                                          No. 89-512

                         IN THE SIJPREME COURT OF THE STATE OF MONTANA
                                             1990



DAVID A. MALEK,
                           Claimant and Respondent,
             -vs-
HENRY'S SAFETY SUPPLY COMPANY,
              Employer,
       and
STATE COMPENSATION INSURANCE FUND,
                           Insurer and Appellant.




APPEAL FROM:               The Workers' Compensation Court, The Honorable
                           Timothy Reardon, Judge presiding.

COUNSEL OF RECORD:
             For Appellant:
                           Richard E. Bach, Helena, Montana

             For Respondent:
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     o           1-        Geoffrey R. Keller; Matovich, Addy   &   Keller, Billings,
     cV3     .   "   >     Montana
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     c'3                                     Submitted on Briefs:      Feb. 9, 1990
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                                               Decided:    March 13, 1990




                                             Clerk
Justice John C. Sheehy delivered the Opinion of the Court.



     The State Compensation Insurance Fund appeals from a judgment
of the Workers1 Compensation Court ordering the Fund to return
monies to the claimant. We affirm.
     In this case we hold principally that the Workers1
Compensation Court had subject matter jurisdiction to compel the
State Compensation Insurance Fund, where no prior determination had
been made as to subrogation rights by the Division of Workers1
Compensation, to return subrogation funds to the claimant.
     Respondent David Malek suffered an injury compensable under
the Workers1 Compensation Act when he was injured in an automobile
accident on February 8, 1985. Malek fully settled the resulting
third-party action for $25,000, the third-party driver's insurance
policy limits.
     On March 27, 1985, a claims examiner for the State
Compensation Insurance Fund (Fund) informed Malek that the Fund was
entitled to a 50 percent subrogation interest in his third-party
settlement under the provisions of 5 39-71-414, MCA.          Malek
thereafter paid the sum of $12,500 to the Fund.
     Malek retained counsel in 1988 to pursue a claim for permanent
partial disability benefits.     Shortly thereafter Malek filed a
petition with the Workers' Compensation Court seeking, amongst
other things, to have the $12,500 subrogation payment refunded, as
Malek alleged he had not been fully informed of the subrogation
issues, and that until action by the Division no subrogation
entitlement in favor of the Fund existed.
     The Fund filed a motion to dismiss the portion of the petition
relating to the determination and allocation of subrogation under
the provisions of subsection (5) of 5 39-71-414, MCA. That section
reads:
     (5) If the amount of compensation and other benefits
     payable under the Workers' Compensation Act have not been
     fully determined at the time the employee, the employee s
     heirs or personal representatives, or the insurer have
     settled in any manner the action as provided for in this
     section, the department shall determine what proportion
     of the settlement shall be allocated under subrogation.
     The department's determination may be appealed to the
     workerst compensation judge.
     The Workers' Compensation Court, pursuant to 5 39-71-414(5),
MCA, granted the Fund's motion to dismiss the subrogation issue.
It then ordered the Fund to return immediately the $12,500 payment
to the claimant.
     The Fund now appeals the lower court's order, maintaining that
the Workerst Compensation Court was without jurisdiction to order
a return of the subrogation funds.
     This Court recently held, in First Interstate Bank v. Tom
Sherry Tire, Inc. (1988), - Mont.          -,     764 P.2d 1287, that the
Workerst Compensation Court is without jurisdiction over the issue
of subrogation where a third-party settlement precedes a petition
for full and final settlement of workers' compensation benefits.
In such a situation, under the statute, the Workerst Compensation
Division,   and    not    the   Workers'        Compensation   Court,   has
jurisdiction.
     The issue now before this Court requires a closer look at 5
39-71-414(5), MCA, and the jurisdictional powers of the Workers'
Compensation Court.
     The    Workerst     Compensation   Court       is   granted   general
jurisdiction by 5 39-71-2905, MCA.      This statute reads in part:
     Petition to workerst compensation judge. A claimant or
     an insurer who has a dispute concerning any benefits
        under Chapter 71 of this title may petition the workers'
        compensation judge for a determination of the dispute
        after satisfying dispute resolution requirements
        otherwise provided in this chapter.


        . . .The workersf compensation judge has exclusive
      jurisdiction to make determinations concerning disputes
      under Chapter 71     . . ..
        In State ex rel. Uninsured Employersf Fund v. Hunt (1981), 191
Mont. 514, 625 P.2d 539, this Court, in review of H 39-71-2905,
MCA, stated that:
      [The Workers' Compensation Court] has been given broad
      powers concerning benefits due and payable to claimants
      under the Act. It has the power to determine which of
      several parties is liable to pay Workersf Compensation
      benefits, or if subrosation is allowable, what
      apportionment of liability may be made between insurers,
      and other matters that so beyond the minimum
      determination of the benefits payable to an employee.
      (Emphasis added.)
      Amendments to   !j   39-71-2905, MCA, since Hunt, have mandated
certain dispute resolution requirements to be comported with prior
to petitioningthe Workers' Compensation judge. Subrogation rights
under    §   39-71-414(5), MCA, are not included in those dispute
resolution requirements.
      Hence we have a situation where the Fund claims that, under
3   39-71-414(5), MCA, and this Court's interpretation of that
statute in First Interstate, the Workers' Compensation Court has
no jurisdiction at this time as to subrogation. On the other hand,
the claimant maintains that the Workers' Compensation Court's
jurisdiction extends to the dispute here by virtue of 5 39-71-
2905, MCA, and our interpretation of that statute in Hunt.
     We Concur with the claimant on this issue.          The Workers1
Compensation Court noted correctly that the determination of the
amount of subrogation is a matter to be addressed initially by the
Division, under   §   39-71-414 (5), MCA.   The Court then pointed out
that the Fund had no right to be in possession of subrogation funds
until a Division determination as to subrogation rights occurred.
The claimant is disputing the Fund's right to claim any subrogation
funds prior to the Division determination, and it was within the
courtls jurisdiction, as authorized by 5          39-71-2905, MCA, to
determine this dispute over benefits.
     There can be no question that the State Fund is improperly in
possession of $12,500 of claimant's third-party settlement, as the
rights to subrogation had not been          first determined by   the
Division. The Workers' Compensation Court had jurisdiction in this
dispute over benefits, and ruled properly.       We hereby affirm the
Workers1 Compensation Court order to the State Fund to return the
$12,500 to claimant, along with accrued interest.

                                        6             . h
                                                      J h
                                                     Justice
We Concur:
