                             NO.    90-388

           IN THE SUPREME COURT OF THE STATE OF MONTANA
                                   1990



JAMES P. MONROY (Deceased),
     Claimant-Respondent,
           v.
CENEX,
     Employer,
     and
NATIONAL FARMERS UNION PROPERTY
AND CASUALTY INSURANCE,
     Defendant-Appellant.



APPEAL FROM:     Workers' Compensation Court,
                 The Honorable Thomas Reardon, Judge presiding.


COUNSEL OF RECORD:
           For Appellant:
                 Donald R. Herndon, Herndon, Hartman, Sweeney
                 & Halverson, Billings, Montana

           For Respondent:
                 Thomas J. Lynaugh, Lynaugh, Fitzgerald, Eiselein
                 & Eakin, Billings, Montana



                         Submitted on briefs: November 29, 1990
                                     Decided: December 19, 1990
Filed:
                                                              x
                                                                  '.

Justice John C. Sheehy delivered the Opinion of the Court.


     Accrual of the liability of a Workers1 Compensation insurer
for permanent partial disability benefits to an injured worker is
the nub of this lawsuit. Defendant insurer, National Farmers Union
Property and Casualty Insurance contends that if the death of the
worker from a cause unrelated to his injuries intervenes before the
permanent partial disability benefits are fully paid, its liability
for the unpaid benefits terminates on the date of death under 5 39-
71-726, MCA.   In the Workers1 compensation Court (~illings
                                                          area),
it was determined that the right to receive such benefits did not
end with the death of the worker, James P. Monroy.      On an agreed
statement of facts, the Workers1 Compensation Court awarded the
estate of Monroy his impairment rating benefits less certain
advances.   sustaining our holdings in two earlier cases that a
workers1 impairment rating is a medical component of a permanent
partial disability rating, and the minimum level of such benefits
which are due to the worker immediately, we affirm.
     An account of the facts surrounding Monroy's injury while in
the employ of the insured Cenex is not given to us.           Montana
workers who    sustain injuries resulting      in permanent partial
disability become entitled to a "Holton award.       In Holton v. F.
H. Stoltze Land   &   Lumber Co. (1981), 195 Mont. 263, 269, 637 P.2d
10, 14 (Harrison, J.) , this Court held that the insurer ''was at

least responsible for payment of a 10% disability claimu based on
the insurer's physician's estimate of impairment of the worker's
whole body.       Grimshaw v. L. Peterson Larson Co. (1984), 213 Mont.
291, 300, 691 P.2d 805, 809 (Gulbrandson, J.) followed Holton
declaring that the physical             impairment rating I1must be paid
regardless. l1    On the authority of those two cases, the Workers1
compensation Court awarded Monroyls estate his permanent partial
disability benefits based on his physical impairment rating.
Scrutiny of those cases and others, and of the applicable statutes,
leads us to sustain the Workers1 compensation Court.
     The uncontested (agreed) facts are easily summarized. Monroy
suffered an industrial injury on April 13, 1985, in the course of
his employment as a            laborer with Cenex     in Laurel, Montana.
Defendant insurer accepted liability for the claimantls injury and
paid weekly temporary total disability benefits in accordance with
  39-71-701, MCA through July 21, 1988.               Monroy also received
partial lump-sum advances of $2,862. On April 5, 1988, Dr. Jeffrey
Hansen rendered Monroy a 37% whole man impairment rating.              Monroy
died on July 21, 1988. On September 28, 1988, Janie Espinoza, the
common-law       wife     of   Monroy,     was   appointed    the    personal
representative of his estate, received her letters, and made claim
for the permanent partial disability benefits due Monroy.                  The
death of Monroy was from causes unrelated to his industrial
accident.
     The I1Holtonawardv1 37% entitled Monroy to 185 weeks at $143
                       of
per week, or a total of $26,455. The insurer was held entitled to
offset   against        that   amount    the   lump-sum   advances   and   any
overpayments. The Workerst Compensation Court found the estate of
Monroy entitled to the balance of the ItHoltonaward."
      In Montana, statutes in effect on the date of injury are
controlling for all aspects of a Workerst Compensation claim.
Buckman v. Montana Deaconess Hospital (1986), 224 Mont. 318, 321,
730 P.2d 380, 382.     The statutes in effect on April 5, 1988,
relating to the determination of permanent partial disability were
89   39-71-703 and 39-71-706, MCA      (both since amended).      They
provided:
      39-71-703.    Compensation or injuries causins partial
      disability.
      (1) Weekly compensation benefits for injury producing
      partial disability shall be 66 2/3% of the actual
      diminution in the worker's earning capacity measured in
      dollars, subject to a maximum weekly compensation of one-
      half the state's average weekly wage.

      (2) The compensation shall be paid during the period of
      disability, not exceeding, however, 500 weeks in cases
      of partial disability.. . .
      39-71-706.   Compensation for a permanent injury to a
      member less than loss.
      (1) [Here a provision for permanent injury to a member
      less than loss of a member]  .    .
                                     . In all other cases of
      permanent injury less than total not included in the
      schedule provided for in 39-71-705, the compensation for
      partial disability shall bear such relation to the
      periods stated in the schedule provided for in 39-71-
      705 as the disabilities bear to those produced by the
      injuries named in the schedule or to partial disability
      (500 weeks).


      (4) No payment under this section shall be in lieu of
      the separate benefits of medical or hospital services and
      of anybenefits paid under 39-71-701 for temporary total
      disability.
     Those same statutes were in effect when this Court decided
Holton.   In that case Holton injured his back while pulling on a
green chain at the employer's saw mill, which injury eventually
required a laminectomy and disc removal. His injuries resulted in
permanent partial impairment. Insurer's physician estimated a 10%
impairment of his whole body, and the Workers' Compensation Court,
considering other factors, found that the claimant had suffered a
40% disability of the whole man.      In determining whether the
injured worker was entitled to 20% penalty against the insurer for
unreasonable delay in making payments, this Court stated:
     The triggering event for the purpose of awarding
     penalties for unreasonable delay or refusal to pay
     compensation is the insurer's receipt of medical
     verification of a compensable injury.       Unless such
     verification contradicts other evidence sufficient to
     make a verification inherently incredible, the insurer's
     duty to pay commences and failure to pay (or deny a
     claim) will expose the carrier the possibility of
     penalties after 30 days. (Citing authority.)


     The language of the statute makes it clear that the
     insurer has no absolute right to delay the payment of
     compensation until a formal hearing. (Citing authority.)
     Although the total amount of compensation may be in
     dispute, the insurer has a duty to promptly -pay any
     undisputed compensation. (citing authority.) Thus, the
     insurer in the instant case was at least responsible for
     payment of a 10% disability claim prior to the formal
     hearing. The balance of the claim shall be paid when the
     disability issue is finally resolved.
Holton, 637 P.2d at 13-14.
     The foregoing is the basis for the term "Holton awardu which
has grown in use in Workers' compensation cases.
     In Grimshaw, this Court tackled the problem of partial
disability benefits from a different direction.    Grimshaw injured
his back when the logging tractor he was operating fell into a hole
on September 11, 1980.      He received temporary total disability
benefits.    In September of 1982, Dr. Carl Albertson concluded that
Grimshaw had an 18% impairment of the whole man as a result of his
injury.     The doctor also concluded that Grimshaw was unable to
return to his former occupation as a manual laborer, and that he
must be trained for a less strenuous job.        Accordingly, Grimshaw
developed    a   rehabilitation plan   which    was    accepted   by   the
Rehabilitation Services Division, and he enrolled in a mechanical
engineering program at Montana State University.         He continued to
receive benefits, reimbursement for his tuition costs, and a
monthly expense payment of $75.     The Workers1 Compensation Court
ruled that Grimshaw was entitled to receive benefits based on his
undisputed impairment rating while concurrently receivingtemporary
total disability benefits during his retraining.           The Worker's
Compensation Court also required the employer to pay a portion of
the partial disability in a lump sum.    The essence of the holding
on appeal in this Court in Grimshaw, was that Part 10 of the
Workers1 Compensation Act covers the rehabilitation program, and
that the worker can receive benefits under Part 10 and at the same
time receive disability benefits under Part 7 of the Act. However,
the Court held that he could not receive at the same time both
temporary    total   disability   benefits     and    permanent   partial
disability benefits.    The Court decided:
     In the case of Matthew Grimshaw, he is, and will be
     entitled to total disability benefits during the
     reasonable duration of his rehabilitation program. At
     the same time, he will also be entitled to any
     rehabilitation benefits awarded under Part 10 of the Act,
     and those benefits are totally separate from, and not
     counted against his Part 7 benefits.        When he has
     completed his rehabilitation program, he will, at that
     time, be entitled to his partial disability benefits.
     Under Holton, his 18% disability payments will be due
     immediatelv. It may be that the effects of his injury
     leave him disabled in the workplace to an extent greater
     than his physical impairment level, in which case, the
     Workers1 Compensation Court will then set his final
     partial disability rating. It is the employerls hope
     that due to his rehabilitation program, Matthew will
     suffer no greater legal disability than the 18% physical
     impairment level. If that is the case, an employer is
     not obliged to pay any more than that, but the 18% amount
     must be paid reqardless. (Emphasis supplied.)
Grimshaw, 691 P.2d at 809.
     The Workers Compensation Court, in deciding this case for the
Monroy estate, first determined there was no dispute that as of
April 5, 1988, the claimant had reached maximum healing from his
injuries, based on the report from Dr. Hansen.            That report also
established Monroyls 37% whole person physical impairment.              The
insurer continued to pay temporary total disability payments to the
claimant until    his   death   on July    21,    1988.      The Workers1
Compensation Court found no conflict in 5 39-71-737, MCA, which
provides   that   compensation shall      run    consecutively    and   not
concurrently, and that payments shall not be paid for two classes
of disability over the same period.       However, considering Holton
and Grimshaw, the Workers1 Compensation Court determined:
    Thus, it seems clear that once the disability status of
    a claimant is changed, subsequent to the rendering of an
    employment award, the minimum entitlement guaranteed by
    the impairment rating is immediately due. Certainly, had
    claimant lived, his entitlement to the 37% rating would
    have been realized. Indeed, it would appear that as
    early as April 19, 1988, (14 days after the letter of Dr.
    Hansen) the defendant could have properly converted
     claimant's disability payments from temporary total
     disability to partial disability benefits.
     The fly in the ointment in this case, however, is 5 39-71-
726, MCA, which the defendant insurer claims is controlling in this
case and has the effect of terminating permanent partial disability
benefits for Monroyls estate:
     39-71-726. No Compensation after death where death not
     the result of injury. If employee shall die from some
     cause other than the injury, there shall be no liability
     for compensation after his death.
     The Workers1 Compensation Court held that the statute was not
applicable to permanent partial disability benefits under Holton
and Grimshaw, because the minimum entitlement for the impairment
rating was an absolute obligation on the part of the insurer and
became an obligation of "liability1'of the insurer on the date of
maximum healing, regardless of whether or when it would be paid.
     This Court said in Grimshaw, with respect to the impairment
rating:
     The impairment rating is the medical component of a
     claimant's disability rating, which is a medical-leqal
     concept (Citing authority.)       This Court in ~olton
     implicitly held that the impairment rating is the lowest
     level the disability rating may reach, and-whenthe legal
     consequences of the impairment are ultimately known, the
     disability rating may be greater. (Citing authority.)
     (Emphasis in the original.)


     However, the defendant insurer points to two other Montana
cases which construed 5 39-71-726, MCA. In both of the cases, this
Court applied the statute literally to deny Workers1 Compensation
benefits after the death of the claimant from causes other than the
industrial accident.
     In Breen v. Industrial Accident Board (1968), 150 Mont. 463,
436 P.2d 701, this Court had the problem of the injured worker's
excessive consumption of alcohol.   The Court found that his death
was a result of alcoholism, and because the injured worker's death
resulted from that and not from his industrial accident, this Court
held that the Workers1 Compensation benefits were terminated under
the statute, except for compensation accrued prior to the death,
but unpaid at the time of the death.
     In Hendricks v. Anaconda Co. (1977), 173 Mont. 59, 566 P.2d
70, the claimant died from causes other than his industrial
accident.    He was paid his temporary total benefits to the day of
his death.    The claimant's widow argued that the claimant had a
right to a lump sum indemnity payment which accrued when the
physicians made their estimate of the percentage of impairment.
In his lifetime, however, Hendricks had not elected between
lldisabilityll
             benefits under the permanent partial       disability
statute or the indemnity statute, and there had never been a
determination made that the healing period had ended.   This Court
concluded that no lump sum benefit had accrued to the claimant as
of the date of his death and none was due and payable by reason of
the predecessor of 5 39-71-703, MCA.
     We here distinguish Breen and Hendricks, on the grounds that
neither case shows that the liability of the insurer for permanent
partial disability benefits had accrued prior to the date of death,
and because in any event they preceded the holding of this Court
in Holton.   It appears clear that the Workers' Compensation Court,
the Workers1 Compensation insurance industry, and the legislature
have accepted the implication in Holton, that an award of permanent
partial     disability       benefits     based   on    the   doctorls medical
impairment     rating    establishes         minimum    liability,     which    is
irreducible, except for present value of lump-sum advances under
the present statute      §   39-71-703(1)(a)(iii), MCA, when applicable.
     The legislature, even at the time of Monroylsaccident, seemed
to regard permanent partial                disability   ratings as      an   asset
belonging to the worker.         In   §   39-71-710, MCA, then in effect, the
legislature provided that if a worker was receiving disability
compensation benefits, and at the same time received retirement
Social Security benefits or disability Social Security benefits,
the claimant was considered to be retired and no longer in the
labor market, and the liability of the insurer for the payment of
compensation benefits terminated.              The legislature specifically
exempted from this statute permanent partial disability benefits.
The legislaturels intent was that even though the worker was
receiving Social Security benefits by reason of age or disability,
he still was entitled to receive as an irreducible minimum, his
permanent partial disability benefits, because they were exempted
from the operation of 5 39-71-710, MCA.
    When, in 1987, the legislature amended 9                      39-71-703, MCA
(Section 23, Ch. 464, Laws of Montana (1987))                 ,   the legislature
incorporated in that amendment the implicit holdings in Holton and
Grimshaw.    Section 39-71-703(1)(a)(iii), MCA, now provides:
    An impairment award may be paid biweekly or in a lump
    sum, at the discretion of the worker. Lump sums paid for
     impairments are not subject to the requirements set forth
     in 39-71-741, except that a lump sum conversion for
     benefits not accrued may be reduced to present value at
     the rate set forth by the Division in 39-71-741(5).
     Finally, this Court in Phelan v. Lee Blaine Enterprises
(1986), 220 Mont. 296, 300, 716 P.2d 601, 603, stated:
     In November 1981, this Court decided Holton v. F. H.
     Stoltze Land and Lumber Company (1981), 195 Mont. 263,
     637 P.2d 10. In Holton, this Court ruled that a carrier
     had a duty to pay without delay undisputed benefits.
     This undisputed amount was to be paid without requiring
     a claimant to enter into a settlement. Holton, 637 P.2d
     at 13, 14.
     We therefore hold that the Workers1 Compensation Court was
correct in determining that Monroyls right to permanent partial
disability benefits based upon his physical impairment rating was
an irreducible minimum of payments to which he was entitled and
which accrued at the time of his ma~imum'healin~.Since the date
of the accrual was before Monroyls death, his right to the unpaid
benefits are an asset in his estate.
     As the Workers1 Compensation Court pointed out, this holding
does not neuter 3 39-71-726, MCA.      The statute continues to be
effective where no settlement has been reached, the impairment has
been fully paid, when total or partial disability benefits continue
because maximum healing has not occurred, or when death from an
unrelated cause would terminate such benefits.
     This cause was bifurcated in the Workers1 Compensation Court,
so as to remove the issue regarding the entitlement of the estate
to receive the Holton award in a lump sum. Therefore we affirm the
holding of the Workers1 Compensation Court as to its decision that
the estate of the decedent Monroy is entitled to the I1Holtonaward1!
                                                           *


of his permanent partial disability benefits, and remand the cause

for further proceedings not inconsistent with this Opinion.




We Concur:


 )   ' /   Chief Justice   /I
