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Murer v. State Compensation Insurance Fund

Court of Workers Compensation of Montana

April 16, 1998

JACK MURER, et al. Petitioner
v.
STATE COMPENSATION INSURANCE FUND Respondent/Insurer.

          Submitted: April 8, 1998

          ORDER FOR CONTEMPT AND LIMITING USE OF CONFIDENTIAL INFORMATION

          MIKE MCCARTER JUDGE.

         Summary: To allow counsel for claimants to assess the adequacy of efforts made by insurer to identify and pay claimants due benefits under Supreme Court decisions in this case, WCC ordered insurer to provide computer printouts identifying claimants who may be entitled to such benefits. Following letter from counsel for insurer, WCC inquired into whether claimant's counsel should be found in contempt of court for using the information to solicit plaintiffs for a bad faith action against the insurer. The Court also inquired into whether attorney had made misrepresentations to the Court during the Court's process of gathering information concerning the insurer's charges.

         Held: Because the WCC had failed to order that claimant's counsel could not use the computer printouts as a means for contacting potential plaintiffs, counsel would not be held in contempt for that action. However, WCC was persuaded beyond any reasonable doubt that some statements made to the Court by counsel were a smokescreen to conceal counsel's real purpose in making contacts from the Court. Counsel found in contempt relating to those statements and is fined $500.

         Topics:

Attorneys: Conduct and Tactics. Because the WCC had failed to order that claimant's counsel could not use computer printouts provided to him by the insurer as a means for contacting potential plaintiffs for a bad faith case, counsel would not be held in contempt for that action, even though it was not contemplated by the parties and counsel acknowledged the listed individuals had rights of privacy. However, WCC was persuaded beyond any reasonable doubt that some statements made to the Court by counsel during the Court's inquiry into the matter were a smokescreen to conceal counsel's real purpose in the challenged conduct. Counsel found in contempt relating to those statements and was fined $500.
Contempt. Because the WCC had failed to order that claimant's counsel could not use computer printouts provided to him by the insurer as a means for contacting potential plaintiffs for a bad faith case, counsel would not be held in contempt for that action, even though it was not contemplated by the parties and counsel acknowledged the listed individuals had rights of privacy. However, WCC was persuaded beyond any reasonable doubt that some statements made to the Court by counsel during the Court's inquiry into the matter were a smokescreen to conceal counsel's real purpose in the challenged conduct. Counsel found in contempt relating to those statements and was fined $500.

         Background

         ¶1 Following the latest Supreme Court decision in this case, Murer v. State Compensation Mut. Ins. Fund, 942 P.2d 69 (Mont. 1997) (Murer III), this Court assumed supervision over the State Compensation Insurance Fund's (State Fund) efforts to identify and pay those claimants due benefits under that decision and a prior decision in Murer v. State Compensation Mut. Ins. Fund, 267 Mont. 516, 885 P.2d 428 (1994) (Murer II). This Court has actively directed and monitored those efforts.

         ¶2 As a part of the Court's supervision, I directed the State Fund to furnish computer information to Mr. Allan M. McGarvey, petitioners' attorney, so he could assess the adequacy of the efforts and recommend improvements. As a result of the Court's direction, in late September 1997, the State Fund furnished Mr. McGarvey with computer printouts identifying claimants who may be entitled to Murer benefits. The printouts provided the addresses of the claimants and in many cases identified the amounts potentially due them.

         The Present Proceeding

         ¶3 On March 10, 1998, the Court received a copy of a letter from Mr. Bradley J. Luck, who represents the State Fund, to Mr. McGarvey. The letter set forth information indicating that Mr. McGarvey had used the computer lists provided pursuant to this Court's directive to solicit plaintiffs for a bad faith class action against the State Fund. Apparently, the action alleges that the State Fund has unreasonably delayed paying Murer benefits to many claimants entitled to those benefits.

         ¶4 On March 12, 1998, I issued an Order Regarding Confidentiality and Claimant Contact. In that Order, I forbade Mr. McGarvey from contacting claimants on the computer lists and ordered him to forward the lists, and any similar documents furnished by the State Fund, to the Court.

         ¶5 On March 23, 1998, I issued an Order to Show Cause. That Order directed Mr. McGarvey to show cause with respect to the following three issues:

1.Whether Mr. McGarvey should be precluded from receiving further information concerning the identity of claimants who are owed Murer benefits.
2.Whether Mr. McGarvey's use of the information furnished by the State Fund violated implicit Court limitations on the use of the information.
3.Whether Mr. McGarvey's representations to the Court regarding his use of the information were false.

         ¶6 After a telephone conference call with Mr. Luck and Mr. James H. Goetz, who represented Mr. McGarvey in the show cause proceeding, an Order Identifying Statements Which Are the Basis for the Contempt Proceeding was issued on April 3, 1998. The Order identified specific portions of two letters and transcript references to statements made by Mr. McGarvey in a March 20, 1998 hearing. The statements identified by the Court were to the effect that the State Fund had "voluntarily" provided Mr. McGarvey with the computer lists (March 18, 1998 letter at 1; Tr. of March 30, 1998 Hearing at 7:18-20), hence no restriction applied to their use, and that the calls had involved a "spot check" in connection with the present case (March 16 and 18, 1998 letters; Tr. of March 30, 1998 Hearing at 7:24-8:4, 12:17-13:22; 15:5-12; 17:23-18:13).

         Hearing

         ¶7 On April 8, 1998, a hearing was held in Helena. Mr. McGarvey was represented by Mr. Goetz, the State Fund by Mr. Luck. At the Court's direction, Mr. Luck subpoenaed six claimants contacted by Mr. McGarvey. Four of those claimants - Richard Matsko, Diane Hansen, Paul Batterman, and Garland Hall -- testified at the hearing. Mr. McGarvey also testified.

         The Contacts Made by McGarvey

         ¶8 The information provided by Mr. McGarvey shows that by October 1997, he had decided to file a bad faith tort action against the State Fund arising out of its alleged failure to promptly identify and pay Murer benefits to all claimants due them. Meanwhile, he was involved in the process ordered by this Court to identify Murer claimants, send them written notice of an attorney fee hearing to be held on February 17, 1998, and ultimately pay the benefits due them. During a hearing held November 21, 1998, Mr. McGarvey agreed that the list of claimants compiled by the State Fund was adequate and was indeed over-inclusive. Notices of the February 17th hearing were then mailed, and the hearing was in fact conducted on February 17th.

         ¶9 Either before or after the February 17th hearing, Mr. McGarvey determined that the bad faith tort action against the State Fund should be filed by March 23, 1998, to avoid statute of limitations problems. (See Tr. March 20, 1998 Hearing at 4.) Using the September 1997 computer printouts furnished by the State Fund, in early March 1998, Mr. McGarvey put together three lists of claimants he intended to contact. (April 8, 1998 Hearing Ex. 3 at 9, 27 and 42.) He limited the list to claimants living in the Butte, Helena, and Great Falls areas because those were the venues he was considering for the new lawsuit. (McGarvey Test. at April 8, 1998 Hearing, and see Hearing Ex. 3 at 9, 27 and 42.) He further limited the list to those claimants who were, based on the computer printouts, due the highest amounts of Murer benefits. (April 8, 1998 Hearing Ex. 3 at 9, 27 and 42.)

         ¶10 On March 5 and 6, 1998, Mr. McGarvey talked to between eight and ten claimants on his lists. (McGarvey Test. at April 8, 1998 Hearing; Hearing Ex. 3.) Testimony from four of the claimants indicated that the focus of Mr. McGarvey's conversations with them was the new lawsuit.

         Discussion and Disposition

         ¶11 Contempt of Court is governed by statute. Section 3-1-501, MCA, specifies the matters for which an individual may be held in contempt, as follows:

3-1-501. What acts or omissions are contempts.

(1) The following acts or omissions in respect to a court of justice or proceedings in a court of justice are contempts of the authority of the court:

(a) disorderly, contemptuous, or insolent behavior toward the judge while holding the court tending to ...

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