COMMON FUND LITIGATION: RETROACTIVITY

MONTANA SUPREME COURT DECISIONS

Flynn v. Montana State Fund, 2011 MT 300, 363 Mont. 55, 267 P.3d 23 The WCC properly applied retroactivity analysis in the unique field of workers’ compensation law, a system which is by nature open-ended.  Despite the potentially indefinite length of a party’s claim, principles of finality must still be incorporated and the Court must properly give credit to the necessary balance between finality and fairness.

Flynn v. Montana State Fund, 2008 MT 394, 347 Mont. 146, 197 P.3d 1007 While recognizing the advantage of finality and the ease of administration that the adoption of a two-year limitation on retroactivity would serve, the Montana Supreme Court refused to adopt such a limit by analogizing to a statute which the legislature has made applicable only to particular cases. There is no specific statutory cutoff point for most workers’ compensation claims. To apply the two-year statute of limitations found in § 39-71-2905, MCA, would extend the statute beyond the legislature’s clearly intended purpose.

Flynn v. Montana State Fund, 2008 MT 394, 347 Mont. 146, 197 P.3d 1007 The WCC considered whether to define the terms “closed” and “inactive,” but correctly concluded that the mandate from Schmill II was for it to “determine which claims . . . would be considered ‘final’ or ‘settled.’” Retroactivity for workers’ compensation claims is dependent upon whether a claim is “final” or “settled.”

Flynn v. Montana State Fund, 2008 MT 394, 347 Mont. 146, 197 P.3d 1007 In Stavenjord II, the Montana Supreme Court did not intend to alter the retroactivity analysis previously set forth in Dempsey and Schmill II. Stavenjord II created no new law, but used the term “open” to mean “not final.” The retroactivity principles set forth in Dempsey and Stavenjord II – applicable to cases not “final” or “settled” – is reaffirmed.

Flynn v. Montana State Fund, 2008 MT 394, 347 Mont. 146, 197 P.3d 1007 The rule set forth in Dempsey was intended to be a compromise between Harper and Chevron Oil. While the court agreed with Harper’s balancing of finality and fairness interests, it chose not to follow the exact Harper rule because of Dempsey’s “compelling need for prospective application in limited circumstances.”
 
MONTANA WORKERS' COMPENSATION COURT DECISIONS
Reesor v. Montana State Fund [06/04/08] 2008 MTWCC 28 Where the Montana Supreme Court has mandated the payment of benefits on all “open” claims impacted by Stavenjord and Schmill, this Court concludes that holding “retroactive” payment of Reesor benefits is neither an unconstitutional taking nor impairment of contract.
Reesor v. Montana State Fund [06/04/08] 2008 MTWCC 28 In Stavenjord II the Montana Supreme Court stated that “it is now well-settled that a party arguing for purely prospective application of this Court’s jurisprudence must show that all three factors of the Chevron test are met.” Where the burden with regard to actual payment of Reesor benefits is not likely any greater than in Schmill or Stavenjord, and the Supreme Court has ordered retroactive application in those cases, the Court concludes that the third Chevron factor – “the inequity imposed by retroactive application”– does not favor prospective application of Reesor.
Reesor v. Montana State Fund [06/04/08] 2008 MTWCC 28 In Stavenjord II the Montana Supreme Court stated that “it is now well-settled that a party arguing for purely prospective application of this Court’s jurisprudence must show that all three factors of the Chevron test are met.” The Supreme Court held that the second Chevron factor was not met in Stavenjord or Schmill; this Court cannot conclude that the second factor can be met in Reesor. Though the constitutional principle in Reesor is not identical to that in Schmill or Stavenjord, all three cases involve equal treatment of similarly-situated individuals with “open” workers’ compensation claims.

Schmill v. Liberty, 2007 MTWCC 27 - headnotes Claims in which TTD benefits are being paid and were either apportioned in the past or are still being apportioned are subject to Schmill retroactivity.
Schmill v. Liberty, 2007 MTWCC 27 - headnotes Claims in which the claimant was found to be PTD and had benefits paid at an apportioned rate which continue to be paid at either an apportioned or full rate are subject to Schmill retroactivity.
Schmill v. Liberty, 2007 MTWCC 27 - headnotes Claims in which TTD benefits were paid at an apportioned rate, the claimant returned to work with no wage loss, and no additional benefits other than medical benefits were paid must be identified and paid under the retroactivity ruling in Schmill II as part of the common fund.
Schmill v. Liberty, 2007 MTWCC 27 - headnotes Claims in which PTD benefits were paid but whose payments were stopped automatically because the claimant reached retirement age must be identified and paid under the retroactivity ruling in Schmill II as part of the common fund.