The Lesson From The Montana Workers' Compensation Court and Victory Insurance Company
AUGUST 29, 2023
The Montana Workers' Compensation Court has ruled rather firmly against the Montana-based workers' compensation insurance company Victory Insurance in the case Russell v Victory Insurance (2023-6351 and 2023-00007) 08/22/2023. This follows a similar case entitled Victory Insurance Co v Andell (2022-6029) 06/27/2022.
The Russell case can be reviewed on the WCC's website at http://www.wcc.dli.mt.gov/r/Russell_2023MTWCC1.pdf .
The Andell case can be reviewed at http://wcc.dli.mt.gov/a/Victory%20Ins._Andell_2022%20MTWCC%209.pdf
Both cases deal with how Victory Insurance Company terminated Temporary Total Disability ("TTD") benefits, or refused to reinstate TTD, both cases in the context of use of an insurer appointed treating physician. We suggest that you read the Andell case first, then the Russell case.
The circumstances of the more recent Russell case are not all that novel or extraordinary in the context of complicated Indemnity (Lost Time) claims. A dispute arose over who was the 'recognized' (my word) treating physician and under which circumstances can TTD be terminated for non-compliance.
The recovering worker chose a treating physician at the beginning of the claim and was actively treating with them. This is fully acceptable under most circumstances prior to the 'insurer' acceptance of the claim. The worker (Phyllis Russell) was at the time represented by an attorney, as was Victory Insurance Company.
Partially through this claim, Victory appointed an Occupational Health doctor when one of the doctors that saw the person for an evaluation (referral from the primary) declined to take the worker on as a patient. The worker held the opinion that the original physician that she chose as the treating remained in that capacity.
An insurer is allowed under specific conditions to designate a treating physician in Montana under § 39-71-1101(2), MCA. The Russell case revolves around the appointment of the treating physician, the worker attending appointments with the appointed treating physician and the consequences when the worker fails to attend appointments with the insurer-approved treating physician. These concepts in the case exist in the context of the insurer handling the claim under "reservation of rights".
39-71-608 Reservation of Rights
Montana allows for the handling of a newly reported workers' compensation claim under "reservation of rights". This is provided for in § 39-71-608, MCA. The documents indicate that the claim was being handled in this "reservation of rights" status when a dispute arose which led Victory to terminate TTD benefits. What is "reservation of rights"? The Montana statute lays out a process for handling in the period of time that the insurer is investigating in § 39-71-608, MCA:
39-71-608. Payments within 30 days by insurer without admission of liability or waiver of defense authorized -- notice -- limitations on payments over 90 days. (1) An insurer may, after written notice to the claimant and the department, make payment of compensation benefits within 30 days of receipt of a claim for compensation without the payments being construed as an admission of liability or a waiver of any right of defense.
(2) An insurer may not make payments pursuant to this section for more than 90 days without:
- (a) written consent of the claimant; or
- (b) approval of the department.
608 allows the insurer to perform an investigation while ensuring that the worker who is unable to work during that time is provided with TTD benefits. This is a good statutory example of the quid pro quo built into the workers' compensation system that I have written about previously.
A claim handled under 608, where TTD is being provided, is to be moved from "reservation of rights" to be either accepted or denied within 90 days. The statute allows for the insurer to 'renew' the 90 day time period on each 90 day anniversary if the investigation has not yet concluded. While there is no specific call out within the statute for a total length of time allowed for 608 status, it is generally accepted that a claim is not to go on 'forever' in 608 status.
In Russell, the claim continued from February through May with what appears to be no 608 notice to the worker. *The case is silent if the insurer provided an initial acceptance letter or what was communicated prior to May. In May, after the worker had been treating for 3 full months, Victory initiates payment of TTD benefits.
The primary treating refers the worker to a physician to evaluate a headache condition. That doctor provides an evaluation and course of treatment for the headaches, but notifies all parties that she is not in a position to accept the Occupational patient. This is when the 'dispute' matures.
The worker wants to return to the primary treating physician after the headache doctor, the insurer wants the worker to attend an appointment with an Occ Health doctor. Because the worker refuses to accept the insurer appointed physician, and refuses to attend an appointment with them, Victory gives the required 14 day notice of termination of TTD benefits and, after the notice period has expired, terminates TTD payments near the end of November. It does not appear clearly, but the case intimates that no further TTD payments are made to the worker prior to the WCC decision in August of the following year. Throughout this period of time, Victory apparently had not accepted the claim and was still operating under a 608 "reservation of rights".
The case before the WCC in 2023: "In her Petition for Emergency Trial, Russell seeks: a ruling that Victory did not have grounds to terminate her benefits under § 39-71-1106(1), MCA; an award of her benefits retroactive to the date Victory terminated them; an award of her ongoing benefits; a penalty under § 39-71-2907, MCA; and an award of her attorney fees and costs under § 39-71-611, MCA."
Both parties asked the court for Summary Judgement. The WCC found in favor of the worker on all issues outlined above, except the penalty and attorney fees/costs issues. The court indicates that a separate trial will be held to make a determination on penalties and costs at a later time.
The WCC held:
"Petitioner is entitled to partial summary judgment because Respondent did not have grounds to terminate her benefits under § 39-71-1106(1), MCA. Respondent had not accepted liability at the time it attempted to designate the occupational medicine physician as Petitioner’s treating physician, nor at the time of the appointment Petitioner refused to attend. At that time, Respondent was paying benefits under a “reservation of rights,” which it asserted allowed it to indefinitely pay benefits without accepting liability. Thus, when Respondent attempted to designate the occupational medicine physician as Petitioner’s treating physician, it did not have the right to do so under the plain language of § 39-71-1101(2), MCA, and, therefore, the occupational medicine physician did not become her treating physician. Because the occupational medicine physician was not Petitioner’s treating physician, she was under no obligation to attend the appointment Respondent scheduled for her. Therefore, Respondent did not have grounds under § 39- 71-1106(1), MCA, to terminate her benefits for refusing to attend the appointment."
The statute provides flexibility to insurers and TPAs handling Montana claims, without an overburdensome number of regulations, requirements, reporting and restrictions. However, there are disputes that can arise on claims. Following the law in the context of disputes is particularly important. When the court finds that the insurer has not followed the law, not only is the claim damaged financially, but there are typically penalties, attorney fees and attorney costs awarded. That appears to be the case in the Russell matter.
Takeaway: In our practice, the general rule we have found 1) to be the most effective from a financial standpoint and 2) to uphold to the quid pro quo at the highest level is to use the age old baseball rule of thumb: Tie Goes To The Runner. Keeping the interests of the recovering worker at the same priority level as that of the payer tends to deliver predictable, effective results. The time tested and results delivered 'best practice' for handling workers' compensation claims is to hold the quid pro quo concept a the highest priority when evaluating claims, developing action plans and implementing the claim-related decisions. Further, holding the interests of the recovering worker and the payor as equal as possible is the most effective way to Humanize the Workers' Compensation system.
Time has shown conclusively that an engaged, interested and non-combative recovering worker recovers faster and more completely. The best practice of the adjuster / examiner is to give the recovering worker incentive to focus upon healing and returning to work. Isn't that why were are here?