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IN THE WORKERS' COMPENSATION COURT OF THE STATE OF MONTANA
2003 MTWCC 15
WCC No. 2002-0527
WILLIAMS INSULATION COMPANY, INCORPORATED
DECISION AND SUMMARY JUDGMENT
Summary: Claimant, Tom Fugere (Fugere), was injured at Conoco's Billings, Montana refinery while working for Williams Insulation Company ("WIC" or "Williams"), a Conoco subcontractor hired to install pipe insulation at the refinery. At the time of the accident, Williams had Wyoming workers' compensation coverage but no Montana workers' compensation coverage. Fugere initially sought benefits in Wyoming but his claim was denied because it was untimely and because he was working in Montana and therefore, according to Wyoming authorities, not covered under the Wyoming policy. He filed a claim in Montana, which was forwarded to the Uninsured Employers' Fund (UEF) since Williams was uninsured in Montana. The UEF then made demand on Conoco that it pay benefits pursuant to section 39-71-405, MCA. Conoco did and now seeks indemnification from Williams.
Held: Assuming Conoco is a Plan I self-insured, it is entitled to indemnification from WIC pursuant to section 39-71-405, MCA (1999). WIC failed to provide Montana workers' compensation insurance as required by section 39-71-402(5), MCA, therefore, Conoco was required to step in and pay benefits
¶1 This is a follow-on proceeding to Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, WCC No. 2001-0473. In that prior proceeding, I affirmed a $94,484.86 penalty imposed by the Montana Department of Labor and Industry (Department) for Williams' failure to maintain Montana workers' compensation insurance. (2002 MTWCC 33.) The present proceeding was commenced by Conoco, Incorporated (Conoco), for a declaratory judgment that it is entitled to indemnification for workers' compensation benefits it has paid Fugere pursuant to section 39-71-402(5), MCA. It was Mr. Fugere's injury and resulting workers' compensation claim that triggered the penalty proceeding referred to above.
¶2 Conoco moves for summary judgment. It argues that the admitted facts in the petition, along with the prior decision in Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, establishes Conoco's right to indemnification as a matter of law.
¶3 Williams has filed a brief opposing summary judgment, however, that brief is grossly deficient. First, Williams sets out its own statement of uncontested facts but does not supply a single citation to support those facts. Second, it does not address either Conoco's collateral estoppel argument or its contractual indemnification argument other than to urge that the facts decided in the prior proceeding are on appeal. I am left to assume that it does not dispute Conoco's legal and factual analysis of either issue. Third, it argues that section 39-39-402, MCA, is unconstitutional under the Privileges and Immunity Clause and the Full Faith and Credit Clause of the United States Constitution but does not cite even a single case to support application of those clauses to the statute in question, this despite the Court's admonishment of counsel in its prior decision for a similar failure to cite legal authority. Fourth, it argues that in the prior proceeding it was denied an opportunity for hearing in violation of the Fifth and Fourteenth Amendments to the United States Constitution. It provided no case authority in the first case, and provides no case authority in this one,(1) despite admonishment by the Court in the prior proceeding for its failure. The quality of advocacy in Williams' brief falls far short of what the Court expects of counsel practicing before this Court.
¶4 Compounding the foregoing deficiencies, Williams repeats its contention, made in the first case, that Mr. Fugere's Wyoming claim with respect to his accident "was rejected because he filed it late." The contention is fact number 3 at page 2 of its brief
Mr. Fugere submitted his claim to Wyoming workers' compensation. It was rejected because he filed it late. (For argument purposes, if Mr. Fugere had been working for an insurer and filed his claim late we doubt seriously that Conoco would have rushed to pick up the claim.) [Parenthetical material in original; bolding added.]
A similar contention in the prior case brought the Court's rebuke. I said:
¶5 To renew almost the same contention here blatantly disregards the Court's prior admonishment. Counsel is warned that future instances of this sort will trigger proceedings for sanctions pursuant to 39-71-2914, MCA, which provides in relevant part:
¶6 But this is not the end of it. In its Response to Declaratory Ruling, which was drafted and signed by its counsel, Williams admits that Fugere was injured while working for WIC then argues in its brief that Fugere was injured on the job. The Petition for Declaratory Ruling, ¶ I. A of its statement of "Uncontested Facts, alleges:
In its Response to Declaratory Ruling at page 1, WIC responds: "Plaintiff [sic] admits the allegation contained in Paragraph A under Uncontested Facts." (Underlining and bolding added.) Despite that admission, in "Plaintiff's Brief in Opposition to Defendant's Motion for Summary Judgment [sic, sic, sic; underlining added], Williams, through its counsel, denies that Fugere suffered a work-related issue:
(Plaintiff's Brief in Opposition To Defendant's Motion for Summary Judgment at 3.) The Court will not consider argument contrary to its admissions in its Response.
¶7 Also, WIC's counsel either cannot distinguish between plaintiffs and defendants, petitioners and respondents, or he failed to devote sufficient time to proof reading his briefs. I will assume the latter.
¶8 And, that is still not the end. In its brief opposing summary judgment, WIC has raised several constitutional challenges to both section 39-71-402, MCA, and the procedure in the prior proceeding involving the UEF. Not one of those challenges is set out in WIC's Response to the Petition for Declaratory Ruling.
¶9 The following facts are set forth in the Petition for Declaratory Ruling and admitted in the Response to Petition for Declaratory Ruling or from uncontested exhibits to the motion for summary judgment, or as matters of judicial notice of this Court's prior decision in Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33.
¶10 Conoco also seeks to collaterally estop claimant with respect to facts, as well as rulings of law, made in Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33.
¶11 The claimant's injury occurred on February 23, 2000, therefore this case is governed by the law in effect on that date. Buckman v. Montana Deaconess Hospital, 224 Mont. 318, 321, 730 P.2d 380, 382 (1986).
¶12 It is undisputed that WIC employed Fugere in pipe insulation work at Conoco's Billings, Montana refinery under a contract it had with Conoco. It is also undisputed that Fugere was injured on February 23, 2000, while working on that project and that at the time of his injury WIC did not have Montana workers' compensation insurance coverage. Fugere sought Montana workers' compensation benefits. Since WIC was uninsured, his claim was sent to the UEF, which in turn tendered the claim to Conoco pursuant to section 39-71-405, MCA (1999). These facts are established without reference to the prior proceeding between WIC and the UEF.
¶13 Section 39-71-405, MCA (1999), requires a general contractor or its insurer to pay workers' compensation benefits to injured workers employed by an uninsured subcontractor. The section provides:
Conoco employed WIC to insulate pipes at its Billings refinery, therefore if WIC did not "properly comply with the coverage requirements of the [Montana] Workers' Compensation Act," Conoco was liable for workers' compensation benefits due Fugere.(5)
¶14 WIC has admitted that claimant suffered a work-related injury while working for it in Billings at Conoco's Billings refinery. It has admitted it did not have Montana workers' compensation coverage.
¶15 Section 39-71-402, MCA (1999), provides in relevant part:
Under subsection (5), if WIC was "engaged in the construction industry, as defined in 39-71-116" at the time of Fugere's injury, then it was required to have Montana workers' compensation coverage.
¶16 Contractors subject to subparagraph (5) of section 39-71-402, MCA, are defined in section 39-71-116, MCA (1999), specifically in subsection (9). While subsection (9) was amended by the 1999 legislature, that amendment was expressly inapplicable until July 1, 2001. The version in effect at the time of claimant's injury provides:
As set forth in the uncontested facts above, contractors engaged in the "insulation of pipes" are listed in major Group 17 of the 1987 Manual and are therefore contractors within the meaning of section 39-71-116(9), MCA (1997), and section 39-71-402(5), MCA. Thus, the Montana Workers' Compensation Act required WIC to provide Montana workers' compensation insurance coverage for its workers at the Conoco refinery in Billings, including coverage for claimant. Having failed to do so, Conoco was and is liable for claimant's injury under section 39-71-405, MCA, but is also entitled to indemnification from WIC.
¶17 Thus, even without resort to this Court's prior decision in Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33, the uncontroverted facts admitted by WIC establish Conoco's right to indemnification under section 39-71-405, MCA.
¶18 The Court is also bound by the determination by the Department which was the subject of the appeal in Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33. WIC does not argue otherwise, it simply says the prior proceeding is on appeal to the Supreme Court.
¶19 Assuming the prior decision is not reversed on appeal, the Department decision in the prior proceeding collaterally estops WIC from relitigating facts and law determined in that prior proceeding. The doctrine of collateral estoppel is a companion doctrine of res judicata. The doctrine of res judicata precludes relitigation of the same claim or cause of action; the doctrine of collateral estoppel bars relitigation of an issue or matter which was necessarily determined in a prior action. The former is characterized as "claim preclusion", the latter as "issue preclusion":
Scott v. Scott, 283 Mont. 169, 175, 939 P.2d 998, 1001 (1997).
¶20 The doctrine of res judicata has specifically been held to apply to administrative proceedings which are judicial in character. Nasi v. State Dept. of Highways, 231 Mont. 395, 397-98, 753 P.2d 327, 329 (1988) (citing and quoting from United States v. Utah Construction and Mining Co., 384 U.S. 394, 422 (1966)). Since the rationale for the doctrine is identical to the rationale for res judicata, there is no reason for not extending collateral estoppel to administrative proceedings which are judicial in character. The Department proceeding at issue in Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33, was a contested case proceeding, thus it was judicial in character.
¶21 The Montana Supreme Court has set forth a three-part test for determining whether collateral estoppel bars an action:
Robinson v. First Wyoming Bank, N.A., 274 Mont. 307, 318-19, 909 P.2d 689 (1995) (holding that the Robinsons were estopped from claiming there was no consideration for the mortgage because: (1) a Wyoming consent judgment recognized the mortgage was valid and it secured payment of the judgment; (2) there was a final judgment which held that the mortgage was valid; and (3) the Robinsons were parties to the Wyoming action and judgment); HKM Assocs. V. Northwest Pipe Fittings, 272 Mont. 187, 900 P.2d 302, 305 (1995). In the present case, (1) the issue of WIC's obligation to provide workers' compensation coverage for Montana employees at the Conoco refinery was decided in the prior case; (2) a final judgment was entered by the Department and affirmed by this Court upon WIC's request for judicial review; and (3) WIC was a party to the Department proceeding. Thus, all three criteria are satisfied.
¶22 Specifically, with regard to WIC's obligation to provide Montana workers' compensation insurance, the Department's hearing officer, found:
Findings of Fact, Conclusions of Law and Order, Finding of Fact Number 1, on file in Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, WCC No. 2001-0473. In his second conclusion of law, the hearing officer found that WIC was "an uninsured employer [in Montana] from June 26, 1997 to June 26, 2000, in violation of § 39-71-401." Id.
¶23 Conoco also seeks indemnification under its contract with WIC. In its brief opposing summary judgment, WIC does not dispute that its contract with Conoco requires it to indemnify Conoco for workers' compensation benefits, rather it argues:
(Plaintiff's Brief in Opposition to Defendant' Motion for Summary Judgment at 3.) Since Conoco was required under section 39-71-405, MCA, to pay benefits for Fugere's industrial injury, its payment of benefits was "legitimate" and it is entitled to indemnification under its contract with WIC.
¶24 In its brief opposing summary judgment, WIC also attacks both the constitutionality of section 39-71-402, MCA, and the Department's procedure in the prior penalty proceeding, Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33.
¶25 As I noted earlier, in its response to the petition, WIC failed to aver that any statute or proceeding violated its unconstitutional rights. Its failure to raise constitutional issues in its response is fatal and precludes my consideration of the issues. Rule 24.5.302 requires that a response to a petition set out "a short, plain statement of the respondent's contentions." This rule is a concise statement of Rule 8 of the Montana Rules of Civil Procedure, which provides:
The unconstitutionality of a statute or proceeding is a "matter constituting an avoidance or affirmative defense," thus it must be pled affirmatively in the response. Indeed, in any proceeding challenging the constitutionality of a statute, the Montana Rules of Civil Procedure require the party raising the challenge to give notice of the challenge both to the Montana Attorney General and the court. Rule 24(d), Mont.R.Civ.P., requires that
The constitutional issues raised by WIC in its brief opposing summary judgment were not properly raised.
¶26 Even if the issues were properly raised in WIC's response, three of the four challenges have not been properly briefed and I would still not consider them. As noted earlier in this decision, WIC has cited no case law in support of its assertions that section 39-71-402, MCA, violates the Privileges and Immunities Clause and the Full Faith and Credit Clause of the United States Constitution, or that it was denied due process of law in the penalty proceeding which was the subject of the prior decision in Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33. Moreover, the process afforded in the prior proceeding is immaterial to the decision in the present case. The uncontroverted material facts in the present case demonstrate that Conoco is entitled to indemnification as a matter of law.
¶27 With respect to WIC's Equal Protection challenge to section 39-71- 402, MCA, WIC contends that "not only is Montana treating a citizen of one State different from a citizen of the State of Montana but it is also treating a citizen of another State in a different fashion of yet different kinds of citizens (or businesses) of other States," citing decisions in: Supreme Court of New Hampshire v. Piper, 470 U.S. 274 (1985); Toomer v. Witsell, 334 U.S. 385 (1948); and Hicklin v. Orbeck, 437 U.S. 518 (1978), as supporting its contention. (Plaintiff's Brief in Opposition to Defendant's Motion for Summary Judgment at 5-6, bold in original.)
¶28 Without even reading the decisions cited, the argument, on its face, is untenable. Section 39-71-402, MCA, does not distinguish between residents (or citizens) of different states: Fugere's and WIC's residency make no difference under the section. The section applies to employees and employers who are residents of Montana, Wyoming, or, for that matter, Bulgaria. The section also does not discriminate between construction contractors who reside in Montana or elsewhere: all are required to have Montana workers' compensation coverage while working in Montana.
¶29 Moreover, a review of the cases cited by WIC shows that they do not apply to the statute challenged in the present case. Supreme Court of New Hampshire v. Piper involved a provision limiting admission of lawyers to the New Hampshire bar to New Hampshire residents. WIC does not explain how that ruling applies to the present case and I have been unable to conjure up any possible application. Toomer v. Witsell involved state statutes differentiating between residents and non-residents with respect to fishing in coastal waters. Montana has no coastal waters; even if it did section 39-71-402, MCA, does not discriminate between residents and non-residents. Hicklin v. Orbeck involved an Alaska law which provided a hiring preference to Alaska residents. Section 39-71- 402, MCA, contains no preference similar to that considered in that case.
¶30 Assuming Conoco is a Plan I self-insured, it is entitled to reimbursement for reasonable and appropriate benefits it has paid to claimant on account of his February 23, 2000 injury. Conoco has not asked the Court to determine how much is due it from WIC. Thus, any disputes as to the reasonableness or appropriateness of specific benefits is beyond the scope of the present proceedings.
¶31 Conoco shall provide WIC and the Court with verification it is a Plan I insurer. Within ten days after furnishing that verification, WIC shall notify the Court in writing whether it contests the verification. If it does, then an evidentiary hearing shall be scheduled.
¶32 If satisfactory verification is furnished by Conoco, then it is entitled to indemnification from WIC for reasonable and appropriate compensation and medical benefits it has paid to Thomas Fugere on account of an industrial injury he suffered on February 23, 2000, while working at Conoco's refinery in Billings, Montana.
¶33 The Court has not been asked to make and makes no determination as to the reasonableness, appropriateness, or amount of benefits paid out by Conoco to which it is entitled to indemnification. Therefore, those matters are not determined.
¶34 Certification of this Judgment is withheld pending verification of Conoco's status as a Plan I self-insured.
¶35 Any party to this dispute may have twenty days in which to request a rehearing from this Decision and Summary Judgment.
DATED in Helena, Montana, this 5th day of March, 2003.
c: Mr. Thomas J. Harrington
1. Moreover, the contention has no basis for fact. Williams was afforded an opportunity for hearing, it simply failed to take advantage of it. As I noted in my prior decision:
(Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33, ¶ 2.)
2. The petition, paragraph I. B. alleges that claimant was a Montana resident who had recently moved to Wyoming. The response does not dispute the facts alleged in paragraph I. B. but alleges affirmatively that the claimant "represented" to WIC that he was a Wyoming resident. (Response to Petition for Declaratory Ruling at 1.) Whether Fugere was a Montana or Wyoming resident is immaterial to the decision in the case, therefore the affirmative allegation can be assumed to be true for purposes of the motion for summary judgment.
WIC also affirmatively alleges in its response to paragraph I. B. that it "maintained insurance on Mr. Fugere through the Wyoming Workers' Compensation Division." I assume that allegation to be true for the purposes of the motion for summary judgment, however, the fact that WIC carried Wyoming insurance is immaterial under the Montana statute applicable in this case. Moreover, one of the reasons for Wyoming denying compensation for Fugere's claim was the fact that Fugere "was hired to work primarily in another state and therefore is not under Wyoming jurisdiction pursuant to Wyoming Statute 27-14-301." Williams Insulation Company, Incorporated v. Uninsured Employers' Fund, 2002 MTWCC 33, ¶ 6.
3. In its response to paragraph I. C. of the Petition for Declaratory Ruling, WIC says only, "With respect to Paragraph I. C, Respondent does not know why the Uninsured Employers' Fund did what it did." (Response to Petition for Declaratory Ruling at 2-3.) That statement does not amount to denial of the allegation, indeed it implicitly admits it.
4. Pipe insulators are in Group 17 of the 1987 Standard Industrial Classification Manual. The Court confirmed the listing at the official WEB site of the United States Occupational Safety and Health Administration, which has the 1987 Manual on-line. The search results are in the file.
5. Presumably, Conoco was self-insured under Plan 1 since it has paid benefits to Fugere. However, before entering final judgment, the Court will require confirmation of that fact
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