### No. 95-290 IN THESUPREME

COURTOFTHESTATEOFMONTANA 1996

KENNETHMARTIN,

Petitioner andAppellant,
v. STATECOMPENSATION INSURANCEFUND, Respondent and Insurer for 

### f[B22?glfj GLENRINDAL,

Employer.

APPEALFROM: Workers' Compensation Court, State of Montana

TheHonorable Mike McCarter, Judge presiding.

COUNSELOFRECORD:

For Appellant: Stephen D. Roberts, Attorney at Law, Bozeman, Montana For Respondent: Charles G.Adams,Attorney, State Compensation Insurance Fund, Helena, Montana

Submitted onBriefs: December 21, 1995

Decided: February 22, 1996 Filed:Justice Terry N. Trieweiler delivered the opinion of the Court.

The petitioner, Kenneth Martin, filed apetition for hearing in the Workers' Compensation Court of the State of Montana in which he sought to set aside afinal settlement agreement that had been approved bythe Division of Workers' Compensation. The respondent, State Compensation Insurance Fund, filed amotion 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. Wereverse 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 amatter 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, whowas insured by the State Compensation Insurance Fund. Three years later, onJanuary 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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### OnJanuary 13, 1995, Martin filed apetition for hearing in

the Workers' Compensation Court inwhich hesought to set aside the final settlement agreement andreopen his claim. In his petition, Martin alleged:

Adispute exists between the parties. Despite the fact that Claimant suffered a severe injury which required alaminectomy of L4-5 andL5-Sl, anddespite the fact that this injury hadavery substantial effect on the earning capacity of Claimant, 

### whosework history was strictly manual 

### labor, the State Fund settled with the Claimant onafinal settlement basis for only 25weeksof permanent partial disability benefits. The State Fund entered into this settlement with Claimant whenClaimant was not represented by an attorney. The settlement, which was for no more 

### than his undisputed impairment rating, wasmadedespite the written memorandumof the State FundBureau Chief which noted that "wewould 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 wasimproperly low asdocumented through information contained in the State Fund's ownfiles. 1n the petition, Martin also requested additional benefits, attorney fees andcosts, andthat the court assess atwenty percent penalty against the State Fundbecause of its unreasonable conduct. The State Fund moved to dismiss the petition, or in the alternative, for summaryjudgment based onthree grounds. First, it asserted that the Workers' Compensation Court lacked jurisdiction; second, it asserted that the claimant's request was barred bythe statute of limitations; andthird, it asserted that the petition failed to set forth anylegal basis for setting aside the settlement. In support of its motion, the State Fundsubmitted
an affidavit of a claims adjuster familiar with Martin's claim file. It also offered as exhibits the petition for final 3settlement 

### and the Division of Workers' Compensation's order

approving the final settlement. Noother evidence wasoffered for
or in opposition to summaryjudgment. OnMay11, 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. ISSUE1 Did the Workers' Compensation Court have jurisdiction to consider Martin's petition? Wereview the Workers' Compensation Court's conclusions of law to determine whether they are correct. CNAInsurance Co’s v.Dunn 

### (Mont

. 1995), 902 

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

### Farm(1993), 261Mont. 256, 258, 862P.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) Thedepartment hascontinuing jurisdiction over all its orders, decisions, and awards and may, at any time, uponnotice, andafter opportunity to beheard is given to the parties in interest, rescind, alter, or amendanysuchorder, decision, or award madebyit upon good cause appearing therefor.

. . . . (3) If aparty is aggrieved byadepartment order, the party may appeal the dispute to the workers' compensation judge. Section 39-71-2909, MCA,provides:

4The 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 bythe judge. Aninsurer'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 afull and final compromise settlement. Wolfeinvolved afull 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

5approving 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 4years after the settlement has been approved by the division or any order approving afull 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 wehave then are aseries 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 amutual mistake of fact regarding the nature and extent of the claimant's injury. Wealso 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.

. . .

. . . Wehave 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 6substantive 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 achange in the procedural law. Wehave 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. StateCamp.Ins.FundY.Sky CountryInc. (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 apetition 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 Wolfeopinion, 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 courtconcluded, 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. Weconclude that §92-848(4), R.C.M. 1947 (1975) (codified as amended at 539-71-2909, MCA), was alimit onthe 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 aperiod of years. As such, in the unique context of our prior decisions set forth and discussed in Wolfe, it was aprocedural rule and the procedural rule in effect when Martin's petition was filed controls. Wesee no distinction between the changes in the Workers' Compensation Court's authority to reopen afinal settlement and its authority to reopen afull and final compromise settlement. For these reasons, weconclude 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 beset aside onappeal as
amatter of law? Martin contends that this Court, on appeal, should reopen his 1980 workers' compensation settlement as a matter of law. He

8

### relies on Kienasv.Peterson (1980), 191 

### Mont. 325, 330, 624P.2d 1, 3,

where wenoted that general contract lawgives courts the right to reopen acompromise settlement whenamutual mistake of material fact has occurred. Since Kienas, 

### wehave set aside several 

### compromise settlement agreements. See,e.g.,Brownv.RichardA.Murphy,Inc. 

### (1993), 261Mont. 275, 281, 862P.2d 406, 410 (rescinding asettlement agreement based on mutual mistake of law); Wolfev.Webb

### (1992), 251Mont. 217, 231, 824 P.2d 240, 248 (finding amutual mistake of fact); Kimesv.Chavlie‘sFamily 

### Dining& DonutShop 

### (1988), 233 Mont. 175, 178, 759 P.2d 986, 988 (finding amutual mistake of fact); Weldelev.MedleyDevelopment (1987), 

### 227Mont. 257, 261, 738P.2d 1281, 1283 (finding amutual mistake of fact). In setting aside the agreement in Wolf, 

### westated that "[wlhether the decision to set aside that agreement is madeinthis Court or the Workers' Compensation Court is merely aprocedural difference and does not effect the substantive rights of either party." Wolfe, 

### 251Mont. at 226-27, 824P.2d at 245. However, an adequate factual record is, in every case, necessary to decide whether anagreement should beset aside. Here, the State Fund responded to Martin's petition for hearing in the Workers' Compensation Court with amotion to dismiss the petition, or in the alternative, for summaryjudgment. The Workers' Compensation Court granted the State Fund's motion for summary judgment based on lack of jurisdiction. Martin did not

9

### file amotion for summaryjudgment andthis court hasnorecord 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 bythe statute of limitations found at 527-2-203, MCA. Afactual record must be developed before any court can decide whether to set aside Martin's settlement agreement. Wetherefore decline to exercise our authority to set aside Martin's settlement. Martin also contends that heis entitled to anaward of costs, attorney fees, andastatutory penalty basedonhis assertions that he is entitled to reopen his claim, andthat the State Fund has unreasonably refused to doso. However, since wehavenot decided that issue, wewill consider neither his claim for costs andfees
nor his claim that heis entitled to astatutory penalty. Wereverse the judgment of the Workers' Compensation Court and remand for further proceedings consistent with this opinion.

Weconcur:

1011