No. 95-290
IN THE SUPREMECOURT OF THE STATE OF MONTANA
1996
KENNETHMARTIN,
Petitioner and Appellant,
v.
STATE COMPENSATIONINSURANCE FUND,
Respondent and Insurer for f[B 2 2 ?glfj
GLEN RINDAL,
Employer.
APPEAL FROM: Workers' Compensation Court, State of Montana
The Honorable Mike McCarter, Judge presiding.
COUNSELOF RECORD:
For Appellant:
Stephen D. Roberts, Attorney at Law,
Bozeman, Montana
For Respondent:
Charles G. Adams, Attorney, State
Compensation Insurance Fund, Helena, Montana
Submitted on Briefs: December 21, 1995
Decided: February 22, 1996
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
The petitioner, Kenneth Martin, filed a petition for hearing
in the Workers' Compensation Court of the State of Montana in which
he sought to set aside a final settlement agreement that had been
approved by the Division of Workers' Compensation. The respondent,
State Compensation Insurance Fund, filed a motion to dismiss, or in
the alternative, for summary judgment. The Workers' Compensation
Court entered an order granting summary judgment in favor of the
State Fund. Martin appeals that order. We reverse the order of
the Workers' Compensation Court.
The issues on appeal include:
1. Did the Workers' Compensation Court have jurisdiction to
consider Martin's petition?
2. Should Martin's settlement agreement be set aside on
appeal as a matter of law?
FACTUAL BACKGROUND
On January 3, 1977, Kenneth Martin suffered an industrial
injury arising out of and in the course of his employment with Glen
Rindal, who was insured by the State Compensation Insurance Fund.
Three years later, on January 29, 1980, Martin and the State Fund
entered into a petition for final settlement for the amount of
$2025 which represented twenty-five weeks of benefits. The
petition was submitted to the Division of Workers' Compensation
which issued its order approving final settlement on January 31,
1980.
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On January 13, 1995, Martin filed a petition for hearing in
the Workers' Compensation Court in which he sought to set aside the
final settlement agreement and reopen his claim. In his petition,
Martin alleged:
A dispute exists between the parties. Despite the
fact that Claimant suffered a severe injury which
required a laminectomy of L4-5 and L5-Sl, and despite the
fact that this injury had a very substantial effect on
the earning capacity of Claimant, whose work history was
strictly manual labor, the State Fund settled with the
Claimant on a final settlement basis for only 25 weeks of
permanent partial disability benefits. The State Fund
entered into this settlement with Claimant when Claimant
was not represented by an attorney. The settlement,
which was for no more than his undisputed impairment
rating, was made despite the written memorandum of the
State Fund Bureau Chief which noted that "we would never
settle the case for this amount if he had the proper
advice. . ." The settlement was also based on a
permanent partial disability rate that was improperly low
as documented through information contained in the State
Fund's own files.
1n the petition, Martin also requested additional benefits,
attorney fees and costs, and that the court assess a twenty percent
penalty against the State Fund because of its unreasonable conduct.
The State Fund moved to dismiss the petition, or in the
alternative, for summary judgment based on three grounds. First,
it asserted that the Workers' Compensation Court lacked
jurisdiction; second, it asserted that the claimant's request was
barred by the statute of limitations; and third, it asserted that
the petition failed to set forth any legal basis for setting aside
the settlement. In support of its motion, the State Fund submitted
an affidavit of a claims adjuster familiar with Martin's claim
file. It also offered as exhibits the petition for final
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settlement and the Division of Workers' Compensation's order
approving the final settlement. No other evidence was offered for
or in opposition to summary judgment.
On May 11, 1995, the Workers' Compensation Court granted the
State Fund's motion for summary judgment. It held that the
Workers' Compensation Court lacked jurisdiction over the petition
to set aside the final settlement.
ISSUE 1
Did the Workers' Compensation Court have jurisdiction to
consider Martin's petition?
We review the Workers' Compensation Court's conclusions of law
to determine whether they are correct. CNA Insurance Co’s v. Dunn (Mont .
1995), 902 P.2d 1014, 1016, 52 St. Rep. 981, 982; Stordalenv.Ricci’sFood
Farm (1993), 261 Mont. 256, 258, 862 P.2d 393, 394.
Sections 39-71-204 and -2909, MCA, grant jurisdiction to the
Workers' Compensation Court to review, diminish, or increase
workers' compensation benefits in certain instances. Section
39-71-204, MCA, provides in part:
(1) The department has continuing jurisdiction over
all its orders, decisions, and awards and may, at any
time, upon notice, and after opportunity 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.
. . . .
(3) If a party is aggrieved by a department order,
the party may appeal the dispute to the workers'
compensation judge.
Section 39-71-2909, MCA, provides:
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The judge may, upon the petition of a claimant or an
insurer that the disability of the claimant has changed
or that the claimant received benefits through fraud or
deception, review, diminish, or increase, in accordance
with the law on benefits as set forth in chapter 71 of
this title, any benefits previously awarded by the judge.
An insurer's petition alleging that the claimant received
benefits through fraud or deception must be filed within
2 years after the insurer discovers the fraud or
deception.
In this case, the Workers' Compensation Court concluded that
it lacked jurisdiction to set aside Martin's 1980 settlement
agreement. In doing so, the court recognized that §§ 39-71-204
and -2909, MCA, grant jurisdiction to the Workers' Compensation
Court to rescind, alter, amend, diminish, or increase full and
final compromise settlements pursuant to this Court's decision in
Worfe Webb (1992), 251 Mont. 217, 824 P.2d 240. However, the court
distinguished this case from Wolfe because it involves a final
settlement rather than a full and final compromise settlement.
Wolfe involved a full and final compromise settlement agreement
which the Division of Workers' Compensation had approved on
March 8, 1983. Wolf, 251 Mont. at 221, 824 P.2d at 242. In Wolfe,
the insurer contended that the law in effect at the time of the
claimant's 1980 injury applied. In 1980, §§ 39-71-204(2) and
-2909, MCA, provided as follows:
The division or the workers' compensation judge
shall not have power to rescind, alter, or amend any
final settlement or award of comoensation more than 4
years after the same has been approved bv the division.
. . . Except as provided in 39-71-2908 [not applicable],
the division or the workers' compensation judge shall not
have the power to rescind, alter, or amend any order
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approving a full and final compromise settlement of
compensation.
Section 39-71-204(2), MCA (1979) (emphasis added).
[Tlhe 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.
Section 39-71-2909, MCA (1979) (emphasis added).
In Worf, we concluded that the statutes which relate to the
court's authority to entertain a petition are procedural, and
therefore, that the statute in effect at the time the petition is
filed controls. wolf, 251 Mont. at 226-27, 824 P.2d at 245-46. We
discussed the unique manner in which this Court had previously
dealt with petitions to set aside settlement agreements and stated:
What we have then are a series of decisions by this
Court that agreements settling claims for workers'
compensation benefits are subject to contract law and can
be set aside, at least by this Court, based upon a mutual
mistake of fact regarding the nature and extent of the
claimant's injury. We also had in effect, at the time of
claimant's injury, statutes which appellant argues
procedurally barred the Workers' Compensation Court, as
opposed to this Court, from setting aside full and final
compromise settlement agreements. . . .
. . . .
When this case was tried in April 1990, however,
both of the sections relied upon by the defendant had
been amended to remove any limitation on the Workers'
Compensation Court's authority to set aside full and
final compromise settlement agreements. . . .
. . .
We have previously held that compromise settlement
agreements can be set aside based upon contract law.
Whether the decision to set aside that agreement is made
in this Court or the Workers' Compensation Court is
merely a procedural difference and does not effect the
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substantive rights of either party. Therefore, the
amendment to the workers' compensation statutes which
eliminated any restriction on the court's authority to
review and rescind compromise settlement agreements was
a change in the procedural law. We have previously held
that procedural rules in effect at the time that a case
proceeds to trial are the rules that are to be applied to
the resolution of that dispute. State Camp. Ins. Fund Y. Sky
Country Inc. (1989), 239 Mont. 376, 379, 780 P.2d 1135,
1137; We&v. L?tate (1986), 219 Mont. 447, 449, 712 P.2d
1315, 1316.
worf , 251 Mont. at 226-27; 824 P.2d at 245-46.
Because the 1987 statute gave the Workers' Compensation Court
jurisdiction to reopen full and final compromise settlement
agreements, we held that the Workers' Compensation Court could
exercise jurisdiction over a petition filed in 1990, even though it
related to an injury that occurred and an agreement made prior to
1987.
Martin filed his claim with the Workers' Compensation Court on
January 13, 1995, after the legislature amended the statutes to
remove any limitations on the Workers' Compensation Court's
authority to set aside settlement agreements.
The Workers' Compensation Court concluded that while the 1987
changes which pertain to full and final compromise settlements are
procedural pursuant to the Wolfe opinion, the changes which pertain
to final settlements are substantive. The court reasoned that
prior to their 1987 amendment the statutes prohibited the Workers'
Compensation Court from reopening full and final compromise
settlements, yet conferred jurisdiction on the court to reopen
final settlements for up to four years. Therefore, the court
concluded, the former four-year limitation for reopening final
settlement agreements acted as a statute of limitation on the
jurisdiction of the Workers' Compensation Court which cannot be
changed retroactively.
We conclude that § 92-848(4), R.C.M. 1947 (1975) (codified as
amended at 5 39-71-2909, MCA), was a limit on the court's authority
to set aside settlement agreements, whether they were entered into
on a final or full and final compromise basis, and whether that
limitation was total or took effect after a period of years. As
such, in the unique context of our prior decisions set forth and
discussed in Wolfe, it was a procedural rule and the procedural rule
in effect when Martin's petition was filed controls. We see no
distinction between the changes in the Workers' Compensation
Court's authority to reopen a final settlement and its authority to
reopen a full and final compromise settlement.
For these reasons, we conclude that at the time Martin filed
his claim, the Workers' Compensation Court had authority to set
aside his final settlement agreement. Therefore, the Workers'
Compensation Court erred when it concluded that it lacked
jurisdiction to decide this dispute.
ISSUE 2
Should Martin's settlement agreement be set aside on appeal as
a matter of law?
Martin contends that this Court, on appeal, should reopen his
1980 workers' compensation settlement as a matter of law. He
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relies on Kienasv.Peterson (1980), 191 Mont. 325, 330, 624 P.2d 1, 3,
where we noted that general contract law gives courts the right to
reopen a compromise settlement when a mutual mistake of material
fact has occurred.
Since Kienas, we have set aside several compromise settlement
agreements. See, e.g., Brown v. Richard A. Murphy, Inc. (1993) , 261 Mont. 275,
281, 862 P.2d 406, 410 (rescinding a settlement agreement based on
mutual mistake of law); Wolfev. Webb (1992), 251 Mont. 217, 231, 824
P.2d 240, 248 (finding a mutual mistake of fact); Kimesv.Chavlie‘sFamily
Dining& Donut Shop (1988), 233 Mont. 175, 178, 759 P.2d 986, 988
(finding a mutual mistake of fact); Weldele v. Medley Development ( 19 8 7 ) ,
227 Mont. 257, 261, 738 P.2d 1281, 1283 (finding a mutual mistake
of fact). In setting aside the agreement in Wolf, we stated that
"[wlhether the decision to set aside that agreement is made in this
Court or the Workers' Compensation Court is merely a procedural
difference and does not effect the substantive rights of either
party." Wolfe, 251 Mont. at 226-27, 824 P.2d at 245. However, an
adequate factual record is, in every case, necessary to decide
whether an agreement should be set aside.
Here, the State Fund responded to Martin's petition for
hearing in the Workers' Compensation Court with a motion to dismiss
the petition, or in the alternative, for summary judgment. The
Workers' Compensation Court granted the State Fund's motion for
summary judgment based on lack of jurisdiction. Martin did not
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file a motion for summary judgment and this court has no record of
the facts which form the basis for his petition. Neither does the
court have evidence which would enable it to conclude whether
Martin's petition is barred by the statute of limitations found at
5 27-2-203, MCA. A factual record must be developed before any
court can decide whether to set aside Martin's settlement
agreement.
We therefore decline to exercise our authority to set aside
Martin's settlement.
Martin also contends that he is entitled to an award of costs,
attorney fees, and a statutory penalty based on his assertions that
he is entitled to reopen his claim, and that the State Fund has
unreasonably refused to do so. However, since we have not decided
that issue, we will consider neither his claim for costs and fees
nor his claim that he is entitled to a statutory penalty.
We reverse the judgment of the Workers' Compensation Court and
remand for further proceedings consistent with this opinion.
We concur:
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