95-542
No. 95-542
IN THE SUPREME COURT OF THE STATE OF MONTANA
1997
JACK MURER, JAY HARBRIGE, KEITH MORDJA, SUSAN VERNON,
BRUCE NELSON, STEVE PRICKETT, and JAMES BROWN,
Claimants & Appellants,
v.
STATE COMPENSATION MUTUAL INSURANCE FUND,
Defendant, Respondent & Cross-Appellant,
and
BEVERLY HARDY, et.al.,
Intervenors & Respondents.
APPEAL FROM: Workers' Compensation Court, State of Montana,
The Honorable Mike McCarter, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
James H. Goetz (argued); Goetz, Madden & Dunn; Bozeman,
Montana; and Allan M. McGarvey; McGarvey, Heberling,
Sullivan & McGarvey; Kalispell, Montana
For Respondent:
Bradley J. Luck (argued) and Lucy T. France; Garlington,
Lohn & Robinson; Missoula, Montana
For Intervenors:
Ira D. Eakin (argued); Lynaugh, Fitzgerald, Eiselein & Eakin;
Billings, Montana
Submitted: February 18, 1997
Decided: June 23, 1997
Filed:
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__________________________________________
Clerk Justice Terry N. Trieweiler delivered the
opinion of the Court.
The claimants, Jack Murer, Jay Harbrige, Keith Mordja, Susan Vernon, Bruce
Nelson, Steve Prickett, and James Brown, filed a petition for benefits in the
Workers'
Compensation Court for the State of Montana. On November 20, 1995, the Workers'
Compensation Court entered its final judgment granting in part and denying in part
the
benefits and fees which were sought. Claimants appeal and the respondent, State
Compensation Mutual Insurance Fund, cross-appeals. We affirm in part and reverse in
part the judgment of the Workers' Compensation Court, and remand to that court for
further proceedings consistent with this opinion.
On appeal, claimants raise the following issues:
1. Did the Workers' Compensation Court err when it concluded that the
temporary cap on maximum benefits enacted in 1987 did not expire until June 30, 1991?
2. Did the Workers' Compensation Court err when it concluded that the
settlement agreements entered into between claimants and the State Fund foreclose
claimants' rights to further benefits?
3. Did the Workers' Compensation Court err when it denied claimants' motion
for attorney fees pursuant to the common fund doctrine?
On cross-appeal, the State Fund raises the following issues:
1. Did the Workers' Compensation Court err when it concluded that an
impairment award, paid in the form of a lump sum before June 30, 1991, at the request
of claimant Keith Mordja, must be increased pursuant to Murer II ?
2. Did the Workers' Compensation Court err when it determined that the State
Fund's failure to increase Mordja's impairment award was unreasonable and, on that
basis, assessed a penalty pursuant to 39-71-2907, MCA?
FACTUAL BACKGROUND
In 1987, the Montana Legislature enacted the following cap on temporary total
disability benefits for injured workers:
[B]eginning July 1, 1987, through June 30, 1989, weekly compensation
benefits for temporary total disability may not exceed the state's average
weekly wage of $299 established July 1, 1986.
Section 39-71-701(5), MCA (1987). See also 39-71-702(6), MCA (1987) (permanent
total disability), and 39-71-703(3), MCA (1987) (permanent partial disability).
The
1989 Legislature enacted similar caps for injuries which occurred between July 17,
1989,
and June 30, 1991. Those caps extended "through June 30, 1991." See 39-71-701
(5),
-702(6), and -703(3), MCA (1989). The State Fund deemed the caps ($299 per week for
total benefits; $149.50 per week for partial benefits) to be permanent and, on that
basis,
continued to apply them after June 30, 1991.
Claimants are seven workers who were injured between July 1, 1987, and June 30,
1991, and who are entitled to disability benefits at the maximum statutory rate.
They
filed a petition in the Workers' Compensation Court in which they contended that the
1987 and 1989 legislative caps were temporary and, therefore, cannot be applied after
1991. Furthermore, they asserted that: (1) the temporary cap enacted in 1987 expired
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June 30, 1989, and did not apply thereafter to workers injured before that date; and
(2)
the temporary cap enacted in 1989 can only be applied to injuries which occurred
between July 17, 1989, and June 30, 1991.
Claimants initiated this litigation as representatives of a class of injured
claimants
similarly situated. However, the Workers' Compensation Court concluded that
a final judgment will have the same effect as a class action without the
unnecessary complications. The Court is convinced that the regulatory
agency (D.O.L.I.) and the supervision of the courts sufficiently protects all
claimants . . . .
On that basis, the Workers' Compensation Court denied class certification and, on
appeal,
we affirmed. Murer v. State Fund (1993), 257 Mont. 434, 849 P.2d 1036 (Murer I).
On remand, the Workers' Compensation Court concluded that the 1987 and 1989
caps were permanent and that, therefore, the State Fund could continue to apply the
caps
after June 30, 1991. On appeal from that decision, we reversed the Workers'
Compensation Court, held that the caps on disability benefits were only temporary,
and
remanded the case to the lower court for further proceedings. Murer v. State Fund
(1994), 267 Mont. 516, 885 P.2d 428 (Murer II).
Pursuant to Murer II, the State Fund was obligated to increase benefit payments
to a substantial number of claimants who were neither parties to, nor directly
involved
in the Murer litigation. For that reason, claimants again moved for class
certification.
The State Fund, however, agreed to contact and pay all absent claimants, without
requiring further action on their behalf.
Under supervision of the Workers' Compensation Court, the State Fund identified
and notified absent claimants, and disbursed to them the required increase in
benefits.
Claimants and their attorneys asserted a lien for fees against those increased
payments.
In recognition of that lien, the State Fund withheld 20 percent from the amounts
paid to
absent claimants. Claimants also moved the Workers' Compensation Court to award
them attorney fees pursuant to the common fund doctrine.
On February 16, 1995, thirteen absent claimants, Beverly Hardy, et.al., filed a
motion to intervene, which the Workers' Compensation Court granted. On August 7,
1995, the court denied claimants' motion and refused to award them attorney fees
pursuant to the common fund doctrine.
Claimants continued to assert that workers' compensation claimants injured
between 1987 and 1989 should be subject only to the 1987 cap, and that the 1989 cap
applies only to claimants injured between 1989 and 1991. The Workers' Compensation
Court, however, refused to differentiate between the two classes of injured workers
and
concluded that both the 1987 and the 1989 temporary caps expired June 30, 1991.
During the pendency of this litigation, four of the Claimants--Jay Harbrige,
Susan
Vernon, Steve Prickett, and James Brown--made settlement agreements with the State
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Fund. Each of the settlement agreements was executed on Form LF820, a standardized
form which is published by the Department of Labor and Industry for purposes of lump
sum conversions pursuant to 39-71-741(2), MCA. Form LF820 contains the following
caption: PETITION FOR COMPROMISE
AND RELEASE SETTLEMENT
(Permanent Partial Wage Supplement
and/or Rehabilitation Benefits).
Notwithstanding the parenthetical language to the caption, the operative
provisions
of each agreement contain the following language:
The parties to this matter have agreed to fully and finally conclude
all compensation and/or rehabilitation payments due the claimant under the
Workers' Compensation Act . . . .
. . . .
The claimant hereby petitions the Division of Workers'
Compensation . . . for approval of this petition and that the claim be fully
and finally closed on the basis set forth above.
The Department of Labor and Industry approved each settlement petition, and its
orders provide that the State Fund is "fully released and discharged from all further
obligations for compensation benefits for this injury under the Workers' Compensation
Act." Those orders also indicate that any dissatisfied party can appeal the order
to the
Workers' Compensation Court; however, no appeals were filed.
Claimants' counsel selected and prepared these standardized settlement petitions
(Form LF820), and then forwarded them to the State Fund for execution. Claimants'
counsel, however, did not use the additional spaces provided to insert any special
provisions or to indicate the retention of any specific rights.
Claimants maintained that there are ambiguities in the settlement petitions,
and that
the contemporaneous correspondence between the parties reveal that they intended to
settle only their wage supplement and rehabilitation entitlements. The Workers'
Compensation Court, however, concluded that the settlement petitions foreclose
Claimants' rights to all further workers' compensation benefits, including their
rights to
increased temporary total and impairment rating benefits.
Claimant Keith Mordja was injured on January 17, 1988. On June 14, 1990, it
was determined that he had reached maximum healing and his physician evaluated his
physical impairment at 30 percent. On June 27, 1990, the State Fund notified him
that
his impairment rating entitled him to 150 weeks of benefits, commencing June 14,
1990.
Thus, 54.57 weeks of benefits would accrue before July 1, 1991, and 95.43 weeks would
accrue after July 1, 1991. He elected to receive his impairment award in a lump sum
and
received the balance of his award on July 10, 1990. Pursuant to 39-71-703(1)(a)
(iii),
MCA (1987), his lump sum award was reduced to present value.
Pursuant to Murer II, the Workers' Compensation Court concluded that, with
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regard to those benefits paid for the 95.43 weeks after July 1, 1991, Mordja was
entitled
to an increase in his impairment award:
The State Fund's refusal to pay the additional benefits was
unreasonable. More than 95 weeks of the benefits were attributable to the
time period after the temporary cap had expired. In paying the benefits in
a lump sum the State Fund discounted the future benefits to present value
(See 39-71-703(1)(a)(iii), MCA (1987)), thus acknowledging that the
benefits were attributable to the later time. The matter was not reasonably
debatable.
On that basis, the court assessed a 20 percent penalty in the amount of $191.32
pursuant
to 39-71-2907, MCA.
STANDARD OF REVIEW
When we review the Workers' Compensation Court's conclusions of law, our
standard of review is plenary and we must determine whether its conclusions are
correct
as a matter of law. Lund v. State Fund (1994), 263 Mont. 346, 348, 868 P.2d 611,
612.
ISSUE 1
Did the Workers' Compensation Court err when it concluded that the temporary
cap on maximum benefits enacted in 1987 did not expire until June 30, 1991?
The Workers' Compensation Court concluded that the 1987 temporary cap on
maximum benefits did not expire until June 30, 1991. The court based its conclusion
on
the following language contained within Murer II:
We hold that the "cap" on benefits, of $299.00, set by the 1987 and 1989
legislatures in 39-71-701(5), MCA, was a temporary cap on benefits
which terminated on June 30, 1991, and that on that date the appellants
should have begun receiving benefits under 39-71-701(3), MCA, at the
statutory rate determined as of the date of injury . . . .
Murer II, 267 Mont. at 522, 885 P.2d at 432. While this isolated quote, by itself,
arguably supports the Workers' Compensation Court's conclusion, a more thorough
analysis of the entire Murer II opinion, and its rationale, reveals that Murer II
does not
support the Workers' Compensation Court's conclusion.
In Murer II, we held that, pursuant to the plain, objective language of the
relevant
statutes, the 1987 and 1989 caps on maximum benefits were only temporary and,
therefore, that the State Fund could not continue to apply those caps after the
dates on
which they expired. We reasoned as follows:
Appellants argue, and we agree, that subsection (5) of 39-71-701, MCA,
for the years 1987 and 1989, was a temporary, time-specific limitation and
that when the limitation expired, the claimants should then have been paid
maximum benefit rates not to exceed the state's average weekly wage rate
at the time of the injury under 39-71-701(3), MCA.
Murer II, 267 Mont. at 522, 885 P.2d at 432. Accordingly, to the extent that any
language in Murer II supports the Workers' Compensation Court's conclusion, we
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clarify
that opinion today.
The 1987 law unequivocally provides that the temporary caps on maximum
benefits expired June 30, 1989. "[B]eginning July 1, 1987, through June 30, 1989,
weekly compensation benefits for temporary total disability may not exceed the
state's
average weekly wage of $299 established July 1, 1986." Section 39-71-701(5), MCA
(1987) (emphasis added). See also 39-71-702(6), MCA (1987) (permanent total
disability), and 39-71-703(3), MCA (1987) (permanent partial disability).
It is well established that the workers' compensation law in effect at the time
of
an injury governs the claim. Chagnon v. Travelers Ins. Co. (1993), 259 Mont. 21, 25,
855 P.2d 1002, 1004; Watson v. Seekins (1988), 234 Mont. 309, 312, 763 P.2d 328,
331. Furthermore, it is undisputed that any attempt by the Legislature to
retroactively
change the law in effect at the time of an injury would be an unconstitutional
impairment
of contract. Buckman v. State Comp. Ins. Fund (1986), 224 Mont. 318, 328, 730 P.2d
380, 386.
Based on these well-established principles of law, we make the following
conclusions: (1) the 1987 temporary cap applies to injuries which occurred between
July
1, 1987, and June 30, 1989; (2) the 1987 temporary cap expired June 30, 1989; (3) the
1989 temporary cap applies to injuries which occurred between July 17, 1989, and June
30, 1991; (4) the 1989 temporary cap expired June 30, 1991; and (5) the 1989
temporary
cap cannot be applied retroactively to injuries which occurred prior to July 17,
1989, the
date on which it became effective.
Accordingly, we hold that the Workers' Compensation Court erred when it
concluded that the temporary cap on maximum benefits enacted in 1987 did not expire
until June 30, 1991. That part of the Workers' Compensation Court's judgment to the
contrary is reversed.
ISSUE 2
Did the Workers' Compensation Court err when it concluded that the settlement
agreements entered into between claimants and the State Fund foreclose claimants'
rights
to additional benefits?
During the pendency of this litigation, four of the claimants--Jay Harbrige,
Susan
Vernon, Steve Prickett, and James Brown--reached settlement agreements with the State
Fund. The Workers' Compensation Court concluded that those agreements foreclose
claimants' rights to all further workers' compensation benefits, including increased
temporary total and impairment rating benefits.
On appeal, claimants contend that the settlement agreements foreclose only their
entitlements to wage supplement and rehabilitation benefits and, therefore, that the
Workers' Compensation Court erred when it concluded that those agreements foreclose
their rights to all further benefits. In support of this contention, they assert
the following
two arguments: (1) pursuant to Ingraham v. Champion International (1990), 243 Mont.
42, 793 P.2d 769, the settlement petitions used by the parties (DOLI Form LF820)
cannot
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be applied to impairment awards; and (2) because the settlement petitions are
ambiguous,
the court can and should analyze extrinsic evidence in order to determine the
parties'
intent.
Claimants' first argument asserts that: (1) pursuant to Ingraham, impairment
awards are not subject to the lump sum conversion requirements of 39-71-741, MCA;
(2) the settlement petitions used in this case (DOLI Form LF820) are specifically
designed to implement the provisions of 39-71-741(2), MCA; and (3) therefore, the
settlement petitions cannot be applied to impairment awards.
Although 39-71-741(2), MCA (1987-89), permits permanent total disability and
permanent partial wage supplement benefits to be converted to a lump sum, it does not
preclude claimants who are entitled to either type of those benefits from fully and
finally
settling their potential rights to other types of benefits. Furthermore, Ingraham
merely
provides that lump sum awards of impairment benefits are not subject to the
requirements
set forth in 39-71-741(2), MCA (1987-89). Ingraham, 243 Mont. at 47, 793 P.2d at
772. We therefore conclude that claimants' reliance upon Ingraham is misplaced.
Second, claimants contend that the settlement petitions are ambiguous and,
therefore, that the court can and should analyze extrinsic evidence---the
contemporaneous
correspondence between the parties--in order to determine the parties' intent. In
their
brief, they concede that there is language in the body of the petitions which "could
be
construed as closing all claims for all types of benefits." The exact language of
the
settlement petitions to which they refer provides, in part, that the parties "agreed
to fully
and finally conclude all compensation and/or rehabilitation payments due the
claimant"
and that the claimant "petitions the Division of Workers' Compensation . . . for
approval
of this petition and that the claim be fully and finally closed."
Despite that operative language in the petitions, claimants allege that, based
on the
following factors, the settlement petitions are ambiguous: (1) the petitions are
standardized forms, produced by the DOLI; (2) the petitions are designed to
implement,
and correspond directly to 39-71-741(2), MCA; and (3) the petition is captioned:
"(Permanent Partial Wage Supplement and/or Rehabilitation Benefits)."
Although the settlement petitions are, in fact, standardized forms produced by
the
DOLI pursuant to 39-71-741(2), MCA, claimants' counsel selected and prepared the
petitions, and then forwarded them to the State Fund for execution. Claimants'
counsel,
however, did not attempt to modify the unambiguous language in the petitions; nor did
they use the additional spaces provided to insert any special provisions or to
indicate the
retention of any specific rights. Had they intended to enter into only a partial
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settlement,
they could easily have inserted an express provision which retained their rights to
further
benefits.
Therefore, even if we assume, without deciding, that the settlement petitions
in this
case are, in fact, ambiguous, we conclude that any such ambiguities must be strictly
construed against the party who created them. Mueske v. Piper, Jaffray & Hopwood,
Inc. (1993), 260 Mont. 207, 216, 859 P.2d 444, 449-50; Lauterjung v. Johnson (1977),
175 Mont. 74, 78, 572 P.2d 511, 513. Accordingly, we hold that the Workers'
Compensation Court did not err when it concluded that the settlement agreements
entered
into between claimants and the State Fund foreclose claimants' rights to all further
benefits, including increased temporary total and impairment rating benefits. That
part
of the judgment of the Workers' Compensation Court is affirmed.
ISSUE 3
Did the Workers' Compensation Court err when it denied claimants' motion for
attorney fees pursuant to the common fund doctrine?
As a result of our decision in Murer II, the State Fund became obligated to
increase the rate of benefits payments to a substantial number of workers'
compensation
claimants who were neither parties to, nor directly involved in the Murer
litigation.
Accordingly, the State Fund agreed to contact and pay those absent claimants. Under
supervision of the Workers' Compensation Court, the State Fund identified and
notified
the absent claimants, and disbursed to them the required increase in benefits.
Claimants and their attorneys asserted a lien against those increased
payments. In
recognition of that lien, the State Fund withheld 20 percent from the amounts paid to
absent claimants. Claimants also moved the Workers' Compensation Court to award
them attorney fees pursuant to the common fund doctrine. The Workers' Compensation
Court, however, denied that motion.
On appeal, claimants contend that the Workers' Compensation Court erred when
it denied their motion. Claimants concede that they do not have attorney fee
agreements
with the absent claimants and that they are not statutorily entitled to the
requested fees.
However, they maintain that, as a result of their attorneys' efforts throughout the
Murer
litigation, they have created a common fund which has directly benefitted a
substantial
number of the absent claimants and, therefore, that those absent claimants should be
required to share in the costs, including reasonable attorney fees, of this unique
litigation.
On that basis, claimants assert that they are entitled, pursuant to the equitable
common
fund doctrine, to reimbursement of their reasonable attorney fees.
The common fund doctrine is deeply rooted in American jurisprudence and
provides a well-recognized exception to the traditional American rule regarding
attorney
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fees. The United States Supreme Court created the common fund doctrine in Trustees
v. Greenough (1881), 105 U.S. 527, 15 Otto 527, 26 L. Ed. 1157, and has subsequently
applied that doctrine in numerous other cases. See e.g. Boeing Co. v. VanGemert
(1980), 444 U.S. 472, 100 S. Ct. 745, 62 L. Ed. 2d 676; Alyeska Pipeline Serv. Co. v.
Wilderness Society (1975), 421 U.S. 240, 95 S. Ct. 1612, 44 L. Ed. 2d 141;
Fleischmann
Distilling Corp. v. Maier Brewing Co. (1967), 386 U.S. 714, 87 S. Ct. 1404, 18 L. Ed.
2d 475; Hobbs v. McLean (1886), 117 U.S. 567, 6 S. Ct. 870, 29 L. Ed. 940; Central
Railroad & Banking Co. v. Pettus (1885), 113 U.S. 116, 5 S. Ct. 387, 28 L. Ed. 915.
These common fund doctrine cases provide that when a party has an interest in a fund
in common with others and incurs legal fees in order to establish, preserve,
increase, or
collect that fund, then that party is entitled to reimbursement of his or her
reasonable
attorney fees from the proceeds of the fund itself.
In Means v. Montana Power Co. (1981), 191 Mont. 395, 625 P.2d 32, we
recognized that the common fund doctrine is "rooted in the equitable concepts of
quasi-
contract, restitution and recapture of unjust enrichment. " Means, 191 Mont. at 403,
625
P.2d at 37. Furthermore, we expressly adopted the common fund doctrine and concluded
that:
The "common fund" concept provides that when a party through
active litigation creates, reserves or increases a fund, others sharing in the
fund must bear a portion of the litigation costs including reasonable attorney
fees. The doctrine is employed to spread the cost of litigation among all
beneficiaries so that the active beneficiary is not forced to bear the burden
alone and the "stranger" (i.e., passive) beneficiaries do not receive their
benefits at no cost to themselves.
Means, 191 Mont. at 403, 625 P.2d at 37.
Application of the common fund doctrine is especially appropriate in a case like
this where the individual damage from an institutional wrong may not be sufficient
from
an economic viewpoint to justify the legal expense necessary to challenge that
wrong.
The alternative to the doctrine's application is simply for the wrong to go
uncorrected.
Based on these legal principles and authorities, we conclude that when a party,
through active litigation, creates a common fund which directly benefits an
ascertainable
class of non-participating beneficiaries, those non-participating beneficiaries can
be
required to bear a portion of the litigation costs, including reasonable attorney
fees.
Accordingly, the party who creates the common fund is entitled, pursuant to the
common
fund doctrine, to reimbursement of his or her reasonable attorney fees from that
fund.
Claimants have engaged in complex, lengthy, and expensive litigation. As a
result, they were able to establish, in Murer II, a legal precedent which directly
benefits
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a substantial number of workers' compensation claimants who were neither parties to,
nor
directly involved in the Murer litigation. However, claimants have also accomplished
significantly more than just the establishment of a favorable legal precedent.
Additionally, claimants established a vested right on behalf of the absent claimants
to
directly receive immediate monetary payments of past due benefits underpayments; and
based on the establishment of those vested rights, the State Fund became legally
obligated
to make the increased benefits payments.
In order to implement the mandate of Murer II, the State Fund, under supervision
of the Workers' Compensation Court: (1) identified a substantial number of absent
claimants; (2) notified those claimants of their rights pursuant to Murer II; (3)
calculated,
with mathematical certainty, the increases to which each individual absent claimant
is
entitled; and (4) made actual payments to those claimants. The State Fund,
therefore, has
been able to determine, with certainty, the number of absent claimants involved and
the
amount of money to which each individual claimant is entitled. Accordingly, as a
direct
result of claimants' litigation efforts, a substantial number of absent claimants
have
received direct monetary benefits payments, even though they were not required to
intervene, file suit, risk expense, or hire an attorney.
Moreover, claimants filed a lien on the increased benefits payments made by the
State Fund to absent claimants. In recognition of that lien, the State Fund
withheld 20
percent from the payments which have actually been disbursed to the individual absent
claimants. In essence, therefore, claimants request that they be awarded a
reasonable
percentage of the amounts which have actually been paid to an identifiable class of
absent
claimants.
Based on the facts in this case, we conclude that claimants, through active
litigation, created a common fund which has directly benefitted an ascertainable
class of
absent workers' compensation claimants and, therefore, that those absent claimants
should
be required to contribute, in proportion to the benefits they actually received, to
the costs
of the litigation, including reasonable attorney fees. Accordingly, we hold that the
Workers' Compensation Court erred when it denied claimants' motion and refused to
award them reasonable attorney fees pursuant to the common fund doctrine. The
judgment of the Workers' Compensation Court to the contrary is reversed.
CROSS-APPEAL ISSUE 1
Did the Workers' Compensation Court err when it concluded that an impairment
award, paid in the form of a lump sum before June 30, 1991, at the request of
Claimant
Keith Mordja, must be increased pursuant to Murer II ?
Claimant Keith Mordja was injured on January 17, 1988. On June 14, 1990, he
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was found to have achieved maximum healing and his physician evaluated his physical
impairment at 30 percent. That rating entitled him, pursuant to 39-71-703, MCA
(1987), to an impairment award of 150 weeks at the maximum statutory rate. He
elected
to receive his impairment award in a lump sum and received the balance on July 10,
1990. Pursuant to 39-71-703(1)(a)(iii), MCA (1987), his lump sum award was reduced
to present value. The calculation by which the State Fund reduced his award to
present
value utilized a period of 150 weeks, commencing June 14, 1990. Thus, 54.57 of the
weeks occurred before July 1, 1991, and 95.43 of the weeks occurred after July 1,
1991.
Pursuant to our holding in Murer II that the 1987 and 1989 caps on maximum
disability benefits were only temporary, Mordja sought an adjustment of his lump sum
impairment award to reflect the increased rate. The State Fund, however, determined
that the 1987 temporary cap did not expire until 1991 and, on that basis, refused to
pay
the increase for those weeks prior to July 1, 1991. The State Fund also refused to
pay the
increase for those weeks after July 1, 1991, based on the fact that Mordja received
his
lump sum award on July 10, 1990, which was prior to the 1991 expiration of the
temporary caps.
Based on its determination that the 1987 temporary cap on benefits did not
expire
until 1991, the Workers' Compensation Court concluded that Mordja is not entitled to
an
increased impairment award for the 54.57 weeks prior to July 1, 1991. The court,
however, found that "[e]ven though all benefits were paid in a lump sum, 95.43 weeks
of those benefits were attributable to July 1, 1991 and thereafter." On that basis,
the
court concluded that Mordja is entitled to an increased impairment award for the
95.43
weeks after July 1, 1991.
On appeal, the State Fund contends that the Workers' Compensation Court erred
when it determined that Mordja is entitled to an increased award for the 95.43 weeks
after July 1, 1991. However, we conclude that the State Fund's contention is now
moot.
In Issue 1 of this opinion, we concluded that the 1987 temporary cap on benefits
expired,
by its express terms, on June 30, 1989, and that the 1989 temporary cap applies only
to
injuries which occurred between July 17, 1989, and June 30, 1991.
Mordja's injury occurred on January 17, 1988, and therefore, the 1987 temporary
cap governs his claim. See Chagnon, 259 Mont. at 25, 855 P.2d at 1004. The actual
payment of his lump sum award, however, did not occur until July 10, 1990, more than
one year after the 1987 cap expired. Moreover, the 1989 cap cannot be applied
retroactively to an injury which occurred before July 17, 1989, the date on which it
became effective. See Buckman, 224 Mont. at 328, 730 P.2d at 386.
Therefore, we conclude that the temporary cap on Mordja's disability benefits
expired June 30, 1989, and that, concomitantly, his entire 150-week benefit package,
which was paid after the applicable 1987 temporary cap expired, must be calculated at
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the maximum statutory rate and is not subject to the temporary cap on benefits. On
that
basis, we hold that the Workers' Compensation Court: (1) did not err when it
concluded
that Mordja is entitled to an increase in his impairment award for the 95.43 weeks
after
July 1, 1991; and (2) erred when it concluded that Mordja is not entitled to an
increase
for the 54.57 weeks prior to July 1, 1991. Accordingly, that part of the judgment
of the
Workers' Compensation Court is affirmed in part and reversed in part.
CROSS-APPEAL ISSUE 2
Did the Workers' Compensation Court err when it determined that the State Fund's
refusal to increase Mordja's impairment award was unreasonable and, on that basis,
assessed a penalty pursuant to 39-71-2907, MCA?
Whether an action is "unreasonable" pursuant to 39-71-2907, MCA, is a
"question of fact which is subject on appeal to the limited review of the substantial
evidence test. If there is substantial evidence to support a finding of
'unreasonableness',
this Court cannot overturn the finding." Wight v. Hughes Livestock Co., Inc.
(1981), 194
Mont. 109, 115, 634 P.2d 1189, 1192; see also Marcott v. Louisiana Pacific Corp.
(1996), 275 Mont. 197, 203, 911 P.2d 1129, 1133 ("reasonableness").
The Workers' Compensation Court determined that:
The State Fund's refusal to pay the additional benefits was
unreasonable. More than 95 weeks of the benefits were attributable to the
time period after the temporary cap had expired. In paying the benefits in
a lump sum the State Fund discounted the future benefits to present value
(See 39-71-703(1)(a)(iii), MCA (1987)), thus acknowledging that the
benefits were attributable to the later time. The matter was not reasonably
debatable.
On that basis, the court assessed a 20 percent penalty in the amount of $191.32
pursuant
to 39-71-2907, MCA.
We conclude that the Workers' Compensation Court's findings are supported by
substantial evidence. Accordingly, we hold that the court did not err when it
concluded
that the State Fund's failure to increase Mordja's impairment award was unreasonable
and, on that basis, assessed a 20 percent penalty pursuant to 39-71-2907, MCA.
That
part of the judgment of the Workers' Compensation Court is affirmed.
For these reasons, and based on these conclusions, this case is remanded to the
Workers' Compensation Court for further proceedings consistent with this opinion.
/S/ TERRY N. TRIEWEILER
We Concur:
/S/ WILLIAM E. HUNT, SR.
/S/ JIM REGNIER
/S/ W. WILLIAM LEAPHART
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/S/ JAMES C. NELSON
Justice Karla M. Gray, concurring in part and dissenting in part.
I concur in the Court's opinion on all issues except that involving the award of
attorney fees pursuant to the common fund doctrine. I respectfully dissent from the
opinion on that issue.
There is no question but that we have recognized and applied the common fund
doctrine, which is based on equitable concepts. Means, 625 P.2d at 37. I agree
with the
doctrine and support its application under appropriate circumstances. I cannot
agree with
its application in this case for two reasons: first, it is my view that neither the
Workers'
Compensation Court or this Court is authorized to award such fees in the context of
the
purely statutory workers' compensation system which exists in Montana; and, second,
the
common fund doctrine is not applicable here in any event.
The Workers' Compensation Act (Act) is a purely statutory scheme, duly enacted
by the Legislature, which governs all aspects of workers' compensation claims and
awards. The extent of compensation which may be awarded for various types of
disabilities is controlled by statute. See, e.g., 39-71-701 through 39-71-703,
MCA.
In a similar fashion, the Act expressly regulates attorney fees and goes so far as to
require an attorney representing a workers' compensation claimant to submit his or
her
employment contract, setting forth the terms of the fee arrangement, to the
Department
of Labor and Industry (Department). See, e.g., 39-71-611 through 39-71-614, MCA.
In light of these circumstances, the Workers' Compensation Court correctly concluded
that it was without authority to create a separate equitable remedy under the Act
regarding attorney fees.
Indeed, one of the United States Supreme Court's decisions on which this Court
relies in concluding that the common fund doctrine is applicable here reaches a
contrary
result under circumstances much like those presently before us. Fleischmann involved
a claim for trademark violation under the federal Lanham Act and the Supreme Court
considered the issue of whether federal courts could award attorney fees as a
separate
element of recovery in light of the Act's enumeration of available remedies. The
Supreme Court discussed the common fund doctrine as an exception to the "American
rule" which allows an award of attorney fees only where expressly permitted by
statute
or contract, but observed that the doctrine had not been developed in the context of
statutory causes of action which prescribe statutory remedies. The Supreme Court
stated
that, "[w]hen a cause of action has been created by a statute which expressly
provides the
remedies for vindication of the cause, other remedies should not readily be
implied."
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Fleischmann, 386 U.S. at 720 (citations omitted). Consequently, the Supreme Court
was
compelled to conclude "that Congress intended 35 of the Lanham Act to mark the
boundaries of the power to award monetary relief in cases arising under the Act. A
judicially created compensatory remedy in addition to the express statutory remedies
is
inappropriate in this context." Fleischmann, 386 U.S. at 721.
In my opinion, we must reach the same result here. The Workers' Compensation
Act is a statutory system providing for a statutory cause of action and statutorily-
prescribed remedies, including attorney fees. No portion of the Act authorizes the
attorney fees sought here pursuant to the common fund doctrine and we are not free to
judicially engraft equitable remedies such as this onto the Act. We have stated on
prior
occasions, in rejecting "equity and fairness" arguments by both claimants and
insurers in
the context of the Act, that it is the province of the courts to construe and apply
the law
as we find it and to maintain its integrity as it was written by a coordinate branch
of state
government. See Wildin v. CNA Ins. Co. (1993), 256 Mont. 354, 358, 846 P.2d 1022,
1025; Raffety v. Kanta Products, Inc. (1991), 250 Mont. 268, 272, 819 P.2d 1272,
1275.
Doing so here requires us to affirm the Workers' Compensation Court's conclusion that
the common fund doctrine for awarding attorney fees is not available in the context
of the
Act.
It is also my view that, even if the equitable remedy were not precluded by the
Act, it is unavailable here. As set forth by the Court, the common fund doctrine
recognized by the United States Supreme Court provides that "when a party has an
interest in a fund in common with others and incurs legal fees in order to
establish . . .
that fund, then that party is entitled to reimbursement of his or her reasonable
attorney
fees from the proceeds of the fund itself." Similarly, as recognized by this Court
in
Means, the doctrine is employed to spread the cost of litigation among all
beneficiaries
so that "the active beneficiary is not forced the bear the burden alone. . . ."
Means, 625
P.2d at 37. I submit that these requirements are not met in this case.
In the first place, it is my view that there is no common fund here. While
Murer
II undoubtedly created an entitlement in numerous individual nonparty claimants to
additional benefits, no "fund" was set aside for the payment of such benefits,
either in
the course of this litigation or otherwise. The common fund cases, while not
defining
precisely what is required to constitute a "common fund," each involve a settlement
fund,
a judgment fund, or a trust fund of some sort. This case does not.
Moreover, the common fund cases commonly involve other beneficiaries who also
are parties in the litigation at issue or, at the least, in related litigation.
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Here, efforts to
certify this litigation as a class action were unsuccessful and the individuals who
are
receiving additional benefits as a result of Murer II have never been parties to
this case.
Yet the Court cites to no case under which nonparty beneficiaries have been
required to
pay a portion of attorney fees under the common fund doctrine.
Finally, while the common fund doctrine is properly applied in certain
circumstances to avoid forcing the active party to bear the burden of the attorney
fees
incurred, those circumstances are not present in this case. The party claimants
here are
not required by their fee arrangements with counsel to bear the burden of fees in
excess
of those relating to their own claims; the fee contracts generally provide that the
client
claimants are responsible only for the standard 20%/25%. Thus, the fees for which
"reimbursement" is being sought here are not fees incurred by these claimants such as
would support application of the common fund doctrine under the federal cases cited
by
the Court. They are additional and extraordinary fees sought by the attorneys who
represented the named claimants in this case. Similarly, the party claimants are not
being
forced to bear the burden of attorney fees for the nonparty beneficiaries. That
burden
ultimately will fall on counsel and, in my view, that is as it should be.
Counsel here submitted their fee agreements with the party claimants to the
Department as required by 39-71-613, MCA. These are the fees they sought in their
pleadings, pursuant to applicable statutes, through the first two appeals to this
Court in
this litigation. In the framework of the Act, those are the only fees to which
counsel are
entitled. Subsequent to Murer II, and on remand to the Workers' Compensation
Court, counsel first asserted a claim to fees under the common fund doctrine. At
that
point, it became clear that counsel had had an early understanding with their
claimant
clients to seek fees in addition to those obtainable pursuant to the submitted fee
agreements. They had planned to be able to do so through the class action mechanism;
as noted above, however, efforts to obtain class certification were not successful.
An
affidavit of record from one counsel repeatedly states that "but for" the
"expectation" that
the fees would be compensated under the common fund doctrine, counsel would not have
been able to afford to pursue the litigation to its successful conclusion, since the
amounts
to which the party claimants ultimately would be entitled would be small.
While I sympathize with counsel's substantial investment of time in this
litigation,
and applaud their success on behalf of their clients and the benefits their work is
providing to numerous nonparties, I am unpersuaded that we should "bend" the common
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fund doctrine to award them fees under a doctrine intended to protect the parties to
a suit
where, as here, the parties require no protection. Many legal actions involve risk
to
counsel of fee awards which are not commensurate with the amount of work performed.
Indeed, it is fair to say that many counsel "give it their all" to the same extent
these
counsel have done and are altogether unsuccessful, both as to their clients'
recovery and
their own. We do not have a system, however, under which counsel are then
remunerated based on their "expectations." We should not create one here.
I would affirm the Workers' Compensation Court's denial of attorney fees under
the common fund doctrine.
/S/ KARLA M. GRAY
Chief Justice J. A. Turnage:
I concur in the dissent of Justice Gray.
/S/ J. A. TURNAGE
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