Caldwell v. MacO Workers' Compensation Trust

July 11 2011

DA 10-0427

IN THE SUPREME COURT OF THE STATE OF MONTANA

2011 MT 162

HAROLD CALDWELL,

Plaintiff and Appellee,

v.

MACO WORKERS’ COMPENSATION TRUST,

Respondent and Appellant.

APPEAL FROM: Workers’ Compensation Court
Honorable James Jeremiah Shea, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Norman H. Grosfield (argued), Grosfield Law Firm, Helena, Montana

For Appellee:

Rexford L. Palmer (argued), Attorneys Inc., P.C., Missoula, Montana

For Amicus Curiae:

Bradley J. Luck (argued), Garlington, Lohn & Robinson, PLLP, Missoula,
Montana

Argued: April 15, 2011
Submitted: April 26, 2011
Decided: July 11, 2011

Filed:

__________________________________________
Clerk
Justice Brian Morris delivered the Opinion of the Court.

¶1 MACo Workers’ Compensation Trust (MACo) appeals from a determination of the

Workers’ Compensation Court (WCC) that § 39-71-710, MCA, violates the Equal Protection

Clause found in Article II, Section 4, of the Montana Constitution. We affirm.

¶2 We review the following issue on appeal:

¶3 Does the categorical denial of rehabilitation benefits to a workers’ compensation

claimant violate equal protection when the basis for denial turns solely on the claimant’s

age-based eligibility for social security benefits?

FACTUAL AND PROCEDURAL BACKGROUND

¶4 Harold Caldwell (Caldwell) worked as the Ravalli County airport manager. On

November 25, 2005, he slipped on an icy airport taxiway, fell, and suffered traumatic head

injuries. Caldwell was 77 years old at the time of his accident. The airport’s insurer, MACo,

accepted Caldwell’s claim and paid his medical and wage-loss benefits.

¶5 Caldwell has worked for 57 years of his life. He stopped working only due to his

debilitating injury. Caldwell served in the U.S. Army for 25 years and retired with a full

military pension at age 44. Caldwell worked in livestock ranching, resort management, and

mining between the ages of 44 and 62. Caldwell began drawing social security retirement

benefits at age 62. Caldwell continued working as a mining supervisor until age 74, when he

began full-time employment as the Ravalli County airport manager. He earned more than

$25,000 per year as the manager.

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¶6 Caldwell reached medical stability from his head injuries on February 11, 2008. He

asked MACo at that point to initiate rehabilitation services under § 39-71-1006, MCA.

Caldwell sought to gain training that would enable him to re-enter the workforce. MACo

denied Caldwell rehabilitation benefits based on § 39-71-710, MCA.

¶7 Caldwell challenged the constitutionality of § 39-71-710, MCA, on the basis that the

statute’s categorical termination of benefits based on a claimant’s eligibility for social

security violated equal protection principles. The WCC agreed. The WCC concluded that

§ 39-71-710, MCA, created two similarly situated classes and treated them disparately

without being reasonably related to a legitimate government interest. MACo appeals the

WCC’s determination.

STANDARD OF REVIEW

¶8 We review for correctness the WCC’s conclusion of law that involves a constitutional

issue. Henry v. St. Compen. Ins. Fund, 1999 MT 126, ¶ 10, 294 Mont. 449, 982 P.2d 456.

DISCUSSION

¶9 Does the categorical denial of rehabilitation benefits to a workers’ compensation

claimant violate equal protection when the basis for denial turns solely on the claimant’s

age-based eligibility for social security benefits?

¶10 Section 39-71-710, MCA, deems “retired” any disabled worker eligible for social

security retirement benefits. The statute eliminates permanent partial disability benefits,

permanent total disability benefits, and rehabilitation benefits for those disabled workers

deemed “retired” by operation of the statute. Section 39-71-710, MCA. Injured workers
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have challenged the constitutionality of § 39-71-710, MCA, twice in the last seven years.

Reesor v. Mont. St. Fund, 2004 MT 370, 325 Mont. 1, 103 P.3d 1019; Satterlee v.

Lumberman’s Mut. Cas. Co., 2009 MT 368, 353 Mont. 265, 222 P.3d 566.

¶11 This Court held in Reesor that § 39-71-710, MCA, violated equal protection as to

claimants who had been denied permanent partial disability benefits based solely on their

eligibility for social security benefits. Id. at ¶ 25. This Court held in Satterlee, in contrast,

that the categorical elimination of permanent total disability benefits passed constitutional

review based on the possibility that permanent total disability benefits could transform into a

lifetime benefit. Id. at ¶ 28. Caldwell and MACo now present the Court with an equal

protection challenge as to the third kind of benefit—rehabilitation benefits—categorically

eliminated by § 39-71-710, MCA.

¶12 A worker injured on the job may recover rehabilitation benefits designed to return the

disabled worker to work. Sections 39-71-1006, -1011(4), MCA. The statute limits to 104

weeks a disabled worker’s right to receive rehabilitation benefits at the worker’s temporary

total disability rate. Section 39-71-1006(2), MCA. A disabled worker can receive additional

costs for tuition, fees, books, and other retraining expenses. Section 39-71-1006(3), MCA.

¶13 A disabled worker must see a rehabilitation provider and establish a rehabilitation

plan in order to determine the worker’s eligibility for rehabilitation benefits and in order to

determine the extent of benefits available. Section 39-71-1006(1)(b)-(c), MCA. The

disabled worker’s rehabilitation plan must consider the worker’s “age, education, training,

work history, residual physical capacities, and vocational interests.” Section 39-71-
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1006(1)(c), MCA. A disabled worker who seeks rehabilitation benefits must have a

rehabilitation provider certify that the disabled worker has “reasonable vocational goals and

reasonable reemployment opportunity.” Section 39-71-1006(1)(b), MCA. Caldwell would

have been entitled to seek rehabilitation benefits subject to the qualifications in § 39-71-

1006, MCA, similar to any younger worker disabled on the job, but for the categorical

elimination of rehabilitation benefits for older workers in § 39-71-710, MCA.

¶14 Article II, Section 4 of the Montana Constitution provides that “[t]he dignity of the

human being is inviolable. No person shall be denied the equal protection of the laws.”

Equal protection provides a check on governmental action that treats similarly situated

persons in an unlike manner. Oberson v. U.S. Dept. of Agric., 2007 MT 293, ¶¶ 18-19, 339

Mont. 519, 171 P.3d 715; Reesor, ¶ 15. We follow a three-step process to analyze an equal

protection claim. Satterlee, ¶ 15.

¶15 1. Whether the challenged statute creates similarly situated classes.

¶16 We first consider whether the governmental action creates classes of similarly situated

persons and treats them in an unequal manner. Id. The parties concede, and we agree, that §

39-71-710, MCA, creates two similarly situated classes and treats them differently. As the

WCC concluded, the classes consist of (1) those vocational rehabilitation eligible claimants

who are eligible to receive social security retirement benefits, and (2) those who are not

eligible. See Reesor, ¶¶ 10, 12; Satterlee, ¶ 15.

¶17 Amicus Montana State Fund (MSF) argues that § 39-71-710, MCA, does not create

two similarly situated classes. MSF agrees that the statute creates two classes, but argues
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that those classes consist of persons “in” the workforce and persons “out” of the workforce.

MSF argues that those “in” the workforce cannot be situated similarly to those “out” of the

workforce. MSF’s argument misses the mark.

¶18 Caldwell challenges § 39-71-710, MCA, precisely because it deems him “out” of the

workforce based solely on his age-defined eligibility for social security benefits. We reject

here, as we did in Reesor and Satterlee, amicus MSF’s argument that § 39-71-710, MCA,

does not create similarly situated classes. Reesor, ¶¶ 11-12; Satterlee, ¶ 16. Section 39-71-

710, MCA, creates two classes out of similarly situated claimants who have suffered work-

related injuries, could not return to their former jobs, had permanent physical impairment

ratings, and must rely on the Workers’ Compensation Act as their exclusive remedy. Reesor,

¶ 12; Satterlee, ¶ 16. Caldwell and MACo correctly assess that § 39-71-710, MCA, creates

two classes out of similarly situated persons, distinguished only by the age-based deemed

“retired” provision of § 39-71-710, MCA.

¶19 We do not operate on a blank slate regarding the appropriate classification for our

equal protection analysis. Oberson, ¶ 19. We begin by considering “the statute’s purpose in

order to determine the threshold question of whether the statute created a discriminatory

classification -- i.e. a classification that treats two or more similarly situated groups in an

unequal manner.” Oberson, ¶ 19. As we concluded in Reesor and Satterlee, age represents

“the only identifiable distinguishing factor between the two classes” created by § 39-71-710,

MCA. Reesor, ¶ 12; Satterlee, ¶ 16. “Furthermore,” as this Court stated in Reesor,

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“chronological age and the corresponding eligibility for social security retirement benefits is

unrelated to a person’s ability to engage in meaningful employment.” Reesor, ¶ 12.

¶20 2. The appropriate level of constitutional scrutiny.

¶21 We next determine the level of scrutiny to apply to the challenged legislation. Reesor,

¶ 13. The parties have not asked the Court to apply a stricter standard of review than rational

basis. The parties dispute only the third step of the equal protection analysis which considers

whether the challenged governmental action passes constitutional scrutiny, in this case,

rational basis review.

¶22 3. Evaluating this constitutional challenge under rational basis.

¶23 Rational basis requires that § 39-71-710, MCA, bear a rational relationship to a

legitimate governmental interest. Satterlee, ¶ 18. We recently have considered the

governmental interests underlying § 39-71-710, MCA, in Reesor and Satterlee. Reesor,

¶¶ 17-24; Satterlee, ¶¶ 25-30.

¶24 The claimant in Reesor had turned age 65 and had begun receiving social security

retirement benefits about eight months before his work-related injury. Id. at ¶ 3. The

claimant, Dale Reesor, received temporary total disability benefits and an impairment award

from his employer’s insurer, MSF. Id. at ¶ 4. MSF denied the claimant permanent partial

disability benefits, however, based on the categorical elimination of such benefits in § 39-71-

710, MCA. Id. at ¶ 5.

¶25 A permanent partial disability exists if a worker has a permanent impairment of the

worker’s ability to work that causes actual wage loss, but does not preclude the worker from
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returning to work in some capacity. Section 39-71-116(24), MCA. Montana law limits

permanent partial disability benefits to a period of 375 weeks and to a percentage of the

worker’s lost wages. Section 39-71-703, MCA. Reesor challenged the fact that the statute

allows the award of permanent partial disability benefits to younger workers, but denies them

to older workers deemed “retired” based on social security eligibility. Reesor claimed that

this disparate treatment violated his right to equal protection. Id. at ¶ 8. The Court agreed

and concluded that no rational basis existed to award permanent partial disability benefits to

a 45-year-old injured worker, but to deny those same benefits to a 65-year-old worker with

an identical injury. Id. at ¶ 23.

¶26 The Court stated broadly that “no rational basis” existed “to deny a class of injured

workers a category of benefits based upon their age.” Reesor, ¶ 23. The Court departed

from this broad statement in Satterlee. The Court concluded in Satterlee that the categorical

age-based elimination of permanent total disability benefits in § 39-71-710, MCA, rationally

related to the legitimate governmental interest of providing wage-loss benefits that bear a

reasonable relationship to actual wages lost. Satterlee, ¶ 28.

¶27 The claimants in Satterlee had suffered work-related injuries for which they received

permanent total disability benefits. Satterlee, ¶ 5. An injured worker has a permanent total

disability if the worker’s injury has foreclosed the worker’s reasonable prospect of physically

performing regular employment. Section 39-71-116(25), MCA. A worker with a permanent

total disability must be paid permanent total disability benefits for the duration of the

worker’s permanent total disability. Section 39-71-702(1), MCA. The Satterlee claimants’
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award of benefits terminated upon becoming eligible for social security benefits pursuant to

§ 39-71-710, MCA. Id. at ¶ 5. The claimants challenged the categorical elimination of

permanent total disability benefits on equal protection grounds. Id. at ¶ 6. The Court

concluded that “it is rational for the workers’ compensation system to terminate [permanent

total disability] benefits at a time when, statistically, most people’s work-lives have ended.”

Id. at ¶ 28.

¶28 Reesor concluded that the categorical elimination in § 39-71-710, MCA, violated

equal protection, while Satterlee concluded that it survived constitutional review. Satterlee

did not overrule Reesor or signify some new path upon which this Court would embark in

our equal protection jurisprudence. The Court’s dispositions instead turned on the

differences between the purposes and entitlement schemes of the varying kinds of benefits.

Satterlee, ¶ 27. The Court determined that “PPD benefits and PTD benefits serve very

different purposes and employ very different entitlement schemes.” Id. The Court further

explained that the “difference between the timeframes over which PPD and PTD benefits are

meant to serve” constituted the critical distinction for purposes of the equal protection

analysis. Id.

¶29 The Court in Satterlee did not even “equate Reesor with the case at bar.” Id. The

Court concluded that each class of benefits was “simply too different and serve[s] such

divergent purposes that equating” them would be inappropriate. Id. at ¶ 24. Permanent

partial disability benefits serve the purpose of restoring a claimant to a pre-accident wage

level by providing wage-loss benefits, but only for 375 weeks. Satterlee, ¶ 23; § 39-71-703,
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MCA. Permanent total disability benefits serve to assist a disabled worker who cannot ever

return to work for the duration of his or her injury. Satterlee, ¶ 23; § 39-71-702, MCA. The

court focused on the fact that permanent total disability benefits did not “terminate after a

limited number of weeks,” but assisted “the worker over the course of his or her work life.”

Satterlee, ¶ 27. As a result, the Court determined that the age-based categorical elimination

in § 39-71-710, MCA, constituted a “sufficiently rational means of ensuring that PTD

benefits [did] not become a lifetime benefit.” Satterlee, ¶¶ 27-28. The Court recognized the

legitimate governmental interest in not allowing permanent total disability benefits to “run

on until the claimant’s death.” Id. at ¶ 28.

¶30 Montana law limits a worker’s eligibility for rehabilitation benefits, like the limitation

for permanent partial disability benefits, to a set number of weeks. Section 39-71-1006,

MCA. A disabled worker can receive rehabilitation benefits for a maximum of 104 weeks.

Id. No risk exists that rehabilitation benefits could “run on until the claimant’s death” or

transform into a “lifetime benefit.” Satterlee, ¶ 28.

¶31 In addition to considering the entitlement scheme of rehabilitation benefits, we must

consider the purposes served by rehabilitation benefits. Satterlee, ¶ 27. We already have

concluded that § 39-71-105(3), MCA, provides the policy statement for the state’s interest

underlying rehabilitation benefits. Henry, ¶ 39. Section 39-71-105(3), MCA, sets forth the

policy of the workers’ compensation system “to return a worker to work as soon as

possible.” The statute recognizes that a work-related injury “has a negative impact on the

worker, the worker’s family, the employer, and the general public.” Section 39-71-105(3),
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MCA. Rehabilitation benefits advance this stated policy by setting the worker on a

rehabilitation plan that assists the worker “in acquiring skills or aptitudes to return to work”

and “reasonably reduce[] the worker’s actual wage loss.” Section 39-71-1011(4), MCA.

¶32 Critical differences exist among the entitlement schemes and purposes underlying

rehabilitation benefits, permanent partial disability benefits, and permanent total disability

benefits. These differences guide our analysis as to whether the categorical elimination of

rehabilitation benefits in § 39-71-710, MCA, violates equal protection. We turn to consider

the governmental interests underlying § 39-71-710, MCA, and whether the categorical

elimination of rehabilitation benefits for older workers rationally relates to those interests.

¶33 a. Legitimate governmental interests served by § 39-71-710, MCA.

¶34 Cost containment of the workers’ compensation system presents a legitimate

governmental interest. Satterlee, ¶ 29. The legislature often pursues its interest in

controlling the costs of the workers’ compensation system. Id. These pursuits lie within

constitutional authority so long as the legislature’s attempts to improve the viability of the

workers’ compensation system follow rational means and so long as “cost containment is not

the sole reason for disparate treatment.” Id. If the Court permitted otherwise, “cost

containment” alone could justify nearly every legislative enactment without regard for the

guarantee for equal protection of the law. Henry, ¶ 40 (citing Heisler v. Hines Motor Co.,

282 Mont. 270, 283, 937 P.2d 45, 52 (1997)).

¶35 The Court in Henry recognized that cost-control alone cannot justify disparate

treatment that “violates an individual’s right to equal protection of the law.” Id. Not
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surprisingly, discrimination in the form of “offering services to some while excluding others

for any arbitrary reason, will always result in lower costs.” Id. We must scrutinize attempts

to disguise violations of equal protection as legislative attempts to “contain the costs” or

“improve the viability” of the worker’s compensation system. Cost alone does not justify the

disparate treatment of similar classes. Satterlee, ¶ 29.

¶36 The WCC concluded that § 39-71-105(3), MCA, sets forth the public policy for

rehabilitation benefits and that terminating rehabilitation benefits “[flew] in the face of this

stated legislative objective.” MACo faults the WCC for focusing solely on the policy

statement in § 39-71-105(3), MCA. We agree insofar as § 39-71-105(3), MCA, provides the

policy statement for providing rehabilitation benefits, as opposed to the policy statement for

the elimination of rehabilitation benefits in § 39-71-710, MCA. Caldwell has challenged the

constitutionality of § 39-71-710, MCA. The WCC correctly looked to the policy statement

in § 39-71-105(3), MCA, however, to consider whether the categorical elimination in § 39-

71-710, MCA, rationally relates to the governmental interests served by rehabilitation

benefits.

¶37 MACo and amicus MSF argue that several additional legitimate governmental

interests, independent of the interest in cost-containment, support the categorical elimination.

MACo argues that the legislature has a legitimate interest in (1) creating a wage replacement

system, (2) assisting the worker at a reasonable cost to the employer, (3) controlling the costs

of the workers’ compensation program in order to continue providing benefits, and (4)

avoiding duplication or overlapping of benefits. Amicus MSF adds that the legislature has a
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legitimate interest in (5) providing wage-loss benefits that bear a reasonable relationship to

actual wages lost, (6) creating reasonably constant rates for employers, and (7) tailoring

benefit entitlement to need. We address these purported interests in turn.

¶38 First we conclude that the governmental interest in creating a wage replacement

system bears little relevance in the context of rehabilitation benefits. Section 39-71-105(1),

MCA, sets forth the governmental interest in creating a wage replacement system. Reesor,

¶ 18. A related legitimate governmental interest exists in providing wage-loss benefits that

bear a reasonable relationship to actual lost wages. Satterlee, ¶¶ 30-31. Rehabilitation

benefits do not replace lost wages, however, and should be distinguished from the wage

replacement system at issue in Reesor and Satterlee. A disabled worker like Caldwell could

receive temporary total disability, permanent total disability, permanent partial disability, or

temporary partial disability benefits to replace his or her lost wages. Sections 39-71-701 to -

703, -712, MCA. In contrast, rehabilitation benefits, like medical benefits, disfigurement

benefits, or funeral benefits, do not replace lost wages. Sections 39-71-704, -708, -725,

MCA. The elimination of rehabilitation benefits cannot be understood as serving, or even

relating to, the governmental interest in creating a wage-replacement system that bears a

reasonable relationship to actual wages lost. We finally note that MACo accepted and paid

Caldwell’s medical and wage-loss benefits.

¶39 We similarly reject the notion that the governmental interest in providing reasonably

constant rates to employers will be served by the categorical elimination of rehabilitation

benefits. Section 39-71-105(4), MCA, contains the policy statement about “reasonably
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constant rates.” That policy statement relates to the interest in creating a “primarily self-

administering” workers’ compensation system that “minimize[s] reliance upon lawyers and

the courts.” Section 39-71-105(4), MCA. We specifically reject the suggestion that the

categorical elimination of rehabilitation benefits serves to provide reasonably constant rates.

Eliminating rehabilitation benefits for older workers might constantly lower rates, but that

interest simply duplicates the cost-containment interest already discussed.

¶40 We also have recognized that “assisting the worker at a reasonable cost to the

employer” presents a legitimate governmental interest in equal protection claims. Satterlee,

¶ 30. We disagree that eliminating rehabilitation benefits relates to assisting the worker at a

reasonable cost to the employer. We particularly reject the argument that “reasonable cost to

the employer” always means “lower cost to the employer.” Such an argument does not

constitute a legitimate governmental interest separate from the cost-containment interest.

¶41 MACo argues that avoiding the duplication or overlapping of benefits serves as a

reasonable and permissive legislative objective. MACo argues that it would be irrational to

allow claimants to receive both social security and rehabilitation benefits. We rejected this

argument in Reesor when we pointed out that no coordination of benefits exists between the

Workers’ Compensation Act and the social security system. Reesor, ¶¶ 20-24. Caldwell’s

social security benefits will not provide him with resources to receive rehabilitation benefits

that will return him to work after being disabled on the job as an employee for the Ravalli

County airport. The Dissent elevates generalized statements of the law from Larson’s

Workers’ Compensation Law and the Kentucky Supreme Court above decisions of this
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Court. Dissent, ¶ 68. We addressed the same “duplication of benefits” argument in Reesor.

Reesor, ¶¶ 20-24. We explained that “social security retirement benefits are not wage loss

benefits” and do not offset one another. Id. at ¶ 24.

¶42 The Dissent makes no attempt to explain how the categorical elimination of

rehabilitation benefits “minimize[s] overlap” of the income a person might receive from

social security. The Dissent fails to show how a person’s social security income “offset[s]”

the categorical denial of rehabilitation benefits for older workers. Moreover, the Dissent

makes no effort to explain why rehabilitation benefits should be treated like the permanent

total disability benefit in Satterlee rather than the permanent partial disability benefit in

Reesor.

¶43 MACo cites Stratemeyer v. Lincoln Co., 259 Mont. 147, 154, 855 P.2d 506, 511

(1993), for the argument that a legitimate governmental interest exists to control costs in

order to continue providing benefits. MACo’s argument misrepresents the actual statements

in Stratemeyer that identified “controlling the costs of the program and providing benefits”

as a legitimate governmental interest. We know of no authority to support the argument that

the legislature can eliminate benefits from one class of people in order to continue providing

benefits to another class of similarly situated people.

¶44 We likewise reject amicus MSF’s “tailoring benefit entitlement to need” argument.

MSF cites no authority for its tailoring argument, except two paragraphs out of Satterlee.

Those paragraphs do not recognize a “tailoring” interest or any additional legitimate

governmental interest not already discussed. We reject the suggestion that the legislature
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constitutionally can eliminate rehabilitation benefits for older workers so as to “tailor” or

provide benefits to those in “need,” which presumably means younger workers.

¶45 Immediately beneath the surface of MACo’s and MSF’s “best allocation” and

“tailoring” arguments lurks the belief that society should not rehabilitate older people

because the return on the investment may not be as high. This bias also permeates the

Dissent’s reasoning that the legislature may “allocate resources toward those who,

statistically speaking, will use them,” Dissent, ¶ 67, and that “the legislature may reasonably

determine that retraining is most important for those workers with a long work life ahead of

them and may channel resources toward that group of workers.” Dissent, ¶ 71.

¶46 The Dissent’s approach would permit the legislature to provide benefits unequally to

similarly situated persons so long as “empirical evidence” or statistics supported the

legislature’s decision. We reject the notion that the legislature acts rationally when it

categorically withholds benefits from a similarly situated minority group because,

“statistically speaking,” most people’s work life ends upon eligibility for social security.

Dissent, ¶ 65. The statistical majority holds no monopoly on equal protection guarantees.

¶47 The Dissent’s reasoning begs the question of whether the constitutional right to equal

protection hinges on the most recent labor statistics of the working elderly or on Congress’s

decision to raise the age eligibility of the social security system. Our equal protection

analysis does not allow the legislature to violate the equal protection rights of those persons

who, statistically speaking, represent the minority of persons who must continue working at

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ages beyond eligibility for social security because they could not otherwise provide for

themselves or their families.

¶48 MACo and MSF have argued that several legitimate governmental interests exist in

addition to the legitimate governmental interest in cost-containment of the workers’

compensation system. The other interests they have offered either (1) duplicate the cost-

containment interest or (2) bear no relation to the elimination of rehabilitation benefits in

§ 39-71-710, MCA. “Cost alone is insufficient to justify the disparate treatment of similar

classes.” Satterlee, ¶ 29. The categorical elimination of rehabilitation benefits in § 39-71-

710, MCA, serves no legitimate governmental interest, other than cost-containment, and

therefore violates equal protection.

¶49 b. Whether § 39-71-710, MCA, rationally relates to any legitimate governmental
interest.

¶50 The WCC concluded that the automatic termination of rehabilitation benefits in § 39-

71-710, MCA, did not rationally relate to any legitimate governmental interest. We agree

that categorical elimination of rehabilitation benefits in § 39-71-710, MCA, based solely on

age-defined eligibility for social security, does not rationally relate to any legitimate

governmental interest. Reesor, ¶¶ 19, 23. Eligibility for social security benefits bears no

rational relationship to a worker’s ability or willingness to return to work. Id. at ¶ 12. Social

security eligibility turns solely on a person’s age and whether he or she has accrued enough

social security earnings. 20 C.F.R. § 404.310 (2011).

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¶51 Caldwell’s work history demonstrates the irrationality of categorically eliminating

rehabilitation benefits once a person becomes eligible for social security. Caldwell served

the workforce for 15 years after becoming eligible to draw social security benefits and for 33

years after “retirement” from the U.S. Army. Caldwell’s entitlement to rehabilitation

benefits will be limited by consideration of his age, residual physical capacities, and

vocational interests. Section 39-71-1006(1)(c), MCA. A rational basis does not support the

categorical elimination of rehabilitation benefits in § 39-71-710, MCA. Section 39-71-710,

MCA, violates the Equal Protection Clause of the Montana Constitution insofar as it deems

disabled workers ineligible to receive rehabilitation benefits based on their eligibility for

social security benefits.

¶52 We affirm the judgment of the WCC.

/S/ BRIAN MORRIS

We Concur:

/S/ MIKE McGRATH
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
/S/ JAMES C. NELSON

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Justice Patricia O. Cotter concurs.

¶53 I concur in the Court’s Opinion. I write separately to dispel the notion inherent in the

cost containment arguments of MACo and amicus MSF that giving older workers the

opportunity to receive rehabilitation benefits will lead to an explosion of costs. This concern

is largely unwarranted, as the Workers’ Compensation Act has in place a cost containment

measure that will account for the age and capacity of the injured worker in determining

whether and to what extent such benefits will be available.

¶54 As the Court points out at ¶ 13, a worker is not eligible for rehabilitation benefits

unless he or she meets the definition of a disabled worker, and a rehabilitation provider

designated by the insurer has certified that the worker has reasonable vocational goals and

reasonable reemployment opportunity. Sections 39-71-1006(1)(a)–(b), MCA. A

rehabilitation plan must be prepared and agreed to by the parties. It must take account of the

worker’s age, education, training, work history, residual physical capacities, and vocational

interests. Section 39-71-1006(1)(c), MCA. This system is designed to and does limit the

number of persons eligible for rehabilitation benefits and the amount of benefits available.

Presumably, the system will continue to function the same way once older workers become

eligible for benefits; indeed, there is a likelihood that it will screen a large number of older

applicants out of the system if the rehabilitation provider concludes that the older worker—

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for any or all of the reasons noted above—does not have reasonable reemployment

opportunities.

¶55 Caldwell and other older workers will not be guaranteed rehabilitation benefits by

virtue of our decision; they will simply be guaranteed the same right to seek such benefits as

is enjoyed by a younger worker disabled on the job. This is the essence of equal protection.

I therefore concur with the Court’s decision.

/S/ PATRICIA COTTER

Justice James C. Nelson joins in the Concurrence of Justice Patricia O. Cotter.

/S/ JAMES C. NELSON

Justice James C. Nelson, concurring.

¶56 I concur with the Court’s decision. While the Opinion correctly discusses Satterlee v.

Lumberman’s Mut. Cas. Co., 2009 MT 368, 353 Mont. 265, 222 P.3d 566, as the present

state of the law, I continue to disagree with our decision in that case. See Satterlee, ¶¶ 42-56

(Morris & Nelson, JJ., dissenting). If nothing else, the Court’s Opinion here points up the

unfairness, fallibility, and illogic of “statistical” retirement ages. See Opinion, ¶¶ 42, 45-47.

¶57 In point of fact, workers are living longer, and, of necessity, many have to work past

their “statistical” retirement ages in order to provide the basic necessities of life for
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themselves and their families. Neither wages nor Social Security has even remotely kept

pace with inflation and the rising prices of basic consumer goods, food, and healthcare.

Grandparents are raising their grandchildren and may have their own out-of-work children

living with them. Defined benefit pension plans are a thing of the past outside government

employment, and any notion that ordinary working people can save enough to actually retire

without working is a fiction.

¶58 Indeed, given the graying of America, our country’s declining birth rates, and an

economy that just never seems to “trickle down” to ordinary working people,1 it is

completely illogical and without rational basis to deny an injured worker compensation or

benefits on the basis of the person’s “statistical” retirement age. If the Legislature is sold on

statistics, I suggest it is using the wrong ones.

¶59 As support for its argument, the Dissent cites cases in which we have said that a

classification is reasonable if “any reasonably conceivable state of facts” provides a rational

basis for it, Kottel v. State, 2002 MT 278, ¶ 55, 312 Mont. 387, 60 P.3d 403, and that the

purpose of the challenged legislation may be “any possible purpose of which the court can

conceive,” Satterlee, ¶ 34 (internal quotation marks omitted). Admittedly these standards

have been in our caselaw for some time now. See e.g. Johnson v. Sullivan, 174 Mont. 491,

498-99, 571 P.2d 798, 802 (1977); Stratemeyer v. Lincoln County, 259 Mont. 147, 152, 855

P.2d 506, 509-10 (1993). Nevertheless, upon reflection, I cannot agree with the proposition

that rational-basis review involves our imagining possible reasons or purposes for an

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enactment. For one thing, why should we be searching for reasons and purposes to support

the challenged legislation? That is not only arbitrary on our part, but also intrudes upon the

Legislature’s duty to craft constitutional laws. Furthermore, this approach does not fulfill

rational-basis scrutiny. “Rational” means based on correct and valid reasoning and logic.

The American Heritage Dictionary of the English Language 1029, 1452 (4th ed., Houghton

Mifflin 2000). The legislative classification, in other words, must bear a logical and

reasoned relationship to a specific and legitimate purpose. Simply because we might

conceive of some purpose that the legislation could theoretically serve under some

hypothetical set of facts in no way establishes that the legislation is rationally related to the

particular purpose for which it was enacted. In my view, the “any conceivable

purpose/reason” approach is flawed and should be rejected.

¶60 Finally, the Dissent also argues that public policy determinations are the domain of

the Legislature and that this Court must give deference to the Legislature’s policy choices.

Our deference, however, is not boundless when legislation is challenged as violative of the

Constitution. Deference does not mean abdication, and “rational-basis scrutiny” is still

scrutiny. It is, in point of fact, this Court’s obligation here to review the Legislature’s

specific implementation of its policy choices and determine whether the legislation at issue

bears a rational relationship to a legitimate governmental interest. It does not bear that

relationship, for the reasons stated in the Court’s Opinion.

¶61 I accordingly concur in our decision.

1
Although, the benefits and rewards of the economy always seem to percolate up.
22
 /S/ JAMES C. NELSON

Justice Beth Baker, dissenting.

¶62 As we often have observed, every objective in favor of the constitutionality of a state

statute must be presumed. In reviewing the constitutionality of state laws, the question is

“not whether it is possible to condemn, but whether it is possible to uphold the legislative

action[.]” Satterlee, ¶ 10 (quoting Powell v. State Compen. Ins. Fund, 2000 MT 321, ¶ 13,

302 Mont. 518, 15 P.3d 877). These principles must be honored by the courts even in cases

where we may think the legislature could have devised a better system to fulfill its purposes.

Particularly when considering an equal protection challenge to legislative enactments of

economic and social regulations, courts must give deference to the legislature’s policy

choices unless their infirmity is proven beyond a reasonable doubt. If there is “any

reasonably conceivable state of facts” to support a legislative classification, its decision is

entitled to respect. Kottel v. State, 2002 MT 278, ¶ 55, 312 Mont. 387, 60 P.3d 403. The

Court’s review is not confined to those purposes espoused by the legislature, litigants, or the

district court, but extends to “any possible purpose of which the court can conceive.”

Satterlee, ¶ 34. This standard reflects the courts’ awareness “that the drawing of lines that

create distinctions is peculiarly a legislative task and an unavoidable one.” Massachusetts

Bd. of Ret. v. Murgia, 427 U.S. 307, 314, 96 S. Ct. 2562, 2567 (1976) (per curiam). “The

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legislature is simply in a better position to develop the direction of economic regulation,

social and health issues.” Stratemeyer, 259 Mont. at 153, 855 P.2d at 510.

¶63 We look frequently to the federal courts for guidance in applying the constitution’s

guarantee of equal protection of the law. See e.g. Powder River County v. State, 2002 MT

259, ¶ 79, 312 Mont. 198, 60 P.3d 357; Stratemeyer, 259 Mont. at 152, 855 P.2d at 509;

Butte Community Union v. Lewis, 219 Mont. 426, 431, 712 P.2d 1309, 1312 (1986). Age-

based distinctions long have been upheld against equal protection challenges where the age

classification is rationally related to a legitimate state interest, despite imperfection in the

state’s determinations or even empirical evidence that its line-drawing is subject to dispute.

“Under the Fourteenth Amendment, a State may rely on age as a proxy for other qualities,

abilities, or characteristics that are relevant to the State’s legitimate interests.” Kimel v. Fla.

Bd. of Regents, 528 U.S. 62, 84, 120 S. Ct. 631, 646 (2000). It is not uncommon that such

challenges are brought against laws restricting employment opportunities for workers over a

certain age. Gregory v. Ashcroft, 501 U.S. 452, 111 S. Ct. 2395 (1991); Vance v. Bradley,

440 U.S. 93, 99 S. Ct. 939 (1979); Murgia. “Our Constitution permits States to draw lines

on the basis of age when they have a rational basis for doing so at a class-based level, even if

it ‘is probably not true’ that those reasons are valid in the majority of cases.” Kimel, 528

U.S. at 86, 120 S. Ct. at 647 (emphasis added). Recognizing that “even improvident

decisions will eventually be rectified by the democratic process,” Vance, 440 U.S. at 97, 99

S. Ct. at 942, it is not the Court’s province to overturn legislative enactments we believe to

be unwise or outdated by evolving societal circumstances.
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¶64 In Satterlee, we relied on the simple truth that “when an individual is considered

retired, they have, by definition, ended their work life[,]” to uphold the constitutionality of

terminating wage-loss benefits intended to bear a reasonable relationship to actual wages

lost. Satterlee, ¶ 27. Despite the presence of illogical and unfair results as applied to some

workers, we affirmed the rationality of using eligibility for social security benefits—based

primarily on age—as a line of demarcation, in order to target limited workers’ compensation

resources toward those who are still considered of working age. We stated,

With the statutory intent of § 39-71-710, MCA, in mind, it is rational for
the workers’ compensation system to terminate [permanent total disability]
benefits at a time when, statistically, most people’s work-lives have ended.
While this may not always seem fair, it is not unconstitutional. By acting
to terminate benefits as it does, § 39-71-710, MCA, rationally advances the
governmental purpose of providing wage-loss benefits that bear a
reasonable relationship to actual wages lost.

Satterlee, ¶ 28.

¶65 Our decision today cannot be reconciled with this clear pronouncement of the

constitutionality of targeting wage-loss benefits toward those workers who, statistically

speaking, are not yet at the end of their work life. The majority states that rehabilitation

benefits “do not replace lost wages[.]” Opinion, ¶ 38. Clearly, though, vocational

rehabilitation benefits are part of the wage-loss benefit provided by the workers’

compensation statutes. By offering a means to facilitate an injured worker’s return to the

workforce, vocational rehabilitation benefits serve the objective of reducing overall wage

loss. The law specifically defines a vocational rehabilitation plan as a plan that “reasonably

reduces the worker’s actual wage loss.” Section 39-71-1011(4), MCA.
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¶66 In drawing a parallel between the temporary availability of vocational rehabilitation

benefits and the permanent partial disability benefits at issue in Reesor, the majority misses

the mark. As we recognized in Satterlee, the rational basis determination turns on the

purpose of the benefits. Satterlee, ¶ 23. Whatever the duration of the actual payments to the

worker, there can be no dispute that rehabilitation benefits, like the benefits upheld in

Satterlee, are intended to provide assistance throughout a worker’s full work life—in this

case, by training the worker for sustained employment in a new field when injuries have

foreclosed continued employment in a previous field. Like education, the real benefits from

rehabilitation training begin upon graduation, when the newly-trained student or worker can

put his or her new skills to use. In contrast, the permanent partial disability benefits

considered in Reesor are designed “to restore the claimant to a pre-accident wage level for a

limited amount of time.” Satterlee, ¶ 23 (citing Rausch v. State Compen. Ins. Fund, 2005

MT 140, ¶ 23, 327 Mont. 272, 114 P.3d 192).

¶67 Further, although the majority dismisses the purported governmental interests in the

limitation on rehabilitation benefits as nothing more than “cost-containment,” Opinion, ¶ 48,

the cut-off represents a policy choice, entrusted to the legislature, to allocate resources

toward those who, statistically speaking, will use them. This is no more a mere cost-

containment measure than our tax code is a mere revenue-generating measure—each

unmistakably reflects a wide variety of policy choices.

¶68 “Wage-loss legislation is designed to restore to the worker . . . wages lost due to the

three major causes of wage-loss: physical disability, economic unemployment, and old age.”
26
9 Arthur Larson & Lex K. Larson, Larson’s Workers’ Compensation Law § 157.01 (rev. ed.,

Matthew Bender 2000). As such, the constitutionality of state laws like § 39-71-710, MCA,

that offset workers’ compensation by federal social security benefits “has, for the most part,

been upheld, as against both equal protection and impairment-of-contract attacks.” Id. at §

157.03[5][b] (citing cases). See generally McDowell v. Jackson Energy RECC, 84 S.W.3d

71 (Ky. 2002). As we referenced in Satterlee, there is a logical “interplay” between the state

and federal statutory schemes under which wage-loss benefits “terminate when actual wages

would normally terminate—upon retirement.” Satterlee, ¶¶ 13, 27.

¶69 While the majority derives support from Mr. Caldwell’s impressive work history,

stating his situation “demonstrates the irrationality of categorically eliminating rehabilitation

benefits once a person becomes eligible for social security[,]” Opinion, ¶ 51, Mr. Caldwell’s

personal situation is not determinative of the facial challenge he has brought against the

statute. “The difference [between a facial challenge and an as-applied challenge] is

important. If a court holds a statute unconstitutional on its face, the state may not [apply] it

under any circumstances, unless an appropriate court narrows its application; in contrast,

when a court holds a statute unconstitutional as applied to particular facts, the state may

[apply] the statute in different circumstances.” In re Marriage of K.E.V., 267 Mont. 323,

336, 883 P.2d 1246, 1255 (1994) (Trieweiler, J., concurring and dissenting) (emphasis in

original). Thus, even if Caldwell still could be a productive member of the workforce, the

statute must be upheld against his facial challenge notwithstanding his individual

circumstances. “Facial challenges, unlike as applied challenges, do not depend on the facts
27
of a particular case.” Brady v. PPL Mont., Inc., 2008 MT 177, ¶ 13, 343 Mont. 405, 185

P.3d 330 (2008) (Gray, C.J., dissenting) (citing cases).

¶70 By requiring an individualized examination of a worker’s ability or willingness to

return to work, Opinion, ¶ 50, the Court balances the interest of the government against that

of the individual right infringed, effectively applying a middle-tier level of scrutiny to the

statute’s classification. Lewis, 219 Mont. at 434, 712 P.2d at 1314. Yet individualized

testing is not constitutionally required, even if it would result in a more precise determination

of eligibility. Murgia, 427 U.S. at 316, 96 S. Ct. at 2568.

¶71 The Court does not dispute that age may be a consideration in determining a worker’s

eligibility for rehabilitation benefits. Opinion, ¶ 51 (citing § 39-71-1006(1)(c), MCA) and ¶

54 (Cotter, J., concurring) (same). That acknowledgement answers the rational basis inquiry

and requires the statute to be upheld. There is legitimacy in targeting rehabilitation benefits

toward those who are, by constitutionally-permissible definition, not retired. That the

legislature found additional means to tailor vocational rehabilitation plans to account for age

and other factors does not mean its decision to set an age-based limit on such benefits is

irrational. Given the unquestioned legitimacy of the State’s interest in providing benefits

that bear a reasonable relationship to wage loss, the legislature reasonably may determine

that retraining is most important for those workers with a long work life ahead of them and

may channel resources toward that group of workers.

¶72 The majority and concurring opinions make a forceful public policy argument for

extending benefits to those who continue working after reaching social security eligibility,
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but that is the domain of a different branch of government. “Whether or not individual

judges may agree with [the legislature’s] assessment, it is not for the courts to reject it.”

Vance, 440 U.S. at 106, 99 S. Ct. at 947. While the statute in question may not survive a

more heightened level of scrutiny, our review here is confined to rational basis. Under that

test, the statute should be upheld.

¶73 I respectfully dissent.

/S/ BETH BAKER

Justice Jim Rice joins in the foregoing dissenting opinion of Justice Beth Baker.

/S/ JIM RICE

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