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IN THE WORKERS' COMPENSATION COURT OF THE STATE OF MONTANA

2002 MTWCC 43

WCC No. 9905-8228

DENNIS HAND

Petitioner

vs.

UNINSURED EMPLOYERS' FUND

Respondent

and

G. JON ROUSH, d/b/a SWITCHBACK RANCH

Employer.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT

REVERSED 11/30/04
Hand v. UEF, 2004 MT 336 (No. 03-346)

Summary: Claimant seeks occupational disease (OD) benefits from the Uninsured Employers' Fund (UEF). The UEF declined benefits based on a $328,500 settlement claimant made with his employer and its general liability insurance carrier, and for other reasons. The settlement agreement included a comprehensive General Release of any and all claims against the employer. Claimant argued the settlement related only to his claim for his back injury during his employment and not to any claim for OD benefits relating to his knee condition. He also argued the UEF could not raise the general release as a defense.

Held: The UEF properly raised the General Release. The failure of the UEF to "appeal" from an initial Department order does not preclude it from raising affirmative defenses to a claim where the claimant requests a contested case hearing. On the merits of the dispute, the General Release bars any claim against the UEF existing at the time of the release.

Topics:

Constitutions, Statutes, Regulations, and Rules: Montana Code Annotated: Section 39-72-602, MCA (1999). Where a contested case hearing is requested, the UEF is entitled to raise in that proceeding any and all defenses it may have to an occupational disease claim.

Constitutions, Statutes, Regulations, and Rules: Montana Code Annotated: Section 39-71-504(2), MCA. A claimant's comprehensive general release of his employer bars any claim he may have against the Uninsured Employers' Fund with respect to injuries and conditions existing prior to or at the time of the release.

Uninsured Employers Fund: Effect of Settlements and Releases. A claimant's comprehensive general release of his employer bars any claim he may have against the Uninsured Employers' Fund with respect to injuries and conditions existing prior to or at the time of the release.

¶1 The trial in this matter was held on March 6, 2002, in Helena, Montana. Petitioner, Dennis Hand (claimant), was present and represented by Mr. Tom L. Lewis. Respondent, Uninsured Employers' Fund (UEF), was represented by Mr. Mark Cadwallader.

¶2 Exhibits: Exhibits 1 through 10 were admitted through stipulation.

¶3 Witnesses: Claimant, Kathy Brown, Keith Messmer, and Bernadette Rice testified at trial. No depositions were submitted.

¶4 Issues: The dispositive issues, as restated by the Court, are:

¶4a Whether the UEF is precluded from asserting defenses to the claim for OD benefits because it did not "appeal" or "cross-appeal" from a February 1, 1999 Order of Determination of the Department of Labor and Industry.

¶4b Whether the claimant's comprehensive general release of his employer bars his claim for OD benefits from the UEF.

¶5 Having considered the Pretrial Order, the testimony presented at trial, the demeanor and credibility of the witnesses, the exhibits, and the arguments of the parties, the Court makes the following:

FINDINGS OF FACT

¶6 Claimant worked as a ranch hand/manager for G. Jon Roush(1) (Roush) for approximately 12 years. He last worked for Roush on or about January 15, 1993. (Uncontested Fact 1.)

¶7 During claimant's employment at the ranch, Roush was an uninsured employer within the meaning of section 39-71-501, MCA (1991). (Uncontested Fact 2.)

¶8 Around 1984, claimant fell while loading hay and injured one or both of his knees. There is no record of medical treatment at that time. The first mention of the injury is in 1989, when claimant was treated by Dr. Patrick R. Robins. At that time, claimant reported twisting his left knee quite severely four years earlier, following which he developed prominent swelling and pain. (Ex. 8 at 1.) Claimant reported that his symptoms had continued since the 1984 incident. He sought treatment from Dr. Robins in 1989 because his knee had recently "went out on him and became swollen." (Id.) Dr. Robins's impression was "internal derangement, left knee, likely secondary to torn meniscus." (Id.) He recommended arthroscopic surgery, but surgery was evidently not performed at that time.

¶9 Claimant did not return to Dr. Robins until September 1992. (Id.) At that time he reported problems with both knees and told the doctor that his right knee sometimes locked. (Id.) Claimant was still managing the ranch, but indicated that work would "end as of the end of next month." (Id.) Dr. Robins recommended outpatient arthroscopic evaluation of both knees. (Id.)

¶10 On October 10, 1992, claimant filed a claim with the UEF for a back injury. Bernadette Rice (Rice), the claims adjuster for the UEF, testified that a narrative attached to the October 10, 1992 claim mentioned knee problems arising from a fall in 1983. Rice accepted the back claim but denied liability for any knee injury.

¶11 In mid-October 1992, claimant underwent bilateral knee arthroscopy. (Id.) During the next several months, claimant made "gradual improvement" from his surgery. (Id. at 2.)

¶12 On March 31, 1993, claimant filed a second claim with the UEF in which he claimed he suffered from an OD of both knees. (Uncontested Fact 3.) Apparently that claim was denied, at least there is no contention that it was accepted, and there is no evidence that claimant did anything further to pursue the claim until 1998, some 5 years later.

¶13 Following the filing of the claim, claimant continued to have knee problems. In April 1993, Dr. Robins recommended further arthroscopic surgery. (Id. at 3.) On January 13, 1994, claimant returned to Dr. Robins for "multiple problems with his lower extremities." (Id.) He reported continued pain and clicking, especially of the left knee. Claimant told Dr. Robins he quit work a couple of weeks earlier because of pain in his lower extremities. (Id.) Dr. Robins concluded:

At this time, I feel that his symptoms are secondary to degenerative arthritis but not to any degree that surgical treatment is indicated. I will try to get him onto some anti-inflammatory analgesics for daytime use and something that he can take at night for pain to get some sleep. I do feel he would be a good candidate for retraining into some sort of job not involving a lot of standing, climbing, kneeling, etc., on his knees.

(Id. at 4.)

¶14 Sometime prior to September 1995, claimant sued Roush and Roush's wife over injuries he allegedly suffered on September 18 and October 10, 1992. (See Ex. 9.) The case went to trial and judgment was entered against the Roushes on September 21, 1995, in the amount of $550,000. (Id.)

¶15 Five days after the verdict, on September 26, 1995, claimant entered into an Assignment and Agreement with Roush and Katherine M. Roush. (Id.) The agreement included the following recitals:

A. First Party, Dennis Hand, worked as a ranch manager and ranch laborer for Second Parties on September 18, 1992 and October 10, 1992, on which dates First Party was injured.

B. A legal action was instituted by First Party against Second Parties . . . to recover damages from the Second Parties, for injuries experienced by First Party on September 18, and October 10, 1992. Thereafter on the 21st day of September, 1995, judgment was entered in favor of First Party and against the Second Parties in the amount of $550,000.00, which judgment has become final.

C. On September 18, 1992 and October 10, 1992, the Second Parties were insured under a farm and ranch liability insurance policy issued by The Travelers Insurance Companies. . . . The Second Parties are unaware of any other insurance policies which may be applicable to First Party's claims . . . .

D. Second Parties have informed First Party that The Travelers Insurance Companies have refused to defend or provide coverage for the claims identified in paragraph B above.

E. Second Parties acknowledge that they are liable to First Party for negligence and for failure to provide a safe work place and the resultant damages to First Party, and Second Parties further acknowledge that these damages have been reduced to a judgment in the amount of $550,000.00.

F. Second Parties are desirous of assigning certain of their claims against The Travelers Insurance Companies to First Party for the consideration hereinafter expressed, and First Party wishes to reserve his rights to proceed against all other defendants, named and unnamed, based upon Dennis Hand's injuries.

G. Second Parties are desirous of protecting their assets from execution, and of protecting themselves from personal liability.

(Id. at 1-2.) Through the assignment agreement, the Roushes went on to assign to Hand

their rights and claims against The Travelers Insurance Companies, existing by reason of negligence, contract, bad faith, intentional conduct and/or violations of Montana Code Annotated Section 33-18-242 by said insurance company; by reason of failing to provide a legal defense to Second Parties for the claims of First Party. . . . and by failing and refusing to provide liability coverage to Second Parties from the claims of First Party, as well as a judgment entered against Second Parties in favor of First Party in the sum of $550,000.00.

(Id. at 2.) The Roushes also assigned to Hand their claims against Travelers for payment of attorney's fees and costs in defense of the action filed by Hand against the Roushes.

¶16 In exchange for this assignment, and for payment of $5,000 by the Roushes to Hand, Hand agreed

that he will not levy an execution on or in an other manner seek at any time to enforce the said judgment, or any part thereof, against Second Parties, individually or against their assets or income, but will only pursue an action to recover the amount due upon the judgment against The Travelers Insurance Companies based upon the assignment executed herewith.

(Id. at 3.)

¶17 Finally, the agreement provided: "This assignment and agreement does not affect First Party's right to proceed with a claim, if any, of uninsured employers fund workers' compensation benefits." (Id. at 3-4, emphasis added.)

¶18 However, Hand thereafter negotiated a settlement with Travelers Insurance Companies (Travelers) and on January 17, 1996, he executed a comprehensive General Release in exchange for payment of $328,500. The release reads in full:

KNOW ALL MEN BY THESE PRESENTS:

That I, DENNIS HAND, for and in consideration of the sum of THREE HUNDRED TWENTY-EIGHT THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($328,500.00) paid to me by TRAVELERS INSURANCE COMPANIES, the receipt and sufficiency of which is hereby acknowledged, have released and discharged and by these presents do release and forever discharge G. JON ROUSH and KATHERINE M. ROUSH, husband and wife, d/b/a the SWITCHBACK RANCH, the said TRAVELERS INSURANCE COMPANIES, and their past, present, and future officers, directors, attorneys, agents, servants, representatives, employees, subsidiaries, affiliates, partners, predecessors and successors in interest, assigns, insurers and reinsurers, and all other persons, firms, or corporations (hereinafter collectively referred to as the Releasees), whether herein named or referred to or not, and who, together with the above-named released parties, may be in any wise directly or indirectly liable to me, of and from any and all actions and causes of action, claims, and demands of every kind whatsoever, whether arising out of contract or tort or by operation of law, and whether for compensatory or punitive damages, from the beginning of time until the date of this release. This release shall include, but is not limited to, all my claims for damages, punitive damages, fraud, mental suffering, emotional distress, physical distress, psychic injury, costs, unfair claim settlement practices arising under Title 33, Chapter 18, Montana Code Annotated and compensation of every kind, arising from and by reason of any conduct, acts, or omissions to act by Releasees in investigating, adjusting, handling, litigating, and negotiating various claims of mine arising as a result of injuries that I suffered on or about September 18, 1992 and October 10, 1992 at Florence, Montana, while working for G. Jon Roush and Katherine M. Roush, husband and wife, d/b/a the Switchback Ranch.

The payment named herein is the sole consideration for this Release, and such consideration is contractual and not a mere recital. All agreements and understandings between the parties hereto are reflected herein. I acknowledge that G. Jon Roush and Katherine M. Roush, husband and wife, d/b/a/ the Switchback Ranch, and the Travelers Insurance Companies do not admit liability, but expressly deny the same, and that the consideration reflected herein is paid and accepted in compromise of doubtful and disputed claims, and that the making of this settlement does not constitute and is not to be construed as an admission of liability on the part of G. Jon Roush and Katherine M. Roush, husband and wife, d/b/a the Switchback Ranch, and the Travelers Insurance Companies or their legal representatives.

It is also agreed that this Release covers all claims past, present, or in the future which can ever be asserted by me, DENNIS HAND, for any and all future loss and damage arising out of said occurrences not now known to any of the parties hereto, but which may later develop or be discovered, including the effects or consequences thereof.

I do hereby state that I am of legal age, have carefully read the foregoing Release, and that its terms have been completely read and explained to me by my attorneys. I know the contents thereof, and have executed the same as my own free act and solely in reliance upon my own judgment and not in reliance upon any representation or statement or promise of Releasees or their representatives.

I hereby stipulate and agree that my attorneys of record shall, upon execution of this agreement and payment of the monies prescribed herein, satisfy the judgment entered on September 21, 1995 by the presiding judge in the civil action pending in State District Court, Montana Twenty-First Judicial District Court, Ravalli County, entitled Dennis Hand, Plaintiff, v. G. Jon Roush and Katherine M. Roush D/B/A Switchback Ranch, Defendants, Cause No. DV-94-387.

(Ex. 10, bolding and underlining added for emphasis.)

¶19 Another two years, ten months, and three days passed, then on November 20, 1998, some five and a half years after his initial claim, the claimant filed a request for an evaluation of his "bilateral knee problems" by the Occupational Disease Panel. (Ex. 1.)

¶20 On December 18, 1998, the Department of Labor and Industry ordered a medical examination by Dr. Dana Headapohl. (Ex. 2; Uncontested Fact 4.)

¶21 Dr. Headapohl examined claimant on December 29, 1998. (Ex. 4; Uncontested Fact 4.) She concluded that he was suffering from an OD but apportioned 75% to injuries rather disease. (Uncontested Facts 4 - 6.)

¶22 Based on Dr. Headapohl's evaluation, on February 1, 1999, the Department issued an Order of Determination finding that claimant "is suffering from an occupational disease and is entitled to benefits under the Occupational Disease Act [ODA]." However, based on Dr. Headapohl's apportionment opinion, the Department went on to find that claimant "is entitled to TWENTY FIVE PERCENT (25%) of their total disability benefits if they suffer a total wage loss as a result of the occupational disease." The Department further ordered that claimant "is entitled to medical and hospital expenses directly related to their occupational disease." (Ex. 5; Uncontested Fact 7.)

¶23 On February 5, 1999, counsel for claimant filed an "Objection to Order of Determination and Request for Hearing." (Ex. 6.) The document stated in its entirety:

The claimant, Dennis A. Hand, by and through his counsel of record, objects to the Department of Labor & Industry's Order of Determination dated February 1, 1999. A copy of the Order of Determination is attached as Exhibit "A." The claimant appeals from the Order of Determination on the grounds that it is not supported by the facts of this case, the occupational disease panel evaluation, or the Montana Occupational Disease Act, § 39-72-101, MCA, et. seq.

Pursuant to § 39-72-612, M.C.A., the claimant hereby requests a hearing before the Department of Labor & Industry concerning the nature and extent of his entitlement to occupational disease benefits for his bilateral knee problems.

The grounds for the hearing is that the Department has misconstrued the law, panel report, and facts of this case in a manner that would deny the claimant the full extent of occupational disease benefits to which he is appropriately entitled under the law.

(Ex. 6.)

¶24 At the time the request for hearing was filed, section 39-72-612, MCA (1997), provided for a contested case hearing before the Department. However, effective April 23, 1999, section 39-72-612, MCA, was amended to give the Workers' Compensation Court original jurisdiction over OD disputes. Those amendments, discussed in detail below, resulted in transfer of this case to the Workers' Compensation Court before any contested case hearing was conducted in the Department.

¶25 The UEF offered no evidence of what, if any, portion of the amount of the money paid in settlement of his claims against Roush was for his knees. His district court action appears to have been on account of his back injury and resulted in a judgment which was in excess of the final settlement with Travelers. I am therefore unable to assign any of the settlement to his knee claims.

CONCLUSIONS OF LAW

¶26 The parties agree that claimant suffers from an OD that arose while he was employed by the uninsured employer. (Uncontested Fact 9.) The UEF, however, has refused payment of any benefits on two grounds. First, it urges it is entitled to an offset under section 39-71-511, MCA , which provides that a claim for benefits against the UEF is "discharged . . . to the extent that an employee . . . receive[s] actual monetary compensation by judgment or settlement from the uninsured employer . . . ." Secondly, it contends that the general release executed by claimant bars his claim altogether.

I.

¶27 Claimant argues that the UEF's defenses are barred because the UEF did not "appeal" or "cross-appeal" from the February 1, 1999 Order of Determination of the Department of Labor and Industry. Claimant argues as follows:

§ 39-72-612, MCA 1991 provides that the Department's Order is final and cannot be appealed unless a request for hearing is presented within 20 days of the date the department issued its order of determination. The petitioner appealed the apportionment issue. The respondent neither appealed nor cross-appealed from the February 1, 1991 Order of Determination. Therefore, this court has no authority to disturb the Department's Order finding that Hand is entitled to benefits.

(Petitioner's Post-Trial Brief at 3.)

¶28 Claimant misconstrues section 39-72-612, MCA (1991). Further, he overlooks other provisions applicable to these proceedings.

¶29 Provisions governing OD proceedings are procedural, therefore the ODA version in effect at the time of the proceedings applies. EBI/Orion Group v. Blythe, 281 Mont. 50, 54, 931 P.2d 38, 40 (1997). The 1997 version of the ODA was in effect at the time claimant requested a panel examination, at the time the Department issued its initial order, and at the time the claimant filed his request for a contested case hearing, therefore it was that version which applied to those three events.

¶30 Initially, section 39-72-602(2)(a), MCA (1997), provided for a medical examination by a panel physician. That was done. Under subsection (2)(b), both claimant and the UEF then had 20 days in which to request a further examination by a second panel member. They did not request a second examination, therefore a determination was issued February 1, 1999, pursuant to subsection (2)(c)(i), which provided:

(c)  (i)  If a second examination is not requested, the department shall issue its order determining whether the claimant is entitled to occupational disease benefits based on the report of the first examining physician.

¶31 This order issued February 1st, was not a final order of determination, rather it was an initial order subject to provisions giving both parties a right to a hearing. See Epperson v. Willis Corroon Administrative Services Corp., 281 Mont. 373, 934 P.2 1034 (1997). Section 39-72-611 and -612, MCA (1997), provide:

39-72-611.   Hearing on determination -- when. Upon the depart-ment's own motion or if a claimant or an insurer requests that a hearing be held by the department prior to the time the department issues its final determination concerning the claimant's entitlement to occupational disease benefits, the department shall hold a hearing.

39-72-612.   Hearing and appeal to workers' compensation judge. (1) Within 20 days after the department has issued its order of determination as to whether the claimant is entitled to benefits under this chapter, a party may request a hearing. In order to perfect an appeal to the workers' compensation judge, the appealing party shall request a hearing before the department. The department shall grant a hearing, which may be conducted by telephone or by videoconference. The department's final determination may not be issued until after the hearing. [Emphasis added.]

The sections do not refer to an "appeal"; they do not require either party to state grounds for a so-called "appeal"; and they do not preclude any party from raising issues not expressly stated in a so-called "appeal." Indeed, terming the request for hearing an "appeal" is a misnomer. Under sections 39-72-611 and -612 a request by either party simply triggered a contested case proceeding under the Montana Administrative Procedure Act (MAPA).

¶32 Under MAPA the UEF was entitled to raise defenses or other matters in avoidance of the claimant's ODA claim. MAPA expressly contemplates expansion of issues beyond an original notice of hearing. Section 2-4-601, MCA (2002), provides in relevant part:

2-4-601. Notice. (1) In a contested case, all parties must be afforded an opportunity for hearing after reasonable notice.

(2) The notice must include:

. . .

(d) a short and plain statement of the matters asserted. If the agency or other party is unable to state the matters in detail at the time the notice is served, the initial notice may be limited to a statement of the issues involved. Thereafter, upon application, a more definite and detailed statement must be furnished.

In Board of Trustees of Billings School Dist. No. 2 of Yellowstone County v. State ex rel. Bd. of Personnel Appeals, 185 Mont. 104, 108, 604 P.2d 778, 780 (1979), the Supreme Court acknowledged that pleadings may be appropriate in administrative proceedings and

that any pleadings should be "liberally construed."

¶33 Subsequent to the claimant's request for a hearing, the 1999 legislature amended sections 39-72-602, MCA, and repealed sections 39-72-611 and -612, MCA. As amended, section 39-72-602, MCA, vests the Workers' Compensation Court with original jurisdiction over OD disputes, providing:

(2) In order to determine the compensability of claims under this chapter when an insurer has not accepted liability, the following procedure must be followed:

(a) The department shall direct the claimant to an evaluator on the list of physicians for an examination. The evaluator shall conduct an examination to determine whether the claimant is totally disabled and is suffering from an occupational disease. In the case of a fatality, the evaluator shall examine the records to determine if the death was caused by an occupational disease. The evaluator shall submit a report of the findings to the department.

(b) Within 7 working days of receipt, the department shall mail the report of the evaluator's findings to the insurer and claimant.

(c) Upon receipt of the report, if a dispute exists over initial compensability of an occupational disease, it is considered a dispute that, after mediation pursuant to department rule, is subject to the jurisdiction of the workers' compensation court. [Emphasis added.]

¶34 The 1999 amendments to section 39-72-602, MCA, were effective April 23, 1999. However, the legislature made a specific provision regarding the application of the amendments to OD claims arising prior to the effective date. Section 31(2), Ch. 442 , 1999 Montana Laws, states that the transfer of jurisdiction to the Court applies to occupational diseases occurring before April 23, 1999, unless a party elects, after notification by the department, to remain in the contested case process. In this matter, neither party asked to remain within the contested case process of the Department of Labor and on May 24,1999, the Department transferred the case to the Court.

¶35 Subsequent to the transfer, the Court issued a Scheduling Order establishing dates for trial and pretrial procedures and ordering the parties to participate in mediation before a Department mediator. Mediation was unsuccessful and on March 27, 2000, the parties presented a Stipulation to the Court requesting a pretrial resolution of the following question: "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?"(2) (Stipulation at 2.) After briefing, that issue was submitted and resolved by this Court's September 18, 2000 Order on Applicability of Section 39-71-511, MCA. In that Order I held that the setoff applies only to the extent that the Travelers' settlement encompassed the harm or condition for which claimant is presently seeking benefits.

¶36 Since the proceeding in this Court was commenced in the Department and did not involve a petition, response or other pleadings, on September 18, 2000, the Court also issued an Order directing both parties to file summaries of their contentions. The Order provided in relevant part:

Because this occupational disease case was transferred to the Workers' Compensation Court following amendment to the Occupational Disease Act (§ 39-71-602(2)), there is no petition before the Court. In order to facilitate adjudication of the pending claim, petitioner Dennis Hand is ordered within 20 days to file and serve upon respondent Uninsured Employers' Fund (UEF) a summary of contentions meeting the requirements of ARM 24.5.301(a) through (h).

UEF is ordered to file responsive contentions meeting the requirements of ARM 24.5.302 within 20 days after service of claimant's summary of contentions.

(Order to File Summary of Contentions at 1.)

¶37 Petitioner thereafter filed a Summary of Contentions requesting a determination that he suffered a compensable OD and is entitled to full total disability benefits as well as rehabilitation, rehabilitation benefits, and medical benefits. In turn, the UEF filed its Summary of Contentions, which reads as follows:

1. The occupational disease conditions regarding Hand's knees are not more than 25% attributable to his employment by Roush.

2. When Hand entered into the settlement with Travelers, Hand executed a release of all claims related to, and arising out of Hand's employment with Roush.

3. The release of all claims executed by Hand provides Roush and the UEF a complete defense to Hand's pending occupational disease claim.

4. The UEF is entitled to apply the setoff provided by § 39-71-511, MCA, against the $328,500 paid by Travelers, to whatever liability the UEF may have to Hand, with respect to Hand's claim for benefits under the Occupational Disease Act.

5. The UEF has not acted unreasonably with respect to Hand's claim.

6. If the UEF is obligated to make benefit payments to Hand or his medical providers, the UEF is entitled to be indemnified by Roush pursuant to § 39-71-504, MCA.

7. In the release of all claims against Roush, Hand agreed to indemnity [sic] Roush for claims against Roush that arise out of the claims released by Hand.

8. Because of the statutory indemnity obligations of Roush to UEF, and the contractual indemnity obligations of Hand to Roush, an order requiring the UEF to pay Hand benefits would result in a circular flow of payments from the UEF to Hand, from Roush to the UEF, and from Hand to Roush.

(UEF's Summary of Contentions at 2-3, emphasis added.) Even if the response filed by the UEF is deemed an amendment to the pleadings, it would be an abuse of discretion to deny the amendments. As said in the recent case of Loomis v. Luraski, 2001 MT 223, ¶41, 36 P.3d 862:

A party may amend its pleading by leave of court and leave shall be freely given when justice so requires. Rule 15(a), M.R.Civ.P. It is an abuse of discretion for the district court to refuse to permit amendments to pleadings which are offered at a reasonable time and which should be made in the furtherance of justice.

¶38 I therefore conclude that the claimant's attempt to preclude the Court from considering the effect of his release on his right to benefits is without merit.

II.

¶39 In light of my resolution of the first issue, I now consider the effect of the claimant's release of Roush.

¶40 The UEF is a statutory entity created by the legislature to provide a safety net for claimants who suffer industrial injuries while working for uninsured employers.

Because not all employers comply with the statutory requirement to carry insurance on their employees, the UEF was created to provide an injured employee of an uninsured employer with the same benefits which the employee would have received had the employer been properly enrolled in a workers' compensation plan. See § 39-71-502, MCA (1991). Zempel v. Uninsured Employers' Fund (1997), 282 Mont. 424, 431, 938 P.2d 658, 663. The UEF is a legislatively created fund, the payments from which are intended to minimize the hardships imposed when an injured worker is unable to get workers' compensation benefits as a result of the employer's failure to provide coverage. Thayer [1999 MT 304,] ¶ 21. The UEF is not an insurer, but merely a safety net. Thayer ¶ 24.

Auto Parts of Bozeman v. Employment Relations Div. Uninsured Employers' Fund, 2001 MT 72, ¶ 22, 305 Mont. 40, 47, 23 P.3d 193, 198 (2001). Thus,"[t]he Fund merely stands in the place of the uninsured employer, to provide some basis for recovery where the employer is impecunious." Thayer v. Uninsured Employers' Fund, 1999 MT 304, ¶ 23, 297 Mont. 179, 991 P.2d 447.

¶41 At the time of the claimant's OD claim, the UEF was required to pay the claimant the same benefits as he would have been entitled to if his employer had been insured. Section 39-71-502, MCA (1991), provided:

39-71-502.  Creation and purpose of uninsured employers' fund. There is created an uninsured employers' fund. The purpose of the fund is to pay to an injured employee of an uninsured employer the same benefits the employee would have received if the employer had been properly enrolled under compensation plan No. 1, 2, or 3, except as provided in 39-71-503(2).

However, the laws in effect at that time also provided, as they do now, for the UEF to recover any benefits paid a claimant from the uninsured employer.(3) Section 39-71-504(2)(a), MCA (1991), provided:

(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. However, the uninsured employer's liability under this subsection (2)(a) may not exceed $50,000.(4)

Thus, if claimant recovers in this case, the UEF would be statutorily entitled to seek repayment from Roush.

¶42 The comprehensive General Release was clearly and unequivocally intended to prevent that possibility. While the release has been set out in full earlier in this decision, the pertinent parts bear repeating here:

KNOW ALL MEN BY THESE PRESENTS:

That I, DENNIS HAND, for and in consideration of the sum of THREE HUNDRED TWENTY-EIGHT THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($328,500.00) . . . have released and discharged and by these presents do release and forever discharge G. JON ROUSH and KATHERINE M. ROUSH, husband and wife, d/b/a the SWITCHBACK RANCH, the said TRAVELERS INSURANCE COMPANIES, and their past, present, and future officers, directors, attorneys, agents, servants, representatives, employees, subsidiaries, affiliates, partners, predecessors and successors in interest, assigns, insurers and reinsurers, and all other persons, firms, or corporations (hereinafter collectively referred to as the Releasees), whether herein named or referred to or not, and who, together with the above-named released parties, may be in any wise directly or indirectly liable to me, of and from any and all actions and causes of action, claims, and demands of every kind whatsoever, whether arising out of contract or tort or by operation of law, and whether for compensatory or punitive damages, from the beginning of time until the date of this release. This release shall include, but is not limited to, all my claims for damages, punitive damages, fraud, mental suffering, emotional distress, physical distress, psychic injury, costs, unfair claim settlement practices arising under Title 33, Chapter 18, Montana Code Annotated and compensation of every kind, arising from and by reason of any conduct, acts, or omissions to act by Releases in investigating, adjusting, handling, litigating, and negotiating various claims of mine arising as a result of injuries that I suffered on or about September 18, 1992 and October 10, 1992 at Florence, Montana, while working for G. Jon Roush and Katherine M. Roush, husband and wife, d/b/a the Switchback Ranch.

The release could hardly be more clear in its intent to release not only the Roushes and Travelers, but any other entities which may be derivatively liable, from "any and all actions and causes of action . . . from the beginning of time until the date of this release." It could not be more clear in its intent to protect the Roushes from any further liability relating to the claimant and its employment of him.

¶43 To allow claimant's ODA claim would require one of two things: it would require nullification of the UEF's statutory right to recover payments made to claimant from the Roushes or it would require the Roushes to pay additional amounts in contravention with the claimant's release. Neither alternative is acceptable. I therefore hold that the UEF was released from liability.

¶44 I am unsympathetic to claimant's assertions that he did not intend to settle the OD claims. There is no provision in the General Release reserving those claims. Moreover, claimant clearly could have pursued his OD claim long ago. He mentioned his knee problems when he filed his 1992 back claim. He filed his knee claim in 1993, then he sat on the claim for over five and a half years while he pursued a district court action against the Roushes and collected $328,500 from the Roushes' liability insurer. Then he renewed his OD claim. Whether his failure to pursue his OD claim for five and a half years was a deliberate strategy is unknown. If it was, it has not worked and warrants condemnation. If it was not, then he was remiss in failing to diligently pursue the claim and for executing the General Release without excepting the OD claim.

JUDGMENT

¶45 The claimant is not entitled to OD benefits. His claim is dismissed with prejudice.

¶46 The claimant is not entitled to costs or attorney's fees.

¶47 This JUDGMENT is certified as final for purposes of appeal.

¶48 Any party to this dispute may have 20 days in which to request a rehearing from these Findings of Fact, Conclusions of Law and Judgment.

DATED in Helena, Montana, this 28th day of August, 2002.

(SEAL)

\s\ Mike McCarter
JUDGE

c: Mr. Tom L. Lewis
Mr. Mark Cadwallader
Submitted: May 20, 2002

1. Roush did business as Swtichback Ranch.

2. That stipulation is inconsistent with claimant's present contention that the UEF is barred from raising defenses to his claim because it failed to appeal the Department's February 1, 1999 Order. The stipulation expressly requested the Court to consider a defense.

3. When beginning work on this decision it occurred to me that one possible outcome was a determination that the UEF is liable for benefits and could seek statutory reimbursement from the employer despite the General Release. In light of that possibility I had the Court's hearing examiner contact counsel to query whether the employer should be joined as a party since it could potentially relitigate the issue if not a party in this case, thus creating the potential for conflicting decisions. Claimant's counsel objected to joinder. In light of my ultimate resolution of the issues, joinder is moot in any event.

4. Current law permits recovery without restriction on amount. § 39-71-504(1)(b), MCA (2001).

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