No. 89-202
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
EBL/ORION GROUP,
petitioner and Appellant,
-vs-
STATE COMPENSATION INSURANCE FUND,
Defendant and Respondent.
IN RE: CLAUDE L . ATHEY,
Intervenor and Claimant.
APPEAL FROM: The Workers' Compensation Court, The Honorable
Timothy Reardon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Charles E. M c ~ e i land Bradley J. Luck; Garlington,
Lohn & Robinson, iss sou la, Montana
For Respondent:
Jerome S. Knutson; Murray, Kaufman, Vidal, Gordon &
Ogle, Kalispell, Montana
Joseph F. Daley: Daley, Seaman & Vannoy, Kalispell,
Montana
Submitted on Briefs: August 10, 1989
~ ~ ~ i dNovember 29, 1989
~ d :
~ustice John C. Sheehy delivered the Opinion of the Court.
We reverse the summary judgment granted by the Workers'
Compensation Court holding in effect that no genuine issue of
material fact was presented as to the right of EBI-Orion
Group for indemnification from the State Compensation
Insurance Fund. We determine that there are substantial
issues of material fact which must be decided by the Workers'
compensation Court, and so remand the cause for further
proceedings in accordance with this opinion.
The issue in this case is whether EBI-Orion (EBI) may be
entitled to indemnification from the State Compensation
Insurance Fund relating to a compromise settlement between
EBI and an injured employee, which compromise was approved by
the ~ivisionof Workers' Compensation.
Claude Athey was an employee of Harp Line construction
in Kalispell, Montana. On September 19, 1985, when EBI was
the Workers' Compensation carrier for Harp, Claude Athey
slipped and fell while carrying nuts and bolts and sustained
a back injury in the course of his employment. However Athey
did not file a claim for benefits relating to this date until
the State Fund received such a claim from Athey on September
16, 1986. On receipt of the claim, the State Fund began
payment of temporary total benefits to Athey.
In the course of investigation, the State Fund made a
determination that Athey's accident had actually occurred on
September 19, 1985. The State Fund therefore terminated
payments because the State Fund coverage of Harp Line
Construction did not commence until October 1, 1985. The
date determined by the State Fund as the date of the accident
preceded the coverage date for State Fund.
EBI, as the carrier whose coverage was in effect on
September 19, 1985, first denied liability for late notice to
the employer, but later accepted liability and began making
benefit payments to Athey.
In the period following September 19, 1985, Athey had
continued his employment vrith Harp ~ i n eConstruction. The
winter months were slow and he was called only occasionally
to work. He returned to steady employment in May of 1986 for
Harp Line Construction.
In the course of the summer of 1986, Athey's employment
duties included lifting of heavy objects. On August or
September of 1986, while State Fund was the compensation
carrier for Harp, he was engaged in stacking iron or heavy
tires when the condition of his back increased to the point
where he could no longer work. He informed his employer, and
from the record here, Athey has not worked since.
~ u r i n gthe period that the State Fund was making payment
of benefits to Athey, one of its field investigators filed a
report respecting Athey's case with the following language in
his report:
It should be noted however that just prior to his
leaving on September 8, 1986, the claimant however
was involved in fairly strenuous activity in
stacking these tires and apparently this is also
when he started to complain more about his
condition and told Mr. Harp that he could not
continue.
It was after Athey's back reached the condition that he
could no longer work that he filed his first claim for
benefits with the State Compensation Insurance Fund.
On ~ p r i l2, 1987, when EBI accepted liability for the
September 19, 1985 claim, it did so by letter, including a
reservation of rights to recover any amount paid in the event
that further investigation revealed that a second injury
occurred while the State Fund was on the risk.
In May 16, 1988, counsel for EBI wrote to the State Fund
that EBI had agreed to a compromise settlement of Athey1s
claim for Workers1 Compensation benefits, but that the
settlement included a reservation by EBI as to its right to
pursue the issue of a second injury against the State Fund.
The letter requested the State Fund to contribute 50 percent
toward the settlement which was by the State Fund denied.
On June 27, 1988, Athey filed a petition for compromise
by settlement with EBI for the sum of $52,000. Included in
the petition was the language:
The insurer reserves all rights to pursue
indemnification for all of amounts paid to claimant
from the State Compensation Insurance Fund for any
second injury which may have occurred during the
summer of 1986.
On August 1, 1988, the ~ivisionof Workers' Compensation
approved the compromise settlement in an order which included
language that the insurer reserved all rights to pursue
indemnification against the State Fund for any second injury
which may have occurred during the summer of 1986.
Following the approval of settlement, EBI undertook to
obtain medical records and depositions from a team of
doctors. On September 2, 1988, it forwarded to the State
Fund copies of the depositions of Dr. ~ i c k e r and Dr.
Coolidge. In its September 2 letter, EBI claimed that the
evidence showed that Athey had reached medical stability and
maximum healing from the injury of September 19, 1985 and
that he received a second injury by aggravation of the
underlying condition while the State Fund was on the risk in
September of 1986. In the letter, EBI demanded complete
indemnification for the compromise paid, and other expenses.
The State Fund denied the demand.
EBI filed a petition before the Workers' Compensation
Court for a determination as to its right of indemnification.
The hearing examiner, in his proposed order, held that there
was no genuine issue of material fact, that the reservation
of rights by EBI in its final compromise settlement petition
was not binding upon the State Fund, that the only claim
filed by Claude Athey was a full and final compromise
settlement of an accident which occurred on September 19,
1985 and that the compromise settlement was voluntarily paid
by EBI. The Workers' compensation Court adopted the proposal
of the hearings examiner and on February 22, 1989, granted
the motion of State Fund for summary judgment and dismissed
EBI's petitior,. From that order of summary judgment, EBI
appeals.
EBI contends on appeal that the Workers' Compensation
Court erred when it determined that EBI's reservation of
indemnity rights in its compromise settlement had no effect
on the State Fund; that the evidence established genuine
issues of material fact precluding summary judgment, and that
it is entitled to have those issues determined by the
Workers' Compensation Court.
The State Fund contends that EBI cannot shift its
liability for the settlement to the State Fund, that any
recovery for a 1986 injury is barred by the failure of EBI to
comply with the claim and notice requirements of 5 39-71-601,
-603, MCA, that EBI lacked standing to bring a workers'
compensation claim, and that the Workers' compensation Court
properly granted summary judgment.
In Belton v. Carlson Transport (1983), 202 Mont. 384,
392, 658 P.2d 405, 409-410, this Court said:
We hold that the burden of proof is properly placed
on an insurance company which is on the risk at the
time of the accident in which a compensable injury
is claimed. This holding assures that claimant
will always know which insurer he can rely on to
pay the benefits. It is the duty of the insurance
company on risk to pay the benefits until it
proves, or until another insurance company agrees,
that it should pay the benefits. If it is later
determined that the insurance company on risk at
the time of the accident should not pay the
benefits, this insurance company, of course, has a
right to seek indemnity from the insurance company
responsible for the benefits already paid out to
the claimant.
This Court held to the Belton rule in Stangler v.
Anderson Meyers ~rillingCompany (Mont. 1987), 746 P.2d 99,
101, saying:
In Belton v. Carlson Transport (1983), 202 Mont.
384, 658 ~ r 2 d405, this Court adopted the idea of
"maximum healins" and "successive injuries" in
2
order to more fairly assess which employer is
responsible for an employee's on-the-job injury.
Maximum healing means that following a compensable
injury a claimant has reached a point constitutinq
the end of the healing period. - It does not mean
the person is free of symptoms such as pain or
objective signs. Belton, 658 P.2d at 408.
The rule of Belton controls a situation where an
employee has been injured more than once and
different employers' insurance carrier are at risk
for the separate injuries. If the first injury has
not reached maximum healing, the insurer at risk at
the time of the first injury will be responsible
for the second injury as well. If the claimant is
medically stable or has reached maximum healing,
the insurer at risk at the time of the second
injury is responsible for Workers' Compensation
benfits.
Under the medical testimony and other evidence of this
case, a genuine issue of material fact exists as to whether
Athey had attained maximum healing from the incident of
September 19, 1985, prior to the time in 1986 when he found
that his back condition prevented him from further working.
(In Belton, we used the terms "maximum healing," "maximum
recovery," and "medically stable condition" interchangeably.
Belton, 658 P.2d at 409.)
In Stangler, this Court also said:
.. . we now uphold the Belton rule that once a
claimant has reached the maximum healing or a
medically stable condition the insurer at risk at
the time of the original injury is no longer
responsible for any subsequent injuries or
conditions.
Stangler, 746 P.2d at 103.
Nonetheless, State Fund contends that because EBI made a
compromise settlement with Athey without the participation of
State Fund, that State Fund is no longer liable for any
second injury. Moreover, State Fund contends that the
compromise settlement referred only to a September 19, 1985
injury, and not to any subsequent injury and therefore does
not relate to any claim of Athey's for a second injury.
The right of indemnity is that where one is compelled to
pay money which, in justice, another ought to pay, the former
may receive from the latter the sums so paid. ~aisler v.
Burlington Northern R. Co. (19851, 219 Mont. 254, 258, 717
P.2d 535, 537; DeShaw v. Johnson (1970), 155 Mont. 355, 259,
472 P.2d 298, 301. The right to indemnity does not accrue
until the payment is made. St. Paul Fire and ~ a r i n e
Insurance Company v. Thompson (19691, 152 Mont. 396, 403, 451
P.2d 98, 102. The party claiming indemnity need only prove
potential liability at the time of making the payment, and
that the payment was reasonable. Iowa Mfg. Co. v. Joy Mfg.
Co. (1983), 206 Mont. 26, 34, 669 P.2d 1057, 1061. Here, the
reasonableness of the compromise settlement was approved by
the Workers' compensation ~ivision. Thus, it is not a
defense that because the State Fund did not participate or
approve the compromise settlement, that the State Fund is
exonerated from its indemnity obligations. Here, EBI had
potential liability, effectuated a reasonable settlement, and
if in fact there was a second injury, a right of indemnity
exists in favor of EBI.
State Fund also contends that EBI has no standing to
bring an indemnity claim. It points to S. 39-71-601(1), MCA,
which reads as follows:
In case of personal injury or death, all claims
shall be forever barred unless presented in writing
to the employer, the insurer, or the division, as
the case may be, within 12 months from the date of
the happening of the accident, either by the
claimant or someone legally authorized to act for
him in his behalf.
State Fund contends that the indemnity claim is not
brought by the claimant or by someone legally authorized to
act for him in his behalf, and further contends that the
petition for compromise settlement was not executed until
June of 1988 and not approved until August of 1988 and that
therefore the one year statute of limitations applies. The
contention is weightless. EBI is not bringing a claim on
behalf of the claimant, but rather on its own behalf,
contending that it has an indemnity right for a payment which
State Fund should have made. section 39-71-601(1), MCA, does
not apply in this case.
Finally, State Fund contends that there is no genuine
issue of material fact in this case and that a second injury
cannot be found from the testimony of the doctors through
deposition or by the affidavits presented. Our examination
of those documents and testimonies indicates that there is
such a genuine issue which must be resolved by a trier of
fact, in this case, the Workers' Compensation Court.
The summary judgment of the Workers' Compensation Court
of this case is reversed and the cause remanded. The
Workers' Compensation Court is instructed to determine
whether Claude Athey had reached the condition of maximum
healing following his injury of September 19, 1985, prior to
his second injury, and whether in fact a second injury
occurred. A resolution of those fact issues will determine
whether EBI is entitled to indemnity.
,--,
-
i
Justice t
We Concur: