Harrison v. Liberty Northwest Insurance

April 1 2008
DA 06-0404
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 102JASON HARRISON,
Petitioner and Appellee,
v.
LIBERTY NORTHWEST INSURANCE CORPORATION,
Respondent and Appellee,
and
STILLWATER MINING COMPANY,
Respondent and Appellant.
APPEAL FROM: Montana Workers’ Compensation Court, WCC No. 2005-1222
Honorable James Jeremiah Shea, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
James R. Hintz, Crowley, Haughey, Hanson, Toole & Dietrich, P.L.L.P.,
Billings, Montana
For Appellee Harrison:
Andrew J. Utick, Utick Law Firm, Helena, Montana
For Appellee Liberty Northwest Insurance Corporation:
Larry W. Jones, Law Offices of Larry W. Jones, Missoula, Montana
Submitted on Briefs: January 31, 2007
Decided: April 1, 2008
Filed:
__________________________________________
Clerk
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Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 In November 2002 Jason Harrison (Harrison) filed an occupational disease claim
while working for Stillwater Mining Company (Stillwater) in Columbus, Montana. After
treatment and achieving maximum medical improvement (MMI), Harrison and Stillwater
entered into a settlement agreement under which medical benefits were reserved.
Subsequently, Harrison went to work for Derek Brown Construction Company (Derek
Brown). He suffered an industrial injury in April 2004. Derek Brown’s insurer, Liberty
Northwest Insurance Corporation (Liberty), paid Harrison’s medical benefits including
the necessary spinal surgery under a reservation of rights. In January 2005 Harrison filed
a Petition in the Workers’ Compensation Court (WCC) to determine whether Stillwater
or Derek Brown was responsible for his medical claim. The WCC determined that
Stillwater was liable. Stillwater appeals. We affirm.
ISSUE
¶2 The dispositive issue on appeal is whether the WCC erred in concluding that
Stillwater was responsible for payment of Harrison’s medical costs and disability
benefits.
FACTUAL AND PROCEDURAL BACKGROUND
¶3 Harrison worked for Stillwater as an underground equipment operator from May
2000 until July 2003. On November 13, 2002, he reported to his employer that he was
suffering from lower back and neck pain as a result of his job duties. Shortly thereafter
Harrison saw a physician, Dr. McDowell, and reported that he was experiencing lower
back pain, radicular leg pain, neck discomfort, and some tingling and numbness in his
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arms. He told the doctor he had been experiencing these symptoms for approximately six
months and attributed them to his work at Stillwater. On December 3, 2002, Stillwater
accepted Harrison’s claim under the Occupational Disease Act and provided him
temporary total disability benefits. In January 2003, upon Dr. McDowell’s
recommendation, Harrison began seeing a neurologist named Dr. Quenemoen. He saw
Quenemoen on several occasions between January and June 2003 for tests and treatment.
In May 2003 Quenemoen told Stillwater that Harrison had reached maximum medical
improvement. In July Quenemoen restated that Harrison was at MMI with a total whole
person impairment of 5 percent.
¶4 After Harrison left his job at Stillwater he moved to Helena, Montana, to enroll in
the September 2003 term at Helena College of Technology (HCT) for vocational re-
training. Also in September 2003 the Montana Department of Labor and Industry
(DOLI) Employment Relations Division approved a settlement agreement between
Harrison and Stillwater. Under this agreement Stillwater paid Harrison $20,339 and
Harrison reserved further medical and hospital benefits.
¶5 Harrison did not complete vocational re-training at HCT but rather left Helena and
moved to Fort Benton, Montana, for family reasons in October 2003. While in Fort
Benton, Harrison worked for a builder for approximately one month doing residential
construction, remodeling, carpentry, drywall, and some concrete work. After about a
month in Ft. Benton, Harrison returned to Helena and worked various short term
construction, equipment maintenance and carpentry jobs until he began working for
Derek Brown in mid-April 2004. During the time between his jobs at Stillwater and
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Derek Brown, his back pain subsided but he continued experiencing numbness and
tingling in his legs and he occasionally took the medications prescribed by Quenemoen.
On April 23, 2004, Harrison suffered a back injury while running a vibrator machine
during a concrete pour at a Derek Brown work site. He submitted a claim for
compensation to Derek Brown on April 29, 2004. On the claim form, Harrison indicated
that he believed that he had aggravated his low back condition by performing the heavy
concrete work.
¶6 In May 2004 Harrison began seeing Dr. Varnavus, a neurosurgeon, for diagnosis
and treatment. In June 2004 Liberty, Derek Brown’s insurer, denied Harrison’s injury
claim but in July 2004 agreed to cover the claim. Varnavus indicated in a September
2004 letter to Liberty that he believed Harrison’s condition was directly connected to the
injury Harrison incurred while working for Stillwater. After extended but unsuccessful
treatment, Varnavus recommended spinal surgery. In October 2004 Liberty refused to
authorize the recommended surgery and in November Liberty notified Harrison that it
was terminating payment of benefits.
¶7 On January 10, 2005, Harrison filed a Petition for an Emergency Hearing with the
WCC. On January 11, 2005, then-WCC Judge McCarter held a telephone conference
with counsel for Harrison, Liberty and Stillwater, at the conclusion of which Liberty
agreed to pay Harrison’s reasonable medical expenses including surgical expenses
subject to a claim for indemnification from Stillwater. Harrison’s surgery was performed
in July 2005.
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¶8 On May 12, 2006, WCC Judge Shea issued his Findings of Fact, Conclusions of
Law and Judgment. The court made numerous findings pertaining to Harrison’s various
physicians’ tests, diagnoses and treatments. The WCC concluded, among other things,
that (1) Liberty had the burden of proving, by a more-probable-than-not standard, that
Stillwater was the responsible party; (2) Varnavus was the only treating physician to offer
an opinion as to whether Harrison’s injury while working at Derek Brown arose from his
earlier injury at Stillwater; (3) Harrison and Stillwater, at the time they entered into their
settlement agreement, were operating under the mutual and material mistake of fact that
surgery would not be required for Harrison’s injury; (4) such a mutual mistake warrants
the reopening of the settlement agreement; and (5) Stillwater must indemnify Liberty for
the payments Liberty made to Harrison.
¶9 Stillwater filed a timely appeal of the WCC’s ruling.
STANDARD OF REVIEW
¶10 The standard of review we employ for this type of case was set forth in detail in
Gamble v. Sears, 2007 MT 131, ¶¶ 20-22, 337 Mont. 354, ¶¶ 20-22, 160 P.3d 537, ¶¶ 20-
22. As this detailed standard is applicable to the case before us, we repeat it in its
entirety.
¶11 We conduct de novo review of the WCC’s conclusions of law in order to
determine whether they are correct. Flynn v. Uninsured Employers’ Fund, 2005 MT
269, ¶ 11, 329 Mont. 122, ¶ 11, 122 P.3d 1216, ¶ 11. As for the WCC’s findings of fact,
however, our review is both deferential and limited in scope. We simply review the
WCC’s factual findings to determine whether they are supported by substantial credible
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evidence. In re Abfalder, 2003 MT 180, ¶ 10, 316 Mont. 415, ¶ 10, 75 P.3d 1246, ¶ 10.
We have stated that substantial credible evidence is that which a reasonable mind could
accept as adequate to support a conclusion. Simms v. State Compensation Ins. Fund,
2005 MT 175, ¶ 11, 327 Mont. 511, ¶ 11, 116 P.3d 773, ¶ 11. Indicating the high level of
deference this Court accords to the WCC’s factual findings, we have stated that evidence
will be considered substantial even if it is contradicted by other evidence, even if it is
somewhat less than a preponderance, and even if it is inherently weak. EBI/Orion Group
v. State Compensation Mut. Ins. Fund, 249 Mont. 449, 453, 816 P.2d 1070, 1073 (1991);
Simms, ¶ 11; Wolfe v. Webb, 251 Mont. 217, 230, 824 P.2d 240, 248 (1992). However, it
must be more than a mere “scintilla” of evidence and it must rise above the level of
“trifling or frivolous.” Simms, ¶ 11; EBI/Orion Group, 249 Mont. at 453, 816 P.2d at
1073. As for the scope of our review, 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; rather, we confine our review to determining whether substantial credible
evidence supports the findings actually made by the WCC. 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; In re Abfalder,
¶ 10.
¶12 The “substantial credible evidence” standard of review is further defined by rules
regarding our consideration of witness testimony. As for witnesses who testify in person
at trial, we defer to the WCC’s findings concerning credibility and the weight to be
accorded to this testimony. Kuntz v. Nationwide Mut. Fire Ins. Co., 1998 MT 5, ¶ 35,
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287 Mont. 142, ¶ 35, 952 P.2d 422, ¶ 35; Wilson v. Liberty Mut. Fire Ins., 273 Mont. 313,
319, 903 P.2d 785, 787-88 (1995). It is the WCC’s job to resolve any inconsistencies in a
witness’s testimony. Walls v. Travelers Indem. Co., 281 Mont. 106, 111, 931 P.2d 712,
716 (1997). Ultimately, because an assessment of testimony is best made upon
observation of the witness’s demeanor and consideration of other intangibles that are only
evident during live testimony, we will not substitute our judgment for the WCC’s
judgment regarding credibility and the weight accorded to live witness testimony.
Wilson, 273 Mont. at 319, 903 P.2d at 787.
¶13 Conversely, we are in as good a position as the WCC to assess testimony
presented at trial by way of deposition. McIntyre v. Glen Lake Irr. Dist., 249 Mont. 63,
67, 813 P.2d 451, 454 (1991); White v. Ford, Bacon & Davis Texas, Inc., 256 Mont. 9,
13, 843 P.2d 787, 789 (1992). Therefore, we conduct de novo review of deposition
testimony. White, 256 Mont. at 13, 843 P.2d at 789. However, this independent review
of deposition testimony is only one component of our task on appeal. We must then
consider the deposition testimony in the context of the other relevant evidence in order to
properly assess the factual findings at issue. McIntyre, 249 Mont. at 67-68, 813 P.2d at
454; White, 256 Mont. at 13, 843 P.2d at 789. As we have stated, even where we conduct
de novo review of deposition testimony, we are ultimately restricted to determining
whether substantial credible evidence supports the WCC’s findings. Weber v. Public
Employees’ Retirement Bd., 270 Mont. 239, 245, 890 P.2d 1296, 1299 (1995).
DISCUSSION
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¶14 Issue: Did the WCC err in concluding that Stillwater was responsible for payment
of Harrison’s medical costs and disability benefits?
¶15 In resolving this issue we first address whether the WCC’s factual findings were
supported by substantial credible evidence. Our review of the record reveals that the
WCC received testimony from Harrison and from two of Harrison’s treating physicians.
Harrison testified in person before the WCC judge as well as by deposition while
Varnavus and Quenemoen provided testimony by deposition alone.
¶16 Stillwater does not expressly challenge any of the WCC’s declared factual
findings; however, it does challenge the conclusion of law set forth below, which
contains factual elements. Therefore, we will review the factual component of this
conclusion to determine if it is supported by substantial credible evidence.
¶17 Stillwater challenges the following legal conclusion:
Varnavus is the only treating physician to offer an opinion as to whether
[Harrison’s] injury while working at Derek Brown arose from [Harrison’s]
earlier injury at Stillwater. Dr. Varnavus opined that it did. When Dr.
Quenemoen was asked whether or not the Derek Brown injury was
attributable to the earlier Stillwater injury, Dr. Quenemoen responded that
he did not know. Therefore, the [c]ourt is left with the uncontroverted
testimony of Dr. Varnavus.
¶18 Stillwater disputes the “uncontroverted” characterization of Varnavus’s opinion
that the injury Harrison experienced while working at Derek Brown was attributable to
the earlier Stillwater injury. Stillwater maintains that because both Harrison and
Quenemoen provided testimony that refuted Varnavus’s opinion, the WCC’s
“conclusion” to the contrary is not supported by substantial credible evidence.
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¶19 Liberty counters that the WCC justifiably gave greater weight to Varnavus’s
expert opinion testimony than it did to Harrison’s recollection testimony. The insurer
notes that Varnavus testified from written medical notes taken during Harrison’s
treatment whereas Harrison testified only from his own memory. Citing the Commission
Comment to M. R. Evid. 803(4), Liberty opines that Harrison’s description of his
symptoms when he visited Varnavus was accurate because Harrison was motivated to
obtain proper diagnosis and treatment; therefore, if Harrison’s current testimony based on
recollection conflicts with Varnavus’s testimony based on written contemporaneous
notes, Varnavus’s testimony as to Harrison’s complaints is entitled to the greater weight.
¶20 Additionally, Liberty argues that Quenemoen acknowledged that he was
unfamiliar with the term used by Varnavus in diagnosing Harrison with “segmental
instability.” Liberty asserts that because Quenemoen could not properly diagnose
Harrison’s condition, Varnavus’s testimony once again was properly given greater
weight.
¶21 Lastly, Liberty argues that if Varnavus and Quenemoen presented conflicting
testimony, it is the WCC’s role to resolve such conflicts.
¶22 As indicated above, the WCC is responsible for resolving conflicting testimony
and assigning the weight to be given to witness testimony. Gamble, ¶¶ 20-21. While
Quenemoen’s testimony conflicted with Varnavus’s and may have supported different
findings leading to different conclusions, the WCC accorded greater weight to
Varnavus’s testimony, as it was entitled to do. Our review of the record confirms that the
WCC’s factual findings, whether they are included in the fact-finding or the legal
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conclusion section of the WCC’s Order, are supported by substantial credible evidence;
therefore we will not disturb its conclusions based on those findings. Lastly, we disagree
with the court’s characterization that Varnavus’s testimony is “uncontroverted,” but
conclude that this erroneous description does not change the fact that there was
substantial evidence to support the court’s decision.
¶23 We next determine whether the WCC correctly applied the “causal” standard as
opposed to the “aggravated” standard in determining Stillwater’s liability. Stillwater
maintains that the WCC erred in its determination that Harrison’s Derek Brown injury
arose from his earlier Stillwater injury, and argues that the Derek Brown injury was an
intervening injury and a permanent aggravation of the Stillwater injury, relieving it of
liability. Stillwater provides extensive legal authority for its position; however, its
argument is irreconcilable with Varnavus’s unequivocal testimony that Harrison’s
Stillwater injury and evolving degenerative spinal condition were the causes of the Derek
Brown injury. In many of the cases upon which Stillwater relies, the WCC had to
determine whether the second injury was a new “permanent aggravation” or a
“recurrence of symptoms” of the initial occupational disease or injury. E.g., Caekaert v.
State Comp. Mut. Ins. Fund, 268 Mont. 105, 885 P.2d 495 (1994); Liberty N.W. Ins. v.
Champion Intern., 285 Mont. 76, 945 P.2d 433 (1997). In Caekaert, we explained that
“[a] later injury is compensable by the original carrier if it is a direct and natural result of
a compensable primary injury and not the result of an independent intervening cause
attributable to the claimant. . . . If the original injury or occupational disease was the
cause of the current condition, the [original carrier] is liable.” Caekaert, 268 Mont. at
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112, 885 P.2d at 499. In making this determination, the court had to rely on the medical
evidence presented, resolve any conflicting testimony and assign weight to the testimony.
Again, in the case before us, the WCC did just that, and after weighing the evidence,
concluded that Varnavus’s testimony was credible and convincing. As determined
above, because the record supports the court’s findings, we will not disturb the court’s
conclusions.
¶24 Lastly, we determine whether the WCC erred in re-opening the parties’ settlement
agreement. As we explained in Gamble, a settlement agreement is a contract; therefore,
we apply contract law to determine whether the agreement is valid and enforceable.
Gamble, ¶ 24 (citation omitted). At the time of settlement, the WCC determined that
Stillwater and Harrison did not believe Harrison’s injury would require surgery and
therefore the settlement terms did not include consideration of this possibility. As a
result, the parties were operating under a material mistake of fact.
¶25 Stillwater’s argument that the WCC’s conclusion is incorrect is based on its
continued assertion that Harrison’s condition was aggravated by the Derek Brown injury
rather than the Derek Brown injury stemming from the Stillwater injury. Having
determined that the WCC’s finding to the contrary is supported by the record, we analyze
only whether the circumstances allowing for re-opening a settlement agreement are
present here.
¶26 Again, as we stated in Gamble, a “material” fact is “a vital fact upon which [the
parties] based their bargain,” and a mutual mistake regarding a material fact is a mistake
that is “so substantial and fundamental as to defeat the object of the parties in making the
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contract.” Gamble, ¶ 27. Additionally, we have determined previously that a settlement
agreement must be re-opened if, when the parties entered into it, they were mutually
mistaken regarding a fact that was material to the agreement. Kienas v. Peterson, 191
Mont. 325, 328-30, 624 P.2d 1, 2-3 (1980); Weldele v. Medley Development, 227 Mont.
257, 260, 738 P.2d 1281, 1283 (1987); Kimes v. Charlies Fam. Din. & Donut Shop, 233
Mont. 175, 177, 759 P.2d 986, 988 (1988); Gamble, ¶ 26. Moreover, we have
determined that the nature and extent of a claimant’s physical condition is a fact that is
material to an agreement settling an injury claim. Kienas, 191 Mont. at 330, 624 P.2d at
3; Weldele, 227 Mont. at 261, 738 P.2d at 1283; Kime, 233 Mont. at 178, 759 P.2d at 988;
Gamble, ¶ 27.
¶27 Here, prior to execution of the settlement agreement, Harrison had been diagnosed
with early degenerative changes in his lumbar spine but had been told by both McDowell
and Quenemoen that surgical intervention was not indicated at that time. The diagnoses
and prognoses of both McDowell and Quenemoen are undisputed. Subsequently, a more
comprehensive diagnosis was made, and it was medically determined that corrective
surgery was in fact required. This fact, coupled with the WCC’s conclusion that the
operable condition stemmed from the earlier Stillwater injury, demonstrates that there
was a material misunderstanding of the nature and extent of Harrison’s condition at the
time of the settlement. Therefore, we conclude that the court did not err in concluding
that a re-opening of the settlement agreement was warranted.
CONCLUSION
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¶28 For the foregoing reasons, we affirm the WCC’s Findings of Fact, Conclusions of
Law and Judgment imposing liability for Harrison’s medical costs and disability benefits
on Stillwater.
/S/ PATRICIA COTTER
We concur:
/S/ KARLA M. GRAY
/S/ JOHN WARNER
/S/ JAMES C. NELSON
/S/ JIM RICE
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