Court Opinion

ID: 878994
Source: CourtListenerOpinion
Date Created: 2013-06-04 23:05:14.149862+00
Date Added: 2024-06-11T12:55:28.739013
License: Public Domain

No. 85-266
                IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    1986

JETT ROLCOMB,
                 Claimant and Respondent,

         -vs-
LOW TEMP INSULATION, Employer,
         and
COMMERCIAL UNION INSURANCE COMPANY,
                 Defendant and Appellant.

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

COUNSEL OF RECORD:

         For Appellant:
                 Anderson, Brown, Gerbase, Cebull    &   Jones; Steven
                 Harman, Billings, Montana

         For Respondent:
                 Charles Hingle, Billings, Montana

                                    Submitted on Briefs: August 21, 1986
                                     Decided:    December 30, 1986

Filed:         o
         ~ E 3C 1986
Mr. Justice L. C. Gulbrandson delivered the Opinion of the
Court.

         Low Temp   Lnsulation and Commercial Union                 Insurance
Company appeal an order from the Workers' Compensation Court
denying their motion for a new trial.
         Two issues are raised on appeal:
         (1) Whether     the      Workers'    Compensation     Court       had
jurisdiction to rescind a final settlement more than four
years after it was approved by               the Division of Workers'
Compensation?
         (2) Whether at the time of final settlement in 1979
the insurance company had a duty to advise the claimant of
the difference between "impairment" and "disability."
      We reverse.
         Jett Holcomb injured his knee and neck on January 25,
1979 while working         for Low Temp        Insulation in Billings,
Montana.       Low Temp's      insurance carrier, Commercial Union
Insurance, began paying Holcomb total disability benefits in
June, 1979.
       Dr. William Walton, an orthopedic surgeon in Billings,
was the treating physician who had previously operated on
Holcomb's back as a result of a 1963 industrial accident.
Dr.   Walton    referred    Holcomb     to    a    Dr.   Maciolek    for   an
arthritis evaluation.            Dr. Maciolek reported that in his
opinion Holcomb had degenerative arthritis of the cervical
spine.
         On   November     15,     1979,     Dr.   Walton    submitted      a
Certificate of Condition to Peter McGraw, claims adjuster for
the insurance company.           Dr Walton stated that in his opinion
Holcomb was not able to return to his previous employment
with Low Temp but could return to another type of employment.
He diagnosed Holcomb as having possible rheumatoid arthritis
and suggested that he be retrained in another field.
         On November 27, 1979, McGraw asked Dr. Walton for an
impairment figure based on his findings and consulted with
the Workers' Compensation Division before deciding to convert
Holcomb's benefits from temporary total to partial permanent
disability.      On that same day, McGraw sent a letter to
Holcomb    explaining       the   conversion    of   benefits     and   its
implications.        On December      18, 1979, Dr.      Walton advised
McGraw of a 10% impairment figure assuming Holcomb underwent
corrective surgery on the cervical spine or neck region.                Dr.
Walton refused to perform the surgery because of doubts that
Holcomb, an admitted alcoholic, had stopped drinking.
      On     December       27,   1979,     McGraw   wrote   to    Holcomb
explaining    that    Dr.    Walton   had    submitted   a   10% partial
permanent disability rating as compared to the body as a
whole and that in order to receive partial permanent benefits
Holcomb would need to sign a petition for final settlement of
his claim.     In his letter McGraw specifically mentioned that
Holcomb should call him if he had any questions.                  Holcomb,
who has a below average IQ, apparently took two or three days
to study the letter with his girlfriend before going to
McGrawls office to sign the petition on January 15, 1980.
The final settlement, approved on February 5, 1980 is set out
in full below:
               Before the DIVISION OF WORKERS' COMPENSATION
                     Department of Labor and Industry
                             815 Front Street
                          Helena, Montana 59601
Jett Holcomb
                 Claimant
Low Temp Insulation                PETITION FOR FINAL SETTLEMENT
                 Employer
Commercial Union Co.               Case    2 79 10542 3
                 Insurer
      The undersigned claimant was accidentally injured on    January 25
1979, while employed by      Low Temp Insulation Co.
an employer enrolled under Plan     2   of the Workers' Compensation Act.
The claim was filed and accepted for compensation and medical benefits.
      The total compensation paid amounts to $     4350.86
      The total medical and hospital benefits paid amounts to $    676.53
       The claimant suffered disability [emphasis added] as a result of the
accidental injury, and an agreement has been reached between the claimant
and the insurer regarding the amount of compensation due wherein the
claimant agrees to accept the sum of           Forty Seven Hundred Dollars
( $ 4,700.00)
in a lump sum in final settlement which represents compensation for
   50   weeks, and that further medical and hospital benefits are expressly
reserved by the claimant.
      The claimant hereby petitions the Administrator with the concurrence
of the     Commercial union Companies      [ Insurer-Employer] for approval
of a    final settlement and that the case be              finally settled
on the basis stated above. [Emphasis added. ]     It is understood by the
claimant and the insurer that under the Workers' Compensation Act an order
approving this petition for final settlement may for good cause, be
rescinded, altered, or amended by the Division within (4) years from the
date this petition is approved.
                                              Jett Holcomb [signature]
                                   Claimant
Witness:
      Marilyn Michotte [signature]
      The    Commercial Union Co         hereby concurs with and joins in
the foregoing petition for final settlement.
      Dated                 1-15     , 19 80
                                      Commercial Union Co.
       Holcomb argues that McGraw did not adequately inform
him of the extent of his disability in 1979 so as to enable
him to reopen his case within four years of final settlement
providing good cause was shown.
       In    the   four years       after     final settlement, Holcomb
worked sporadically at various construction jobs.                  In April,
1984, or      approximately       two    months   after    the    four      year
reopening    period      had    expired, a neurosurgeon, Dr.             Wood,
performed the surgery on Holcomb's neck deemed necessary by
Dr. Walton in 1979.            Dr. Wood gave Holcomb a 10% disability
rating after the surgery, the identical figure submitted by
Dr. Walton to the insurance company in 1979.                   Holcomb then
asked the insurance company to reopen his case.                  The hearing
examiner rescinded the            final settlement on the basis of
constructive fraud and focused on Holcomb's lack of education
and the possibility that he may not have comprehended the
language     in    the   petition       for   final   settlement       or    the
explanation of the petition by                the claims adjuster, Mr.
McGraw.      The Workers1 Compensation Court agreed that the
insurance company's constructive fraud prevented the entering
of a valid final settlement agreement and as a result the
four year statute of limitations for reopening the case had
not run on Holcomb.
       The first issue is whether the Workers1 Compensation
Court had jurisdiction to rescind a final settlement more
than   four years        after    it was      approved    by   the Workers'
Compensation Division.
       The    jurisdictional         statute      applicable      to        final
settlements is found at S 39-71-204, MCA.
             (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.
         In Williams v. Industrial Accident Board                  (1939), 109
Mont. 235, 243, 97 P.2d 1115, 1118, we said:
                [Als officers, we act in a representative
               capacity and have such powers and only
               such as the law gives to us.           The
               individual members of the defendant
               Board, [now the Workers' Compensation
               Division] like all other officers, may
               not lawfully act as their whim or caprice
               may dictate, but only in accordance with
               that authority with which the law clothes
               them. Any other doctrine is destructive
               of the fundamental principles of our
               whole system of government.
         Subsection (1) of S 39-71-204, MCA, states that "except
as   provided     in     subsection       (2), the division        shall have
continuing        jurisdiction     ...      "            (Emphasis     added. )
Subsection (2) in turn, provides that "the division or the
workers'       compensation       judge     shall not have the power         to
rescind, alter, or amend any final settlement" more than four
years    after    the    approval of        the      settlement.     (Emphasis
added.
         In other words, the Workers' Compensation Court has
jurisdiction to rescind a final settlement for a period of
four years upon a showing of good cause after which time
jurisdiction ceases to exist.              In this case, Holcomb entered
into    a    final settlement with Commercial Union                  Insurance
effective      February     5,    1980.         He   sought   to   reopen   the
settlement on May 31, 1984, more than four years after the
final       settlement    order    had     been      entered,   claiming    the
insurance adjuster failed to inform him of the extent of his
disability at the time of final settlement.
     We hold that pursuant to 5 39-71-204, MCA, the Workers'
Compensation    Court   had   no   authority    or     jurisdiction   to
rescind the     final settlement.      That court's jurisdiction
expired on February 5, 1984, four years from the time of
final settlement.
      Because    of     our   ruling   on    the     first   issue    of
jurisdiction, we deem it unnecessary to address the second
issue.
      The    judgment    rescinding    the     final
                                                             2
                                                        sett ement    is
reversed.

We concur:

 .
Pn   Jack L. Green, District
Judge, sitting in place of
!r Justice William E. Hunt, Sr.
 l.
Mr. Justice John C. Sheehy, dissenting:

     P. J.   McGraw is quick on the draw, and a high-paid
insurance adjuster.    Holcomb was sick, and a little bit
thick, and any big words made him fluster.
     "Impairment" is a word      that when   it is hea.rd, its
meaning is surely amorphous; and few lawyers can see that
"disability" has a much different meaning for us.     Lawyers,
in fact, who construe the Act, are probably not aware of what
might ensue to those workers who take words that they should
beware of.   Here Holcomb   signed, as one ~ ~ h o 'born blind,
                                                     s
the petition McGraw had prepared.   With his knowledge gap he
walked into the trap which his untutored girl-friend had
shared.
    Constructive fraud. is not something odd.       It springs
from a clear legal duty to be candid. and open, and not try to
rope in, a man in a deal. that is sooty.      It is founded on
trust and good trustee must avoid all taint of deception.
What Jett Holcomb saw in I?.   J. McGraw was a trust in the

law's perception.
    To the Workers' Court credit it may now be said it saw
through the insurer's oration, and promptly recorded a fraud
that was sordid as a bar to the law's        limitation.   The
Workers' Court found that the fraud. gave it ground to allow
Holcomb's suit though belated.    But this Court, intent that
the law not he bent, rejects what the Workers' Court stated.
    The lesson to learn for those who d.iscern from studies
of what we are doing is that most of this Court wil.1 haply
consort with fraud if a worker is suing.      Gone is the day
when a lawyer could say that we follow the old legal chant,
one we derive from an old 1,atin jive, Fraus -
                                             et        nunquam
cohabitant.   (Fraud and justice do not dwell together.)

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