No. 89-512 IN THE SIJPREME COURT OF THE STATE OF MONTANA 1990

DAVID A. MALEK, Claimant and Respondent,-vsHENRY'S SAFETY SUPPLY COMPANY, Employer, and STATE COMPENSATION INSURANCE FUND, Insurer and Appellant.

APPEAL FROM: The Workers' Compensation Court, The Honorable Timothy Reardon, Judge presiding.

COUNSEL OF RECORD: For Appellant: Richard E. Bach, Helena,Montana For Respondent:

L - o 1- Geoffrey R. Keller; Matovich, Addy & Keller, Billings, cV3
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### - c'3 LL r-4 Submitted on Briefs: Feb. 9, 1990 Decided: March 13, 1990

ClerkJustice John C. Sheehy delivered the Opinion of the Court.

The State Compensation Insurance Fund appeals from a judgment of the Workers1 Compensation Court ordering the Fund to return monies to the claimant. We affirm. In this case we hold principally that the Workers1 Compensation Court had subject matter jurisdiction to compel the StateCompensation Insurance Fund,where noprior determinationhad been made as to subrogation rights by the Division of Workers1 Compensation, to return subrogation funds to the claimant. Respondent David Malek suffered an injury compensable under the Workers1Compensation Act when he was injured in an automobile accident on February 8, 1985. Malek fully settled the resulting third-party action for $25,000, the third-partydriver's insurance policy limits. On March 27, 1985, a claims examiner for the State Compensation InsuranceFund (Fund)informedMalek that the Fundwas entitled to a 50 percent subrogation interest in his third-party settlement under the provisions of 5 39-71-414, MCA. Malek thereafterpaid the sum of $12,500 to the Fund. Malek retained counsel in 1988 topursue a claim forpermanent partial disability benefits. Shortly thereafter Malek filed a petition with the Workers' Compensation Court seeking, amongst other things, tohave the $12,500 subrogation payment refunded,as Malek alleged he had not been fully informed of the subrogation issues, and that until action by the Division no subrogation entitlement in favor of the Fund existed. The Fund filed amotion todismiss theportion of thepetition relating to the determination and allocation of subrogationunder theprovisionsof subsection (5) of 5 39-71-414,MCA. That section reads:(5) If the amount of compensation and other benefits payable under theWorkers' CompensationAct havenotbeen fully determined at thetimetheemployee,theemployee s heirs or personal representatives, or the insurer have settled in anymanner the action as provided for in this section, the department shall determine what proportion of the settlement shall be allocated under subrogation. The department's determination may be appealed to the workerstcompensation judge. The Workers' Compensation Court, pursuant to 5 39-71-414(5), MCA, granted the Fund's motion to dismiss the subrogation issue. It then ordered the Fund to return immediately the $12,500payment to the claimant. The Fund now appeals the lower court's order,maintaining that the WorkerstCompensation Court was without jurisdiction to order

a return of the subrogation funds. This Court recently held, in First Interstate Bank v. Tom Sherry Tire, Inc. (1988), -Mont. 

## -, 764 P.2d 1287, that the WorkerstCompensation Court iswithout jurisdiction over the issue of subrogation where a third-party settlement precedes a petition for full and final settlement of workers' compensation benefits. In such a situation, under the statute, the WorkerstCompensation Division, and not the Workers' Compensation Court, has jurisdiction. The issue now before this Court requires a closer look at 5 39-71-414(5), MCA, and the jurisdictional powers of the Workers' Compensation Court. The Workerst Compensation Court is granted general jurisdiction by 

### 5 39-71-2905,MCA. This statute reads in part: Petition to workerstcompensation judge. A claimant or an insurer who has a dispute concerning any benefitsunder Chapter 71 of this titlemay petition theworkers' compensation judge for a determination of the dispute after satisfying dispute resolution requirements otherwise provided in this chapter.



# . . . The workersf compensation judge has exclusive jurisdiction to make determinations concerning disputes under Chapter 71 

# . . .. In State ex rel.Uninsured EmployersfFundv. Hunt (1981)

### , 191 Mont. 514, 625 P.2d 539, this Court, in review of 

### H 39-71-2905, MCA, stated that: [The Workers' Compensation Court] has been given broad powers concerning benefits due and payable to claimants under the Act. It has the power to determine which of several parties is liable to pay Workersf Compensation benefits, or if subrosation is allowable, what apportionment of liabilitymay be made between insurers, and other matters that so beyond the minimum determination of the benefits payable to an employee.

(Emphasisadded.) Amendments to !j 39-71-2905, MCA, since Hunt, have mandated certain dispute resolution requirementstobe comported with prior topetitioningtheWorkers' Compensation judge. Subrogation rights under § 39-71-414(5), MCA, are not included in those dispute resolution requirements. Hence we have a situation where the Fund claims that, under 3 39-71-414(5), MCA, and this Court's interpretation of that statute in First Interstate, the Workers' Compensation Court has

no jurisdictionat this time as to subrogation. On the otherhand, the claimant maintains that the Workers' Compensation Court's jurisdiction extends to the dispute here by virtue of 

### 5 39-71- 2905, MCA, and our interpretation of that statute in Hunt.We Concur with the claimant on this issue. The Workers1 Compensation Court noted correctly that the determination of the amount of subrogation is 

### amatter to be addressed initially by the Division, under § 39-71-414(5)

## , MCA. The Court then pointed out that the Fund had no right tobe inpossession of subrogation funds until a Division determination as to subrogation rights occurred. The claimant isdisputing the Fund'sright to claimany subrogation funds prior to the Division determination, and it was within the courtls jurisdiction, as authorized by 5 39-71-2905, MCA, to determine this dispute over benefits. There can be no question that the State Fund is improperly in possession of $12,500of claimant's third-party settlement,as the rights to subrogation had not been first determined by the Division. TheWorkers' Compensation Courthad jurisdiction in this dispute over benefits, and ruled properly. We hereby affirm the Workers1Compensation Court order to the State Fund to return the $12,500 to claimant, along with accrued interest. 

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# Jhh Justice We Concur: