No. 84-150
IN THE SUPREME COURT OF THE STATE OF MONTANA
1985
DAVID HUTCHINSON,
Claimant and Respondent,
PIERCE PACKING COMPANY,
Employer,
and
INTERMOUNTAIN INSURANCE COMPANY, t
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APPEAL FROM: The Workers' Compensation Court, The Honorable
Timothy Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant :
Crowley, Haughey,Hanson, Toole & Dietrich; Terry G.
Spear argued, Billings, Montana
For Respondent :
Kelly & Halverson, P.C.; Sheehy, Prindle & Finn;
Patrick R. Sheehy argued, Billings, Montana
Submitted: June 6, 1985
Decided: December 6, 1985
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
David Hutchinson, claimant, was injured in April 1981.
He executed a final settlement in September 1981. In
December 1982, he petitioned the Workers1 Compensation Court
for rescission of the settlement agreement and reinstatement
of benefits. The court rescinded the agreement and awarded
permanent total disability benefits. Intermountain Insurance
Company (Intermountain) appeals. We affirm in part and
reverse in part. Our initial opinion, which was decided
December 11, 1984, is withdrawn.
The issue is whether the record supports the Workers1
Compensation Court decision to set aside the final settlement
on the basis of mutual mistake of the parties or on the basis
of good cause shown?
In April 1981, while in the course of his employment at
Pierce Packing Company, Hutchinson fell down an elevator
shaft striking his lower back against the edge of the eleva-
tor shaft. He landed on his feet and immediately began
experiencing pain in his lower back, legs 2nd feet.
Following the accident, Hutchinson was assigned the job of
pulling hams out of ham presses. While doing so, the rack
fell on Hutchinson striking him on the right shoulder blade,
the center of his back and his right leg. He experienced
immediate pain. After several months of treatment, he
executed a. final settlement in September 1981. In December
1982, ' he petitioned the Workers' Compensation Court for
rescission of the settlement agreement with a request for
reinstatement of benefits.
Claimant testified that his condition had substantially
worsened since the settlement in September 1981. He testi-
fied that he is now dragging his left leg, which he did not
do before, and that he has an "irritated feeling" on the top
of his leg as if he had. a.n open sore in that area. He also
testified tha.t both of his big toes become numb and that he
has considerably more back pain than he had prior to Septem-
ber 1981. He testified that the pain from his back has now
become so severe that he is unable to sleep and that he has
extreme difficulty with bowel movements because of radiating
pain in his back. Claima.nt also presented evidence with
regard to a disability rating change by the Veteran's
Administration, but that evidence is not properly before this
Court.
The Workers' Compensation Court made various findings of
fact, which included the following:
12. Prior to the Final Settlement, the
claimant was experiencing sharp pains in
his lower and central back that increased
with increased physical activity, numb-
ness and tingling in his left and right
calves, tingling and numbness in his big
toes; his legs hurt. ...
13. At the time of trial, the claimant's
back pain had increased significantly and
he experienced more pain than before with
increased physical activity. He now
drags his left leg and has an irritating
feeling on top of one of his legs. He
now gets less sleep at night because his
back pain now awakens him two to three
times a night and he cannot return to
sleep until he "cracks" his back. He now
must crack his back more than he did
prior to his Final Settlement to relieve
his back pain. The numbness in his
calves is now more constant. He now must
evacuate his bowels more frequently; if
he does not do so, the pain that radiates
from his back increases.
The court further noted that claimant could not return to any
jobs for which he was trained because of his disability and
there was no prospect of finding employment in the normal
labor market.
The court then entered its ruling setting aside the
settlement. It based its ruling on the doctrine of mutual
mistake contained in Kienas v. Peterson (Mont. 1980), 624
P.2d 1, 37 St.Rep. 1747. The judge found as a matter of law
that "the parties were laboring under an unconscious
ignorance about the claimant's condition when they entered
the Final Settlement; this was a materiai mistake that
prevented the free consent of the parties." He therefore
concluded that the claimant was entitled to rescind the final
settlement. The court made its order rescinding the
agreement and awarded permanent total disability benefits to
the claimant.
On the question of mutual mistake of the parties,
Intermountain argues that the worsening of a known injury or
condition should not be grounds for a rescission of a settle-
ment agreement. It argues that the risk of a worsening
condition was known by the claimant and the insurance company
when the settlement was made. The company further notes that
a change in symptoms should not be equated with a change in
disability unless there is concrete evidence of greater
disability. It argues that where there is only testimony on
the part of a claimant, neither the "mutual mistake doctrine"
nor the "good cause" theory justifies setting aside the final
settlement.
The claimant argues that under the statute, he may "for
good cause shown" rescind the final settlement. He states
this is a proper standard to be applied and not the "mutual
mistake of fact" standard under Kienas. In particular,
claimant argues that under the Workers' Compensation Court
finding no. 13, there is a sufficient worsening of condition
to constitute a good cause for reopening.
Because of the differences in procedure and the
amendment of pertinent statutes in 1979 and 1981, we will
review the procedures by which a claimant may seek a change
in a settlement. The pertinent sections in this discussion
are the following:
39-71-204. Rescission, alteration, or
amendment & division - - orders,
of its
decisions, - awards -- limitation --
- . .
or
effect. (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 opportu-
nity 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' compen-
sation judge shall not have power to
rescind, alter, or amend any final set-
tlement 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 con-
sidered 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 work-
ers' 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 re-
scinding, altering, or amending a prior
order, decision, or award shall have the
same effect as original orders or awards.
39-71-2909. Authority to review, dimin-
ish, or increase awardz -- limitation.
The judge may, upon the petition of a
claimant or an insurer that the disabili-
ty of the claimant has changed, review,
diminish, or increase, in accordance with
the law on benefits as set forth in
cha.pter 71 of this title, any benefits
previously awarded by the judge or bene-
fits received by a claimant through
settlement agreements. However, the
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.
39-71-121. Disability defined. A worker
is disabled when his ability to enqaqe in
gainful employment is diminished as a
result of impairment, which in turn ma.y
be combined with such factors as the
worker's physical condition, age, educa-
tion, work history, and other factors
affecting the worker's ability to engage
in gainful employment. Disability is not
a purely medical condition. Disability
may be temporary total, permanent total,
or permanent partial as defined in
39-71-116.
39-71-122. Impairment defined. Impair-
ment means any anatomic or functional
abnormality or loss of bodily function.
Impairment refers to functional use of
the body and. is a purely medical condi-
tion. Permanent impairment is any an-
atomic or functional abnormality or loss
of bodily function after the maximum
medical rehabilitation has been achieved.
The anatomic or functional abnormality or
loss must be considered stable by the
physician at the time the impairment
rating evaluation is made. An impairment
rating is purely a medical determination.
Impairment may or may not result in
disability.
We also point out that 5 s 39-71-121 and -122, MCA, were
added by the legislature in 1981. Under the same act which
added those sections, the legislature provided that
§ 39-71-116(12), (13) & (19), MCA, were amended so as to
include in the definitions of permanent partial disability,
permanent total d.isability, and temporary total disability, a
requirement that "[dlisability shall be supported by a
preponderance of medical evidence."
So far as the division is concerned, S 39-71-204(1),
MCA, provides that the division has continuing jurisdiction
to rescind or a.mend orders "upon good cause appearing."
Apparently that power was modified by the 1979 amendment of
5 39-71-204(2), MCA, which provides that the division has
power to rescind, alter or amend only by agreement between a
claimant and an insurer.
In 1979, S 39-71-204(2), MCA, was amended to provide
that rescission, alteration or amendment of a final
settlement shall be by agreement; but in the absence of
agreement, it is a dispute for which the workers'
compensation judge has jurisdiction. As pointed out in the
present case by the workers' compensation judge, that code
section does not set a specific standard or test. While
S 39-71-204, MCA, does not specifically state that the
standard of "good cause appearing" shall be applied by the
judge, that follows logically from a liberal construction as
required under S 39-71-104, MCA. We therefore hold that
under $
. 39-71-204, MCA, the workers' compensation judge has
jurisdiction to rescind, alter or amend a final settlement
"upon good cause appearing therefor."
In 1979, the legislature also amended S 39-71-2909, MCA.
Under S 39-71-2909, MCA, a workers' compensation judge has
jurisdiction to rescind, alter or amend a final settlement
upon a showing that "the disability of the claimant has
changed. "
In this case, Hutchinson petitioned for approval of a
final settlement. Intermountain concurred in that petition
which stated an agreement had been reached regarding the
amount of compensation due. The petition also contained a
statement that claimant and insurer understood that an order
approving the petition for final settlement may "for a good
cause" be rescind-ed, altered or amended by the division
within four years. The Order Approving Final Settlement
dated September 28, 1981, stated in part:
IT IS ORDERED that the petition for final
settlement be approved., and that upon
payment of the amount specified in the
petition, the claim shall be closed as
finally settled. Under the Workers'
Compensation Act, the Division may, for
good cause, rescind, alter or amend this
final settlement within four (4) years
from the date of the settlement.
The petition for rescission of the foregoing Order was made
to the workers' compensation judge.
Our initial question is whether the judge may rescind
the order of final settlement under either S $ 39-71-204 or
-2909, MCA. Under S 39-71-204, MCA, the claimant may request
rescission from the judge on a theory of good cause appearing
for such a rescission. Under S 39-71-2909, MCA, a claimant
may petition the judge for a rescission of the final
settlement on the ground that the disability of the claimant
has changed. We conclude that the claimant has alternate
statutory theories available.
It is important to bear in mind that the statutes
authorize rescission of a final settlement agreement, but do
not authorize rescisssion of a full and final compromise
settlement. These are different settlement agreements. In
the present case, we have an order approving final
settlement. In contrast, in Kienas, a full and final
compromise settlement was involved. While under the
provisions of § S 39-71-204 and -2909, MCA, the judge is -
not
granted the power to rescind an order approving a full and.
final compromise settlement, under Kienas a full and final
compromise settlement may be set aside for mutual mistake.
The workers' compensation judge granted rescission on
the basis of mutual mistake between the claimant and insurer,
and relied upon Kienas for authority. The claimant in Kienas
received an injury to his lower back for which he was granted
an award on a full and final compromise settlement basis.
The Court concluded that both parties labored under a
material- mistake as to the nature and extent of the
claimant's injuries, and in addition, neither party was aware
of the disability resulting from the preexisting cerebral
palsy. The Court concluded a mutual mistake had been made by
the claimant and insurer, the contracting parties.
Therefore, the Court authorized the setting aside of the
full and final compromise settlement based on mutual mistake
of fact. Because we approve the conclusion of the Workers'
Compensation Court on a different theory, we do not find it
necessary to determine if the claimant has met the mutual
mistake test of Kienas.
We hold that the findings of fact of the Workers'
Compensation Court afford a basis sufficient for a rescission
by the workers' compensation judge for good cause under
S 39-71-204, MCA, and also a sufficient basis to establish
that the disability of the claimant has changed as required
under § 39-71-2909, MCA. We therefore affirm the rescission
of the final settlement by the Workers' Compensation Court.
I11
We are not able to affirm the judgment of the Workers'
Compensation Court that certain payments be made to the
claimant for permanent total disability benefits. In
reaching its conclusion, the Workers' Compensation Court did
not adequately consider the 1981 amendments to SS 39-71-116,
-121 & -122, MCA. Section 39-71-116 (13), MCA, defines
permanent total disability and concludes with the statement
that " [dlisability shall be supported by a preponderance of
medical evidence." Under 5 39-71-121, as enacted in 1981, a
worker is disabled when his ability to engage in employment
is diminished as a result of impairment. Impairment is
defined in S 39-71-122 as a purely medical condition based
upon an impairment rating evaluation by a physician.
The record in this case does not contain a preponderance
of medical evidence sufficient to meet the statutory
requirements of 39-71-116, MCA, as to permanent partial
disability, temporary total disability, or permanent total
disability. As a result we are not able to affirm the award
of permanent total disability benefits by the Workers'
Compensation Court. An opportunity to present further
evidence is needed on the part of both parties.
We affirm the portion of the judgment of the Workers'
Compensation Court rescinding the final settlement. We remand
the cause for further proceedings on the issue of disability
benefits, with any determination of such disability to be
completed in accordance with this opinion and appropriate
statutory requirements.
In connection with this remand, we point out that
39-71-116 (19) was amended in 1985 to pr0vid.e that " [a] worker
shall be paid temporary total disability benefits during a
reasonable period of retraining." In the present case, based
upon previous case authority, the lower court had concluded
that a determination of permanent total disability was
required prior to the entry of an order providing benefits
during a reasonable period of retraining.
Justices
/"
H n Thomas Honzel,/bistfict Judge,
o!
sitting in place Mr. Justice
John C. Sheehy