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Zempel v. Uninsured Employers' Fund

Court of Workers Compensation of Montana

February 21, 1996

DARWIN ZEMPEL Petitioner
v.
UNINSURED EMPLOYERS' FUND Respondent/Insurer.

          DECLARATORY JUDGMENT

          MIKE McCARTER JUDGE

         Summary: Petitioner, who was injured while employed by a business wholly owned by an enrolled member of the Confederated Salish and Kootenai Tribes and operated exclusively within reservation boundaries, sought declaratory judgment from the WCC that the Uninsured Employer's Fund's refusal to pay him benefits violated equal protection provisions or Montana's constitutional right to access to the Courts.

         Held: The UEF was established by statute to pay benefits to employees of uninsured employers, which are defined as employers who have not "properly complied" with Montana Workers' Compensation laws. WCC agrees with Tribal Court holding that the WCA is not applicable to the Flathead Reservation, meaning petitioner's employer was not in violation of the WCA and petitioner is not entitled to benefits from the UEF. Where there is a rational relationship between this exclusion and a legitimate governmental purpose -- to respect tribal self-governance and to encourage tribal self-sufficiency and economic development -- the denial of benefits to petitioner is not unconstitutional.

         Topics:

Constitutions, Statutes, Regulations and Rules: Montana State Constitution: Article II, section 16. UEF's refusal to pay benefits to employee of business wholly owned by enrolled member of the Confederated Salish and Kootenai Tribes and operated exclusively within reservation boundaries did not violate legal redress clause of Montana Constitution where WCA did not apply to employer and rational relationship existed between that exclusion and legitimate governmental purpose of encouraging tribal self-sufficiency and economic development.
American Natives: Comity. While the judgment of a tribal court is not entitled to full faith and credit, principles of comity require that the judgment be honored in the same manner as that of a foreign nation. Day v. Montana Dept. Of Social and Rehabilitation Services, 272 Mont. 170, 900 P.2d 296 (1995); Wippert v. Blackfeet Tribe of Blackfeet Indian Reservation, 201 Mont. 299, 654 P.2d 512 (1982). But while comity may mean that the Montana courts will recognize the judgment as valid and enforceable as between the litigants in the matter, the doctrine does not require Montana courts to accept a tribal court's conclusions of law as binding. See, Larrivee v. Morigeau, 184 Mont. 187, 602 P.2d 563 (1979).
American Natives: Generally. UEF's refusal to pay benefits to employee of business wholly owned by enrolled member of the Confederated Salish and Kootenai Tribes and operated exclusively within reservation boundaries did not violate equal protection provisions or legal redress clause of Montana Constitution where WCA did not apply to employer under federal law and rational relationship existed between that exclusion and legitimate governmental purpose of encouraging tribal self-sufficiency and economic development. (Case decided under 1991 WCA, prior to 1993 adoption of provision excluding WCA coverage of a person employed by an enrolled tribal member operating exclusively on a reservation, see section 39-71-401(2)(m), MCA (1993).)
American Natives: Reservations. Because requiring workers' compensation insurance increases the cost of doing business and may impact tribal economy, workers' compensation laws are preempted by federal law and inapplicable on a reservation absent some agreement to the contrary. Although the Confederated Salish and Kootenai Tribes had adopted an ordinance, authorized by section 25 U.S.C. section 1322 (1992), to extend certain laws and jurisdiction of the state of Montana onto the reservation, workers' compensation laws were not included.
Constitutional Law: Constitutional Challenges: Burden. Petitioner challenging constitutionality of UEF statute, which excludes coverage of employees of employer who was not required to have WC insurance because he was an enrolled member of an Indian tribe working exclusively on a reservation, bore a heavy burden, requiring him to prove beyond a reasonable doubt that the statute was unconstitutional as applied to him.
Constitutional Law: Equal Protection. UEF's refusal to pay benefits to employee of business wholly owned by enrolled member of the Confederated Salish and Kootenai Tribes and operated exclusively within reservation boundaries did not violate equal protection provisions or legal redress clause of Montana Constitution where WCA did not apply to employer under federal law and rational relationship existed between that exclusion and legitimate governmental purpose of encouraging tribal self-sufficiency and economic development.
Constitutional Law: Full Redress. UEF's refusal to pay benefits to employee of business wholly owned by enrolled member of the Confederated Salish and Kootenai Tribes and operated exclusively within reservation boundaries did not violate equal protection provisions or legal redress clause of Montana Constitution where WCA did not apply to employer under federal law and rational relationship existed between that exclusion and legitimate governmental purpose of encouraging tribal self-sufficiency and economic development.
Courts: Access to Courts. UEF's refusal to pay benefits to employee of business wholly owned by enrolled member of the Confederated Salish and Kootenai Tribes and operated exclusively within reservation boundaries did not violate equal protection provisions or legal redress clause of Montana Constitution where WCA did not apply to employer under federal law and rational relationship existed between that exclusion and legitimate governmental purpose of encouraging tribal self-sufficiency and economic development.

         This Declaratory Judgment action arises out of an industrial accident occurring on the Flathead Reservation. Petitioner, Darwin Zempel (claimant), was injured while employed by a business which is wholly owned by an enrolled member of the Confederated Salish and Kootenai Tribes. The business operated exclusively within reservation boundaries.

         A tribal court has previously determined that the Montana Workers' Compensation Act (WCA) did not apply to the employer. The Montana Uninsured Employers' Fund (UEF), which is the respondent in this case, denied liability for the injury since by law the UEF provides coverage only for injured workers employed by uninsured employers who are required to maintain workers' compensation coverage under the Act. Petitioner now challenges that limitation on constitutional grounds. Invalidating the limitation would render the UEF liable for his industrial injury.

         Factual and Procedural Background

         This case is submitted upon the parties' Stipulation Regarding Pleadings, Issues and Facts. The stipulation contains an agreed statement of facts.

         In 1991 claimant was employed by Rodney Schall, an enrolled member of the Confederated Tribes of the Flathead Reservation. Schall operated a logging operation confined to the reservation. At the time of claimant's industrial accident, Schall was logging under a contract with the Flathead Post and Pole Yard, Inc., which is a tribally owned enterprise.

         On December 5, 1991, while working in the logging operation, claimant was hit in his eye. According to claimant's opening brief, he suffered a puncture wound of his right eye when poked in the eye by a snag.

         At the time of the accident the Confederated Tribes were covered by a workers' compensation insurance policy issued by the State Compensation Insurance Fund. Schall, however, was not covered by workers' compensation insurance.

         A series of legal actions followed on the heels of the injury. Initially, claimant filed two petitions with this Court, naming the State Fund as respondent. Darwin Zempel v. State Compensation Ins. Fund, WCC Nos. 9207-6498 and 9207-6505 (1992). Those petitions were dismissed without prejudice after the parties agreed to proceed in the Tribal Court of the Confederated Tribes.

         The State Fund then filed a declaratory judgment action in the Tribal Court to determine the applicability of the WCA on the reservation. On November 15, 1993, the Tribal Court issued its decision, holding that the WCA "does not apply to Indian owned businesses whose business activity is conducted wholly within the exterior boundaries of the Flathead Indian." State Compensation Mutual Insurance Fund, et al. v. Leonard Pierce Logging, et al., No. CV-161-92 (November 15, 1993).

         Claimant thereafter sought benefits from the UEF but was rebuffed. He then brought this action.

         Discussion

         The UEF was established by statute "to pay to an injured employee of an uninsured employer the same benefits the employee would have received if the employer had been properly enrolled under compensation plan No. 1, 2, or 3 . . . ." § 39-71-502, MCA (1991) (emphasis added). Within the limits of the funds available to it, the UEF is required by law to "pay all proper benefits to injured employees of uninsured employers." § 39-71-503(1), MCA (1991) (emphasis added).

         "Uninsured employer" is expressly defined. Section 39-71-501, MCA (1993), provides:

39-71-501. Definition of uninsured employer. For purposes of 39-71-501 through 39-71-511 and 39-71-515 through 39-71-519, "uninsured employer" means an employer who has not properly complied with the provisions of 39-71-401.

(Italics and underlining added for emphasis.) Section 39-71-401(1), MCA (1991), provides broadly that the WCA applies "to all employers . . . and to all employees" except those enumerated in subsection (2). It requires employers to provide workers' compensation coverage for their non-exempt employees.[1] At the time of claimant's injury, the section did not contain an exception for the employees of an Indian employer doing business ...


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