McClanathan v. Smith

• Decision Date: 13 February 1980
• Docket Number: No. 14641,14641
• Citation: 606 P.2d 507,186 Mont. 56,37 St.Rep. 113
• Parties: Harold J. McCLANATHAN, Claimant and Appellant, v. Ed SMITH, Employer, and State Compensation Insurance Fund, Defendant and Respondent.
• Court: Montana Supreme Court

Page 507

606 P.2d 507

186 Mont. 56

Harold J. McCLANATHAN, Claimant and Appellant, v. Ed SMITH, Employer and State Compensation Insurance Fund, Defendant and Respondent.

No. 14641.

Supreme Court of Montana.

Submitted Nov. 5, 1979.

Decided Jan. 23, 1980.

Rehearing Denied Feb. 13, 1980.

Kelly & Foley, Billings, William Kelly, argued, Billings, for claimant and appellant.

Tim Reardon (argued), Helena, for defendant and respondent.

Stephen Williams, Butte, Marra, Wenz, Iwen & Johnson, Great Falls, Gene A. Picotte, Clancy, Norman H. Grosfield, Helena, for amicus curiae.

HARRISON, Justice.

This is a cross-appeal on a petition for an emergency hearing concerning appellant's termination of disability benefits under the Workers' Compensation Act. From an order of the Workers' Compensation Court in which disability benefits for appellant were partially reinstated, both parties appeal. Amicus curiae briefs were filed by Gene A. Picotte, Alaska Pacific Assurance Company, Industrial Indemnity Company, and Anaconda Copper Company.

Respondent is the State Compensation Insurance Fund, an insurance carrier under the Workers' Compensation Act. Appellant is a former painter who was severely injured in an industrial accident on February 26, 1974. Appellant's employer carried workers' compensation insurance with respondent. The accident occurred when a scaffold collapsed beneath appellant, and appellant fell a distance of approximately 15 to 20 feet, landing on his head. As a result of the accident, appellant sustained permanent brain damage and was unable to resume work as a painter.

At the time of the accident, appellant was married and had two dependents. Since that time appellant has become divorced. He now lives in Kentucky, and his ex-wife and minor children live in Maryland.

Shortly after appellant's accident, appellant applied for and received Social Security disability benefits from the Federal Social Security Administration for himself and his dependents. Appellant's injuries were also deemed compensable under the Montana Workers' Compensation Act. The benefits under the state Act, however, were terminated by respondent pursuant to section 92-702.1, RCM (1947). That statute provided that, where a claimant simultaneously received disability benefits under the state workers' compensation fund and the Social Security Act, weekly benefits from the state fund would be reduced by an amount equal to the weekly benefits received under the federal system. In appellant's case, the offset amounted to 100 percent of the funds he was eligible to receive under the State Act. Section 92-702.1, RCM (1947) has since been amended (now section 39-71-702, MCA) to provide that benefits received under the state Act shall be reduced by 50 percent of the benefits received under the Social Security Act.

Appellant protested the termination of his workers' compensation benefits by a petition filed in the Workers' Compensation Court. On November 4, 1977, a hearing was held on appellant's contentions concerning the right to additional compensation. The court took the matter under consideration and briefs were filed by both parties. On July 21, 1978, the court issued findings of facts, conclusions of law, and a judgment concerning the matter. The court held that the 100 percent offset statute, which was in effect at the time of the injury, was unconstitutional. The court then applied the 50 percent offset statute to the matter.

Appellant made an application for rehearing of the matter, but the court denied the request except for a grant of attorney fees made by order of December 19, 1978. On December 26, 1978, appellant appealed, and on January 2, 1979, respondent cross-appealed.

Several issues are raised for our consideration:

1. Is Montana's offset statute, section 39-71-702, MCA (formerly section 92-702.1, RCM (1947)), ineffective because it only refers to a federal statute which does not provide for disability insurance benefits and which has been repealed?

2. Should Montana's offset statute be declared null and void because it conflicts with the legitimate purposes of the federal government?

3. Is Montana's offset statute an unconstitutional denial of equal protection because claimants with dependents, such as appellant, receive less benefits than similarly situated claimants without dependents?

4. Is Montana's offset statute unconstitutional because it discriminates against appellant on the basis of his social condition as a permanent and totally disabled person?

5. Does Montana's offset statute violate federal and state constitutional prohibitions against ex post facto laws?

Respondent raises the following issue as a cross-appeal. Is Montana's former offset statute, section 92-702.1, RCM (1947), constitutionally valid and enforceable? On this appeal we are presented with determining the validity and enforceability of two statutes. The first is Montana's former offset statute, section 92-702.1, RCM (1947), which provided for a 100% Offset of Social Security benefits and which was in effect at the time of appellant's injury. The second is Montana's present offset statute, section 39-71-702, MCA, which provides for a 50% Offset of Social Security benefits. Those statutes state:

"In cases where it is determined that periodic benefits granted by the Social Security Act, 42 U.S.C. 301 (1935), are payable because of the injury, the weekly benefits payable under this section shall be reduced by the amount of federal periodic benefits for such week." Section 92-702.1, RCM (1947) (as enacted 1973).

"In cases where it is determined that periodic benefits granted by the Social Security Act, 42 U.S.C. 301 (1935), are payable because of the injury, the weekly benefits payable under this section are reduced, but not below zero, by an amount equal, as nearly as practical, to one-half of the federal periodic benefits for such week." Section 39-71-702, MCA.

The first issue in this case concerns whether Montana's offset statute, section 39-71-702, MCA, is ineffective because it makes specific reference to only one particular subchapter of the Social Security Act, section 301. That section deals with old age and medical assistance benefits and has been repealed. Appellant maintains that the specific reference to section 301 indicates that the statute is limited exclusively in its application to section 301 and does not apply to any other subchapters of the Social Security Act. Because section 301 has been repealed, appellant contends that the statute is thereby rendered ineffective. Appellant further submits that the statute cannot apply because section 301 deals with benefits different from those received by appellant. Appellant's benefits are disability benefits, which are set forth in sections 401 through 434 of the Social Security Act.

Respondent argues that the statute is effective and that such limited application is not proper. Respondent submits that the legislature, in adopting the statute, intended to incorporate all of the relevant subchapters of the Social Security Act into the statute and merely referred to section 301 for purposes of convenience since it was the beginning subchapter of the Act.

In resolving this issue, we are faced with construing the statute. In this connection, we note several well-established principles of construction. First, provisions of the Workers' Compensation Act are to be liberally construed. Section 39-71-104, MCA. Second, where there is doubt about the meaning of a phrase in a statute, the statute is to be construed in its entirety and the phrase must be given a reasonable construction which will enable it to be harmonized with the entire statute. Dean v. Brandjord (1939), 108 Mont. 447, 457, 92 P.2d 273, 277. Third, statutory construction should not lead to absurd results where reasonable construction will avoid it. Keller v. Smith (1976), 170 Mont. 399, 407, 553 P.2d 1002, 1007. Finally, where a statute is ambiguous, the intention of the legislature is the controlling consideration. Security Bank v. Connors (1976), 170 Mont. 59, 66, 550 P.2d 1313, 1317.

We find that the offset statute here is ambiguous and that it was the intention of the legislature to incorporate all of the relevant subchapters of the Social Security Act into the statute. While it is true that the statute only specifically refers to section 301, it is also true that the statute describes other parts of the Social Security Act in more general terms. The statute refers to the "Social Security Act" and "benefits payable because of the injury." The inference to be made is that the statute covers more than simply section 301 of the Social Security Act. That this is the intention of the legislature is further confirmed by the language of the forerunner of the offset statute, which describes the Social Security Act in terms of its subchapters. In 1971, section 92-701, RCM (1947), stated "In cases where it is determined that periodic disability benefits granted by the Federal old age, survivors, and disability insurance act are payable on account of such injury, the weekly benefits payable pursuant to this section shall be reduced, but not below zero, by an amount equal as nearly as practical to one-half such federal periodic benefits for such week." (Emphasis added.)

Limiting the statute, as appellant suggests, would lead to a very narrow interpretation and defeat its meaning and purpose. It would create an absurd result where a reasonable construction would avoid it. Finally, it would run contrary to the legislative mandate that provisions of the Workers' Compensation Act be liberally construed.

We find, therefore, that the offset statute is effective and that, despite the repeal of section 301, federal disability insurance benefits are covered under the statute.

The second issue raised by appellant involves determining whether Montana's offset statute conflicts with the legitimate purposes of the federal government...