Rausch v. State Compensation Insurance Fund

Nos. 01-420, 01-441 and 01 -112 rzi THE SUPREME COURT OF THE STATE OF MONTXNrl, .ALEXIS KAUSCL-I, as Conservator h r KEVIN R*\USCH, and on behalf of others similarly situated, CHARLES FISCH, ind~vidually 011behalf of and others simrlarly situated, THOMAS FROST, irtdividually and on behalf of others similarly situated, STATE COMPENS24TION INSURAKCE FUND.

APPEAL FROM: Workers- Compensat~on Court, State of Montana The Honorable M ~ k e McCartcr, Judge pressdmg.

COUNSEL OF RECORD:

For Appellants:

Lon J. Dale, James T. Towe, Milodragovich, Dale, Steinbrenner & Binney, P.C., Missoula, Montana (For Rausch)

Monte D. Beck, Attorney at Law, Bozcman, Montana (For Fisch)

Stephen D. Roberts, Attorney at Law, Bo~eman. Montana (For Frost)

For Respondent: dw- - Greg E. Overturf, Montana State Fund, I-lelena, Montana Submitted on Briefs: Decernber 13, 2001 Decided: September 5. 2002. CLERK OF SUPREME COURT fir$$E RAONTANW Justice Terry 21, 'Tric\vciler delivered the Opinion of the Court.

71 Appellants; Alexis Rausch (as conservator for Kevin Rausch'), Charles Fisch, and

Tlronias Frostt cacli filed separate petitions in Workers' Compensation Court claiming

cntitlernent to immediate payment of an impairment award based on their respective

impaimlent ratings. Respondent, State Compensation Insurance Fund, denied immediate

payment of the impairment awards, asserting that the benefit was not due until each claimant

reached his retirement age. Appellants brought their claims as individuals and on behalf of

others similarly situated, and also sought attorney fees, penalties, and common fund attorney

fees. The Workers' Compensation Court consolidated the three cases and concluded that

neither the 1991 nor 1997 Montana Workers' Compensation Acts (\vhich applied to these

claimants) provided a statutoty basis for an impainnent award to permanently totally disabled

claimants. Claimants contended that if that conclusion was correct, their rights to equal

protection and due process were violated. The Workers' Compensation Court held that the

Montana Workers' Compensation Act, as interpreted by the Court in its previous order, did

not violate either the equal protection or due process clauses of the Montana Constitution.

.%ppellants appeal from the LVorkers' Compensation Court's Order and Decision Disposing

of Non-Constitutional Issues, Order and Judgment Regarding Constitutional Challenge. and

the Judgment Respecting impairment Awards. We reverse the LVorkers' Compensation

C:ourt's orders \vhich denied impairment awards to permanently totally disabled workers and

denied attorney fees.

!2 I The issues presented on appeal arc restated as follows:

2 rili I . Did the District Court err as a ritalter of law when it cctnciudcd, pursiianl to the

1W h a d 1997 versions ofti~b: Montana Workers' Compei~salion that pern~ancntly Act; toraliy

disabled workers are not entitled to receive impairment awards'?

74 2. Is an impairment award due to a pemtanently totally disabled claimant upon the

receipt of his or her undisputed impairment rating or upon retirement?

35 3. Should an impaimlent award to a permanently totally disabled claimant be

characterized as a total or partial disability benefit?

1:6 4. Are elaimaiits' attorneys entitled to attorney fees pursuant to the common fund

doctrine?

FACTUAL AND PROCEDURAL BACKGROUND

'7 Kevin Rausch, Charles Fiseh; and Thomas Frost were all determined to be

pernlanently totally disabled as a result of work-related injuries. Kevin Rausch sustained a

head and spinal cord injury on July 8, 1992, and is quadriplegic with brain damage. Charles

Fisch sustained a spinal cord injury on July 9, 1998, and is an incomplete quadriplegic.

Thomas Frost sustained a back injury on August 30, 1997, and has undergone a series of four

back surgeries. The State Compensation Insurance Fund(State Fund) insured each claimant's

cnlployer and has accepted liability for each of the injuries.

ij8 Rausch, Fisch, and Frost currently receive pelmanent totiil disability benefits as a

r e s ~ ~oft thcir work-related injuries, and are entitled to those benefits until their death or l

retirement age, whichever occurs first. The claimants began receiving permanent total disability benefits immediately upon termination oftheir temporary total disability benefits.

None of tire claimants h a w ever received permanent partial disability benefits.

79 Each claimant has reached maximum medical improvement from his respective

injuries, On Deccmber 14, 1998, Kevin Rausch received an impairment rating equal to 96%

of the whole person. On July 29, 1999, Charles Fisch received an impairment rating equal

to 74% of the whole person and on August 26, 1999, Thomas Frost received an impairment

rating equal to 25?h of the whole person. Each impairment rating was based on the American

Medical Association Guide to Evaluation of Permanent Impairment, and on objective

medical findings.

Ti 10 Each elairnatlt filed separate petitions in the Workers' Compensation Court claiming

entitlement to immediate payment of an impairment award. The State Fund denied

immediate payment of the impairment awards, based on its contention that in~pairnlent

a\nlards for permanently totally disabled claimants are not due until the claimants either

receive social security retirement benefits or are entitled to receive social security retirement

bcnetits. Claimants also asserted that postponement of their impairment awards would

violate their rights to equal protection and substantive due process as guaranteed by the

Montana Constitution. Claimants sought attorney fees individually and pttrsuant to the

cornmon fund doctrine for similarly situated claimants. At no time did the State Fund

contend that claimants had no entitlement to an impairment award. The dispute centered on

the timing of the payn~ent. (11 1 On March 2 ) 20(rClf!, the Starc Fund offered to pay the impairment awards, as an "

undiscounted, lump srrrn, to each claimant concumeniwith permanent total dlsabiiiiy benefits.

In additiorr, the State Fund agreed to pay the claimants' attorney fees. Fisch and Frost

accepted the State Fund's offer, but continued to maintain standing for class certification and

for common fund attorney fees. Rausch rejected the State Fund's offer because of its

unwillingness to characterize the impaimlent award as a permanent total disability benefit

(which would impact whether there is a social security offset). Although the State Fund has

paid inipairmelit awards to Fisch and Frost, it has not paid impairment awards to all other

similarly situated claimants.

7 12 The Workers' Compensation Court consolidated the three cases, and bifurcated the

statutory and constitutional issues. It first examined the statutory basis for impairment

awards, arid then cxatnined the constitutionality of its decision in light of the claimants'

cosistitutional arguments. Based oil briefs and stipulated facts, the Workers' Compensation

Court issued an Order and Decision Disposing of Non-Constitutional Issues on September

13, 2000. It held that neither the 1991 nor 1997 Montana Workers' Compensation Acts

provided for impairment awards to pernianently totally disabled claimants. The Workers'

Cornpensation C o ~ ~ r t issued an Order and Judgment Regarding Constitutional Challenge then

on '4pril 20, 2001. In that Order, it held that the Court's interpretation of the Montana

Workcrs' Comperisation Act did not violate either the due process or cqual protection clauses

of thc Montana Constitution. "13 The ciaimanrs appealed the iVorkerst Compensation Courts Order and Dccision

Disposing of Non-Cor.rsiituiionai issues, Order and Judgment Regarding Constitutional

Challenge, and the Court's Judgment Respecting impairment Awards which was based on

those orders.

STANDARD OF REVIEW

114 We review the Workers' Cotnpensation Court's conclusions of law to determine

whether they are correct. ibfatthrws v. State Cornpensution112s.Fund, 1999 MT 225,15 , 296

Mont. 76 , 1' 5, 985 P.2d 741 ,T 5.

DISCLJSSION ISSUE 1

71 5 Did the D ~ s t r ~Court e n as a matter of law when it concluded. pursuant to the 1991 ct

and I997 vers~onsof the Montana Workers' Compensation Act, that permanently totally

disabled workers are not entitled to receive impairment awards?

7116 The contested legal issue presented to the Workers' Compensation Court by the parties

related to when an impairment award should be paid to a permanently totally disabled

claimant. The claimants asserted that the impairment award should be paid immediately

upon receipt of their undisputed impairment ratings, while the State Fund responded that the

ilnpairmeiit award should be paid at age 65, upon retirement, pursuant to 5 39-71-710, MCA

I I & 9 ' 7 'The State Fund had already conceded that the claimants were entitled to

impairment auards. However, in analyzing the legal issue presented, the Workers'

Compensation Court concluded there was no statutory basis for impairment awards to 6 permancntiy totally disabled claimants in either the 19901 or 1997 versions of the Montana

Workcrs' Compensation ,Act. On that basis, the LL70rkers'Compensation Court concluded as

a matter of law that permanently totally disabled workers are not entitled to impainnent

awards. After review of the applicable statutes. we conclude that the Workers' Compensation

Court's intet~retation the acts IS incorrect. of

1 7 Workers' compensation benefits are determined by the statutes in effect on the date

of the injury. Rzickniaiz v. hlontnfzaDeaconess Nosp. (1986), 224 Mont. 318,321 , 730 P.2d

380,382 . Therefore, with respect to the Rausch claim, the 1991 Workers' Compensation Act

is applicable. With respect to the Fisch and Frost claims, the 1997 Workers' Compensation

Act is applicable.

71 8 Montana recognizes four distinct classes of disability benefits: (1) temporarytotal; (2)

temporaty partial; (3) permanent partial; and (4) permanent total. 3 39-71- 116, MCA (1991 & 1997); lieeverts v. Sears, Roebuck & Co. (1994), 266 Mont. 509 ,5 17, 881 P.2d 620,625 .

The claimants in this ease have all been classified as permane~ttly totally disabled, and have

never been classified pemtanently partially disabled.

I Several sections of tile Montana Workers' Compensation Act discuss impairment

awards. We have previously stated that where one part of the law deals with a subject in

general and comprehensive tenns, while another part of it deals in a more specific or definite

way, the two parts should be read together and, ifpossible, harmonized, with a viem-to giving

effect to aconsistent legislative policy. 3 1-2-101, MCA; E.H. O@dirlc~t~d,Sorts. v. State Irzc. "120 No section of the tVorkersl Compensation ,4ct explicit1y authorizes impairment awards

pcr sc. HOMCLCT, impalrment abards arc impliedly authoriicd lo any injured bcorkcr

classified in one of the four distinct classes of disability benefits by two sections of the Act.

8 39-71-710, MCA, and (3 39-71-737, MCA. The 1991 and 1997 bersions of 6 39-71-710,

MCR, differed in only minor respects, and provided in relevant part:

Termination of benefits upon retirement. ( 1 ) If a claimant is receiving disability or rehabilitation compensation benefits and the claimant receives social security retirement benefits or is eligible to receive full social security retirement benefits, the claimant is considered to be retired. When the claimant is considered retired, the liability of the insurer is ended for payment of wage supplement, perfaanent total disability, and rehabilitation compensation benefits. However: the insurer remains liable for temporary total disability benefits, itny inzpmirnzenf itward, and medical benefits.

8 39-71-710(1), MC,4 (1991) (emphas~s added).

Termination of benefits upon retirement. (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, paynzerzt fffper-rnarterrt total disability benefits, and payment of rehabilitation compensation benefits. However, the insurer remains liable for temporary total disability benefits, urzy irnpuirn~enta~'i~irrit, and medical benefits.

3 39-71-710(1), MCA (199'7) (emphasis added). YiZI Section 3")-11-710, MCA (199 i i 1997). speciiicaiiy states thiir a11 insurer remains ,.

liable for other benefits, including "any inlpai1men.i award," upon cessation of pcmiancnt

totai disability benetits. The statute's contemplatio~~ when permanent total d~sabtlity of

bcncfits terminate and when impairment a\vard liability continues recognixes the fundamental

nature of the impalmwnt award itself. lmpa~rmenta~vardsare based on a worker's

impa~rnleat ratlng, n hich is a purely medical determination of the loss of physical function

ofthe bod3 caused by the injury. $39-71-71 1, MCA (1991 & 1997). ?'he lmpalrment rating

is the physical component on which the disability is based. Disability benefits compensate

tl~e worker for losses related to their inability to work. An impairment akvard is paid to

compensate the worker for the loss of physical function of his or her body, which may hake

ramifications beyond just the worker's ability to return to work. The difference is subtle, yet

important. The inclusion of continued impairment award liability in $ 39-71-710, MCA

(I991 8L 1997), ~ndicates distinct nature of the impairment award from other types of the

disability benetits

722 Furthermore, Impairment anards are implicitly recognized in 3 39-71-737, MCA.

Seetlons 39-71-737, MCA, of the 19% and 1907 Workers' Compensation Acts provided as Compensation to run consecutively - exceptions. Compensation shall run consecutively and not concurrently, and payment shall not be made for two classiis of disability over the same period except that impairment awards and auxiliary rehabilitation benefits may be paid concurrently with otlier cliisses of betzejifits, and wage supplement and partial rehabilitation benefits may be paid concurrently. 5 89-71-737, klCA (19")) (emphasis added).

Compensation to run cansecutivefy - exceptions, Compensation must run consecutively and not concurrently, and payment may not be made for two classes of disability over the same period, except that impairment aviards and auxiliary rehabilitation benefits may be paid concurrently ivith otlier clusses ofbengfirs.

$ 39-71-737, MCA (1997) (emphasis added).

7/23 Section 39-71-737, MCA (1991 & 1997), like $ 39-71-710, MCA (1991 & 1997),

creates an entitleinent to an impairment auard for disabled workers within more than one

class of disability benefits. Since a permanent impairment rating is inconsistent with

temporary dlsabilrty benefits , impairment anards must necessarily be rccol erable by both

permanently partially and permanently totally disabled claimants.

721 The \h70rkers'Compensation Court concluded that the only section in the Workers' awards 1s 4 39-71-703, MCA (1991 Compensat~on u bich directly authorizes ~mpairment Act

& 1997), pertaining to compensation for permailently partially disabled claimants. Because Temporary benefits (meluding temporary partial and temporary total benefits) are recoverable as a result of losses incurred by a claimant prior to maximum healing. ,See $ 3%71-1 16(23), MCA (1991) and $39-71-1 lG(32) & (33),MCA (1997). By comparison, permanent benefits (including permanent partial and permanent total benefits) are detern-rined uper the worker has reuciwd mu~irnum ~~zedical heulirzg. See $; 39-71-1 16(15) & (16); MCA (1991) and 5 39-71-1 16(23) & (24), MCA (1997). Pursuant to $ 39-71-71 l(l)(a), blCA (1991 & l997), "[ajn impairment rating is a purely medical determination and must be determined by an impairment evaluator after a claimant has rcached maximum healing." $ 19-71-71 l(l)(a), MCA (1991 & 1997). Therefore, if impairment awards are payable concurrently with "other classes of benefits," it has to be pennanent partial and permanent total disability benefits. the claimants in this case c\-cre never ciassifiedpermarrently pariially disauied. the Coun heid

~t had no authority to a ~ l a r d compensation for permanent rmpaimcnt.

725 However, the Court's conclusion that i. 39-71-703, MCA, expressly provided h r ;

~mpairment auards in both the 1091 and 1997 Workers' Compensation Acts 1s ~ncorrect.

Sectlon 39-71-703. MCA. of the 1991 M'ot-kers' Compensation Acts pro~ided relevant in

part:

Compensation for permanent partial disability. (1) If an injured worker suffers a permanent partial disability and is no longer entitled to temporary total or permanent total disability benefits, the worker is entitled to a permanent partial disability award. (2) The permanent partial disability award must be arrived at by nlultiplying the percentage arrived at through the calculation provided in subsection (3) by 350 weeks. (3) An award granted an injured worker may not exceed a permanent partial disability rating of 1000/o. The criteria for the rating of disability must be calculated using the medical inlpairment rating as determined by the latest edition of the American medical association Guides to the Evaluation of Permanent Impairment. The percentage to be used in subsection (2) must be determined by adding the following applicable percentages to the impairment rating: (a) if the claimant is 30 years of age or younger at the time of the injury, 0%; if the claimant is over 30 years of age but under 56 years of age at the time of injury, 2%; and if the claimant is 56 years of age or older at the time of injury, 3%; (b) for a worker who has completed less than 9 years of cducation, 3%; for a worker who has completed 9 through 12 years of education or who has received a graduate equivalency diploma, 294; for a worker who has completed more than 12 years of education, 0%; (c) if a worker has no wage loss as a result of the industrial injury, 0%; if a worker has an actual w-age loss of $2 or less an hour as a result of the industrial injury: 10%; if a worker has an actual wage loss of more than $2 an hour as a result of the industrial injury, 20%; and (d) if a worker, at the time of the injury, was performing heavy labor activity and after the injury the worker can perform only light or sedentary labor activity, 20%; if a worker, at the time of injury, was performing heavy iabor activity and after the injury the worker can perform only medium labor activity, 15%; if a worker was performing medium labor activity at the time of the injury and after rhe injury the worker can perform only lighr or sedentary labor activity, 10%.

The same sectiot~ thc 1097 itct provided: in Compensation for permanent partial disability. ( 1 ) If an injured worker suffers a permanent partial disability and is no longer entitled to temporary total or permanent total disability benefits, the worker is entitled to permanent partial disability award if that worker: (a) has an actual wage loss as a result of the injury; and (b) has a permanent impairment rating that: (i) is established by objective medical findings; and (ii) is more than zero as determined by the latest edition of the American medical association Guides to the Evaluation of Permanent Impairment. (2) When a worker receives an impairment rating as a result of a compensable injury and has no actual wage loss as a result of the injury, the worker is eligible for an impairnzent award onlJ!. (3) The permanent partial disability award must be arrived at by multiplying the percentage arrived at through the calculation provided in subsection (5) by 350 weeks. (4)A permanent partial disability award granted an injured worker may not exceed a permanent partial disability rating of 10004. (5) The percentage to be used in subsection (3) must be determined by adding all of the following applicable percentages to the impairment rating:

Section 39-71 -703, MCA (1997) (emphasis added).

v 26 The 1901 version of 5 39-71-703, MCA, did not expressly provide for impairment auarcis. The stattite simply discussed the use of the "impaimlent rating" as one factor it1

dctcrrnining permanent partial disability benefits 12 17 f h e i9W version of539-'71-703. MCA, on the other hand, does specifically provide

for irnpairmcnr a\*-ards. Howeber, they are not linked to pariial disability. Section 39-71-

7 3 2 , MCA (1997), provided that "[wlhen a worker receives an impairment rating as a 0()

result of a compensable injury and has no actual wage loss as a result of the injury, the

worker is eligible for an impairment award." Pursuant to the definition of "permanent partial

disability" found in 5 39-71-1 16(23), MCA (19!97), however, if there is no wage loss, there 1s no permanent partial disabilitj .'

728 Therefore, netther the 1991 nor 1997 version of $; 39-71-703, MCA, are authority for

ltmiting ~mpairmetlt awards to partially disabled claimants. In the 1991 version, they Mere

not expressly provided for. In the 1997 version, they here unrelated to the disability.

2 9 One final consideration is necessarily part of our statutory analysis. To provide an

~mpairment award to permanently partially disabled claimants and not to permanently totally

d~sabled claimants would lead to an absurd result, and contravene the intent underlying the

Workers' Compensation Act. When more than one interpretation is possible, in order to

promote justice, we will reject an interpretation that leads to an unreasonable result in favor (23j "Permanent partial disability" means a physical condition in which a worker, after reaching maximum medical healing: (a) lias a permanent impairment established by objective medical findings; jbj is able to return to work in some capacity but the permanent impairment impairs the worker's ability to work; and (c) /?(IS a2 UC~ZINI~ g e US u ~ e s u lof the injuiy. 1 l v ~ 10s.~ t

3 39-71-1 16(23), MCA (1997) (emphasis added) of another that will lead to a reasonable result. Jol~ilsonv. ill/rrias River. EIec. Co-op, ~ I Z C .

(!084j, 21 1 Mont. 518, 524 . 687 P,Zd 668, 671. As interpreted by the Workers'

Cornpensation Court, a pemanently partially disabled worker, cvho is by definition less

disabled, can receive an in~paimient award while a permanently totally disabled worker is

dcprived of the benefit. Therefore, the most disabled of all claimants, despite having an

undisputed impairment rating caused as a result of a permanent loss of physical ftrnction,

would receive no impairment award. Furthemlore, an injured worker who is at first

classified as a pem~anentlypartially disabled worker, hut is subsequently reclassified as

permanently totally disabled is eligible for a full impairment award, while another worker

with the same injury who is fro111 the onset classified as permanently totally disabled is

ineligible. Such a result would be unreasonable and callnot have been the Legislature's

intent.

130 We conclude. therefore, that permanently totally disabled claimants are legally entitled

to an impairment award for the loss ofphysical function of their body occasioned by a work-

related injury pursuant to the recognition of such awards in ij 39-71 -71 0. MCA, and 9 39-7 1-

737, VCA. The \Vorkersl Compensation Court's conclusion to the contrary is reversed.

ISSUE 2

731 is an impairment award due to a permanently totally disabled claimant upon the

receipt of his or her undisputed impairn~ent rating or upon retirement?

*i72 !,- Thc primary issue presented to the Workers' Compensation Court by the parties was

when an impairment award should be paid to a permanently totally disabled claimant. The I4 award should be paid at age 65 upon retirement State Fund contended that an in~paiment

pursuant to 4 39--7-710, ?JICA. The claimants, on the other hand, contended that an

in~pairrnent award is due immediately upon thc rcccipt of an unhsputed impairmen1 rating, permanent total disability benefits pursuant to 5 39-71- and should be paid concurreiitly \+-it11

737, MCA. The District Court did not reach this issue based on its resolution of Issue 1 .

'33 The rules of statutory construction require the language of a statute to be construed

according to its plain meaning. If the language is clear and unambiguous, no further

interpretation is required. Love11 v. Stute Conlpensntion Mut. Ins. Fund ( 1 993), 260 Mont.

279,285 , 860 P.2d 95 .99.

7/34 Section 39-71-737, b1CA (1991 & 1997), states that compensation benefits shall run

consecutively "except that impairment awards and auxiliar)! rehabilitation benefits lnay be

paid concurrently with other classes." Section 39-71-737, MCA (1991 & 1997), is clear and

unambiguous, and the claimants in this case are, therefore, entitled to receive their

impairment awards concurrently with their permanent total disability benefits. The State

Fund's reliance on 5 39-71-710, MCA (1991 & 1997), is misplaced. Section 39-71-710.

MCA (1991 & 1997). merely states than an insurer remains liable for payment of an

impairment award if it has not already been paid to the claimant before age 65. !t says

nothing to suggest that payment should be delayed until retirement. Furthermore, to read

such a meaning into the statute would create another absurd result. Partially disabled

workers would be entitled to impairment awards while receiving their disability benefits, but totally disabled workcrs who presumably have the grater need would not be. Again, tve

conciude thar the Legisiature couid not reasonably have had such an intention.

7/35 For these reasons, we conclude that an impairment award is due a perma~~cntly totally

disabled claimant upon receipt of his or her undisputed impairment rating.

ISSUE 3

136 Should an inipairment award to a permanently totally disabled claimant be

characterized as a total or partial disability benetit?

737 An issue raised by the conservator of the estate of Kevin Rausch, which went

unaddressed by the Workers' Compensation Court based on its resolution of Issue 1, is how

impairment benefits due a permanently totally disabled clainiant should be characterized.

The characterization ofthe inipaiiment award is significant because it determines whether

there is a social security offset. The Social Security Administration offsets benefits which

are designated as partial benefits, but does not offset permanent or temporary total disability

benefits.

7138 Rausch contends that his impairment award should be characterized as part of his

permanent total disability benefits, since impairment is simply the functional or medical

component of that disability.

( j 3 9 T h e State Fund did not address this issue in its brief on appeal. However, in the

LVorkcrs' Coinpensation Court, the State Fund contended that an impair-ment award shou!d

be classified as netther a permanent total disabilrty benefit nor a permanent partial disablllty

benefit. The State Fund asserted that an itnpairment award is a unique benefit distinct from 16 disabtlrty benefits and rntcnded oniy to compensate cla~rnantc. r the med~cal h component of

their disability. Ti~crefore~ urged the Woi-K~TS' it Compensation Court to characteri;le

impairment awards as a special class of benefits referred to as an "impairment award."

740 The problem .v, ith the approach suggested by the State Fund is tl~at Social Security the

Administration does not recognve a class of benefits entitled "lmpalrment award" or

"impairment benefits." Periodically, the Social Security Administration requests \+orkersl

compensation insurers to complete a form for confirmation and classtfication of uorkers'

con~pensation bencfits being paid to individuals who concur-rently receive workers'

compensation benefits and social security disability benefits. Therefore, because Rausch will

receive an impairment award, the State Fund will have to advise the Social Security

Administration of how it classified those benefits by completing Form SSA-1709. Form

SSA-I 709, however, like Montana law, only recognizes the existence of four classifications

of benefits? i.e.; temporary partial, temporary total, permanent partial and permanent total.

If we were to adopt the State Fund's suggestion, and a fifth classification of benefits was

recognized under the guise of "impairment benefits," the Social Security Administration has

stated that it would categorize the impairment award as a permanent partial benefit,

Therefore, the Social Security Administration will offset Rausch's disability benefits, even

though Rauscl~ pennanently totally disabled, not permanently partially disabled. is

4 That result irrationally reduces Kausch's impairment award benefit, even though the

Statc Fund concedes that impairment is merely the medical component of his total disability

and that classification of impairment bencfits for a permanently totally d~sabled uorkcr as 17 21 partial disabi!ity bcnefit is improper. The nlost logical approach is to characterize the

inlpainncnt award consistently with the ciaimant's disability status, considering that the

impairment is a result of the claimant's injury and a substantial factor in his disability.

142 Therefore, we conclude that because Kevin Rausch was permanently and totally

disabled, his impanment a\?ard should be characteri~edas a permanent total disabrlity

benefit.

ISSUE 4

743 Are claimants' attorneys entitled to attomey fees pursuant to the common fund

doctrine?

744 Ciaimants' attomeqs contend they are elltitled to attorney fees pursuant to the coinmon

fund doctrine thrall similarly s~tuatedpermanently totally dtsabled claimants who hate been

dented immedtate tmpairment awards by the State Fund, and will now be able to obtain those

benefits as a rcsult of this decision. As authority, claimants' attorneys cite this Court's

decision in Murer v. Stare Chnzp. itf~it Ft~nd(1997), Mont. 210, 942 P.2d 69 . The Ins. 283

State Fund did not rcspond to the claimants' request for common fund attorney fees in the

brief subnutted for thrs appeal

745 Generally, the common fund doctrine "authorizes the spread of fees among those

individuals benefitting from the litigation which created the common fi~nd.",bfou~ztai~z West

Faivii Buwc~u l l u thzs. C.i,. ~ . Y. f i l l , 2001 MT 314 ,l 14, 308 iblont. 29,T 14, 38 P.3d 825,1 ;

1 1 . Thc common fund doctrine provides: [Wllicn a patty has an interest in a fund in common with others and incurs legal fees in order to establish, preserve, increase: or collect that fund, then that party 1s cnt~tlcd rc~mbursement to ol'h~s her reasonable attorncy fecs fion: or the proceeds of the fund rtsclf.

q36 To be awarded attorney fees based on the common fund doctrine, a party must satisfy

three clemcnts. First, a party (or multjplc parties in the case of a consolidated case) must

create, rescrte, increase, or presertc a common fund. This party is typically referred to as

the actite beneficiary. Second, tlre actice beneficiary must incur legal fecs in establishing

the common fund. Third, the common fund must benefit ascertainable, non-participating

beneficiaries. hfoulztnirz Vest, ti7 15-16, 18.

7,47 In hlzireu. clannants engaged in complex, lengthy, and expensive litigation that

resulted in a legal precedent which d~rectlybenefitted a substantial number of workers'

coinpensation claimants tvho were neither parties to nor directly in~olved the blurer in

ltt~gatton. 283 Mont. at 223 , 942 P.2d at 76 . In addition, "claimants established a tested

right on behalf of the absent claimants to directly receive immediate monetary payments of

past due benefits underpayments; . . . ." ~tlu~*e.er, hlont. at 223. 942 P.2d 76 -77. We held: 283 [\nilhen a part>, through actibe litigation, creates a common fund whtch directly benefits an ascertainable class-ofnon-participating beneficiaries, those non-participating beneficiaries can be required to bear a portion of the litigation costs, including reasonable attorney fees. Accordingly, thc party who creates the common ftind is entitled, pursuant to the common fund doctrine, to reimbursement of his or her reaso~lable attorney fees from that fund. 348 P ~ ~ r s u a n t;\h4rer7 we conclude that ciairnants' attorneys in this case are entitled to to

cornrnon fund attorney fecs. The attomoys representing Rausch, Fisch and Frost all engaged

in acti~velitigation which prescncd the benefit of irnrnediate impaim-rent awards to

pernlanently totally disabled claimants. The attorneys incurred legal costs and fees in thc

preservation of that right, and the common fund will benefit an ascertainable class of workers

who were denied irnrnediate payment of an impairment award by the State Fund which they

were legally entitled to receive. Those absent claimants will receive the benefit "even though

they were not required to intervene, file suit, risk expense, or hire an attorney." ;Mzuer, 283

Mont. at 223 , 942 P.2d at 77 .Accordingly, claimants' attorneys are entitled to reasonable

attorney fees for the creation or preservation of a common fund, and those fees should be

divided among the three firms involved in this ease. This case is remanded to the Workers'

Coinpensation Court for a determination of a reasonable fee.

4 9 Finally, claimilnts request this Court to award a twenty percent penalty against the

State Fund for its unreasonable initial denial of benefits and delay in p a p e n t of their

impairment awards. However, we conclude that unreasonable conduct has not been

established and, therefore, decline to assess a penalty.

7,:50 Accordingly, we conclude that permanently totally disabled claimants are entitled to

inrpairtnent awards, which are due upon the receipt of the undisputed impairment rating.

Furthermore, impairment awards of permanently totally disabled claimants should be

characterized as a permanent total disability benefit. Finally, we conclude that claimants' attorneys are entitled to reasonable attorney fees pursuant to the common h n d doctrine, but

that clairnairts are not entitled to a tkventy percent penalty.

"11 LVe reverse the order of the Workers' C:on~pcnsationCourt and remand for further

proc-cdii~gsconsistent \%iththis Opinion

Wc Concur:

~~~-~~ Chief Justice Justices Jizstlce Jim H ~ c e speciall~ . concurring

7/52 1 concur with the holding of the Court hereii~, offer the f01iowi1:g comments in and

regard to lssuc I .

753 The CiTorl\ers' Compens:ttion Court was hced with the unenviabic duty ofcontruing,

not just one statute. but the cntlret) of the statutory fiamcuork surrorind~ngimpa~nnent

a\%ards. As ex idenced by the opinions herein of both the Workers' Compensation Court and

this Court, determining the proper interpretation of the statutes was a difficult task; even w~ith

application of maxims of statutory construction. IZ reading of the statutes gives the distinct impression that the impairmelit award is a benefit provided in all disability cases. However,

a closer re\ i e rc\eals that such an cntctlement is not expIicitiy created. The situation IS ~

something akin to a group of people talking about an absent comrade. They all know he

exists. He just isn't there.

f,54 Yonetheless, I b e l t e ~ e conclusion drawn by the Court from the l~rnited the drrectlon

provided by the statutes is the correct one, and mould offer the follo\~ing addltioiial reasons

tllerefor. I diverge from the Workers' Corllpensation Court's rationale at 20 of its opinion,

wherein it states:

Cla~mants argue that. failure to tnterprct sectlon 30-71-737. MCA. as entitling permanently totally disabled claimants to impairment awards would - render the section's reference to impairment awards meaninrrless. If that were so, the Court might have to deem the statute ambiguous and eonslder the maxim of statutoi-y interpretation that coul-ts should attempt to construe a statute in a manner which docs not render it meaningless, Alhriglit v. State By und 7hroug11 Sfnte, 28 1 'l4ont. i Yb.206,933 P.2d 8 I S , 82 1 (19%'). I-Iowever, failure to adopt claimants' interpretation does not render the language ,- meaningless. I here are other bcncfits which a claimant mlght receive concurrently with an impairnient award, specifically, an a\\-ard fhr disfigurement, 4 39-71-508 (1991; i947jl MCA. andrehabilitation benefits 39-71-1006, MCA (lt197), 39-71-2001, klCA (1991).

The LVorkers' Compensation Court thtls found that its interpretation would not render

meaningless the provision of $ 39-71 -737; MCA, which authorized payment of in~pairtnent

awards "with other classcs," because there were "othcr benefits" which a claimant might

receive concurrently with an impairment award, namely, rehabilitation or disfigurement

benefits H o u e ~ e rour ease law construes "classcs" of benefits in a manner \ t h ~ c h , supports

the claimants' argument.

625. the Court: citing Iloseil v. East Butte Copper .bfinit~gCotrzp~z~iy9271, 'Ilont. 579, (1 78 254 P. 880 (oven-uled on other grounds), hcld that:

[Tlhis Court observed that [$39-71-71?, MCA, ofthe Workers' Compensation Act], as it existed in 1927, contemplated the possibility of four resulting conditions from an injury: (1) temporary total disability; (2) per~nanent total disability; (3) temporary partial disability; and (4) permanent partial disability. The Court hcld that the tenn "classes" mentioned in this predecessor to 5 -737 referred to the different types of disability benefits which cotrld potentially be received for a single injury. LVe held that they had to be paid successively in the order provided for in the statute, and that payment for two different classes e o ~ ~not be made ovcl- tlie same period of time. ld

Thus, the tern1 "class of henefits" is restrictcd by t h ~ s interpretation to the four referenced

disability classes. Given this longstanding interpretation, the provision of $ 3'1-71-737,

MCA, which now authorizes payment of an itnpairment award ""with othcr classes" cannot

be satisfied by the payment of rehabilitation or disfigurement benefits, as held by the LVorkers*C;ompensation Court. 1.11~s~ bcneiits arc not considered "disability" bcnciiis othcr authorizing statutes and do nor constitute ""ciasses7' of benefits, Consequently, i find by ii~cir

that t!x interpretation offered b > the Workers' Compensation Court would render 5 34-7i-

737, MCA. meaningless, and I x1:ould construe the statute to hold illat in~psimenia\vards arc

to be paid concurrently with permanent total disability benefits.

756 1 disagree with the Court's rationale set forth in 7 2") wherein it reasons that the

Workers' Compensation Court's conclusion that apcma~lently partially disabled worker can

receive an impairment award while a permanently totally disabled worker is deprived of the

award. is based upon a statutory interpretation which lcads to an absurd result. While this

result may be thought to lack reason from a policy point of view, 1 do not belicve this to be

an absurd result that compels a different statutory interpretation. The Legislature may very

bvell decide to restrict impairment awards to partially disabled workers, but for the reasons

set forth above, I do not believe it has donc so.

757 For these reasons, I concur with the C:ourt. Clzief Justice Karla M. Gray, concurriilg in par-t and disscntii~g parr. in

758 I agree with the Court's statutory analysis at 77 25 through 27, hut disagree with the

remainder of its discussion on issue one. I would affirm the Workers' Compensation Coi~rt's

conclusion that permanently total11 disabled Lvorkers are not entitled to receive impairment

awards under the 1991 and 1997 Acts. As a result, I would not reach the remaining issues.

759 The Workers' Compensation Court's statutory analysis, and this Court's statutory

analysis at 77 25 through 27, can be summarized relatively briefly. Both courts determined 2

that, pursuant to $ 39-71-703(1), MCA (1991), a worker who suffered a permanent partial

d~sability, was no longer entitled to either temporary total or permanent total drsab~lity but

benefits, was entitled to a permanent partial disability award. No stand-alone "impalrmcnt

a ~ a r dwas available to such an injured worker; rather, an "impanment rattngn--basedinpart "

on the amount of uage loss--mas calculated and used in determ~ning ifmount of the the

permanent partial disability award. See i;. 39-71-703(2) and (3), MCA (1991). Both courts

also determined, on the other hand, that 5 39-71-703(2), MCA (1 997), provided for a stand-

alone "impaitnlent a v ard" for an injured worker who recelved an impaitment rating but had

no actual wage loss. Such a worker receited only the impairment award; he or she d ~ not d

receive permanent partial disability benefits because no actual wage loss occurred. See 5 39-

71-703(1) and (21, MCA (1997). 1 agree with tk~ese analysts.

'160 ?'he Workers' Compensation Court then proceeded to address $8 39-71-737, MCA (1991) and (I")"), which are identical with respect to the provision under which thc

clain~ants this case asser? cntjtlen~ent an inlpainnent atvard in? addition to permanent in to

total disability benefits. Both statutes provide generally that compensation is to run

consecutively, and that payment shall not be made for two classes of disability over the same

period; the language at issue then states, as an exception, "that impairment awards . . . may

be paid concurrently with other classes of benefits." See $$ 39-71-737, MCA (1991) and

(1997). The Workers' Compensation Court rejected the claimants' arguments thereunder,

concluding that "[nleither version creates any entitlement to an impairment award. . . . It

only prescribes when different classes ofbenefits which are authorized in other sections may

be paid concurrently. TJze cluiinurzt must be due the ben~fits tlzeJirstplacefor the section in

to apply." (Emphasis added.) I agree with the Workers' Compensation Court's analysis.

761 That court also addressed both the 1991 and 1997 versions of 5 39-71-710, MCA, on

which the claimants relied. While the statutes differ in detail, they generally address

termination of certain benefits on retirement and remaining liability for other benefits;

specifically, $5 39-71-710, MCA (1991) and (1997), both state that, on a claimant's

retirement, "the insurer remains liable for. . . any impairnlent award. . . ." As with 5 39-71-

737, MCA, the Workers' Compensation Court concluded that the latter language "can only

bc construed as indicating that liability for the award must exist in the first instance,"

independently of 5 39-71-710, MCA, and does not create any entitlement to benefits nor otherwise created in the Workers' Compensation Act. Again, I agree with the Workers' 762 it is not altogether clear whether this Coun has determined directly that the Workers'

Compensation Court erred in its statutory analysis of $ 3 39-71-710 and 39-71-737, MCA, since its opinion does not expressly address those analyses. Instead of doing so. the Court

moves to a "final eonsideraf on" as a necessary part of its "statutorj analysis." and accepts

the claimants' argument that to disallow an impairment award to permanently totally disabled

claimants. when such an award is statutorily provided to permanently partially disabled

claimants, "would lead to an absurd result, and contravene the intent underlying the Workers'

Compensation Act." The Court offers no authority in this regard, but relies on .John,sotz for

the general principle that "[wlhen more than one interpretation is possible, u c will reject an

interpretation that leads to an unreasonable result in fa~ror another that will lead to a of

reasonable result." It is my Licw that the Court ens in these regards.

1/63 First, the Court does not state how "more than one interpretation is possible" of the

statutes and language at issue here. While it obsenes that impairment awards are

"recognized" in $3 39-71-710 and 39-71-737, MCA, that observation does not explain how

"recognition" of thc existence of impairment awards else~vhere in the Workers'

Compensation Act properly results in a determination that some statute provides an

entitlement to an impaiment award. Our first rule in ascertaining legislative intent is to

construe the plain language of the statutes at issue. ,Tee, e.g., Lalzgenio v. A'fontrirztr Rail Link,

Inc., 2001 MT 273 , 7 22, 307 Mont. 2 9 3 , l 22, 38 P,3d 782, qi 22 (citations omitted). The 1 plain language of these statutes does notsupport the Court's implicit determination that more

than one interpretation is possible here under any ordinary rules of statutory constl-u-uction.

164 Nor do I believe the Court's somewhat blithe statement that the result produced by a

proper statutory analysis would bc "unreasonable and cannot have been the Legislature's

intentH--withoutany legal ai~alysis--is sufficient to create a right to an impairment award

when no statute does so. The job of courts "is simply to ascertain and declare what is in

terms or in substance" contained in a statute, "not to insert what has been omitted. . . ." Section 1-2-101, MCA. The Court here is inserting into a purely statutory scheme an

entitlement to a right not provided therein. I cannot agree,

765 1 would affirm the Workers' Compensation Court's conclusion that these permanently

totally disabled claimants are not legally entitled to an impairment award in addition to their

other benefits.