No. 81-229 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

GARY P. SWANSON (fatal), KIM SWANSON 

COLLINS, formerly known as Kim R. 

Swanson, Personal Representative of Estate 

of GARY P. SWANSON, 

Appellant and Claimant, 

CHAMPION INTERNATIONAL CORPORATION, 

Employer, and LIBERTY MUTUAL INSURANCE 

COMPANY, 

Defendants and Respondents. 

Appeal from: Workers' Compensation Court, 

Honorable William E. Hunt, Judge presiding 

Counsel of Record: 

For Appellant: 

James J. Benn argued, Missoula, Montana 

For Respondents: 

Garlington, Lohn and Robinson, Missoula, Montana 

Robert Sheridan argued, Missoula, Montana 

Filed: APR 9 - 1982 

Submitted : December 1, 19 81 

Decided : Ictm 0 1982 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

This case comes to us on appeal from the Workers' 

Compensation Court, which entered an order affirming a 

determination by the Workers' Compensation Division that 

Liberty Mutual Insurance Company was entitled to $24,000 out 

of a settlement of $56,250 that Kim Swanson had received for 

claims arising out of the death of her husband Gary P. 

Swanson. 

Gary P. Swanson, an employee of Champion International 

Corporation, died in an airplane crash on July 14, 1976 in 

the course of performing an aerial timber cruise for his 

employer. At the time of the accident, Champion was insured 

for its Workers' Compensation liabilities by Liberty Mutual. 

The insurer paid a total amount of $37,862.75 in benefits to 

Kim R. Swanson, the surviving spouse of the decedent, in 

full satisfaction of the Workers' Compensation obligations 

of Champion and Liberty Mutual Insurance Company. 

The airplane in which the decedent Gary P. Swanson was 

killed was owned by Stockhill Aviation of Kalispell. Stockhill's 

insurer, National Aviation Underwriters, Inc. brought a 

declaratory judgment action contesting coverage. On April 12, 

1978, counsel for Kim Swanson wrote to counsel for Liberty 

Mutual "tendering" participation under section 39-71-414(2), 

MCA, in the declaratory judgment suit, and asking for further 

participation by Liberty Mutual in a proposed action against 

Cessna Aircraft, on a products liability claim against the 

manufacturer. On May 5, 1978, Liberty Mutual, through its 

counsel, pointed out that it was already participating in 

the declaratory judgment action and that it would thereafter 

participate in any subsequent action by the widow against 
Stockhill Aviation. Liberty Mutual declined to participate 

in a proposed lawsuit against Cessna upon the ground that it 

had only a remote chance of success. 

While the declaratory judgment action was pending, Kim 

R. Swanson, through her attorney, settled with National 

Aviation Underwriters, Inc., the insurer for Stockhill, all 

of her claims against Stockhill for the sum of $56,250. As 

between Stockhill and Kim R. Swanson, the settlement was 

allocated $3,000 to the survival action, and $53,250 to the 

wrongful death action. 

It is not clear in the record that suit, as distinguished 

from claim, had been instituted against Stockhill Aviation, 

Inc. by Kim R. Swanson either on the survival action or the 

wrongful death action. 

Liberty Mutual filed a petition before the Workers' 

Compensation Division asking the Division to determine 

Liberty Mutual's subrogation rights in the settlement that 

had been effectuated. The division by order determined that 

Liberty Mutual was entitled to a subrogation interest out of 

the settlement of $24,000. 

Kim R. Swanson appealed the decision of the Workers' 

Compensation Division to the Workers' Compensation Court. 

There Kim R. Swanson contended that the settlement included 

payment by the responsible third party for noneconomic 

as well as economic losses sustained by the claimant and that 

such noneconomic losses were the property right of Kim R. 

Swanson and not subject to the subrogation claims of ~iberty 

Mutual. The Workers' Compensation Court, relying on s is her 

v. Missoula White Pine Sash Co. (1974), 164 Mont. 41, 518 

P.2d 795, concluded that the Workers' Compensation Act does 
not provide a differentiation between those portions of the 

settlement allocated to wrongful death and survival claims, 

or to economic and noneconomic losses, or to the wife and 

children. On that basis, the Workers' Compensation Court 

affirmed the division order that Liberty Mutual was entitled 

to subrogation of $24,000 from the settlement. 

Kim R. Swanson duly appealed the order of the Workers' 

Compensation Court to this Court. 

We frame the issue before us thus: where the death of 

an employee in the course of his employment is caused by the 

neglect of a party other than his employer or fellow employees 

(section 39-71-412, MCA) and the heirs of the decedent 

employee receive proceeds from settlement or judgment from 

the responsible third party, does the Workers' compensation 

lien of decedent's employer or its insurer attach to that 

portion of the proceeds which may represent noneconomic 

damages to the heirs? 

Counsel for Kim R. Swanson has carefully limited the 

issue to those noneconomic damages that she would have 

received in her personal right which may be part of the settlement. 

At first blush, it would seem that this case is controlled 

by this Court's earlier holding in Fisher, supra. There, we 

held that the Workers' Compensation Act does not in its 

subrogation clause differentiate between survival actions 

and actions for wrongful death. Therefore, this Court 

reasoned, all recoveries made through either claim of action 

were subject to the subrogation interest of the employer or 

the insurer if the death of the decedent arose out of or in 

the course of his employment. 
The case at bar presents a facet slightly different 

than the court faced in Fisher. Here the claimant widow 

contends squarely that the noneconomic damages recovered by 

her as a part of the settlement of both causes of action 

against the responsible third party are not subject to 

subrogation by the employer or its insurer. It is a contention that leads us to re-examine the totality of the 

holding in Fisher for two reasons: (1) the intrinsic 

differences in the sources and effect of recoveries between 

survival actions and wrongful death actions were not discussed 

in Fisher; and, (2) the changes in the subrogation provisions 

of the Workers' Compensation Act since Fisher which require 

a reassessment of the bases on which Fisher is grounded. 

We look first at the causes of action that are open in 

Montana to the survivors of a decedent whose death is caused 

by the negligence of another. 

One cause of action is the "survival" action. It 

arises from section 27-1-501, MCA, t-ke Montana version of 

Lord Campbell's Act. By this statute, a cause of action, 

including tort actions existing during the lifetime of a 

person survive his death, and the cause may be pursued 

against the responsible party by his personal representative. 

See section 72-3-604, MCA. The damages that may be recovered 

in the survival cause of action for the death of the decedent 

through tort include his lost earnings from the time of his 

injury to his death; the present value of his reasonable 

earnings during his life expectancy, Krohmer v. Dahl (19651, 

145 Mont. 491, 402 P.2d 979; the medical and funeral expenses 

incurred by him as a result of the tort; reasonable compensation for his pain and suffering, and other special damages. 

Beeler v. Butte and London Copper Development Co. (1910), 

41 Mont. 465, 478, 110 P. 528. 
Note that the source of the damages recoverable in the 

survival action are personal to the decedent. They do not 

include any damages suffered by the decedent's widow, children 

or other heirs. Marinkovich v. Tierney (1932), 93 Mont. 72, 

86, 17 P.2d 93, 96. 

Note further the effect of recovery of such damages by 

settlement or satisfaction of judgment for the survival 

claim. Such damages belong to the decedent's estate. They 

are subject to the claims of his creditors. They must be 

included in any computation to determine if inheritance 

taxes are due from his estate. 

Only the personal representative may sue for the damages 

suffered by the decedent in survival actions. Section 27-1- 

501, MCA. Neither the widow nor any other heir has a legal 

right to pursue such an action unless appointed as a personal 

representative. The damages suffered are so personal to the 

decedent that this Court has held that no survival action 

exists if the decedent's death is instantaneous. illo on v. 

Great Northern Ry. Co. (1909), 38 Mont. 455, 502, 100 Po 

960, 966. Reason: the cause of action must have existed 

in the lifetime of the decedent to survive him under the 

survival statute. 

The distribution by the personal representative of 

damages recovered in a survival action is controlled by the 

law of probate. After payment of creditors, expenses of 

administration and inheritance taxes, if any, the personal 

representative distributes the damage proceeds as a part of 

the estate of the decedent, controlled by his will or by the 

laws of intestate succession. 

Since the subrogation clause of the Workers' Compensation 

Act refers to the personal representative, section 39-71-414, 
MCA, it is clear that the cause of action embraced in the 

survival proviso of section 27-1-501, MCA, is subject to the 

employer's subrogation rights under 37-71-414, MCA. The 

employer or his insurer is in effect and by this statute a 

super creditor of the estate of the decedent, having a claim 

prior to any other creditor of the decedent or tax agency to 

that portion of the decedent's estate included in the employer's 

subrogation rights. Especially the subrogation claim comes 

before any heir's right of distribution of the recovered 

damages from the estate. 

We must be conscious, however, of the point that the 

damages recovered by the personal representative in the 

survival action may include economic and noneconomic items. 

In addition to medical costs, funeral expenses, and wageloss damages, the pain, suffering, and disfigurement of the 

decedent may have been compensated, Beeler, supra, and even 

punitive damages awarded. Nonetheless, the subrogation 

clause is clear. The employer or his insurer is entitled to 

subrogation from the personal representative without regard 

to the nature of the damages for which the decedent through 

his estate is compensated in the survival action. Section 

39-71-414(1), MCA. Thus far we are in agreement with the 

holding in Fisher. 

Now let us examine the nature, source, and effect of 

damages recoverable under the "wrongful death" statute. 

By virtue of section 27-1-513, MCA, a cause of action 

for the wrongful death of one not a minor (for the wrongful 

death of a minor, see section 27-1-512, MCA; the result is 

the same) is created and vests in the heirs of the decedent. 

The cause of action may be prosecuted by the personal representative or by the heirs. Section 27-1-513, MCA. 
The law is not specific about the source of damages in 

a wrongful death action. It provides that "damages may be 

given as under all the circumstances of the case may be 

just." Section 27-1-323, MCA. Generally the proof of 

damages under this cause of action will include loss of 

consortium by a spouse, Mize v. Rocky Mountain Bell Telephone 

Co. (19091, 38 Mont. 521, 535, 100 P. 971, 974; the loss of 

comfort and society of the decedent suffered by the surviving 

heirs; and the reasonable value of the contributions in 

money that the decedent would reasonably have made for the 

support, education, training and care of the heirs during 

the respective life expectancies of the decedent and the 

survivors. Hennessey v. Burlington Transp. Co. (U.S.D.C. 

Dist. Mont. 1950), 103 F.Supp. 660, 665. No specific pecuniary 

loss need be shown. Waltee v. Petrolane, Inc. (1973), 162 

Mont. 317, 321, 511 P.2d 975, 978. 

Note again that the source of the damages recoverable 

in a wrongful death action is personal to the survivors of 

the decedent. The damages are not those of the decedent, 

but of the heirs by reason of his death. The action may be 

prosecuted without regard to whether the decedent's death 

was instantaneous. 

Again note further the effect of the recovery of damages 

in a wrongful death cause of action by settlement or by 

satisfaction of judgment. Such damages do not belong to the 

decedent's estate. They are not subject to the claims of 

decedent's creditors. They are not a part of the estate for 

the determination of inheritance taxes. They pertain to the 

personal loss of the survivors. Though the personal representative of the decedent, under the wrongful death statute, 

may sue the responsible party, any recovery made by the 
personal representative in the wrongful death claim is not 

in his capacity as personal representative. He is a trustee 

of the moneys for the person entitled. Batchoff v. Butte Pacific 

Copper Co. (1921), 60 Mont. 179, 183-184, 198 P. 132, 134. 

When a wrongful death action is prosecuted, the damages 

are returned by general verdict, covering all of the heirs 

involved. The jury is not given the duty of ascribing so 

much to one heir and so much to another. Rather, the trial 

court, after the verdict, is given the task of allocating 

the money damages among the heirs. State ex rel. Carroll v. 

District Court (1961), 139 Mont. 367, 372, 364 P.2d 739, 741. 

The distribution of the damages to the heirs is not controlled 

by the decedent's will or by the laws of intestate succession. 

This Court has never had occasion to examine the damages 

recoverable in a wrongful death action as economic or noneconomic in nature. Who is to say? Such damages will 

usually be founded on such factors as the loss of counsel, 

protection, aid, comfort, guidance and society of the decedent, 

the loss of consortium, and the loss by the survivors of 

reasonable support, contributions, and the opportunity for 

education or training from the decedent. The loss of support 

or education is not measured by the lost future earnings of 

the decedent, per se, although proof of such earnings is 

necessary in wrongful death actions. Rather, it is measured 

in terms of the needs of the heirs which the decedent would 

reasonably have supplied to the heirs had he lived. 

In any event, the damages recoverable in a wrongful 

death action are so personal to the heirs that the subrogation 

clause of the Workers' Compensation Act must be stretched to 

the fullest extent to include them. The obvious intent of 

the wrongful death statute is to provide a recovery for 
i ' -,f" ,b- /- (- : 1 ?% bLLf Ld :-:I Lf 

losses not covered by herd-, for heirs who 

might otherwise have no recovery for their personal loss, 

especially if the death of the decedent were instantaneous. 

The heirs were not parties to the employment contract that 

existed between the employer and the employee-decedent. To 

construe the compensation subrogation clause as including 

the damages appointed under the wrongful death statute is to 

lessen the personal rights of heirs of employees as compared 

to the heirs of noncompensated decedents. There exists in 

that light a conflict between the wrongful death statutes on 

the one hand, which seek to provide succor for heirs, and 

the subrogation clause on the other, which seeks to invade 

that succor. 

Then there is the nature of subrogation itself. "Subrogation" has its root in the latin "subrogare", to pray 

under or through. It is the right of one who has paid what 

another should have paid to recover the payment from the 

party justly responsible. Skauge v. Mountain States Tel. & 

Tel. Co. (1977), 172 Mont. 521, 524, 565 P.2d 628, 630. 

Compensation payments are of two kinds: (1) for medical or 

funeral expenses incurred, and, (2) payments in lieu of 

wages. These are the items of damages, as we have shown 

above, that are recoverable in the decedent's estate 

through the survival action. (It is true, however, that 

medical and burial expenses can be reimbursed through the 

wrongful death action.) It is in the survival action that 

"the party justly responsible" ordinarily makes recompense 

for the expenses incurred and wages lost to the decedent. 

It is there that the subrogation rights of the employer, by 

the nature of subrogation should reach. 

We have said that there is another factor, in looking 

at Fisher, that we should consider: namely, the changes in 
the subrogation clauses as they existed at the time of 

Fisher to the clauses that now apply to the case at bar. 

The statute in effect when Fisher was decided was 

section 92-204, R.C.M. 1947. With respect to subrogation, 

it provided in pertinent part: 

"I. . . In the event said employee shall 

prosecute an action for damages for or on 

account of such injuries so received, he shall 

not be deprived of his right to receive compensation 

but such compensation shall be received by him 

in addition to and independent of his right to 

bring action for such damages, provided, that in 

the event said employee, ----- or in case of his death, 

his personal representative, shall bring such 

action, then the employer or insurance carrier paying 

such compensation shall be subrogated only to 

the extent of either one-half (1/2) of the gross 

amount paid at time of bringing action and the 

amount eventually to be awarded -- to such employee 

as compensation under the workmen's compensation 

law, or one-half (1/2) of the amount recovered and 

paid to such employee in settlement of, or by 

judgment in said action, whichever is the lesser amount. 

All expense of prosecuting such action shall be 

borne by the employee, or if the employee -- shall - fail 

to bring such action or make settlement of - his 

cause -- of action within six (6) months from the time 

such injury is received, the employer or insurance 

carrier who pays such compensation may thereafter 

bring such action and thus become entitled to all 

of the amount received from the prosecution of such 

action up to the amount -- paid the employee under the 

Workmen's Compensation Act, and all over that amount 

shall be paid to the employee . . . 1 11 

--- 164 Mont. 41, 46-47, 518 p.2d 795, 798. (Emphasis added.) 

The legislature amended section 92-204, R.C.M. 1947, by 

breaking the complex and wandering statute up into several 

components. The result is that the pertinent parts of our 

statutes as they apply to this case are as follows: 

"39-71-412. Liability _ of _ third party - other ____ - than 

employer - or fellow employee--additional cause of - 

action. 

. . . Whenever such event occurs to an employee 

while performing the duties of his employment and 

such event is caused by the act or omission of 

some persons or corporations other than his employer 

or the servants or employees of his employer, the 

employee or in case of his death his heirs or 

personal representative shall, in addition to the 

right to receive compensation under this chapter, 
have a right to prosecute any cause of action he 

may have for damages against such persons or 

corporations." 

"39-71-414. Subrogation. (1) If an action 

is prosecuted as provided for in 39-71-412 or 

39-71-413, and except as otherwise provided in 

this section, the insurer is entitled to 

subrogation for all compensation and benefits 

paid or to be paid under the Workers' 

Compensation Act. The insurers right of 

subrogation is a first lien on the claim, 

judgment, or recovery. 

" (2) (a) If the injured employee intends to 

institute the third party action, he shall give 

the insurer reasonable notice of his intention 

to institute the action. 

" (b) The injured employee may request that the 

insurer pay a proportionate share of the reasonable 

cost of the action, including attorneys' fees. 

"(c) The insurer may elect not to participate 

in the cost of the action. If this election is 

made, the insurer waives 50% of its subrogation 

rights granted by this section. 

"(d) If the injured employee or the employee's 

personal representative institutes the action, 

the employee is entitled to at least one-third 

of the amount recovered by judgment or settlement 

less a proportionate share of reasonable costs, 

including attorneys' fees, if the amount of 

recovery is insufficient to provide the employee 

with that amount after payment of subrogation. 

"(3) If an injured employee refuses or fails to 

institute the third party action within 1 year from 

the date of injury, the insurer may institute the 

action in the name of the employee and for the 

employee's benefit or that of the employee's 

personal representative. If the insurer institutes 

the action, it shall pay to the employee any amount 

received by judgment or settlement which is in excess 

of the amounts paid or to be paid under the Workers' 

Compensation Act after the insurer's reasonable costs, 

including attorneys' fees for prosecuting the action, 

have been deducted from the recovery." 

Especially pertinent to our discussion here is the foregoing 

provision of section 39-71-414(3), MCA, that if the injured 

employee refuses or fails to institute the third party 

action, the insurer may institute it for the benefit of "the 

employee's personal representative." No mention is made in 
that statute of an action "for the benefit of the heirs" 

The statute could not be construed as giving the employer or 

its insurer the right to institute a wrongful death action. 

While it is true, as we have pointed out above, that a 

personal representative may sue for the wrongful death 

rights of the heirs, nonetheless if recovery is made, the 

personal representative holds those proceeds, not as a 

personal representative, but as a trustee of the moneys for 

the benefit of the heirs. Batchoff, supra. 

More important is the change that was made in the 1977 

Montana Legislature of the provisions that relate to the 

protection of the employer through the exclusivity of the 

Workers' Compensation Act. In Fisher, this Court placed 

great reliance on that part of former section 92-204, R.C.M. 

1947, which stated, "and in case of death shall bind his 

personal representative, and all persons having any right or 

claim to compensation for his injury or death," as meaning 

that the recovery rights of the heirs were subject to the 

subrogation rights of the employer. 164 Mont. at 45, 518 

The 1977 amendment removed this language from the subrogation portions of former section 92-204, and established 

a separate statute which related to the exclusivity of the 

Workers' Compensation Act as to the employer. The intent of 

the legislature that the heirs were bound as to exclusivity 

but not as to subrogation is now more clear. That statute 

now reads: 

"39-71-411. Provisions of chapter exclusive 

remedy--nonliability ofsured employer. For 

all employments covered under the Workers' 

Com~ensation Act or for which an election has 

been made for coverage under this chapter, the 

provisions of this chapter are exclusive. Except 
as provided in part 5 of this chapter for uninsured 

employers and except as otherwise provided in 

the Workers' Compensation Act, an employer is not 

subject to any liability whatever for the death of 

or personal injury to an employee covered by the 

Workers' Compensation Act or for any claims for 

contribution or indemnity asserted by a third person 

from whom damages are sought on account of such 

injuries or death. The Workers' Compensation Act 

binds the employee himself, and in case of death 

binds his personal representative and all persons 

having any right or claim to compensation for his 

injury or death, as well as the employer and the 

servants and employees of such employer and those 

conducting his business during liquidation, bankruptcy, or insolvency." 

A study of the foregoing statute will demonstrate that 

the inclusion of the words "all persons having any right or 

claim to compensation for his injury or death" is intended 

to bind those persons as to suits against the employer, not 

third parties. In that context, any reference to this 

language with respect to the subrogation rights in the 

succeeding statutes is to take the quoted language out of 

context and away from the subject to which it is intended to 

pertain. The language relates to exclusivity; under the 

present statutory scheme, it should not be construed to 

include the Workers' Compensation subrogation provisions, 

for in none of the present subrogation provisions is there 

any indication that the legislature intended to include the 

rights of heirs within the employer's subrogation lien. 

We therefore conclude that under the present statutory 

scheme, as it applies to this case, and because of the 

intrinsic differences that exist now and have always existed 

in the source and effect of recoveries made in survival 

actions as distinguished from wrongful death actions, 

the subrogation rights of the employer or its insurer under 

the Workers' Compensation Act do not extend to recoveries 

made under wrongful death claims. To that extent, we 
distinguish Fisher v. Missoula White Pine Sash Co. (19741, 

164 Mont. 41, 518 P.2d 795. 

Decisions of other states with respect to subrogation 

rights of the employer or its carrier are not helpful. The 

variety and shades of opinion or statutory background differ 

from state to state. Suffice it to say that in recognizing 

subrogation rights as extending to benefits received by 

dependents, regardless of the nature of the action, we 

appear to be following the trend of the majority of the 

decisions in the United States. Of special interest on this 

point is the fact that in Utah it is recognized that because 

of state constitutional provisions, nondependent heirs are 

not divested of their rights to damages as against subrogating 

carriers. Oliveras v. Caribou-Four Corners, Inc. (Idaho 1979), 

598 P.2d 1320. In Idaho, it is provided by statute that if 

no dependents survive the decedent, the employer has a cause 

of action for the benefits paid, and the heirs separately 

5 

have a right of action. Idaho Code (1972) , 5 223 (f) . 

Having so concluded, we do not, however, end the discussion with regard to the rights of the widow Kim R. Swanson 

in this case. What has been presented to us here, in the 

carefully tailored issue presented by Swanson's counsel, is 

whether the Workers' Compensation Court should hold a 

hearing to determine and allocate the portion of the settlement 

that is referable to the economic, as distinguished from 

the noneconomic damages that the settlement may include. 

That aspect of the case requires some examination. 

We pointed out above that in a survival action, the 

lost wages between the date of the injury and the death, and 

the future earnings (reduced to present value) that the 

decedent might have earned during his life expectancy are 
proper elements of damages. We have also pointed out 

that in wrongful death actions, in determining "such damages 

. . as under all the circumstances of the case may be 

just" (section 27-1-323, MCA), the jury may include as a 

factor in such damages the reasonable value of the contributions 

in money that the deceased would reasonably have made during 

his lifetime for the support, education, training and care 

of the heirs during their respective life expectancies. 

It is obvious that the contributions which a decedent 

might have made to his heirs for their support, maintenance, 

education or training would come out of his earnings during 

his lifetime. While it is true that survival actions and 

wrongful death actions are separate and distinct causes of 

action and that recovery of lost earnings in the survival 

action, or the value of contributions in the wrongful death 

action, are each proper factors for determination in those 

respective cases, it is also true that in Workers' Compensation cases where a death is involved, the heirs receive 

benefits that represent the wages that the employee would 

have received had he lived. Under considerations of equity 

and the doctrine of subrogation, therefore, apart from the 

statutory provisions, it is meet and just in cases of 

instantaneous death that the subrogation lien of the employer 

or its insurer should extend to that portion of the recovery 

made under the wrongful death claim that may represent 

reasonable contributions to the heirs derived from the 

earnings of the decedent. 

Where the death of the employee is instantaneous, no 

recovery exists under the survival action. If recovery is 

made nonetheless in the wrongful death phase of the claim, 

and no recovery is possible under the survival action, the 
Workers' Compensation Court should determine the value of 

the economic damages in the settlement or the judgment. 

By "economic damages" we refer to those elements of damages 

in a wrongful death case that would have their source in the 

earnings of the decedent, and recompensed medical and burial 

expenses paid partly or wholly by the subrogating carrier. 

Once that portion of the wrongful death settlement or 

judgment is determined, the Workers' Compensation Court 

should apply the subrogating carriers' rights to the economic 

damages received by dependent heirs in the usual fashion. 

Whether the Workers' Compensation Court allows subrogation out of survival proceeds, or out of wrongful death 

proceeds, the attorneys fees and costs would, in the absence 

of circumstances requiring otherwise, be allocated pro-rata 

between the subrogated portion and the remaining portion of 

the whole settlement. 

The order of the Workers' Compensation Court in this 

case should take the following form: 

(1) Amount of third party action recovery $56,250.00 

(2) Attorneys' fees and costs 20,250.00 

(3) Amount of recovery allocated to 

survival action (in instantaneous 

death write "none") $ 

(4) Amount of recovery in wrongful 

death allocation determined to 

represent economic damages (use 

a figure only if death were 

instantaneous, otherwise enter " none " 1 

(5) Amount of recovery subject to 

employer/carriergs subrogation 

rights (enter figure from (3) or 

(4)) 

(6) Attorneys fees and costs allocable 

to subrogation rights I 
(7) Factor to be used in determining 

proportion of attorneys fees and 

costs to be assumed by insurer and 

claimant [(6)/(5)] 

(8) Claimants minimum statutory entitlement excluding proportionate share 

of attorneys fees and costs 

[ (5) x 1/31 

(9) Insurer's maximum statutory entitlement excluding proportionate share 

of attorneys fees and costs 

[ (5) x 2/31 $ 

(10) Insurer's total payments to date $37,862.75 

(11) Insurer's portion to date of attorneys 

fees and cost obligation [ (7) % x (6) 1 $ 

(12) Net portion insurer is entitled to 

from third party recovery for 

payments made [(9) - (ll), or (10) 

whichever is the lesser] $ 

In the settlement of this case, counsel for the heirs 

of the decedent and counsel for National Aviation Underwriters, between themselves, allocated the sum of $3,000 to 

the survival action, and the remainder of the settlement to 

the wrongful death action. When subrogation is considered, 

neither the court nor the Workers' Compensation Court or 

Division should be bound by the allocations so made between 

private counsel. We find it proper here that the Workers' 

Compensation Court be directed to consider, in the absence 

of a District Court determination, all of the elements that 

went into the settlement arrived at, and to apportion therefrom 

that portion of the settlement that represents the settlement 

value of the survival action, if the decedent's death was 

not instantaneous. If his death was instantaneous, then the 

entire settlement should be regarded as a wrongful death 

recovery and the economic damages allocated accordingly. 

The order and judgment of the Workers' Compensation 

Court denying the motion of Kim R. Swanson to determine the 

economic and noneconomic elements of the settlement for 

purposes of subrogation is hereby vacated and the cause is 

remanded to the Workers' Compensation Court with instructions 
to conduct hearings, and to make and enter its findings, 

conclusions and order determining the subrogation rights of 

the employer or its insurer based on the guidance of this 

opinion. 

i ,1 ..X.c/ ib, 

Justice 

We Concur: 

- Chief Justice 

Morrison, Jr . 
Mr. Chief Justice Haswell, dissenting : 

I dissent. In my view, our decision in Fisher v. Missoula 

White Pine and Sash Co. (1974), 164 Mont. 41, 518 P.2d 795, mandates affirmance of the order of the Workers' Compensation Court. 

The majority hold that the subrogation rights of the 

employer and insurer do not extend to a wrongful death recovery 

by the heirs of the deceased employee against a third party. I 

find no support for this holding in the subrogation statute of 

the Workers' Compensation Act. Section 39-71-414, MCA. 

Moreover, such holding is directly contrary to our decision in 

Fisher. 

In Fisher we held that the distinction between survival 

and wrongful death actions was neither preserved nor dif ferentiated under the subrogation provisions of the Workers 

Compensation Act; that such distinction finds no support in the 

statutory plan or purpose of the Act; that the compensatory purpose of the subrogation provision remains the same whether compensation benefits are paid to the employee or in case of his 

death to his surviving dependents; and accordingly the employer 

and insurer is subrogated to that portion of a compromise settlement that the widow received from a third party tortfeasor in a 

wrongful death action. 

The following passages from Fisher illustrate its rationale : 

"Claimant contends that any subrogation right 

the employer or its insurer possesses is purely 

statutory under section 92-204, R.C.M. 1947, of 

the Montana Workmen's Compensation Act. She 

argues -- that this statute grants subrogationonly 

on derivative claims of the injured employee and 

-- has no application to wrongful death actions 

involving claims fordamages suffered by the 

survivors." (Emphasis added.) 164 Mont. at 44-45, 

518 P.2d at 797. 

"We reject such construction as inconsistent 

with the statutory plan and purpose of the 

Workmen1 s Compensation Act. The purpose of the 

subrogation provisions is to compensate the 

employer and his insurer to some extent for the 

additional liability they assume under the 

Workmen s Compensation Act for wrongful acts of 

independent third party tortfeasors. Koppang 
v. Sevier, 101 Mont. 234, 53 P.2d 455. 164 

Mont. at 47, 518 P.2d at 798. 

"Accordingly, the claimed distinction between 

subrogation rights in survival actions and 

wrongful death actions finds no support in the 

statutory plan or purpose of the Workmen's 

Compensation Act." 164 Mont. at 48, 518 P.2d at 

799. 

The majority attempt to distinguish Fisher on two grounds : 

( 1) statutory changes in the Workers' Compensation Act since 

Fisher, and (2) the differences between wrongful death and survival actions and economic and noneconomic damages. 

In reasoning that statutory changes in the Act since 

Fisher require a different result in this case, the majority 

ignore our decision in Tuttle v. Morrison-Hnudsen Co., Inc. 

(1978), 177 Mont. 168, -QBH P.2d 1379: 

Sw 

"The statute under consideration [the subrogation statute in the Workers' Compensation Act] 

was amended in 1977. The amendments simply 

cleared up the language in the statute and 

divided it into two sections. --- They did not 

make any substantive change -- in the statute." 

( ~mphzs added. ) 

The majority then explain at length the difference between 

survival actions and wrongf ul death actions and economic damages 

and noneconomic damages. I agree that these differences exist. 

I do not agree that the legislature intended to incorporate these 

differences in the Workers' Compensation Act and deny subrogation 

in wrongful death recoveries against third persons. 

The controlling statute provides in pertinent part: 

"39-71-414. Subrogation. (1) If an action is 

prosecuted as provided for in 39-71-412 [tort 

action against third party] or 39-71-413 [action 

against fellow employee for intentional and 

malicious acts] and except as otherwise provided 

in this section, the insurer is entitled to 

subrogation for all compensation and benefits 

paid or to be paid under the Workers' 

Compensation Act." (Emphasis added. ) 

Here compensation and benefits under the Workers' 

Compensation Act were paid to the surviving widow. She presented 

a tort claim against a third party, Stockhill Aviation, who paid 

her $56,250. Under the plain language of the Act quoted above, 
the Workers' Compensation insurer is entitled to subrogation for 

all compensation and benefits paid. No distinction is made between survival and wrongful death actions, between instantaneous 

and prolonged death or between economic and noneconomic damages. 

The majority have simply engaged in some judicial legislation to justify the result they seek. In the process they have 

denied effect to Fisher and have ignored Tuttle. 

b 

Chief Justice \