No. 91-489
TN THE SUPREME COURT O F THE STATE OF MONTANA
STANLEY STRUCTURES,
Employer,
and
AETNA LIFE AND CASUALTY COMPANY,
Insurer and Respondent,
-vs-
CHESTER SCRIBNER,
Claimant and Appellant.
APPEAL FROM: The Workersf Compensation Court,
The Honorable Timothy Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
R. Russell Plath; Halverson, Sheehy & Plath,
Billings, Montana
F o r Respondent:
Brendon J. Rohan; Poore, Roth & Robinson, Butte,
i-r - Montana
Submitted on Briefs: February 6 , 1992
Decided: June 4, 1992
Justice John Conway Harrison delivered the Opinion of the Court.
Claimant, Chester Scribner (Scribner), appeals from a judgment
of the Workers' Compensation Court issued on September 16, 1991,
which ruled in favor of the insurer (Aetna). The order entitled
Aetna to recoup lump sum advances and social security overpayments
by reducing Scribnerls weekly workers' compensation benefits.
Further, Scribner was not entitled to an additional lump sum
advance. We affirm.
On May 16, 1979, Scribner suffered an injury arising out of
and in the course of his employment. Scribner was injured when the
650 pound wheelbarrow he was pushing tipped over, resulting in torn
muscles in his lower back. At the time of Scribnerlsinjury, his
employer was insured under Plan I1 of the Workers' Compensation
Act. Aetna accepted liability for Scribner's injury. In addition
to paying medical, temporary total, and permanent total disability
benefits, Aetna advanced Scribner three lump sum payments.
On April 2, 1984, the Social Security Administration
determined that Scribner was eligible for social security
disability benefits as of May 17, 1979.' Therefore, on April 2,
1984, Aetna decreased Scribner's workers1 compensation benefits to
the social security offset rate provided for in § 39-71-702(2), MCA
(1978) . Aetna also determined that, prior to April 2, 1984, it
'
Claimant received social security disability benefits from
November 1, 1979, through November 1, 1982, while he was receiving
full workers1 compensation permanent total disability benefits.
Thereafter, he started receiving social security disability
benefits on June 1, 1983, continuing to present until he reaches
age 65, at which time he will receive social security retirement
benefits for which no offset exists in the Workers' Compensation
Act.
overpaid Scribner approximately $7,702 due to the social security
offset.
Additionally, with court approval, Aetna advanced Scribner
three lump sum payments from June 6, 1980, through June 2 , 1982,
totalling approximately $17,779.
Aetna petitioned the Workers' Compensation Court for an order
allowing Aetna to reduce Scribner's benefits to recoup overpayments
and lump sum advances previously made to him. Scribner cross-petitioned requesting an additional lump sum payment for debt
management. Subsequently, the parties commenced settlement
negotiations which resulted in a tentative settlement. When
Scribner refused to sign the settlement agreement, Aetna moved the
court to enforce the settlement agreement. On June 20, 1991,
Hearings Examiner, David J. Patterson, heard Aetnals motion to
enforce the settlement agreement as well as all other matters
raised by the parties.
The hearings examiner issued proposed findings of fact and
conclusions of law on September 12, 1991, denying Aetna's motion to
enforce the settlement agreement and Scribner's request for an
additional lump sum advance. The hearings examiner determined that
Aetna could reduce Scribner's weekly benefits to recoup the amount
Aetna overpaid Scribner. The Workers' Compensation Court adopted
the hearings examiner's proposed findings and conclusions on
September 16, 1991, from which Scribner appeals.
Scribner presents the following issues for our review:
1. Did the Workers' Compensation Court err in allowing Aetna
to recoup social security overpayments and lump sum advances from
Scribner by reducing his weekly workersf compensation benefits?
2. Did the Workersf Compensation Court err in denying
Scribner's request for an additional lump sum advance to implement
a debt management plan?
I.
From the time of his injury until April 2, 1984, Scribner
received full workerst compensation benefits and social security
disability benefits. section 39-71-702(2), MCA (1978), allows an
offset against workersv compensation benefits when the injured
worker receives social security disability benefits. Belton v.
Carlson Transport (19861, 220 Mont. 194, 196,714 P.2d 148, 149
.
Aetna did not take the offset until April 2, 1984, at which time it
reduced Scribnervs compensation to the offset rate. Aetna
determined that it overpaid Scribner approximately $7,702.
Scribner does not dispute the amount or Aetnals entitlement to
recoup the social security overpayments; Scribnerts argument
focuses on the manner in which Aetna proposed, and the Workers1
Compensation Court adopted, to realize the recoupment.
In addition to recoupment of the overpayments due to the
social security offset, the Workerst Compensation Court concluded
that Aetna is entitled to recoup the lump sum advances previously
made to Scribner, totalling approximately $17,779. Scribner
contends that Aetna is only entitled to recoupment of the lump sum
advances when a final settlement is reached between the parties.
We disagree.
A claimant is not entitled to double recovery of both a
lump sum advance and the biweekly payments. Since a lump
sum advance is merely the whole or partial conversion of
a claimant's biweekly payments, the insurer is entitled
to recover the advance.
Hedegaard v. Knife River Coal Mining Co. (1989), 238 Mont. 290,
293,776 P.2d 1225, 1227
.
The appropriate standard of review for reviewing conclusions
of law by the Workersg Compensation Court is to determine whether
the lower court I s interpretation of the law is correct. Raffety v.
Kanta Prod., 1nc. (Mont. lggl), 819 P.2d 1272, 1273,48 St.Rep. 926
. In the case at bar, the parties essentially agree on the
facts. They disagree as to the Workers' Compensation Court's
determination of what the law requires for an insurer to recoup
overpayments. Here, case law indicates that insurers are entitled
to recover lump sum advances. Since the Workers1 Compensation
Court interpreted the law correctly, it did not err in concluding
that Aetna was entitled to recoupment of the social security
overpayments and the lump sum advances.
11.
Scribner maintains that if this Court finds that Aetna was
entitled to recover the overpayments, the Workersf Compensation
Court erred in allowing Aetna to reduce Scribnerfsweekly benefits
because with the reduction, Scribnergsexpenses exceed his income.
Scribner contends that he is entitled to an additional lump sum
advance to implement his proposed debt management plan before the
court can reduce his weekly benefits.
Scribner sought a lump sum advance of $88,000 to reimburse
Aetna for its prior overpayments and to pay off Scribnerrs home
mortgage, automobile expenses, and miscellaneous debts. Paying
these debts in full would leave Scribner with monthly income in
excess of his monthly expenses even with an offset to his weekly
benefits.
On May 16, 1979, the date of Scribner's injury, the statute
controlling lump sum advances stated in part:
The biweekly payments provided for in this chapter may be
converted, in whole or in part, into a lump-sum payment.
Such conversion can only be made upon the written
application of the injured worker or the worker's
beneficiary and shall rest in the discretion of the
division, both as to the amount of such lump-sum payment
and the advisability of such conversion. The division is
hereby vested with full power, authority, and juris-diction to compromise claims and to approve compromises
of claims under this chapter. All settlements and
compromises of compensation provided in this chapter are
void without the approval of the division. ...
Section 39-71-741, MCA (1978) . Lump sum settlements are granted in
situations in which outstanding indebtedness exists, a pressing
need is shown, or the best interests of the claimant, his family
and the general public will be served. Willoughby v. Arthur G.
McKee & Co. (1980), 187 Mont. 253, 257,609 P.2d 700, 702
.
Generally, the best interests of the claimant are served by
compensating the claimant in regular periodic installments; lump
sum conversions of periodic benefits are the exception rather than
the rule. Phelps v. Hillhaven Corp. (1988), 231 Mont. 245, 252,752 P. 2d 737, 741-42
(citation omitted) . However, if the best interests of the parties will be served by lump sum conversions, the Workersg Compensation Court should award them without hesitation. Crittendon v. TerriisRestaurant & Lounge (1991),247 Mont. 293, 295
,806 P.2d 534, 536
.
Scribner possessed the burden of proving that a lump sum
conversion was in his best interest. Phel~s,
231 Mont. at 252,752 P.2d at 742
. He failed to meet this burden. An additional lump sum would benefit Scribner by reducing his monthly expenses at the present time. However, the fact that Scribnerlsdebts exceed his income does not require conversion of ~cribner'sweekly benefits into a lump sum settlement. Ruple v. Bob Peterson Logging Co. (1984),209 Mont. 276, 281
,679 P.2d 1252, 1254
.
The Workers' Compensation Court is the proper forum for
determining how an insurer can recover overpayments. In this case,
the court denied Scribnerls lump sum request because Scribnerls
tax-free yearly income does not justify such a result. Further the
court found that a reduction in ~cribner'sweekly benefits (by $25
per week until the overpayments are repaid) is fair and reasonable.
The court's findings of fact are undisputed and the court made
correct conclusions of law. Therefore, we will not disturb its
ruling .
AEf irmed.
We concur: /
Justices
Justice William E . Hunt, Sr., dissenting.
3: dissent. The benefits received by the claimant are
insufficient to cover his living expenses, and the fact that this
Court finds that reducing his income by $25 per week until
overpayments are repaid is fair and reasonable does not mean that
it is enough for claimant and his family to live on.
In its majority opinion, this Court states that lump sum
settlements are granted in situations in which outstanding
indebtedness exists, a pressing need is shown, or the best
interests of the claimant, his family, and the general public will
,
be served. Willoughby v. Arthur G. McKee and Co. (1980) 187 Mont.
253,609 P.2d 700
. The Court further states that the fact that claimant's debts exceeded his income does not require conversion of his weekly benefits into a lump sum settlement. As a matter of law, it does. While a carrier is entitled to receive its overpayments, a Lump sum advance would be in the best interest of the claimant, his family, and the general public, and therefore, the reduction of his income to below his obligations is contrary to the statement of law as set forth in Willouqhbv. I dissent.
¶1delivered the Opinion of the Court.
¶2Claimant, Chester Scribner (Scribner), appeals from a judgment of the Workers’ Compensation Court issued on September 16, 1991, which ruled in favor of the insurer (Aetna). The order entitled Aetna to recoup lump sum advances and social security overpayment by reducing Scribner’s weekly workers’ compensation benefits. Further, Scribner was not entitled to an additional lump sum advance. We affirm.
¶3On May 16,1979, Scribner suffered an injury arising out of and in the course of his employment. Scribner was injured when the 650 pound wheelbarrow he was pushing tipped over, resulting in torn muscles in his lower back. At the time of Scribner’s injury, his employer was insured under Plan II of the Workers’ Compensation *238Act. Aetna accepted liability for Scribner’s injury. In addition to paying medical, temporary total, and permanent total disability benefits, Aetna advanced Scribner three lump sum payments.
¶4On April 2, 1984, the Social Security Administration determined that Scribner was eligible for social security disability benefits as of May 17, 1979.
¶5Additionally, with court approval, Aetna advanced Scribner three lump sum payments from June 6, 1980, through June 2, 1982, totalling approximately $17,779.
¶6Aetna petitioned the Workers’ Compensation Court for an order allowing Aetna to reduce Scribner’s benefits to recoup overpayment and lump sum advances previously made to him. Scribner cross-petitioned requesting an additional lump sum payment for debt management. Subsequently, the parties commenced settlement negotiations which resulted in a tentative settlement. When Scribner refused to sign the settlement agreement, Aetna moved the court to enforce the settlement agreement. On June 20,1991, Hearings Examiner, David J. Patterson, heard Aetna’s motion to enforce the settlement agreement as well as all other matters raised by the parties.
¶7The hearings examiner issued proposed findings of fact and conclusions of law on September 12, 1991, denying Aetna’s motion to enforce the settlement agreement and Scribner’s request for an additional lump sum advance. The hearings examiner determined that Aetna could reduce Scribner’s weekly benefits to recoup the amount Aetna overpaid Scribner. The Workers’ Compensation Court adopted the hearings examiner’s proposed findings and conclusions on September 16, 1991, from which Scribner appeals.
¶8Scribner presents the following issues for our review:
¶91. Did the Workers’ Compensation Court err in allowing Aetna to recoup social security overpayment and lump stun advances from Scribner by reducing his weekly workers’ compensation benefits?
¶10*2392. Did the Workers’ Compensation Court err in denying Scribner’s request for an additional lump sum advance to implement a debt management plan?
¶11I.
¶12From the time of his injury until April 2, 1984, Scribner received full workers’ compensation benefits and social security disability benefits. Section 39-71-702(2), MCA (1978), allows an offset against workers’ compensation benefits when the injured worker receives social security disability benefits. Belton v. Carlson Transport (1986), 220 Mont. 194, 196, 714 P.2d 148, 149. Aetna did not take the offset until April 2, 1984, at which time it reduced Scribner’s compensation to the offset rate. Aetna determined that it overpaid Scribner approximately $7,702. Scribner does not dispute the amount or Aetna’s entitlement to recoup the social security overpayment; Scribner’s argument focuses on the manner in which Aetna proposed, and the Workers’ Compensation Court adopted, to realize the recoupment.
¶13In addition to recoupment of the overpayment due to the social security offset, the Workers’ Compensation Court concluded that Aetna is entitled to recoup the lump sum advances previously made to Scribner, totalling approximately $17,779. Scribner contends that Aetna is only entitled to recoupment of the lump sum advances when a final settlement is reached between the parties. We disagree.
A claimant is not entitled to double recovery of both a lump sum advance and the biweekly payments. Since a lump sum advance is merely the whole or partial conversion of a claimant’s biweekly payments, the insurer is entitled to recover the advance.
¶14Hedegaard v. Knife River Coal Mining Co. (1989), 238 Mont. 290, 293, 776 P.2d 1225, 1227.
¶15The appropriate standard of review for reviewing conclusions of law by the Workers’ Compensation Court is to determine whether the lower court’s interpretation of the law is correct. Raffety v. Kanta Prod., Inc. (Mont. 1991), [250 Mont. 268,] 819 P.2d 1272, 1273, 48 St.Rep. 926. In the case at bar, the parties essentially agree on the facts. They disagree as to the Workers’ Compensation Court’s determination of what the law requires for an insurer to recoup overpayment. Here, case law indicates that insurers are entitled to recover lump sum advances. Since the Workers’ Compensation Court interpreted the law correctly, it did not err in concluding that Aetna was *240entitled to recoupment of the social security overpayment and the lump sum advances.
¶16II.
¶17Scribner maintains that if this Court finds that Aetna was entitled to recover the overpayment, the Workers’ Compensation Court erred in allowing Aetna to reduce Scribner’s weekly benefits because with the reduction, Scribner’s expenses exceed his income. Scribner contends that he is entitled to an additional lump sum advance to implement his proposed debt management plan before the court can reduce his weekly benefits.
¶18Scribner sought a lump sum advance of $88,000 to reimburse Aetna for its prior overpayment and to pay off Scribner’s home mortgage, automobile expenses, and miscellaneous debts. Paying these debts in full would leave Scribner with monthly income in excess of his monthly expenses even with an offset to his weekly benefits.
¶19On May 16, 1979, the date of Scribner’s injury, the statute controlling lump sum advances stated in part:
The biweekly payments provided for in this chapter may be converted, in whole or in part, into a lump-sum payment. Such conversion can only be made upon the written application of the injured worker or the worker’s beneficiary and shall rest in the discretion of the division, both as to the amount of such lump-sum payment and the advisability of such conversion. The division is hereby vested with full power, authority, and juris-diction to compromise claims and to approve compromises of claims under this chapter. All settlements and compromises of compensation provided in this chapter are void without the approval of the division ....
¶20Section 39-71-741, MCA (1978). Lump sum settlements are granted in situations in which outstanding indebtedness exists, a pressing need is shown, or the best interests of the claimant, his family and the general public will be served. Willoughby v. Arthur G. McKee & Co. (1980), 187 Mont. 253, 257, 609 P.2d 700, 702.
¶21Generally, the best interests of the claimant are served by compensating the claimant in regular periodic installments; lump sum conversions of periodic benefits are the exception rather than the rule. Phelps v. Hillhaven Corp. (1988), 231 Mont. 245, 252, 752 P.2d 737, 741-42 (citation omitted). However, if the best interests of the parties will be served by lump sum conversions, the Workers’ *241Compensation Court should award them without hesitation. Crittendon v. Terri’s Restaurant &; Lounge (1991), 247 Mont. 293, 295, 806 P.2d 534, 536.
¶22Scribner possessed the burden of proving that a lump sum conversion was in his best interest. Phelps, 231 Mont. at 252, 752 P.2d at 742. He failed to meet this burden. An additional lump sum would benefit Scribner by reducing his monthly expenses at the present time. However, the fact that Scribner’s debts exceed his income does not require conversion of Scribner’s weekly benefits into a lump sum settlement. Ruple v. Bob Peterson Logging Co. (1984), 209 Mont. 276, 281, 679 P.2d 1252, 1254.
¶23The Workers’ Compensation Court is the proper forum for determining how an insurer can recover overpayment. In this case, the court denied Scribner’s lump sum request because Scribner’s tax-free yearly income does not justify such a result. Further the court found that a reduction in Scribner’s weekly benefits (by $25 per week until the overpayment are repaid) is fair and reasonable. The court’s findings of fact are undisputed and the court made correct conclusions of law. Therefore, we will not disturb its ruling.
¶24Affirmed.
¶25 Claimant received social security disability benefits from November 1, 1979, through November 1, 1982, while he was receiving full workers’ compensation permanent total disability benefits. Thereafter, he started receiving social security disability benefits on June 1,1983, continuing to present until he reaches age 65, at which time he will receive social security retirement benefits for which no offset exists in the Workers’ Compensation Act.
¶26dissenting.
¶27I dissent. The benefits received by the claimant are insufficient to cover his living expenses, and the fact that this Court finds that reducing his income by $25 per week until overpayment are repaid is fair and reasonable does not mean that it is enough for claimant and his family to live on.
¶28In its majority opinion, this Corut states that lump sum settlements are granted in situations in which outstanding indebtedness exists, a pressing need is shown, or the best interests of the claimant, his family, and the general public will be served. Willoughby v. Arthur G. McKee and Co. (1980), 187 Mont. 253, 609 P.2d 700. The Court further states that the fact that claimant’s debts exceeded his income does not require conversion of his weekly benefits into a lump sum settlement. As a matter of law, it does. While a carrier is entitled to receive its overpayment, a lump sum advance would be in the best interest of the claimant, his family, and the general public, and therefore, the reduction of his income to below his obligations is contrary to the statement of law as set forth in Willoughby. I dissent.