
    A. J. SPEARS, Plaintiff-Appellant, v. TRADERS AND GENERAL INSURANCE COMPANY et al., Defendants-Appellees.
    No. 8969.
    Court of Appeal of Louisiana. Second Circuit.
    April 3, 1959.
    Rehearing Denied May 4, 1959.
    Certiorari Denied June 1, 1959.
    
      Smallenberger, Eatman & Morgan, Shreveport, for appellant.
    Jackson, Smith, Mayer & Kennedy, Shreveport, for appellees.
    Before GLADNEY, AYRES and JAMES E. BOLIN, JJ.
   AYRES, Judge.

Plaintiff instituted this action to recover of his employer and its insurer workmen’s compensation at the maximum statutory rate, LSA-R.S. 23:1202, as for total and permanent disability, and to recover of the insurer statutory penalties and attorney’s fees provided by LSA-R.S. 22:658, as the result of an accidental injury to his right knee, consisting primarily of a deranged medial meniscus occurring August 13, 1957, while engaged as a carpenter.

After trial there was judgment in plaintiff’s favor for compensation and medical expenses. His demands for penalties and attorney’s fees were rejected. From the judgment thus rendered plaintiff appealed. The sole question involved is whether the insurer’s failure to pay compensation after January 7, 1958, was arbitrary, capricious or without probable cause so as to entitle plaintiff to recover penalties and attorney’s fees.

The facts may be briefly recounted. Following his injuries plaintiff was paid either his full wages or compensation to January 7, 1958, when he was advised by his physician, Dr. Willis J. Taylor, an orthopedist, that He could return to his former occupation. He was further advised, however, that he had a residual disability of 7.5% to his right knee, which would likely improve with active use. The insurer’s adjuster on receiving a copy of Dr. Taylor’s report advised plaintiff his compensation as for total disability would be discontinued but that he was entitled to additional compensation because of his aforesaid residual disability, a statement of the amount of which he, the adjuster, would have to obtain from his home office. This statement was promptly requested, and on or about January 21st or 22nd, 1958, the adjuster submitted an offer of compromise settlement in the sum of $841.60, which plaintiff refused. This action was followed by his attorney’s demands on January 22, 1958, that the compensation at the weekly rate of $35 be brought to date. A discussion ensued between counsel for both plaintiff and defendant as to further medical examination of plaintiff without apparently reaching any agreement as to the expert to make the examination. However, at his or his counsel’s instance, plaintiff was examined by Dr. D. F. Overdyke, Jr., also an orthopedist, on February 4, 1958, who found plaintiff totally disabled. A copy of the doctor’s report was furnished the insurer February 12, 1958. On the following date this action was filed and an order was obtained assigning the case for trial for March 20, 1958.

On receipt of Dr. Overdyke’s report the insurer caused further examinations to be made by Dr. Taylor on February 18, 1958, and by Dr. Gene D. Caldwell, another orthopedist, on March 6, 1958. Dr. Taylor concurred in the conclusions reached by Dr. Overdyke that plaintiff was totally disabled, and Dr. Caldwell’s findings were the same. In the meantime plaintiff was offered, and refused, the minimum statutory compensation of $10 per week, predicated upon the residual disability to his knee. Following the report of Drs. Taylor and Caldwell, defendants, on March 13, 1958, paid all compensation to date, and on March 20, 1958, filed an amended answer admitting liability for plaintiff’s compensation as for total disability and reiterated their proposal of March 13, 1958, for a further operation in an effort to relieve plaintiff’s condition.

Thus it appears from the record that the insurer’s discontinuance of payment of full compensation on January 7, 1958, was in accord with the medical report of Dr. Taylor, who was plaintiff’s physician and who had performed surgery upon his knee. The report was, as aforesaid, that plaintiff was able to resume the duties of his occupation. On receipt of this report, negotiations began immediately for a determination of a proper amount to compensate plaintiff for the aforesaid residual disability.

It is noted that Dr. Taylor was the only physician who had examined plaintiff prior to Dr. Overdyke’s examination of February 4, 1958. Dr. Overdyke’s report was furnished defendants on February 12, 1958. In an obvious effort to resolve the differences in Dr. Taylor’s findings as of that date and of Dr. Overdyke’s conclusions, a subsequent examination was caused to be made by Dr. Taylor on February 18, 1958, and by Dr. Caldwell on March 6, 1958.

Notwithstanding brief delays occasioned by the negotiations and the examinations and reports of the physicians, as aforesaid, were inevitable, no showing is made in the record other than that the insurer did everything that was reasonable and proper to settle plaintiff’s claim or to pay him compensation in accordance with the report of Dr. Taylor. On consideration of the subsequent reports confirming plaintiff’s total disability, the insurer promptly paid compensation accordingly, admitted liability in an amended answer and consented that judgment be rendered against it. In view; of these facts and circumstances, it does not appear that defendant’s actions with respect to the payment of compensation, or as to its discontinuance after January 7, 1958, were arbitrary, capricious or without probable cause. Carrington v. Consolidated Underwriters, 230 La. 939, 89 So.2d 399; Id., La.App., 80 So.2d 427.

Plaintiff contends, however, that defendant was well aware that plaintiff was partially disabled and, therefore, that its discontinuance of all compensation was indefensible. Cited in support of the position taken are — Wright v. National Surety Corp., 221 La. 486, 59 So.2d 695; Fruge v. Pacific Mutual Insurance Co., 326 La. 530, 76 So.2d 719. These authorities are inapposite to the facts of the instant case, particularly in that during the period for which compensation was discontinued negotiations for a settlement were under consideration. Moreover, compensation for partial disability was offered and refused. Hence, it could only be concluded that plaintiff is not entitled to recover penalties and attorney’s fees.

The judgment appealed is therefore affirmed at appellant’s cost.

Affirmed.

HARDY, J., absent.

BOLIN, Judge ad hoc

(dissenting).

I respectfully dissent from that portion of the majority opinion which denied plaintiff recovery of penalties and attorney’s fees.

The majority, in its opinion, states that the cases of Wright v. National Surety Corporation and Fruge v. Pacific Mutual Insurance Company, are inapposite to the facts of the instant case. This conclusion is based on the fact that, during the period for which compensation was discontinued in the instant case, negotiations for a settlement were under consideration, and that compensation for partial disability was offered and refused. It is with these conclusions that I am compelled to disagree. To the contrary, I cannot see how the case under consideration can be differentiated, either as to legal principles or any material facts, from the cited cases, which were decided by the Supreme Court.

Immediately upon receipt of Dr. Taylor’s report on January 7, 1958, an adjuster for the defendant called on the plaintiff and informed him that the doctor had notified the company that he was able to return to work with some disability, but that he was entitled to some compensation. It is true, that from that date the insurance company attempted to negotiate a settlement with the injured employee. However, if the company was of the opinion that the employee was entitled to payment for his injuries, they were not justified in completely stopping all compensation payments while thus attempting to negotiate a settlement. In other words, for this court to hold that attempting to negotiate a settlement of a case would exempt the company from penalties and attorney’s fees under the statute, would be an invitation for the insurance companies to hold the employee at their mercy, indefinitely, under the pretense of attempting a settlement.

The only evidence in the case that compensation for partial disability was offered the employee was a check for eight weeks at $10 per week, which was left at the •office of Dr. Caldwell for the employee on the fifty-ninth day after his compensation payments were stopped. This could not be construed as an offer to pay compensation for partial disability, because at that time the company had definite knowledge that the plaintiff was totally and permanently disabled.

In the case of Fruge v. Pacific Mutual Insurance Company, the insurance company had been paying the employee compensation for total and permanent disability for approximately six months when it received notification from its examining physician that the employee had only a 20% disability. Based on this letter, the insurance company discontinued paying any compensation to the employee. On these facts, the Supreme Court assessed penalties and attorney’s fees against the insurance company. It was the opinion of the court in the cited case that the insurance company should not have ceased all payment of disability but should at least have tendered payment for partial disability.

In my opinion, the holding of the Fruge case should be controlling in the instant case. While it is true that Dr. Taylor wrote the company that it was his opinion that the employee could return to work with a 7.5% disability, the insurance company apparently did not share his opinion, from a legal standpoint. The company apparently interpreted this letter to mean that the employee was entitled to partial payment because of the residual disability. When the insurance company received this letter, if it had immediately contacted the employee and told him that he was not entitled to anything because of the findings of Dr. Taylor, such a conclusion on their part might have been justified. However, the insurance company took the position that the medical report entitled the employee to some compensation.

It is the testimony of the insurance adjuster, throughout the trial in the lower court, that the employee was entitled to some compensation. The defendants in their pleadings in the lower court admitted in their answer that they knew the employee was entitled to some compensation on the day that his payments were stopped. The defendants have never contended that the offer to settle was in the nature of a gratuity, but was something to which the employee was entitled. Therefore, if it has been judicially admitted that he was entitled to some compensation, I feel that he should have been tendered compensation for at least partial disability rather than completely stop such payments and attempt to force a compromise settlement on him.

The majority opinion points out that various delays by the insurance company were of short duration and that, therefore, none of its actions should be classified as arbitrary or capricious. However short such delays might have been, they were of such a duration as to force the plaintiff to employ counsel. In other words, if the insurance company had tendered the employee partial disability instead of completely stopping his compensation payments, he would probably never have consulted an attorney.

For the reasons stated herein, I respectfully dissent from the majority opinion.  