Court Case Update, Montana and Missouri - April 2021
InsightsLegal
By NCCI Insights April 23, 2021
 

Missouri—Permanent Total Disability (PTD) Benefits From the Second Injury Fund

The Supreme Court of Missouri, on April 20, 2021, in Treasurer of the State of Missouri v. Parker, clarified the application of the statutory conditions that an employee must meet to be entitled to permanent total disability (PTD) benefits from the Second Injury Fund under Missouri statute § 287.220.

In its analysis, the court reviewed the two conditions under § 287.220(3)—that the preexisting disability equal at least 50 weeks of permanent partial disability (PPD) and that the employee show a subsequent compensable work-related injury combined with the preexisting disability, results in permanent total disability. The court clarified that an employee who suffers a preexisting disability before the subsequent or primary injury, as described by the court, can meet the first condition regardless of whether it was known or determined that the preexisting disability equaled 50 weeks of PPD before suffering the primary injury. The court further explained that the second condition is met by showing the primary injury results in PTD when combined with all preexisting disabilities that qualify under the statute’s eligibility criteria. With this ruling, the court vacated a decision from the Labor and Industrial Relations Commission awarding PTD benefits to an injured worker under a different section of the statute, which the court found did not apply, and remanded the case for the Commission to evaluate the PTD award under the correct section.

Montana—Constitutionality of Workers Compensation (WC) Subrogation Statute

On April 9, 2021, the Montana Worker’s Compensation Court held, in Hogan v. Federated Mutual Insurance Co., that the statutory formula to calculate whether a WC insurer may exercise its right of subrogation in Montana statute 39-71-414(6) is unconstitutional under the Montana Constitution, to the extent that it allows an insurer to subrogate against a claimant’s recovery before the claimant is made whole.

In its decision, the court reviewed statute 39-71-414(6), which provides that an insurer is entitled to full subrogation rights on a claimant’s recovery against a third-party tortfeasor for all compensation and benefits paid under WC, unless the claimant is able to demonstrate it has suffered damages in excess of the WC benefits and the third-party recovery combined. The court reasoned that because the statutory formula does not account for a claimant’s cost of recovery, such as attorney fees, in the third-party claim, it unconstitutionally allows an insurer to subrogate, even though the claimant has not been made whole. The court concluded that this violates a claimant’s rights under Montana Constitution article II, § 16, which provides that no person should be deprived of full legal redress for injuries incurred in employment.

However, the court declined to hold that a WC insurer does not have a right of subrogation as a matter of law. Instead, the court found that the insurer has a right to subrogation under Montana statute § 39-71-414(1)—which states that the insurer is entitled to subrogation for all compensation and benefits paid or to be paid under the Workers’ Compensation Act. The court reasoned that the phrase “to be paid” does not allow a WC insurer to immediately exercise its right of subrogation against a claimant’s tort recovery; instead, the WC insurer can only exercise its right of subrogation when the claimant is made whole.

This decision may be appealed. NCCI will monitor for further developments.

For more information on other cases monitored by NCCI’s Legal Division, visit previous Court Case Updates and Court Case Insights under the Legal section of INSIGHTS on ncci.com.

​This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.

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