NO. 88-63
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
ROBERT KIMES ,
Claimant and Respondent,
-vs-
CHARLIES FAMILY DINING & DONUT SHOP,
Employer,
and
PACIFIC EMPLOYERS INSURANCE COMPANY,
Defendant and Appellant.
APPEAL FROM: The Workers' Compensation Court, The Honorable Timothy
Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Utick & Grosfield; Andrew J. Utick, Helena, Montana
For Respondent:
Richard J. Pyfer, Helena, Montana
Submitted on Briefs: May 26, 1988
Decided: August 9, 1988
Filed: AUG 9 1988'
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court..
Claimant Mr. Kimes received disability benefits for a
work-related injury to his knee until he entered a settlement
agreement with the insurer, Pacific Employers Insurance
Company (Pacific). Pacific appeals the ruling of the Work-
ers' Compensation Court which set aside the settlement. Mr.
Kimes cross appeals the discontinuation of his temporary
total disability benefits. We affirm.
The issues are:
1. Did the lower court err in setting aside the full
and final settlement agreement on the grounds of mutual
mistake of fact?
2. Did the lower court err by failing to continue
temporary total disability benefits beyond August 20, 1986?
Mr. Kimes injured his knee in 1983 when he fell down
steps during his employment as a cook for Charlie's Family
Dining and Donut Shop. The employer accepted liability for
benefits and paid compensation to Mr. Kimes. An orthopedic
physician repaired a ruptured cruciate ligament in the knee,
after which he assigned Mr. Kimes a 30 percent impairment
rating to his left knee and leg. The physician felt, howev-
er, that Mr. Kimes should be able to return to work as a
cook. In January 1985, the parties entered a full and final
settlement agreement for a $14,500 lump sum.
In November 1985, Mr. Kimes returned to see his physi-
cian because of continuing problems with his left knee. The
physician referred Mr. Kimes to a second doctor, who suggest-
ed that Mr. Kimes's problems could be due to a tear of the
medial meniscus, which is a cartilage in the knee. Surgery
was performed, a tear was found, and the meniscus was re-
moved. The first physician has testified by deposition that
X-rays show that the tear j.n the meniscus was present before
the settlement was reached, but that he simply did not detect
it.
Mr. Kimes petitioned the Workers' Compensation Court to
reopen his case based on a mutual mistake of medical fact.
The court held a hearing at which Mr. Kimes and the attorneys
for both sides presented testimony. The depositions taken of
the physician both before and after the settlement were also
available to the court. The court set aside the settlement
agreement and ruled that the employer is entitled to a credit
for the settlement amount.
I
Did the lower court err in setting aside the full and
final settlement agreement on the grounds of mutual mistake
of fact?
As this Court discussed in Kienas v. Peterson (Mont.
1980), 624 P.2d 1, 37 St.Rep. 1747, general contract law
gives courts the right to reopen a compromise settlement when
there has been a non-negligent mutual mistake of material
fact. In Kienas, the claimant suffered an injury to his
back. After a full and final settlement was made, doctors
concluded that the injury had also aggrevated claimant's
previous condition of cerebral palsy, rendering him totally
disabled. Ruling that there was a mutual mistake of material
fact, this Court set aside the settlement agreement.
In Weldele v. Medley Development (Mont. 1987), 738 P.2d
1281, 44 St.Rep. 1062, the claimant had suffered an industri-
al shoulder injury. At the time full and final settlement
was made, the injury had been diagnosed as a rotator cuff
tear and a healed carpal tunnel syndrome. After the settle-
ment, the claimant was diagnosed as having thoracic outlet
syndrome in the shoulder. The physician testified that it
was more probable than not that the claimant's work-related
injury was the cause. This Court affirmed the lower court's
conclusion that those circumstances constituted a mistake of
fact upon which the settlement could be reopened.
In contrast, where findings in medical reports following
a settlement are consistant with those prior to the settle-
ment, where the impairment rating is substantially unchanged,
and where the claimant is in much the same condition as at
the time of settlement, there is no mutual mistake of fact
justifying reopening a settlement. Sol.1i.e v. Peavey Co.
(Mont. 1984), 686 P.2d 920, 41 St.Rep. 1684. Variance in the
symptom level, where claimant knew this level would vary, is
not enough. Sollie, 686 P.2d at 924.
Pacific argues that there was no mutual mistake of fact
here. It asserts that Mr. Kimes and his attorney were aware
at the time of the settlement that there were potentially
permanent problems with the knee and that those problems were
related to Mr. Kimes's industrial accident. However, not
only has Mr. Kimes's disability rating increased as a result
of the post-settlement surgery to remove the torn meniscus,
but his prognosis now includes probable degenerative changes
in his knee joint. He now requires pain medication and has
been advised not to return to his former line of work as a
cook. The X-rays show that Mr. Kimes had a tear in his
medial meniscus at the time of settlement, and it is undis-
puted that this was unknown to the parties when settlement
was made.
While the dissent argues that the Workers' Compensation
Court does not have statutory authority to set aside this
full and final compromise agreement, the parties did not
raise that argument. Further, this Court is not so limited
where there has been mutual mistake. We conclude that the
uncontradicted medical evidence establishes a material mis-
take of fact relating to both the nature and extent of Mr.
Kimes's injury. We hold that the full and final settlement
entered in this case may be reopened on the basis of this
material mistake of fact.
I1
Did the lower court err by failing to continue temporary
total disability benefits beyond August 20, 1986?
The Workers' Compensation Court terminated Mr. Kimes's
temporary total disability benefits as of the date the physi-
cian, by deposition, stated that Mr. Kimes had reached his
maximum medical recovery. Mr. Kimes argues that he is enti-
tled to an award of continued temporary total disability
benefits until he reaches a point at which he can return to
the job market.
Under the statutory scheme in effect at the time of Mr.
Kimes's injury, temporary total disability did not exist past
the time of maximum healing. Section 39-71-116(19), MCA
(1983), provided:
"Temporary total disability" means a condition
resulting from an injury as defined in this chapter
that results in total loss of wases and exists
until the injured worker - - - Gestored - -
is as far as the
permanent character - - injuries will permit.
of the
Disability shall be supported by a preponderance of
medical evidence. [Emphasis supplied.]
The physician testified on August 20, 1986, that Mr. Kimes
had reached maximum healing. We conclude that the lower
court was correct in terminating temporary total disability
benefits as of August 20, 1986. This does not in any way
constitute a ruling on Mr. Kimes's right to permanent total
or permanent partial disability benefits.
Affirmed as to the result
We concur: L'
, C h i e f Justice
Mr. Justice L . C. Gulbrandson, dissenting.
I respectfully dissent.
In my view the Workers' Compensation Court erred
procedurally and substantively in setting aside the full and
final settlement.
The majority in this case, as in Weldele v. Medley
Development (Mont. 1987), 738 P.2d 1281, 44 St-Rep. 1062, has
tacitly approved the unauthorized practice, by the Workers'
Compensation Judge, of setting aside full and final
settlements when the legislature has expressly removed such
authority from the Workers' Compensation Court.
Section 39-71-204 (2), (1985) MCA, applicable to this
case, includes the following:
[Elxcept as provided in 39-71-2908, - the
division or the workers' compensation
judge s h a m K t - -
- have the power to
rescind, alter, oramend order
approving - - - final compromise
a full and
settlement - compensation.
of (Emphasis
added. )
Section 39-71-2908, (1985) MCA, states:
All orders allowing full and final
compromise settlements of workers'
compensation claims shall be immediately
referred to the workers' compensation
judge, and the judge may, within 10 days
of the judge's receipt of an order,
disapprove an order allowing a full and
final compromise settlement.
In addition, S 39-71-2909, (1985) MCA, provides:
The judge may, upon the petition of a
claimant or an insurer that the
disability of the claimant has changed,
review, diminish, or increase ...any
benefits previously awarded by the judge
or benefits received by a claimant
through settlement agreements. However,
the judge may not change any final
settlement aqreement or award of
compensation more than 4 years after the
settlement has been approved by the
division or any order approving - -
a full
and finaF compromise settlement - of
compensation. (Emphasis added.)
Here the Division entered its order approving full and
final compromise settlement on February 7, 1985 and said
order was then referred to the Workers' Compensation Judge,
pursuant to S 39-71-2908, (1985) MCA, who reviewed the file,
approved the order, and closed the claimant's file. After
that point, in my view, the Workers' Compensation Court was
without authority to set aside the settlement agreement. A
review of Kienas, relied upon by the majority, is necessary
to explain my view. In Kienas, the claimant, who was not
represented by counsel, entered into a full and final
compromise settlement for a payment of $4,040, where the
claim involved potential payments in excess of $115,000. The
Workers' Compensation Court refused to set aside the
settlement, and on appeal, this Court, finding the case to be
unique, applied contract law and reversed and remanded,
without discussing S 39-71-204, (1985) MCA and S 39-71-2909,
(1985) MCA, which limits the power of the workers'
Compensation Court to rescind, alter, or amend an order
approving a final compromise settlement. Upon rehearing
Kienas, this Court considered S 39-71-204, (1985) MCA and
S 39-71-2909, (1985) MCA, stating the following:
Petitioner argues that the Workers'
Compensation Court had no power to alter
or rescind a full and final compromise
settlement agreement four years after the
parties had executed the same. Section
39-71-204, MCA. However, in Kienas, the
Workers' Compensation Court did not set
aside the agreement. This Court
- appellate
---
set aside the agreement.
- 39-71-2909, -
nor MCA.
Our
Dower is not limited to section 39-71-204
See section
3-2-204, MCA.
It is universally accepted tenet of
contract law, statutory in our state,
that consent to the contract is lacking
if it is entered into through mutual
mistake or a material fact by the
parties. We found such a mutual mistake
in the compromise settlement agreement in
this case. In applying ordinary contract
law to reach our result, we are not
unduly broadening the possibilities of
reopening workers' compensation
settlements. - - simply finding here
We are
- - a contract to settle - - exist
that did not
- - first plaFe.
in the (Emphasis added.)
Kienas v. Peterson, Opinion on Rehearing (Mont. 1981), 38
St.Rep. 320, 321.
In addition to the lack of authority by the Workersi
Compensation Judge to set aside the settlement agreement, I
have a second problem with the majority opinion. If the
majority is "simply finding here that a contract to settle
did not exist in the first place" (see Kienas quote above)
then, in my opinion, it can only do so by ignoring the
pre-injury and post-injury medical history, in addition to
the expressed intent of the parties as set forth in the
settlement agreement. The medical history indicates that
claimant's anterior cruciate ligament was torn in 1979 when,
as a pedestrian, he was struck by an automobile and that such
pre-existing problem led to the industrial injury, and that
following surgery the cruciate ligament was better than it
had been prior to the first slip and fall at work, and that
after reaching a medically stable condition, the claimant, on
the first day he was returning to work, injured the knee in a
non-industrial motorcycle accident. The medical record is
clear that the only permanent injury sustained by claimant
was confined to the lower left extremity and S 39-71-705,
(1985) MCA, limits permanent partial disability payments for
such an injury to 200 weeks. Here, the defendant's payments
were the equivalent of 215.96 weeks of benefits. These
factors, in my opinion, indicate that the claimant, and his
attorney, were fully cognizant of the material facts when
they both signed claimant's petition, prepared by his
counsel, which petition reads as follows:
The undersigned claimant was accidentally
injured on June 16, 1983, while employed by
Charlie's Family Dining & Donut Shop, an employer
enrolled under Compensation Plan No. I1 of the
Montana Workers' Compensation Act. The claim was
filed and accepted by the insurer for the payment
of any compensation and medical benefits due.
The total compensation paid to date is $
16.408.00
The total medical and hospital benefits paid
to date are $ $5,250.00
A controversy exists between this claimant
and insurer over the amount and duration of
compensation. This controversy has been resolved
by an agreement between the claimant and the
insurer wherein the claimant agrees to accept the
sum of Fourteen Thousand Five Hundred ($14,500.00)
Dollars in a lump sum in a full and final
compromise settlement, which represents
compensation for 129+ weeks. Further medical
and hospital benefits are expressly hereby reserved
by the claimant unless otherwise indicated in this
petition. This settlement includes attorney fees.
The claim [sic] hereby petitions the Division
of Workers' Compensation, with the concurrence of
the above named insurer, for approval of this
petition and that the case be fully and finally
-
closed on the basis set forth above. The claimant
understands that % entering - - - - full and final
into a
compromise settlement, - - named insurer and
both the
- claimant agree - assume - - - -
the to the risk that the
condition of the claimant, - indicatedas a
reasonable i';nves=ation to date. mav be-
. A
other than
- appears, - -
it or itamay chTnge - - future. The
in the
claimant further understands that another
settlement option is available to him which would
allow the settlement to be reconsidered within a
four-year period, but finds that closing the
settlement -finally at this time is in his best
interest. The claimant understands - - if this
that -
etition is approved, - claim - forever closed
the is
- - never again - reopened.
:
nd can be (Emphasis added.)
DATED this - 15
- day of January, 1985.
(signed) Robert Kimes
Robert Kimes, Claimant
2131 9th Avenue
Helena, Montana 59601
WITNESS :
Isianed) John C. Doubek
The Defendant hereby concurs and joins
in the foregoing petition for full and final
compromise settlement.
DATED this January ,
(signed) Andrew J. Utick
Authorized Representative
its Attorney
It is obvious that the language used was in direct
response to the Kienas decision, and was drafted by counsel
for claimant to meet the defendant's requirements and to
avoid the possibility of the agreement being set aside. It
appears that the English language does not contain words
adequate to draft a legally enforceable "full and final
compromise settlement."
I would reverse.
I join in the foregoing dissent/of Mr. Justice I,. C.
Gulbrandson.
ief Justice