IN THE WORKERS' COMPENSATION
COURT OF THE STATE OF MONTANA
L. THAYER, (DECEASED)
SMITH, d/b/a RRS, INCORPORATED
DECISION AND JUDGMENT
Under section 39-71-511, MCA, Uninsured Employers' Fund ceased paying
death benefits to widow of worker whose death resulted from burns received
during the course and scope of employment for an uninsured employer.
The UEF argues it was entitled to discharge the remaining $74,301.22
of future benefits following the widow's recovery of $100,000 from the
uninsured employer in a tort lawsuit. The widow argues the UEF is not
entitled to a set-off and that section 39-71-511, MCA is unconstitutional
in that it violates the full redress provision stated in Article II,
section 16 of the Montana Constitution.
UEF is entitled to discharge the future benefits at issue under section
39-71-511, MCA. Because this is not the application of a subrogation
interest under section 39-71-414, MCA, limits on subrogation under that
statute do not apply. Application of the statute to permit discharge
following recovery from an employer does not limit full legal redress
under the Montana Constitution.
Regulations and Rules: Montana Code: section 39-71-511, MCA (1991).
Under section 39-71-511, MCA, the Uninsured Employers' Fund is entitled
to discharge the remaining $74,301.22 of future benefits payable to
decedent's widow based upon her recovery of $100,000 from the uninsured
employer in a tort lawsuit. See also Montana Supreme Court decision
affirming WCC, Thayer v. Uninsured
Employer's Fund, 1999 MT 304.
Regulations and Rules: Montana Code: section 39-71-511, MCA (1991).
The statutory authorization that the UEF may discharge benefits payable
to claimants of uninsured employers by the amount of third-party recovery
does not violate the "full redress" provision of Article
II, Section 16 of the Montana Constitution. See also Montana Supreme
Court decision affirming WCC, Thayer
v. Uninsured Employer's Fund,
1999 MT 304.
Regulations and Rules: Montana Constitution: Article II, section 16.
The statutory authorization that the UEF may discharge benefits
payable to claimants of uninsured employers by the amount of third-party
recovery does not violate the "full redress" provision of
Article II, Section 16 of the Montana Constitution. See also Montana
Supreme Court decision affirming WCC, Thayer
v. Uninsured Employer's Fund, 1999 MT 304.
section 39-71-511, MCA, the Uninsured Employers' Fund is entitled
to discharge the remaining $74,301.22 of future benefits payable to
decedent's widow based upon her recovery of $100,000 from the uninsured
employer in a tort lawsuit. The statutory authorization that the UEF
may discharge benefits payable to claimants of uninsured employers
by the amount of third-party recovery does not violate the "full
redress" provision of Article II, Section 16 of the Montana Constitution.
See also Montana Supreme Court decision affirming WCC, Thayer
v. Uninsured Employer's Fund, 1999 MT 304.
Employers' Fund: Generally. Under section 39-71-511, MCA, the Uninsured
Employers' Fund is entitled to discharge the remaining $74,301.22 of
future benefits payable to decedent's widow based upon her recovery
of $100,000 from the uninsured employer in a tort lawsuit. The statutory
authorization that the UEF may discharge benefits payable to claimants
of uninsured employers by the amount of third-party recovery does not
violate the "full redress" provision of Article II, Section
16 of the Montana Constitution. See also Montana Supreme Court decision
affirming WCC, Thayer v. Uninsured
Employer's Fund, 1999 MT 304.
¶1 This case is submitted
on an agreed statement of facts and exhibits. The issue presented is
whether the Uninsured Employers' Fund (UEF) may cut off death benefits
based on a monetary recovery received in an action against the uninsured
¶2 Gerald L. Thayer suffered
fatal burns when his clothes caught fire while he was cutting scrap
metal with a torch. Mrs. Phyllis Thayer, the petitioner herein, is his
¶3 In a prior proceeding
before this Court, I found that at the time of his accident Mr. Thayer
was employed by Richard Smith (Smith) and acting within the scope and
course of his employment. Since Smith was uninsured, I entered judgment
against the UEF for medical and death benefits. Gerald Thayer (deceased)
by Phyllis Thayer v. Uninsured Employers' Fund, WCC No. 9311-6942,
Findings of Fact, Conclusions of Law and Judgment (December 8, 1994).
Facts concerning the accident and the employment relationship are set
forth in the prior decision.
¶4 Thereafter, Mrs. Thayer
pursued negligence and wrongful death actions against Smith and Garry
Thompson (Thompson), who worked for or with Smith.(1)
She also brought negligence and products liability actions against the
retail seller and the manufacturer of a chemical product Mr. Thayer
had applied to his clothing as a fire retardant. Ultimately, Smith declared
bankruptcy; however, his liability insurer paid $100,000 to Mrs. Thayer.
The remaining actions were settled for $305,000, bringing the total
amount received by Mrs. Thayer to $405,000 before attorney fees and
¶5 Based on the $100,000
settlement with Smith's liability insurer, on June 25, 1997, the UEF
terminated Mrs. Thayers' biweekly death benefits effective July 9, 1997.
¶6 Mr. Thayer's medical expenses
alone were $253,207.98. In addition, in the tort actions, Mrs. Thayer
claimed the following damages:
death, loss of companionship, grief, etc.
medical expenses, the total damages claimed were
¶7 The UEF's payments on
this claim total $156,878.78. Of that amount, $85,000.00 was paid to
the Montana Department of Public Health and Human Services (DPHHS) to
reimburse it, at least in part, for medical payments it made for Mr.
Thayer's treatment.(3) The DPHHS released
its lien, thus the UEF's obligation for medical expenses has been satisfied.
The remaining $71,878.78 represents biweekly benefits paid to Mrs. Thayer
for the period October 22, 1992 through July 8, 1997. Absent the settlements,
the UEF's additional exposure is $74,301.22.(4)
¶8 The parties have separately
set out their statement of issues. Mrs. Thayer frames her issues as
1. Is § 39-71-511 MCA,
2. If § 39-71-511 is constitutional,
is UEF entitled to a setoff when the Petitioner's damages exceed the
third party recoveries from the uninsured employer?
3. If § 39-71-511 is constitutional,
is UEF entitled to a setoff before the employee or his beneficiaries
is made whole for their entire loss, including attorney fees and costs?
4. If § 39-71-511 is constitutional,
is UEF entitled to a setoff for settlements which include damages
that are in addition to medical expenses and lost earnings?
5. Were the actions of
the UEF in terminating benefits unreasonable or did the UEF unreasonably
delay or refuse to make the benefit payments?
6. If the actions of the
UEF were unreasonable or if the UEF unreasonably delayed or refused
to make benefit payments, what is the amount of attorney fees, costs,
and statutory penalty to which Petitioner is entitled?
The UEF sets forth the following
7. Does the UEF's application
of § 39-71-511 MCA (1991), set off rights as to the $100,000.00 paid
by the uninsured employer, Richard Smith, deny Mrs. Thayer her right
to full legal redress under the Montana Constitution, Article II,
¶9 The Montana Workers' Compensation
Act (WCA) requires every employer, with some exceptions, to provide
workers' compensation insurance coverage for its workers. § 39-71-401,
MCA. Coverage may be provided by insuring with the State Compensation
Insurance Fund or a private insurer, or by self-insuring. (Id.
and see Title 39, chap. 71, parts 21, 22 and 23.) In exchange for providing
workers' compensation insurance to its workers, the employer is insulated
from liability arising in tort on account of injuries the employee suffers
at work. § 39-71-411, MCA.
¶10 The WCA establishes the
UEF as a safety net for workers whose employers fail to provide insurance.
Section 39-71-502, MCA, provides in relevant part:
and purpose of uninsured employers' fund.
(1) There is created an
uninsured employers' fund. The purpose of the fund is to pay:
(a) 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); and
. . .
¶11 On its face, section
39-71-502(1)(a), MCA, requires that the UEF pay the same benefits as
plan 1, 2 and 3 insurers and self-insurers. The section, however, does
not stand alone. It must be read together with other sections. Dale
v. Trade Street, Inc., 258 Mont. 349, 357, 854 P.2d 828, 832 (1993)
(Courts must "construe the several provisions of a statute to give effect
to all, if possible."); State v. Berger, 259 Mont. 364, 367,
856 P.2d. 552, 554 (1993) ("We are required to avoid any statutory interpretation
that renders any sections of the statute superfluous and does not give
effect to all of the words used.").
¶12 Other sections limit
the benefits payable by the UEF. Initially, section 39-71-503, MCA,
provides a statutory appropriation for the UEF and limits the benefits
payable by the UEF to the appropriated moneys. Since the appropriation
may be insufficient to pay all benefits, the section also prioritizes
benefits. The section provides:
of fund -- appropriation.
(1) The department shall
administer the fund and shall pay from it all expenses of administering
the fund, all loss adjustment expenses for claims of injured employees
of uninsured employers, and all proper benefits to injured employees
of under insured and uninsured employers.
(2) Surpluses and reserves
may not be kept for the fund. The department shall make payments that
it considers appropriate as funds become available from time to time.
The payment of weekly disability benefits takes preference over the
payment of medical benefits. No lump-sum payments of future projected
benefits, including impairment awards, be made from the fund. The
board of investments shall invest the money of the fund. The cost
of administration of the fund must be paid out of the money in the
(3) The amounts necessary
for the payment of benefits from this fund are statutorily appropriated,
as provided in 17-7-502, from this fund.
The appropriation mentioned
in subsection (3) is a permanent appropriation, § 17-7-502, MCA, based
on moneys collected by the UEF under section 39-71-504, MCA.(6)
¶13 Section 39-71-503(2),
MCA, indicates that UEF benefits are payable only to the extent of available
funds. Section 39-71-510, MCA, makes that limitation express, providing:
on benefit entitlement under fund. Notwithstanding the provisions
of 39-71-407, 39-71-502, and 39-71-503, injured employees or an employee's
beneficiaries who pursue a claim for benefits from the uninsured employers'
fund are not granted an entitlement by this state for full workers'
compensation benefits from the fund. Benefits from the fund must be
paid in accordance with the sums in the fund. If the department determines
at any time that the sums in the fund are not adequate to fully pay
all claims, the department may make appropriate proportionate reductions
in benefits to all claimants. The reductions do not entitle claimants
to retroactive reimbursements in the future.
¶14 Section 39-71-511, MCA,
places a further limitation on benefits payable by the UEF. The section
to claim against fund. A claim for benefits from the uninsured
employer's fund must be discharged, finally or periodically, to the
extent that an employee or the employee's beneficiaries receive actual
monetary compensation by judgment or settlement from the uninsured
employer, a third party who shares liability as defined in 39-71-412,
or a fellow employee who shares liability as defined in 39-71-413.
The section is separate and
distinct from the general subrogation right afforded plan 1, 2 and 3
insurers and self-insurers, § 39-71-414, MCA, and the grist for the
¶15 The UEF relies on section
39-71-511, MCA, in justifying its termination of Mrs. Thayer's benefits.
To date it has paid Mrs. Thayer $71,878.78. Absent the set-off provision
of section 39-71-411, MCA, its further liability is $74,301.22. The
UEF argues that its liability for the $74,301.22 was "discharged" by
Mrs. Thayer's receipt of $100,000 from Smith's insurer. It does not
seek to recoup any benefits it has already paid her.
¶16 Mrs. Thayer contests
the UEF's termination of benefits on both statutory and constitutional
¶17 Mrs. Thayer's constitutional
arguments can be considered only if the Court rejects her non-constitutional
Courts should avoid constitutional
questions whenever possible. Ingraham v. Champion Int'l (1990), 243
Mont. 42, 46, 793 P.2d 769, 771. A court should not rule on the constitutionality
of a legislative act if the court can decide the case before it without
reaching constitutional considerations. Taylor v. Dept. of Fish, Wildlife
& Parks (1983), 205 Mont. 85, 90, 666 P.2d 1228, 1231.
Wolfe v. State, Dept.
of Labor and Industry, Bd. of Personnel Appeals ex rel. Helena Educ.
Ass'n. 255 Mont. 336, 339, 843 P.2d 338, 340 (1992). Therefore,
I must first address her non-constitutional arguments.
¶18 On statutory grounds,
Mrs. Thayer argues that the UEF's termination of benefits amounts to
a subrogation interest and is therefore subject to the same subrogation
limitations applicable to insurers. She says:
UEF claims that it is
not claiming a "subrogation interest". UEF's unsupported declaration
does not change the nature of the statute. If something looks, talks,
and acts like a duck, then it probably is a duck, no matter how vociferously
one declares the contrary.
(Petitioner's Brief at 7.)
Mrs. Thayer's arguments are unpersuasive for two reasons.
¶19 First, the subrogation
statute is altogether inapplicable to the facts of this case. Section
39-71-414, MCA, provides in relevant part:
(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. [Emphasis added.]
. . .
Section 39-71-412, MCA, provides
actions against third-parties other than the employer or co-employees,
providing in relevant part:
of third party other than employer or fellow employee -- additional
cause of action. The right to compensation and medical benefits
as provided by this chapter is not affected by the fact that the injury,
occupational disease, or death is caused by the negligence of a third
party other than the employer or the servants or employees of the
employer. Whenever such event occurs to an employee while performing
the duties of his employment and such event is caused by the act or
omission of some persons or corporations other than his employer
or the servants or employees of his employer, the employee
or in case of his death his heirs or personal representative shall,
in addition to the right to receive compensation under this chapter,
have a right to prosecute any cause of action he may have for damages
against such persons or corporations. [Emphasis added.]
Section 39-71-413, MCA, provides
in relevant part:
of fellow employee for intentional and malicious acts or omissions
-- additional cause of action. If an employee receives an
injury while performing the duties of his employment and the
injury or injuries so received by the employee are caused by the intentional
and malicious act or omission of a servant or employee of his employer,
then the employee or in case of his death his heirs or personal representatives
shall, in addition to the right to receive compensation under the
Workers' Compensation Act, have a right to prosecute any cause of
action he may have for damages against the servants or employees of
his employer causing the injury. [Emphasis added.]
The UEF 's termination of
benefits in this case is not based on Mrs. Thayer's recovery against
a third-party (§ 39-71-412, MCA,) or on a recovery from a co-employee
on account of an "intentional and malicious act or omission." It is
based on her recovery from the employer. That recovery is not subject
to subrogation under section 39-71-414, MCA.
¶20 Even if section 39-71-414,
MCA, otherwise applied, Mrs. Thayer's "looks, talks, and acts like a
duck" argument ignores basic rules of statutory construction. Where
two sections are in conflict, the more specific section must be given
effect. Gibson v. State Compensation Mut. Ins. Fund, 255 Mont.
393, 396, 842 P.2d 338, 340 (1992). Section 39-71-511, MCA, is a specific
statute applicable to UEF payments and liability. On its face it provides
for a dollar for dollar discharge of the UEF's statutory obligation
to pay benefits. The discharge does not depend on claimant obtaining
the full measure of his or her damages. It does not depend on the characterization
of damages recovered. As the more specific statute, section 39-71-511,
MCA, not the subrogation provision section 39-71-414, MCA, applies.
¶21 Mrs. Thayer's argument
that the UEF is subject to the subrogation provisions of the WCA and
that any setoff must consider the nature of her recovery are without
merit. Issues 2 through 4 are answered in the negative. Therefore, the
Court must consider her constitutional arguments.
¶22 Mrs. Thayer's constitutional
challenge is based on Article 2, section 16 of the 1972 Montana Constitution.
The section provides:
Section 16. The
administration of justice. Courts of justice shall be open
to every person, and speedy remedy afforded for every injury of person,
property, or character. No person shall be deprived of this
full legal redress for injury incurred in employment for which another
person may be liable except as to fellow employees and his immediate
employer who hired him if such immediate employer provides coverage
under the Workmen's Compensation Laws of this state. Right
and justice shall be administered without sale, denial, or delay.
The operative language for
purposes of this appeal is bolded.
¶23 The "full legal redress"
language of Section 16 has been interpreted by the Montana Supreme Court
as precluding a workers' compensation insurer from recouping or discharging
benefits until the claimant has been made whole in tort damages from
a third-party. Francetich v. State Compensation Mutual Ins. Fund,
252 Mont 215, 827 P.2d 1279 (1992). This case, however, does not involve
a workers' compensation insurer which paid a premium to provide insurance.
¶24 The UEF is not an insurer
in the usual sense. It is State funded and State operated. It receives
no premiums, it writes no policies. Rather, it is a safety net for workers
whose employers fail to comply with the law requiring that they provide
workers' compensation insurance coverage for their employees. But it
is a limited safety net, limited to the funds it secures through statutory
penalties and collections, and limited by the set-off provisions of
section 39-71-511, MCA. Neither this Court nor the Supreme Court have
examined the applicability of the full legal redress guarantee
in this context.
¶25 In determining whether
the full redress language of section 16 of Article II applies to a State
safety net, I am guided by the history of the section as set forth in
the minutes of the 1972 Constitutional Convention and quoted in Trankel
v. Montana Dept. of Military Affairs, 282 Mont. 348, 938 P.2d 614
(1997). The minutes of the Convention indicate that full redress
language was intended to overturn a prior Montana Supreme Court decision
in Ashcraft v. Montana Power Co., 156 Mont. 368, 480 P.2d 812
(1971). Ashcraft held that an employee covered by workers'
compensation insurance could not sue a third-party [someone other than
the employer] for injuries suffered during his or her employment. Trankel
282 Mont. at 359, 938 P.2d at 621. The Supreme Court said in Trankel:
It is clear from the minutes
of the Constitutional Convention that the second sentence of Section
16 was in response to our decision in Ashcraft v. Montana Power
Co. (1971), 156 Mont. 368, 480 P.2d 812. In that case, the plaintiff
was injured while working on behalf of his employer on property owned
by the Montana Power Company. He sued the power company based on his
allegation that its negligence caused his injury. Ashcraft,
156 Mont. at 369, 480 P.2d 812-13. On appeal, this Court held that
pursuant to § 92-438, RCM (1947), the power company could not be sued
because it had required the plaintiff's employer to carry workers'
compensation coverage. Ashcraft, 156 Mont. at 371, 480 P.2d at 813.
The second sentence of Article II, Section 16, was a response to that
decision based on the delegates' intent that employees not be barred
from third-party suits for injuries sustained during the course of
their employment. The following minutes from the Constitutional Convention
illustrate that point.
In his report to the Convention
as a whole, Delegate Murray, representing the Bill of Rights Committee
which drafted Section 16, gave the following explanation for the second
sentence of that section:
Under Montana law, as
announced in the recent decision of Ashcraft versus Montana Power
Company, the employee has no redress against third parties for
injuries caused by them if his immediate employer is covered under
the Workmen's Compensation law. The committee feels that this violates
the spirit of the guarantee of a speedy remedy for all injuries of
person, property or character. It is this specific denial, and this
one only, that the committee intends to alter with the following additional
wording: "No person shall be deprived of his full legal redress for
injury incurred in employment for which another person may be liable
except as to fellow employees and his immediate employer who hired
him if such immediate employer provides coverage under the Workmen's
Compensation laws of this state." In other words, the committee wants
to insure that the Workmen's Compensation laws of the state will be
used for their original purpose--to provide compensation to injured
workmen--rather than to deprive an injured worker of redress against
negligent third parties, beyond his employer and fellow employees,
because his immediate employer is covered by Workmen's Compensation....
To permit no remedy against third parties in cases where they [sic]
employer is covered by Workmen's Compensation is to encourage persons
with rundown premises to contract out work without improving the quality
of the premises. The committee urges that this is an abuse of the
Workmen's Compensation law and constitutes a misapplication of that
law to protect persons who are negligent. The committee commends this
provision to the Convention with the belief that it is an important,
if technical, aspect of the administration of justice. Those are the
remarks which are contained in the booklet. Let me amplify them by
saying basically this: we feel that the right to third-party action
is a right which we should establish in our Constitution. It is a
right which working men and women who are unfortunate enough to be
injured have had for nearly 80 years in this state. We feel that it
was wrongly taken away from these people by the Supreme Court decision
which was mentioned. We feel that we perhaps are legislating in asking
that this be written into our Constitution, but we of the committee
really believe that we are acting in a judicial manner in asking that
it be written in the Constitution for we feel that this Convention,
perhaps, is the court of last resort for injured working men and women
in Montana with respect to the third-party lawsuit, and we recommend
that the section be adopted.
Montana Constitutional Convention,
Vol. V at 1754, March 8, 1972 (emphasis added).
The second sentence of
Section 16 was extensively debated. Delegate Habedank moved that it
be deleted. That motion was defeated by a vote of 76-14 (Montana
Constitutional Convention, Vol. V at 1759, March 8, 1972), and Section
16 was ultimately approved by a vote of 76-21 (Montana Constitutional
Convention, Vol. VII at 2644, March 18, 1972).
. . .
We have considered the
impact of Article II, Section 16, on numerous occasions and, without
exception, have held that it precludes limitations on claims by injured
employees against persons other than the employee's employer or fellow
employee. See Francetich v. State Comp. Mut. Ins. Fund (1992),
252 Mont. 215, 827 P.2d 1279; Meech v. Hillhaven West, Inc.
(1989), 238 Mont. 21, 776 P.2d 488; Webb v. Montana Masonry Constr.
Co. (1988), 233 Mont. 198, 761 P.2d 343; and Hayes v. Aetna
Fire Underwriters (1980), 187 Mont. 148, 609 P.2d 257.
Trankel at 360-61,
938 P.2d at 621-22.
¶26 The discussion at the
1972 Constitutional Convention concerned itself, with the right of a
claimant to recover from a negligent third-party other than
his or her employer. Neither the discussion nor the language
of the second sentence of Article II, section 16, guarantees a safety
net for employees of uninsured employers.
¶27 An insurer receives a
premium for providing workers' compensation insurance coverage. In writing
coverage, it agrees that it will be subject to the full legal redress
provision of Article II, section 16. In contrast, the State of Montana
receives no premium. It is not required by the Constitution to provide
a safety net. It is not required by the Constitution to pay benefits
to injured workers employed by uninsured employers. Should no provisions
have ever been made for UEF, Mrs. Thayer could not complain. Article
II, section 16 is inapplicable to the UEF and section 39-71-511, MCA,
¶28 The UEF has paid Mrs.
Thayer $71,878.78. Assuming she recovered nothing from her deceased
husband's employer, its potential, additional liability was $74,301.22.
She recovered $100,000 from her husband's employer. That amount more
than off-sets any remaining benefits that might be due her. The UEF
properly terminated her benefits.
¶29 1. Section 39-71-511,
MCA (1991) is not unconstitutional under Article II, section 16 of the
1972 Montana Constitution.
¶30 2. The Uninsured Employers'
Fund properly terminated the petitioner's benefits pursuant to section
39-71-511, MCA (1991).
¶31 3. The petition in this
matter is dismissed with prejudice.
¶32 4. This Decision and
Judgment is certified as final for purposes of appeal pursuant to ARM
DATED in Helena, Montana
this 28th day of October, 1998.
c: Mr. Norman L. Newhall
Mr. Kevin Braun
Submitted: April 6, 1998
The parties stipulate and
agree that the following facts are true:
a. Gerald Thayer was an
employee of Richard Smith. (Conclusions, WCC 9311-6942)
b. Gerald Thayer was injured
in the course and scope of his employment on October 15, 1992, when
his clothes caught fire and he was burned. On October 31, 1992, Gerald
Thayer died as a result of his injuries. (Conclusions, WCC No. 9311-6942)
c. Phyllis Thayer is Gerald
Thayer's widow. She is entitled to workers' compensation death benefits
under Sections 39-71-704 and 39-71-721 M.C.A. (Conclusions, WCC No.
d. Richard Smith, the
employer, was uninsured for the payment of workers' compensation benefits.
(Conclusions, WCC No. 9311-6942)
e. Benefits are payable
to Phyllis Thayer, Gerald Thayer's widow, by the Uninsured Employer's
Fund (UEF) to the extent provided by § 39-71-503 M.C.A. (Conclusions,
WCC No. 9311-6942)
f. Before his death, Gerald
Thayer incurred reasonable costs for medical treatment of his burn
injuries in the sum of $253,207.98. (Pretrial Order, Agreed Facts,
USDC Cause No. CV-93-054-GF-PGH)
g. The UEF has paid $85,000.00
to reimburse Montana Department of Public Health and Human Services
for the costs of Gerald Thayer's medical treatment and Montana Department
of Public Health and Human Services has released its lien.
h. UEF has paid death
benefits (wage loss) to Petitioner at the rate of $292.36 per week
commencing October 22, 1992, through July 8, 1997 (245.8571 weeks
x $292.36 = $71,878.78) when the benefits stopped.
i. Petitioner's maximum
potential entitlement to death benefits (wage loss) per the Workers'
Compensation Court judgment is 500 weeks x $292.36/week = $146,180.00,
less the wage loss benefits already paid.
j. In 1993 and 1994, Petitioner
commenced actions including an action in the United State District
Court for the District of Montana, Great Falls Division, Cause No.
CV-93-054-GF-PGH, against various defendants and alleging survival
and wrongful death claims arising from injuries to and death of Gerald
k. In said action, Petitioner
alleged claims of negligence against Gerald Thayer's employer (Richard
Smith) and Gerald Thayer's co-employee (Garry Thompson) and claims
of negligence and strict product liability against the retail seller
(Federal Sales Corporation, d/b/a Harris Warehouse and Canvas Sales)
and the manufacturer (Midland Chicago Corporation) of CHEX liquid,
a product which was being used by Gerald Thayer at the time of his
l. The damages
sought by Petitioner in said action in the United States District Court
were as follows:
future lost earnings during life expectancy = $263,592.82.
expenses of $253,207.98 and funeral expenses of $3,531.88.
for conscious mental and physical pain and suffering of Gerald L.
Thayer between the time of injury and time of death: $250,000.00.
damages for grief, sorrow and mental anguish of Phyllis Thayer and
the heirs of Gerald Thayer and for their loss of the comfort, protection,
society and companionship of Gerald L. Thayer = $1,000,000.00.
services = $85,734.78.
support = (See future lost earnings and loss of support above).
interest under § 27-1-210, MCA from June 7, 1993. (Pretrial Order,
Relief Sought, USDC Cause #CV-93-054-GF-PGH, 2/5/97, p. 15)
m. Richard Smith filed
a Chapter 7 bankruptcy action on June 27, 1996, in the Western District
of Wisconsin, Case No. 96-12594, in which Richard Smith discharged
any personal liability to Petitioner in Cause No. CV-93-054-GF-PGH
in the United States Court for the District of Montana, Great Falls
n. The insurance carrier
for Richard Smith denied coverage for Richard Smith's liability for
the reasons stated in a "Reservation of Rights" letter dated May 18,
o. Prior to trial, the
negligence claim of Petitioner against the employer, Richard Smith,
was settled for the sum of $100,000.00.
p. Prior to trial, the
negligence and product liability claims of Petitioner against Federal
Sales Corporation were settled for the sum of $130,000.00.
q. The negligence claim
against Midland Chicago Corporation was voluntarily dismissed by Petitioner
prior to trial without any settlement consideration.
r. Prior to trial and
after dismissal of the negligence claim against Midland Chicago Corporation,
the product liability claim of Petitioner against Midland Chicago
Corporation was settled for the sum of $75,000.00.
s. On June 16, 1997, in
said Cause No. CV-93-054-GF-PGH, the remaining negligence claim against
Garry Thompson proceeded to trial before a six person jury.
t. On June 19, 1997, the
jury returned a Special Verdict in which it found that the negligence
of Garry Thompson was a cause of the injuries sustained by Gerald
Thayer; that the negligence of Gerald Thayer was a cause of the injuries
sustained by Gerald Thayer; that the percentage of fault attributable
to Garry Thompson was 55%; that the percentage of fault attributable
to Gerald Thayer was 45%; and that the total amount of damages that
would reasonably compensate Petitioner was $500,000.00.
u. On July 8, 1997, the
United States District Court entered judgment on the verdict.
v. On November
12, 1997, and pursuant to Plaintiff's Motion For New Trial, the United
States District Court affirmed the jury's apportionment of negligence,
but granted Plaintiff's Motion for New Trial on the issue of damages.
(Memorandum and Order, USDC CV-93-054-GF, 11/12/97)
u. December 10, 1997,
the negligence claim of Petitioner against the co-employee, Garry
Thompson, was settled for the sum of $100,000.00.
x. On June 25, 1997, the
UEF advised Petitioner that by reason of her receipt of third party
settlements and pursuant to § 39-71-511 M.C.A., Petitioner is not
entitled to receive further benefits from the Uninsured Employer's
fund and further advised that such benefits "will be terminated fourteen
days from the date of this letter."
y. Under the terms of
the settlements with Richard Smith, Federal Sales Corporation, Midland
Chicago Corporation, and Garry Thompson, the settlement monies were
paid in compromise of disputed claims, and were not to be construed
as an admission of liability.
z. From the settlements
received from Richard Smith, Federal Sales Corporation, Midland Chicago
Corporation, and Garry Thompson, Petitioner has paid attorneys fees
of $135,000 and had paid costs in pursuing her cause of action against
the several defendants before the United States District Court totalling
$37,718.34 through July 10, 1997.
aa. On June 26, 1997,
the day after the UEF issued its 14 day Notice of Termination of Benefits,
Petitioner filed a Petition for Mediation.
bb. The mediator's
Mediation Report and Recommendation was issued on August 28, 1997.
facts set forth in this paragraph and the paragraphs that follow in
this section are taken from an extensive set of uncontested facts the
parties set forth in their Pretrial Order. The statement of uncontested
facts is set forth verbatim in the Addendum to this decision.
Thayer initially survived his burns. He was burned on October 15, 1992.
He died 16 days later on October 31, 1992.
the DPHHS payments were made under the Medicaid program.
maximum number of weeks benefits are payable to a widow is 500. § 39-71-721(5),
issues are taken verbatim from the Pretrial Order.
39-71-504, MCA, authorizes the collection of a penalty from uninsured
employers, as well as recoupment from the uninsured employer of benefits
paid by the UEF.