Court Opinion

ID: 884058
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:53:50.10251+00
Date Added: 2024-06-11T09:16:49.284389
License: Public Domain

NO.      95-221
               IN THE SUPREMECOURT OF THE STATE OF MONTANA
                                             1996

THOMASR. BROEKER,
               Petitioner,      Appellant,      and Cross-Respondent,
         v.
GREAT FALLS COCA-COLA BOTTLING COMPANY,
               Employer,
         and
STATE COMPENSATIONMUTUAL INSURANCE FUND,
               Defendant,    Respondent,        and Cross-Appellant.

APPEAL FROM:          Workers' Compensation Court of the State of Montana
                      The Honorable Mike McCarter,  Judge presiding.

COUNSEL OF RECORD:
               For Appellant:
                      Lawrence A. Anderson,          Attorney      at Law,
                      Great Falls, Montana
               For Respondent:
                      William 0. Bronson,           James, Gray,
                      & McCafferty, Great           Falls, Montana
               For Amicus American           Insurance    Association:
                      Jacqueline T. Lenmark, Keller,    Reynolds,
                      Drake, Johnson & Gillespie,    Helena, Montana

                                      Submitted       on Briefs:         February   1, 1996
                                                         Decided:~;:,: April
                                                                   .            5, 1996
Filed:                                                              .,:
Justice         Terry      N. Trieweiler                      delivered              the opinion          of the Court
         The petitioner,                        Thomas Broeker,                        filed         a petition          in     the
Workers'           Compensation                  Court         of    the        State         of Montana         in which        he
sought        to     reduce        the          amount          by which               State      Compensation           Mutual
Insurance           Fund was offsetting                         his workers'                  compensation         disability
benefits            based        on        his         receipt             of        social      security          disability
benefits.                He      alleged                 that        cost-of-living                    adjustments             were
inappropriately                 included                in     the        offset        computation             and that        the
social        security          rate       against            which his benefits                      were offset        should
have       been         indexed            to          his      date            of     injury,         rather       than        his
eligibility             date.      The Workers'                     Compensation               Court entered          an order
and judgment            resolving               the cost-of-living                       issue       in favor      of Broeker
and the         indexing          issue           in     favor        of the State                Fund.          Both Broeker
and the State                Fund appeal                 the order               and judgment.              We affirm           the
order      and judgment                of the Workers'                      Compensation               Court.
         The issues             on appeal                include:
         1.         Did the Workers'                     Compensation                  Court err when it            concluded
that      the      State        Fund could                   not     include            social        security        cost-of-
living          increases             in         its         calculation                of     the     amount       by        which
Broeker's           workers'           compensation                  benefits            could       be reduced?
         2.         Did the Workers'                     Compensation                  Court err when it            concluded
that      the       social        security               disability                  benefit         by which       Broeker's
workers'           compensation             benefits                would be offset               should        be indexed       to
the date           on which he became eligible                                   for    social        security      benefits,
rather        than      the date            of his            injury?

                                                                      2
                                                FACTUAL BACKGROUND
         In    1980,        Thomas Broeker,                    a truck            driver          and refrigeration
repairman           with         a ninth-grade                education,            suffered                 an industrial
injury        when a Coke machine                      fell        on him.          His         injury        arose       out of
and in        the     course            of     his     employment           with      Great           Falls          Coca-Cola
Bottling        Company,             which           was insured             by     the          State        Compensation
Insurance           Fund.
         Broeker         properly            reported         his      injury      pursuant              to the workers'
compensation               law      and the           State        Fund accepted                  liability            for       his
claim      and has paid                  him benefits               since        1980.            After        his      injury,
Broeker       continued             to work intermittently;                        however,              by August             1984,
the degree of his disability                               had worsened            and he was no longer                         able
to perform          his      job.        At that           time,       the State          Fund began to pay him
temporary           total         disability               benefits,         which         it      continued              to     pay
until      June       1,     1992,           when his         status        was converted                     to     permanent
total      disability.               Since           1992, the State              Fund has continued                      to pay
Broeker       permanent             total        disability            benefits.
         On     May         30,      1990,            Broeker            applied          for       Social            Security
Disability            Benefits               and      in      March        1992,      after              a    hearing,            an
administrative               law judge               held      that       he was entitled                     to     benefits.
The judge           found        that        Broeker's         period           of disability,                 pursuant           to
the Social           Security            Act,        began on August               23, 1984.                 Benefits           were
awarded        retroactive               to May 1989.                  While       the payment                accrued           from
May 1989,           the      initial            benefit         rate,        which         was $651 per                   month,
reflected           a basic             rate         indexed        to     August          23,       1984,         plus         five

                                                                3
cost-of-living               increases             that     had gone into             effect         between December
1984 and December 1987.
         Following           the Social             Security          Administration's                    determination,
the      State       Fund began              to     take       an offset             from      Broeker's              workers'
compensation               payments           based         on his          reception           of     federal          social
security           benefits          pursuant             to     §§ 39-71-701(2)                    and     -702(2),          MCA
(1979).            The amount of the offset                           was based on the                    initial       amount
of the social              security          disability             benefit,         $651.50,          and amounted to
$74.91         per week.
         Broeker           petitioned             the Workers'              Compensation              Court         to reduce
the      State       Fund's         offset          based on his               claim         that      the      State        Fund
should         not    be able           to     include           adjustments            for         inflation           in    its
offset         calculation.                He also          claimed         that     the State             Fund's       offset
should         be based on a social                   security           disability            rate       indexed        to his
date      of     injury,          rather      than         the date         on which           he became eligible
for    benefits.
                                                            ISSUE 1
         Did the Workers'                  Compensation               Court        err when it            concluded          that
the      State       Fund could              not     include          social         security             cost-of-living
increases            in     its     calculation                of     the      amount         by which              Broeker's
workers'           compensation              benefits            could      be reduced?
         We review           the Workers'             Compensation                 Court's      conclusions              of law
to     determine           whether           they     are        correct.            CNA Ins. 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.

                                                                  4
          The State          Fund contends                that         it      did       not        miscalculate          its
offset,          but      simply         based      it      on      the            initial           social       security
disability         benefit         Broeker        was entitled               to receive.               And while         this
benefit        included       cost-of-living                increases,                 the State             Fund has not
taken      an offset          based upon any cost-of-living                                     increases          Broeker
received          since     the     date     of his          initial               social       security         benefit.
Therefore,             the State       Fund asserts              that         it     did      not act         contrary       to
the     offset         statutes       or    this         Court's            decision           in     McClanathan v.Smith

(198O)I        186 Mont. 56, 606 P.2d 507.
          The offset         statute        applicable             to this             case provides:
                 In cases where it      is determined    that   periodic
          benefits    granted by the Social Security    Act, 42 U.S.C.
          301 (1935), are payable because of the injury,      the weekly
          benefits   payable under this section are reduced, but not
          below zero, by an amount equal, as nearly as practical,
          to one-half    the federal periodic  benefits  for such week.
Sections         39-71-701(2)            and -702(2),              MCA (1979).
          In McClanathan , we held                 that     Congress               intended           that     the offset

apply      only        to the primary             insurance             amount specified                      pursuant       to
42 U.S.C.          § 423,          and     not     to      cost-of-living                      increases         provided
pursuant         to 42 U.S.C.            § 415.          McClanathan , 186 Mont.                      at 64, 606 P.2d

at      512.            McClanathan        concerned             cost-of-living                       increases          made

subsequent          to the initial               award,         and therefore,                 we did not discuss
increases          included        in the initial                award.
          Any cost-of-living                increases,             including                 those     which     become a
part      of the initial           award,        are governed                by the Social               Security        Act.
Because          the      State     Fund has              not      taken            offsets          based       upon     any
cost-of-living                     increases                since          the        initial           award,                  the         cost-of-
living          adjustments                at      issue          here        are          those      built           into            the      Social

Security             Administration's                       initial            benefit             determination                         in     1992.

&e 42 U.S.C.                 5 415(i).                  Pursuant              to     42 U.S.C.             § 415,               the         cost-of-

living          increase             is       added          to       the          primary            insurance                  amount,                 and
increases             which        are granted                  in any year                 following                and including                       the

year      the        individual             becomes             eligible              for       benefits              are       added           to       the

primary          insurance            amount             "without             regard          to the          time         of      entitlement
to     that      benefit."                 42 U.S.C.              § 415(i)             (2) (A) (ii)-(iii).

          Therefore,                although             Broeker              did      not      apply          for      benefits                 until

May 1990,             he became              eligible             for         benefits             on August                 23,         1984           (his

disability              date),         subject             to     a waiting                 period,           and was entitled                            to

cost-of-living                     increases                which           were           granted            between                 that           1984

eligibility               date        and          the      date         his         benefits              actually                   commenced.

Broeker's             commencement                  date        was May 1989 at which                                 time         his        initial

benefit          was         $651.50              and      included                 five        cost-of-living                           increases

granted          social            security              recipients                 between           1984           and        1988.             These

increases              included            a 3.5         percent              increase             on 12/84;                 a 3.1            percent

increase             on 12/85;             a 1.3         percent              increase             on 12/86;                 a 4.2            percent

increase             on 12/87;             and a 4.0              percent              increase            on 12/88.

          When          we         decided               A4cClanathan,                the          statutory                    formula                  for

determination                 of     the          primary         insurance                  amount,           unlike              the        version

which           is        now         applicable,                       did          not           include              cost-of-living

adjustments.                  42 U.S.C.                  § 415.               Therefore,                when          we decided                     that

case      we concluded                    that:
               The benefits      to which appellant            is entitled      under
        42 U.S.C.    § 423 are disability              benefits,     not cost-of-
        living   benefits,     and are defined as "equal to his primary
        insurance amount for such month" calculated                   as though he
        had attained       age 62.     It is evident that the provisions
        of 42 U.S.C. 5 424a(d) allowing              the states to provide an
        offset   contemplate       only the benefits           recoverable      under
        42 U.S.C.    § 423, relating          to the individual's            primarv
        insurance    benefits.       Therefore,        we hold that the state
        offset   may not be used to reduce the benefits                 accruing to
        the appellantunderthe           cost-of-living        increases provided
        in 42 U.S.C. 5 415.
McClanathan, 186 Mont.             at 64, 606 P.2d at 511-12                       (emphasis          added).

        Because the definition                         of primary             insurance         amount has since
changed        to        include            cost-of-living               adjustments,                we     must       IlOW

determine       whether             the     cost-of-living               adjustments              included      in     the
primary      insurance              amount should                also    be excluded              from    the offset
determination.
        Despite          the        change       in        the   definition          of    primary           insurance
amount,      the basic              benefit      for        disabled      persons         is still         the amount
prescribed           by        42      U.S.C.          §     415(a)      before           any      cost-of-living
increases       are added.                 Any increase               to that     basic         amount is due to
an increase              in    the        cost-of-living,               which       in     turn      is    caused        by
inflation.               For        several           reasons,          inclusion          of      cost-of-living
increases           in        offset          calculations               is      neither           equitable           nor
necessary.           McClanathan, 186 Mont.          at 64, 606 P.2d at 511.                       Reasons

for   exclusion           were given            by the Colorado                Supreme Court              in Engelbrecht

v. HartfordAccident andIndemnity Co. (Cola.                          1984) , 680 P.2d 231.                  The court

reasoned:
        Allowing           an injured     worker to keep his cost-of-living
        increase          better   protects   the worker and gives him a more

                                                                 7
          reliable  source of income.       In addition   a cost-of-living
          increase does not result      in a double award.      The federal
          government has decided that it will maintain           the buying
          power of social      security    payments,    not that      it will
          provide   additional    benefits    for a particular         injury.
          Because Colorado does not provide [workers'        compensation1
          benefits   to keep pace with inflation,       there is no double
          payment.
Engelbrecht ,         680 P.Zd       at       233.        Like      Colorado's            Act,         the      Montana

Workers'         Compensation            Act,     at the time of Broeker's                      injury,         did not
provide         for     cost-of-living             increases.           Therefore,             allowing         Broeker
to    keep        the       cost-of-living                increases         does         not     result           in      an
increased             benefit      or a double           award.      Moreover,            inclusion            of cost-
of-living              increases         in     offset      calculations            does         not      serve        the
purpose         of the offset            statute,         which we have described                       as follows:
                 The    legislative      intent   behind     the     workers'
          compensation      statutes   is to replace    income to injured
          workers.     The purpose behind the state offset        statute     is
          to    prevent      " over  replacement"    or    duplication        of
          disability     pay.
Watsonv.Seekins           (1988),     234 Mont. 309, 314-15,           763 P.2d 328,                 332.

          As noted in Colorado,                   allowing        a claimant        to keep that                portion
of his or her benefits                    attributable            to inflation            allows        that     person
to replace             income without             duplication           of benefits.
          For     these         reasons,          we conclude            that      all         social          security

disability              cost-of-living               increases,          whether           included             in     the
initial         rate      or awarded later,                should       be excluded             when the offset
against         workers'           compensation            disability           benefits          is      calculated
pursuant         to 5s 39-71-701(2)                  and -702(2),          MCA (1979).                 The decision
of the Workers'                 Compensation             Court    to this        effect         is affirmed

                                                            8
                                                                            ISSUE            2
             Did     the Workers'                      Compensation                      Court           err     when it             concluded                that
the     social            security                  disability                    benefit           by which                Broeker's              workers'

compensation                    benefits               would             be offset                should            be indexed                 to the         date

on which                 he became                  eligible                for      social            security                  benefits,               rather

than         the      date        of     his          injury?

             Broeker             contends                    that          the          language               of      the         offset             statute
requires                 use     of      an offset                    based             on       a social              security                 disability

rate         indexed             to      the          date          of      his         injury,            rather                than      the        date        on

which             he became            eligible                to receive                    those        benefits.                 His         contention

is     based             on his          suggestion                        that         the       offset             statute              is     ambiguous

when         it     provides:

                      In cases                       where    it     is    determined      that     periodic
             benefits    granted                        by the Social         Security    Act,    42 U.S.C.
             301 (1935),     are                    payable      because of the injury,          the weekly
             benefits    payable                       under this       section     are reduced,     but not
             below zero,     by                     an amount equal,           as nearly    as practical,
             to one-half     the                     federal     periodic       benefits   for such week.

Sections                  39-71-701(2)                           and              -702(Z),                 MCA                  (1979)            (emphasis

added).               Broeker              claims                that              the           phrase             "for          such          week,"            is

ambiguous                 because              it       could              refer          to       the         date         of      the         claimant's

industrial                 injury;              the          date          of      the        claimant's                   disability;                  or     the

date         of      the        claimant's                     ultimate                  entitlement                       to     Social           Security

benefits.                      Broeker               asks           this          Court           to      conclude                 that          since         the

statute             is     ambiguous,                   it      should              be interpreted                          liberally              in     favor

of     the         claimant            so that                "for          such         week"         refers              to     "the         week      of    the

injury."                 See § 39-71-104,                            MCA (1979).

                                                                                    9
           In response               to         this      argument,            the     Workers'            Compensation                   Court
held       that:

           HOWeVer,     the Court         finds      nothing       ambiguous      about     the
           phrase.    None of the proposed              interpretations         is correct.
           The provision        is express          and clear.          It provides      that
           "the weekly       [workers'       compensation]          benefits"      are to be
           reduced by "one-half          of the federal          periodic      benefits     for
           such week."        It is plain          from the words and context                 of
           the provision       that    "for     such week" refers           to the week in
           which the workers'          compensation          benefits       are paid.       The
           statute    requires       that      the offset          be based       on actual
           social   security      benefits       paid during        the same week as the
           workers'    compensation          benefits       are paid.

(Alteration              in     original.)

           We agree.                Furthermore,                    the      rule        of     liberal         construction                  in

effect        at     the      time         of      Broeker's               injuries           is      inapplicable                 because,

as stated,             the      words             of      the     statute            are      plain        and unambiguous                    on

their       face      and must                  be applied                as written.                 Love11v. state camp. Mut. Ins.

Fund       (1993),            260 Mont. 279,       285,          860 P.2d 95,        99.       Rules          of

construction               applicable                    to     ambiguous            statutes           do not         apply        to     this

statute.
           Therefore,               we conclude                   that       the      Workers'             Compensation                   Court

was      correct              when         it          held       that       the       amount           by      which          Broeker's

workers'           compensation                        benefits           should           be offset            is         based     on the

social        security           disability                     benefit        as indexed               to the         date        on which

he became            eligible              to          receive       those          benefits.

           For     these         reasons                 we affirm             the         order       and      judgment             of     the

Workers'           Compensation                        Court.
we concur:

      Chief   Justice

  i