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W.R. Grace & Co. v. Riley

Court of Workers Compensation of Montana

March 23, 1998

W.R. GRACE & COMPANY and TRANSPORTATION INSURANCE COMPANY Petitioners
v.
KAREN RILEY Respondent.

          Submitted: November 20, 1997

          DECLARATORY JUDGMENT

          MIKE MCCARTER JUDGE

         Summary: Insurer filed petition for declaratory judgment seeking resolution of the amount of death benefits to which widow was entitled. Prior to his death, the decedent, who suffered from an occupational disease involving exposure to asbestos, had received a lump-sum settlement from the insurer in the amount of $85, 000. The insurer argued it was entitled to recoup this settlement from death benefits owed to decedent's widow. The insurer also sought a social security offset, arguing that if it had been paying decedent bi-weekly benefits, those benefits would have been subject to an offset under section 39-71-702(2), MCA (1985). Respondent disputed the offsets under applicable statutes and also argued that if statutes permitted such offset, they violated constitutional guarantees of due process and equal protection and the full redress provision of the Montana Constitution.

         Held: Under section 39-72-701, MCA (1985), previously interpreted by this Court in Manweiler v. The Travelers Ins. Co., WCC No. 9511-7445 (6/6/96), the amount and duration of death benefits under the Occupational Disease Act is governed by the death benefits provisions of the Workers' Compensation Act, including section 39-71-721, MCA (1985), which states that where an injured or diseased worker subsequently dies, the beneficiary "is entitled to the same compensation as though the death occurred immediately following the injury, but the period during which the death benefits is paid shall be reduced by the period during or for which compensation was paid for the injury." As previously held in Manweiler, the insurer is entitled to a credit for any portion of settlement monies paid to decedent which are attributable to periods of time after decedent's death. The fact that decedent herein had entered into a full and final compromise, not merely a lump-sum advance, is not material. Because decedent died 163.42 weeks after the settlement, section 39-71-721(1), MCA (1985) requires that the portion of the settlement remaining after 163.42 of biweekly benefits must be offset against future death benefits payable to the widow. The statute does not violate equal protection or due process guarantees where it has a rational basis in avoiding duplication of benefits. It does not violate Montana's full redress provision where it involves a statutory entitlement to benefits and does not violate the narrow proscription covered by the provision. The insurer is not, however, entitled to an offset for social security benefits where the amount of death benefits is specified by section 39-71-721(1), MCA (1985), which requires calculation of death benefits "as though the death occurred immediately following the injury," at which point no social security benefits would have been due decedent. Moreover, on its face, the offset applies only to "disability benefits," which death benefits are not.

         Topics:

Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-71-721, MCA (1985). Under section 39-72-701, MCA (1985), previously interpreted by this Court in Manweiler v. The Travelers Ins. Co., WCC No. 9511-7445 (6/6/96), the amount and duration of death benefits under the Occupational Disease Act is governed by the death benefits provisions of the Workers' Compensation Act, including section 39-71-721, MCA (1985), which states that where an injured or diseased worker subsequently dies, the beneficiary "is entitled to the same compensation as though the death occurred immediately following the injury, but the period during which the death benefits is paid shall be reduced by the period during or for which compensation was paid for the injury." As previously held in Manweiler, the insurer is entitled to a credit for any portion of settlement monies paid to decedent which are attributable to periods of time after decedent's death.
Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-72-701, MCA (1985). Under section 39-72-701, MCA (1985), previously interpreted by this Court in Manweiler v. The Travelers Ins. Co., WCC No. 9511-7445 (6/6/96), the amount and duration of death benefits under the Occupational Disease Act is governed by the death benefits provisions of the Workers' Compensation Act, including section 39-71-721, MCA (1985), which states that where an injured or diseased worker subsequently dies, the beneficiary "is entitled to the same compensation as though the death occurred immediately following the injury, but the period during which the death benefits is paid shall be reduced by the period during or for which compensation was paid for the injury." As previously held in Manweiler, the insurer is entitled to a credit for any portion of settlement monies paid to decedent which are attributable to periods of time after decedent's death.
Constitutions, Statutes, Regulations and Rules: Montana Constitution: Art. II, § 16 (Full Redress). Section 39-71-721, MCA (1985), which under section 39-72-701, MCA (1985) applies in an occupational disease case involving death benefits, is not unconstitutional by allowing an insurer to take a credit against future death benefits corresponding to that portion of settlement monies paid to the decedent which are attributable to periods of time after decedent's death. It does not violate Montana's full redress provision where it involves a statutory entitlement to benefits and does not violate the narrow proscription covered by the constitutional provision.
Benefits: Death Benefits: Offset for Prior Settlement. Under section 39-72-701, MCA (1985), previously interpreted by this Court in Manweiler v. The Travelers Ins. Co., WCC No. 9511-7445 (6/6/96), the amount and duration of death benefits under the Occupational Disease Act is governed by the death benefits provisions of the Workers' Compensation Act, including section 39-71-721, MCA (1985), which states that where an injured or diseased worker subsequently dies, the beneficiary "is entitled to the same compensation as though the death occurred immediately following the injury, but the period during which the death benefits is paid shall be reduced by the period during or for which compensation was paid for the injury." As previously held in Manweiler, the insurer is entitled to a credit for any portion of settlement monies paid to decedent which are attributable to periods of time after decedent's death. The fact that decedent herein had entered into a full and final compromise, not merely a lump-sum advance, is not material. Because decedent died 163.42 weeks after the settlement, section 39-71-721(1), MCA (1985) requires that the portion of the settlement remaining after 163.42 of biweekly benefits must be offset against future death benefits payable to the widow.
Benefits: Social Security Offset: Generally. Insurer paying death benefits to widow was not entitled to offset those benefits by amount of social security benefits decedent would have received had he survived and been permanently totally disabled.
Constitutional Law: Equal Protection. Section 39-71-721, MCA (1985), which under section 39-72-701, MCA (1985) applies in an occupational disease case involving death benefits, is not unconstitutional by allowing an insurer to take a credit against future death benefits corresponding to that portion of settlement monies paid to the decedent which are attributable to periods of time after decedent's death. Workers' Compensation statutes need only be justified with a rational basis, which here exists in that the statute avoids duplication of benefits.
Constitutional Law: Full Redress. Section 39-71-721, MCA (1985), which under section 39-72-701, MCA (1985) applies in an occupational disease case involving death benefits, is not unconstitutional by allowing an insurer to take a credit against future death benefits corresponding to that portion of settlement monies paid to the decedent which are attributable to periods of time after decedent's death. It does not violate Montana's full redress provision where it involves a statutory entitlement to benefits and does not violate the narrow proscription covered by the constitutional provision.

         ¶1 This matter comes to the Court on a petition for declaratory judgment filed by the insurer, Transportation Insurance Company (Transportation), against the widow (Mrs. Riley) of a deceased worker. Transportation asks the Court to determine the amount of death benefits due Mrs. Riley under the Occupational Disease Act (ODA).

         Facts

         ¶2 The parties have agreed to the submission of the controversy on an agreed statement of facts. The agreed facts are as follows:

1. Petitioner W.R. Grace & Company (hereafter "Grace"), formerly operated a vermiculite mine near Libby, Lincoln County, Montana. Donald A. Riley worked for Grace at the Libby mine from May 1960 until March 3, 1987. Transportation Insurance company insured Grace for occupational disease purposes during the latter years of Mr. Riley's employment.
2. During the course of his employment for Grace, Mr. Riley contracted asbestosis, an occupational disease. As a result, he submitted a claim to the Division of Workers Compensation for occupational disease benefits. The initial Order of Determination issued by the Montana Department of Labor & Industry on March 24, 1987 held that Mr. Riley was not entitled to occupational disease benefits.
3. Mr. Riley appealed the March 24, 1987 Order of Determination to the Department of Labor & Industry, and following an administrative hearing, the hearing examiner determined that Mr. Riley was permanently totally disabled, that such disability was solely related to his occupational disease, that disability commenced March 4, 1987, and that he was entitled to occupational disease compensation and medical benefits. However, Mr. Riley's attorney's fees and costs incurred in such administrative proceeding were denied. Neither party appealed such decision which was issued in the form of written Findings of Fact, Conclusions of Law and Order dated January 9, 1991, Cause No. 2-82-05400-6.
4. Petitioner and decedent Don Riley entered into a full and final compromise settlement wherein a lump sum payment of $85, 000.00 was paid to Mr. Riley. An order approving such settlement was issued by the Employment Relations Division on December 28, 1993, and $85, 000.00 was paid by petitioner to decedent Don Riley pursuant to that order.
5. Don Riley died on February 26, 1997.
6. Karen Riley, surviving spouse of Don Riley, timely submitted a claim for death benefits and petitioner has initiated payment of benefits at the rate of $299.00 per week.
7. The death benefits that would have been paid to Karen Riley had the death occurred upon the onset of the disease on ...

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