony. In this particular case, not only did the treating physician have experience with claimant's condition both pre- and post-injury, he had the greater medical expertise with respect to claimant's knee condition.
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.
Ardesson v. Legion Ins. [1/15/98] 1998 MTWCC 2 Penalty awarded to claimant litigating inclusion of actual value of meals in wages for purposes of TTD benefit rate. Insurer unreasonably delayed payment of benefits corresponding to at least $3.00 valuation of meal. Unreasonable conduct included the insurer's failure to investigate the meal issue following claimant's demand, withholding of increase related to conceded $1.50 because claimant demanded more, and two-month delay in issuing check for conceded back benefits.
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 The lack of a reasonable investigation into a claimant's demand for inclusion of the actual value of meals into wage rate is itself sufficient to impose a penalty on the insurer.
Briney v. Pacific Employers Ins. Co. [10/17/97] 1997 MTWCC 55 Where either the material facts or the law applicable to a case are reasonably debatable, the parties are entitled to present the case to the WCC and no penalty shall attach to that presentation. A penalty may also be appropriate when the evidence at trial is such that a reasonable insurer would accept liability and pay the benefits requested without awaiting decision of the WCC. In this case, the evidence before and after trial were not so neatly framed in the claimant's favor so as to make continued dispute by the insurer unreasonable.
Stevens v. National Union Fire Ins. Co. of Pittsburgh [7/17/97] 1997 MTWCC 45 Insurer's persistent denial of medical benefits was unreasonable. Three doctors consistently opined her condition was related to the injury. While the claims adjuster suspected another accident caused the exacerbation, she took no affirmative steps to investigate that possibility. Claimant was entitled to a twenty-percent penalty on medical benefits under section 39-71-2907, MCA (1989), even though the insurer acknowledged liability prior to trial. Although the statute refers to "an order by the workers' compensation judge" granting benefits, the Supreme Court has found the section ambiguous and construed it to allow penalty in cases where the insurer unreasonably denies benefits, even if the claim is settled prior to trial. Mintyala v. State Compensation Insurance Fund, 276 Mont. 521, 527, 917 P.2d 442, 445-446 (1996); Handlos v. Cyprus Industrial Minerals, 243 Mont. 314, 317 794 P.2d 702, 703-704 (1990).
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.
Gubler v. Liberty Northwest Ins. Co. [1/6/97] 1997 MTWCC 1 Penalty not awarded where insurer relied on version of events described by supervisor when denying liability for motor vehicle accident. While Court found another version of events to have occurred, insurer's reliance on supervisor's recollection was not unreasonable.
(Evans) Brian v. State Fund [11/22/96] 1996 MTWCC 73 Penalty 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.
Gerhardt v. State Fund [8/1/96] 1996 MTWCC 56 Under 1980 version of penalty statute, insurer's motion to dismiss claim for penalty after medical benefits were paid is denied. In Mintyala v. State Compensation Insurance Fund, 917 P.2d 442 (1996), the Court held the 1987 version of the penalty statute, which is similar in relevant part to the 1980 statute, made penalty available from the moment the insurer's delay became unreasonable.
McClanahan v. State Fund [7/5/96] 1996 MTWCC 50 Penalty 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 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. Insurer's reliance on out-of-state cases regarding horseplay was not reasonable where it ignored reasonably clear Montana precedents.
Ostwald v. Plum Creek Manufacturing [12/19/95] 1995 MTWCC 107 Although WCC found insurer acted unreasonably, penalty not awarded where Pretrial Order contained no request for penalty.
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.
Burgan v. Nationwide Ins. Co. [10/04/95] 1995 MTWCC 75 Claimant is also entitled to a penalty under section 39-71-2907, MCA (1985) because the claimant’s right to some amount of permanent partial disability benefits should have been patently clear to the insurer, but it made no offer to settle claims for permanent partial disability benefits, but tied its offers to relinquishment of all claims for TTD and PTD benefits.
Yarde v. Liberty Northwest [9/7/95] 1995 MTWCC 69 Where there was no evidence insurer attempted to manipulate preparation of job description by certified rehabilitation consultant, or attempted to influence physician reviewing the JA, insurer did not act unreasonably by submitting time-of-injury job for physician’s review even though job was ultimately disapproved.
Yarde v. Liberty Northwest [9/7/95] 1995 MTWCC 69 Although claims adjuster was inexperienced and made mistakes, penalty was not appropriate where the mistakes were corrected before they impacted claimant’s receipt of benefits. No harm, no foul.
Yarde v. Liberty Northwest [9/7/95] 1995 MTWCC 69 Under section 39-71-2001, MCA (1993), insurer did not act unreasonably in limiting designated rehabilitation consultant’s initial assignment to determining whether claimant, without retraining, could return to work in a job that paid wages comparable to her time-of-injury job.
Johnson v. The Travelers Ins. Co. [04/28/95] 1995 MTWCC 30 Though the Workers’ Compensation Court has sometimes bifurcated penalty issues from trial on the merits, this is appropriate only where disputes regarding the penalty threaten to overshadow, if not swallow up, the underlying dispute. Motion to bifurcate denied.
Beckers v. State Compensation Ins. Fund [02/08/95] 1995 MTWCC 11 Where medical evidence linked claimant’s ongoing need for treatment for his neck condition to industrial injuries, insurer’s reference to subsequent temporary aggravations of claimant’s condition did not sever its liability. Indeed, insurer’s denial of liability in absence of medical opinion that later incidents constituted permanent aggravation was unreasonable, justifying imposition of penalty and attorneys fees.
Ingebretson v. Louisiana-Pacific Corp. [12/14/94] 1994 MTWCC 113 Although self-insured employer brought claimant back to work prior to MMI by offering him work within his restrictions (see section 39-71-701(4), MCA (1993)), it assigned him work that caused him pain, and refused to heed his requests for reassignment. When claimant fell asleep at work the next day, it was because his employer-caused pain had caused a sleepless night. Employer’s purported termination for sleeping at work was a pretext for the employer to rid itself of a disabled employee, making the alternative job “no longer available” to claimant and entitling him to reinstatement of temporary total disability benefits. Claimant was entitled to temporary total disability benefits, attorneys fees, and penalty. Affirmed in Ingebretson v. Louisiana-Pacific Corporation, 272 Mont. 294 (1995) (No. 94-622).
Marcott v. Louisiana Pacific Corp. [12/07/94] 1994 MTWCC 109 Crediting mechanic’s testimony that he was rushing and turned sharply, placing unusual strain on his calf muscle, the Court finds ruptured calf muscle compensable. Where a legitimate factual dispute existed over whether claimant was merely walking or walking rapidly and turning, the employer’s denial of compensability was not unreasonable. Attorneys fees and penalty were denied.