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Hand v. Uninsured Employers' Fund

Court of Workers Compensation of Montana

September 18, 2000

DENNIS HAND Petitioner
v.
UNINSURED EMPLOYERS' FUND Respondent G. JON ROUSH, d/b/a SWITCHBACK RANCH Employer.

          Submitted: June 22, 2000

          ORDER ON APPLICABILITY OF SECTION 39-71-511, MCA

          MIKE McCARTER JUDGE.

         Summary of Case: Claimant seeks occupational disease benefits from the Uninsured Employers' Fund (UEF). Through stipulation, the parties seek pretrial resolution of whether section 39-71-511, MCA, entitles the UEF to discharge or reduce claimant's claim for occupational disease benefits to the extent claimant has recovered in a settlement with Travelers Insurance Company and its insureds. While claimant's employer carried no workers' compensation insurance, it had a farm and ranch liability policy with Travelers. When claimant sued his uninsured employer for injuries suffered in the workplace, Travelers refused to provide coverage. Claimant obtained a judgment for $550, 000 against the employer. To provide a means for satisfaction of that judgment, the employer assigned various claims it alleged against Travelers (e.g., failure to provide coverage or a defense) to claimant, who negotiated a settlement with Travelers for $328, 500.

         Held: The setoff provisions of section 39-71-511, MCA, apply to cases involving occupational disease benefits, even though the statute is contained within the Workers' Compensation Act (WCA). This application results from section 39-72-305(2), MCA, which states that provisions of the WCA relating to uninsured employers and benefits due uninsured claimants apply to and are incorporated into the ODA. In appropriate cases, the UEF is thus entitled to discharge or reduce claims for occupational disease benefits on the basis of civil recovery for the same alleged condition or harm. In this case, the Court is presently unable to determine the propriety of setoff because the factual stipulation does not make clear whether claimant's settlement with Travelers compensated him for the same harm or condition for which he now seeks occupational disease benefits. Whether the General Release also releases the UEF is not presented for decision.

         Topics:

Subrogation. Under section 39-71-511, MCA, as applied to OD claims through section 39-72-305(2), MCA, the UEF is entitled to discharge or reduce OD claims on the basis of civil recovery for the same alleged condition or harm. Here, the WCC was unable to determine the propriety of setoff because the parties' factual stipulation did not state whether claimant's settlement compensated him for the same harm or condition for which he now seeks OD benefits.
Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-72-305, MCA. Under section 39-72-305(2), MCA, which states that provisions of the WCA relating to uninsured employers and benefits due uninsured claimants apply to and are incorporated into the ODA, the setoff provisions of section 39-71-511, MCA, apply to cases involving occupational disease benefits. In appropriate cases, the UEF is entitled to discharge or reduce claims for OD benefits on the basis of civil recovery for the same alleged condition or harm. Here, the WCC was unable to determine the propriety of setoff because the parties' factual stipulation did not state whether claimant's settlement compensated him for the same harm or condition for which he now seeks OD benefits.
Uninsured Employers' Fund: Setoffs. Under section 39-71-511, MCA, as applied to OD claims through section 39-72-305(2), MCA, the UEF is entitled to discharge or reduce OD claims on the basis of civil recovery for the same alleged condition or harm. Here, the WCC was unable to determine the propriety of setoff because the parties' factual stipulation did not state whether claimant's settlement compensated him for the same harm or condition for which he now seeks OD benefits.

         ¶1 This occupational disease case was transferred to this Court following enactment in 1999 of amendments to the Occupational Disease Act (ODA). The amendments give the Court original jurisdiction over disputed OD claims. § 39-71-602(2)(c), MCA (1999). Before proceeding to trial, the parties have agreed to submit the following legal issue to the Court for resolution:

Is the Uninsured Employers' Fund entitled to a setoff under the provisions of § 39-71-511, MCA against petitioner's settlement with Travelers Insurance Company and its insureds?

         (Stipulation at 2.)

         ¶2 The facts essential to the issue are set out in the Stipulation, which states as follows:

         For the purposes of briefing the above question, the parties agree that the Court may assume the following facts to be true:

• At all relevant times, claimant Dennis Hand was an employee of the uninsured employer.
• Hand suffers from an occupational disease that arose while he was employed by ...

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