November 27 2007
DA 06-0531
IN THE SUPREME COURT OF THE STATE OF MONTANA
2007 MT 305
DUANE J. KESSEL,
Petitioner and Appellee,
v.
LIBERTY NORTHWEST INSURANCE
CORPORATION,
Respondent, Insurer and Appellant.
APPEAL FROM: Montana Workers’ Compensation Court, WCC No. 2004-1189
Honorable James Jeremiah Shea on certification of
Honorable Mike McCarter’s Order
COUNSEL OF RECORD:
For Appellant:
Larry W. Jones, Law Offices of Larry W. Jones, Missoula, Montana
For Appellee:
Laurie Wallace, Bothe & Lauridsen, PC, Columbia Falls, Montana
Jon Heberling, McGarvey, Heberling, Sullivan & McGarvey,
Kalispell, Montana
Submitted on Briefs: March 14, 2007
Decided: November 27, 2007
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 Duane Kessel (Kessel), a former employee of Stimson Lumber Company
(Stimson) in Libby, Montana, sought compensation and medical benefits for an
occupational disease he allegedly derived from asbestos exposure while working at
Stimson. Liberty Northwest Insurance Corporation (Liberty), as insurer of Stimson,
moved for summary judgment on the ground that Kessel’s Petition was time-barred. The
Workers’ Compensation Court (WCC) denied Liberty’s motion. Liberty appeals. We
affirm.
ISSUE
¶2 A restatement of the issue on appeal is:
¶3 Did the WCC err when it ruled that the two-year statute of limitations provided
for at § 39-71-2905(2), MCA, does not begin to run until after the occupational disease
evaluator issues its report?
FACTUAL AND PROCEDURAL BACKGROUND
¶4 Kessel worked for Stimson from 1993 until January 2001 during which time he
asserts he contracted asbestos-related lung disease. He submitted a claim for
occupational disease (OD) benefits on December 3, 2001. On August 2, 2002, an
adjuster for Liberty wrote a letter to Kessel informing him that:
Based on the healthcare information received as of this date, this letter is to
notify you that your claim for asbestos related disease is denied. It is our
opinion there is not sufficient evidence to indicate this is related to your
employment at Stimson Lumber Co.
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¶5 On August 22, 2002, the Department of Labor and Industry (DOLI) in
accordance with § 39-72-602(2)(a), MCA (1999), notified Kessel and Liberty that a
medical panel examination of Kessel had been scheduled for September 20, 2002. Kessel
contacted Liberty and requested cancellation of the evaluation. Liberty replied that it was
constrained by § 39-72-602, MCA, which required such an evaluation when an insurer
has not accepted liability for an occupational disease claim. It acquiesced however to
cancellation but did so without waiving “any other rights or defenses that it may have
with regard to [the] claims.”
¶6 On August 2, 2004, Kessel submitted a Petition for Workers’ Compensation
Mediation Conference to the DOLI. The conference took place on August 27, 2004. The
mediator issued a recommendation on August 31, 2004, and mailed it to the parties on
September 2, 2004. Subsequently, on October 18, 2004, Kessel underwent an
occupational disease panel evaluation (OD evaluation). The doctor who conducted the
evaluation concluded that Kessel was suffering from asbestos-related lung disease as a
result of his employment. On November 12, 2004, Kessel filed a Petition for Hearing
with the WCC. On January 31, 2005, Liberty moved for summary judgment on the
ground that the two-year statute of limitations period provided in § 39-71-2905(2), MCA,
had run prior to Kessel filing his Petition.
¶7 Liberty requested a hearing on its motion which was held on March 28, 2005.
On August 4, 2005, the WCC, by order of then-WCC Judge McCarter, denied Liberty’s
motion and ruled that Kessel’s Petition had been filed within the applicable statute of
limitations period. The trial scheduled for the week of October 31, 2005, was vacated by
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agreement of counsel so that the parties could resolve the statute of limitations issue
before proceeding to trial. Counsel stipulated to certification, and on July 10, 2006,
current-WCC Judge Shea ordered that the August 4, 2005 ruling denying Liberty’s
motion for summary judgment be certified as final for purposes of appeal. Liberty filed a
Notice of Appeal with this Court on July 12, 2006.
STANDARD OF REVIEW
¶8 We review a Workers’ Compensation Court’s findings of fact to determine
whether those findings are supported by substantial evidence. We review a WCC’s
conclusions of law to determine whether those conclusions are correct. Preston v.
Transportation Ins. Co., 2004 MT 339, ¶ 19, 324 Mont. 225, ¶ 19, 102 P.3d 527, ¶ 19
(citation omitted).
DISCUSSION
¶9 Issue: Did the WCC err when it ruled that the two-year statute of limitations
provided for at § 39-71-2905, MCA, does not begin to run until after the occupational
disease evaluator issues its report?
¶10 Based on Kessel’s January 2001 last working day at Stimson, the statutes
applicable to his case are the 1999 versions of the Workers’ Compensation Act,
§§ 39-71-101 through 2914, MCA (WCA), and the Occupational Disease Act of
Montana, §§ 39-72-101 through 714, MCA (ODA) (repealed 2005). Buckman v.
Montana Deaconess Hosp., 224 Mont. 318, 321, 730 P.2d 380, 382 (1986) (law in effect
on the date of the injury determines compensation), and Gidley v. W.R. Grace & Co., 221
Mont. 36, 38, 717 P.2d 21, 22 (1986) (The last date of actual employment sets the
contractual rights of the parties.). Section 39-72-402(1), MCA (1999), provides that
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except as otherwise specified, the practice and procedure prescribed in the WCA applies
to proceedings under the ODA. The relevant provisions of the two acts are:
Section 39-71-2905, MCA, (1999) (of the WCA) which provided:
(1) A claimant or an insurer who has a dispute concerning any benefits
under chapter 71 of this title may petition the workers’ compensation judge
for a determination of the dispute after satisfying dispute resolution
requirements otherwise provided in this chapter. . . . After parties have
satisfied dispute resolution requirements provided elsewhere in this chapter,
the workers’ compensation judge has exclusive jurisdiction to make
determinations concerning disputes under chapter 71 . . . .
(2) A petition for hearing before the workers’ compensation judge must be
filed within 2 years after benefits are denied.
Section 39-72-602, MCA, (1999) (of the ODA) provided:
Insurer may accept liability -- procedure for medical examination when
insurer has not accepted liability.
(1) An insurer may accept liability for a claim under this chapter based on
information submitted to it by a claimant.
(2) In order to determine the compensability of claims under this chapter
when an insurer has not accepted liability, the following procedure must be
followed:
(a) The department shall direct the claimant to an evaluator on the list of
physicians for an examination. The evaluator shall conduct an examination
to determine whether the claimant is totally disabled and is suffering from
an occupational disease. In the case of a fatality, the evaluator shall
examine the records to determine if the death was caused by an
occupational disease. The evaluator shall submit a report of the findings to
the department.
(b) Within 7 working days of receipt, the department shall mail the report
of the evaluator’s findings to the insurer and claimant.
(c) Upon receipt of the report, if a dispute exists over initial compensability
of an occupational disease, it is considered a dispute that, after mediation
pursuant to department rule, is subject to the jurisdiction of the workers’
compensation court.
¶11 Liberty maintained that Kessel’s Petition was time-barred, and posited the
following alternative theories to the WCC in support of its position:
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Section 39-71-2905(2), MCA, does not include a tolling provision and is a statute
of repose, not a statute of limitation. A statute of repose cannot be tolled by a
mediation request or an OD evaluation. Kessel’s cause of action accrued on
August 2, 2002—the day Liberty denied his claim for benefits—and the two-year
time period expired on August 1, 2004.
If the two-year time period in § 39-71-2905(2), MCA, can be tolled by a mediation
request, Kessel’s request filed on August 2, 2004, was filed one day too late.
If the two-year time period actually expired on August 2, 2004, rather than August
1, and the statute can be tolled by a mediation request, it cannot be tolled further
by an OD evaluation; therefore, in Kessel’s case the statute expired on September
25, 2004, twenty-five days after the August 31, 2004, mediation recommendation
was issued. As such Kessel’s Petition for Hearing filed on November 12, 2004,
was untimely.
Lastly, if an OD evaluation can toll the statute, in this case, the limitations period
nonetheless expired before Kessel filed his Petition.
¶12 Liberty further maintained that §§ 39-71-2905 and 39-72-602, MCA, can be read
harmoniously, and that the statutes when read together simply require that a claimant
submit to an OD evaluation within the two-year statutory period.
¶13 Kessel countered that Preston supported his contention that the time limitation
provided in § 39-71-2905(2), MCA, was tolled by his request for mediation. He further
asserted that because his claim was an occupational disease claim, the OD evaluation
process mandated in circumstances such as his by § 39-72-602, MCA, also tolled the
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two-year statute of limitation. Additionally, he submitted that DOLI allowed the insurer
thirty days after the completed OD evaluation recommendation to determine if it would
accept or deny the claim. Based on this allowance, Kessel calculated a limitations
expiration of November 25, 2004, i.e. October 26, 2004, plus thirty days. Using this
calculation, he maintained that his November 12, 2004 Petition was timely filed.
¶14 The WCC, citing Fleming v. International Paper Co., 2005 MTWCC 34,
rejected Liberty’s argument that the relevant statute is a statute of repose, having held in
Fleming that it is a statute of limitations that is tolled upon the filing of a mediation
petition. Additionally, the court held that under Bosch v. Town Pump, Inc., 2004 MT
330, 324 Mont. 138, 102 P.3d 32, a limitations period is calculated by excluding the day
of the event which gives rise to the claim. In this case, August 2, 2002, is the day the
claim arose; therefore, the statute of limitations began running on August 3, 2002. As a
result, August 2, 2004, was the last day of the limitations period and the day that Kessel
requested mediation which stopped the running of the limitations period. However, after
so finding, the WCC then held that “the event triggering the limitations period under
section 39-71-2905(2), MCA (1995-2003), [was] not Liberty’s original denial but rather
its denial after the medical panel evaluation” (emphasis in original); therefore, Kessel’s
November 12, 2004, filing of his Petition was within the statute of limitations.
¶15 The WCC reasoned that §§ 39-71-2905 and 39-72-602, MCA, must be read and
applied together. By so doing, the court concluded that Liberty’s letter denying Kessel’s
occupational disease claim on August 2, 2002, was a “non-acceptance” rather than a
“denial” under § 39-72-602, MCA. The court explained:
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The language of [§ 39-72-602, MCA,] indicates that an initial, premedical
panel denial of an occupational disease claim is to be treated as nonfinal,
i.e., a “nonacceptance” rather than a denial. The section expressly requires
that where a claim is not initially accepted, the medical panel provisions
must be followed, and only after a report is issued does a denial become a
dispute which is both subject to mediation and to the jurisdiction of the
Workers’ Compensation Court. Thus, the Workers’ Compensation Court
lacks jurisdiction over an occupational disease claim which has not been
accepted by an insurer until the medical panel provision is satisfied, and
until such time, section 39-71-2905(2), MCA (1995-2003), does not come
into play. I therefore conclude and hold that the limitations period under
section 39-71-2905(2), MCA (1995-2003), did not commence running until
November of 2004, after the medical panel report issued. Thus, the
petition in this case is not time-barred. (Emphasis in original.)
¶16 The rationale underlying the WCC’s order appears to be somewhat conflicting—
in one part of the order the court, relying on Preston and Bosch, states that the statute of
limitations began running on August 3, 2002, but was tolled by Kessel’s request for
mediation on August 2, 2004, while, in its conclusion, the court states that the limitations
period under § 39-71-2905(2), MCA (1995-2003), did not commence running until after
the medical panel report was issued some time in November 2004. While the WCC’s
interpretation of Preston and Bosch was correct, we conclude these cases do not dictate
the date the statute of limitations began to run in this case. We also conclude that the
WCC’s holding that the statute did not begin to run until after the OD evaluation report
was issued was correct.
¶17 Whether the statute of limitations applicable to this case is tolled until after a
statutorily-mandated OD evaluation has been conducted is a question of first impression
for this Court. As stated by the WCC, resolution of this issue requires the joint reading
and application of both relevant statutes. We begin with § 39-72-602, MCA (1999),
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which expressly states that in the event an insurer “has not accepted liability,” the DOLI
must direct the claimant to an evaluator and an examination must be performed. The
language of the statute is unequivocal and mandatory. While Liberty takes issue with the
WCC’s characterization that its denial in August 2002 was a “nonacceptance” of Kessel’s
claim under § 39-72-602, MCA, rather than a denial which triggered the two-year
limitations period in § 39-71-2905, MCA, the fact remains that under the language of the
statute, a final “denial” of an OD claim cannot take place until after an OD evaluation has
been conducted. Turning to § 39-71-2905, MCA, the statute plainly, and without
ambiguity, states that a petition for hearing before the workers’ compensation judge must
be filed within 2 years after benefits are denied. Again, however, interpreted in the
context of § 39-72-602, MCA, such a denial in an OD claim can take place only after an
OD evaluation has been conducted.
¶18 Liberty argues that the statutes, read together, can operate simultaneously by
requiring that an OD evaluation be conducted within the two-year statutory period. It
maintains that, as a result of the WCC’s interpretation, § 39-71-2905(2), MCA, now
reads, “A petition for hearing before the workers’ compensation judge must be filed
within 2 years after benefits are denied, and after an injured worker can file for
mediation and then petition the Court.” The insurer opines that the court’s interpretation
violates the rule of statutory construction that a judge is “not to insert what has been
omitted or to omit what has been inserted.” Section 1-2-101, MCA. We note, however,
that § 39-72-602, MCA, of the now-repealed ODA, did not impose a requirement that a
claimant submit to the statutorily-required medical examination within a specific amount
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of time. Were we to adopt Liberty’s construction of the statute, we would, in essence, be
inserting a requirement that an evaluator conduct an OD examination within two years of
the insurer’s notice to the claimant that it “has not accepted liability.” Moreover, we
would be required to omit, or ignore, the mandatory language that, in a case where an
insurer has not accepted liability, an OD evaluation must occur before a dispute can be
presented to and resolved by the WCC.
¶19 We acknowledge concerns that our interpretation could result in an OD
claimant’s claim being open for an indeterminate amount of time after discovery of the
medical condition underlying the claim. However, our ruling in this case will, in any
event, have limited application. Section 39-71-2905, MCA, was enacted in 1997. The
Occupational Disease Act was repealed, effective July 1, 2005. Therefore our ruling will
apply only to those OD cases arising prior to June 30, 2005, where medical evaluations
have already occurred. Moreover, it is reasonable to conclude that claimants will not
unnecessarily delay the evaluation as such delay will also delay receipt of benefits.
¶20 Having determined that Liberty did not “deny” Kessel’s OD claim until
sometime after the DOLI issued the OD examination report on October 26, 2004,
Kessel’s Petition filed on November 12, 2004, is timely. Therefore, under the
circumstances of this case, we conclude the Workers’ Compensation Court’s findings are
supported by the evidence and that its conclusion of law is correct.
CONCLUSION
¶21 For the foregoing reasons, we affirm the Workers’ Compensation Court.
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/S/ PATRICIA COTTER
We Concur:
/S/ JOHN WARNER
/S/ JAMES C. NELSON
/S/ JIM RICE
/S/ W. WILLIAM LEAPHART
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