DA 10-0368

IN THE SUPREME COURT OF THE STATE OF MONTANA

2011 MT 300

ROBERT FLYNN and CARL MILLER,

Individually and on Behalf of Others

Similarly Situated,

 Petitioners and Appellants,

 v.

MONTANA STATE FUND,

 Appellee and Cross-Appellant,

 and

LIBERTY NORTHWEST INSURANCE CORPORATION,

 Respondent/Insurer and Appellee.

APPEAL FROM: Workers’ Compensation Court,

Cause No. 2000-0222

Honorable James Jeremiah Shea, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Rexford L. Palmer (argued); Attorneys Inc., P.C.; Missoula, Montana

For Appellees:

Steven W. Jennings (argued); Crowley Fleck PLLP; Billings, Montana

(Common Fund Insurers) 

Larry W. Jones; Law Offices of Larry W. Jones; Missoula, Montana

(Liberty Northwest Insurance Corporation)

November 29 2011
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Bradley J. Luck (argued); Garlington, Lohn & Robinson; Missoula, 

Montana (Montana State Fund) 

Thomas E. Martello; Montana State Fund; Helena, Montana

For Amicus Curiae (Cassandra Schmill):

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

Argued and Submitted: September 28, 2011

 Decided: November 29, 2011

Filed:

__________________________________________

Clerk
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Justice Beth Baker delivered the Opinion of the Court. 

¶1 Petitioners Robert Flynn and Carl Miller (collectively “Flynn”) appeal the Order 

of the Workers’ Compensation Court (WCC) defining the term “paid in full,” as used in 

the definition of “settled” workers’ compensation claims, for purposes of determining the 

retroactive application of judicial decisions. On appeal, we consider whether the WCC 

properly applied retroactivity principles in formulating a definition of “paid in full.”

FACTUAL AND PROCEDURAL BACKGROUND

¶2 We begin by summarizing the protracted history of this matter. This opinion 

marks the Court’s third decision since 2002, complementing several other cases that have 

outlined the parameters for retroactive application of new judicial decisions in workers’

compensation cases. Flynn initially filed a petition in the WCC, alleging Respondent

State Compensation Insurance Fund should pay a proportionate share of the attorney fees 

he incurred to recover social security disability benefits. Flynn v. St. Compen. Ins. Fund, 

2002 MT 279, ¶ 1, 312 Mont. 410, 60 P.3d 397 (Flynn I). Applying the common fund 

doctrine, we held that if a claimant successfully recovers social security disability 

benefits, thereby allowing the workers’ compensation insurer to offset benefits paid the 

claimant, the insurer must bear a proportionate share of the costs and attorney fees 

incurred by the claimant in pursuing the social security benefits. Flynn I, ¶¶ 15-18. 

¶3 On remand, the WCC determined Flynn I applied retroactively and Flynn’s 

attorney was entitled to common fund attorney fees from claimants who benefitted from 

the decision. Flynn v. Mont. St. Fund, 2008 MT 394, ¶ 7, 347 Mont. 146, 197 P.3d 1007 

(Flynn II). Shortly thereafter, this Court decided Schmill v. Liberty N.W. Ins. Corp., 2005 
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MT 144, ¶ 28, 327 Mont. 293, 114 P.3d 204 (Schmill II), concluding that our decision in 

Schmill v. Liberty N.W. Ins. Corp., 2003 MT 80, 315 Mont. 51, 67 P.3d 290 (Schmill I) 

applied retroactively. Relying on previous case law and reiterating the importance of 

finality, we held the retroactive effect of a decision “does not apply to cases that became 

final or were settled prior to a decision’s issuance.” Schmill II, ¶ 17 (quoting Dempsey v. 

Allstate Ins. Co., 2004 MT 391, ¶ 31, 325 Mont. 207, 104 P.3d 483). We left the 

determination of what is considered “final or settled” to the WCC. Schmill II, ¶ 19. 

¶4 Heeding this command, the WCC issued the Flynn Order, which was intended to 

be used as a general model for determining whether a claim is final or settled and the 

effect of retroactivity on each type of claim. Flynn II, ¶¶ 8-9. In its order, the WCC 

defined a “final” claim as a “claim in which a final judgment has been entered by the 

Workers’ Compensation Court only if the claim is not currently pending on appeal.” 

Flynn II, ¶ 9. The WCC relied on § 39-71-107(7)(a), MCA (2005), to define “settled” as

“a department-approved or court-ordered compromise of benefits between a claimant and 

an insurer or a claim that was paid in full.” Flynn II, ¶ 9. 

¶5 Shortly following the WCC’s order, we decided Stavenjord v. Mont. St. Fund, 

2006 MT 257, 334 Mont. 117, 146 P.3d 724 (Stavenjord II). In Stavenjord II, we 

determined there is no “legal authority for ‘partial’ retroactive application” of a judicial 

decision and found that judicial decisions apply retroactively to “any and all open

claims . . . .” ¶ 15 (emphasis in original). Moreover, we defined “open claims” as those 

“still actionable, in negotiation but not yet settled, now in litigation, or pending on direct 

appeal.” Stavenjord II, ¶ 15. 
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¶6 In Flynn II, we clarified several points arising from the intersection between the 

Flynn Order and Stavenjord II and the definition of “final,” “settled,” and “open.” First, 

the language of Stavenjord II discussing “open claims” did not change previous 

retroactivity rules or create new law. Flynn II, ¶ 21. Reaffirming prior case law, we 

confirmed that retroactivity principles apply to cases not “final” or “settled.” Flynn II, 

¶ 21. We held a “settled” claim is “a department-approved or court-ordered compromise 

of benefits between a claimant and an insurer or a claim that was paid in full.” Flynn II, 

¶ 26 (emphasis added). 

¶7 The WCC subsequently requested briefing on the definition of “paid in full.” Or. 

Re: Paid in Full, Flynn v. Mont. St. Fund, 2010 MTWCC 20, ¶ 1 (July 1, 2010). After 

considering the parties’ arguments, the WCC defined “paid in full” as:

A claim in which all benefits to which a claimant is entitled[,] pursuant to 

the statutes applicable to that claim, are paid prior to the issuance of a

judicial decision. If any benefits are paid on the claim after the issuance of 

a judicial decision, the claim can no longer be considered “paid in full” and 

is subject to retroactive application of the judicial decision. 

Or. Re: Paid in Full, ¶ 17. Thus, according to the WCC’s Order, a “settled” claim for 

purposes of retroactivity is either (1) a department-approved or court-ordered settlement 

agreement or (2) a claim in which the claimant received all applicable benefits prior to a 

new judicial decision and has not received subsequent benefits on his or her pre-judicial 

decision claim. 

¶8 Flynn appealed, challenging the WCC’s decision on the definition of “paid in 

full.”
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STANDARD OF REVIEW

¶9 “We review the WCC’s conclusions of law for correctness.” Flynn II, ¶ 12 (citing 

Schmill II, ¶ 11). 

DISCUSSION

¶10 Whether the WCC properly applied retroactivity law in formulating a definition 

of “paid in full.”

¶11 The general rule favors retroactive application of new rules of law. Stavenjord II, 

¶ 9; Dempsey, ¶ 29. We continue to recognize, however, that “truly compelling” cases

merit application of a new rule prospectively only. Dempsey, ¶ 29. This Court’s 

approach to retroactivity was thoroughly analyzed in Dempsey. There, we considered 

whether our decision in Hardy v. Progressive Specialty Ins. Co., 2003 MT 85, 315 Mont. 

107, 67 P.3d 892, applied prospectively only, or applied retroactively to require payment 

of certain insurance coverages in qualifying circumstances to open claims arising before 

Hardy was issued. Dempsey, ¶ 3. In keeping with our prior rulings, we held the Hardy

decision applied retroactively to cases pending on direct review or not yet final. 

Dempsey, ¶ 4. We concluded that “the retroactive effect of a decision does not apply ab 

initio, that is, it does not apply to cases that became final or were settled prior to a 

decision’s issuance.” Dempsey, ¶ 31. 

¶12 Citing Dempsey, we reiterated the importance of finality in Flynn II. We stated,

“the interests of fairness and finality are not generally served by drawing ‘an arbitrary 

distinction between litigants based merely on the timing of their claims.’” Flynn II, ¶ 33. 
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¶13 Here, we conclude the WCC properly applied retroactivity analysis in the unique 

field of workers’ compensation law. The workers’ compensation system is by nature 

open-ended; in some cases, benefits may continue for the life of a claimant, or a claimant 

may be eligible for new benefits upon aggravation of a prior injury. Sections 39-71-710, 

39-71-739, MCA. Despite the potentially indefinite length of a party’s claim, principles

of finality still must be incorporated. As explained below, the WCC’s decision properly 

gives credit to the necessary balance between finality and fairness.

¶14 In its order, the WCC recognized four types of claims that would be considered 

“open” and subject to retroactivity: (1) claims where the claimant was still receiving 

benefits at the time Flynn I was decided; (2) claims where the parties were still 

negotiating the amount of indemnity to be paid; (3) claims where settlement negotiations 

had broken down and the claim was subject to litigation or appeal at the time Flynn I was 

decided; and (4) claimants whose benefits may have terminated prior to the issuance of 

Flynn I, but received further benefits on their claim after the issuance of Flynn I. Or. 

Re: Paid in Full, ¶¶ 15-16.

¶15 Urging reversal, Flynn argues a claim is “paid in full” only if the applicable 

statutory rules bar the disabled worker from seeking further benefits. Flynn’s proposed 

definition fails in several respects. 

¶16 First, Flynn’s position gives no independent meaning to “paid in full” because he 

essentially argues the only claims truly “paid in full” are those stemming from a 

settlement agreement. Flynn cites § 39-71-739, MCA, for the proposition no claim really 
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can be “paid in full” because though a claim may be “temporarily dormant,” a claimant 

later may receive benefits for aggravation of a disability. That section provides:

If aggravation, diminution, or termination of disability takes place or is 

discovered after the rate of compensation is established or compensation is 

terminated in any case where the maximum payments for disabilities as 

provided in this chapter are not reached, adjustments may be made to meet 

such changed conditions by increasing, diminishing, or terminating 

compensation payments in accordance with the provisions of this chapter. 

Section 39-71-739, MCA. Flynn’s interpretation essentially nullifies the inclusion of the 

term “paid in full” in § 39-71-107(7)(a), MCA (2005). We already have applied that 

section’s definition of “settled” as “a department-approved or court-ordered compromise 

of benefits between a claimant and an insurer or a claim that was paid in full.” Flynn II, 

¶ 26 (emphasis added). Flynn’s position would simply omit the latter clause. The 

legislature purposely distinguished between claims resolved by settlement agreement and 

those that have been “paid in full.” Defining “paid in full” as a settlement agreement is 

redundant. We must construe statutes to give effect to all language contained therein and 

we cannot omit what has been inserted by the legislature. Section 1-2-101, MCA. 

Flynn’s argument asks us to do the opposite. 

¶17 Flynn argues the potential for a future benefit precludes any claim from being 

“paid in full” if there has been no judgment or approved settlement. This argument fails 

because it ignores that a final judgment or settled claim can be re-opened in some 

circumstances. See M. R. Civ. P. 60; Kruzich v. Old Republic Ins. Co., 2008 MT 205, 

¶¶ 45-47, 344 Mont. 126, 188 P.3d 983 (recognizing settlement agreements can be reopened when there is a mutual mistake of fact). If we were to accept Flynn’s argument, 
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all “settled” cases or “final” judgments could be subject to retroactive application of new 

law merely because the potential existed for the claim to be re-opened. The potential for 

future change does not impact the claim’s finality. The WCC correctly observed, “it is 

the actual payment of benefits, as opposed to the potential payment of benefits, that 

renders a claim no longer ‘paid in full,’ and subject to retroactive application of Flynn I.”

Or. Re: Paid in Full, ¶ 9 (emphasis in original). Flynn’s position would mean all claims, 

whether final, settled, or “paid in full” would be subject to retroactive application merely 

because of the potential to be re-opened. This clearly deviates from the important 

principles of finality we discussed in Dempsey. 

¶18 We also reject the State Fund’s position that the second sentence of the WCC’s 

Order is invalid. State Fund argues that excluding from the definition of “paid in full”

those claims where benefits are paid after the issuance of a judicial decision creates 

uncertainty and a “monumental lack of necessary finality.” State Fund contends the 

WCC’s definition swallows the “paid in full” exception to retroactivity. In reliance on 

Dempsey, State Fund contends “finality cannot be breached by subsequent events, but 

this is exactly what the second sentence of the WCC’s conclusion allows.” Further, State 

Fund argues the fact a subsequent benefit could “un-finalize” a claim undermines finality 

principles. 

¶19 In Dempsey, we specifically drew the retroactivity line between claims that were 

final and those that were not. ¶ 28. In the workers’ compensation context, if 

compensation payments are adjusted upon aggravation of the original injury, the claim is 

not “final.” Section 39-71-739, MCA. State Fund would have us breathe new life into 
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the arguments we rejected in Flynn II—that “final” or “settled” should include claims 

that were “closed” or “inactive” (Flynn II, ¶ 30), or that judicial decisions can only apply 

retroactively to those claims that are “currently in active litigation” (Flynn II, ¶ 19).

Simply put, a case is not final if a benefit is later paid. 

¶20 As noted above, it is not the potential for a future benefit that makes a claim 

outside the scope of “paid in full.” Rather, it is the actual payment of a benefit, following 

the issuance of a judicial decision, that results in a claim not being “paid in full.” At the 

moment the latter benefit is paid, it becomes clear the claim was not “paid in full.” 

¶21 State Fund argues this qualification permits the claimant to control application of 

substantive law by seeking a benefit under the Workers’ Compensation Act. Flynn also 

refers to this possibility, noting the WCC’s ruling gives disabled workers an incentive to 

obtain some type of benefit in order to trigger the retroactive application of Flynn I, and 

likewise creates an incentive for insurers to deny benefits. We decline to engage in 

speculation as to what might occur in the inventive minds of those inclined to thwart the 

law. The potential for fraudulent or wrongful behavior currently exists. Montana law 

addresses unreasonable denial of claims by an insurer, §§ 39-71-611, 39-71-612(2), 

MCA; forfeiture of fees by an attorney who violates the workers’ compensation statutes 

or rules, § 39-71-613(3), MCA; wrongful practices by health care providers, § 39-71-315;

and fraudulent or deceptive claims for benefits, §§ 39-71-316, 39-71-613(4), 45-6-301(5), 

MCA; Taylor v. St. Compen. Ins. Fund, 275 Mont. 432, 436, 913 P.2d 1242, 1244 (1996). 

The WCC’s order does nothing to undermine the lawful filing and processing of workers’

compensation claims. As acknowledged by Appellee Common Fund Insurers, the 
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WCC’s definition of “paid in full” provides a pragmatic and workable solution to ensure 

the policy of finality has meaning.

¶22 Finally, we decline to consider the argument of Amicus that “paid in full” only 

applies to expired medical claims under § 39-71-615, MCA. This Court generally

declines to address separate arguments raised by an amicus which are not raised by the 

parties. Dempsey, ¶ 36 (citing Dep’t of Health v. Lasorte, 182 Mont. 267, 596 P.2d 477 

(1979)); but see St. Compen. Ins. Fund v. Sky Country, 239 Mont. 376, 378, 780 P.2d 

1135, 1136 (1989) (addressing the arguments of an amicus where “compelling”). 

CONCLUSION

¶23 The WCC’s definition of “paid in full” properly applies the retroactivity principles 

we announced in Dempsey. Its order of July 1, 2010, is affirmed.

/S/ BETH BAKER

We concur: 

/S/ MIKE McGRATH

/S/ BRIAN MORRIS

/S/ MICHAEL E WHEAT

/S/ PATRICIA COTTER

/S/ JAMES C. NELSON

/S/ JIM RICE