NO. 88-63 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

ROBERT KIMES , 

Claimant and Respondent, 

-vsCHARLIES FAMILY DINING & DONUT SHOP, 

Employer, 

and 

PACIFIC EMPLOYERS INSURANCE COMPANY, 

Defendant and Appellant. 

APPEAL FROM: The Workers' Compensation Court, The Honorable Timothy 

Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Utick & Grosfield; Andrew J. Utick, Helena, Montana 

For Respondent: 

Richard J. Pyfer, Helena, Montana 

Submitted on Briefs: May 26, 1988 

Decided: August 9, 1988 

Filed: AUG 9 1988' 

Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court.. 

Claimant Mr. Kimes received disability benefits for a 

work-related injury to his knee until he entered a settlement 

agreement with the insurer, Pacific Employers Insurance 

Company (Pacific) . Pacific appeals the ruling of the Workers' Compensation Court which set aside the settlement. Mr. 

Kimes cross appeals the discontinuation of his temporary 

total disability benefits. We affirm. 

The issues are: 

1. Did the lower court err in setting aside the full 

and final settlement agreement on the grounds of mutual 

mistake of fact? 

2. Did the lower court err by failing to continue 

temporary total disability benefits beyond August 20, 1986? 

Mr. Kimes injured his knee in 1983 when he fell down 

steps during his employment as a cook for Charlie's Family 

Dining and Donut Shop. The employer accepted liability for 

benefits and paid compensation to Mr. Kimes. An orthopedic 

physician repaired a ruptured cruciate ligament in the knee, 

after which he assigned Mr. Kimes a 30 percent impairment 

rating to his left knee and leg. The physician felt, however, that Mr. Kimes should be able to return to work as a 

cook. In January 1985, the parties entered a full and final 

settlement agreement for a $14,500 lump sum. 

In November 1985, Mr. Kimes returned to see his physician because of continuing problems with his left knee. The 

physician referred Mr. Kimes to a second doctor, who suggested that Mr. Kimes's problems could be due to a tear of the 

medial meniscus, which is a cartilage in the knee. Surgery 

was performed, a tear was found, and the meniscus was removed. The first physician has testified by deposition that 

X-rays show that the tear j.n the meniscus was present before 
the settlement was reached, but that he simply did not detect 

it. 

Mr. Kimes petitioned the Workers' Compensation Court to 

reopen his case based on a mutual mistake of medical fact. 

The court held a hearing at which Mr. Kimes and the attorneys 

for both sides presented testimony. The depositions taken of 

the physician both before and after the settlement were also 

available to the court. The court set aside the settlement 

agreement and ruled that the employer is entitled to a credit 

for the settlement amount. 

I 

Did the lower court err in setting aside the full and 

final settlement agreement on the grounds of mutual mistake 

of fact? 

As this Court discussed in Kienas v. Peterson (Mont. 

1980), 624 P.2d 1, 37 St.Rep. 1747, general contract law 

gives courts the right to reopen a compromise settlement when 

there has been a non-negligent mutual mistake of material 

fact. In Kienas, the claimant suffered an injury to his 

back. After a full and final settlement was made, doctors 

concluded that the injury had also aggrevated claimant's 

previous condition of cerebral palsy, rendering him totally 

disabled. Ruling that there was a mutual mistake of material 

fact, this Court set aside the settlement agreement. 

In Weldele v. Medley Development (Mont. 1987), 738 P.2d 

1281, 44 St.Rep. 1062, the claimant had suffered an industrial shoulder injury. At the time full and final settlement 

was made, the injury had been diagnosed as a rotator cuff 

tear and a healed carpal tunnel syndrome. After the settlement, the claimant was diagnosed as having thoracic outlet 

syndrome in the shoulder. The physician testified that it 

was more probable than not that the claimant's work-related 
injury was the cause. This Court affirmed the lower court's 

conclusion that those circumstances constituted a mistake of 

fact upon which the settlement could be reopened. 

In contrast, where findings in medical reports following 

a settlement are consistant with those prior to the settlement, where the impairment rating is substantially unchanged, 

and where the claimant is in much the same condition as at 

the time of settlement, there is no mutual mistake of fact 

justifying reopening a settlement. Sol.1i.e v. Peavey Co. 

(Mont. 1984), 686 P.2d 920, 41 St.Rep. 1684. Variance in the 

symptom level, where claimant knew this level would vary, is 

not enough. Sollie, 686 P.2d at 924. 

Pacific argues that there was no mutual mistake of fact 

here. It asserts that Mr. Kimes and his attorney were aware 

at the time of the settlement that there were potentially 

permanent problems with the knee and that those problems were 

related to Mr. Kimes's industrial accident. However, not 

only has Mr. Kimes's disability rating increased as a result 

of the post-settlement surgery to remove the torn meniscus, 

but his prognosis now includes probable degenerative changes 

in his knee joint. He now requires pain medication and has 

been advised not to return to his former line of work as a 

cook. The X-rays show that Mr. Kimes had a tear in his 

medial meniscus at the time of settlement, and it is undisputed that this was unknown to the parties when settlement 

was made. 

While the dissent argues that the Workers' Compensation 

Court does not have statutory authority to set aside this 

full and final compromise agreement, the parties did not 

raise that argument. Further, this Court is not so limited 

where there has been mutual mistake. We conclude that the 

uncontradicted medical evidence establishes a material mistake of fact relating to both the nature and extent of Mr. 
Kimes's injury. We hold that the full and final settlement 

entered in this case may be reopened on the basis of this 

material mistake of fact. 

I1 

Did the lower court err by failing to continue temporary 

total disability benefits beyond August 20, 1986? 

The Workers' Compensation Court terminated Mr. Kimes's 

temporary total disability benefits as of the date the physician, by deposition, stated that Mr. Kimes had reached his 

maximum medical recovery. Mr. Kimes argues that he is entitled to an award of continued temporary total disability 

benefits until he reaches a point at which he can return to 

the job market. 

Under the statutory scheme in effect at the time of Mr. 

Kimes's injury, temporary total disability did not exist past 

the time of maximum healing. Section 39-71-116(19), MCA 

(1983), provided: 

"Temporary total disability" means a condition 

resulting from an injury as defined in this chapter 

that results in total loss of wases and exists 

until the injured worker --- is as far Gestored -- as the 

permanent character -- of the injuries will permit. 

Disability shall be supported by a preponderance of 

medical evidence. [Emphasis supplied.] 

The physician testified on August 20, 1986, that Mr. Kimes 

had reached maximum healing. We conclude that the lower 

court was correct in terminating temporary total disability 

benefits as of August 20, 1986. This does not in any way 

constitute a ruling on Mr. Kimes's right to permanent total 

or permanent partial disability benefits. 

Affirmed as to the result 

We concur: L' 
,Chief Justice 
Mr. Justice L. C. Gulbrandson, dissenting. 

I respectfully dissent. 

In my view the Workers' Compensation Court erred 

procedurally and substantively in setting aside the full and 

final settlement. 

The majority in this case, as in Weldele v. Medley 

Development (Mont. 1987), 738 P.2d 1281, 44 St-Rep. 1062, has 

tacitly approved the unauthorized practice, by the Workers' 

Compensation Judge, of setting aside full and final 

settlements when the legislature has expressly removed such 

authority from the Workers' Compensation Court. 

Section 39-71-204 (2), (1985) MCA, applicable to this 

case, includes the following: 

[Elxcept as provided in 39-71-2908, - the 

division or the workers' compensation 

judge sham Kt --- have the power to 

rescind, alter, or amend order 

approving - a - full - and final compromise 

settlement - of compensation. (Emphasis 

added. ) 

Section 39-71-2908, (1985) MCA, states: 

All orders allowing full and final 

compromise settlements of workers' 

compensation claims shall be immediately 

referred to the workers' compensation 

judge, and the judge may, within 10 days 

of the judge's receipt of an order, 

disapprove an order allowing a full and 

final compromise settlement. 

In addition, S 39-71-2909, (1985) MCA, provides: 

The judge may, upon the petition of a 

claimant or an insurer that the 

disability of the claimant has changed, 

review, diminish, or increase . . . any 

benefits previously awarded by the judge 

or benefits received by a claimant 

through settlement agreements. However, 

the judge may not change any final 

settlement aqreement or award of 

compensation more than 4 years after the 
settlement has been approved by the 

division or any order approving -- a full 

and finaF compromise settlement - of 

compensation. (Emphasis added.) 

Here the Division entered its order approving full and 

final compromise settlement on February 7, 1985 and said 

order was then referred to the Workers' Compensation Judge, 

pursuant to S 39-71-2908, (1985) MCA, who reviewed the file, 

approved the order, and closed the claimant's file. After 

that point, in my view, the Workers' Compensation Court was 

without authority to set aside the settlement agreement. A 

review of Kienas, relied upon by the majority, is necessary 

to explain my view. In Kienas, the claimant, who was not 

represented by counsel, entered into a full and final 

compromise settlement for a payment of $4,040, where the 

claim involved potential payments in excess of $115,000. The 

Workers' Compensation Court refused to set aside the 

settlement, and on appeal, this Court, finding the case to be 

unique, applied contract law and reversed and remanded, 

without discussing S 39-71-204, (1985) MCA and S 39-71-2909, 

(1985) MCA, which limits the power of the workers' 

Compensation Court to rescind, alter, or amend an order 

approving a final compromise settlement. Upon rehearing 

Kienas, this Court considered S 39-71-204, (1985) MCA and 

S 39-71-2909, (1985) MCA, stating the following: 

Petitioner argues that the Workers' 

Compensation Court had no power to alter 

or rescind a full and final compromise 

settlement agreement four years after the 

parties had executed the same. Section 

39-71-204, MCA. However, in Kienas, the 

Workers' Compensation Court did not set 

aside the agreement. This Court 

set aside the agreement. - Our appellate 

--- Dower is not limited to section 39-71-204 

- nor 39-71-2909, - MCA. See section 

3-2-204, MCA. 
It is universally accepted tenet of 

contract law, statutory in our state, 

that consent to the contract is lacking 

if it is entered into through mutual 

mistake or a material fact by the 

parties. We found such a mutual mistake 

in the compromise settlement agreement in 

this case. In applying ordinary contract 

law to reach our result, we are not 

unduly broadening the possibilities of 

reopening workers' compensation 

settlements. -- We are simply finding here 

-- that a contract to settle -- did not exist 

-- in the first plaFe. (Emphasis added.) 

Kienas v. Peterson, Opinion on Rehearing (Mont. 1981), 38 

St.Rep. 320, 321. 

In addition to the lack of authority by the Workersi 

Compensation Judge to set aside the settlement agreement, I 

have a second problem with the majority opinion. If the 

majority is "simply finding here that a contract to settle 

did not exist in the first place" (see Kienas quote above) 

then, in my opinion, it can only do so by ignoring the 

pre-injury and post-injury medical history, in addition to 

the expressed intent of the parties as set forth in the 

settlement agreement. The medical history indicates that 

claimant's anterior cruciate ligament was torn in 1979 when, 

as a pedestrian, he was struck by an automobile and that such 

pre-existing problem led to the industrial injury, and that 

following surgery the cruciate ligament was better than it 

had been prior to the first slip and fall at work, and that 

after reaching a medically stable condition, the claimant, on 

the first day he was returning to work, injured the knee in a 

non-industrial motorcycle accident. The medical record is 

clear that the only permanent injury sustained by claimant 

was confined to the lower left extremity and S 39-71-705, 

(1985) MCA, limits permanent partial disability payments for 

such an injury to 200 weeks. Here, the defendant's payments 

were the equivalent of 215.96 weeks of benefits. These 
factors, in my opinion, indicate that the claimant, and his 

attorney, were fully cognizant of the material facts when 

they both signed claimant's petition, prepared by his 

counsel, which petition reads as follows: 

The undersigned claimant was accidentally 

injured on June 16, 1983, while employed by 

Charlie's Family Dining & Donut Shop, an employer 

enrolled under Compensation Plan No. I1 of the 

Montana Workers' Compensation Act. The claim was 

filed and accepted by the insurer for the payment 

of any compensation and medical benefits due. 

The total compensation paid to date is $ 

16.408.00 

The total medical and hospital benefits paid 

to date are $ $5,250.00 

A controversy exists between this claimant 

and insurer over the amount and duration of 

compensation. This controversy has been resolved 

by an agreement between the claimant and the 

insurer wherein the claimant agrees to accept the 

sum of Fourteen Thousand Five Hundred ($14,500.00) 

Dollars in a lump sum in a full and final 

compromise settlement, which represents 

compensation for 129+ weeks. Further medical 

and hospital benefits are expressly hereby reserved 

by the claimant unless otherwise indicated in this 

petition. This settlement includes attorney fees. 

The claim [sic] hereby petitions the Division 

of Workers' Compensation, with the concurrence of 

the above named insurer, for approval of this 

petition - and that the case be fully and finally 

closed on the basis set forth above. The claimant 

understands that % entering ---- into a full and final 

compromise settlement, -- both the named insurer and 

- the claimant agree - to assume the risk ---- that the 

condition of the claimant, - as indicated a 

reasonable i';nves=ation to date. .Amav be other than 

- it appears, -- or itamay chTnge -- in the future. The 

claimant further understands that another 

settlement option is available to him which would 

allow the settlement to be reconsidered within a 

four-year period, but finds that closing the 

settlement -finally at this time is in his best 

interest. The claimant understands that if this --- 
etition is approved, - the claim - is forever closed 

:nd -- can never again - be reopened. (Emphasis added.) 

DATED this -- 15 day of January, 1985. 

(signed) Robert Kimes 

Robert Kimes, Claimant 

2131 9th Avenue 

Helena, Montana 59601 

WITNESS : 

Isianed) John C. Doubek 

The Defendant hereby concurs and joins 

in the foregoing petition for full and final 

compromise settlement. 

DATED this January , 

(signed) Andrew J. Utick 

Authorized Representative 

its Attorney 

It is obvious that the language used was in direct 

response to the Kienas decision, and was drafted by counsel 

for claimant to meet the defendant's requirements and to 

avoid the possibility of the agreement being set aside. It 

appears that the English language does not contain words 

adequate to draft a legally enforceable "full and final 

compromise settlement." 

I would reverse. 

I join in the foregoing dissent/of Mr. Justice I,. C. 

Gulbrandson. 

ief Justice