Supreme Court Overturns Billings Police Back-Pay Ruling

Legal Exams

The Montana Supreme Court has overturned a judge's ruling that the City of Billings owes 27 current and former police officers $2.7 million in back pay, costs and penalties in a dispute over how longevity pay should be calculated.

District Judge Nels Swandal ruled in 2011 that the contract awarded longevity pay from the beginning of an officer's employment. The city and union officials said longevity pay was earned based on completed years of service.

The Billings Gazette reports that because the contracts could be interpreted both ways, the Supreme Court sent the case back to District Court for a trial to determine the parties' intent in the longevity pay portion of the contract.

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Workers’ Compensation Subrogation of Administrative Fees and Costs

When a worker covered by workers’ compensation makes a claim against a third party, the workers’ compensation insurance retains the right to subrogate against any recovery from that third party for all benefits paid to or on behalf of a claimant injured at work. When subrogating for more than basic medical and indemnity benefits, the Texas workers’ compensation subrogation statute provides that “the net amount recovered by a claimant in a third‑party action shall be used to reimburse the carrier for benefits, including medical benefits that have been paid for the compensable injury.” TX Labor Code § 417.002.

In fact, all 50 states provide for similar subrogation. However, none of them precisely outlines which payments or costs paid by a compensation carrier constitute “compensation” and can be recovered. The result is industry-wide confusion and an ongoing debate and argument with claimants’ attorneys over what can and can’t be included in a carrier’s lien for recovery purposes.

In addition to medical expenses, death benefits, funeral costs and/or indemnity benefits for lost wages and loss of earning capacity resulting from a compensable injury, workers’ compensation insurance carriers also expend considerable dollars for case management costs, medical bill audit fees, rehabilitation benefits, nurse case worker fees, and other similar fees. They also incur other expenses in conjunction with the handling and adjusting of workers’ compensation claims. Workers’ compensation carriers typically assert, of course, that, they are entitled to reimbursement for such expenditures when it recovers its workers’ compensation lien. Injured workers and their attorneys disagree.

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