Francetich v. State Compensation Mut. Ins. Fund

• Citation: 252 Mont. 215,827 P.2d 1279
• Decision Date: 10 March 1992
• Docket Number: No. 91-093,91-093
• Parties: Wayne FRANCETICH, Claimant and Appellant, v. STATE COMPENSATION MUTUAL INSURANCE FUND, Defendant and Respondent.
• Court: Montana Supreme Court

Page 1279

827 P.2d 1279

252 Mont. 215

Wayne FRANCETICH, Claimant and Appellant, v. STATE COMPENSATION MUTUAL INSURANCE FUND, Defendant and Respondent.

No. 91-093.

Supreme Court of Montana.

Submitted Nov. 5, 1991.

Decided March 10, 1992.

Don Edgar Burris (argued), Billings, for claimant and appellant.

Laurence A. Hubbard (argued), Mark E. Cadwallader, Helena, for defendant and respondent.

Patricia Cotter (argued), Cotter & Cotter, Great Falls, for amicus curiae.

HUNT, Justice.

Claimant and appellant Wayne Francetich suffered an on-the-job injury on December 2, 1988. Respondent State Compensation Mutual Insurance Fund accepted liability and paid workers' compensation benefits to the claimant. The claimant also obtained a policy limits insurance settlement from the third party responsible for the accident. The State Fund attempted to exercise subrogation rights pursuant to Sec. 39-71-414(6)(a), MCA. The claimant resisted the State Fund's attempt to subrogate, contending that the statute providing for subrogation in this instance is in direct violation of Article II, Section 16, of the Montana Constitution. We reverse.

We are presented with the following three issues for review:

1. Is Sec. 39-71-414(6)(a), MCA, unconstitutional in that it directly contravenes the clear language of Article II, Section 16, of the Montana Constitution?

2. Does Sec. 39-71-414(6)(a), MCA, violate constitutional guarantees of equal protection?

3. Does Sec. 39-71-414(6)(a), MCA, violate the worker's right to due process of law?

Because of our holding on issue one that Sec. 39-71-414(6)(a), MCA, is unconstitutional we need not address issues two and three. The determinative issue before this Court is whether Sec. 39-71-414(6)(a), MCA, is unconstitutional in that it directly contravenes the clear language of Article II, Section 16, of the Montana Constitution.

Claimant petitioned for a hearing before the Department of Labor and Industry for a determination of the State Fund's subrogation interest. The parties submitted their dispute to an administrative hearing officer before the Department of Labor and Industry by way of the following stipulated uncontested facts, along with a motion for summary judgment.

1. On December 2, 1988, the claimant Wayne Francetich suffered an industrial injury while employed by an insured of the respondent State Fund.

2. The State Fund paid temporary total disability and other benefits to claimant.

3. Claimant accepted a policy limits settlement in the amount of $25,000 from the third-party tortfeasors responsible for the December 2, 1988, accident.

4. The State Fund contends that it has a 50 percent subrogation interest in the settlement proceeds from the claimant's third-party recovery and is entitled to subrogation in the amount of $10,865.14.

5. The State Fund demanded payment from claimant in the sum of $5,391.03, that amount being 50 percent of the benefits previously paid to claimant.

6. On April 6, 1990, the State Fund refunded to claimant the aforesaid $5,391.03 pursuant to the decision of this Court in Malek v. Henry's Safety Supply Company (1990), 242 Mont. 311, 790 P.2d 965.

7. The State Fund has demanded that it only be required to pay any future compensation or medical benefits to the claimant at 50 percent until the State Fund has reached their total entitlement of $10,879.61.

On September 26, 1990, the hearing examiner granted summary judgment for the respondent while correctly declining to address the constitutional questions on the grounds that administrative agencies lack the necessary judicial power to decide such issues. Jarussi v. Board of Trustees (1983), 204 Mont. 131, 135-36, 664 P.2d 316, 318. Claimant appealed this decision to the Workers' Compensation Court. Following a briefing of the constitutional issues by the parties, the Workers' Compensation Court on January 17, 1991, entered its order on appeal, affirming the administrative decision of the Department of Labor and Industry. Claimant appeals from the decision of the Workers' Compensation Court.

Both parties stipulated to an agreement of facts below and the dispute was before the Workers' Compensation Court solely for an interpretation of the law. In reviewing conclusions of law of the Workers' Compensation Court, we apply a different standard of review than we would if reviewing factual findings. Factual findings by the Workers' Compensation Court are reviewed using the substantial credible evidence standard. Our review of conclusions of law is, as we recently stated:

"In such a case, the appropriate standard of review is simply whether the lower court's interpretation of the law is correct. We are not bound by the lower court's conclusion and remain free to reach our own."

Schaub v. Vita Rich Dairy (1989), 236 Mont. 389, 391, 770 P.2d 522, 523. We explained the rational for this standard in Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 803 P.2d 601:

The reasoning for simply determining if the court's conclusions are correct is that no discretion is involved when a tribunal arrives at a conclusion of law--the tribunal either correctly or incorrectly applies the law. For that reason, this Court concludes that our standard of review relating to conclusions of law, whether the conclusions are made by an agency, workers' compensation court, or trial court, is whether the tribunal's interpretation of the law is correct.

Steer, 803 P.2d at 603. The instant case involved only an interpretation of the law by the Workers' Compensation Court, and therefore, upon review we will simply determine whether or not the conclusion was correct.

Additionally, this case involves the interpretation of a statute that is being challenged on constitutional grounds. This Court has long held that when the constitutionality of a statute is in question:

"We commence inquiry into the constitutional questions with the well-settled rule that when the constitutionality of a statute is under scrutiny, the statute is presumed to be constitutional and [that] the party attacking it has the burden of proving its invalidity. [Citations omitted.] This presumption of validity applies to all legislative enactments and it is the duty of the court to resolve all conceivable doubts in favor of validity whenever possible. [Citations omitted.]" Reeves v. Ille Electric Co. (1976), 170 Mont. 104, 109, 551 P.2d 647, 650.

McClanathan v. Smith (1980), 186 Mont. 56, 65-66, 606 P.2d 507, 512.

This case involves an analysis of Sec. 39-71-414(6)(a), MCA, in relation to Article II, Section 16, of the Montana Constitution. Section 39-71-414(6)(a), MCA, provides:

The insurer is entitled to full subrogation rights under this section, even though the claimant is able to demonstrate damages in excess of the workers' compensation benefits and the third-party recovery combined. The insurer may subrogate against the entire settlement or award of a third party claim brought by the claimant or his personal representative, without regard to the nature of the damages.

Article II, Section 16, of the Montana Constitution, as amended in 1972, provides:

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. [Emphasis added.]

The emphasized portion of Article II, Section 16, was added by amendment during the Constitutional Convention of 1972. Subsection 6(a) was added to Sec. 39-71-414, MCA, in 1987. Prior to the 1987 amendment, the statute was silent concerning the issue of subrogation when the injured worker's damages were in excess of the workers' compensation benefits and the third-party recovery combined. This is the first time that we have been called upon to review the 1987 amendment to the subrogation statute in light of Article II, Section 16, of the Montana Constitution.

A review of the history of the cases interpreting Article II, Section 16, as well as those cases discussing subrogation when the injured worker's damages exceed the worker's compensation benefits and the third-party recovery combined, is necessary to demonstrate the rationale and reasoning underlying our decision in this case.

A good starting point for the discussion on Article II, Section 16, is our decision in White v. State (1983), 203 Mont. 363, 661 P.2d 1272. In White, the issue before this Court was the constitutionality of Sec. 2-9-104, MCA (1981), a statute which limited the liability of any governmental entity of the State. The statute provided that governmental entities were not liable for noneconomic damages, nor for any economic damages in excess of $300,000 for any one claimant, or more than $1,000,000 in any one occurrence. White held that Article II, Section 16, created a fundamental right to full legal redress for all injuries. The Court stated in White that:

Article II, section 16 of the Montana Constitution guarantees that all persons shall have a "speedy remedy ... for every injury of person, property, or character." In Corrigan v. Janney (1981), 192 Mont. 99, 626 P.2d 838, 38 St.Rep. 545, this Court held that it is "patently unconstitutional" for the legislature to pass a statute which denies a certain class of Montana citizens their causes of action for personal injury and wrongful death. We affirm and refine our holding in Corrigan v. Janney, supra; we hold that the Montana Constitution guarantees that all persons have a speedy remedy for every injury. The language "every injury" embraces all recognized compensable components of injury, including the right to be compensated for physical pain and mental...