IN THE WORKERS' COMPENSATION
COURT OF THE STATE OF MONTANA
UNINSURED EMPLOYERS' FUND
ORDER DENYING MOTION TO DISMISS
The Uninsured Employers' Fund (UEF) petitioned the Court to enforce a
settlement agreement between itself and a claimant. The agreement provided
for claimant to pay the UEF one-third of any recovery over $10,000 which
claimant secured from the uninsured employer. In return, the UEF assigned
its right to reimbursement from the uninsured employer to the claimant
and also discharged claimant from any claim by the UEF for subrogation
to monies collect by claimant from the uninsured employer. The claimant
moves to dismiss for lack of jurisdiction.
Since the Workers' Compensation Court has jurisdiction over the UEF claims
which were the subject of the settlement agreement, it has jurisdiction
to enforce the settlement agreement.
Original Jurisdiction. Where the Workers' Compensation Court
has jurisdiction to resolve claims arising under the Workers' Compensation
Act, and those claims are resolved in a settlement agreement, it also
has jurisdiction to enforce the settlement agreement.
¶1 The Uninsured Employers'
Fund (UEF) petitioned this Court to enforce the claimant's agreement,
the validity of which is not disputed, to pay the UEF one-third of any
recovery from the unemployed insurer on whose account UEF had paid claimant
benefits. The claimant moves to dismiss for lack of jurisdiction.
¶2 The salient facts are undisputed.
The following facts are pled in the petition and admitted in the claimant's
¶2a On or around April
8, 1989, while working for Royal Pines Equestrian Center, Amy Mackey
injured her back while bucking hay bales.
¶2b On June 6, 1989 Amy
Mackey filed a claim for workers' compensation benefits. Amy Makey's
employer, Royal Pines Equestrian Center, had no workers' compensation
insurance policy in place at the time Amy was injured, and the Uninsured
Employer's Fund accepted the claim and began paying Amy Mackey indemnity
and medical benefits.
¶2c Don and June Frownfelter
were the sole owners of Royal Pines Equestrian Center.
¶2d On March 27, 1992,
Jon Heberling, drafted an agreement for the UEF's signature and provided
this agreement to Cheryl Russel who signed on behalf of the UEF. It
stated in pertinent part that "Amy Mackey agrees to pay the Fund 1/3
of any recovery in the Mackey v. Frownfelters action over $10,000."
¶2e Amy Mackey filed a
civil action against the Frownfelters in Flathead District Court and
on September 21, 1993 she received a judgment against June and Don
Frownfelter for $116,273.13.
¶2f According to Amy Mackey's
attorney, Jon L. Heberling, through various collection actions, Amy
Mackey collected $27,904 of this in 1994 and $19,615 in 1999, making
Amy Mackey's total recovery $47,519.
¶3 The agreement referenced
in paragraph 2d is attached to the claimant's Response to Petition as
a part of her exhibit A. It reads in full part:
P.O. Box 8011
Helena, MT 59601-8011
Re: Mackey v. Frownfelters
Claim # 5-89-00059-5
This will confirm our
conversation of 3/26/92. We discussed the letter of Allan McGarvey
of 2/13/92 and your response of 2/25/92. I believe we will be in a
stronger position with the Court if we have an assignment of the Fund's
rights under § 39-71-506, MCA.
I suggest the following
The parties agree as follows:
1. Amy Mackey agrees to
pay the Fund 1/3 of any recovery in the Mackey v. Frownfelters
action over $10,000.
2. The Fund assigns to
Amy Mackey its rights to sue the uninsured employer under § 39-71-506,
3. This assignment also
covers and discharges the Fund's subrogation rights under § 39-71-505,
MCA, referencing § 39-71-414, MCA.
If the Fund approves this
agreement, please sign below.
\s\ Cheryl Russell
Uninsured Employers Fund
Jon L. Heberling
JON L. HEBERLING
¶4 The statutes in effect at
the time of the claimant's injury govern the substantive rights of the
parties. Buckman v. Montana Deaconess Hospital, 224 Mont. 318,
321, 730 P.2d 380, 382 (1986). However, the forum for resolution of substantive
disputes under the Workers' Compensation Act is a procedural matter and
governed by the law in effect at the time of the proceeding. Seger
v. Magnum Oil, 1999 MTWCC 67 (and cases cited therein, including
Supreme Court cases.)(1)
¶5 The following 1987 statutes
in effect at the time of the claimant's injury are substantive and govern
the rights of the UEF to recover amounts paid by it to claimant.
of [uninsured employers'] fund - option for agreement between division
and injured employee. The fund shall be funded in the following
. . .
(2)(a) The fund shall
receive from an uninsured employer an amount equal to all benefits
paid or to be paid from the fund to an injured employee of the uninsured
employer. . . .
of payments from uninsured employer by suit. If, upon demand
of the division, an uninsured employer refuses to make the payments
to the fund that are provided for in subsections (1) and (2) of 39-71-504,
the sums may be collected by the division through suit. The division
may settle through compromise with an uninsured employer the amount
due the fund under 39-71-504.
(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.
. . .
¶6 The current forum for resolving
disputes under the above sections is the Workers' Compensation Court.
Section 39-71-2905(1), MCA (2001), provides:
to workers' compensation judge -- time limit on filing. (1)
A claimant or an insurer who has a dispute concerning any benefits
under chapter 71 of this title may petition the workers' compensation
judge for a determination of the dispute after satisfying dispute
resolution requirements otherwise provided in this chapter. In addition,
the district court that has jurisdiction over a pending action under
39-71-515 may request the workers' compensation judge to determine
the amount of recoverable damages due to the employee. The judge,
after a hearing, shall make a determination of the dispute in accordance
with the law as set forth in chapter 71 of this title. If the dispute
relates to benefits due to a claimant under chapter 71, the judge
shall fix and determine any benefits to be paid and specify the manner
of payment. After parties have satisfied dispute resolution requirements
provided elsewhere in this chapter, the workers' compensation
judge has exclusive jurisdiction to make determinations concerning
disputes under chapter 71, except as provided in 39-71-317 and 39-71-516.
The penalties and assessments allowed against an insurer under chapter
71 are the exclusive penalties and assessments that can be assessed
by the workers' compensation judge against an insurer for disputes
arising under chapter 71. [Emphasis added.]
¶7 The Workers' Compensation
Court is a statutory court(2) and its jurisdiction
is fixed by the legislature. The general grant of jurisdiction is set
out in section 39-71-2905(1), MCA (2001), which is set forth verbatim
above. As pertains to the present controversy, the claims compromised
by the parties' agreement were claims arising under chapter 71, thus under
the plain language of section 39-71-2905(1), MCA, this Court has jurisdiction
to resolve disputes over those claims.(3)
The question presented here is whether the Court also has jurisdiction
to enforce a settlement agreement encompassing the claims. I conclude
that it does. In State ex. rel Uninsured Employers' Fund v. Hunt,
191 Mont. 514, 519, 625 P.2d 539, 542 (1981), the Supreme Court held:
Although the Workers'
Compensation Court is not vested with the full powers of a District
Court, it nevertheless has been given broad powers concerning benefits
due and payable to claimants under the Act. It has the power to determine
which of several parties is liable to pay the Workers' Compensation
benefits, or if subrogation is allowable, what apportionment of liability
may be made between insurers, and other matters that go beyond
the minimum determination of the benefits payable to an employee.
If the Court has jurisdiction
to litigate the claims which are compromised in the settlement agreement,
then it certainly has jurisdiction to enforce the settlement agreement.
¶8 The motion to dismiss for
lack of jurisdiction is denied.
DATED in Helena, Montana,
this 31st day of January, 2003.
c: Ms. Julia W. Swingley
Mr. Jon L. Heberling
Attachment: Seger v. Magnum Oil, 1999 MTWCC 67
Submitted: August 7, 2002
1. A copy
of the Seger decision is attached in lieu of repeating what was
said and cited there.
2. See discussion
in Seger v. Magnum Oil, 1999 MTWCC 67, ¶ 8.
the Court has jurisdiction under the first sentence of section 39-71-2905(1),
MCA (2001), since the UEF claims involve benefits paid by it. The procedural
provisions applicable to insurers, including those in 39-71-2905, MCA,
are expressly applicable to the UEF, § 39-71-505, MCA (2001).