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, Pres iding 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 20112 Bradley J. Luck (argued); Garlington, Lohn & Robinson; Missoula, Montana (Montana State Fund) Thomas E. Martello; Montana State Fund; Helena, Montana For Amicus Curiae (Ca ssandra Schmill): Laurie Wallace; Bothe & Lauridsen, P.C.; Columbia Falls, Montana Argued and Submitted: September 28, 2011 Decided: November 29, 2011 Filed:

__________________________________________ Clerk3

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) defin ing the term “paid in full , ”as used in the definition of “ settled ”workers ’ compensation claims , f or pur poses of determining the retroactive application of j udicial 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 su mmariz ing the protractedh istory of this matter . This opinion marks theCourt ’ s third decisionsince 2002 , complementing several other cases that have outlined the parameters for retroactive application of new judicial decisions in workers ’ compensationc ases . Flynninitially f iled a petition intheWCC , alleging Respondent State Compensation Insurance Fundshould pay a proportionate share of the attorney fees he incurred to recover social security disability benefits. Flynn v. St. Compen. Ins. Fund , 2002 MT 2 79, ¶ 1, 312 Mont. 410, 60 P.3d 397 (Flynn I). A pplying the common fund doctrine, we held that if a claimant successfully recovers social security disability benefits, thereby allowing the workers ’ c om pensation 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 , ¶¶ 1 5 - 18 . ¶3 On remand, the WCC determined Flynn I applied retroactively

and Flynn ’ s attorney was entitl ed to common fund attorney fees from claimants who benefitt ed 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. , 20054

MT 144, ¶

28, 327 Mont. 293, 114 P.3d 204 (Schmill II), conclud ing that our decision in Schmill v. Liberty N.W. I ns. Corp. , 2003 MT 80, 315 Mont. 51, 67 P.3d 290 (Schmill I) applied retroactively. Relying on previous case law andr eiterating the importance of fina lity, we held theretroactive 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 lef t 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

o n each type of claim . Flynn II , ¶ ¶ 8 - 9 . I n its order, the WCC defineda “ final ”c laim as a “ claim in which a final judgment has been entered by the Workers ’ C om

pensation Court only if the claim is not currently pending on appeal . ” Flynn II , ¶ 9. The WCC relied on § 3 9 - 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 o r a claim that was paid in full. ” Flynn II , ¶ 9. ¶5 Shortly follo wing the WCC ’ s order, we decided Stavenjord v. Mont. St . F und , 2006 MT 257, 334 Mont. 117, 146 P.3d 724 (Stavenjord II) . I n Stavenjord

I I , we determined there is no “ legal authority for ‘ partial ’ r etroactive application ”of aj udicial 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

, ¶ 15.5

¶6 In Flynn II

, we clarified several points arising from the intersection between the Flynn Orderand Stavenjord II and the definition of “ final, ” “ settled, ”a nd “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 ”o r “ 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:P aid in Full, Flynn v . Mont. St. F

und , 2010 MTWCC 20, ¶ 1 (July 1, 2010). A fter 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 pai d 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:P aid in Full, ¶

1 7. Thus , a ccording to the WCC ’ s Order, a “ settled ”claim for purposes of retroactivity

is either (1) ade

partment - approved or court - ordered settlement ag reement or (2) a claim in which the claimant received all applicable benefits p rior to a new judicial decisionand has not received subsequent benefits on his or her pre -judicial decision claim. ¶8 Flynn appealed , challenging the WCC ’ s decision ont he definitiono f “paid in full. ”6 **STANDARD OF REVIEW** ¶9 “ We revie w the WCC ’ s conclusions o f 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 g

eneral rule favorsretroactive application of new rules of law . Stavenjo rd II , ¶ 9; Dempsey , ¶ 29. We continue to recognize, h owever, that “ truly compelling ”c ases merit application of a new rule prospectively o nly . Dempsey , ¶ 29. This Court ’ s approach to retroactivity was thoroughly analyzed in Dempsey . There, we consider ed 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 heldthe Hardy decision appliedr etroactively to cases pending on direct rev iew or not yet final. Dempsey , ¶ 4. We concluded that “ the retroactive effect of a decision d oes 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 . Westated , “ the interests of fairness an d finality are not generally served by drawing ‘ an arbitrary distinction between litigants based merely on the timing of their claims. ’” Flynn II , ¶ 33.7

¶13 Here, we conclude t he WCC properly applied retroactivity analysis in the unique field of workers ’ c om

pensation law. The workers ’ c om pensation system is by nature open - ended ; in some cases, benefits may continue for the life of a claimant, or a claimant ma y be eligible for new benefits upon aggravation of a prior injury. Section s39 - 71 - 710, 39 - 71 - 739, MC A. Despite the potentially indefinite length of a party ’ s claim, principle s of finality still must be incorporated. As explained below, t he WCC ’ s de cision properly gives credit to the necessary balance between finality and fa irness . ¶14 In its order, the WC C recognized four types of claims thatwould be considered

“ open ”a ndsubject to retroactivity: (1) claims where the claimant was st ill receiving benefits at the time Flynn I was decided; (2) claims where the parties were still negotiating the amount of in demnity 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 ma y hav e terminated prior to the issuance of Flynn I , but received further benefits on their claim af ter the issuance of Flynn I . Or. Re: Paid in Full, ¶¶ 15 - 16. ¶15 Urging rev

ersal, Flynn argues a claim is “paid in full ” only if the applicable statutory rules bar the disabled worker from seeking further benefits. Fly nn ’ s proposed definition fa ils in several respects. ¶16 First, Flynn ’ s position gives no independent meaning to “paid in full ”because he essentially arg

ues 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 really8

can be “paid in full ”because though a claim may be “ temporarily dormant, ”ac laimant later may receive benefits for aggravation of a disability. That s ection 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 me et 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 § 3 9 - 71 - 107(7)(a), MCA (2005) . We already have applied that section ’ s defin ition of “ settled ”as “ a department - approved or court - ordered compromise of benefits between a claimant and an insurer ora claim that was paid in full. ” Flynn II , ¶ 26 ( e mpha sis added) . Flynn ’ s position would simply omit the latter clause. The legislature purposely distinguished between claims resolved by settlement agreementand 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 al l language contained thereinand 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 thep otential for a future be nefit precludes any

c laim from being

“paid in full ”if there has been no judgment or approved settlement. This argument fails because it ign ores that a final judgment or settled claim c an 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 ag reements can be re opened when there is a mutual mistake of fact). If we were to accept Flynn ’ s argument,9

all “ settled ”cases or “ final ”judgments couldbe 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 notimpact the claim ’ sf inality . The WCC correctly observed, “ it is the **actual**

p ayment of benefits, a s opposed to the **potential** p ayment 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 (emphasisin original ). Flynn ’ s position would mean all claims, whether final, s ettled, 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 sentenceo f the WCC ’ s Order is invalid. S tate Fund arg ues that exclud ing 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. ”S tate Fund contendst he WCC ’ s definition swallows the “ paid in full ”e xception to retroactivity. In reliance on Dempsey , State Fund contends “ finality cannot be breache d by subsequent events, but thisis 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 ther etroactivity line between claims that were final and those that were not. ¶ 2 8. In the workers ’ c om pensation context, if compensation payments areadjusted upon aggravation of the original injury, the claim is not “ final . ” Section 39 - 71 - 739, MCA. State Fund would have us breathe new life into10

the argumentswe rejected in Flynn II

— that “ final ”o r “ 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, acase 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 decis ion, that results in a claim not being “paid in full. ” At the mo ment the latter benefit is paid, it becomes clear the claim wasnot “ paid in full. ” ¶21 State Fund argues this qualification permits the claimant to control application of substantive law by se eking a benefit under the Workers ’ C ompensation Act. F lynn also refer sto 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 likewisec reates 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 pote

ntial for fraudulent or wrongful behavior currently exists. M ontana law a ddresses unreasonable denial of claims by an insurer, §§ 39 - 71 - 611, 39 - 71 - 6 12(2), MCA; forfeiture of fees by an attorney who violates the workers ’ c ompensation 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 worker s ’ compensation claims. As acknowledged by Appellee Common Fund Insurers, the11

WCC ’ s definition of “paid in full ”prov ides a pragmatic and workable solution to ensure the policy of finality has meaning. ¶22 Finally, we decline to consider the argument o f Amicus that “paid in full ”o nly applies to expired medical claims under § 39 - 71 - 615, MCA . This Courtg enerally declines to address separate arg uments raised by an amicu s which are not raised by the parties. Dempsey, ¶ 36 (citing Dep ’ t of Health v. Laso rte , 182 Mont. 267, 596 P.2d 477 (1979)); but see St. Compen. I ns. Fund v. Sky Country , 239 Mont. 376, 378, 780 P.2d 1135, 1136 (1989) (addressing the arguments of an amicus where “ compelling ” ) . **C ONCLUSION**  ¶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 a ffirmed. /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