                              No.    90-181
            IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    1991


JERRY STAHL,
                 Petitioner and Appellant,
     -vs-
RAMSEY CONSTRUCTION CO. ,
                Employer,
     and
STATE COMPENSATION MUTUAL INSURANCE FUND,
                 Insurer, Defendant and Respondent.




APPEAL FROM:    The Workers1 Compensation Court,
                The Honorable Timothy Reardon, Judge presiding.


COUNSEL OF RECORD:
            For Appellant:
                Lloyd E. Hartford, Billings, Montana
            For Respondent:
                Laurence Hubbard, State Comp. Mutual Ins. Fund,
                Helena, Montana



                                Submitted on Briefs:     March 28, 1991
       hO4Y 1 6 1991                          Decided:   May 16, 1991
Justice Fred J. Weber ~eliveredthe opinion of the Court.

     Claimant, Jerry Stahl, appeals from an order of the Workers1
Compensation Court granting summary judgment to State Compensation
Mutual Insurance Fund (State Fund) .   We affirm.
     The issues are:
     1. Is State Fund entitled to offset auxiliary social security

disability benefits paid to Mr. Stahl's minor child when the
benefits are paid directly to the minor child's mother?
     2.   Is State Fund entitled to offset a portion of Mr. Stahl Is
retroactive social security disability benefits which are paid to
his attorney as an authorized attorney's fee for legal services
rendered in obtaining those benefits?
     3.   Should State Fund be required to bear an equal share of
costs and attorney's fees incurred by Mr. Stahl to establish his
social security claim?
     In 1985, Mr. Stahl suffered a compensable injury to his back
and began receiving workers1 compensation benefits.    Subsequently
he filed an application for social security disability benefits.
The social security claim was denied, and Mr. Stahl retained legal
counsel to pursue his claim.     Following litigation, the Social
Security Administration determined that Mr. Stahl was entitled to
retroactive social security disability benefits in the amount of
$31,744.00 with $23,800.03 paid directly to him and $7,943.97
withheld for direct payment of attorney's fees. Mr. Stahl's minor
son was determined to be entitled to retroactive benefits in the
amount of $16,656.00 with $12,668.00 paid directly to the minor
                                 2
child's mother and   $3,968.00 withheld     for direct payment   of
attorney's fees.
     State Fund determined that it was entitled under 5 39-71-701,
MCA, to an offset against the retroactive social security payments
as well as future weekly social security benefits.        Mr. Stahl
challenges State Fund's right to offset for the auxiliary benefits
that go directly to his minor child's mother, and to the portion
of the retroactive benefits that go directly to the attorney who
litigated the social security claim.        In addition, Mr. Stahl
asserts that since State Fund receives an offset benefit from the
litigation against Social Security, State Fund should be required
to help pay for the costs of litigation.


     Is State Fund entitled to offset auxiliary social security
disability benefits paid to Mr. Stahlls minor child when the
benefits are paid directly to the minor child's mother?
     Section 39-71-701(2), MCA, provides:
     In cases where it is determined that periodic disability
     benefits granted by the Social Security Act are payable
     because of the injury, the weekly benefits payable under
     this section are reduced, but not below zero, by an
     amount equal, as nearly as practical, to one-half the
     federal periodic benefits for such week, which amount is
     to be calculated from the date of the disability social
     security entitlement. (~mphasis   added.)
    Mr. Stahl argues that since the social security disability
benefits for his child go directly to the child's mother, he
receives no economic benefit from those payments.         He cites
McClanathan v. Smith (1980), 186 Mont. 56, 606 P.2d 507, for the
proposition that because he does not personally receive the funds
there is no duplication of benefits and therefore no basis for the
offset.     Mr. Stahl acknowledges that McClanathan affirms the
insurer's right to offset auxiliary benefits; however he attempts
to distinguish McClanathan because the opinion does not directly
address whether 5 39-71-701 (2), MCA, entitles the State Fund to
take an offset where auxiliary benefits are payable to the
dependent at a different address than the claimant's.
     Section 39-71-701(2),   MCA,   does not distinguish between
primary and auxiliary benefits.       The statute applies to all
benefits "payable because of the injury1'.     In McClanathan, the
claimant's dependents also lived with someone other than the
claimant.   Mr. Stahl cannot reasonably argue that he receives no
economic benefit from auxiliary benefits that go to a dependent for
whom he is legally responsible.     We hold that the State Fund is
entitled to offset auxiliary social security disability benefits
paid to Mr. Stahl 's minor child when the benefits are paid directly
to the minor child's mother, even though they reside at a different
address.


     Is State Fund entitled to offset a portion of Mr. Stahlls
retroactive social security disability benefits which are paid to
his attorney as an authorized attorney's fee for legal services
rendered in obtaining those benefits?
     Mr. Stahl asserts that he received no economic benefit from
the amount of the retroactive social security disability benefits
that go directly to the attorney because he did not personally
receive those funds.    This argument is without merit.   Mr. Stahl
cannot reasonably assert that he received no economic benefit from
the services of the attorney in his litigation against Social
Security.
     Mr. Stahl also asserts that by allowing State Fund to offset
the portion of the retroactive social security disability benefits
that were paid directly to the attorney, it unfairly placed on him
the entire burden of attorney's fees and costs for the social
security claim because State Fund was also benefited by the right
to an offset.
     Section 39-71-701(2), MCA, specifically gives the State Fund
the right to offset an amount equal to one half the benefits
''payable because of the injury1'without consideration of attorney's
fees or costs of collection.      In the absence of statutory or
contractual authority for the claimant's position, we conclude
there is no basis to deny the State Fund's right to offset that
portion of the social security benefits that are paid to the
attorney.
     Under the Summary Judgment Order of the Workers1 Compensation
Court the retroactive primary social security benefits in the
amount of $31,744.00 payable to Mr. Stahl will be divided as
follows:    $15,872.00 as offset to State Fund, $7,943.97 directly
to the attorney, and $7,928.03 to Mr. Stahl.       The retroactive
auxiliary social security benefits in the amount of $16,656.00
payable to Mr. Stahl's son will be divided as follows:    $8,328.00
as offset to State Fund, $ 3,968.00 directly to the attorney, and
$4,360.00 to Mr. Stahlls son.   On its face such division does not
seem entirely     fair.   However,   it   is the   legislature which
determines what portion of social security benefits are to go to
the claimant as compared to the State Fund. While it may be argued
it is unfair to the claimant, the statute clearly establishes the
division of the funds.
     We hold that under     39-71-701 (2), MCA, the State Fund is
entitled to offset a portion of Mr. Stahl's retroactive social
security benefits which are paid to his attorney as an authorized
attorney's fee for legal services rendered in obtaining those
benefits.


     Should State Fund be required to bear an equal share of costs
and attorney's fees incurred by Mr. Stahl to establish his social
security claim?
     This issue is an alternative argument to issue 11.       Absent
statutory or contractual authority to support Mr. Stahl's claim,
this issue fails for the same reasons discussed under issue 11.
    Affirmed.

We Concur:   /
