No. 14764
IN THE SUPREME COURT OF THE STATE OF MONTANA
1980
WILLIAM VIGUE and MRS. WILLIAM VIGUE,
Plaintiffs and Appellants,
EVANS PRODUCTS COMPANY, and
GEORGE WOOD,
Defendants and Respondents.
Appeal from: District Court of the Fourth Judicial District,
Honorable Jack L. Green, Judge presiding.
Counsel of Record:
For Appellants:
Hoyt, Trieweiler, Lewis & Regnier, Great Falls, Montana
John Hoyt argued, Great Falls, ~ontana
For Respondents:
Garlington, Lohn and Robinson, Missoula, Montana
Larry Riley argued, Missoula, Montana
Andrew J. Utick argued, Helena, Montana
Submitted: January 15, 1980
Decided: MAR 1$j
Filed: k!A!?$';
Mr. Justice John Conway Harrison delivered the Opinion of
the Court.
This is an appeal from an order dismissing a complaint
which alleged the commission of certain tortious acts in the
adjusting and processing of a Workers' Compensation claim.
The order was entered in the District Court of Missoula
County, the Honorable Jack L. Green presiding.
The claimant and appellant, William Vigue, suffered an
industial accident injury on March 29, 1976 while employed
by one of the respondents, Evans Product Company. After the
injury, appellant underwent extensive back surgery and was
certified by his physician on February 20, 1978 as totally
and permanently disabled. Evans is a Plan I insurer under
the Montana Workers' Compansation Act and employs George
Wood, the other respondent in this matter. Wood is a
professional adjuster in Workers' Compensation claims. On
July 13, 1978, appellant filed a complaint against respon-
dents alleging the commission of certain tortious acts in
the adjusting and handling of his Workers' Compensation
claim. Among the torts alleged were fraud, couT_r~~sion,
economic duress and bad faith.
Respondents moved to dismiss the complaint upon the
ground that it failed to state a claim for which relief
could be granted. Respondents contended that the controversy
among the parties was within the exclusive jurisdiction of
the Workers' Compensation Court. After submission of briefs
and oral argument, the District Court granted the motion to
dismiss. Appellant then appealed.
The issue raised for our consideration upon this appeal
is whether a claimant, who sustains an injury covered by the
Workers' Compensation Act, may assert a separate action
fordamagesin District Court against an insurer and its ad-
juster for the commission of intentional torts in the pro-
cessing and handling of a Workers' Compensation claim.
In resolving this issue, the focus of our inquiry is on
the scope and coverage of the Workers' Compensation Act and
the extent to which its provisions and remedies are made
exclusive. The exclusivity provision of the Act states:
-- employments covered under the Workers1
"For all
Compensation Act - - which an election has
or for
been made for coveraqe under this chapter, the
---
provisions - -
of this chapter are exclusive. Ex-
w -
-o v i d e d in part 5 of this chapter for
uninsured employers and except as otherwise
provided in the Workers' Compensation Act, an
employer - - subject to any liability what-
is not
ever- - death - -
- for the of orpersonal injury - -
to an
employee covered by the Workers' Compensation
Act or for any claims for contribution or
indemnity asserted by a third person from whom
damaqes are sought on account of such injuries
--
or death. The workers1 Compensation ~ c t - b i n d s
the em~loveehimself. - - - - of death binds
L z and in case
his personal representative and all persons
having any right or claim to compensation for his
injury or death, as well as the employer and the
servants and employees of such employer and those
conducting his business during liquidation,
bankruptcy, or insolvency." Section 39-71-411,
MCA. (Emphasis added.)
Under the Act, the Workers' Compensation Court is given
exclusive jurisdiction over all disputes arising from claims.
Section 39-71-2905, MCA states:
"A claimant or an insurer who has a dispute con-
cerning any benefits under chapter 71 of this
title may petition the workers' compensation judge
for a determination of the dispute. The judge,
after a hearing, shall make a determination of
the dispute in accordance with the law as set
forth in chapter 71 of this title. If the dis-
pukerelates to benefits due a claimant under
chapter 71, the judge shall fix and determine
any benefits to be paid and specify the manner
of payment. The workers' compensation judge
has exclusive jurisdiction to make determinations
concerning disputes under chapter 71. The pen-
alties and assessments allowed against an in-
surer under chapter 71 are the exclusive penalties
and a s s e s s m e n t s t h a t c a n be a s s e s s e d a g a i n s t a n
i n s u r e r f o r d i s p u t e s a r i s i n g under c h a p t e r 71."
A p p e l l a n t contends t h a t , w h i l e t h e e x c l u s i v i t y pro-
v i s i o n s of t h e A c t b a r a n a c t i o n i n D i s t r i c t Court a g a i n s t
employers o r t h e i r i n s u r e r s f o r p e r s o n a l i n j u r y o r d e a t h t o
t h e c l a i m a n t , they do n o t b a r a n a c t i o n i n D i s t r i c t Court
a g a i n s t t h e i n s u r e r s o r a d j u s t e r s f o r t h e commission of
i n t e n t i o n a l t o r t s i n t h e s e t t l i n g of a claim. Appellant
r e l i e s o n s e v e r a l cases o u t s i d e o f t h i s j u r i s d i c t i o n which
have u p h e l d a c l a i m a n t ' s r i g h t t o b r i n g a s e p a r a t e a c t i o n a t
law f o r t h e commission o f 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 i n
t h e s e t t l e m e n t of a Workers' Compensation c l a i m . See Coleman
v. American U n i v e r s a l I n s . Co. (Wis. 1 9 7 9 ) , 273 N.W.2d 220;
Gibson v . Nat. Ben F r a n k l i n I n s . Co. (Me. 1 9 7 8 ) , 387 A.2d
220; S t a f f o r d v. W e s t c h e s t e r F i r e I n s . Co. o f N . Y . , Inc.
( A l a s k a 1 9 7 4 ) , 526 P.2d 37; M a r t i n v. T r a v e l e r s I n s u r a n c e
Company (1st C i r . 1 9 7 4 ) , 497 F.2d 329; Reed v . H a r t f o r d
Accident & I n d e m n i t y Co. (E.D. Pa. 1 9 7 3 ) , 367 F.Supp. 134;
Unruh v. Truck I n s u r a n c e Exchange ( 1 9 7 2 ) , 7 C a l . 3 d 616, 498
P.2d 1063. I n t h e s e c a s e s , p r i m a r i l y two b a s e s have been
o f f e r e d f o r t h e upholding of t h e r i g h t . The f i r s t b a s i s i s
t h a t t h e a c t s complained o f do n o t a r i s e o u t o f t h e employment
relationship. R a t h e r , a t t h e t i m e o f t h e commission o f t h e
t o r t s , t h e employment r e l a t i o n s h i p h a s t e r m i n a t e d . The
i n s u r a n c e c a r r i e r i s no l o n g e r t h e " a l t e r e g o " o f t h e employee
and, t h e r e f o r e , i s n o t a f f o r d e d t h e p r o t e c t i o n of t h e A c t .
"The i n j u r y f o r which remedy i s s o u g h t i n t h e
i n s t a n t c a s e i s t h e e m o t i o n a l d i s t r e s s and o t h e r
harm c a u s e d by t h e d e f e n d a n t s ' i n t e n t i o n a l a c t s
d u r i n g t h e i n v e s t i g a t i o n and d u r i n g t h e c o u r s e
o f payment of t h e c l a i m . This claimed i n j u r y w a s
d i s t i n c t i n t i m e and p l a c e from t h e o r i g i n a l on-
t h e - j o b p h y s i c a l i n j u r y which was s u b j e c t t o t h e
Compensation A c t . The i n j u r y f o r which r e c o v e r y
i s sought i n t h e p r e s e n t a c t i o n s d i d n o t occur
while the plaintiff was employed or while he was
performing services growing out of and incidental
to his employment. As the plaintiff repeatedly
and correctly stresses in his brief, this action
is based not on the original work-related injury
but on a second and separate injury resulting from
the intentional acts of the insurer and its agents
while investigating and paying the claim. The
Act does not cover the alleged injury, and the
exclusivity provision does not bar the claim."
Coleman, supra, at 223.
The second basis upon which the right has been upheld
is that the penalty provisions of the various state Workers'
Compensation Act are inappropriate for intentional wrong-
doings. Coleman, supra, at 224; Stafford, supra, at 43;
Martin, supra, at 331; Gibson, supra, at 223. Rather, the
provisions apply to conduct which falls short of bad faith
or unintentional conduct, such as cases of mismanagement or
deficient administrative practices. They are not appropri-
ate for intentional wrongdoings.
We have had occassion to consider one of the cases
cited by appellant in a matter where we addressed essentially
the same issue that is now before the Court. That case was
Carlson v. Anaconda Company (1974), 165 Mont. 413, 529 P.2d
356. We distinguished the facts of Carlson from the facts
of Reed, supra, and held that the provisions of the Workers'
Compensation Act were Carlson's exclusive remedy. Respondents
urge that Carlson is "on all fours" with the instant case.
Carlson was injured in an industrial accident at the
Anaconda Company's Great Falls plant on August 20, 1972.
Carlson was rendered permanently and totally disabled.
Anaconda was a Plan I self-insurer under the Workers' Com-
pensation Act. Carlson filed a complaint against Anaconda
for failing and refusing to make compensation payments to
which Carlson was entitled, and for giving false information
to the Workers' Compensation Division that Carlson was
continuing to receive 70% of his regular salary. Anaconda
argued that the failure to pay resulted from a mix-up in
their records which had since been corrected and payments
made. Characterizing the case as a case of mismanagement
rather than intentional wrongdoing, we held that Carlson was
barred from asserting an action at law:
"Reed, cited by plaintiff, is distinguishable
on the facts. There the action at law was
against the employer's Workmen's Compensation
insurance carrier based on independent inten-
tional torts and breach of an express contract
to pay total disability benefits by false,
fraudulent and perjured means. This is a far
cry from the facts here, and the attempted
analogy fails." Carlson, supra, at 417, 529
P.2d at 358.
Carlson may be distinguished from the instant case on
the basis that the facts and circumstances in Carlson give
the case a much different character. Whereas the instant
case involves allegations of intentional torts or the presence
of bad faith, Carlson, as stated earlier, involved a case of
mismanagement. The instant case was dismissed at the pleading
stage. It is well settled that on appeal all of the allega-
tions of a complaint must be accepted as true in determining
the issues involved, realizing of course, that all the
allegations are subject to proof through the regular trial
procedures. State v. District Court of the Eighth Judicial
District (1967), 149 Mont. 131, 423 P.2d 598, 600. It is
also established law that a complaint cannot be properly dis-
missed for failure to state a claim unless it appears for
certain that the plaintiff is entitled to no relief under
any stated facts which could be proven in support of his
claim. Keilman v. Mogan (1970), 156 Mont. 230, 478 P.2d
275, 276.
Treating the allegations in appellant's complaint as
being true for purposes of this appeal, as indeed we must,
leads t o t h e conclusion t h a t t h e D i s t r i c t Court acted im-
properly i n dismissing a p p e l l a n t ' s complaint. This holding
i s r e q u i r e d by a r e c e n t and a s y e t u n p u b l i s h e d d e c i s i o n o f
t h i s C o u r t i n Hayes v. Aetna I n s . Co. (Supreme C o u r t # 1 4 8 5 3 ) ,
where w e r e c o g n i z e d t h e r i g h t o f a c l a i m a n t t o b r i n g a
s e p a r a t e a c t i o n i n D i s t r i c t C o u r t f o r t h e commission o f
i n t e n t i o n a l t o r t s o c c u r r i n g d u r i n g t h e s e t t l e m e n t of a
claim. The c o m p l a i n t h e r e s u f f i c i e n t l y s t a t e d a c a u s e o f
a c t i o n u n d e r t h e Hayes r u l e . A s s u c h , i t was improper f o r
t h e D i s t r i c t C o u r t t o d i s m i s s t h e c a s e . S e e c o n c u r r i n g o p i n i o n i n Hayes.
A s a n a s i d e , w e a l s o n o t e t h a t a p p e l l a n t complains i n
t h i s c a s e t h a t t h e respondents claimed o f f s e t s a g a i n s t
a p p e l l a n t ' s Workers' Compensation b e n e f i t s u n d e r M o n t a n a ' s
o f f s e t s t a t u t e , s e c t i o n 39-71-702, MCA. That s t a t u t e has
t h e e f f e c t of depriving a claimant of c o s t of l i v i n g i n c r e a s e s
under t h e S o c i a l S e c u r i t y A c t . R e c e n t l y , i n McClanathan v .
S t a t e Compensation I n s u r a n c e Fund ( 1 9 7 9 ) , Mont. -I -
P.2d ,
- 37 St.Rep. 1 1 3 , w e r u l e d t h a t t h i s p o r t i o n o f t h e
s t a t u t e was u n c o n s t i t u t i o n a l . A t t h e t i m e t h a t respondents
c l a i m e d t h e o f f s e t s h e r e , however, r e s p o n d e n t s c o u l d o n l y
have w i t h h e l d t h e o f f s e t u n d e r t h e i m p r e s s i o n t h a t t h e
s t a t u t e was c o n s t i t u t i o n a l . T h e i r c o n d u c t was l a w f u l and
m o t i v a t e d by good f a i t h . As a result, t h e r e c a n be no
complaint here.
~ c c o r d i n g l y ,t h e a c t i o n o f t h e D i s t r i c t C o u r t i s r e v e r s e d .
W e concur:
chief Justice