Kruzich v. Old Republic Ins. Co.
| Decision Date | 10 June 2008 |
| Docket Number | No. DA 06-0436.,DA 06-0436. |
| Parties | Henry KRUZICH, Petitioner and Appellee, v. OLD REPUBLIC INSURANCE COMPANY, Respondent/Insurer and Appellant. |
| Court | Montana Supreme Court |
¶ 1 Old Republic Insurance Company (Old Republic) appeals a judgment of the Workers' Compensation Court (WCC) setting aside the 1994 settlement agreement between Old Republic and Henry Kruzich, and reopening Henry's claim. We reverse.
¶ 2 We address the following issue on appeal: Did the WCC err in rescinding the settlement agreement based upon mutual mistake of fact?
¶ 3 In August 1988, Henry suffered a serious head injury while employed with Blue Range Mining of Butte, when an ore bucket struck Henry on the side of the face. At the time of Henry's injury, Blue Range Mining was enrolled under Compensation Plan No. 2 of the Workers' Compensation Act (WCA), and was insured by Old Republic.
¶ 4 The blow to Henry's head caused a cave-in to the right orbital rim with the orbital floor and left lateral orbit being pushed up into the frontal lobe of his brain. He underwent surgery to repair and reconstruct his fractured skull. Henry was 37 years old at the time of the accident. He and his wife Kathy had been married for five years and had two small children.
¶ 5 Shortly after the accident, Old Republic accepted liability for Henry's injury and began paying temporary total disability and medical benefits. Old Republic retained the services of Industrial Injury Claims Services (Industrial) to adjust the claim. While the extent of Henry's disability was initially unclear, the parties ultimately agreed that Henry was permanently totally disabled.
¶ 6 In March 1990, Henry traveled to the Virginia Mason Clinic in Seattle for additional testing to determine the extent of his brain injury. These tests revealed that Henry had reductions in speed and flexibility of thinking, and in fine motor speed and grip strength in his right hand; significant problems with visual spatial memory and with complex tactual spatial problem solving; and a tendency to lose complex visual spatial information. The clinic also noted that Henry suffered from constant headaches.
¶ 7 In February 1991 and over the next two years, Henry's doctors suggested that Henry needed a minimum of eight to ten hours of domiciliary care daily and that, in all likelihood, he required 24-hours-a-day domiciliary care. The doctors opined that without such care, Henry was at a significant risk for additional injuries, continued depression, and possible suicide. While Henry could bathe and dress himself, Kathy explained that Henry engaged in unsafe behaviors when he was unsupervised, such as forgetting to turn off stove burners or leaving the door to the wood stove open.
¶ 8 Since the accident, Kathy had operated a small day care out of her home which also provided her the opportunity to supervise Henry. In October 1991, Kathy closed her day care to take employment outside the home in order to obtain health insurance coverage for her family. Neighbors and family members checked in on Henry during the day, but he struggled to function on his own. Henry's doctors believed that Henry required more structure, hence Kathy quit her job to stay home and care for Henry.
¶ 9 Kathy was appointed as Henry's conservator on June 9, 1992. After months of negotiations, the parties reached an agreement that required Old Republic to pay Kathy $5.30 per hour, 70 hours per week, for her to stay home and care for Henry. Old Republic began paying for this domiciliary care in January 1993 at the agreed upon rate.
¶ 10 In June 1994, Henry and Old Republic entered into a Compromise and Settlement Agreement, which was approved by the Department of Labor and Industry on July 26, 1994. Under the terms of this agreement, Henry's claims for permanent total disability benefits and domiciliary care benefits were settled for $132,701.28 (of which $125,000.00 represented new money and $7,701.28 represented the waiver of an overpayment). In conformance with the parties' agreement, an exhibit was attached to the settlement agreement which expressly closed "fully and forever ... any and all present and future domiciliary care" benefits while specifically reserving medical and hospital benefits. To that end the exhibit provided:
Such benefits shall include all costs and charges associated with any type of supervised care that claimant may need or desires as a result of his industrial injury including, but not limited to, domiciliary (attendant) care as presently provided by claimant's wife and paid for by the Insurer, rest home care, rehabilitation center or attended care (and its equivalent), and paid supervision of daily activities in or outside of the home. In closing out all domiciliary care medical benefits, the parties agree that all other medical care benefits for medical conditions caused by the industrial injury shall remain in force.
¶ 11 In December 1995, Henry no longer required domiciliary care, hence Kathy was able to return to work outside the home. As before, their neighbors checked on Henry from time to time.
¶ 12 In 2004, Henry began to exhibit symptoms of a movement disorder. His doctors variously described his condition as Parkinsonism, Parkinson's disease, and Parkinson's-plus. It was determined that the Parkinson's disease was most likely the result of the traumatic brain injury sixteen years earlier.
¶ 13 On February 17, 2005, Henry filed a petition with the WCC seeking to rescind the settlement agreement. Henry argued that the parties' failure to anticipate that he would ultimately contract Parkinson's disease as a result of his injury was a mutual mistake of fact justifying rescission of the settlement agreement.
¶ 14 A hearing was held in the matter on January 23, 2006. On June 1, 2006, the WCC entered its Findings of Fact, Conclusions of Law and Judgment wherein it determined that because a mutual mistake of fact regarding the nature of Henry's injuries had occurred, the settlement agreement must be set aside and Henry's claim reopened.
¶ 15 Old Republic appeals.
¶ 16 We conduct de novo review of the WCC's conclusions of law to determine whether the court's conclusions are correct. Harrison v. Liberty Northwest Ins. Corp., 2008 MT 102, ¶ 11, 342 Mont. 326, ¶ 11, 181 P.3d 590, ¶ 11 (citing Flynn v. Uninsured Employers' Fund, 2005 MT 269, ¶ 11, 329 Mont. 122, ¶ 11, 122 P.3d 1216, ¶ 11).
¶ 17 Our review of the WCC's findings of fact, on the other hand, is both deferential and limited in scope. We simply review the WCC's factual findings to determine whether they are supported by substantial credible evidence. Harrison, ¶ 11 (citing In re Abfalder, 2003 MT 180, ¶ 10, 316 Mont. 415, ¶ 10, 75 P.3d 1246, ¶ 10). Substantial credible evidence is that which a reasonable mind could accept as adequate to support a conclusion. Harrison, ¶ 11 (citing Simms v. State Compensation Ins. Fund, 2005 MT 175, ¶ 11, 327 Mont. 511, ¶ 11, 116 P.3d 773, ¶ 11). Because of the high level of deference we accord to the WCC's factual findings, we will consider evidence to be substantial even if it is contradicted by other evidence, it is somewhat less than a preponderance and it is inherently weak. However, it must be more than a mere "scintilla" of evidence and it must rise above the level of "trifling or frivolous." Harrison, ¶ 11 (citing EBI/Orion Group v. State Compensation Mut. Ins. Fund, 249 Mont. 449, 453, 816 P.2d 1070, 1073 (1991)).
¶ 18 As for the scope of our review, we confine our review to determining whether substantial credible evidence supports the findings actually made by the WCC. We do not resolve conflicts in the evidence, and we do not consider whether evidence supports findings that are different from those made by the WCC. Harrison, ¶ 11 (citing Kloepfer v. Lumbermen's Mut. Cas. Co., 276 Mont. 495, 498-99, 916 P.2d 1310, 1312 (1996); Montana State Fund v. Murray, 2005 MT 97, ¶ 19, 326 Mont. 516, ¶ 19, 111 P.3d 210, ¶ 19).
¶ 19 Did the WCC err in rescinding the settlement agreement based upon mutual mistake of fact?
¶ 20 Old Republic argues that the WCC erred in concluding that the parties' made a material and mutual mistake when they failed to predict that Henry would contract Parkinson's disease several years after the settlement. Old Republic provides the following four reasons for its contention. First, Old Republic asserts that the mutual mistake-of-fact doctrine rejects the notion that a mistake of fact can consist of a failure to predict future events. Second, Old Republic asserts that even accepting the WCC's conclusion that a failure to anticipate future events can be a mistake, such failure in this case is not a mutual mistake because, at the time of settlement, Old Republic was aware that Henry's condition would worsen over time. Third, Old Republic asserts that even assuming that the parties' failure to predict Parkinson's disease was a mutual mistake, the WCC erred by concluding that the mistake was material. Finally, Old Republic asserts that in concluding that the parties' failure to predict the future was a mutual mistake of fact, the WCC erred by setting forth a rule that jeopardizes the enforceability of settlement agreements, thereby disregarding the public policy of encouraging settlements.
¶ 21 Henry argues, on the other hand, that at the time of the settlement, his condition was stable and he had no problems with motor function. Thus, neither Henry, his wife, nor Old Republic's adjuster knew that Henry would develop a movement...
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