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                                                               No. 99-521

                          IN THE SUPREME COURT OF THE STATE OF MONTANA

                                                             2000 MT 216N

                                                          RICK EASTMAN,


                                                      Petitioner and Appellant,

                                                                      v.

                                  INSURANCE COMPANY OF NORTH AMERICA,

                                                    Respondent and Insurer for

                                                   FAMILIAN NORTHWEST,

                                                                Employer.

                        APPEAL FROM: Workers' Compensation Court, State of Montana

                                     The Honorable Mike McCarter, Judge presiding.

                                                     COUNSEL OF RECORD:

                                                             For Appellant:

                           R. Russell Plath; Halverson, Sheehy & Plath, Billings, Montana

                                                            For Respondent:

                       Leo S. Ward; Browning, Kaleczyc, Berry & Hoven, Helena, Montana

                                            Submitted on Briefs: January 13, 2000

                                                     Decided: August 10, 2000

                                                                   Filed:

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                                    __________________________________________

                                                                     Clerk

Justice W. William Leaphart delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal Operating
Rules, the following decision shall not be cited as precedent but shall be filed as a public
document with the Clerk of the Supreme Court and shall be reported by case title,
Supreme Court cause number, and result to the State Reporter Publishing Company and to
West Group in the quarterly table of noncitable cases issued by this Court.

¶2 Appellant Rick Eastman (Eastman) appeals from the judgment of the Workers'
Compensation Court, determining that Eastman was not entitled to rehabilitation benefits
for his vo-tech training and that he was not entitled to attorney fees and costs. We affirm.

¶3 The sole issue on appeal is whether the Workers' Compensation Court erred in
determining that Eastman was not entitled to 104 weeks of rehabilitation benefits for a
two-year Major Appliance Repair and HVAC vo-tech program when the insurer did not
formulate a rehabilitation plan for Eastman and the court found Eastman's rehabilitation
plan did not represent reasonable vocational goals and reemployment and wage potential
                                                                    (1)
pursuant to § 39-71-2001(1), MCA (1991).

                                                        Standard of Review

¶4 This Court employs two standards of review for Workers' Compensation Court
decisions: Findings of Fact are reviewed to determine if they are supported by substantial,
credible evidence, and conclusions of law are reviewed to determine if they are correct.
See Turjan v. Valley View Estates (1995), 272 Mont. 386, 390, 901 P.2d 76, 79 (citation
omitted).

                                           Factual and Procedural Background

¶5 In 1992, Eastman suffered an employment-related back injury. His employer, Familian
Northwest, was insured by Insurance Company of North America (North America). North
America accepted liability and paid him medical and wage-loss benefits. In 1994, he
underwent surgery for the injury and was subsequently rated at a 20% impairment level.

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¶6 Eastman's time-of-injury job had been classified as heavy labor, and after his injury he
was restricted to light to medium work, precluding him from returning to his time-of-
injury job. Eastman received temporary total disability benefits until December 1993,
when he began receiving partial disability benefits. At that time, North America told
Eastman to contact them if he was interested in retraining, but the issue of retraining or
rehabilitation did not arise until 1996.

¶7 In August 1996, Eastman's attorney contacted a representative of North America,
Michele Fairclough (Fairclough), requesting initiation of "temporary total rehab benefits."
In November 1996, Eastman and his attorney spoke to Fairclough and informed her that
Eastman was meeting with the State's vocational rehabilitation agency to develop a
retraining plan for small appliance repair. Eastman's counsel memorialized the
conversation in a letter to Fairclough dated November 4, 1996 as follows:

        [Eastman] is meeting with SRS to develop a rehab plan for small appliance repair.
        He is going to provide the information to me which I will then forward to you. It is
        my understanding that CIGNA will initiate Total Rehab benefits once Rick is
        enrolled in a full-time retraining plan, and that the job he is retraining to has been
        approved by his treating physician.

In January 1997, Eastman began a two-year associate's degree program at the Billings Vo-
tech in Major Appliance Repair and heating, ventilation and air conditioning (HVAC)
(hereinafter "vo-tech program"). The first year of the program was devoted to major
appliance repair and the second year consisted of the HVAC program. He informed
Fairclough of his intention of pursuing this program in December 1996.

¶8 In February 1997, Fairclough referred Eastman's file to Crawford and Company
(Crawford), a rehabilitation provider, to determine whether major appliance and HVAC
repair were consistent with Eastman's physical restrictions. Patricia Murray (Murray), a
Crawford employee, prepared a job analysis for major appliance service technicians and
forwarded it to Eastman's treating physician, who disapproved the position because
Eastman could not tolerate the physical demands required of the service position.

¶9 When Eastman discovered his physician had disapproved the program, he asked his vo-
tech instructor Dave Foster (Foster) to help him convince Crawford that he would be
employable in HVAC sales upon graduating from the program. In April 1997, Murray met
with Eastman and Foster to discuss the type of employment Eastman could expect to find

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upon graduation. Foster said that vo-tech graduates had a 100% placement rate and that
20% of graduates found jobs in sales rather than service positions.

¶10 Eastman's physician approved the sales position because it required only light labor.
Once the sales position was medically approved, Murray conducted labor market research
to determine the availability of HVAC sales positions. She searched for positions only in
Billings, because Eastman had indicated his unwillingness to relocate. She found that
Foster's claim that 20% of vo-tech graduates found sales positions was not true in the
Billings area. Based on Murray's findings, North America rejected the vo-tech program
and provided no further rehabilitation services and did not pay rehabilitation benefits.

¶11 Eastman contested North America's denial of rehabilitation benefits and petitioned the
Workers' Compensation Court for payment of the vo-tech program and also requested
attorney fees and costs. The court held trial on the matter on February 2, 1998, after
Eastman had completed his first year of training, and again on April 26, 1999, after
Eastman had graduated from the vo-tech program. At the close of the first phase of the
trial, the court ruled from the bench that under Eastman's rehabilitation plan-attending the
vo-tech program-he would only be eligible for HVAC service jobs exceeding his physical
abilities because sales positions were virtually nonexistent in Billings and that his plan
was unreasonable in light of Eastman's physical restrictions. The judge encouraged the
parties to work together to develop and implement a new plan and postponed a final
decision until the parties had agreed upon a new plan.

¶12 In April 1998, the parties informed the court that Eastman had decided to go ahead
with the vo-tech program and was unwilling to consider alternative options. The parties
had agreed that rehabilitation assistance would cease at this point and that North America
would offer Eastman rehabilitation assistance in finding employment upon graduation.

¶13 Eastman received his degree in December 1998. Upon graduation, he renewed his
petition to the Workers' Compensation Court to retroactively award rehabilitation benefits
for the vo-tech program. The court agreed to a hearing on the issue of benefits for his job
search but ordered that "I do not intend to reopen or reconsider my . . . finding the HVAC
program inappropriate."

¶14 At the second phase of the trial, Eastman testified that he had not been able to find
employment in a sales position following graduation. Instead, in February 1999, he and his
wife purchased a building and opened their own business-The Appliance Shack. Eastman


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buys used appliances, reconditions them, and sells them. Eastman testified that this work
does not exceed his physical restrictions.

¶15 The court found that Eastman's degree program did not assist him in opening this
business and further that his rehabilitation plan had not been reasonable in any case. The
court found that North America had not acted unreasonably in refusing to pay
rehabilitation benefits. The court noted that Eastman had not been interested when North
America initially approached him about a rehabilitation program. When Eastman decided
he wanted retraining, the court found that North America acted reasonably in approving
his plan subject to medical confirmation and that the potential job would be appropriate in
light of his physical restrictions. The court also found that North America acted reasonably
in conducting additional research when Eastman changed his plan from small appliance
repair to major appliance/HVAC service/sales and ultimately concluding that this field
was not vocationally appropriate.

¶16 The court concluded that Eastman was not entitled to 104 weeks of rehabilitation
benefits for the vo-tech program. The court also denied Eastman's request for attorney fees
and costs.

                                                                Discussion

¶17 Did the Workers' Compensation Court err in determining that Eastman was not
entitled to 104 weeks of rehabilitation benefits for a two-year Major Appliance Repair and
HVAC vo-tech program when the insurer did not formulate a rehabilitation plan for
Eastman and the court found Eastman's rehabilitation plan did not represent reasonable
vocational goals and reemployment and wage potential pursuant to § 39-71-2001(1), MCA
(1991)?

¶18 Eastman argues that North America failed to prepare a rehabilitation plan, which is a
prerequisite to obtaining rehabilitation benefits under § 39-71-2001(1), MCA. He urges
that we adopt the rule that when a vocational consultant fails to prepare a rehabilitation
plan, the injured worker should be allowed to present a plan to the court. Eastman argues
that the worker's plan should be approved unless the insurer can establish by clear and
convincing evidence that the worker's plan does not have a reasonable vocational goal that
will provide for reemployment and wage potential. Eastman contends that the "clear and
convincing" standard should be imposed as a penalty when the designated vocational
consultant does not prepare a rehabilitation plan.


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¶19 We agree with North America that Eastman's claim is disingenuous. The record
clearly shows that Eastman was determined to pursue his rehabilitation plan-the vo-tech
program-and showed no interest in an alternative rehabilitation plan. Even after the court
found that Eastman's plan was unreasonable and ordered the parties to work out a new
plan, Eastman continued with the vo-tech program and was unable to work out another
plan with the rehabilitation provider. The insurer in this case did not attempt to prevent the
rehabilitation provider from formulating a rehabilitation plan. Any attempt to formulate an
alternative rehabilitation plan would have been futile in light of Eastman's determination
to finish the vo-tech program. The need to "punish" the insurer for not formulating a
rehabilitation plan by adopting a "clear and convincing" standard does not arise under
these facts.

¶20 Further, Eastman's contention that the lack of a rehabilitation plan prepared by the
rehabilitation provider was somehow attributable to North America's control and direction
of Crawford lacks merit. The record reflects that Fairclough did not attempt to control
Crawford's evaluation of Eastman's plan.

¶21 We note that Eastman was allowed to present his rehabilitation plan to the Workers'
Compensation Court, just as Eastman urges should be done when the rehabilitation
provider does not prepare a rehabilitation plan. The parties operated under the defacto
rehabilitation plan formulated by Eastman-the vo-tech program-and the court reviewed
that plan as if it had been a plan prepared by a rehabilitation provider. Upon reviewing
Eastman's rehabilitation plan, the court found the plan unreasonable because Eastman was
physically unqualified for HVAC service and because no job market existed in Billings for
HVAC sales. We decline Eastman's suggestion that we adopt the Leastman decision, a
Workers' Compensation Court decision that was not appealed and was in fact followed in
this case. Here, the Workers' Compensation Court engaged in judicial review of Eastman's
rehabilitation plan despite the fact that the rehabilitation provider did not formulate a plan.

¶22 We turn next to the issue of whether the Workers' Compensation Court's
determination that Eastman's rehabilitation plan was not reasonable was supported by
substantial and credible evidence. Eastman contends that it was not and that he had proven
at trial that he had a reasonable vocational goal at the time he started the vo-tech program,
that he proved that his earning capacity had been substantially reduced due to a job-related
disability, that his earning capacity could be substantially improved by furthering his
education, and that he was qualified by training for the program he enrolled in. North
America counters that substantial and credible evidence was presented demonstrating that

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Eastman's plan was unreasonable and would not result in reemployment and wage
potential, and that Eastman's insistence on finishing the vo-tech program was unreasonable
in light of the Workers' Compensation Court's disapproval of the program.

¶23 Section 39-71-2001(1)(c), MCA, states in relevant part that a rehabilitation plan must
show that "the injured worker has reasonable vocational goals and a reemployment and
wage potential with rehabilitation." When his physician disapproved the HVAC service
position, Eastman changed his plan to HVAC sales even though he had no sales
experience, no concept of the labor market, and the vo-tech program did not include any
sales component. While Eastman's witness Walter Ware, a vo-tech instructor, agreed with
Foster that approximately twenty percent of the vo-tech program's graduates found jobs in
sales positions, he also testified that he was not aware of anyone with Eastman's physical
restrictions working in a sales position and that the vo-tech currently had no listings for
HVAC sales on its job board. Eastman also admitted that he was not aware of anyone with
his physical restrictions working in HVAC sales. A review of the transcript shows that
North America presented several industry witnesses who testified that HVAC sales
positions were unavailable in Billings and that HVAC service jobs required lifting beyond
Eastman's 50-pound limitation.

¶24 Eastman also contends that the Workers' Compensation Court's finding was not
supported by substantial and credible evidence because he was working within his
physical restrictions at the Appliance Shack and that the venture had been successful for
him. The Workers' Compensation Court found that even if Eastman was working within
his physical restrictions at the Appliance Shack, the vo-tech program was not a reasonable
rehabilitation plan. We agree. Eastman had the training to repair major appliances from his
year of vo-tech training in 1981 and testified that he had done such work in the past. He
was not performing HVAC repair at the Appliance Shack. The record shows that Eastman
could have opened the Appliance Shack without the vo-tech program, particularly without
the second year of the program.

¶25 Finally, we reject Eastman's equitable estoppel claim. The case cited by Eastman,
Kuzura v. State Fund (1996), 279 Mont. 223, 231, 928 P.2d 136, 141, states that "[e]
quitable estoppel applies when an employer or insurer has taken some positive action
which either prevents a claimant from filing a timely claim or leads the claimant
reasonably to believe she need not file such a claim." In Turjan v. Valley View Estates
(1995), 272 Mont. 386, 395, 901 P.2d 76, 82 (citation omitted), we further held that "'the
party . . . to be estopped [must] have knowledge that he is misleading the claimant and an

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intention to mislead the claimant to his detriment.'" Based on our finding that North
America did not prevent the rehabilitation provider from formulating a rehabilitation plan
for Eastman and that the denial of rehabilitation benefits for Eastman is attributable to his
insistence on pursuing the vo-tech program despite the fact that the Workers'
Compensation Court had found that plan unreasonable, the doctrine of equitable estoppel
does not arise under these circumstances. North America neither prevented Eastman from
pursuing any benefits nor misled Eastman to his detriment.

¶26 The judgment of the Workers' Compensation Court is affirmed.

                                               /S/ W. WILLIAM LEAPHART

                                                               We concur:

                                                        /S/ J. A. TURNAGE

                                                    /S/ JAMES C. NELSON

                                                         /S/ JIM REGNIER

                                                      /S/ KARLA M. GRAY

Justice William E. Hunt, Sr. dissents from the majority opinion.

¶27 The majority opinion allows an insurer to wait and watch while an injured worker
attempts on his own to rehabilitate himself and then pounce out at the last minute, just in
time to avoid payment. Under the majority's decision, an insurer bears no risk but has
everything to gain if the rehabilitation provider ignores its statutory obligations.

¶28 The Workers' Compensation Act provides no remedy for an injured worker who
clearly is entitled to rehabilitation benefits, but the insurer refuses to allow a rehabilitation
plan to be prepared. Whenever an insurer, or the rehabilitation provider it hires and pays
for, fails to provide a rehabilitation plan for an injured worker, that injured worker must
necessarily have the option of submitting his own rehabilitation plan. To hold otherwise
would allow an insurer to effectively deny benefits to a deserving injured worker by
simply not filing a rehabilitation plan.

¶29 The majority's premise that Eastman's uncooperativeness justifies the rehabilitation
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provider's failure to formulate a rehabilitation plan ignores statutory law. Section 39-71-
2001(6), MCA (1991), expressly provides that the rehabilitation provider "shall continue
to work with and assist the injured worker until the rehabilitation plan is completed." The
statutory obligation to prepare a rehabilitation plan rests squarely with the designated
rehabilitation provider. Further, if at any point in this process the insurer feels the injured
worker is uncooperative, it may give a 14-day notice to the worker prior to termination of
rehabilitative benefits. Section 39-71-1032, MCA (1991). Non-cooperation does not
relieve the rehabilitation provider of its duty to provide a rehabilitation plan.

¶30 Here, the rehabilitation provider has never provided Eastman with a rehabilitation
plan. Rather, the insurance company is allowed to attack Eastman's proposed plan without
providing any alternatives. The majority seems to find something deplorable in Eastman's
determination to rehabilitate himself while ignoring the rehabilitation provider's failure to
comply with its statutory obligations. This line of reasoning ignores that it is the obligation
of the insurer and the rehabilitation provider it hires, not the injured worker, to provide
rehabilitative services.

¶31 I would reverse the Workers' Compensation Court's decision.



/S/ WILLIAM E. HUNT, SR.


1. Unless otherwise noted, the 1991 code is cited throughout this Opinion.




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