                                                                                            April 15 2014


                                            DA 13-0286

                  IN THE SUPREME COURT OF THE STATE OF MONTANA

                                            2014 MT 99



DERRICK GOBLE and LYNN GERBER,

              Petitioners and Appellants,

         v.

MONTANA STATE FUND,

              Respondent and Appellee.



APPEAL FROM:           Montana Workers’ Compensation Court,
                       Cause Nos. WCC 2010-2615, WCC 2012-2904
                       Honorable James Jeremiah Shea, Presiding Judge


COUNSEL OF RECORD:

                For Appellants:

                       Thomas C. Bulman, Eric Rasmusson, Bulman Law Associates, PLLC,
                       Missoula, Montana

                For Appellee:

                       Thomas E. Martello, Daniel B. McGregor, Special Assistants Attorney
                       General, Montana State Fund, Helena, Montana



                                                    Submitted on Briefs: February 5, 2014
                                                               Decided: April 15, 2014


Filed:

                       __________________________________________
                                         Clerk
Justice Laurie McKinnon delivered the Opinion of the Court.

¶1     Appellants Derrick Goble (Goble) and Lynn Gerber (Gerber) appeal from the

Montana Workers’ Compensation Court’s (WCC) March 28, 2013 orders denying their

motions for summary judgment and granting Montana State Fund’s (MSF) motion for

summary judgment. We affirm.

¶2     We consider the following issues on appeal:1

¶3     1. Whether the WCC properly determined that § 39-71-744, MCA, rendered

incarcerated claimants ineligible for disability or rehabilitation compensation benefits.

¶4     2. Whether § 39-71-744, MCA, violates appellants’ constitutional rights to equal

protection.

¶5     3.     Whether § 39-71-744, MCA, violates appellants’ constitutional rights to

substantive due process.

¶6     4.     Whether § 39-71-744, MCA, violates appellants’ constitutional rights to

procedural due process.

¶7     5. Whether § 39-71-744, MCA violates appellants’ constitutional rights to be free

from excessive fines.




       1
          Goble/Gerber have set forth in their “Statement of Issue #2: Whether the Workers’
Compensation Court’s holdings in Wimberly v. State Compen. Ins. Fund, 1994 MTWCC 52, and
McCuin v. Montana State Fund, 2006 MTWCC 41 regarding Mont. Code Ann. § 39-71-744
should be reversed.” The Court may not, however, visit two prior decisions of the WCC and sua
sponte reverse them. We are nevertheless confident that our analysis herein will be beneficial to
further proceedings before the WCC interpreting the provisions of § 39-71-744, MCA. We have
restated the issues accordingly.
                                               2
                                      BACKGROUND

¶8     On July 8, 2004, Goble injured his right shoulder while in the course and scope of

his employment with ECC Controls, Inc. in Missoula County. At the time of Goble’s

injury, ECC Controls, Inc. was insured by MSF. MSF accepted liability for his claim,

and paid Goble indemnity and medical benefits.

¶9     Two years later, Goble was charged with the commission of numerous criminal

offenses. Goble and MSF stipulated before the WCC to the following history of Goble’s

incarceration:2

       On November 6, 2006, in State v. Goble, Cause No. DC-06-294, Montana
       Fourth Judicial District Court, Missoula County, Goble pled guilty to three
       felonies and one misdemeanor. On December 18, 2006, Goble was
       sentenced to a term of incarceration of greater than 30 days in that case,
       with all counts to run concurrently but consecutively with Cause Nos.
       DC-06-103 and DC-04-520, plus financial assessments, fees, and fines.

       On November 6, 2006, Goble pled guilty to three felonies and two
       misdemeanors in State v. Goble, Cause No. DC-06-103, Montana Fourth
       Judicial District Court, Missoula County. On December 18, 2006, Goble
       was sentenced to incarceration for 5 years on each of the felonies and to 6
       months incarceration for each of the misdemeanors, together with financial
       assessments, fees, and fines.

       On December 18, 2006, Goble admitted he had violated the terms and
       conditions of his probation in State v. Goble, Cause No. DC-04-520,
       Montana Fourth Judicial District Court, Missoula County. On December
       18, 2006, Goble’s prior deferred sentence was revoked and he was ordered
       incarcerated for five years on the two felonies and one misdemeanor in that
       case, his sentence to run consecutively with the sentence in DC-06-294,
       together with financial assessments, fees, and fines.


       2
          The Court is limited to the WCC’s record and the parties’ stipulated facts. While the
history of Goble’s incarceration has not been clearly set out by the parties, it is nevertheless
sufficient to establish that Goble was incarcerated for a period in excess of 30 days and for
substantially longer than 120 weeks.
                                               3
       On July 24, 2007, Goble pled guilty to the offense of being a felon in
       possession of a stolen firearm in United States of America v. Derrick Goble,
       Cause No. CR-07-31-M-DWM, United States District Court for the District
       of Montana, Missoula Division. On November 21, 2007, Goble was
       sentenced to 84 months of incarceration, plus an assessment fee. His
       sentence was to run consecutively with the sentence in Cause No.
       DC-04-520 and concurrently with the sentences in Cause No. DC-06-294
       and DC-06-103.

Goble, 2013 MTWCC 8, ¶¶ 9-12. Goble owed back child support at the time of his

incarceration.

¶10    The parties further stipulate that Goble was not advised in any of his state or

federal criminal matters that his incarceration would impact his receipt of workers’

compensation benefits.

¶11    On June 22, 2006, MSF notified Goble that, pursuant to § 39-71-744, MCA, MSF

was going to terminate payment of temporary benefits beyond May 29, 2006, as a result

of Goble’s incarceration. Thereafter, on March 25, 2009, MSF notified Goble that he

would have been entitled to 120 weeks of permanent partial disability (PPD) benefits

beginning May 1, 2006, at a rate of $252 per week (for a total of $30,240), but that he

was not entitled to receive those benefits while he was incarcerated. The parties do not

dispute that Goble was incarcerated for the entire 120-week period during which he was

eligible to receive PPD benefits.

¶12    In August 2008, while in the course and scope of his employment with Vann’s,

Inc. in Missoula County, claimant Gerber sustained an injury to his right shoulder. MSF

also accepted liability for Gerber’s claim and paid him indemnity and medical benefits.

MSF notified Gerber that he was eligible to receive PPD benefits for 48.75 weeks, at a


                                            4
rate of $287.16 per week, as of May 12, 2010. MSF also notified Gerber that he had the

option to receive these benefits in a lump sum, which Gerber declined. In December

2010 Gerber was sentenced to a period of incarceration in excess of 30 days. Gerber was

not advised that his incarceration would affect his workers’ compensation benefits. In

January 2011 MSF sent Gerber a letter notifying him that he was ineligible to receive the

approximately 16 remaining weeks of his PPD benefits, amounting to $4,381.02, due to

his incarceration.

¶13    Goble and Gerber each appealed to the WCC their ineligibility to receive PPD

benefits under § 39-71-744, MCA. Gerber sought certification as a class action and

joinder with Goble’s earlier petition. The WCC denied both motions and the claims of

Goble and Gerber went forward individually. At the November 27, 2012 hearing,

Goble/Gerber argued the same issues which they now raise on the appeal. On March 28,

2013, the WCC granted MSF’s motions for summary judgment as to both Goble and

Gerber and denied claimants’ cross-motions for summary judgment. Goble and Gerber

filed a joint notice of appeal.

                                  STANDARDS OF REVIEW

¶14    We review a grant of summary judgment de novo. Wiard v. Liberty N.W. Ins.

Corp., 2003 MT 295, ¶ 13, 318 Mont. 132, 79 P.3d 281. In reviewing the WCC’s grant

or denial of summary judgment, this Court uses the same standard in ruling on a motion

for summary judgment; “we determine whether there is an absence of genuine issues of

material fact and whether the moving party is entitled to judgment as a matter of law.”

Satterlee v. Lumberman’s Mut. Cas. Co., 2009 MT 368, ¶ 9, 353 Mont. 265, 222

                                           5
P.3d 566.    We review the WCC’s legal conclusions for correctness.           Lund v. State

Compen. Mut. Ins. Fund, 263 Mont. 346, 348, 868 P.2d 611, 612 (1994).

¶15    The constitutionality of a statute is a question of law, and we review a lower

court’s legal conclusions for correctness. Henry v. State Compen. Ins. Fund, 1999 MT

126, ¶ 10, 294 Mont. 449, 982 P.2d 456. The constitutionality of a statute is presumed,

“unless it conflicts with the constitution, in the judgment of the court, beyond a

reasonable doubt.” Powell v. State Compen. Ins. Fund, 2000 MT 321, ¶ 13, 302 Mont.

518, 15 P.3d 877. The party challenging the constitutionality of a statute bears the

burden of proving the statute unconstitutional beyond a reasonable doubt. Henry, ¶ 11.

If any doubt exists, it must be resolved in favor of the statute. Powell, ¶ 13.

                                       DISCUSSION

¶16    When assessing a claimant’s entitlement to benefits pursuant to the Workers’

Compensation Act (WCA; Title 39, chapter 71, MCA), we apply the statutes in effect at

the time the claimant was injured. Dunnington v. State Compen. Ins. Fund, 2000 MT

349, ¶ 12, 303 Mont. 252, 15 P.3d 475 (citing Hale v. Royal Logging, 1999 MT 302,

¶ 14, 297 Mont. 165, 990 P.2d 1245). Therefore, the 2003 version of the WCA is

applicable to Goble’s claim, and the 2007 version is applicable to Gerber’s claim.

However, these two versions are nearly identical, aside from one minor difference which

will be discussed below.

¶17    Section 39-71-703, MCA, provides the basis for an award of PPD benefits and

states, in pertinent part:



                                              6
              (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 if that worker:
              (a) has an actual wage loss as a result of the injury; and
              (b) has a permanent impairment rating . . . .
              (2) When a worker receives a Class 2 or greater class of impairment
       as converted to the whole person . . . , and has no actual wage loss as a
       result of the compensable injury or occupational disease, the worker is
       eligible to receive payment for an impairment award only.

The only relevant difference between the 2003 and 2007 versions of § 703 is that the

latter provides that an undisputed impairment award may be paid in a lump sum if

requested by the claimants. See § 39-71-703(7) (2007), MCA. In the instant case, Goble

and Gerber met all the criteria set forth in § 703(1) for benefits and were deemed to be

“entitled” to PPD by MSF. Gerber, the only claimant under which the provisions of

§ 703 (2007) applied, did not elect to pursue a lump sum payment.

¶18    Issue One: Whether the WCC properly determined that § 39-71-744, MCA,
       rendered incarcerated claimants ineligible for disability or rehabilitation
       compensation benefits.

¶19    Goble and Gerber contend that the WCC misconstrues § 744 as allowing it to

deduct from their PPD benefits one week of benefits for each week of incarceration,

effectively drawing down all of their PPD benefits to zero. Goble/Gerber argue that the

“time limit on benefits” language in § 744 should be read as referring to the statute of

limitations contained in §§ 39-71-601 through -603, MCA, and not to the payment of

their PPD benefits to which Goble/Gerber would otherwise be entitled, but for their

incarceration. MSF responds that the plain meaning of § 744 clearly supports the WCC’s

interpretation of the statute.



                                             7
¶20    We observe that § 744 (2003) and § 744 (2007) are identical. Section 744(1)

provides:

       [A] claimant is not eligible for disability or rehabilitation compensation
       benefits while the claimant is incarcerated for a period exceeding 30
       days in a correctional institution or jail as the result of conviction of a
       felony or a misdemeanor. The insurer remains liable for medical
       benefits. A time limit on benefits otherwise provided in this chapter is
       not extended due to a period of incarceration.

¶21    “We construe a statute to ascertain the legislative intent and give effect to the

legislative will.” State v. Letasky, 2007 MT 51, ¶ 11, 336 Mont. 178, 152 P.3d 1288

(citing S.L.H. v. State Compen. Mut. Ins. Fund, 2000 MT 362, ¶ 16, 303 Mont. 364,

15 P.3d 948). The Court’s first step in interpreting a statute is to look at its plain

language, and if the language is clear and unambiguous, no further interpretation is

required. Letasky, ¶ 11. “In the construction of a statute, the office of the judge is simply

to ascertain and declare what is in terms or in substance contained therein, not to insert

what has been omitted or to omit what has been inserted.” Section 1-2-101, MCA.

¶22     As set forth above, § 744 provides that a claimant is not eligible for disability or

rehabilitation compensation benefits during the time when the claimant is incarcerated,

provided the incarceration exceeds 30 days. Furthermore, the statute specifically states

that “[a] time limit on benefits otherwise provided in this chapter is not extended due to a

period of incarceration.” In considering the plain language of § 744, it is clear that the

Legislature intended for claimants incarcerated in excess of 30 days to be ineligible to

receive disability or rehabilitation benefits.




                                                 8
¶23    Goble/Gerber argue that they are immune from the ineligibility language of § 744

because their eligibility to receive § 703 benefits was determined prior to their

incarceration. They argue that ineligibility to receive benefits based upon incarceration

amounts to a “forfeiture” of a constitutionally protected right. Goble/Gerber’s argument

would have us interpret the words “eligible” and “time limit” to mean that § 744 forfeits

only the benefits of claimants who become eligible while they are incarcerated, and not

before, and that such benefits are presumably payable upon discharge from confinement.

Such an interpretation is inconsistent with the clear provisions of § 744, and would

require the Court, among other adaptations, to insert “forfeiture” and remove “not

eligible” from the statute in contravention of § 1-2-101, MCA.

¶24    We further note, as did the WCC, that in the absence of a provision such as § 744,

the payment of benefits to an incarcerated claimant would essentially mean that the

public would bear the cost of an incarcerated individual twice: first, through the payment

of benefits; and second, through the cost of incarceration. The public policy of Montana’s

WCA, as set forth in § 39-71-105(1) and (3), MCA, is to provide wage-loss benefits

which bear a reasonable relationship to actual wages lost and “to return a worker to work

as soon as possible after the worker has suffered a work-related injury or disease.” Both

objectives are thwarted by the interpretation of § 744 offered by Goble/Gerber.           If

Goble/Gerber were to receive wage-loss benefits when they are incapable of earning a

wage and incapable of returning to work, then the clear purpose of the statute, as stated in

§ 39-71-105, MCA would be frustrated. A worker who has become incarcerated has

removed himself from the job force as a result of committing a crime. Goble/Gerber,

                                             9
therefore, are not losing wages as a result of their injuries, but rather as a result of their

criminal activity.

¶25    The parties stipulate that Goble was incarcerated during the entire 120-week

period that he was otherwise eligible to receive PPD payments, and that Gerber was

incarcerated for approximately the final 16 weeks of his 48.75-week payment period. As

a direct result of their incarcerations, Goble received no PPD benefits, and Gerber’s

benefits were terminated after approximately 34 weeks. We conclude that the WCC

interpreted and applied the provisions of § 703 and § 744 correctly.

¶26    Issue Two: Whether § 39-71-744, MCA, violates appellants’ constitutional rights
       to equal protection.

¶27    Goble/Gerber argue that § 744 violates their rights to equal protection because

they are being treated differently than similarly situated individuals, and this difference in

treatment bears no rational relationship to a legitimate governmental interest.            In

addressing the first step of the equal protection analysis, Goble/Gerber identify the

classes involved as those workers who qualify for PPD benefits under § 703, and those

workers with the same criteria who are subsequently incarcerated for a period in excess

of 30 days. They argue that the WCC erred in determining that these classes are not

similarly situated.3

¶28    Under the Fourteenth Amendment to the United States Constitution, and Article II,

Section 4, of the Montana Constitution, no person shall be denied equal protection of the

       3
          At some point in the proceedings, Goble/Gerber attempted to introduce an additional
theory under their equal protection claim concerning the definitions of the classes. The WCC
rejected this theory. We find that the WCC did not abuse its discretion by not allowing this
alternate theory, and thus will not address it.
                                             10
laws. “The basic rule of equal protection is that persons similarly situated with respect to

a legitimate governmental purpose of the law must receive like treatment.” Rausch v.

State Compen. Ins. Fund, 2005 MT 140, ¶ 18, 327 Mont 272, 114 P.3d 192 (citing

Powell, ¶ 22). When analyzing an equal protection claim, the Court follows a three-step

process: (1) identify the classes involved and determine if they are similarly situated; (2)

determine the appropriate level of scrutiny to apply to the challenged legislation; and (3)

apply the appropriate level of scrutiny to the challenged statute. Henry, ¶ 27.

¶29    It is necessary for the plaintiff to identify a similarly situated class against which

the plaintiff’s class can be compared because “‘[d]iscrimination cannot exist in a

vacuum; it can be found only in the unequal treatment of people in similar

circumstances.’” Freeman v. City of Santa Ana, 68 F.3d 1180, 1187 (9th Cir. 1995)

(quoting Atty. Gen. of U.S. v. Irish People, Inc., 684 F.2d 928, 946 (D.C. Cir. 1982)).

The goal of identifying a similarly situated class is to isolate the factor allegedly subject

to impermissible discrimination. Freeman, 68 F.3d at 1187. Thus, two groups are

similarly situated if they are equivalent in all relevant respects other than the factor

constituting the alleged discrimination. See Snetsinger v. Mont. U. Sys., 2004 MT 390,

¶ 27, 325 Mont. 148, 104 P.3d 445; Oberson v. U.S. Dept. of Agric., 2007 MT 293,

¶¶ 19-20, 339 Mont. 519, 171 P.3d 715.

¶30    In the present context, Gerber/Goble identify two classes that are similarly situated

in all relevant respects except the factor of incarceration. The two classes Goble/Gerber

identify are defined by their eligibility for PPD benefits. In order to properly consider



                                             11
whether the two classes are similarly situated, we must examine the nature of PPD

benefits and their statutory origin. Section 39-71-116(27), MCA, defines PPD as:

       a physical condition in which a worker, after reaching maximum medical
       healing:
              (a) has a permanent impairment . . . .
              (b) is able to return to work in some capacity but the permanent
       impairment impairs the worker’s ability to work; and
              (c) has an actual wage loss as a result of the injury.

Specifically, PPD benefits serve to restore the claimant to a pre-accident wage level for a

limited amount of time. Satterlee, ¶ 23. We have previously explained:

       The PPD claimant, who is able to return to work, is entitled to wage
       supplement benefits, which serve to restore the claimant to a pre-accident
       wage level if the claimant has suffered a decrease in wages upon return to
       work. Additionally, the PPD claimant is entitled to an impairment award,
       which compensates the claimant for the permanent loss of physical
       function. This benefit is smaller than the total disability benefit, and is paid
       over a shorter period of time, but is designed to compensate a claimant who
       is able to return to work and re-commence earning a wage. The payment of
       an award to a claimant who returns to work is consistent with the [WCA’s]
       stated purpose of returning injured workers to the work force.

Rausch, ¶ 23.4 Thus, PPD benefits are designed for the worker who is able to return to

work in the worker’s job pool, but nevertheless suffers impairment or partial wage loss,

or both. Section 39-71-116(27), MCA.

¶31    In Caldwell v. MACo Workers’ Compensation Trust, 2011 MT 162, 361 Mont.

140, 256 P.3d 923, we considered whether the denial of rehabilitation benefits to a


       4
          Our use of the term “wage supplements” in Rausch refers to statutory language which
was discontinued in the 1991 legislative session (see Laws of Mont., 1991, ch. 574, § 4) and
changed to a benefit calculated by a disability formula which considers multiple factors,
including wage loss. See § 39-71-703(1)-(9), MCA. Thus, despite the use of the discontinued
term, the above explanation in Rausch of the purpose of § 703 benefits is still instructive to the
instant case.
                                               12
claimant violated equal protection when the basis for the denial turned on the claimant’s

age-based eligibility for social security benefits.   Section 39-71-710, MCA, deemed

“retired,” and therefore ineligible for workers’ compensation benefits, any disabled

worker eligible for social security retirement benefits. We determined that two similarly

situated classes were created: (1) those vocational rehabilitation eligible claimants who

are not eligible for social security, and (2) those vocational rehabilitation eligible

claimants who are eligible to receive social security retirement benefits. We stated that

“§ 39-71-710, MCA, creates two classes out of similarly situated persons, distinguished

only by the age-based deemed ‘retired’ provision of § 39-71-710, MCA.” Caldwell, ¶ 18;

see also Reesor v. Mont. State Fund, 2004 MT 370, ¶ 12, 325 Mont. 1, 103 P.3d 1019;

Satterlee, ¶ 16.

¶32    As in Caldwell, we deem § 703 and § 744, construed together, to create two

classes out of similarly situated persons, distinguished only by the provision of § 744

relating to incarceration. Both classes are composed of workers who otherwise qualify

for disability benefits under § 703, but one class (of which Gerber/Goble are members) is

denied those benefits based on the sole distinguishing factor of incarceration. Whether an

individual is currently incarcerated bears no relation to that individual’s likelihood of

receiving PPD benefits prior to incarceration.

¶33    The WCC determined that Goble/Gerber’s equal protection claim failed due to the

lack of similarly situated classes.   The WCC’s determination was based largely on

State v. Renee, 1999 MT 135, 294 Mont. 527, 983 P.2d 893. Renee dealt with a statute

which required a court to consider sentencing alternatives for non-violent felony

                                            13
offenders. Renee, ¶ 14. Defendant Renee, who was convicted of misdemeanors, brought

an equal protection claim, arguing that the statute should also apply to misdemeanor

offenders as well. Renee, ¶ 14. We held that misdemeanor and non-violent felony

offenders are not similarly situated for the purposes of sentencing considerations due in

part to the differences in the quality and duration of punishment between the two groups,

and in the long term effects on an individual’s liberty interest brought about by a felony

conviction as compared to that of a misdemeanor conviction. Renee, ¶¶ 31-32. We

explained that individuals convicted of different criminal offenses—misdemeanors and

non-violent felonies—are not similarly situated for purposes of sentencing. The only

distinguishing characteristic between the two classes in Renee bore a direct relationship

to the statute requiring the court’s consideration of sentencing alternatives.     Renee,

¶¶ 30-33.

¶34   In the present case, the WCC reasoned that if misdemeanor and non-violent felony

offenders are not similarly situated for the purposes of an equal protection analysis

pursuant to Renee, then unincarcerated injured workers and incarcerated injured workers

are also not similarly situated. The WCC essentially came to the conclusion that the

classes presented by Goble/Gerber were not similarly situated because a rational basis

exists for treating incarcerated claimants differently from unincarcerated claimants. By

doing so, the WCC subsumed the factor—incarceration—that we are trying to isolate and

test against a rational basis. Defining the classes for equal protection analysis can be

difficult and tedious, and if not done with clarity of vision, may result in the class

definition swallowing up the factor we are attempting to examine. An inherent problem

                                           14
in evaluating an equal protection challenge to a statute lies in defining the classes in a

way which will effectively test the statute without truncating the analysis. Thus,

Goble/Gerber have established that they are similarly situated to unincarcerated PPD

beneficiaries by virtue of the provisions of § 703.   Renee, therefore, does not direct the

inquiry here. We conclude the WCC erred in finding that workers who qualify for PPD

benefits under § 703 are not similarly situated to workers also meeting the criteria of

§ 703, but who are incarcerated for a period in excess of 30 days.

¶35    The second step in addressing an equal protection claim is determining the

appropriate level of scrutiny to apply to the challenged legislation. Henry, ¶ 29. We

review equal protection challenges under one of three recognized tiers of scrutiny: strict

scrutiny, intermediate scrutiny, or rational basis. State v. Price, 2002 MT 229, ¶¶ 33-34,

311 Mont. 439, 57 P.3d 42.         This Court has previously held that the workers’

compensation statutes neither infringe upon the rights of a suspect class nor involve

fundamental rights which would trigger a strict scrutiny analysis. Henry, ¶ 29; Heisler v.

Hines Motor Co., 282 Mont. 270, 279, 937 P.2d 45, 50 (1997) (citing Stratemeyer v.

Lincoln Co., 259 Mont. 147, 151, 855 P.2d 506, 509 (1993); Cottrill v. Cottrill Sodding

Serv., 229 Mont. 40, 42, 744 P.2d 895, 897 (1987)). We have held that the rational basis

test applies when considering equal protection challenges to the workers’ compensation

statutes. Henry, ¶ 29; Zempl v Uninsured Employers’ Fund, 282 Mont. 424, 430, 938

P.2d 658, 662 (1997); Heisler, 282 Mont. at 279, 937 P.2d at 50 (citing Stratemeyer, 259

Mont. at 151, 855 P.2d at 509). Based on the foregoing, we will apply the rational basis

test to Goble/Gerber’s equal protection challenge.

                                            15
¶36   The final step in our equal protection analysis is to apply the appropriate level of

scrutiny to evaluate the constitutional challenge. Henry, ¶ 32. The rational basis test

requires a statute to bear a rational relationship to a legitimate governmental interest.

Satterlee, ¶ 18 (citing Henry, ¶ 33).     As such, we must address the public policy

considerations that underlie the WCA. These considerations are stated in § 39-71-105(1)

and (3), MCA, as follows:

              (1) An objective of the Montana workers’ compensation system is
      to provide, without regard to fault, wage-loss and medical benefits to a
      worker suffering from a work-related injury or disease. Wage-loss benefits
      are not intended to make an injured worker whole but are intended to assist
      a worker at a reasonable cost to the employer. Within that limitation, the
      wage-loss benefit should bear a reasonable relationship to actual wages lost
      as a result of a work-related injury or disease.

                                          .        .   .

             (3) A worker’s removal from the workforce because of work-related
      injury or disease has a negative impact on the worker, the worker’s family,
      the employer, and the general public. Therefore, an objective of the
      workers’ compensation system is to return the worker to work as soon as
      possible after the worker has suffered a work-related injury or disease.

“Actual wage loss” means that “the wages that a worker earns or is qualified to earn after

the worker reaches maximum healing are less than the actual wages the worker received

at the time of injury.” Section 39-71-116(1), MCA.

¶37   Based upon these statutory provisions, the policy of Montana’s WCA is to provide

wage-loss benefits which bear a reasonable relationship to actual wages lost and to return

a worker to work as soon as possible. The provisions of § 744 remove from the pool of

eligible beneficiaries those individuals who cannot return to work due to incarceration

and who are unable to earn an actual wage. Because an incarcerated claimant has

                                              16
removed himself from the job force by committing a crime, his lost wages are attributable

to his incarceration and not his injury. Permitting incarcerated claimants to collect

workers’ compensation benefits, as Goble/Gerber suggest, would undercut a principal

objective of the WCA to provide wage-loss benefits that bear a reasonable relationship to

actual wages lost as a result of a work-related injury. The ineligibility provision of § 744

rationally advances the legitimate governmental interests of the WCA. See Satterlee,

¶ 28. As such, the WCC did not err in concluding that § 744 did not violate

Goble/Gerber’s rights to equal protection.

¶38    Issue Three: Whether § 39-71-744, MCA, violates appellants’ constitutional
       rights to substantive due process.

¶39    Goble/Gerber argue that § 744 violates their substantive rights to due process

because it unreasonably and arbitrarily provides that incarcerated claimants are ineligible

for § 703 benefits. They assert that the WCC’s interpretation of § 744 is “a further

instrument of punishment” because it “forfeits” their benefits.        MSF maintains that

substantive due process is satisfied because there is a legitimate purpose of the statute and

it is not patently arbitrary.

¶40    “The theory underlying substantive due process reaffirms the fundamental concept

that the Due Process Clause contains a substantive component which bars arbitrary

governmental actions, regardless of the procedures used to implement them, and serves as

a check on oppressive governmental action.” Newville v. State, Dept. of Family Servs.,

267 Mont. 237, 249, 883 P.2d 793, 801 (1994). Thus, a “‘substantive due process

analysis requires a test of the reasonableness of a statute in relation to the State’s power


                                             17
to enact legislation.’” Newville, 267 Mont. at 250, 883 P.2d at 801 (quoting Raisler v.

Burlington N. Ry. Co., 219 Mont. 254, 263, 717 P.2d 535, 541 (1985)). The State cannot

use its power to take unreasonable, arbitrary, or capricious action against an individual;

therefore, a statute enacted by the Legislature must be reasonably related to a permissible

legislative objective in order to satisfy guarantees of substantive due process. Powell,

¶ 29 (citing Newville, 267 Mont. at 250, 883 P.2d at 801).

¶41    We have already determined pursuant to our equal protection analysis that there

exists a rational basis for treating incarcerated claimants differently from those who

choose to remain law abiding. We will not elaborate further except to state that § 744 is

not arbitrary, and serves the legitimate governmental purpose set forth in the policy

provisions of Montana’s workers’ compensation statutes.        Section 39-71-105, MCA.

Furthermore, a statute enacted by the Legislature is presumed to be constitutional.

Satterlee, ¶ 10 (citing Powell, ¶ 13).      Goble/Gerber have the burden of proof in

challenging the constitutionality of § 744, which they have failed to meet. Henry, ¶ 11.

¶42    The Dissent correctly notes that one purpose of the WCA is to relieve a worker’s

family from the negative impact occasioned by the worker’s work-related injury and

resulting wage loss. Dissent, ¶ 53. However, neither Goble/Gerber nor their families are

suffering a negative impact due to their work-related injuries. Rather, the families of

Goble/Gerber are suffering a negative impact due to Goble/Gerber’s decisions to conduct

criminal activity which led to incarceration. As the WCC’s orders correctly explained,

       Non-incarcerated injured workers rely on their benefits to provide the
       necessities of life for themselves and their families. Incarcerated workers
       are provided the necessities of life (food and shelter) due to their

                                            18
         incarceration. Likewise one of the results of their incarceration is that they
         cannot provide for their families irrespective of whether they had suffered
         an industrial injury.

Additionally, workers’ compensation benefits, just like wages, are subject to garnishment

for the purposes of fulfilling child support obligations. See §§ 39-71-743, 40-5-411,

MCA. However, a child support obligor’s wages or workers’ compensation benefits can

only be garnished to the extent that he or she continues to be employed. While this

undoubtedly creates a serious financial hardship for families that rely on such support, the

remedy for this problem is not ours to make. And despite the Dissent’s assertion that

§ 744 is purely punitive and thus unreasonable in a substantive due process analysis, as

discussed in Issue 4, sound policy decisions underlie the Legislature’s decision not to

allow individuals who are no longer earning wages due to incarceration to continue to

receive wage-loss benefits.

¶43      Goble/Gerber also argue that § 744 violates their rights to substantive due process

by undermining the quid pro quo basis of the WCA. Black’s Law Dictionary defines

quid pro quo as “[a]n action or thing that is exchanged for another action or thing of more

or less equal value.” Black’s Law Dictionary 1282 (Bryan A. Garner ed., 8th ed., West

2004).     As this Court has held on several occasions, the enactment of the WCA

demonstrated a compromise between industry and labor in which labor received

guaranteed no-fault recovery, and industry was relieved of the possibility of large and

potentially uncapped recoveries in the tort system. Satterlee, ¶ 37 (citing Stratemeyer v.

Lincoln Co., 276 Mont. 67 at 74, 915 P.2d 175 at 179 (1996)). Essentially, the WCA

requires both an employer and an employee to give up rights which are proportional in

                                              19
value. Goble/Gerber argue that § 744 violates the quid pro quo foundation of the WCA,

in that they gave up their rights to sue their employers, and did not receive anything in

return. However, as the WCC correctly noted, § 744 upholds the quid pro quo because it

reflects that an incarcerated claimant cannot return to the workforce and,

correspondingly, requires that he be deemed ineligible for PPD benefits. We additionally

note that, while § 744 renders incarcerated claimants ineligible for PPD benefits, it still

provides for any medical benefits due to claimants, even while incarcerated. Contrary to

the assertions of Goble/Gerber, we deem § 744 to be consistent with the quid pro quo of

the WCA. The claims of Goble/Gerber that their rights to substantive due process have

been violated because of § 744’s failure to maintain the quid pro quo mistakenly ignores

the fundamental compromise reached by the Legislature’s enactment of the WCA. In

exchange for no-fault recovery, employers gained the predictability of consistent

workers’ compensation insurance payments that would be capped in a way that personal

injury tort claims were not. As such, § 744 is not an arbitrary governmental action that

serves as a windfall to insurers as the Dissent suggests, but rather, is rationally related to

a legitimate governmental purpose. Thus, with respect to Goble/Gerber’s quid pro quo

assertions, we hold that the statute does not violate their substantive due process rights.

¶44    Issue Four: Whether § 39-71-744, MCA, violates appellants’ constitutional
       rights to procedural due process.

¶45    Goble/Gerber assert they were denied procedural due process because they were

not informed that, as a result of their guilty pleas in their criminal proceedings, they

would lose their eligibility to receive PPD benefits.       Goble/Gerber argue that “at a


                                             20
minimum” the State had a duty to notify them that they would be unable to receive PPD

benefits due to their incarcerations, and the failure to notify them constituted violations of

their rights to procedural due process. They assert that the notions of fair play and

substantial justice that underlie the right to due process requires an individual to be

informed of a loss of a right before any action is taken.

¶46    Article II, Section 17 of the Montana Constitution provides that “[n]o person shall

be deprived of life, liberty, or property without due process of law.” This Court has held

that workers’ compensation benefits are considered to be the property of the individual

claimant. Lockhart v. N.H. Ins. Co., 1999 MT 205, ¶ 24, 295 Mont. 467, 984 P.2d 744.

“Due process is flexible and calls for such procedural protections as the particular

situation demands.” Mathews v. Eldridge, 424 U.S. 319, 334, 96 S. Ct. 893, 902 (1976)

(internal quotation marks and citation omitted); Wheelsmith Fabrication, Inc. v. Mont.

Dept. of Labor & Indus., 2000 MT 27, ¶ 17, 298 Mont. 187, 993 P.2d 713. Specifically,

procedural due process requires consideration of three distinct factors: “(1) the private

interest that will be affected by the official action; (2) the risk of an erroneous deprivation

of such interest through the procedures used, and the probable value, if any, of additional

or substitute procedural safeguards; and (3) the government’s interest.” M.C. v. Dept. of

Insts., 211 Mont. 105, 109, 683 P.2d 956, 958 (1984) (citing Mathews, 424 U.S. at 335,

96 S. Ct. at 903).

¶47    We are not persuaded by Goble/Gerber’s argument that they were not afforded

procedural due process. We first note that both Goble/Gerber were advised by letter from

MSF that their PPD benefits would be terminated under the provisions of § 744.

                                              21
Goble/Geber contested their ineligibility and the WCC conducted a hearing and

considered their arguments. They were provided notice, were represented by counsel,

and had an opportunity to present evidence and argument.

¶48    Additionally, when the Mathews v. Eldridge factors are applied, it is clear that

§ 744 withstands a procedural due process challenge.       Goble/Gerber have failed to

provide any arguments that there is any risk of an erroneous deprivation of rights.

Goble/Gerber do not argue that their PPD benefits were being terminated by mistake or

accident on behalf of MSF, or that had a hearing been held, they would have been able to

continue receiving their PPD benefits while they were incarcerated. Instead, they argue

that § 744, standing alone, is arbitrary and oppressive. Goble/Gerber have not provided

sufficient argument demonstrating § 744 is unconstitutional.      As the WCC noted,

Goble/Gerber’s ignorance of the existence of § 744 does not mean that their procedural

due process rights were violated. Wiard, ¶ 32.

¶49    Issue Five: Whether § 39-71-744, MCA, violates appellants’ constitutional
       rights to be free from the imposition of excessive fines.

¶50    Goble/Gerber argue that § 744 violates the Excessive Fines Clause because the

forfeiture of their PPD benefits is both punitive and grossly disproportional to their

crimes, in that the crimes they were convicted of are unrelated to receiving workers’

compensation benefits. MSF argues that the Excessive Fines Clause only pertains to

criminal cases, and has no applicability to a workers’ compensation case. MSF maintains

that even if the Excessive Fines Clause applied, forfeiture of PPD benefits does not

constitute a fine.


                                           22
¶51   The WCC relied on State v. Good, 2004 MT 296, 323 Mont. 378, 100 P.3d 644, to

find that § 744 does not violate Article II, Section 22 of the Montana Constitution, which

prohibits the imposition of excessive fines. In Good, we held that a district court’s

restitution order for a criminal defendant constituted a fine for the purposes of the

Excessive Fines Clause, in part because “restitution is not separate from the offender’s

punishment but is an aspect of it.” Good, ¶ 22 (citing § 46-18-241, MCA, which states

that “a sentencing court shall, as part of the sentence, require an offender to make full

restitution”). Relying on U.S. v. Bajakajian, 524 U.S. 321, 328, 118 S. Ct. 2028, 2033

(1998), we found that because Good’s restitution order was punitive in part, it was

squarely within the purview of the Excessive Fines Clause.           We considered the

relationship between the offense and the fine, and determined that the restitution order

was not “grossly disproportional,” and therefore did not violate the Excessive Fines

Clause.

¶52   Goble/Gerber are correct in their assertion that the Excessive Fines Clause is not

limited to criminal proceedings.    State ex rel. Hardy v. State Bd. of Equalization,

133 Mont. 43, 47-48, 319 P.2d 1061, 1063-64 (1958). However, their argument that the

forfeiture of their PPD benefits constitutes a fine for purposes of the Excessive Fines

Clause is unpersuasive. Unlike Good, where the defendant brought an excessive fine

claim about a restitution order imposed as a part of his sentence for punitive purposes,

Goble/Gerber’s ineligibility for PPD benefits is a consequence of their incarceration and

unrelated to the terms of the underlying sentence.         Additionally, Goble/Gerber’s

ineligibility for PPD benefits was neither punitive, nor an aspect of their punishment.

                                           23
Therefore, because the forfeiture of PPD benefits does not constitute a fine, we need not

discuss whether the effect of § 744 is grossly disproportional.

                                       CONCLUSION

¶53    For the foregoing reasons, we affirm the Order of the WCC.


                                                 /S/ LAURIE McKINNON

We Concur:

/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ JIM RICE


Justice Patricia Cotter, dissenting.

¶54    I dissent on the grounds that § 744 unconstitutionally violates the substantive due

process rights of the claimants. The Court ignores the basic truth that disability benefits

sustain not only the worker but also those who rely upon him or her for sustenance.

Further, I cannot begin to agree with the Court’s conclusion that “[t]he ineligibility

provision of § 744 rationally advances the legitimate governmental interests of the

WCA.” Opinion, ¶ 37.

¶55    Section 39-71-105, MCA, contains the Legislature’s “Declaration of public

policy.” Section 39-71-105(3), MCA, provides in pertinent part: “A worker’s removal

from the workforce because of a work-related injury or disease has a negative impact on

the worker, the worker’s family, the employer, and the general public.” It can therefore

fairly be argued that one of the “legitimate governmental interests” of the WCA is to

relieve a worker’s family from the negative impact occasioned by the worker’s injury and

                                            24
resulting disability and wage loss. However, in complete disregard of the consequences

to the injured employee’s family, § 744 supplements the punishment levied against the

worker by the criminal justice system by stripping away benefits to which the worker has

a vested right and entitlement.

¶56    In arguing against Goble and Gerber’s substantive due process challenge to § 744,

MSF freely concedes that the claimants are entitled to their PPD benefits. It argues,

however, that “it is entirely reasonable that the legislature determined that incarceration

removes eligibility for disability benefits, even though those persons may be entitled to

such benefits” (emphasis in original). It is here that MSF’s substantive due process

analysis collapses, as does that of this Court. Goble and Gerber are indeed entitled to

their PPD benefits. Their entitlement was fixed by MSF when it determined that Goble

sustained a 20% wage loss and Gerber a 10% wage loss. MSF adopted the findings of

physicians that both claimants sustained permanent whole person impairments and

permanent physical restrictions. The question therefore becomes whether removing their

eligibility for these benefits in favor of the insurer who was paid to cover the workers’

impairment and loss is unreasonable, arbitrary, or oppressive.

¶57    As we said in Newville, “[s]ubstantive due process primarily examines the

underlying substantive rights and remedies to determine whether restrictions . . . are

unreasonable or arbitrary when balanced against the purpose of the legislature in enacting

the statute.” Newville, 267 Mont. at 249, 883 P.2d at 800. The restrictions in § 744 are

purely punitive and cumulative of the criminal penalties already imposed upon Goble and

Gerber, as the end is to punish the impaired worker for his incarceration by taking away

                                            25
his benefits.   Stripping the claimants of the impairment benefits to which they are

unquestionably entitled bears no rational relation to the underlying public policy of the

WCA, which is at least in part to relieve the negative impact on a worker’s family

occasioned as a result of the worker’s injury and impairment. Section 39-71-105(3),

MCA.

¶58    I cannot fathom how application of “[t]he ineligibility provision of § 744

rationally advances the legitimate governmental interests of the WCA,” as this Court

concludes. Opinion, ¶ 37. The money to which Goble and Gerber are entitled stays

instead in the pockets of private insurers who received valuable consideration in

exchange for providing insurance coverage. The money to which Goble and Gerber are

entitled becomes a windfall to the insurer at the expense of the claimants’ dependents

who relied upon that established fund of money for child support and sustenance.

Respectfully, giving money to which the claimants are entitled back to the insurance

company instead of to their families does not under any stretch of logic rationally

advance the legitimate governmental interests of the WCA.

¶59    For the foregoing reasons, I would conclude that § 744 is unreasonable, arbitrary,

and oppressive, and that it violates the substantive due process rights of the claimants.

On this basis, I would declare it unconstitutional. I dissent from our refusal to do so.


                                                  /S/ PATRICIA COTTER

Justice Michael E Wheat joins in the dissenting Opinion of Justice Patricia Cotter.


                                                  /S/ MICHAEL E WHEAT

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