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Murer v. Montana State Compensation Insurance Fund

Court of Workers Compensation of Montana

November 20, 1995

JACK MURER, et al. Petitioner
v.
MONTANA STATE COMPENSATION INSURANCE FUND, et al. Defendants BEVERLY HARDY, et al Intervenors.

         Murer v. State Compensation Ins. Fund, 283 Mont. 210, 942 P.2d 69 (1997) (No. 95-542)

          FINAL DECISION AND JUDGMENT

          MIKE MCCARTER JUDGE.

         Summary: Claimants receiving benefits challenged insurer's interpretation of 1987 and 1989 statutes placing cap on benefits. Claimants who settled their claims during pendency of litigation argued that settlement did not bar receipt of additional benefits. Claimants' attorneys sought common fund fees. Additional issues raised regarding impairment award and penalty.

         Held: Workers' Court interpreted statutes as noted in following opinion, superceded by reversal of this issue in Murer v. State Compensation Ins. Fund, 283 Mont. 210, 942 P.2d 69 (1997) (No. 95-542). Court's denial of common fund fees also reversed in that decision. WCC held settlement agreements barred additional benefits, affirmed on appeal. Additional issues decided.

         This case was filed on June 25, 1992. Since that time it has twice been to the Montana Supreme Court. Murer v. Montana State Compensation Mut. Ins. Fund, 257 Mont. 434, 849 P.2d 1036 (1993) (Murer I) and Murer v. State Compensation Mut. Ins. Fund, 267 Mont. 516, 885 P.2d 428 (1994) (Murer II). In the first appeal the Supreme Court affirmed this Court's denial of petitioners' request that their case be certified as a class action. In the second appeal the Court held that the cap on benefits which was imposed by the 1987 and 1989 legislatures was temporary and does not apply to benefits payable after June 30, 1991.

         Since the second remittitur petitioners have renewed their request for class certification. The request was denied. (Order Denying Renewed Motion for Class Certification, April 5, 1995.) Petitioners' attorneys also moved for an award of attorney fees against all benefits paid to claimants, including claimants they do not represent, on account of the precedent set in Murer II. The motion was denied. (Order Denying Attorney Fees under Common Fund Doctrine, August 7, 1995.) Now, and finally, pursuant to the Supreme Court's directive in Murer II, the Court must determine petitioners' entitlement to additional benefits, attorney fees and costs against the insurer, and a penalty.

         BACKGROUND

         Prior to 1987, the maximum amount of compensation benefits payable to injured workers was tied to the average weekly wage of Montana workers. Temporary total and permanent total disability benefits were pegged at two-thirds of the injured worker's actual wages, but could not exceed the average weekly wage. § 39-71-701 and -702, MCA (1985). Permanent partial disability benefits were similarly pegged at two-thirds of the worker's actual wages, but could not exceed one-half the State's average weekly wage. § 39-71-703, MCA (1985). As of July 1, 1986, Montana's average weekly wage was $299.00. Thus, on that date the maximum rate for temporary and permanent total disability benefits was $299.00. For permanent partial disability it was $149.50 (one-half of $299.00).

         In 1987 the legislature imposed an additional cap on benefits. For temporary and permanent total disability benefits the legislature provided that beginning July 1, 1987, through June 30, 1989, the weekly compensation benefits for temporary or permanent total disability may not exceed the State's average weekly wage of $299.00 established July 1, 1986. § 39-71-701(5) and -702(6), MCA (1987) (enacted by 1987 Montana Laws, ch. 464, §§ 21 and 22). It similarly capped permanent partial disability for the period July 1, 1987 through June 30, 1989, at "$149.50, which is one-half the State's average weekly wage established July 1, 1986." § 39-71-703(3), MCA (1987) (enacted by 1987 Montana Laws, ch. 464, § 23). The 1989 legislature extended the cap to June 30, 1991 by changing the June 30, 1989 expiration date specified in the sections to June 30, 1991. (1989 Montana Laws, Spec. Sess.1 ch. 9, §§ 4-6). Both legislatures left intact the provisions setting forth the traditional caps. §§ 39-71-701(3), 702(3), and 703(1), MCA (1987-89). Thus, the special caps enacted by the 1987 and 1989 legislatures superseded the traditional caps in the event the average weekly wage increased after 1986.

         The average weekly wage indeed grew after 1986. For the fiscal years (July 1 to June 30) 1987 through 1991, the applicable average weekly wage was:

1987

$302.00

1988

$308.00

1989

$318.00

1990

$323.00

         The following chart shows the difference between the $299.00 cap and the traditional caps:

Year 87/89

Cap Traditional

Cap Difference

1987$299.00

$302.00

$ 3.00

1988$299.00

$308.00

$ 9.00

1989$299.00

$318.00

$19.00

1990$299.00

$323.00

$24.00

         The differences for permanent partial disability are as follows:

Year 87/88

Cap Traditional

Cap Difference

1987$149.50

$151.00

$ 1.50

1988$149.50

$154.00

$ 4.50

1989$149.50

$159.00

$ 9.50

1990$149.50

$161.50

$12.00

         Relying on precedents which hold that the law in effect at the time of the injury governs the benefits payable to the worker, insurers interpreted the 1987-89 cap as applying to all benefits payable for injuries occurring between July 1, 1987 and June 30, 1991. Thus, they believed, claimants injured between those dates were forever locked into the $299.00 and $149.50 maximums. The petitioners, who were injured between July 1, 1987 and June 30, 1991, and earned more than the State's average weekly wage, interpreted the 1987-89 cap as applying only to benefits payable between July 1, 1987 and June 30, 1991, and not to any benefits payable thereafter. As they interpreted the freeze, the 1987-89 cap expired on July 1, 1991, thus their benefits thereafter would be subject only to the traditional cap.

         In Murer II the Supreme Court adopted the petitioners' interpretation. The Court agreed that the law in effect at the time of injury fixes benefits, but it held that the 1987-89 cap was by its express terms a temporary cap applicable only to benefits actually paid between July 1, 1987 and June 30, 1991. It held that benefits paid after July 1, 1991, were subject only to the traditional cap. The Court remanded for a determination of additional benefits due the petitioners.

         DISMISSAL OF PARTIES

         The original petition was commenced on behalf of nine named petitioners and against two insurers. After remand, petitioners Larry Mack and William Logan, as well as respondent ASARCO, Incorporated, were dismissed pursuant to a stipulation of parties. (Order Dismissing Asarco and Setting Schedule, January 19, 1995.) The State Fund remains as the sole respondent.

         RECORD

         The remaining issues have been submitted upon stipulated facts and documents. The parties filed an initial stipulation on March 1, 1995, with attached documents designated A through G. Stipulated Facts and Issues, Contentions and Contested Issues (hereinafter "First Stipulation"). On July 13, 1995, they filed a Stipulation for Submission of Decision (hereinafter "Second Stipulation") which contains further stipulations of fact and issues. The Second Stipulation also sets forth a list of additional agreed exhibits. Some of the agreed exhibits were attached to Claimants' Proposed Findings and Conclusions as Exhibits P1 to P8 and SF16. The remaining exhibits were submitted separately and designated as Defendant's Exhibits, Exhibits SF1 through SF20. There is no overlap in the exhibit numbers. Therefore, the original numbers will be used when citing to the exhibits.

         ISSUES PRESENTED

         The petitioners and the State Fund have agreed on some of the issues which remain to be decided on remand, they disagree as to others. Despite their quibbling, I have had no difficulty in discerning what issues remain for determination. The Supreme Court remanded the case "for a calculation of benefits consistent with this opinion." 267 Mont. at 522, 885 P.2d at 432. My job is simply to determine what, if any, additional benefits are due each of the petitioners as the result of the Court's decision in Murer II. Insofar as their entitlement to additional benefits is affected by other unresolved issues, I must resolve those additional issues as well.

         After reviewing the parties' stipulations, I have identified two sub-issues. They are (1) whether settlement agreements reached between some of the petitioners and the State Fund during the pendency of this action bar the settling petitioners from seeking additional benefits and (2) whether the temporary cap for petitioners injured between July 1, 1987 and June 30, 1989, expired on July 1, 1989.

         DISCUSSION

         1. The effect of the settlements.

         During the pendency of this action, four of the seven remaining petitioners -- Brown, Prickett, Harbrige and Vernon -- entered into settlement agreements with the State Fund. All of the agreements were negotiated by petitioners' counsel. For the State Fund, either a claims adjuster or in-house counsel was involved in the negotiations. Litigation counsel for the State Fund were not involved.

         The settlement agreements executed by each of the four settling petitioners are virtually identical. Each agreement was executed on a form provided by the Department of Labor and Industry. The caption reads:

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 of the agreements contains 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, wherein the insurer shall pay to the claimant the sum of . . . .
. . . .
The claimant hereby petitions the Division of Workers' Compensation, with the concurrence of the above named insurer, for approval of this petition and that the claim be fully and finally closed on the basis set forth above.

(Exs. B at 6, E at 5, F at 4 and G at 5; emphasis and underlining added.) In each case, the Department of Labor and Industry's order approving the settlement contained the following language:

IT IS FURTHER ORDERED the claimant shall accept the above amount as a compromise and release settlement and that, the insurer is fully released and discharged from all further obligations for compensation benefits for this injury under the Workers' Compensation Act.

(Exs. B at 7, E at 6, F at 5 and G at 6; emphasis and underlining added.)

         All of the settlement agreements were executed and approved after this case was filed. Brown's settlement was negotiated in August, 1992, and approved on October 5, 1992. (Ex. B at 5-7.) Prickett's settlement was executed on June 29, 1992 and approved on July 20, 1992. (Ex. E at 5-6.) Harbrige's settlement was executed on June 29, 1992 and approved on July 21, 1992. (Ex. F at 4-5.) Vernon's settlement was executed on December 7, 1993 and approved on January 3, 1994. (Ex. G at 5-6.)

         Notwithstanding the agreements, the four settling petitioners claim additional impairment benefits. Harbrige, in addition, seeks additional temporary total disability benefits. The State Fund contends that none of the four is entitled to additional benefits because the agreements conclude its liability and bar the petitioners from claiming any further benefits.

         The petitioners argue that the settlement agreements conclude only their entitlement to wage loss and rehabilitation benefits, and nothing else. Thus, they argue, the agreements do not bar them from seeking additional impairment and temporary total disability benefits.

         Petitioners concede that "some language in the body of the petition standing alone could be construed as closing all claims for all types of benefits . . . ." (Claimants' Proposed Findings and Conclusions at 17; underlining in original.) However, they argue that the parenthetical statement below the title of the agreements, along with section 39-71-741, MCA (1987-89), limit the scope of the settlements to wage loss and rehabilitation benefits only.

         Workers' compensation settlements are contracts and as such are governed by the legal principles applicable to contracts. Kienas v. Peterson, 191 Mont. 325, 328, 624 P.2d 1, 3 (1980). Thus, resolution of the opposing positions requires an application of contract law.

         As a general rule, contractual provisions which arguably conflict with one another should be reconciled to the extent possible in a manner which will give effect to the general intentions of the parties. "Repugnant provisions should be interpreted in a way to give them some effect, subordinate to the general intent and purpose of the entire contract." St. Paul Fire and Marine Ins. Co. v. Cumiskey, 204 Mont. 350, 363, 665 P.2d 223, 229 (1983). However, none of the Montana cases which have stated this principle have involved a conflict between the title or headings of a contract and the operative provisions of the contract. In each case the controversy was over alleged conflicts between operative provisions in the contract. St. Paul Fire, 204 Mont. at 360-61, 665 P.2d at 228-29, (ambiguity created by fixtures and alterations clauses in a lease agreement); Riis v. Day 188 Mont. 253, 257, 613 P.2d 696, 698 (1980) (Court resolved apparently conflicting language in operative provisions giving lessees an option to renew); Rumph v. Dale Edwards, Inc., 183 Mont. 359, 369, 600 P.2d 163, 169 (1979) (provisions for the extension of a lease and option to purchase were construed by looking at entire agreement and without specific resort to the rule regarding repugnant provisions); Montana-Dakota Utilities v. Lower Yellowstone Rural Electric, 178 Mont. 427, 435, 585 P.2d 626, 630 (1978) (potentially ambiguous language in operative provisions of utility contract were construed in manner consistent with general intent of agreement); Brown v. Griffin, 150 Mont. 498, 507, 436 P.2d 695, 699 (1968) (operative provision regarding the furnishing of title insurance was construed in context of a purchase and sale agreement).

         We have not identified any Montana case which has addressed a conflict between an operative provision of a contract and non-operative language contained in the contract title, contract headings, or contract recitals. However, we have come upon other, albeit rather old, precedents which address conflicts between contractual titles and operative provisions.

         In Sturm v. Boker, 150 U.S. 312 (1893), the United State Supreme Court had to determine whether a particular transaction was a bailment or a sale of goods. The agreement of the parties was set out in an exchange of written documents. Since the Court ultimately determined that the contract was a bailment rather than sale, the parties will be referred to as "bailor" and "bailee" rather than seller and purchaser.

         On September 18, 1867, the bailor wrote a letter to the bailee setting out its terms for the sale of certain weapons in Mexico. An invoice listing the weapons for sale and the dollar amounts upon which the sale was to be concluded accompanied the letter. The terms provided for the bailee to attempt to sell the weapons in Mexico and that any profit exceeding the amounts specified in the invoice be split between bailee and bailor. If unable to sell the weapons, the bailee was to return them to the bailor. On September 26, 1867, the bailee sent a reply letter accepting "the terms of said conditions of consignment." 150 U.S. at 316. In classical contract terms, the September 18, ...


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