No. 95-290 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1996 

KENNETH MARTIN, 

Petitioner and Appellant, 

v. 

STATE COMPENSATION INSURANCE FUND, 

Respondent and Insurer for f[B 2 2 ?glfj 

GLEN RINDAL, 

Employer. 

APPEAL FROM: Workers' Compensation Court, State of Montana 

The Honorable Mike McCarter, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Stephen D. Roberts, Attorney at Law, 

Bozeman, Montana 

For Respondent: 

Charles G. Adams, Attorney, State 

Compensation Insurance Fund, Helena, Montana 

Submitted on Briefs: December 21, 1995 

Decided: February 22, 1996 

Filed: 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

The petitioner, Kenneth Martin, filed a petition for hearing 

in the Workers' Compensation Court of the State of Montana in which 

he sought to set aside a final settlement agreement that had been 

approved by the Division of Workers' Compensation. The respondent, 

State Compensation Insurance Fund, filed a motion to dismiss, or in 

the alternative, for summary judgment. The Workers' Compensation 

Court entered an order granting summary judgment in favor of the 

State Fund. Martin appeals that order. We reverse the order of 

the Workers' Compensation Court. 

The issues on appeal include: 

1. Did the Workers' Compensation Court have jurisdiction to 

consider Martin's petition? 

2. Should Martin's settlement agreement be set aside on 

appeal as a matter of law? 

FACTUAL BACKGROUND 

On January 3, 1977, Kenneth Martin suffered an industrial 

injury arising out of and in the course of his employment with Glen 

Rindal, who was insured by the State Compensation Insurance Fund. 

Three years later, on January 29, 1980, Martin and the State Fund 

entered into a petition for final settlement for the amount of 

$2025 which represented twenty-five weeks of benefits. The 

petition was submitted to the Division of Workers' Compensation 

which issued its order approving final settlement on January 31, 

1980. 

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On January 13, 1995, Martin filed a petition for hearing in 

the Workers' Compensation Court in which he sought to set aside the 

final settlement agreement and reopen his claim. In his petition, 

Martin alleged: 

A dispute exists between the parties. Despite the 

fact that Claimant suffered a severe injury which 

required a laminectomy of L4-5 and L5-Sl, and despite the 

fact that this injury had a very substantial effect on 

the earning capacity of Claimant, whose work history was 

strictly manual labor, the State Fund settled with the 

Claimant on a final settlement basis for only 25 weeks of 

permanent partial disability benefits. The State Fund 

entered into this settlement with Claimant when Claimant 

was not represented by an attorney. The settlement, 

which was for no more than his undisputed impairment 

rating, was made despite the written memorandum of the 

State Fund Bureau Chief which noted that "we would never 

settle the case for this amount if he had the proper 

advice. . . " The settlement was also based on a 

permanent partial disability rate that was improperly low 

as documented through information contained in the State 

Fund's own files. 

1n the petition, Martin also requested additional benefits, 

attorney fees and costs, and that the court assess a twenty percent 

penalty against the State Fund because of its unreasonable conduct. 

The State Fund moved to dismiss the petition, or in the 

alternative, for summary judgment based on three grounds. First, 

it asserted that the Workers' Compensation Court lacked 

jurisdiction; second, it asserted that the claimant's request was 

barred by the statute of limitations; and third, it asserted that 

the petition failed to set forth any legal basis for setting aside 

the settlement. In support of its motion, the State Fund submitted 

an affidavit of a claims adjuster familiar with Martin's claim 

file. It also offered as exhibits the petition for final 

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settlement and the Division of Workers' Compensation's order 

approving the final settlement. No other evidence was offered for 

or in opposition to summary judgment. 

On May 11, 1995, the Workers' Compensation Court granted the 

State Fund's motion for summary judgment. It held that the 

Workers' Compensation Court lacked jurisdiction over the petition 

to set aside the final settlement. 

ISSUE 1 

Did the Workers' Compensation Court have jurisdiction to 

consider Martin's petition? 

We review the Workers' Compensation Court's conclusions of law 

to determine whether they are correct. CNA Insurance Co’s v. Dunn (Mont . 

1995), 902 P.2d 1014, 1016, 52 St. Rep. 981, 982; Stordalenv.Ricci’sFood 

Farm (1993), 261 Mont. 256, 258, 862 P.2d 393, 394. 

Sections 39-71-204 and -2909, MCA, grant jurisdiction to the 

Workers' Compensation Court to review, diminish, or increase 

workers' compensation benefits in certain instances. Section 

39-71-204, MCA, provides in part: 

(1) The department has 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. 

. . . . 

(3) If a party is aggrieved by a department order, 

the party may appeal the dispute to the workers' 

compensation judge. 

Section 39-71-2909, MCA, provides: 

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The judge may, upon the petition of a claimant or an 

insurer that the disability of the claimant has changed 

or that the claimant received benefits through fraud or 

deception, review, diminish, or increase, in accordance 

with the law on benefits as set forth in chapter 71 of 

this title, any benefits previously awarded by the judge. 

An insurer's petition alleging that the claimant received 

benefits through fraud or deception must be filed within 

2 years after the insurer discovers the fraud or 

deception. 

In this case, the Workers' Compensation Court concluded that 

it lacked jurisdiction to set aside Martin's 1980 settlement 

agreement. In doing so, the court recognized that §§ 39-71-204 

and -2909, MCA, grant jurisdiction to the Workers' Compensation 

Court to rescind, alter, amend, diminish, or increase full and 

final compromise settlements pursuant to this Court's decision in 

Worfe Webb (1992), 251 Mont. 217, 824 P.2d 240. However, the court 

distinguished this case from Wolfe because it involves a final 

settlement rather than a full and final compromise settlement. 

Wolfe involved a full and final compromise settlement agreement 

which the Division of Workers' Compensation had approved on 

March 8, 1983. Wolf, 251 Mont. at 221, 824 P.2d at 242. In Wolfe, 

the insurer contended that the law in effect at the time of the 

claimant's 1980 injury applied. In 1980, §§ 39-71-204(2) and 

-2909, MCA, provided as follows: 

The division or the workers' compensation judge 

shall not have power to rescind, alter, or amend any 

final settlement or award of comoensation more than 4 

years after the same has been approved bv the division. 

. . . Except as provided in 39-71-2908 [not applicable], 

the division or the workers' compensation judge shall not 

have the power to rescind, alter, or amend any order 

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approving a full and final compromise settlement of 

compensation. 

Section 39-71-204(2), MCA (1979) (emphasis added). 

[Tlhe 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. 

Section 39-71-2909, MCA (1979) (emphasis added). 

In Worf, we concluded that the statutes which relate to the 

court's authority to entertain a petition are procedural, and 

therefore, that the statute in effect at the time the petition is 

filed controls. wolf, 251 Mont. at 226-27, 824 P.2d at 245-46. We 

discussed the unique manner in which this Court had previously 

dealt with petitions to set aside settlement agreements and stated: 

What we have then are a series of decisions by this 

Court that agreements settling claims for workers' 

compensation benefits are subject to contract law and can 

be set aside, at least by this Court, based upon a mutual 

mistake of fact regarding the nature and extent of the 

claimant's injury. We also had in effect, at the time of 

claimant's injury, statutes which appellant argues 

procedurally barred the Workers' Compensation Court, as 

opposed to this Court, from setting aside full and final 

compromise settlement agreements. . . . 

. . . . 

When this case was tried in April 1990, however, 

both of the sections relied upon by the defendant had 

been amended to remove any limitation on the Workers' 

Compensation Court's authority to set aside full and 

final compromise settlement agreements. . . . 

. . . 

We have previously held that compromise settlement 

agreements can be set aside based upon contract law. 

Whether the decision to set aside that agreement is made 

in this Court or the Workers' Compensation Court is 

merely a procedural difference and does not effect the 

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substantive rights of either party. Therefore, the 

amendment to the workers' compensation statutes which 

eliminated any restriction on the court's authority to 

review and rescind compromise settlement agreements was 

a change in the procedural law. We have previously held 

that procedural rules in effect at the time that a case 

proceeds to trial are the rules that are to be applied to 

the resolution of that dispute. State Camp. Ins. Fund Y. Sky 

Country Inc. (1989), 239 Mont. 376, 379, 780 P.2d 1135, 

1137; We&v. L?tate (1986), 219 Mont. 447, 449, 712 P.2d 

1315, 1316. 

worf , 251 Mont. at 226-27; 824 P.2d at 245-46. 

Because the 1987 statute gave the Workers' Compensation Court 

jurisdiction to reopen full and final compromise settlement 

agreements, we held that the Workers' Compensation Court could 

exercise jurisdiction over a petition filed in 1990, even though it 

related to an injury that occurred and an agreement made prior to 

1987. 

Martin filed his claim with the Workers' Compensation Court on 

January 13, 1995, after the legislature amended the statutes to 

remove any limitations on the Workers' Compensation Court's 

authority to set aside settlement agreements. 

The Workers' Compensation Court concluded that while the 1987 

changes which pertain to full and final compromise settlements are 

procedural pursuant to the Wolfe opinion, the changes which pertain 

to final settlements are substantive. The court reasoned that 

prior to their 1987 amendment the statutes prohibited the Workers' 

Compensation Court from reopening full and final compromise 

settlements, yet conferred jurisdiction on the court to reopen 

final settlements for up to four years. Therefore, the court 
concluded, the former four-year limitation for reopening final 

settlement agreements acted as a statute of limitation on the 

jurisdiction of the Workers' Compensation Court which cannot be 

changed retroactively. 

We conclude that § 92-848(4), R.C.M. 1947 (1975) (codified as 

amended at 5 39-71-2909, MCA), was a limit on the court's authority 

to set aside settlement agreements, whether they were entered into 

on a final or full and final compromise basis, and whether that 

limitation was total or took effect after a period of years. As 

such, in the unique context of our prior decisions set forth and 

discussed in Wolfe, it was a procedural rule and the procedural rule 

in effect when Martin's petition was filed controls. We see no 

distinction between the changes in the Workers' Compensation 

Court's authority to reopen a final settlement and its authority to 

reopen a full and final compromise settlement. 

For these reasons, we conclude that at the time Martin filed 

his claim, the Workers' Compensation Court had authority to set 

aside his final settlement agreement. Therefore, the Workers' 

Compensation Court erred when it concluded that it lacked 

jurisdiction to decide this dispute. 

ISSUE 2 

Should Martin's settlement agreement be set aside on appeal as 

a matter of law? 

Martin contends that this Court, on appeal, should reopen his 

1980 workers' compensation settlement as a matter of law. He 

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relies on Kienasv.Peterson (1980), 191 Mont. 325, 330, 624 P.2d 1, 3, 

where we noted that general contract law gives courts the right to 

reopen a compromise settlement when a mutual mistake of material 

fact has occurred. 

Since Kienas, we have set aside several compromise settlement 

agreements. See, e.g., Brown v. Richard A. Murphy, Inc. (1993) , 261 Mont. 275, 

281, 862 P.2d 406, 410 (rescinding a settlement agreement based on 

mutual mistake of law); Wolfev. Webb (1992), 251 Mont. 217, 231, 824 

P.2d 240, 248 (finding a mutual mistake of fact); Kimesv.Chavlie‘sFamily 

Dining& Donut Shop (1988), 233 Mont. 175, 178, 759 P.2d 986, 988 

(finding a mutual mistake of fact); Weldele v. Medley Development ( 19 8 7 ) , 

227 Mont. 257, 261, 738 P.2d 1281, 1283 (finding a mutual mistake 

of fact). In setting aside the agreement in Wolf, we stated that 

"[wlhether the decision to set aside that agreement is made in this 

Court or the Workers' Compensation Court is merely a procedural 

difference and does not effect the substantive rights of either 

party." Wolfe, 251 Mont. at 226-27, 824 P.2d at 245. However, an 

adequate factual record is, in every case, necessary to decide 

whether an agreement should be set aside. 

Here, the State Fund responded to Martin's petition for 

hearing in the Workers' Compensation Court with a motion to dismiss 

the petition, or in the alternative, for summary judgment. The 

Workers' Compensation Court granted the State Fund's motion for 

summary judgment based on lack of jurisdiction. Martin did not 

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file a motion for summary judgment and this court has no record of 

the facts which form the basis for his petition. Neither does the 

court have evidence which would enable it to conclude whether 

Martin's petition is barred by the statute of limitations found at 

5 27-2-203, MCA. A factual record must be developed before any 

court can decide whether to set aside Martin's settlement 

agreement. 

We therefore decline to exercise our authority to set aside 

Martin's settlement. 

Martin also contends that he is entitled to an award of costs, 

attorney fees, and a statutory penalty based on his assertions that 

he is entitled to reopen his claim, and that the State Fund has 

unreasonably refused to do so. However, since we have not decided 

that issue, we will consider neither his claim for costs and fees 

nor his claim that he is entitled to a statutory penalty. 

We reverse the judgment of the Workers' Compensation Court and 

remand for further proceedings consistent with this opinion. 

We concur: 

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