Talbot v. WMK-Davis, LLC

Talbot v. WMK-Davis, LLC, 2016 MT 247 (Oct. 4, 2016) (Cotter, J.; McKinnon, J., dissenting) (6-1, aff’d)

Issue: (1) Whether the district court erred in determining that Montana courts will not conduct a choice of law analysis when determining the validity of a workers’ compensation subrogation lien under Oberson v. Federated Mutual Insur. Co.; and (2) whether the district court erred in grating summary judgment to Talbot.

Short Answer: (1) No; and (2) no.


Facts: Jason Talbot, an Oklahoma resident, was seriously injured in March 2014 after being struck by a vehicle while crossing an intersection in Billings. The vehicle was driven by Johnathan Tokarksi, an employee of EMK-Davis, LLC. Talbot was employed by Cudd Pressure Control, Inc., on whose behalf he had traveled to Montana for business. Talbot filed a work comp claim in Oklahoma, which is ongoing.

Talbot was severely injured in the accident, suffering an extensive brain injury as well as multiple orthopedic injuries. His medical bills exceed $680,000 and are still accruing; his economist estimates that Talbot’s loss of earning capacity is valued in excess of $3.4 million. Although Tokarski carried high limits of liability insurance, the limits were inadequate to fully compensate Talbot. Cudd does not argue that Talbot has been made whole by Tokarski.

In August 2014, Talbot sued Tokarski in Billings state court, later amending his complaint to name WMK-Davis. Cudd moved to intervene in April 2015 to assert a workers’ compensation subrogation lien against Talbot’s potential recovery. Such an action is allowable in Oklahoma, where there is a statutory policy favoring subrogation.

Procedural Posture & Holding: The parties filed cross-motions for summary judgment on the issue of whether Cudd could assert a workers’ compensation lien in the underlying action. The district court held that Montana law applied, and that subrogation is not allowed until the injured worker is made whole. Cudd appeals, and the Supreme Court affirms.

Reasoning: The Court discusses its decisions in Oberson and Phillips v. General Motors Corp., clarifying that the analytical basis for its decision in Oberson was Article II, section 16 of the Montana Constitution, which prohibits the enforcement of any statute or court decision that deprives an employee of his right to full legal redress.

The Court concludes that Montana courts should use the Restatement to determine choice of law issues involving workers’ compensation subrogation liens to tort recoveries, but concludes Oberson was correctly decided and reaffirms that the rigid test from § 185 does not apply in Montana. It concludes that the constitutional provision forbidding subrogation before an injured worker is made whole is evidence of an exceptionally strong public policy interest, as contemplated by § 90 of the Restatement.

Talbot’s employer, Cudd, sent him to Montana to perform a job. While here, he was seriously injured by a third party’s negligence. Talbot’s action against the tortfeasor arises in Montana, and Montana has a strong tie to — and a strong interest in resolving — the underlying tort action. Cudd’s intervention in the action to assert a subrogation lien directly implicates Article II, Section 16’s guarantee of “full legal redress for injury incurred in employment for which another person may be liable.” Because Talbot undisputedly will not be made whole for his injuries, his “full legal redress” would be denied if his employer is allowed to subrogate his recovery.

Justice McKinnon’s Dissent: Based on Phillips, Justice McKinnon would remand so the district court can apply the most significant relationship test to the underlying tort action. If, pursuant to §§ 6(2) and 145 of the Restatement, Montana law is the appropriate choice of law for the underlying tort action, then Montana’s made-whole doctrine would foreclose payment of Cudd’s subrogation lien until Talbot has been fully compensated for his injuries. While a state’s interest in subrogation may be relevant to deciding the choice of law for the underlying tort action, it is subsumed into consideration of the §§ 6(2) and 145 factors.