                                                                                      April 1 2008


                                     DA 06-0404

           IN THE SUPREME COURT OF THE STATE OF MONTANA
                                     2008 MT 102



JASON HARRISON,

          Petitioner and Appellee,

    v.

LIBERTY NORTHWEST INSURANCE CORPORATION,

          Respondent and Appellee,

    and

STILLWATER MINING COMPANY,

          Respondent and Appellant.


APPEAL FROM:      Montana Workers’ Compensation Court, WCC No. 2005-1222
                  Honorable James Jeremiah Shea, Presiding Judge


COUNSEL OF RECORD:

           For Appellant:

                  James R. Hintz, Crowley, Haughey, Hanson, Toole & Dietrich, P.L.L.P.,
                  Billings, Montana

           For Appellee Harrison:

                  Andrew J. Utick, Utick Law Firm, Helena, Montana

           For Appellee Liberty Northwest Insurance Corporation:

                  Larry W. Jones, Law Offices of Larry W. Jones, Missoula, Montana



                                              Submitted on Briefs: January 31, 2007

                                                         Decided: April 1, 2008
Filed:

         __________________________________________
                           Clerk




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Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1     In November 2002 Jason Harrison (Harrison) filed an occupational disease claim

while working for Stillwater Mining Company (Stillwater) in Columbus, Montana. After

treatment and achieving maximum medical improvement (MMI), Harrison and Stillwater

entered into a settlement agreement under which medical benefits were reserved.

Subsequently, Harrison went to work for Derek Brown Construction Company (Derek

Brown). He suffered an industrial injury in April 2004. Derek Brown’s insurer, Liberty

Northwest Insurance Corporation (Liberty), paid Harrison’s medical benefits including

the necessary spinal surgery under a reservation of rights. In January 2005 Harrison filed

a Petition in the Workers’ Compensation Court (WCC) to determine whether Stillwater

or Derek Brown was responsible for his medical claim. The WCC determined that

Stillwater was liable. Stillwater appeals. We affirm.

                                          ISSUE

¶2     The dispositive issue on appeal is whether the WCC erred in concluding that

Stillwater was responsible for payment of Harrison’s medical costs and disability

benefits.

                 FACTUAL AND PROCEDURAL BACKGROUND

¶3     Harrison worked for Stillwater as an underground equipment operator from May

2000 until July 2003. On November 13, 2002, he reported to his employer that he was

suffering from lower back and neck pain as a result of his job duties. Shortly thereafter

Harrison saw a physician, Dr. McDowell, and reported that he was experiencing lower

back pain, radicular leg pain, neck discomfort, and some tingling and numbness in his


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arms. He told the doctor he had been experiencing these symptoms for approximately six

months and attributed them to his work at Stillwater. On December 3, 2002, Stillwater

accepted Harrison’s claim under the Occupational Disease Act and provided him

temporary total disability benefits.         In January 2003, upon Dr. McDowell’s

recommendation, Harrison began seeing a neurologist named Dr. Quenemoen. He saw

Quenemoen on several occasions between January and June 2003 for tests and treatment.

In May 2003 Quenemoen told Stillwater that Harrison had reached maximum medical

improvement. In July Quenemoen restated that Harrison was at MMI with a total whole

person impairment of 5 percent.

¶4     After Harrison left his job at Stillwater he moved to Helena, Montana, to enroll in

the September 2003 term at Helena College of Technology (HCT) for vocational re-

training.   Also in September 2003 the Montana Department of Labor and Industry

(DOLI) Employment Relations Division approved a settlement agreement between

Harrison and Stillwater. Under this agreement Stillwater paid Harrison $20,339 and

Harrison reserved further medical and hospital benefits.

¶5     Harrison did not complete vocational re-training at HCT but rather left Helena and

moved to Fort Benton, Montana, for family reasons in October 2003. While in Fort

Benton, Harrison worked for a builder for approximately one month doing residential

construction, remodeling, carpentry, drywall, and some concrete work. After about a

month in Ft. Benton, Harrison returned to Helena and worked various short term

construction, equipment maintenance and carpentry jobs until he began working for

Derek Brown in mid-April 2004. During the time between his jobs at Stillwater and


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Derek Brown, his back pain subsided but he continued experiencing numbness and

tingling in his legs and he occasionally took the medications prescribed by Quenemoen.

On April 23, 2004, Harrison suffered a back injury while running a vibrator machine

during a concrete pour at a Derek Brown work site.           He submitted a claim for

compensation to Derek Brown on April 29, 2004. On the claim form, Harrison indicated

that he believed that he had aggravated his low back condition by performing the heavy

concrete work.

¶6    In May 2004 Harrison began seeing Dr. Varnavus, a neurosurgeon, for diagnosis

and treatment. In June 2004 Liberty, Derek Brown’s insurer, denied Harrison’s injury

claim but in July 2004 agreed to cover the claim. Varnavus indicated in a September

2004 letter to Liberty that he believed Harrison’s condition was directly connected to the

injury Harrison incurred while working for Stillwater. After extended but unsuccessful

treatment, Varnavus recommended spinal surgery. In October 2004 Liberty refused to

authorize the recommended surgery and in November Liberty notified Harrison that it

was terminating payment of benefits.

¶7    On January 10, 2005, Harrison filed a Petition for an Emergency Hearing with the

WCC. On January 11, 2005, then-WCC Judge McCarter held a telephone conference

with counsel for Harrison, Liberty and Stillwater, at the conclusion of which Liberty

agreed to pay Harrison’s reasonable medical expenses including surgical expenses

subject to a claim for indemnification from Stillwater. Harrison’s surgery was performed

in July 2005.




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¶8     On May 12, 2006, WCC Judge Shea issued his Findings of Fact, Conclusions of

Law and Judgment. The court made numerous findings pertaining to Harrison’s various

physicians’ tests, diagnoses and treatments. The WCC concluded, among other things,

that (1) Liberty had the burden of proving, by a more-probable-than-not standard, that

Stillwater was the responsible party; (2) Varnavus was the only treating physician to offer

an opinion as to whether Harrison’s injury while working at Derek Brown arose from his

earlier injury at Stillwater; (3) Harrison and Stillwater, at the time they entered into their

settlement agreement, were operating under the mutual and material mistake of fact that

surgery would not be required for Harrison’s injury; (4) such a mutual mistake warrants

the reopening of the settlement agreement; and (5) Stillwater must indemnify Liberty for

the payments Liberty made to Harrison.

¶9     Stillwater filed a timely appeal of the WCC’s ruling.

                               STANDARD OF REVIEW

¶10    The standard of review we employ for this type of case was set forth in detail in

Gamble v. Sears, 2007 MT 131, ¶¶ 20-22, 337 Mont. 354, ¶¶ 20-22, 160 P.3d 537, ¶¶ 20-

22. As this detailed standard is applicable to the case before us, we repeat it in its

entirety.

¶11    We conduct de novo review of the WCC’s conclusions of law in order to

determine whether they are correct. Flynn v. Uninsured Employers’ Fund, 2005 MT

269, ¶ 11, 329 Mont. 122, ¶ 11, 122 P.3d 1216, ¶ 11. As for the WCC’s findings of fact,

however, our review is both deferential and limited in scope. We simply review the

WCC’s factual findings to determine whether they are supported by substantial credible


                                          6
evidence. In re Abfalder, 2003 MT 180, ¶ 10, 316 Mont. 415, ¶ 10, 75 P.3d 1246, ¶ 10.

We have stated that substantial credible evidence is that which a reasonable mind could

accept as adequate to support a conclusion. Simms v. State Compensation Ins. Fund,

2005 MT 175, ¶ 11, 327 Mont. 511, ¶ 11, 116 P.3d 773, ¶ 11. Indicating the high level of

deference this Court accords to the WCC’s factual findings, we have stated that evidence

will be considered substantial even if it is contradicted by other evidence, even if it is

somewhat less than a preponderance, and even if it is inherently weak. EBI/Orion Group

v. State Compensation Mut. Ins. Fund, 249 Mont. 449, 453, 816 P.2d 1070, 1073 (1991);

Simms, ¶ 11; Wolfe v. Webb, 251 Mont. 217, 230, 824 P.2d 240, 248 (1992). However, it

must be more than a mere “scintilla” of evidence and it must rise above the level of

“trifling or frivolous.” Simms, ¶ 11; EBI/Orion Group, 249 Mont. at 453, 816 P.2d at

1073. As for the scope of our review, we do not resolve conflicts in the evidence, and we

do not consider whether evidence supports findings that are different from those made by

the WCC; rather, we confine our review to determining whether substantial credible

evidence supports the findings actually made by the WCC. Kloepfer v. Lumbermen’s

Mut. Cas. Co., 276 Mont. 495, 498-99, 916 P.2d 1310, 1312 (1996); Montana State Fund

v. Murray, 2005 MT 97, ¶ 19, 326 Mont. 516, ¶ 19, 111 P.3d 210, ¶ 19; In re Abfalder,

¶ 10.

¶12     The “substantial credible evidence” standard of review is further defined by rules

regarding our consideration of witness testimony. As for witnesses who testify in person

at trial, we defer to the WCC’s findings concerning credibility and the weight to be

accorded to this testimony. Kuntz v. Nationwide Mut. Fire Ins. Co., 1998 MT 5, ¶ 35,


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287 Mont. 142, ¶ 35, 952 P.2d 422, ¶ 35; Wilson v. Liberty Mut. Fire Ins., 273 Mont. 313,

319, 903 P.2d 785, 787-88 (1995). It is the WCC’s job to resolve any inconsistencies in a

witness’s testimony. Walls v. Travelers Indem. Co., 281 Mont. 106, 111, 931 P.2d 712,

716 (1997).    Ultimately, because an assessment of testimony is best made upon

observation of the witness’s demeanor and consideration of other intangibles that are only

evident during live testimony, we will not substitute our judgment for the WCC’s

judgment regarding credibility and the weight accorded to live witness testimony.

Wilson, 273 Mont. at 319, 903 P.2d at 787.

¶13    Conversely, we are in as good a position as the WCC to assess testimony

presented at trial by way of deposition. McIntyre v. Glen Lake Irr. Dist., 249 Mont. 63,

67, 813 P.2d 451, 454 (1991); White v. Ford, Bacon & Davis Texas, Inc., 256 Mont. 9,

13, 843 P.2d 787, 789 (1992). Therefore, we conduct de novo review of deposition

testimony. White, 256 Mont. at 13, 843 P.2d at 789. However, this independent review

of deposition testimony is only one component of our task on appeal. We must then

consider the deposition testimony in the context of the other relevant evidence in order to

properly assess the factual findings at issue. McIntyre, 249 Mont. at 67-68, 813 P.2d at

454; White, 256 Mont. at 13, 843 P.2d at 789. As we have stated, even where we conduct

de novo review of deposition testimony, we are ultimately restricted to determining

whether substantial credible evidence supports the WCC’s findings. Weber v. Public

Employees’ Retirement Bd., 270 Mont. 239, 245, 890 P.2d 1296, 1299 (1995).

                                     DISCUSSION




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¶14    Issue: Did the WCC err in concluding that Stillwater was responsible for payment
       of Harrison’s medical costs and disability benefits?

¶15    In resolving this issue we first address whether the WCC’s factual findings were

supported by substantial credible evidence. Our review of the record reveals that the

WCC received testimony from Harrison and from two of Harrison’s treating physicians.

Harrison testified in person before the WCC judge as well as by deposition while

Varnavus and Quenemoen provided testimony by deposition alone.

¶16    Stillwater does not expressly challenge any of the WCC’s declared factual

findings; however, it does challenge the conclusion of law set forth below, which

contains factual elements. Therefore, we will review the factual component of this

conclusion to determine if it is supported by substantial credible evidence.

¶17    Stillwater challenges the following legal conclusion:

       Varnavus is the only treating physician to offer an opinion as to whether
       [Harrison’s] injury while working at Derek Brown arose from [Harrison’s]
       earlier injury at Stillwater. Dr. Varnavus opined that it did. When Dr.
       Quenemoen was asked whether or not the Derek Brown injury was
       attributable to the earlier Stillwater injury, Dr. Quenemoen responded that
       he did not know. Therefore, the [c]ourt is left with the uncontroverted
       testimony of Dr. Varnavus.

¶18    Stillwater disputes the “uncontroverted” characterization of Varnavus’s opinion

that the injury Harrison experienced while working at Derek Brown was attributable to

the earlier Stillwater injury.    Stillwater maintains that because both Harrison and

Quenemoen provided testimony that refuted Varnavus’s opinion, the WCC’s

“conclusion” to the contrary is not supported by substantial credible evidence.




                                          9
¶19    Liberty counters that the WCC justifiably gave greater weight to Varnavus’s

expert opinion testimony than it did to Harrison’s recollection testimony. The insurer

notes that Varnavus testified from written medical notes taken during Harrison’s

treatment whereas Harrison testified only from his own memory. Citing the Commission

Comment to M. R. Evid. 803(4), Liberty opines that Harrison’s description of his

symptoms when he visited Varnavus was accurate because Harrison was motivated to

obtain proper diagnosis and treatment; therefore, if Harrison’s current testimony based on

recollection conflicts with Varnavus’s testimony based on written contemporaneous

notes, Varnavus’s testimony as to Harrison’s complaints is entitled to the greater weight.

¶20    Additionally, Liberty argues that Quenemoen acknowledged that he was

unfamiliar with the term used by Varnavus in diagnosing Harrison with “segmental

instability.”   Liberty asserts that because Quenemoen could not properly diagnose

Harrison’s condition, Varnavus’s testimony once again was properly given greater

weight.

¶21    Lastly, Liberty argues that if Varnavus and Quenemoen presented conflicting

testimony, it is the WCC’s role to resolve such conflicts.

¶22    As indicated above, the WCC is responsible for resolving conflicting testimony

and assigning the weight to be given to witness testimony. Gamble, ¶¶ 20-21. While

Quenemoen’s testimony conflicted with Varnavus’s and may have supported different

findings leading to different conclusions, the WCC accorded greater weight to

Varnavus’s testimony, as it was entitled to do. Our review of the record confirms that the

WCC’s factual findings, whether they are included in the fact-finding or the legal


                                         10
conclusion section of the WCC’s Order, are supported by substantial credible evidence;

therefore we will not disturb its conclusions based on those findings. Lastly, we disagree

with the court’s characterization that Varnavus’s testimony is “uncontroverted,” but

conclude that this erroneous description does not change the fact that there was

substantial evidence to support the court’s decision.

¶23     We next determine whether the WCC correctly applied the “causal” standard as

opposed to the “aggravated” standard in determining Stillwater’s liability. Stillwater

maintains that the WCC erred in its determination that Harrison’s Derek Brown injury

arose from his earlier Stillwater injury, and argues that the Derek Brown injury was an

intervening injury and a permanent aggravation of the Stillwater injury, relieving it of

liability.   Stillwater provides extensive legal authority for its position; however, its

argument is irreconcilable with Varnavus’s unequivocal testimony that Harrison’s

Stillwater injury and evolving degenerative spinal condition were the causes of the Derek

Brown injury. In many of the cases upon which Stillwater relies, the WCC had to

determine whether the second injury was a new “permanent aggravation” or a

“recurrence of symptoms” of the initial occupational disease or injury. E.g., Caekaert v.

State Comp. Mut. Ins. Fund, 268 Mont. 105, 885 P.2d 495 (1994); Liberty N.W. Ins. v.

Champion Intern., 285 Mont. 76, 945 P.2d 433 (1997). In Caekaert, we explained that

“[a] later injury is compensable by the original carrier if it is a direct and natural result of

a compensable primary injury and not the result of an independent intervening cause

attributable to the claimant. . . . If the original injury or occupational disease was the

cause of the current condition, the [original carrier] is liable.” Caekaert, 268 Mont. at


                                           11
112, 885 P.2d at 499. In making this determination, the court had to rely on the medical

evidence presented, resolve any conflicting testimony and assign weight to the testimony.

Again, in the case before us, the WCC did just that, and after weighing the evidence,

concluded that Varnavus’s testimony was credible and convincing.            As determined

above, because the record supports the court’s findings, we will not disturb the court’s

conclusions.

¶24    Lastly, we determine whether the WCC erred in re-opening the parties’ settlement

agreement. As we explained in Gamble, a settlement agreement is a contract; therefore,

we apply contract law to determine whether the agreement is valid and enforceable.

Gamble, ¶ 24 (citation omitted). At the time of settlement, the WCC determined that

Stillwater and Harrison did not believe Harrison’s injury would require surgery and

therefore the settlement terms did not include consideration of this possibility. As a

result, the parties were operating under a material mistake of fact.

¶25    Stillwater’s argument that the WCC’s conclusion is incorrect is based on its

continued assertion that Harrison’s condition was aggravated by the Derek Brown injury

rather than the Derek Brown injury stemming from the Stillwater injury.             Having

determined that the WCC’s finding to the contrary is supported by the record, we analyze

only whether the circumstances allowing for re-opening a settlement agreement are

present here.

¶26    Again, as we stated in Gamble, a “material” fact is “a vital fact upon which [the

parties] based their bargain,” and a mutual mistake regarding a material fact is a mistake

that is “so substantial and fundamental as to defeat the object of the parties in making the


                                         12
contract.” Gamble, ¶ 27. Additionally, we have determined previously that a settlement

agreement must be re-opened if, when the parties entered into it, they were mutually

mistaken regarding a fact that was material to the agreement. Kienas v. Peterson, 191

Mont. 325, 328-30, 624 P.2d 1, 2-3 (1980); Weldele v. Medley Development, 227 Mont.

257, 260, 738 P.2d 1281, 1283 (1987); Kimes v. Charlies Fam. Din. & Donut Shop, 233

Mont. 175, 177, 759 P.2d 986, 988 (1988); Gamble, ¶ 26.             Moreover, we have

determined that the nature and extent of a claimant’s physical condition is a fact that is

material to an agreement settling an injury claim. Kienas, 191 Mont. at 330, 624 P.2d at

3; Weldele, 227 Mont. at 261, 738 P.2d at 1283; Kime, 233 Mont. at 178, 759 P.2d at 988;

Gamble, ¶ 27.

¶27   Here, prior to execution of the settlement agreement, Harrison had been diagnosed

with early degenerative changes in his lumbar spine but had been told by both McDowell

and Quenemoen that surgical intervention was not indicated at that time. The diagnoses

and prognoses of both McDowell and Quenemoen are undisputed. Subsequently, a more

comprehensive diagnosis was made, and it was medically determined that corrective

surgery was in fact required. This fact, coupled with the WCC’s conclusion that the

operable condition stemmed from the earlier Stillwater injury, demonstrates that there

was a material misunderstanding of the nature and extent of Harrison’s condition at the

time of the settlement. Therefore, we conclude that the court did not err in concluding

that a re-opening of the settlement agreement was warranted.

                                    CONCLUSION




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¶28    For the foregoing reasons, we affirm the WCC’s Findings of Fact, Conclusions of

Law and Judgment imposing liability for Harrison’s medical costs and disability benefits

on Stillwater.


                                                      /S/ PATRICIA COTTER


We concur:

/S/ KARLA M. GRAY
/S/ JOHN WARNER
/S/ JAMES C. NELSON
/S/ JIM RICE




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