|
No.
96-103
IN
THE SUPREME COURT OF THE STATE OF MONTANA
1997
DARWIN
ZEMPEL,
Petitioner
and Appellant,
v.
UNINSURED
EMPLOYERS' FUND,
Respondent
and Insurer.
APPEAL FROM: Workers' Compensation Court, State of Montana,
The Honorable Mike McCarter, Judge presiding.
COUNSEL OF RECORD:
For
Appellant:
Thomas
C. Bulman; Bulman Law Associates,
Missoula, Montana
For
Respondent:
Mark
Cadwallader, Department of Labor & Industry, Legal
Services Division, Helena, Montana
Submitted on Briefs: July 11, 1996
Decided:
May 15, 1997
Filed:
__________________________________________
Clerk
Justice Karla M. Gray delivered the Opinion of the Court.
Darwin Zempel (Zempel) appeals from the judgment of the Workers'
Compensation Court dismissing his petition for a declaratory judgment.
We affirm.
We restate the issues on appeal as follows:
1. Did the Workers'
Compensation Court err in concluding that 39-71-501,
MCA (1991), as applied, does not deny Zempel equal protection of the laws?
2. Did the Workers'
Compensation Court err in concluding that 39-71-501,
MCA (1991), as applied, does not deny Zempel access to the courts?
FACTUAL AND
PROCEDURAL BACKGROUND
The facts in this
case are undisputed. In early December of 1991, Zempel was
living and working on the Flathead Reservation in Lake County, Montana.
He injured
his eye while employed by Rodney Schall (Schall), an enrolled member of
the
Confederated Salish and Kootenai Tribes (Confederated Tribes) of the Flathead
Reservation. Zempel is not a member of the Confederated Tribes.
At the time of
Zempel's injury, Schall was conducting a logging operation on the
Flathead Reservation pursuant to a contract with Flathead Post and Pole
Yard, Inc.
(Flathead Post and Pole), a tribally-owned business. Schall did not have
workers'
compensation insurance at the time of Zempel's injury. The Confederated
Tribes carried workers' compensation insurance, obtained through the State
Compensation Mutual Insurance Fund (State Fund), which covered tribal
members employed by Flathead Post and Pole.
Following his
injury, Zempel filed two petitions in the Workers' Compensation
Court seeking workers' compensation benefits from the State Fund. Those
petitions were dismissed without prejudice after the parties agreed to
proceed in the Confederated Tribes' tribal court (Tribal Court).
In accordance
with the parties' agreement, the State Fund, together with Flathead
Post and Pole, filed a declaratory judgment action in the Tribal Court,
naming Schall and other loggers as respondents. The State Fund and Flathead
Post and Pole requested the Tribal Court to determine whether Schall and
the other loggers' contracts with Flathead Post and Pole required them
to carry workers' compensation insurance. The petition also requested
the Tribal Court to determine whether the Workers' Compensation Act (the
Act) is applicable to a business wholly owned by an enrolled tribal member
(Indian business) and operated exclusively within the exterior boundaries
of the Flathead Reservation. Zempel intervened in the action. The Tribal
Court concluded that Schall's contract with Flathead Post and Pole did
not require him to carry workers' compensation insurance. It further concluded
that the Act does not apply to an Indian business conducted exclusively
within the exterior boundaries of the Flathead Reservation.
Zempel then sought
benefits for his injury from the Uninsured Employers' Fund
(UEF), a statutory fund which is part of the Act and the general purpose
of which is to pay an injured employee of an "uninsured employer"
the benefits the employee would have received if the employer had been
properly enrolled under the Act. The UEF denied Zempel's claim for benefits
on the basis that Schall was not an "uninsured employer" as
defined in 39-71-501, MCA (1991), because he was not--and could not
be--required to carry workers' compensation insurance under the Act.
Zempel subsequently
petitioned the Workers' Compensation Court for a
declaratory judgment, naming the UEF as the respondent. Zempel and the
UEF agreed that Schall could not be required to carry workers' compensation
insurance and, therefore, that he was not an "uninsured employer"
as defined in 39-71-501, MCA (1991). By stipulation, they limited the
issue before the Workers' Compensation Court to whether 39-71-501, MCA
(1991), as applied, denies Zempel equal protection of the laws or access
to the courts in violation of the Montana Constitution.
In accordance
with well-established case law requiring courts to avoid
constitutional questions whenever possible, the Workers' Compensation
Court made an independent determination that the Act does not apply to
a business wholly owned by tribal members and operating exclusively on
the Flathead Reservation. As a result, the court concluded that Schall
was not required to provide workers' compensation insurance for his employees;
that, for the same reason, Schall was not an uninsured employer within
the meaning of 39-71-501, MCA (1991); and, therefore, that the UEF is
not statutorily obligated to pay benefits for Zempel's work-related injury.
Turning to the constitutional questions of whether 39-71-501, MCA (1991),
as applied, denied Zempel equal protection of the laws or access to the
courts under the Montana Constitution, the Workers' Compensation Court
concluded that it did not. Zempel appeals the court's conclusions on his
constitutional arguments.
STANDARD OF REVIEW
It is well-established
in Montana that a legislative enactment "is presumed to be
constitutional and will be upheld on review except when proven to be unconstitutional
beyond a reasonable doubt." City of Billings v. Laedeke (1991), 247
Mont. 151, 154, 805 P.2d 1348, 1349. A party attacking the constitutionality
of a statute bears a significant burden in establishing its invalidity.
In re Matter of Wood (1989), 236 Mont. 118, 122, 768 P.2d 1370, 1373 (citation
omitted).
Zempel asserts error by the Workers' Compensation Court in interpreting
the law
applicable to this case. We review the Workers' Compensation Court's conclusions
of law to determine if the court's interpretation of the law is correct.
Caekaert v. State Compensation Mutual Ins. Fund (1994), 268 Mont. 105,
110, 885 P.2d 495, 498.
DISCUSSION
1. Did the Workers'
Compensation Court err in concluding that 39-71-
501, MCA (1991), as applied, does not deny Zempel equal protection of
the laws?
The principal
purpose of the Equal Protection Clause is to ensure that citizens are
not subject to arbitrary and discriminatory state action. Godfrey v. Montana
State Fish & Game Comm'n (1981), 193 Mont. 304, 306, 631 P.2d 1265,
1267. We review state action or legislation subject to an equal protection
challenge under one of three levels of scrutiny. See McKamey v. State
(1994), 268 Mont. 137, 145-46, 885 P.2d 515, 521.
If a fundamental
right is infringed or a suspect class is affected, we apply strict scrutiny.
McKamey, 885 P.2d at 521. We apply middle-tier scrutiny in limited situations
where constitutionally significant interests are implicated by government
classification. See Butte Community Union v. Lewis (1986), 219 Mont. 426,
434, 712 P.2d 1309, 1314. In all other situations, we apply the rational
basis test; the inquiry under this test is whether the classification
is rationally related to a legitimate government objective. McKamey, 885
P.2d at 521.
The Workers' Compensation
Court applied the rational basis test to Zempel's equal
protection challenge to 39-71-501, MCA (1991). Zempel contends that,
pursuant to Lewis, middle-tier scrutiny applies because, like welfare
benefits, workers' compensation benefits are "lodged in" Article
XII, Section 3(3) of the Montana Constitution. We disagree that Lewis
has application here.
At the time Lewis
was decided, Article XII, Section 3(3) of the Montana
Constitution provided: "The legislature shall provide such economic
assistance and social and rehabilitative services as may be necessary
for those inhabitants who, by reason of age, infirmities, or misfortune
may have need for the aid of society." See Lewis, 712 P.2d at 1310
(emphasis added). We determined that this section did not create a fundamental
right to welfare benefits because the directive to provide such benefits
was not found within the Declaration of Rights and welfare was not a right
" 'without which other constitutionally guaranteed rights would have
little meaning.' " See Lewis, 712 P.2d at 1311 (citation omitted).
We noted, however, that welfare benefits were sufficiently important to
warrant reference in our Constitution and concluded that, by virtue of
the directive contained in Article XII, Section 3(3), welfare benefits
were "lodged in" the Montana Constitution. See Lewis, 712 P.2d
at 1311, 1313. On that basis, we held that classifications which abridge
welfare benefits are subject to heightened scrutiny, or a middle-tier
analysis. Lewis, 712 P.2d at 1311, 1313-14.
Article XII, Section
3(3) of the Montana Constitution was amended in 1988,
approximately two years after we decided Lewis. The amended version was
in effect at the time of Zempel's work-related injury.
As amended, Article
XII, Section 3(3) provides: "The legislature may provide such
economic assistance and social and rehabilitative services for those who,
by reason of age, infirmities, or misfortune are determined by the legislature
to be in need." (Emphasis added.) Unlike the version of Article XII,
Section 3(3) at issue in Lewis, the amended version does not contain a
directive that the legislature shall provide welfare benefits. Thus, the
constitutional underpinning for our application of heightened scrutiny
to a statute abridging welfare benefits in Lewis no longer existed at
the time of Zempel's injury. As a result, Lewis provides no support for
Zempel's argument for application of middle-tier analysis here and it
is not necessary to determine whether workers' compensation benefits are
"lodged in" Article XII, Section 3(3) of the Montana Constitution.
Moreover, we consistently
have applied the rational basis test to equal protection
challenges in workers' compensation cases. See, e.g., Stratemeyer v. Lincoln
County (1993), 259 Mont. 147, 151, 855 P.2d 506, 509 (Stratemeyer I);
Burris v. Employment Relations Div./Dept. of Labor and Indus. (1992),
252 Mont. 376, 380, 829 P.2d 639, 641; Cottrill v. Cottrill Sodding Serv.
(1987), 229 Mont. 40, 43, 744 P.2d 895, 897.
In fact, we have
expressly rejected use of the middle-tier level of scrutiny in analyzing
equal protection arguments in a workers' compensation case. See Burris,
829 P.2d at 641 (citation omitted). We conclude, therefore, that the rational
basis test applies in determining whether 39-71-501, MCA (1991), as
applied, denies Zempel equal protection of the laws.
Zempel's equal
protection argument is not a model of clarity. He contends that
he is advancing an "as applied" challenge, rather than a facial
challenge, to the definition of uninsured employer contained in 39-71-501,
MCA (1991), in that application of the definition to his situation precludes
his entitlement to the same UEF benefits as "all other workers."
This approach apparently recognizes that a facial equal protection challenge
to the definition of uninsured employer contained in 39-71-501, MCA
(1991), is not available because Zempel is excluded from UEF coverage
by controlling principles of federal law regarding state jurisdiction
over Indian reservations, rather than by the statutory definition itself.
On the other hand, Zempel relies on our analysis of a facial equal protection
challenge in Arneson v. State, by Dept. of Admin. (1993), 262 Mont. 269,
864 P.2d 1245, in arguing that the statutory definition of uninsured employer
is under-inclusive due to the exclusion from UEF coverage of injured workers
employed by Indian businesses operating exclusively within the exterior
boundaries of the Flathead Reservation.
In considering
Zempel's equal protection challenge, we initially address the Act
itself and the underlying purpose of the UEF, which is part of the Act.
The Montana
legislature enacted the Act to provide employees who experience work-related
injuries with guaranteed compensation on a no-fault basis while relieving
employers from potential uncapped tort recoveries. See Stratemeyer v.
Lincoln County (1996), 276 Mont. 67, 74, 915 P.2d 175, 179 (Stratemeyer
II); see also 39-71-105(1), MCA (1991). To that end, and with certain
statutory exceptions, employers in Montana are subject to the Act and
are required to provide workers' compensation insurance coverage to their
employees through enrollment in one of three workers' compensation insurance
plans. See 39-71-401, MCA (1991). Nothing in the 1991 Act specifically
exempts or excludes Indian businesses operated exclusively on an Indian
reservation in Montana from being subject to the Act.
The UEF was created
as part of the Act 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). For UEF purposes, "uninsured employer"
is defined as an "employer who has not properly complied" with
the Act by enrolling in a workers' compensation insurance plan, as required
by 39-71-401(1), MCA (1991). See 39-71-501, MCA (1991). Thus, only
injured employees of employers meeting the definition of uninsured employer
contained in 39-71-501, MCA (1991), are entitled to the "substitute"
workers' compensation benefits the UEF was created to provide to injured
employees of employers who have failed to "properly compl[y]"
with the Act. See 39-71-501 and 39-71-502, MCA (1991).
The UEF is part
of the Act and inseparable from it. The UEF is funded by
reimbursed benefits from statutorily-defined "uninsured employers"--employers
subject to the Act but who fail to meet its requirements--as well as by
penalties assessed against such employers. See 39-71-504, MCA (1991).
As a result, the UEF has no funding mechanism to provide "substitute"
workers' compensation benefits to injured employees of employers not subject
to the Act. If the UEF were to provide coverage to employees whose employers
are not subject to the Act, such as employees of Indian businesses operating
exclusively on Indian reservations, it would be unable to recoup such
benefits from the exempt employers. Nor would the UEF have authority to
assess penalties against such employers.
Zempel's equal
protection argument essentially asks us to unhook the UEF from
the Act of which it is an integral part, but it is the tie between the
two--and the viability of the UEF as a direct result of that tie--which
is the very purpose for which the UEF was created. The limitation on entitlement
to UEF benefits to injured employees of uninsured employers subject to
the Act bears a reasonable relationship to that purpose because it is
only those employers subject to the Act in the first instance upon whom
the State can impose the reimbursement and penalty obligations which provide
the source of the UEF benefits.
In this regard,
it is critical to recall that equal protection does not require that all
persons be treated alike regardless of whether their circumstances are
the same; it
requires only that all persons be treated alike under like circumstances.
See Billings
Assoc. Plumbing, Etc. v. State Bd. of Plumbers (1979), 184 Mont. 249,
253, 602 P.2d 597, 600 (citations omitted). Here, Zempel's circumstances
are unlike those of injured employees working for uninsured employers
as defined by 39-71-501, MCA (1991).
Statutorily-defined
uninsured employers have failed to comply with an Act to which they are
subject, but they remain subject to the state's authority to enforce funding
for the UEF through reimbursement and penalties. Schall, on the other
hand, has not failed to comply with the Act because he is not subject
to it by virtue of federal Indian law; nor is he subject to the state's
authority to fund UEF benefits through imposition of reimbursement and
penalty obligations on employers subject to the Act. We conclude, therefore,
that because Indian businesses operating exclusively on Indian reservations
are not subject to the Act, the exclusion of injured employees of such
employers from UEF coverage--via application of the 39-71-501, MCA (1991),
definition of "uninsured employer"--is rationally related to
the legitimate government purpose of providing "substitute"
workers' compensation benefits to injured employees of employers subject
to--but failing to comply with--the Act.
We note that Zempel
relies entirely on Arneson in support of his argument that the
39-71-501, MCA (1991), definition of "uninsured employer"
is under-inclusive and, therefore, violates equal protection as applied
to him. As noted above, however, Arneson involved a facial equal protection
challenge to a statute. Our analysis there, which involved whether a rational
basis existed for a legislative classification, cannot be superimposed
onto Zempel's "as applied" challenge to 39-71-501, MCA (1991),
in this case, because here it is federal law regarding state jurisdiction
over Indian reservations-- rather than a legislative classification--which
results in the classification excluding Zempel from UEF coverage.
Moreover, we agree
with the Workers' Compensation Court's observation that,
when citizens of Montana avail themselves of jobs on an Indian reservation,
they agree to abide by tribal rules. It is no more onerous to exclude
a Montana citizen who decides to work on an Indian reservation from the
protections of the Act--and the UEF--than to exclude a Montana citizen
who decides to work in another state.
Accordingly, we
hold that the Workers' Compensation Court did not err in
concluding that 39-71-501, MCA (1991), as applied, does not deny Zempel
equal
protection of the laws.
2. Did the Workers'
Compensation Court err in concluding that 39-71-501, MCA (1991), as
applied, does not deny Zempel access to the courts?
Relying on Article
II, Section 16 of the Montana Constitution, Zempel argues that
the Workers' Compensation Court erred in concluding that 39-71-501,
MCA (1991), as applied, does not deny him access to the courts. His denial
of access to the courts argument is based entirely on his lack of entitlement
to the legal remedies afforded injured employees under the Act. Specifically,
he points out that he is denied access to the Workers' Compensation Court
because his employer, Schall, is not subject to the Act and that he is
precluded from bringing an independent cause of action under 39-71-515,
MCA (1991), because Schall is not an uninsured employer as defined in
39-71-501, MCA (1991). We observe that the concessions inherent in Zempel's
specifications of denial of access--that Schall is not subject to the
Act and is not an "uninsured employer"-- constitute an implicit
concession that the Act is inapplicable.
Article II, Section
16 of the Montana Constitution provides that "[c]ourts of justice
shall be open to every person. . . ." Whatever the parameters of
this right of access to the courts may be, Zempel cites to no authority
pursuant to which a court action under a purely statutory scheme such
as the Act must be permitted even where the Act itself is conceded to
be inapplicable to the case at hand.
Furthermore, nothing
in 39-71-501, MCA (1991), as applied to Zempel,
precludes the viability of non-workers' compensation claims or actions
under such
circumstances and, indeed, an employee of such an employer not subject
to the Act is not limited by the exclusive remedy provision contained
within the Act. See 39-71-411, MCA (1991); see also Kleinhesselink v.
Chevron, U.S.A. (Mont. 1996), 920 P.2d 108, 111, 53 St.Rep. 668, 669;
Stratemeyer II, 915 P.2d at 181. Thus, while application of 39-71-501,
MCA (1991), may preclude judicial access and remedies under the Act, it
does not prevent Zempel from pursuing non-Act claims against Schall.
It is true that
federal law may limit Zempel's legal recourse against Schall to an
action in the Tribal Court, because state courts generally do not have
jurisdiction over civil causes of action by a non-Indian against an Indian
where the event at issue occurred on an Indian reservation; assumption
of jurisdiction by the state in such actions would "undermine the
authority of the tribal courts over Reservation affairs and hence would
infringe on the rights of Indians to govern themselves." See Williams
v. Lee (1959), 358 U.S. 217, 223, 79 S.Ct. 269, 272, 3 L.Ed.2d 251, 255.
However, Zempel has cited to no authority, and this Court has found none,
which requires--or even allows--guaranteed access to state courts for
an injury where such access is precluded by federal law prohibiting the
exercise of state jurisdiction over the claim. Accordingly, we hold that
the Workers' Compensation Court did not err in concluding that 39-71-501,
MCA (1991), as applied, does not deny Zempel access to the courts.
Affirmed.
/S/ KARLA M.
GRAY
We concur:
/S/ W. WILLIAM
LEAPHART
/S/ WILLIAM E. HUNT, SR.
/S/ JAMES C. NELSON
Justice Terry
N. Trieweiler specially concurring.
I concur with
the result of the majority opinion. However, consistent with my
dissenting opinion in Stratemeyer v. MACO Workers' Compensation Trust
(1993), 259 Mont. 147, 155, 855 P.2d 506, 511, I would apply middle-tier
scrutiny to any legislative classification which denies workers' compensation
benefits to distinct classes of injured employees.
Nevertheless,
applying middle-tier scrutiny to the distinction alleged in this case,
I would arrive at the same conclusion that the majority has reached pursuant
to the
rational basis test.
For these reasons,
I specially concur with the majority opinion.
/S/ TERRY N.
TRIEWEILER
|
