Opinion
No. DA 10-0368
Decided: June 13, 2011
On Appeal from the Montana Workers' Compensation Court, WCC No. 2000-0222, the Honorable James Jeremiah Shea, presiding Judge.
Rex Palmer, ATTORNEYS INC., P.C, Missoula, MT, Attorney for Petitioners/Appellants.
Thomas E. Martello, MONTANA STATE FUND, Helena, MT, Attorney for Respondent/Appellee.
Bradley J. Luck, GARLINGTON, LOHN ROBINSON, Missoula, MT, Attorney for Respondent/Appellee.
Larry W. Jones, LAW OFFICES OF LARRY W. JONES, Missoula, MT, Attorney for Intervenor/Appellee.
APPELLANTS' REPLY BRIEF. TABLE OF CONTENTS
INTRODUCTION ................................................. 1 ARGUMENT .................................................... 3 CONCLUSION .................................................. 21TABLE OF AUTHORITIES
Cases Borden v. H.H.S. 836 F.2d 4 Dempsey v. Allstate Ins. Co. 2004 MT 391 Estate ofMorelli Flynn v. Montana State Fund 2008 MT 394 Intel. Mailing v. Ascom Johnson v. Tindall 195 Mont. 165 Kinsey-Cartwright v. Brower 2000 MT 198 Leonard v. Dorsey 553 F.3d 609 Missoula v. Robertson 2000 MT 52 Nasca v. Hull 2004 MT 306 Rivot-Sanchez v. Warner 707 F.Supp.2d 234 Rouse v. Anaconda 250 Mont. 1 Schmill v. Liberty Northwest Ins. Corp. 2005 MT 144 Silva v. Columbia Falls 258 Mont. 329 State v. Caldwell 1998 MT 261 State v. Sanders 68 P.3d 434 Stavenjord v. Montana State Fund 2006 MT 257 U.S. v. Mitchell U.S. v. Redmond Wein v. Seaman 687 N.E.2d 477 Statutes 39-71-739Other Authorities
, (1st Cir. 1987) ................................ 19 , ................................... 12 ,(R.I.Super. 9-3-08) ........................................ 19 , ................................. 2, 12 (N.D.Ohio 2-21-06) .................................. 19 , (1981) ........................... 14-16,18-19 , ..................................... 20 , (8th Cir. 2009) .............................. 19 , ........................................ 15, 18 , ................................................... 17 , ................................... 19 , (1991) ................................... 15, 18 , ......................... 2 , ....................................... 18 , ............................................... 18 , (2003) .......................................... 9 , ............................ 1,2,10 (E.D.Pa. 5-21-2007) ......................................... 9 , (E.D.Ky. 5-28-09) ........................................... 19 , (1996) ........................................ 18 § , MCA ............................................................... 7,8 Black's Law Dictionary ............................................................. 9Appellants ("Flynn") respectfully submit this brief in reply to the briefs filed by the insurers, Liberty Northwest Insurance Corporation ("Liberty"), Montana State Fund ("MSF"), and the group of 75 insurers referred to as the "Common Fund Insurers."
INTRODUCTION
Retroactivity analysis requires weighing "the interests of fairness against the need for finality." Stavenjord II, If 16.
This case requires the Court to answer: Why should a claim be excluded from retroactivity when no settlement agreement has ever been executed, no judgment has ever been entered, and the claim is still subject to the statutory rule of benefit adjustments based on changed conditions? How can a claim be considered "paid in full" in these circumstances? And why, in such cases, should insurers be permitted to retain funds that undisputedly were withheld in violation of the Flynn I rule?
Given the extent to which the insurers' arguments cloud the issue at hand, it is necessary to reiterate the specific, limited circumstances at issue here. This case addresses only workers' compensation claims wherein:
(1) it is undisputed that the worker suffers from an injury or occupational disease that renders him or her totally disabled, either permanently or temporarily;
(2) it is undisputed that the insurer has withheld benefits in a manner that is prohibited by the Flynn I rule;
(3) it is undisputed that the claim has never been resolved by a final judgment or settled by a compromise agreement; and
(4) it is undisputed that the claim is subject to the statutory rule providing for benefit adjustments based on changed conditions, and no applicable statutory rules bar the disabled worker from pursuing further benefits in the claim.
It is also necessary to reiterate the controlling legal principles which establish the context for this case. This Court has held:
• "There exists a strong presumption in favor of retroactive application of new rules of law." Stavenjord II, ¶ 9. This Court's decisions are "presumptively retroactive." Schmill II, ¶ 13.
• However, there must be a line "drawn between claims that are final and those that are not." Stavenjord II, ¶ 16.
• Retroactivity applies to all "open" claims. Stavenjord II, ¶ 15.
• Retroactivity does not apply to "cases already closed." Stavenjord II, ¶ 16. This means cases that are either "final" or "settled." Flynn II, ¶ 21. Those terms are defined as follows:
Given this context, the issue is: In workers' compensation claims where benefits have been withheld in a manner violative of the Flynn I rule, is the disabled worker entitled to retroactive application of the Flynn I rule when his claim has never been resolved by a final judgment or a compromise agreement; the claim is subject to the statutory rule providing for benefit adjustments based on changed conditions; and no applicable statutory rules bar the disabled worker from seeking further benefits?
ARGUMENT
Flynn will first address a false premise that is pervasive throughout the arguments of MSF and the Common Fund Insurers. These insurers repeatedly assert that Flynn's argument, if adopted, would result in the "reopening" of claims that are already "closed" or "settled."
This notion is patently false. The claims at issue here are, by definition, only those claims that have not been "closed" or "settled." Indeed, the issue of retroactivity is already decided with respect to "closed" and "settled" claims. Such claims are not eligible for retroactivity.
As noted above, it is undisputed that "open" claims are eligible for retroactivity. Those claims are not at issue here, as that issue has already been decided. Likewise, it is undisputed that "final" claims are not eligible for retroactivity. Again, those claims are not at issue here, as that issue has already been decided. The only claims at issue here are those in which there has been no WCC judgment entered, no Department-approved compromise agreement, and no Court-ordered settlement agreement. The claims at issue here are essentially dormant, having never been formally resolved. Thus, these claims all contain the potential for future benefits to be paid, based on specific statutory authority that provides for ongoing benefit adjustments based on changed conditions. That is precisely why these cases have such a unique status. And that is why there is a disputed issue as to whether retroactivity should apply.
Since the claims at issue here have never been resolved by a judgment or "settled" or "closed," they cannot be "reopened" as the insurers claim. The issue here is how to define a "paid in full" claim. Flynn's proposed solution would never result in "reopening" of any closed or settled claim. Indeed, closed and settled claims simply are not at issue here. Flynn's proposed solution here would allow for retroactivity only as to claims that have never been formally resolved. Thus, the Court should reject the assertion that Flynn is attempting to "reopen" claims that have been "closed" or "settled."
Additionally, MSF takes issue with how narrowly Flynn defines the issue here. MSF criticizes Flynn for presenting a "Flynn-specific" statement of the issue. MSF argues that "the task at hand" is to create a rule "applicable to retroactivity in all workers' compensation cases." MSF further argues that the issue here is retroactivity "within the entire workers' compensation arena." These assertions are erroneous.
MSF's argument arises from the fact that the WCC has stated this case will serve as a "general model" for future cases. However, that does not mean that the Court should disregard the specific facts at issue here. Indeed, Flynn is required to present arguments tailored to the specific facts at issue here. This case, like all others, must be decided on its facts alone. To the extent this case will be used as a "general model" for future cases, it is no different than any other type of precedent. It must still be decided on its specific facts. The WCC's statement that this case will serve as a "general model" for future cases is nothing more than a reflection of the fact that stare decisis governs.
A "Flynn-specific" statement of the issue is exactly what is needed here. Future cases will involve different facts and must be decided accordingly. Thus, the Court should reject MSF's invitation to make a decision here that is not tailored to the specific facts at issue.
1. Liberty's Argument
This case is about retroactivity law. Yet, Liberty argues that the Court's focus should be elsewhere. Liberty argues:
• the real issue here is "the law governing settlements" and not "the law of retroactive application"
• it is a mistake to "focus on the law of retroactive application instead of the law governing settlements"
• the law of settlements is "the underpinning legal basis for the WCC s decision"
• "the WCC's decision focused on the law of settlements."
None of the other parties take this position. Nor does the WCC. Liberty stands alone on this matter.
Liberty's argument is erroneous. The WCC's Order contains no discussion of "the law governing settlements." Indeed, Liberty admits that the WCC did not "expressly" acknowledge any reliance on "the law governing settlements." Yet, Liberty insists that the WCC's decision was nonetheless based on "the law governing settlements, which is to say the law of contracts."
Settlement law is not relevant. In claims where a settlement has been reached, those cases fall into one of two categories: Department approved settlements, or Court ordered settlements. Yet, neither of those two categories of cases are at issue here. Rather, this case concerns only the issue of what constitutes a "paid in full" claim. Such claims necessarily do not involve a settlement agreement. This court has conclusively resolved the application of retroactivity to claims where a settlement agreement exists: retroactivity is inapplicable.
From its premise that settlement law is the real issue here, Liberty then engages in a discussion of "rescinding" and "reopening" settlement agreements on a voluntary or contested basis. These issues are not relevant because the only claims at issue here are those in which no settlement agreement exists.
It is true that, because of the terminology adopted by the Court, the "paid in full" claims fall into the category of claims deemed "settled" for purposes of retroactivity law. Despite this terminology, however, it is undisputed that the only claims at issue here are those in which no settlement agreement exists.
The Court should reject Liberty's arguments. These arguments do nothing to establish whether the WCC erred or did not err.
2. Common Fund Insurers' Arguments
The Common Fund Insurers repeatedly criticize Flynn's argument regarding the results that can occur under the WCC's ruling. In his opening brief, Flynn described several scenarios wherein the WCC's ruling would result in disparate treatment of similarly situated claimants and thereby cause arbitrary and unfair results. These scenarios begin by recognizing the nature of the claims at issue here — i.e., claims wherein no judgment or settlement exists. It is undisputed that these claims are subject to the statutory rule providing for benefit adjustments based on changed conditions. Section 39-71-739, MCA.
The Common Fund Insurers do not dispute that this disparate treatment can occur under the WCC's ruling, nor do they dispute that it is arbitrary and unfair. Rather, they repeatedly assert that these scenarios Flynn describes are merely "hypothetical" and the "record is devoid" of real examples of specific claimants with changed conditions that would trigger application of § 39-71-739, MCA.
Two responses are in order. First, there is nothing "hypothetical" about a claimant's changing condition resulting in the need for adjustments to benefits. Rather, it is a very real fact of life for many claimants. Indeed, it occurs often enough that the Legislature formally recognized it in enacting § 39-71-739, MCA, and thereby expressly dictating that changing conditions warrant changes in benefits. Second, the Common Fund Insurers claim it is important that Flynn has not provided examples of specific claimants with changed conditions, but they fail to explain why it should be considered important. Indeed, no specific examples are necessary to demonstrate the reality that the Legislature has expressly recognized in enacting § 39-71-739, MCA.
Additionally, the Common Fund Insurers present several conclusory arguments. They assert that Flynn's position, if accepted, "would run contrary to the Workers' Compensation Act's purpose that the workers' compensation system be primarily self-administering" and "would penalize insurers for not involving the judiciary or Department of Labor to settle every claim." However, the provide no explanation to support this assertion. They also assert that Flynn seeks to "re-argue" the decision in Flynn II and "overturn" a long line of precedent. Again, however, they provide no explanation to support these assertions. The Court should not accept these assertions that are not supported by explanation.
Further, the Court should recognize that the Common Fund Insurers repeatedly misrepresent Flynn's argument. For example, they assert that (1) Flynn argues "no workers' compensation claim involving indemnity benefits may ever be settled by payment in full"; and (2) they assert that Flynn makes the "argument that claims `paid in full' are not settled." These are not Flynn's arguments. These are absurd contentions manufactured by the Common Fund Insurers and then attributed to Flynn. This diversionary tactic is a classic "strawman argument," i.e., positing a false or exaggerated argument not actually made by the opponent, for the sole purpose of disproving it, rather than addressing the actual argument at issue. Black's Law Dictionary, 8th Ed., p. 1461; State v. Sanders, 68 P.3d 434, 172, fn. 6 (2003); U.S. v. Mitchell, (E.D.Pa. 5-21-2007) (No. 05-CV-823), p. 20. The Common Fund Insurers are attacking arguments never made and positions never taken by Flynn. This is similar to their other argument, noted above, which claims that Flynn's position would result in "reopening" claims that are already settled. That outcome is simply not possible because the only claims at issue here are those which necessarily do not involve a settlement agreement.
Finally, the Common Fund Insurers fail to justify the outcome they seek — i.e., an outcome that permits insurers to retain funds that undisputedly were withheld in violation of the Flynn I rule. Nor do they provide an explanation as to how "the interests of fairness" could possibly justify excluding claims from retroactivity when no settlement agreement has ever been executed, no judgment has ever been entered, and these claims are still subject to statutory rule of adjustment of benefits based on changed conditions.
3. MSF's Argument
This Court has held that retroactivity analysis requires weighing "the interests of fairness against the need for finality." Stavenjord II, If 16. MSF fails to even attempt any weighing of these two interests against each other. Instead, like the Common Fund Insurers, MSF focuses on the policy of "finality" to the exclusion of all other considerations.
Additionally, MSF provides argument that demonstrates its unwillingness to accept the facts of this case. MSF analogizes the claims at issue here to a transaction involving the payment of a bill. MSF posits: "A bill, for example, is paid in full when the amount owing is $0 and the transaction is over." On this basis, MSF argues that the claims at issue here should be considered "paid in full" because a payment was previously made under the statutes in effect at that prior time. However, unlike the hypothetical transaction which is "over" after full payment of "a bill," the claims at issue here are not "over" when payment is made, because these claims are not formally resolved by judgment or settlement and they are subject to the statutory rule providing for subsequent adjustment of benefits based on changed conditions.
MSF also asserts that one of Flynn's arguments is barred because it is raised "for the first time on appeal." Specifically, MSF refers to Flynn's argument that a claim is paid in full when the worker is precluded from seeking further benefits such that the insurer has no further exposure to liability. MSF's assertion is factually inaccurate. MSF relies on the WCC's Order, which summarizes the thrust of Flynn's position in a manner that does not include this argument. However, MSF omits the fact that the WCC's Order expressly analyzes this argument which MSF claims is raised "for the first time on appeal." WCC Order, 1 8. In doing so, the WCC attributed this argument only to Schmill, but Flynn also adopted this argument made by Schmill in the underlying proceedings. Exhibit A (one of several briefs filed by Flynn in the underlying proceedings). Thus, MSF is factually inaccurate. This argument was part of the underlying proceedings, and was expressly presented to and addressed by the WCC.
Further, MSF erroneously asserts that Flynn's argument, if adopted, would mean that "settlements approved by the WCC and Department of Labor and Industry would not ever be final." Claims involving such settlements are, by definition, not subject to retroactivity. Flynn II, ¶ 26; Dempsey, ¶ 31. Flynn's arguments accept this rule as controlling. MSF's assertion to the contrary is erroneous.
Finally, MSF fails to provide any explanation as to how "the interests of fairness" could possibly justify excluding claims from retroactivity when no settlement agreement has ever been executed, no judgment has ever been entered, and these claims are still subject to statutory rule of adjustment of benefits based on changed conditions. Nor does MSF provide any explanation as to why insurers should be permitted to retain funds that undisputedly were withheld in violation of the Flynn I rule.
4. MSF's Cross-Appeal Arguments
This Court has dismissed MSF's cross-appeal because it was not timely filed. Yet, MSF now presents extensive cross-appeal arguments challenging the lower court's decision and expressly seeking a reversal. This violates the dismissal Order. MSF's arguments should be stricken.
Because MSF has no cross-appeal, it's only role here is as a respondent. In that role, MSF is permitted only to defend the WCC's conclusion. MSF is barred from seeking reversal or attempting to obtain a result more favorable to MSF than what was obtained in the WCC proceedings.
MSF is forcing the parties to re-litigate an issue that has already been thoroughly briefed and conclusively resolved. Upon full briefing, the Court dismissed MSF's cross-appeal, and thus barred MSF from challenging the lower court's order. MSF did not seek reconsideration. Nor did MSF move for an out-of-time appeal, even though this Court expressly provided that option. Thus, that dismissal Order is the law of the case. MSF now defies that Order by presenting numerous cross-appeal arguments challenging the lower court's order.
MSF asserts that "the WCC erred" (p. 10). MSF argues that the WCC's Order is "a mistake" (p. 17), that it "must be rejected" (p. 18), that it "flies in the face" of established law (p. 20), and "cannot be affirmed" (p. 22). Further, MSF argues the Order is "impermissible" (p. 21), "illogical" (p. 23), "contrary" to established law (p. 23), "unwarranted," "unworkable" and "inappropriate" (p. 37).
MSF also presents numerous pages of argument in support of these assertions. Ultimately, more than 40% of MSF's brief is devoted to challenging the WCC's Order. (Of 32 pages of argument, 13 are devoted to challenging the WCC's Order (pgs. 16-24, and portions of pgs. 6, 10, 28, 30, and 33-37)).
The issue here is: What is the consequence of the Order dismissing MSF's cross-appeal? It should be noted that Flynn has engaged in years of protracted and costly litigation, and finally obtained a partial victory in the WCC, which issued a ruling granting, to certain workers, accrued benefits that were previously withheld. This victory cannot now be challenged by MSF because MSF has no cross-appeal. The only issue on appeal is the matter that was resolved adversely to Flynn, because that is the issue he timely appealed.
This case is about where the line should be drawn to distinguish between claims eligible and not eligible for retroactivity. Flynn and MSF have both tried to push that line in opposite directions since the outset. In the WCC proceedings, Flynn argued for a more expansive rule that would render more claims eligible for retroactivity. Conversely, MSF and the other insurers argued for a more narrow rule that would exclude more claims from retroactivity. The WCC's Order established a definition of "paid in full" which draws a line that renders certain claims eligible and others ineligible. Now, Flynn has appealed that part of the Order that was adverse to him — i.e., the portion that excludes certain claims from retroactivity. The other portion of the Order, which was decided in Flynn's favor and renders certain claims eligible for retroactivity, is not at issue. Flynn argues here that additional claims should be deemed eligible for retroactivity. By contrast, MSF argues that claims already defined as eligible should be deemed ineligible. Flynn's appeal does not raise this issue.
"A respondent who has not cross-appealed may not seek a determination . . . more favorable to him than that made by the court below." Johnson v. Tindall, 195 Mont. 165, 169 (1981). Here, MSF seeks a more favorable result. This Court holds:
The established doctrine governing appeals to all appellate courts, including the U.S. Supreme Court, is that a party must cross-appeal if the party seeks to change any part of the judgment below. . . . Furthermore, unlike those federal courts that hold that the initial notice of appeal invokes jurisdiction over the entire case, this Court follows the rule that it only has jurisdiction over those issues addressed in the appeal or a properly filed cross-appeal.
Missoula v. Robertson, 2000 MT 52, ¶ 19 (emphases added). MSF seeks to change part of the WCC's Order. However, because its cross-appeal was dismissed, MSF has forfeited its right to raise this challenge. This Court's Order of dismissal held: MSF "is not the Appellant in this case, but the Appellee." As the Appellee — i.e., the responding party — MSF may only respond to the issues raised in Flynn's appeal. This limits MSF to defending the part of the WCC Order that Flynn appealed. MSF is not free to raise its cross-appeal issue challenging another part of the WCC Order, because that issue is distinct from the issue Flynn properly raised. This Court holds:
Although [the appellate rules] provide for review of matters by cross-assignment of error, this does not eliminate the necessity for cross-appeal by a respondent who seeks review of rulings on matters separate and distinct from those sought to be reviewed by the appellant.
Rouse v. Anaconda, 250 Mont. 1, 9 (1991).
What constitutes a "separate and distinct" appeal issue? If the argument seeks to "change any part" of the underlying order ( Robertson, ¶ 19), or seek a "more favorable" outcome ( Johnson, 195 Mont, at 169), then it is a "separate and distinct" issue that may be raised only by properly appealing.
Here, MSF's claim of error is "separate and distinct" from Flynn's. Flynn's appeal raises only one issue: whether additional claims should be added to the class of eligible claims. Conversely, MSF's cross-appeal argues that claims already defined as eligible should now be defined as ineligible. This issue is "separate and distinct" from Flynn's issue because MSF seeks to "change" part of the WCC's order to obtain a "more favorable" outcome.
This case is closely analogous to Johnson, where the appealed issue was whether the fee award should be reduced. The respondent presented a separate issue — i.e., whether the award should be increased. The dispute in Johnson was over where the line should be drawn. The same type of dispute is at issue here. Because the respondent in Johnson filed no cross-appeal, and yet sought to obtain a more favorable result than obtained below, this Court refused to consider that separate issue. The issue of reducing the award was deemed "separate and distinct" from the issue of increasing the award. Johnson, 195 Mont, at 169.
Johnson is controlling. Like the underlying order there, the WCC's Order here is not reviewable in its entirety simply because Flynn appealed part of it. Rather, any part to be reviewed must be formally appealed. Just as the competing claims of error in Johnson were deemed "separate and distinct" from one another, MSF's claim of error is likewise "separate and distinct" from Flynn's.
MSF relies on Nasca v. Hull, 2004 MT 306, to justify its challenge of the WCC's Order. However, Nasca refutes MSF's position. There, the respondents were permitted to challenge part of the lower court's reasoning without filing a cross-appeal. This was permissible, however, only because the respondents ultimately argued in favor of affirming the result of the underlying order. Nasca, ¶¶ 15-18. Thus, given the distinction between an order's conclusion and the reasoning therefor, Nasca simply reflects the age-old rule requiring affirmance of correct decisions, even those based on erroneous reasoning. Ultimately, Nasca conforms with the rule that a respondent may not challenge a lower court's ultimate decision.
Additionally, to justify its arguments challenging the WCC's Order, MSF asserts: "Flynn appealed the entire WCC order." This assertion is false. Flynn obtained a partial victory in the WCC, on behalf of a group of claimants. He did so at an enormous expenditure of time and resources over more than a decade of litigation. He did not appeal that part of the Order on which he prevailed. What sense would it make for Flynn to argue for a particular result below, obtain it, and then challenge it on appeal? Flynn does nothing of the sort. Flynn appealed only that part of the WCC Order that was adverse to him. He is not attempting to have his victory overturned. MSF's assertion to the contrary drastically distorts the nature of this appeal; it has no basis in fact; and it is singularly disingenuous.
In another attempt to justify its brief, MSF argues that because de novo review applies to Flynn's appeal, this permits MSF to mount its own challenge to the WCC's Order, despite the dismissal of MSF's cross-appeal. According to MSF, de novo review places the entirety of the WCC's Order "at issue" such that MSF may challenge the Order without filing an appeal. MSF is wrong. De novo review applies only to properly appealed issues. The standard of review dictates only how to review properly appealed issues; it does not determine whether an issue was properly appealed. Failure to properly appeal an issue precludes review of that issue altogether, regardless of the standard of review applicable to other issues that were properly appealed.
MSF is entitled to de novo review of only the issues it properly appealed. As its cross-appeal was dismissed, MSF cannot challenge any part of the WCC's Order. MSF fails to cite even a single authority for its argument that it can challenge the WCC's Order because de novo review applies. Indeed, the law is directly contrary to MSF's argument. This is true in Montana, other states, and federal court. As one federal court has noted, it is "untenable" to suggest that de novo review means the party seeking review of an order triggers review of even the issues that party prevailed on. U.S. v. Redmond, No. 08-105-GFVT, (E.D.Ky. 5-28-09), p. 5.
Montana: Missoula v. Robertson, 2000 MT 52, ¶¶ 14, 19 (review of legal questions is plenary, but respondent must cross-appeal to obtain review of arguments seeking to change any part the judgment below); Silva v. Columbia Falls, 258 Mont. 329, 332-33 (issues of law are reviewed for correctness, but only when properly appealed); Rouse v. Anaconda, 250 Mont. 1,9 (the Court cannot review issues not properly appealed); Johnson v, Tindall, 195 Mont. 165, 169 (1981) (proper appeal is a "necessity" to obtain appellate review); State v. Caldwell, 1998 MT 261, If 12 (criminal context: de novo review does not apply to entire case; only to properly preserved issues).
Other states: Wein v. Seaman, 687 N.E.2d 477,479 (1996) (de novo review applies "only in regards to decisions from which an appeal had been timely and properly commenced"); Estate of Morelli, 05-0897 (R.I.Super. 9-3-08) p. 15,27 (de novo review applies to "properly appealed issues"; "Court will only address the matters properly raised").
Federal Courts: Borden v. H.H.S., 836 F.2d 4,6 (1st Cir. 1987) (de novo review applies only to issues properly preserved for review); Leonard v. Dorsey, 553 F.3d 609,619-20 (8th Cir. 2009) (de novo review applies only to issues properly preserved for review); Rivot-Sanchez v. Warner, 707 F.Supp.2d 234, 242 (de novo review applies only to issues properly preserved); Intel. Mailing v. Ascom (N.D.Ohio 2-21-06) No. 4:04 CV 2195, p. 8-11 (de novo review applies to legal conclusions, but issues not properly appealed are not reviewed).
MSF also argues that it can challenge the second conclusion of the WCC's Order because Flynn challenges that same conclusion in his appeal. This argument distorts the fundamental nature of this appeal. The second conclusion was resolved adversely to MSF. The WCC ruled that certain claimants are entitled to additional benefits. Then, MSF attempted to cross-appeal that issue. The cross-appeal was dismissed. Flynn's appeal argues only that the WCC's second conclusion does not go far enough — i.e., it should have included other claimants. This argument does not entitle MSF to challenge the victory that Flynn obtained below. MSF is only entitled to raise such a challenge by cross-appealing.
It is well established that appealing one part of an order does not render the entire order subject to review. Rather, proper cross-appeal is necessary to trigger review of any issue. Johnson v. Tindall, 195 Mont. 165, 169 (1981).
Here, after years of litigation, Flynn obtained a hard-fought partial victory in the WCC. That victory cannot be challenged because MSF failed to cross-appeal. The Court should consider: What was accomplished by the dismissal Order? It's sole function was to prohibit MSF from challenging the WCC Order. However, if MSF can now present its cross-appeal, then the dismissal Order was meaningless, as would be the statutory requirement of filing timely notice of cross-appeal. Moreover, no party would ever have to file a cross-appeal if it is permissible to piggy-back on the opposing party's appeal.
MSF has acted in bad faith. It presented its cross-appeal arguments despite the unambiguous Order of dismissal. This has resulted in re-litigation of the motion to dismiss the cross-appeal. This wastes the Court's time and creates unnecessary expense for Flynn. MSF's approach is calculated and deliberate. It should be punished. If not punished, MSF will have no reason to not try this again.
A motion to strike is the proper mechanism to address inappropriate content in a brief. Kinsey-Cartwright v, Brower, 2000 MT 198, 19. At the very least, this Court should strike MSF's inappropriate arguments. A more appropriate alternative is to strike MSF's entire brief.
Striking MSF's brief will relieve the Court of the laborious task of parsing out MSF's inappropriate arguments which are intertwined with other argument. Moreover, the appeal is already fully briefed by the numerous other insurers who, unlike MSF, have a real interest in this case. MSF is no longer a real party in interest because it has already settled. MSF has been permitted to continue participating in briefing, as the precedent set here will impact other cases. That privilege should now be revoked because of MSF's disregard for this Court's authority.
See ht1p://wcc.dli.mt.gov/common_nd/flynn-rmller/flynnsettlernent.pdf.
Importantly, striking MSF's brief would not hinder proper appellate analysis. The concerns of the real parties in interest are fully represented in the 2 briefs already filed on behalf of the other 76 insurers. Accordingly, MSF's brief is not necessary. This Court should strike all or part of MSF's brief.
CONCLUSION
Why should a claim be excluded from retroactivity when no settlement agreement has ever been executed, no judgment has ever been entered, and the claim is still subject to the statutory rule of benefit adjustments based on changed conditions? How can a claim be considered "paid in full" in these circumstances? And why, in such cases, should insurers be permitted to retain funds that undisputedly were withheld in violation of the Flynn I rule?
The insurers want permission from this Court to walk away with funds that were never theirs to take in the first place. This would create a windfall for the insurers. They have already benefitted greatly from their violation of the Flynn I rule, because they have enjoyed the use and/or investment potential of the funds withheld for, in some cases, many years. They should not be permitted to permanently retain these funds at the expense of disabled workers whose claims have not proceeded to settlement or judgment. These workers have never taken any steps or exercised a conscious choice to relinquish their rights to ongoing benefits. To now declare those claims "paid in full" would be an unfair surprise. It would also constitute another step in the steady erosion of the quid pro quo underlying the Workers' Compensation Act. See e.g. Walters v. Flathead Concrete Products, 2011 MT 45, ¶¶ 12-17 (discussing various aspects of quid pro quo).
Flynn respectfully requests that this Court reverse the WCC's Order and hold that a claim is not considered "paid in full," and is therefore eligible for retroactive application of the Flynn I rule, if the disabled worker is still permitted to seek further benefits. Rather, a claim should be deemed "paid in full" if the applicable statutory rules bar the disabled worker from seeking further benefits.
Dated this 10th day of June, 2011
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