Reesor v. Montana State Fund

• Court: Montana Supreme Court
• Citation: Reesor v. Montana State Fund, 2004 MT 370, 325 Mont. 1, 103 P.3d 1019 (Mont. 2004)
• Decision Date: 22 December 2004
• Docket Number: No. 03-639.,03-639.
• Parties: Dale REESOR, Petitioner and Appellant, v. MONTANA STATE FUND, Respondent and Insurer.

103 P.3d 1019

2004 MT 370

325 Mont. 1

Dale REESOR, Petitioner and Appellant, v. MONTANA STATE FUND, Respondent and Insurer.

No. 03-639.

Supreme Court of Montana.

Argued and Submitted May 5, 2004.

Decided December 22, 2004.

For Appellant: Thomas J. Murphy (argued), Murphy Law Firm, Great Falls, Montana.

For Respondent: Thomas E. Martello (argued), Special Assistant Attorney General, Montana State Fund, Helena, Montana.

For Amicus Montana Self-Insurers Association: Bradley J. Luck, Robert E. Sheridan (argued), Garlington, Lohn & Robinson, PLLP, Missoula, Montana.

For Amicus Montana Trial Lawyers Association: Laurie Wallace (argued), Bothe & Lauridsen, P.C., Columbia Falls, Montana.

Justice JIM REGNIER delivered the Opinion of the Court.

¶ 1 Dale Reesor (Reesor) filed a petition for hearing before the Workers' Compensation Court in which he alleged he suffered injury arising out of and in the course of his employment with Northwest Equipment in Cascade County, Montana, an employer insured by the State Compensation Insurance Fund (State Fund). Reesor contended that § 39-71-710, MCA, unconstitutionally denied him equal protection under the laws; specifically, he received lower permanent partial disability (PPD) benefits because of his age. The Workers' Compensation Court rejected Reesor's claim and held § 39-71-710, MCA, was constitutionally sound because the receipt of social security retirement benefits, or eligibility for such benefits, was a rough yardstick for determining whether there will be future wage loss, and thus the statutory framework did not violate equal protection guarantees. Reesor appeals from this conclusion. We reverse and remand.

¶ 2 The only issue on appeal is whether the age limitation on PPD benefits, set forth in § 39-71-710, MCA, violates Article II, Section 4 of the Montana Constitution.

BACKGROUND

¶ 3 On January 13, 2000, Reesor injured his right shoulder when he fell from the back of a truck in the course and scope of his employment with Northwest Equipment in Cascade County, Montana. Reesor was sixty-five years old at the time of injury. He began receiving social security retirement benefits on May 24, 1999, his sixty-fifth birthday.

¶ 4 He reached maximum medical improvement on May 10, 2002, and his doctor rated him at four percent permanent partial impairment. The State Fund paid temporary total disability benefits from January 22, 2000, through August 2, 2002. At that point, the State Fund paid PPD from June 10, 2002, through September 15, 2002, a total of fourteen weeks of PPD/Impairment benefits or $2,975, representing his impairment award. ¶ 5 Due to his age, Reesor received no other PPD benefits other than the impairment award. Pursuant to § 39-71-710, MCA, Reesor was not eligible to receive expanded PPD benefits based on other enumerated factors set forth in § 39-71-703, MCA, specifically, age, education, lifting restrictions and wage loss. If he had been eligible for additional benefits pursuant to statute, he would have received an additional entitlement of $20,081.25 in PPD benefits.

STANDARD OF REVIEW

¶ 6 When reviewing a question of constitutional law, this Court reviews conclusions of law to determine whether they are correct. Henry v. State Compensation Ins. Fund, 1999 MT 126, ¶ 10, 294 Mont. 449, ¶ 10, 982 P.2d 456, ¶ 10. Statutes are presumed to be constitutional, and the party challenging the constitutionality of a statute bears the burden of proving, beyond a reasonable doubt, that the statute is unconstitutional. State v. Butler, 1999 MT 70, ¶ 8, 294 Mont. 17, ¶ 8, 977 P.2d 1000, ¶ 8.

DISCUSSION

¶ 7 Whether the age limitation on PPD benefits, set forth in § 39-71-710, MCA, violates Article II, Section 4 of the Montana Constitution.

¶ 8 Article II, Section 4, of the Montana Constitution provides that "[n]o person shall be denied the equal protection of the laws." Reesor contends the failure of the Workers' Compensation Act (WCA) to extend the same PPD benefits to "retired persons" as to younger workers, pursuant to § 39-71-710, MCA, violates his rights to equal protection under the Montana Constitution.

¶ 9 Section 39-71-710, MCA, termination of benefits upon retirement, provides:

(1) If a claimant is receiving disability or rehabilitation compensation benefits and the claimant receives social security retirement benefits or is eligible to receive or is receiving full social security retirement benefits or retirement benefits from a system that is an alternative to social security retirement, the claimant is considered to be retired. When the claimant is retired, the liability of the insurer is ended for payment of permanent partial disability benefits other than the impairment award, payment of permanent total disability benefits, and payment of rehabilitation compensation benefits. However, the insurer remains liable for temporary total disability benefits, any impairment award, and medical benefits.

(2) If a claimant who is eligible under subsection (1) to receive retirement benefits and while gainfully employed suffers a work-related injury, the insurer retains liability for temporary total disability benefits, any impairment award, and medical benefits.

¶ 10 When addressing an equal protection challenge, this Court must first identify the classes involved, and determine if they are similarly situated. Geil v. Missoula Irr. Dist., 2002 MT 269, ¶ 35, 312 Mont. 320, ¶ 35, 59 P.3d 398, ¶ 35. Reesor maintains the two classes involved in this appeal are: (1) PPD eligible claimants who receive or are eligible to receive social security retirement benefits; and (2) PPD claimants who do not receive and are not eligible to receive social security retirement benefits.

¶ 11 The State Fund initially challenges Reesor's classification scheme contending these classes are not similarly situated because the added benefit of social security serves the same purpose as replacing lost wages, and specifically, Reesor only suffers a partial wage loss yet receives full social security retirement benefits. Corollary to this argument is the State Fund's assertion that workers' compensation benefits and social security retirement benefits are part of an integrated system of wage loss benefits, and both benefits serve the same purpose to restore earnings due to wage loss, the cause of wage loss being irrelevant. Relying upon Watson v. Seekins (1988), 234 Mont. 309, 763 P.2d 328, it contends workers' compensation offset statutes prevent double dipping, and receiving both social security retirement benefits and disability benefits is, in essence, double dipping. ¶ 12 We agree with Reesor, however, when he asserts that both classes are similarly situated because both classes have suffered work-related injuries, are unable to return to their time of injury jobs, have permanent physical impairment ratings and must rely on § 39-71-703, MCA, as their exclusive remedy under Montana law. The claimant's age, as a result of eligibility to receive social security retirement benefits, is the only identifiable distinguishing factor between the two classes. Furthermore, chronological age and the corresponding eligibility for social security retirement benefits is unrelated to a person's ability to engage in meaningful employment. Therefore, we conclude the classes are similarly situated for equal protection purposes.

¶ 13 Next, in addressing an equal protection challenge, we must select the appropriate level of scrutiny to apply to the challenged legislation. When reviewing equal protection challenges, we apply one of three recognized levels of scrutiny: strict scrutiny, middle-tier scrutiny, or rationality review. Powell v. State Compensation Ins. Fund, 2000 MT 321, ¶¶ 17-19, 302 Mont. 518, ¶¶ 17-19, 15 P.3d 877, ¶¶ 17-19. This Court applies strict scrutiny, the most stringent level of review, when a law affects a suspect class or threatens a fundamental right. Under this standard, the State has the burden of showing the law is narrowly tailored to serve a compelling government interest. Powell, ¶ 17. We apply middle-tier scrutiny when the law affects a right conferred by the Montana Constitution, but is not found in the Constitution's Declaration of Rights. Powell, ¶ 18. Middle-tier scrutiny requires the State to demonstrate the law in question is reasonable and its interest in the resulting classification outweighs the value of the right to an individual. Powell, ¶ 18. We apply the rational basis test when neither strict nor middle-tier scrutiny applies. Under this standard, the government must illustrate that the objective of the statute is legitimate and such objective is rationally related to the classification used by the Legislature. Powell, ¶ 19.

¶ 14 The Workers' Compensation Court applied the rational basis test to Reesor's equal protection challenge to § 39-71-710, MCA. Relying heavily upon Butte Community Union v. Lewis (1986), 219 Mont. 426, 712 P.2d 1309, Reesor sets forth various arguments to suggest his claim deserves middle-tier level of scrutiny. However, we see no need to depart from our analysis set forth in Henry wherein we stated that equal protection claims brought by an injured worker are generally reviewed pursuant to the rational basis test. See Henry, ¶ 32.

¶ 15 We next turn to the heart of equal protection analysis, that is, whether the government's stated objective bears a rational relationship to the statutory classification adopted by the Legislature and set forth in § 39-71-710, MCA. We said in Henry that "[a] classification that is patently arbitrary and bears no rational relationship to a legitimate governmental interest offends equal protection of the laws. As we have previously held, equal protection of the laws requires that all persons be treated alike under like circumstances." Henry, ¶ 36 (quoting Davis v. Union Pacific R. Co. (1997), 282 Mont. 233, 242-43, 937 P.2d 27, 32).

¶ 16 It is well settled that the rational basis test...