Court Opinion

ID: 884080
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:54:47.525923+00
Date Added: 2024-06-11T09:16:49.298075
License: Public Domain

No.     95-290
              IN THE SUPREMECOURT OF THE STATE OF MONTANA
                                         1996

KENNETHMARTIN,
              Petitioner   and Appellant,
         v.
STATE COMPENSATIONINSURANCE 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.

COUNSELOF 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:

                                                            4
         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

                                                                9
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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