Use Back Button to return to Index of Cases
Nos. 01-420, 01-441 and 01-442
THE SUPREME COURT OF THE STATE OF MONTANA
RAUSCH, as Conservator for KEVIN RAUSCH,
FISCH, individually and on behalf of
FROST, individually and on behalf of
STATE COMPENSATION INSURANCE FUND,
Lon J. Dale, James T. Towe, Milodragovich, Dale, Steinbrenner & Binney, P.C., Missoula, Montana (For Rausch)
Monte D. Beck, Attorney at Law, Bozeman, Montana (For Fisch)
Stephen D. Roberts, Attorney at Law, Bozeman, Montana (For Frost)
Greg E. Overturf, Montana State Fund, Helena, Montana
Submitted on Briefs: December 13, 2001
September 5, 2002
Justice Terry N. Trieweiler delivered the Opinion of the Court.
2 The issues presented
on appeal are restated as follows:
4 2. Is an impairment award due to a permanently totally disabled claimant upon the receipt of his or her undisputed impairment rating or upon retirement?
5 3. Should an impairment award to a permanently totally disabled claimant be characterized as a total or partial disability benefit?
6 4. Are claimants' attorneys entitled to attorney fees pursuant to the common fund doctrine?
FACTUAL AND PROCEDURAL BACKGROUND
7 Kevin Rausch,
Charles Fisch, and Thomas Frost were all determined to be permanently
totally disabled as a result of work-related injuries. Kevin Rausch sustained
a head and spinal cord injury on July 8, 1992, and is quadriplegic with
brain damage. Charles Fisch sustained a spinal cord injury on July 9,
1998, and is an incomplete quadriplegic. Thomas Frost sustained a back
injury on August 30, 1997, and has undergone a series of four back surgeries.
The State Compensation Insurance Fund (State Fund) insured each claimant's
employer and has accepted liability for each of the injuries.
9 Each claimant has reached maximum medical improvement from his respective injuries. On December 14, 1998, Kevin Rausch received an impairment rating equal to 96% of the whole person. On July 29, 1999, Charles Fisch received an impairment rating equal to 74% of the whole person and on August 26, 1999, Thomas Frost received an impairment rating equal to 25% of the whole person. Each impairment rating was based on the American Medical Association Guide to Evaluation of Permanent Impairment, and on objective medical findings.
10 Each claimant
filed separate petitions in the Workers' Compensation Court claiming entitlement
to immediate payment of an impairment award. The State Fund denied immediate
payment of the impairment awards, based on its contention that impairment
awards for permanently totally disabled claimants are not due until the
claimants either receive social security retirement benefits or are entitled
to receive social security retirement benefits. Claimants also asserted
that postponement of their impairment awards would violate their rights
to equal protection and substantive due process as guaranteed by the Montana
Constitution. Claimants sought attorney fees individually and pursuant
to the common fund doctrine for similarly situated claimants. At no time
did the State Fund contend that claimants had no entitlement to an impairment
award. The dispute centered on the timing of the payment.
12 The Workers'
Compensation Court consolidated the three cases, and bifurcated the statutory
and constitutional issues. It first examined the statutory basis for impairment
awards, and then examined the constitutionality of its decision in light
of the claimants' constitutional arguments. Based on briefs and stipulated
facts, the Workers' Compensation Court issued an Order and Decision Disposing
of Non-Constitutional Issues on September 13, 2000. It held that neither
the 1991 nor 1997 Montana Workers' Compensation Acts provided for impairment
awards to permanently totally disabled claimants. The Workers' Compensation
Court then issued an Order and Judgment Regarding Constitutional Challenge
on April 20, 2001. In that Order, it held that the Court's interpretation
of the Montana Workers' Compensation Act did not violate either the due
process or equal protection clauses of the Montana Constitution.
STANDARD OF REVIEW
14 We review the Workers' Compensation Court's conclusions of law to determine whether they are correct. Matthews v. State Compensation Ins. Fund, 1999 MT 225, 5, 296 Mont. 76, 5, 985 P.2d 741, 5.
15 Did the District
Court err as a matter of law when it concluded, pursuant to the 1991 and
1997 versions of the Montana Workers' Compensation Act, that permanently
totally disabled workers are not entitled to receive impairment awards?
17 Workers' compensation benefits are determined by the statutes in effect on the date of the injury. Buckman v. Montana Deaconess Hosp. (1986), 224 Mont. 318, 321, 730 P.2d 380, 382. Therefore, with respect to the Rausch claim, the 1991 Workers' Compensation Act is applicable. With respect to the Fisch and Frost claims, the 1997 Workers' Compensation Act is applicable.
18 Montana recognizes
four distinct classes of disability benefits: (1) temporary total; (2)
temporary partial; (3) permanent partial; and (4) permanent total. §
39-71-116, MCA (1991 & 1997); Reeverts v. Sears, Roebuck & Co.
(1994), 266 Mont. 509, 517, 881 P.2d 620, 625. The claimants in this case
have all been classified as permanently totally disabled, and have never
been classified permanently partially disabled.
20 No section of the Workers' Compensation Act explicitly authorizes impairment awards per se. However, impairment awards are impliedly authorized to any injured worker classified in one of the four distinct classes of disability benefits by two sections of the Act, § 39-71-710, MCA, and § 39-71-737, MCA. The 1991 and 1997 versions of § 39-71-710, MCA, differed in only minor respects, and provided in relevant part:
§ 39-71-710(1), MCA (1991) (emphasis added).
22 Furthermore, impairment awards are implicitly recognized in § 39-71-737, MCA. Sections 39-71-737, MCA, of the 1991 and 1997 Workers' Compensation Acts provided as follows:
§ 39-71-737, MCA (1991) (emphasis added).
§ 39-71-737, MCA (1997) (emphasis added).
23 Section 39-71-737,
MCA (1991 & 1997), like § 39-71-710, MCA (1991 & 1997), creates
an entitlement to an impairment award for disabled workers within more
than one class of disability benefits. Since a permanent impairment rating
is inconsistent with temporary disability benefits , impairment awards
must necessarily be recoverable by both permanently partially and permanently
totally disabled claimants.
25 However, the Court's conclusion that § 39-71-703, MCA, expressly provided for impairment awards in both the 1991 and 1997 Workers' Compensation Acts is incorrect. Section 39-71-703, MCA, of the 1991 Workers' Compensation Acts provided in relevant part:
The same section in the 1997 Act provided:
Section 39-71-703, MCA (1997) (emphasis added).
26 The 1991 version of §
39-71-703, MCA, did not expressly provide for impairment awards. The statute
simply discussed the use of the "impairment rating" as one factor
in determining permanent partial disability benefits.
28 Therefore, neither the 1991
nor 1997 version of § 39-71-703, MCA, are authority for limiting
impairment awards to partially disabled claimants. In the 1991 version,
they were not expressly provided for. In the 1997 version, they were unrelated
to the disability.
30 We conclude, therefore, that permanently totally disabled claimants are legally entitled to an impairment award for the loss of physical function of their body occasioned by a work-related injury pursuant to the recognition of such awards in § 39-71-710, MCA, and § 39-71-737, MCA. The Workers' Compensation Court's conclusion to the contrary is reversed.
31 Is an impairment award due
to a permanently totally disabled claimant upon the receipt of his or
her undisputed impairment rating or upon retirement?
33 The rules of statutory construction
require the language of a statute to be construed according to its plain
meaning. If the language is clear and unambiguous, no further interpretation
is required. Lovell v. State Compensation Mut. Ins. Fund (1993), 260 Mont.
279, 285, 860 P.2d 95, 99.
35 For these reasons, we conclude that an impairment award is due a permanently totally disabled claimant upon receipt of his or her undisputed impairment rating.
36 Should an impairment award to a permanently totally disabled claimant be characterized as a total or partial disability benefit?
37 An issue raised by the conservator of the estate of Kevin Rausch, which went unaddressed by the Workers' Compensation Court based on its resolution of Issue 1, is how impairment benefits due a permanently totally disabled claimant should be characterized. The characterization of the impairment award is significant because it determines whether there is a social security offset. The Social Security Administration offsets benefits which are designated as partial benefits, but does not offset permanent or temporary total disability benefits.
38 Rausch contends that his
impairment award should be characterized as part of his permanent total
disability benefits, since impairment is simply the functional or medical
component of that disability.
40 The problem with the approach
suggested by the State Fund is that the Social Security Administration
does not recognize a class of benefits entitled "impairment award"
or "impairment benefits." Periodically, the Social Security
Administration requests workers' compensation insurers to complete a form
for confirmation and classification of workers' compensation benefits
being paid to individuals who concurrently receive workers' compensation
benefits and social security disability benefits. Therefore, because Rausch
will receive an impairment award, the State Fund will have to advise the
Social Security Administration of how it classified those benefits by
completing Form SSA-1709. Form SSA-1709, however, like Montana law, only
recognizes the existence of four classifications of benefits, i.e., temporary
partial, temporary total, permanent partial and permanent total. If we
were to adopt the State Fund's suggestion, and a fifth classification
of benefits was recognized under the guise of "impairment benefits,"
the Social Security Administration has stated that it would categorize
the impairment award as a permanent partial benefit. Therefore, the Social
Security Administration will offset Rausch's disability benefits, even
though Rausch is permanently totally disabled, not permanently partially
42 Therefore, we conclude that because Kevin Rausch was permanently and totally disabled, his impairment award should be characterized as a permanent total disability benefit.
45 Generally, the common fund doctrine "authorizes the spread of fees among those individuals benefitting from the litigation which created the common fund." Mountain West Farm Bureau Mut. Ins. Co. v. Hall, 2001 MT 314, 14, 308 Mont. 29, 14, 38 P.3d 825, 14. The common fund doctrine provides:
Murer, 283 Mont. at 222, 942 P.2d at 76.
46 To be awarded attorney fees based on the common fund doctrine, a party must satisfy three elements. First, a party (or multiple parties in the case of a consolidated case) must create, reserve, increase, or preserve a common fund. This party is typically referred to as the active beneficiary. Second, the active beneficiary must incur legal fees in establishing the common fund. Third, the common fund must benefit ascertainable, non-participating beneficiaries. Mountain West, 15-16, 18.
47 In Murer, claimants engaged in complex, lengthy, and expensive litigation that resulted in a legal precedent which directly benefitted a substantial number of workers' compensation claimants who were neither parties to nor directly involved in the Murer litigation. 283 Mont. at 223, 942 P.2d at 76. In addition, "claimants established a vested right on behalf of the absent claimants to directly receive immediate monetary payments of past due benefits underpayments; . . . ." Murer, 283 Mont. at 223, 942 P.2d 76-77. We held:
Murer, 283 Mont. at 223, 942 P.2d at 76.
48 Pursuant to Murer, we conclude that claimants' attorneys in this case are entitled to common fund attorney fees. The attorneys representing Rausch, Fisch and Frost all engaged in active litigation which preserved the benefit of immediate impairment awards to permanently totally disabled claimants. The attorneys incurred legal costs and fees in the preservation of that right, and the common fund will benefit an ascertainable class of workers who were denied immediate payment of an impairment award by the State Fund which they were legally entitled to receive. Those absent claimants will receive the benefit "even though they were not required to intervene, file suit, risk expense, or hire an attorney." Murer, 283 Mont. at 223, 942 P.2d at 77. Accordingly, claimants' attorneys are entitled to reasonable attorney fees for the creation or preservation of a common fund, and those fees should be divided among the three firms involved in this case. This case is remanded to the Workers' Compensation Court for a determination of a reasonable fee.
49 Finally, claimants request
this Court to award a twenty percent penalty against the State Fund for
its unreasonable initial denial of benefits and delay in payment of their
impairment awards. However, we conclude that unreasonable conduct has
not been established and, therefore, decline to assess a penalty.
51 We reverse the order of the Workers' Compensation Court and remand for further proceedings consistent with this Opinion.
/S/ TERRY N. TRIEWEILER
Justice Jim Rice, specially concurring.
52 I concur with the holding of the Court herein, and offer the following comments in regard to Issue 1.
53 The Workers' Compensation Court was faced with the unenviable duty of construing, not just one statute, but the entirety of the statutory framework surrounding impairment awards. As evidenced by the opinions herein of both the Workers' Compensation Court and this Court, determining the proper interpretation of the statutes was a difficult task, even with application of maxims of statutory construction. A reading of the statutes gives the distinct impression that the impairment award is a benefit provided in all disability cases. However, a closer review reveals that such an entitlement is not explicitly created. The situation is something akin to a group of people talking about an absent comrade. They all know he exists. He just isn't there.
54 Nonetheless, I believe the conclusion drawn by the Court from the limited direction provided by the statutes is the correct one, and would offer the following additional reasons therefor. I diverge from the Workers' Compensation Court's rationale at 20 of its opinion, wherein it states:
The Workers' Compensation Court thus found that its interpretation would not render meaningless the provision of § 39-71-737, MCA, which authorized payment of impairment awards "with other classes," because there were "other benefits" which a claimant might receive concurrently with an impairment award, namely, rehabilitation or disfigurement benefits. However, our case law construes "classes" of benefits in a manner which supports the claimants' argument.
55 In Reeverts v. Sears, Roebuck & Company (1994), 266 Mont. 509, 517, 881 P.2d 620, 625, the Court, citing Dosen v. East Butte Copper Mining Company (1927), 78 Mont. 579, 254 P. 880 (overruled on other grounds), held that:
Thus, the term "class of benefits" is restricted by this interpretation to the four referenced disability classes. Given this longstanding interpretation, the provision of § 39-71-737, MCA, which now authorizes payment of an impairment award "with other classes" cannot be satisfied by the payment of rehabilitation or disfigurement benefits, as held by the Workers' Compensation Court. These other benefits are not considered "disability" benefits by their authorizing statutes and do not constitute "classes" of benefits. Consequently, I find that the interpretation offered by the Workers' Compensation Court would render § 39-71-737, MCA, meaningless, and I would construe the statute to hold that impairment awards are to be paid concurrently with permanent total disability benefits.
56 I disagree with the Court's rationale set forth in 29, wherein it reasons that the Workers' Compensation Court's conclusion that a permanently partially disabled worker can receive an impairment award while a permanently totally disabled worker is deprived of the award, is based upon a statutory interpretation which leads to an absurd result. While this result may be thought to lack reason from a policy point of view, I do not believe this to be an absurd result that compels a different statutory interpretation. The Legislature may very well decide to restrict impairment awards to partially disabled workers, but for the reasons set forth above, I do not believe it has done so.
57 For these reasons, I concur with the Court.
/S/ JIM RICE
Chief Justice Karla M. Gray, concurring in part and dissenting in part.
58 I agree with the Court's statutory analysis at 25 through 27, but disagree with the remainder of its discussion on issue one. I would affirm the Workers' Compensation Court's conclusion that permanently totally disabled workers are not entitled to receive impairment awards under the 1991 and 1997 Acts. As a result, I would not reach the remaining issues.
59 The Workers' Compensation
Court's statutory analysis, and this Court's statutory analysis at 25
through 27, can be summarized relatively briefly. Both courts determined
that, pursuant to § 39-71-703(1), MCA (1991), a worker who suffered
a permanent partial disability, but was no longer entitled to either temporary
total or permanent total disability benefits, was entitled to a permanent
partial disability award. No stand-alone "impairment award"
was available to such an injured worker; rather, an "impairment rating"--based
in part on the amount of wage loss--was calculated and used in determining
the amount of the permanent partial disability award. See § 39-71-703(2)
and (3), MCA (1991). Both courts also determined, on the other hand, that
§ 39-71-703(2), MCA (1997), provided for a stand-alone "impairment
award" for an injured worker who received an impairment rating but
had no actual wage loss. Such a worker received only the impairment award;
he or she did not receive permanent partial disability benefits because
no actual wage loss occurred. See § 39-71-703(1) and (2), MCA (1997).
I agree with these analyses.
61 That court also addressed
both the 1991 and 1997 versions of § 39-71-710, MCA, on which the
claimants relied. While the statutes differ in detail, they generally
address termination of certain benefits on retirement and remaining liability
for other benefits; specifically, §§ 39-71-710, MCA (1991) and
(1997), both state that, on a claimant's retirement, "the insurer
remains liable for . . . any impairment award . . . ." As with §
39-71-737, MCA, the Workers' Compensation Court concluded that the latter
language "can only be construed as indicating that liability for
the award must exist in the first instance," independently of §
39-71-710, MCA, and does not create any entitlement to benefits not otherwise
created in the Workers' Compensation Act. Again, I agree with the Workers'
63 First, the Court does not
state how "more than one interpretation is possible" of the
statutes and language at issue here. While it observes that impairment
awards are "recognized" in §§ 39-71-710 and 39-71-737,
MCA, that observation does not explain how "recognition" of
the existence of impairment awards elsewhere in the Workers' Compensation
Act properly results in a determination that some statute provides an
entitlement to an impairment award. Our first rule in ascertaining legislative
intent is to construe the plain language of the statutes at issue. See,
e.g., Langemo v. Montana Rail Link, Inc., 2001 MT 273, 22, 307 Mont. 293,
22, 38 P.3d 782, 22 (citations omitted). The plain language of these statutes
does not support the Court's implicit determination that more than one
interpretation is possible here under any ordinary rules of statutory
65 I would affirm the Workers' Compensation Court's conclusion that these permanently totally disabled claimants are not legally entitled to an impairment award in addition to their other benefits.
/S/ KARLA M. GRAY
Use Back Button to return to Index of Cases