No. 01-663

IN THE SUPREME COURT OF THE STATE OF MONTANA

2003 MT 80

CASSANDRA SCHMILL,

Petitioner and Respondent,

v.

LIBERTY NORTHWEST INSURANCE CORP., 

Respondent, Appellant and Insurer for

MURALT'S TRUCK PLAZA,

Employer.

APPEAL FROM: Workers’ Compensation Court, State of Montana

The Honorable Mike McCarter, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Larry W. Jones, Liberty Northwest Insurance Corp., Missoula, Montana

For Respondent:

Laurie Wallace, Bothe & Lauridsen, P.C., Columbia Falls, Montana

For Amicus Montana State Fund:

David A. Hawkins, State Compensation Insurance Fund, Helena, Montana

Submitted on Briefs: February 13, 2003

 Decided: April 10, 2003

Filed:

__________________________________________

Clerk
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Justice Terry N. Trieweiler delivered the Opinion of the Court.

¶1 The Petitioner, Cassandra Schmill, filed a petition in the Montana Workersí

Compensation Court, in which she alleged that she suffered from an occupational disease

arising from her employment with Muraltís Travel Plaza. Muraltís is insured by the

Respondent, Liberty Northwest Insurance. Schmill contended that because ß 39-72-706,

MCA, of the Occupational Disease Act required reduction of disability benefits for nonoccupational factors, while the Workersí Compensation Act did not, her right to equal

protection was violated. The Workersí Compensation Court held that ß 39-72-706, MCA,

violates the equal protection clause of the United States and Montana Constitutions and

awarded Schmill full benefits without reduction for non-occupational factors. Liberty

Northwest appeals that conclusion. We affirm the judgment of the Workersí Compensation

Court. 

¶2 The sole issue on appeal is, whether the Workersí Compensation Court erred when

it concluded that ß 39-72-706, MCA, violates the equal protection clause of the United States

and Montana Constitutions?

FACTUAL AND PROCEDURAL BACKGROUND

¶3 In the Spring of 1999 the Respondent, Cassandra Schmill, had been working at

Muraltís Travel Plaza as a waitress for approximately five years when she began

experiencing discomfort in her left heal. She was subsequently diagnosed with chronic left

Achilles peritendonitis and tendonosis, an occupational disease. Schmill began physical

therapy for her condition and filed a temporary total disability claim with Muraltís insurer,
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Liberty Northwest Insurance. Liberty Northwest accepted the claim pursuant to Montanaís

Occupational Disease Act. Despite physical therapy and treatment for the pain, her condition

did not improve and surgery was performed by Dr. Glenn Jarrett in February of 2000. 

¶4 After Schmill reached maximum medical improvement, she was given a 3% physical

impairment rating of the whole body by Dr. Jarrett. Dr. Jarrett indicated that it would be

difficult for Schmill to walk continuously and a job that allowed her to rest periodically was

more appropriate to her condition. In spite of her limitations, Schmill did not suffer an actual

wage loss as the result of her occupational disease. Therefore, Schmill requested an

impairment award for the disability caused by her occupational disease pursuant to the

Workersí Compensation Act. That request was denied by Liberty Northwest. Schmill

sought benefits pursuant to the WCA rather than the ODA because the ODA did not provide

partial disability or impairment benefits. 

¶5 On March 12, 2001, Schmill filed a petition in the Workersí Compensation Court in

which she alleged that she was entitled to the same impairment award that was available

pursuant to the WCA. Liberty Northwest filed a motion for summary judgment and argued

that Schmillís impairment was the result of an occupational disease and that, therefore, she

was not entitled by statute to benefits.

¶6 Subsequently, the Workersí Compensation Court issued its decision in Stavenjord v.

State Compensation Ins. Fund, 2001 MTWCC 25, which required that permanent partial

disability benefits be paid to occupational disease claimants pursuant to the WCA. Schmill
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filed a response to Liberty Northwestís motion for summary judgment, which cited the

Workersí Compensation Courtís decision in Stavenjord in support of her claims.

¶7 Based on the Stavenjord decision, Liberty Northwest agreed to pay Schmillís

impairment award. However, Liberty Northwest deducted twenty percent from her award

for non-occupational factors that contributed to her disability pursuant to ß 39-72-706, MCA.

Schmill maintained that she was entitled to a full payment pursuant to the WCA and that the

apportionment of benefits pursuant to ß 39-72-706, MCA, violated her right to equal

protection of the law. The issue that remained for the Workersí Compensation Court was

whether the apportionment statute of the ODA, found at ß 39-72-706, MCA, violated

Schmillís constitutional right to equal protection of the law.

¶8 On June 22, 2001, the Workersí Compensation Court concluded that ß 39-72-706,

MCA, violated the Montana and United States Constitutionsí guarantees of equal protection

because it provided disparate treatment to injured workers and those with what are now

defined as occupational diseases. Consequently, it held that Schmill was entitled to the full

amount of the impairment award without a reduction for non-occupational factors. 

STANDARD OF REVIEW

¶9 The Workersí Compensation Courtís decision on the merits was based on its

construction of constitutional law. Our review of questions of constitutional law is plenary.

In re Custody of Krause, 2001 MT 37, ¶ 16, 304 Mont. 202, ¶ 16, 19 P.3d 811, ¶ 16. We

review conclusions of law to determine whether they are correct. Henry v. State

Compensation Ins. Fund, 1999 MT 126, ¶ 10, 294 Mont. 449, ¶ 10, 982 P.2d 456, ¶ 10.
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¶10 All legislative enactments are presumed to be constitutional. Henry, ¶ 11. The party

challenging the constitutionality of a statute bears the burden of proving the statute

unconstitutional beyond a reasonable doubt. Henry, ¶ 11. 

DISCUSSION

¶11 Liberty Northwest contends that the Workersí Compensation Court erred when it

concluded that the ODAís apportionment statute is unconstitutional because the equal

protection clause does not require that diseased and injured workers be treated in the same

manner. In the alternative, Liberty Northwest maintains that there is a legitimate government

interest for apportioning compensation based on the percentage of a disease that is

attributable to non-occupational factors. Finally, Liberty Northwest contends that the WCA

reduces compensation in a similar fashion and that, therefore, workers are not treated

differently by the ODA and the WCA. 

¶12 Article II, Section 4 of the Montana Constitution provides that ì[n]o person shall be

denied equal protection of the laws.î The equal protection clause requires that ìall persons

be treated alike under like circumstances.î Grooms v. Ponderosa Inn (1997), 283 Mont. 459,

467, 942 P.2d 699, 703. An equal protection claim brought by an injured or diseased worker

is reviewed pursuant to the rational basis test. Henry, ¶ 33. ìThe rational basis test requires

the government to show (1) that the statuteís objective was legitimate, and (2) that the

statuteís objective bears a rational relationship to the classification used by the legislature.î

Henry, ¶ 33. ìëA classification that is patently arbitrary and bears no rational relationship

to a legitimate government interest offends equal protection of the law.íî Henry, ¶ 36
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(quoting Davis v. Union Pacific R. Co. (1987), 282 Mont 233, 242-43, 937 P.2d 27, 32

(citation omitted)).

¶13 Liberty Northwest argues that the apportionment clause is valid pursuant to this

Courtís holding in Eastman v. Atlantic Richfield Co. (1989), 237 Mont. 332, 777 P.2d 862.

In Eastman we considered a pro se appellantís equal protection challenge of the ODA that

was raised for the first time on appeal. We held Eastman was only entitled to $10,000

pursuant to the ODA because he suffered from an occupational disease despite the fact the

WCA would provide greater compensation. Eastman, 237 Mont. at 340, 777 P.2d at 866.

We noted that while Eastman was unable to prove an equal protection violation, review of

the ODA indicated there were ìserious questions which should be addressed by the

legislature.î Eastman, 237 Mont. at 340, 777 P.2d at 866. In recent years, Eastman has

been both criticized and distinguished by this Court in Henry and Stavenjord v. Montana

State Fund, 2003 MT 67, 314 Mont. 466, __ P.3d __. Due to the circumstances of

Eastmanís appeal, Eastman would likely be a non-cite Opinion if decided today. 

¶14 In Henry, this Court considered the disparate treatment of a worker who suffered a

disability as the result of an ìoccupational disease.î Henry was precluded from receiving

vocational rehabilitation benefits by the ODA in spite of the fact that the WCA provided

vocational rehabilitation benefits to workers with a similar disability. Henry, ¶ 24. We

noted that when the legislature revised the definition of ìinjuryî and ìoccupational diseaseî

in 1987, two classes of workers were created which depended solely upon the number of

shifts over which an affliction occurred. Henry, ¶¶ 15, 18. A worker who suffered from a
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herniated disc that was contracted during one shift was ìinjuredî and entitled to benefits

pursuant to the WCA. Henry, ¶ 21. However, a worker who developed the same injury over

more than one shift suffered from an ìoccupational diseaseî and provided fewer benefits

pursuant to the ODA. Henry, ¶ 21. We concluded that the two classes of workers were

similarly situated for equal protection purposes. Henry, ¶ 28. 

¶15 This Court held that there was no rational basis for treating a worker who contracted

a herniated disc during one shift differently than a worker who contracted a herniated disc

over more than one shift. Henry, ¶¶ 38-40. Economic justifications were dismissed as an

insufficient reason to treat the two classes of workers differently and were not considered a

legitimate government interest. Henry, ¶ 40. We distinguished Eastman from Henry and

stated:

Second, Eastman filed his claim for compensation benefits in 1985, prior to

the 1987 amendments to the WCA and the ODA. As pointed out earlier, after

the 1987 amendments to the WCA and ODA, the definitions of ìinjuryî and

ìoccupational diseaseî no longer focus on the nature of the medical condition,

but rather focus on the number of work shifts over which the worker incurs an

injury. Thus, the historical justification for treating workers differently under

the WCA and the ODA no longer exists. Indeed, the entire underpinnings of

Eastman have evaporated, rendering its continued validity questionable. 

Henry, ¶ 43.

¶16 In Stavenjord v. Montana State Fund, 2003 MT 67, 314 Mont. 466, __ P.3d __, we

recently affirmed the reasoning the Workersí Compensation Court relied upon when it

determined the ODAís apportionment clause violated Schmillís right to equal protection.

Stavenjord followed the reasoning set forth in Henry and further questioned the validity of
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Eastman. We recognized that Eastman held that a difference in the degree of benefits

available to the two classes of workers did not violate equal protection, while Henry held that

denying one class of worker a specific type of benefit violated equal protection. Stavenjord,

¶ 42. However, that distinction was dismissed in light of the 1987 amendments to the ODA

and WCA. Stavenjord, ¶ 44. 

¶17 Consistent with Henry, we concluded that the two classes of workers created by the

ODA and the WCA were distinguished only by the time over which an affliction was

contracted, and that the two classes of workers were similarly situated for equal protection

purposes. Stavenjord, ¶ 46. We noted that the governmentís objective pursuant to ß 39-71-

105, MCA, was to provide a wage loss benefit that was reasonably related to the actual

wages lost as the result of a work-related injury or disease and, therefore, concluded that the

disparate treatment of workers based upon the time over which their injury or disease was

contracted was not reasonably related to the stated governmental interest. Stavenjord, ¶ 47

(citing ß 39-71-105(1), MCA (1997)).

¶18 For these same reasons, Liberty Northwestís continued reliance on Eastman is not

well founded. We continue to recognize that the ODA and WCA create two classes of

workers: (1) a class of workers who suffer a work-related affliction during one shift; and (2)

a class of workers who contract a work-related affliction over more than one shift. See

Stavenjord, ¶ 46; Henry, ¶ 27. We conclude that a worker who seeks an impairment award

for a physical impairment caused by an ìoccupational diseaseî is similarly situated to a

worker who seeks an impairment award for a work-related ìinjury.î The time over which
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the injury occurred remains the only distinction between the two. Regardless of the time

frame over which their affliction was contracted or the name assigned to the affliction, both

workers are physically impaired. 

¶19 Liberty Northwest cites ß 39-71-703, MCA, to support its contention that the WCA

apportions non-occupational disability factors in a manner similar to the ODA and that,

therefore, the similarly situated classes of injured workers are not treated differently.

However, it does not provide any specific reference to the apportionment language relied

upon. Nor is it clear how ß 39-71-703, MCA, of the WCA and ß 39-72-706, MCA, of the

ODA apportion non-occupational factors from a workerís impairment award in a similar

manner. A plain reading of ß 39-71-703(7), MCA, indicates that the provision prevents an

injured worker from receiving duplicate coverage. A reduction only occurs, however, when

there is a previous injury or disability rating for which the worker already received

compensation. Nothing cited by Liberty Northwest suggests that the WCA apportions nonoccupational factors in its impairment award calculation. Section 39-72-706, MCA, does

require that compensation be reduced by the percentage that an injury is attributable to nonoccupational factors. We conclude that the WCA does not apportion a workerís impairment

award in the same manner as ß 39-72-706, MCA, of the ODA.

¶20 Consequently, we must determine whether the disparate treatment of workers by the

ODA apportionment statute is rationally related to a legitimate government interest. Liberty

Northwest concedes that the public policy pronouncement in ß 39-71-105, MCA, constitutes
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the government objective for the WCA and the ODA. Section 39-71-105, MCA, provides

in part: 

It is an objective of the Montana workersí compensation system to provide,

without regard to fault, wage supplement and medical benefits to a worker

suffering from a work-related injury or disease. Wage-loss benefits are not

intended to make an injured worker whole; they are intended to assist a worker

at a reasonable cost to the employer. Within that limitation, the wage-loss

benefit should bear a reasonable relationship to actual wages lost as a result

of a work-related injury or disease. 

¶21 Liberty Northwest maintains that public policy dictates that compensation is only

available for a work-related injury or disease. Therefore, the apportionment statute in the

ODA is consistent with public policy because it apportions an impairment award for nonoccupational factors. 

¶22 Liberty Northwest has missed the point. The WCA does not take non-occupational

factors into consideration while the ODA does. The fact that the workersí compensation

system seeks to provide benefits for work-related afflictions does not justify treating the two

classes of workers identified above differently. The issue before this Court is whether the

disparate treatment of workers by the ODA violates Schmillís right to equal protection. We

conclude that it does. Liberty Northwest has not demonstrated how treating the two similarly

situated classes of workers differently furthers the stated objective of limiting benefits to job

related disability. 

¶23 We conclude that the ODA and the WCA treat similarly situated classes of workers

differently. Furthermore, apportioning Schmillís permanent impairment award for her

occupational disease pursuant to ß 39-72-706, MCA, of the ODA while providing full
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benefits for injured workers pursuant to the WCA is not rationally related to a legitimate

governmental interest. Therefore, we conclude that ß 39-72-706, MCA, violates the equal

protection guarantee found at Article II, Section 4 of the Montana Constitution. The

judgment of the Workersí Compensation Court is affirmed. 

/S/ TERRY N. TRIEWEILER

We Concur:

/S/ JAMES C. NELSON

/S/ W. WILLIAM LEAPHART

/S/ PATRICIA COTTER
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Chief Justice Karla Gray, dissenting.

¶24 I respectfully dissent from the Court's opinion for the reasons set forth in the dissent

in Stavenjord v. State Fund, 2003 MT 67, 314 Mont. 466 (Rice, J., dissenting), which I

joined. Applying that rationale to the present case, I would reverse the Workers'

Compensation Court's conclusion that § 39-72-706, MCA, violates the equal protection

clauses of the United States and Montana Constitutions. I dissent from the Court's failure

to do so.

/S/ KARLA M. GRAY