No. 84-150 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

DAVID HUTCHINSON, 

Claimant and Respondent, 

PIERCE PACKING COMPANY, 

Employer, 

and 

INTERMOUNTAIN INSURANCE COMPANY, t 1 

f,? o U 

APPEAL FROM: The Workers' Compensation Court, The Honorable 

Timothy Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant : 

Crowley, Haughey,Hanson, Toole & Dietrich; Terry G. 

Spear argued, Billings, Montana 

For Respondent : 

Kelly & Halverson, P.C.; Sheehy, Prindle & Finn; 

Patrick R. Sheehy argued, Billings, Montana 

Submitted: June 6, 1985 

Decided: December 6, 1985 

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

David Hutchinson, claimant, was injured in April 1981. 

He executed a final settlement in September 1981. In 

December 1982, he petitioned the Workers1 Compensation Court 

for rescission of the settlement agreement and reinstatement 

of benefits. The court rescinded the agreement and awarded 

permanent total disability benefits. Intermountain Insurance 

Company (Intermountain) appeals. We affirm in part and 

reverse in part. Our initial opinion, which was decided 

December 11, 1984, is withdrawn. 

The issue is whether the record supports the Workers1 

Compensation Court decision to set aside the final settlement 

on the basis of mutual mistake of the parties or on the basis 

of good cause shown? 

In April 1981, while in the course of his employment at 

Pierce Packing Company, Hutchinson fell down an elevator 

shaft striking his lower back against the edge of the elevator shaft. He landed on his feet and immediately began 

experiencing pain in his lower back, legs 2nd feet. 

Following the accident, Hutchinson was assigned the job of 

pulling hams out of ham presses. While doing so, the rack 

fell on Hutchinson striking him on the right shoulder blade, 

the center of his back and his right leg. He experienced 

immediate pain. After several months of treatment, he 

executed a. final settlement in September 1981. In December 

1982, ' he petitioned the Workers' Compensation Court for 

rescission of the settlement agreement with a request for 

reinstatement of benefits. 

Claimant testified that his condition had substantially 

worsened since the settlement in September 1981. He testified that he is now dragging his left leg, which he did not 

do before, and that he has an "irritated feeling" on the top 

of his leg as if he had. a.n open sore in that area. He also 
testified tha.t both of his big toes become numb and that he 

has considerably more back pain than he had prior to September 1981. He testified that the pain from his back has now 

become so severe that he is unable to sleep and that he has 

extreme difficulty with bowel movements because of radiating 

pain in his back. Claima.nt also presented evidence with 

regard to a disability rating change by the Veteran's 

Administration, but that evidence is not properly before this 

Court. 

The Workers' Compensation Court made various findings of 

fact, which included the following: 

12. Prior to the Final Settlement, the 

claimant was experiencing sharp pains in 

his lower and central back that increased 

with increased physical activity, numbness and tingling in his left and right 

calves, tingling and numbness in his big 

toes; his legs hurt. . . . 

13. At the time of trial, the claimant's 

back pain had increased significantly and 

he experienced more pain than before with 

increased physical activity. He now 

drags his left leg and has an irritating 

feeling on top of one of his legs. He 

now gets less sleep at night because his 

back pain now awakens him two to three 

times a night and he cannot return to 

sleep until he "cracks" his back. He now 

must crack his back more than he did 

prior to his Final Settlement to relieve 

his back pain. The numbness in his 

calves is now more constant. He now must 

evacuate his bowels more frequently; if 

he does not do so, the pain that radiates 

from his back increases. 

The court further noted that claimant could not return to any 

jobs for which he was trained because of his disability and 

there was no prospect of finding employment in the normal 

labor market. 

The court then entered its ruling setting aside the 

settlement. It based its ruling on the doctrine of mutual 

mistake contained in Kienas v. Peterson (Mont. 1980), 624 

P.2d 1, 37 St.Rep. 1747. The judge found as a matter of law 

that "the parties were laboring under an unconscious 
ignorance about the claimant's condition when they entered 

the Final Settlement; this was a materiai mistake that 

prevented the free consent of the parties." He therefore 

concluded that the claimant was entitled to rescind the final 

settlement. The court made its order rescinding the 

agreement and awarded permanent total disability benefits to 

the claimant. 

On the question of mutual mistake of the parties, 

Intermountain argues that the worsening of a known injury or 

condition should not be grounds for a rescission of a settlement agreement. It argues that the risk of a worsening 

condition was known by the claimant and the insurance company 

when the settlement was made. The company further notes that 

a change in symptoms should not be equated with a change in 

disability unless there is concrete evidence of greater 

disability. It argues that where there is only testimony on 

the part of a claimant, neither the "mutual mistake doctrine" 

nor the "good cause" theory justifies setting aside the final 

settlement. 

The claimant argues that under the statute, he may "for 

good cause shown" rescind the final settlement. He states 

this is a proper standard to be applied and not the "mutual 

mistake of fact" standard under Kienas. In particular, 

claimant argues that under the Workers' Compensation Court 

finding no. 13, there is a sufficient worsening of condition 

to constitute a good cause for reopening. 

Because of the differences in procedure and the 

amendment of pertinent statutes in 1979 and 1981, we will 

review the procedures by which a claimant may seek a change 

in a settlement. The pertinent sections in this discussion 

are the following: 

39-71-204. Rescission, alteration, or 

amendment & division - of - its orders, -. . decisions, - or awards -- limitation -- 
effect. (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. 

39-71-2909. Authority to review, diminish, or increase awardz -- limitation. 

The judge may, upon the petition of a 

claimant or an insurer that the disability of the claimant has changed, review, 

diminish, or increase, in accordance with 

the law on benefits as set forth in 

cha.pter 71 of this title, 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 

or award of compensation more than 4 

years after the settlement has been 

approved by the division or any order 

approving a full and final compromise 

settlement of compensation. 

39-71-121. Disability defined. A worker 

is disabled when his ability to enqaqe in 

gainful employment is diminished as a 

result of impairment, which in turn ma.y 

be combined with such factors as the 

worker's physical condition, age, education, work history, and other factors 

affecting the worker's ability to engage 

in gainful employment. Disability is not 

a purely medical condition. Disability 

may be temporary total, permanent total, 
or permanent partial as defined in 

39-71-116. 

39-71-122. Impairment defined. Impairment means any anatomic or functional 

abnormality or loss of bodily function. 

Impairment refers to functional use of 

the body and. is a purely medical condition. Permanent impairment is any anatomic or functional abnormality or loss 

of bodily function after the maximum 

medical rehabilitation has been achieved. 

The anatomic or functional abnormality or 

loss must be considered stable by the 

physician at the time the impairment 

rating evaluation is made. An impairment 

rating is purely a medical determination. 

Impairment may or may not result in 

disability. 

We also point out that 5s 39-71-121 and -122, MCA, were 

added by the legislature in 1981. Under the same act which 

added those sections, the legislature provided that 

§ 39-71-116(12), (13) & (19), MCA, were amended so as to 

include in the definitions of permanent partial disability, 

permanent total d.isability, and temporary total disability, a 

requirement that "[dlisability shall be supported by a 

preponderance of medical evidence." 

So far as the division is concerned, S 39-71-204(1), 

MCA, provides that the division has continuing jurisdiction 

to rescind or a.mend orders "upon good cause appearing." 

Apparently that power was modified by the 1979 amendment of 

5 39-71-204(2), MCA, which provides that the division has 

power to rescind, alter or amend only by agreement between a 

claimant and an insurer. 

In 1979, S 39-71-204(2), MCA, was amended to provide 

that rescission, alteration or amendment of a final 

settlement shall be by agreement; but in the absence of 

agreement, it is a dispute for which the workers' 

compensation judge has jurisdiction. As pointed out in the 

present case by the workers' compensation judge, that code 

section does not set a specific standard or test. While 
S 39-71-204, MCA, does not specifically state that the 

standard of "good cause appearing" shall be applied by the 

judge, that follows logically from a liberal construction as 

required under S 39-71-104, MCA. We therefore hold that 

under $. 39-71-204, MCA, the workers' compensation judge has 

jurisdiction to rescind, alter or amend a final settlement 

"upon good cause appearing therefor." 

In 1979, the legislature also amended S 39-71-2909, MCA. 

Under S 39-71-2909, MCA, a workers' compensation judge has 

jurisdiction to rescind, alter or amend a final settlement 

upon a showing that "the disability of the claimant has 

changed. " 

In this case, Hutchinson petitioned for approval of a 

final settlement. Intermountain concurred in that petition 

which stated an agreement had been reached regarding the 

amount of compensation due. The petition also contained a 

statement that claimant and insurer understood that an order 

approving the petition for final settlement may "for a good 

cause" be rescind-ed, altered or amended by the division 

within four years. The Order Approving Final Settlement 

dated September 28, 1981, stated in part: 

IT IS ORDERED that the petition for final 

settlement be approved., and that upon 

payment of the amount specified in the 

petition, the claim shall be closed as 

finally settled. Under the Workers' 

Compensation Act, the Division may, for 

good cause, rescind, alter or amend this 

final settlement within four (4) years 

from the date of the settlement. 

The petition for rescission of the foregoing Order was made 

to the workers' compensation judge. 

Our initial question is whether the judge may rescind 

the order of final settlement under either S$ 39-71-204 or 

-2909, MCA. Under S 39-71-204, MCA, the claimant may request 

rescission from the judge on a theory of good cause appearing 

for such a rescission. Under S 39-71-2909, MCA, a claimant 
may petition the judge for a rescission of the final 

settlement on the ground that the disability of the claimant 

has changed. We conclude that the claimant has alternate 

statutory theories available. 

It is important to bear in mind that the statutes 

authorize rescission of a final settlement agreement, but do 

not authorize rescisssion of a full and final compromise 

settlement. These are different settlement agreements. In 

the present case, we have an order approving final 

settlement. In contrast, in Kienas, a full and final 

compromise settlement was involved. While under the 

provisions of §S 39-71-204 and -2909, MCA, the judge is - not 

granted the power to rescind an order approving a full and. 

final compromise settlement, under Kienas a full and final 

compromise settlement may be set aside for mutual mistake. 

The workers' compensation judge granted rescission on 

the basis of mutual mistake between the claimant and insurer, 

and relied upon Kienas for authority. The claimant in Kienas 

received an injury to his lower back for which he was granted 

an award on a full and final compromise settlement basis. 

The Court concluded that both parties labored under a 

material- mistake as to the nature and extent of the 

claimant's injuries, and in addition, neither party was aware 

of the disability resulting from the preexisting cerebral 

palsy. The Court concluded a mutual mistake had been made by 

the claimant and insurer, the contracting parties. 

Therefore, the Court authorized the setting aside of the 

full and final compromise settlement based on mutual mistake 

of fact. Because we approve the conclusion of the Workers' 

Compensation Court on a different theory, we do not find it 

necessary to determine if the claimant has met the mutual 

mistake test of Kienas. 
We hold that the findings of fact of the Workers' 

Compensation Court afford a basis sufficient for a rescission 

by the workers' compensation judge for good cause under 

S 39-71-204, MCA, and also a sufficient basis to establish 

that the disability of the claimant has changed as required 

under § 39-71-2909, MCA. We therefore affirm the rescission 

of the final settlement by the Workers' Compensation Court. 

I11 

We are not able to affirm the judgment of the Workers' 

Compensation Court that certain payments be made to the 

claimant for permanent total disability benefits. In 

reaching its conclusion, the Workers' Compensation Court did 

not adequately consider the 1981 amendments to SS 39-71-116, 

-121 & -122, MCA. Section 39-71-116 (13), MCA, defines 

permanent total disability and concludes with the statement 

that " [dl isability shall be supported by a preponderance of 

medical evidence." Under 5 39-71-121, as enacted in 1981, a 

worker is disabled when his ability to engage in employment 

is diminished as a result of impairment. Impairment is 

defined in S 39-71-122 as a purely medical condition based 

upon an impairment rating evaluation by a physician. 

The record in this case does not contain a preponderance 

of medical evidence sufficient to meet the statutory 

requirements of 39-71-116, MCA, as to permanent partial 

disability, temporary total disability, or permanent total 

disability. As a result we are not able to affirm the award 

of permanent total disability benefits by the Workers' 

Compensation Court. An opportunity to present further 

evidence is needed on the part of both parties. 

We affirm the portion of the judgment of the Workers' 

Compensation Court rescinding the final settlement. We remand 

the cause for further proceedings on the issue of disability 

benefits, with any determination of such disability to be 
completed in accordance with this opinion and appropriate 

statutory requirements. 

In connection with this remand, we point out that 

39-71-116 (19) was amended in 1985 to pr0vid.e that " [a] worker 

shall be paid temporary total disability benefits during a 

reasonable period of retraining." In the present case, based 

upon previous case authority, the lower court had concluded 

that a determination of permanent total disability was 

required prior to the entry of an order providing benefits 

during a reasonable period of retraining. 

Justices 

/" 

Hon! Thomas Honzel,/bistfict Judge, 

sitting in place Mr. Justice 

John C. Sheehy