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State Compensation Insurance Fund v. McMillan

Court of Workers Compensation of Montana

October 25, 1999

STATE COMPENSATION INSURANCE FUND Petitioner/Insurer for ANDERSON LOGGING COMPANY, INCORPORATED Employer
v.
LOWELL McMILLAN Respondent/Claimant.

          Date Submitted: June 21, 1999

          ORDER DENYING MOTION FOR SUMMARY JUDGMENT

         ¶1 This action is brought by the State Compensation Insurance Fund (State Fund) to establish and enforce a subrogation interest in a $2, 619, 477 third-party recovery. The claimant, who is the respondent herein, moves for summary judgment, alleging that the subrogation claim is time-barred and if not time-barred then barred by the doctrine of laches.

         Facts

         ¶2 The following facts are taken from the parties' briefs and exhibits. They are uncontroverted.

         ¶3 On July 13, 1987, claimant suffered an industrial injury in the course and scope of his employment with Anderson Logging Co., Inc. (Anderson Logging).

         ¶4 At the time of claimant's industrial injury, Anderson Logging was insured by the State Fund.

         ¶5 Claimant filed a claim for compensation and the State Fund accepted liability for his claim. The State Fund has paid claimant substantial compensation and medical benefits.

         ¶6 Claimant filed a third-party claim against the United States Forest Service on account of his accident. The claim was filed under the Federal Tort Claims Act and was eventually litigated in the United States District Court of Montana. After a bench trial the District Court (the Honorable Charles Lovell) issued Findings of Fact, Conclusions of Law and Order on May 3, 1995, finding that claimant's total damages were $4, 762, 686. However, the Court reduced the award to $2, 619, 477 based on a finding that the claimant was 45% negligent.

         ¶7 The State Fund was aware of the District Court decision by at least August 18, 1995.

         ¶8 The Forest Service appealed and claimant cross-appealed from the District Court judgment. McMillan v. United States, 112 F.3rd 1040, 1041 (1997).

         ¶9 On May 2, 1997, the United States Court of Appeals for the Ninth Circuit affirmed the District Court decision. Id.

         ¶10 The judgment, without interest, was paid sometime after September 29, 1997, and prior to September 14, 1998. The Court is not informed as to the exact date of payment. See Exhibits B and C to petitioner's brief in opposition to motion for summary judgment. An appeal regarding the payment of interest on the judgment is presently pending in the United States Court of Appeals for the Ninth Circuit. Id., Exhibit D.

         ¶11 The petition in the present case was filed February 19, 1999.

         Summary Judgment Standards

         ¶12 Summary judgment may be granted only where uncontroverted, material facts require, as a matter of law, judgment for the moving party. ARM 24.5.329(2); Schelske v. Creative Nail Design, Inc., 280 Mont. 476, 482, 933 P.2d 799, 802 (1997). It is appropriate where the statute of limitations is raised as an affirmative defense and uncontroverted facts show that the claim or action is time-barred. Boles v. Simonton, 242 Mont. 394, 398, 791 P.2d 755, 757 (1990).

         Discussion

         ¶13 The State Fund's right to subrogation is governed by section 39-71-414, MCA (1985), which was the subrogation statute in effect on the date of the claimant's injury.[1] The section provides:

39-71-414. Subrogation. (1) If an action is prosecuted as provided for in 39-71-412 or 39-71-413 and except as otherwise provided in this section, the insurer is entitled to subrogation for all compensation and benefits paid or to be paid under the Workers' Compensation Act. The insurer's right of subrogation is a first lien on the claim, judgment, or recovery.
(2) (a) If the injured employee intends to institute the third party action, he shall give the insurer reasonable notice of his intention to institute the action.
(b) The injured employee may request that the insurer pay a proportionate share of the reasonable cost of the action, including attorneys' fees.
(c) The insurer may elect not to participate in the cost of the action. If this election is made, the insurer waives 50% of its subrogation rights granted by this section.
(d) If the injured employee or the employee's personal representative institutes the action, the employee is entitled to at least one-third of the amount recovered by judgment or settlement less a proportionate share of reasonable costs, including attorneys' fees, if the amount of recovery is ...

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