No. 85-266 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

JETT ROLCOMB, 

Claimant and Respondent, 

-vsLOW TEMP INSULATION, Employer, 

and 

COMMERCIAL UNION INSURANCE COMPANY, 

Defendant and Appellant. 

APPEAL FROM: The Workers' Compensation Court of the State of 

Montana, The Honorable Timothy Reardon, Judge 

presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Anderson, Brown, Gerbase, Cebull & Jones; Steven 

Harman, Billings, Montana 

For Respondent: 

Charles Hingle, Billings, Montana 

Submitted on Briefs: August 21, 1986 

Decided: December 30, 1986 

Filed: ~EC 3 o 1986 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Low Temp Lnsulation and Commercial Union Insurance 

Company appeal an order from the Workers' Compensation Court 

denying their motion for a new trial. 

Two issues are raised on appeal: 

(1) Whether the Workers' Compensation Court had 

jurisdiction to rescind a final settlement more than four 

years after it was approved by the Division of Workers' 

Compensation? 

(2) Whether at the time of final settlement in 1979 

the insurance company had a duty to advise the claimant of 

the difference between "impairment" and "disability." 

We reverse. 

Jett Holcomb injured his knee and neck on January 25, 

1979 while working for Low Temp Insulation in Billings, 

Montana. Low Temp's insurance carrier, Commercial Union 

Insurance, began paying Holcomb total disability benefits in 

June, 1979. 

Dr. William Walton, an orthopedic surgeon in Billings, 

was the treating physician who had previously operated on 

Holcomb's back as a result of a 1963 industrial accident. 

Dr. Walton referred Holcomb to a Dr. Maciolek for an 

arthritis evaluation. Dr. Maciolek reported that in his 

opinion Holcomb had degenerative arthritis of the cervical 

spine. 

On November 15, 1979, Dr. Walton submitted a 

Certificate of Condition to Peter McGraw, claims adjuster for 

the insurance company. Dr Walton stated that in his opinion 

Holcomb was not able to return to his previous employment 

with Low Temp but could return to another type of employment. 

He diagnosed Holcomb as having possible rheumatoid arthritis 

and suggested that he be retrained in another field. 

On November 27, 1979, McGraw asked Dr. Walton for an 

impairment figure based on his findings and consulted with 

the Workers' Compensation Division before deciding to convert 
Holcomb's benefits from temporary total to partial permanent 

disability. On that same day, McGraw sent a letter to 

Holcomb explaining the conversion of benefits and its 

implications. On December 18, 1979, Dr. Walton advised 

McGraw of a 10% impairment figure assuming Holcomb underwent 

corrective surgery on the cervical spine or neck region. Dr. 

Walton refused to perform the surgery because of doubts that 

Holcomb, an admitted alcoholic, had stopped drinking. 

On December 27, 1979, McGraw wrote to Holcomb 

explaining that Dr. Walton had submitted a 10% partial 

permanent disability rating as compared to the body as a 

whole and that in order to receive partial permanent benefits 

Holcomb would need to sign a petition for final settlement of 

his claim. In his letter McGraw specifically mentioned that 

Holcomb should call him if he had any questions. Holcomb, 

who has a below average IQ, apparently took two or three days 

to study the letter with his girlfriend before going to 

McGrawls office to sign the petition on January 15, 1980. 

The final settlement, approved on February 5, 1980 is set out 

in full below: 
Before the DIVISION OF WORKERS' COMPENSATION 

Department of Labor and Industry 

815 Front Street 

Helena, Montana 59601 

Jett Holcomb 

Claimant 

Low Temp Insulation PETITION FOR FINAL SETTLEMENT 

Employer 

Commercial Union Co. Case 2 79 10542 3 

Insurer 

The undersigned claimant was accidentally injured on January 25 

1979, while employed by Low Temp Insulation Co. 

an employer enrolled under Plan 2 of the Workers' Compensation Act. 

The claim was filed and accepted for compensation and medical benefits. 

The total compensation paid amounts to $ 4350.86 

The total medical and hospital benefits paid amounts to $ 676.53 

The claimant suffered disability [emphasis added] as a result of the 

accidental injury, and an agreement has been reached between the claimant 

and the insurer regarding the amount of compensation due wherein the 

claimant agrees to accept the sum of Forty Seven Hundred Dollars 

($ 4,700.00) 

in a lump sum in final settlement which represents compensation for 

50 weeks, and that further medical and hospital benefits are expressly 

reserved by the claimant. 

The claimant hereby petitions the Administrator with the concurrence 

of the Commercial union Companies [ Insurer-Employer] for approval 

of a final settlement and that the case be finally settled 

on the basis stated above. [Emphasis added. ] It is understood by the 

claimant and the insurer that under the Workers' Compensation Act an order 

approving this petition for final settlement may for good cause, be 

rescinded, altered, or amended by the Division within (4) years from the 

date this petition is approved. 

Jett Holcomb [signature] 

Claimant 

Witness: 

Marilyn Michotte [signature] 

The Commercial Union Co hereby concurs with and joins in 

the foregoing petition for final settlement. 

Dated 1-15 , 19 80 

Commercial Union Co. 
Holcomb argues that McGraw did not adequately inform 

him of the extent of his disability in 1979 so as to enable 

him to reopen his case within four years of final settlement 

providing good cause was shown. 

In the four years after final settlement, Holcomb 

worked sporadically at various construction jobs. In April, 

1984, or approximately two months after the four year 

reopening period had expired, a neurosurgeon, Dr. Wood, 

performed the surgery on Holcomb's neck deemed necessary by 

Dr. Walton in 1979. Dr. Wood gave Holcomb a 10% disability 

rating after the surgery, the identical figure submitted by 

Dr. Walton to the insurance company in 1979. Holcomb then 

asked the insurance company to reopen his case. The hearing 

examiner rescinded the final settlement on the basis of 

constructive fraud and focused on Holcomb's lack of education 

and the possibility that he may not have comprehended the 

language in the petition for final settlement or the 

explanation of the petition by the claims adjuster, Mr. 

McGraw. The Workers1 Compensation Court agreed that the 

insurance company's constructive fraud prevented the entering 

of a valid final settlement agreement and as a result the 

four year statute of limitations for reopening the case had 

not run on Holcomb. 

The first issue is whether the Workers1 Compensation 

Court had jurisdiction to rescind a final settlement more 

than four years after it was approved by the Workers' 

Compensation Division. 

The jurisdictional statute applicable to final 

settlements is found at S 39-71-204, MCA. 

(1) Except as provided in subsection (2) , the division shall have continuing 

jurisdiction over all its orders, 

decisions, and awards and may, at any 

time, upon notice, and after opportunity 

to be heard is given to the parties in 

interest, rescind, alter, or amend any 

such order, decision, or award made by it 

upon good cause appearing therefor. 

(2) The division or the workers' 

compensation judge shall not have power 

to rescind, alter, or amend any final 
settlement or award of compensation more 

than 4 years after the same has been 

approved by the division. Rescinding, 

altering, or amending a final settlement 

within the 4-year period shall be by 

agreement between the claimant and the 

insurer. If the claimant and the insurer 

cannot agree, the dispute shall be 

considered a dispute for which the 

workers ' compensation judge has 

jurisdiction to make a determination. 

Except as provided in 39-71-2908, the 

division or the workers' compensation 

judge shall not have the power to 

rescind, alter, or amend any order 

approving a full and final compromise 

settlement of compensation. 

(3) Any order, decision, or award 

rescinding, altering, or amending a prior 

order, decision, or award shall have the 

same effect as original orders or awards. 

In Williams v. Industrial Accident Board (1939), 109 

Mont. 235, 243, 97 P.2d 1115, 1118, we said: 

[Als officers, we act in a representative 

capacity and have such powers and only 

such as the law gives to us. The 

individual members of the defendant 

Board, [now the Workers' Compensation 

Division] like all other officers, may 

not lawfully act as their whim or caprice 

may dictate, but only in accordance with 

that authority with which the law clothes 

them. Any other doctrine is destructive 

of the fundamental principles of our 

whole system of government. 

Subsection (1) of S 39-71-204, MCA, states that "except 

as provided in subsection (2), the division shall have 

continuing jurisdiction . . . " (Emphasis added. ) 

Subsection (2) in turn, provides that "the division or the 

workers' compensation judge shall not have the power to 

rescind, alter, or amend any final settlement" more than four 

years after the approval of the settlement. (Emphasis 

added. 

In other words, the Workers' Compensation Court has 

jurisdiction to rescind a final settlement for a period of 

four years upon a showing of good cause after which time 

jurisdiction ceases to exist. In this case, Holcomb entered 

into a final settlement with Commercial Union Insurance 

effective February 5, 1980. He sought to reopen the 

settlement on May 31, 1984, more than four years after the 

final settlement order had been entered, claiming the 
insurance adjuster failed to inform him of the extent of his 

disability at the time of final settlement. 

We hold that pursuant to 5 39-71-204, MCA, the Workers' 

Compensation Court had no authority or jurisdiction to 

rescind the final settlement. That court's jurisdiction 

expired on February 5, 1984, four years from the time of 

final settlement. 

Because of our ruling on the first issue of 

jurisdiction, we deem it unnecessary to address the second 

issue. 

The judgment rescinding the final sett ement is 2 

reversed. 

We concur: 

Pn . Jack L. Green, District 

Judge, sitting in place of 

!lr. Justice William E. Hunt, Sr. 
Mr. Justice John C. Sheehy, dissenting: 

P. J. McGraw is quick on the draw, and a high-paid 

insurance adjuster. Holcomb was sick, and a little bit 

thick, and any big words made him fluster. 

"Impairment" is a word that when it is hea.rd, its 

meaning is surely amorphous; and few lawyers can see that 

"disability" has a much different meaning for us. Lawyers, 

in fact, who construe the Act, are probably not aware of what 

might ensue to those workers who take words that they should 

beware of. Here Holcomb signed, as one ~~ho's born blind, 

the petition McGraw had prepared. With his knowledge gap he 

walked into the trap which his untutored girl-friend had 

shared. 

Constructive fraud. is not something odd. It springs 

from a clear legal duty to be candid. and open, and not try to 

rope in, a man in a deal. that is sooty. It is founded on 

trust and good trustee must avoid all taint of deception. 

What Jett Holcomb saw in I?. J. McGraw was a trust in the 

law's perception. 

To the Workers' Court credit it may now be said it saw 

through the insurer's oration, and promptly recorded a fraud 

that was sordid as a bar to the law's limitation. The 

Workers' Court found that the fraud. gave it ground to allow 

Holcomb's suit though belated. But this Court, intent that 

the law not he bent, rejects what the Workers' Court stated. 

The lesson to learn for those who d.iscern from studies 

of what we are doing is that most of this Court wil.1 haply 

consort with fraud if a worker is suing. Gone is the day 

when a lawyer could say that we follow the old legal chant, 
one we derive from an old 1,atin jive, Fraus - et nunquam 

cohabitant. (Fraud and justice do not dwell together.) 

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