No. 12806
I N THE SUPREME COURT O THE STATE O M N A A
F F OTN
1974
CARL N, CARLSON,
P l a i n t i f f and A p p e l l a n t ,
T E ANACONDA COMPANY, a c o r p o r a t i o n ,
H
and M e t r o p o l i t a n L i f e I n s u r a n c e Company,
Defendants and Respondents.
Appeal from: D i s t r i c t Court of t h e Eighth J u d i c i a l D i s t r i c t ,
Honorable Paul G. H a t f i e l d , Judge p r e s i d i n g .
Counsel of Record :
For Appellant :
Hoyt and Bottomly, Great F a l l s , Montana
John C. Hoyt argued, Great F a l l s , Montana
For Respondents :
J a r d i n e , Stephenson, Blewett and Weaver, Great F a l l s ,
Montana
Holland and Haxby, B u t t e , Montana
Leonard J. Haxby, argued, B u t t e , Montana
Stephen Williams appeared, B u t t e , Montana
Submitted: November 15, 1974
Decided: [9EC f 8 :974
r
F i l e d : DEb
% e :q74
Mr. Justice Frank I Haswell delivered the Opinion of the Court.
.
This is an action at law for damages by an injured
employee against his employer and a group disability insurance
company. The district court of Cascade County granted the
employer's motion to dismiss the complaint without leave to
amend and entered judgment thereon. The injured employee appeals
from the judgment.
The issue is whether the Montana Workmen's Compensation
Act is the employee's exclusive remedy precluding an action at
law for damages. The district court held it is. We agree.
Plaintiff is Carl N. Carlson, a salaried employee of
defendant, The Anaconda Company, at its Great Falls plant. The
other defendant, Metropolitan Life Insurance Company, is a pri-
vate insurance company which provided long term disability bene-
fits to Anaconda's employees under a group disability policy.
According to the complaint, Carlson was injured in an
industrial accident on August 20, 1972, while employed by Anaconda
and has been totally disabled since. Anaconda is a self-insurer
under Plan I of the Montana Workmen's Compensation Act. Metro-
politan and Anaconda had previously entered into an agreement
whereby Metropolitan insured Anaconda's employees for long term
disability. Under the policy provisions, Metropolitan was to pay
disabled Anaconda employees 70% of their base monthly salary after
total disability of one year.
Anaconda paid Carlson temporary total disability payments
Act
under the Workmen's ~ompensation/for the first year. Since Aug-
ust 20, 1973, according to the complaint, Anaconda has paid no
Workmen's Compensation benefits and Metropolitan has paid no
monthly disability insurance benefits although each has known
that Carlson remained totally disabled.
The complaint alleges that on September 6, 1973, the
Workmen's Compensation Division wrote Anaconda requesting them
to maintain Carlson on temporary total disability benefits.
Anaconda replied, according to the complaint, as follows:
"Mr. Carlson is on the salary roll of The Anaconda
Company at the Great Falls plant. He is covered
by a long term disability benefit. We paid Mr.
Carlson full salary for six months and 70% of
his full salary for the second six months. From
these payments we subtracted the amount of money
that was paid to him as temporary total disability
compensation payments. Mr. Carlson is continuing
to receive the 70% of his regular salary and if
we place him back on temporary total, then we will
deduct these payments from his monthly check. He
will end up with the same amount of money being
paid to him and I would prefer to leave him off our
compensation rolls and eventually make a settle-
ment when we receive Dr. Tom Powers' evaluation
report. "
According to the complaint, Anaconda (1) failed and
refused to make the Workmen's Compensation payments to which
Carlson was entitled, and (2) fraudulently, maliciously, wrong-
fully and deliberately gave false information to the Workmen's
Compensation Division by asserting that Carlson was continuing
to receive 70% of his regular salary. In passing, we note that
during oral argument it was brought out that Anaconda failed to
pay because of a mix-up in their records which has since been
corrected and payments made.
The complaint alleges that Metropolitan breached the
provisions of their insurance policy and violated the insurance
statutes of Montana in failing and refusing to make the monthly
disability payments.
Carlson seeks payment of all benefits due under the
WorkmenJs Compensation Act and the group disability policy,
$1,000,000 exemplary damages against each defendant and costs.
9
Anaconda moved to dismiss the complaint on the ground
that it failed to state facts sufficient to constitute a claim
for relief against Anaconda. After hearing, the district court
granted this motion without leave to amend and entered judgment
for Anaconda against Carlson. Carlson.'~
claim against Metro-
politan remains pending.
Carlson has appealed contending that the Workmen's
Compensation Act is not his exclusive remedy, but that he has
an action at law. He contends that Anaconda, after first hav-
ing elected to be bound by the work men.'^ Compensation Act,
breached and abrogated the Act by substituting its own insurance
program and accordingly should be considered an insurer and sub-
ject to the penalties of the state insurance statutes. Carlson
cites Reed v. Hartford Accident & Indemnity Company, 367 F.Supp.
134 (1973), in support.
Where both employer and employee have elected to come
under the Montana Workmen's Compensation Act, the provisions of
the Act are exclusive. Section 92-204, R.C.M. 1947, as amended.
The same statute, in effect on the date of the injury, express-
ly provides that the employee surrendersany other compensation
or action at law for his injuries against his employer, subject
to exceptions not pertinent to Carlson's claim.
Anaconda's obligation as a Plan I self-insurer is to pay
Carlson the Workmen's Compensation benefits provided by the Act.
If it does not, Carlson's remedy is with the Workmen's Compensa-
tion Division. Section 92-821, R.C.M. 1947. In case of non-
payment of benefits under the Act, it is the duty of the Workmen's
Compensation Division to apply the employer's deposits to payment
(section 92-906, R.C.M. 1947) including a 10% penalty for unreason-
able delay (section 92-824.1, as amended).
Anaconda's obligation to pay compensation under the Act
is neither increased nor diminished by the Metropolitan group
disability policy. This policy is collateral to Workmen's Comp-
ensation benefits and irrelevant to the obligations of the
employer under t h e A c t . That b e n e f i t s under t h e p o l i c y may be
reduced by t h e amount of compensation p a i d under t h e Act i s
p r o p e r t o p r e v e n t d u p l i c a t i o n of wage-loss b e n e f i t s and d o e s n o t
a l t e r t h e e m p l o y e r ' s o b l i g a t i o n under t h e A c t . See L a r s e n ,
Workmen's Compensation, Vol. 3 , S 97.10 e t s e q .
A c c o r d i n g l y , Anaconda h a s n e i t h e r breached n o r a b r o g a t e d
t h e Act by s u b s t i t u t i n g i t s own i n s u r a n c e program, n o r h a s i t
become a n i n s u r a n c e company by r e a s o n o f c o n t r a c t i n g w i t h Metro-
p o l i t a n f o r a long-term group d i s a b i l i t y p o l i c y f o r i t s employees.
Reed, c i t e d by p l a i n t i f f , i s d i s t i n g u i s h a b l e on t h e f a c t s .
There t h e a c t i o n a t law was a g a i n s t t h e e m p l o y e r ' s Workmen's
Compensation i n s u r a n c e c a r r i e r based on i n d e p e n d e n t i n t e n t i o n a l
t o r t s and b r e a c h of a n e x p r e s s c o n t r a c t t o pay t o t a l d i s a b i l i t y
b e n e f i t s by f a l s e , f r a u d u l e n t and p e r j u r e d means. This i s a f a r
c r y from t h e f a c t s h e r e , and t h e a t t e m p t e d a n a l o g y f a i l s .
The judgment of t h e d i s t r i c t c o u r t i n f a v o r o f Anaconda
i s affirmed. The c a s e i s remanded t o t h e d i s t r i c t c o u r t f o r
f u r t h e r proceedings a g a i n s t t h e remaining defendant.
Justice
W concur:
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C h i e f Justice