INSURANCE: Injured driver of leased mail truck employed by USPS contractor excluded from auto policy coverage under truck policy by Comp Exclusion because contractor had statutory obligation to provide comp even though it did not do so… summary judgment for insurer on remand from reversal of summary judgment for insurer based on Employee Exclusion… Morris.

Triple L maintained contracts with the USPS to deliver mail to rural areas near East Glacier. It owned no trucks and directly employed no drivers, but contracted with 3rd parties for trucks and drivers. It obtained its drivers from Phoenix, RCM. and leased its trucks from Penske.

Jeffrey Love is president of Triple L. His wife Milka is president/secretary/treasurer. Triple L initially employed drivers to perform its USPS contracts. Milka formed Phoenix in 2004 and Triple L transferred its drivers to Phoenix partly as a means of avoiding higher work comp rates that resulted from Jeffrey having been injured while working for Triple L. Triple L and Phoenix are registered under the same email address and operate from Loves’ residence.

John Oeleis was allegedly injured while operating a tailgate lift on a Triple L leased truck 12/7/16. He submitted a claim under Phoenix’s comp policy and filed a separate action against Triple L and Penske in Gallatin Co. State Court alleging negligence and violation of Montana’s OSHA.

State Farm insures the trucks that Triple L leases from Penske. The Employee Exclusion bars coverage of damages for injury to Triple L’s employees that arise out of that employee’s employment. The Workers’ Compensation Exclusion bars coverage of damages for injury that would otherwise be covered by a comp policy.

State Farm issued a reservation of rights letter to Triple L and filed this declaratory action. It argued in its initial summary judgment briefing that the policy excluded Oeleis’s injuries under both exclusions. Triple L argued that it covered Oeleis’s injuries because Phoenix employed Oeleis. The Court granted summary judgment for State Farm, finding that Oeleis served as a Triple L employee and that the Employee Exclusion barred coverage because he qualified as an employee under Montana’s 4-factor “control test.” The 9th Circuit reversed (2-1 memorandum). On remand, this Court ordered supplemental briefing and conducted a new hearing 10/27/22. State Farm contends in its supplemental briefing that the Comp Exclusion bars coverage.

The 9th Circuit determined that the Court erred in applying Montana’s “control test” rather than analyzing the Employee Exclusion according to its “usual, common sense meaning.” It looked to the Montana Supreme Court’s interpretation of the “usual and common sense meaning” of “employee” in the context of insurance exclusions that seek to bar coverage for injuries to an insured’s employees. Horton (Mont. 2003) determined that “employee” in this context instead “refers to all those engaged in services for wages and salary by another.” The 9th Circuit concluded that Oeleis was not Triple L’s employee because Phoenix — not Triple L — paid his wages.

This Court’s initial summary judgment declined to address State Farm’s argument that the Comp Exclusion also applies and the 9th Circuit did not consider the Comp Exclusion.

The Comp Exclusion states: “There is no coverage for an insured or for that insured’s insurer for any obligation under any type of workers’ compensation, disability, or similar law.” State Farm asserts that the plain language bars coverage because Triple L was obligated under the Montana WCA to provide comp. Triple L responds that the Comp Exclusion does not apply or that its language is ambiguous requiring construction in favor of extending coverage to Triple L.

“The party seeking the benefit of a particular policy provision bears the burden of proving its application.” Ribi (Mont. 2005). State Farm argues that the WCA supplies the standard for analyzing the Comp Exclusion. Triple L urges the Court to avoid looking to the WCA to understand the exclusion’s meaning and scope and instead import the 9th Circuit’s Employee Exclusion analysis into its evaluation of the Comp Exclusion. The Court declines the invitation. The plain text of the Comp Exclusion indicates clearly that comp law supplies the legal standard. The Comp Exclusion specifies that the policy bars coverage “for any obligation under” comp law.

The 9th Circuit opinion additionally draws an explicit distinction between the scope of insurance law and comp law. Exclusions to insurance coverage generally must be “narrowly and strictly construed because they run contrary to the fundamental protective purpose of an insurance policy.” Triple L (quoting ALPS (Mont. 2021)). Comp law sweeps more broadly due to its “distinct protective purpose of providing benefits to a broader category of workers.” Triple L (citing MCA 39-71-105(1); Carlson (Mont. 1983).

Courts in this District have applied Montana’s comp law when interpreting similar comp exclusions. Colmore (D.Mont. 2007) concerned insurance liability for the death of a ranch employee. Tutvedt (D.Mont. 2012) involved insurance liability for a farm employee’s injuries. They analyzed the comp exclusions under the WCA and concluded that they barred coverage.

Triple L relies on Animals of Montana (D.Mont. 2015) to argue that the definition of “employee” in the State Farm policy should dictate the Court’s analysis. It addressed potential insurance coverage under the employer’s liability policy for injuries suffered by a short-term employee who had been fatally mauled by a grizzly. The comp exclusion barred coverage “for any injury to any employee(s) &/or independent contractor(s) &/or volunteer(s).” The insurer admitted that potential application of the exclusion “ultimately depends” on the policy’s definition of “employee” and Judge Lynch concluded that it controlled. The definition excluded temporary workers. The policy failed to define “temporary worker.” The insurer urged the Court to look to the WCA for guidance as to who constitutes a “temporary worker.” Lynch rejected this invitation when the policy failed to define “temporary worker” in any manner, let alone in a manner that had been “crafted in consideration of workers’ compensation law.” He concluded that a material fact question remained as to whether the worker qualified as a “temporary employee” and denied summary judgment on the basis that the insurer had failed to prove his employment status.

Animals is distinguishable because its exclusion differs significantly from the State Farm Comp Exclusion and because State Farm has made no claim that the definition of “employee” should be used in determining coverage, but argues instead that the WCA’s statutory scheme controls the definition of “obligation” under comp law.

State Farm argues that Triple L owed Oeleis an obligation under the WCA to obtain comp. Triple L counters that it owed no obligation because Phoenix employed him, and additionally claims that the Comp Exclusion applies only where an insured seeks coverage for obligations arising directly from a comp claim, and no obligation arose because it never obtained comp for Oeleis. Both of Triple L’s arguments falter.

First, Triple L cannot rebut the presumption that it employed Oeleis for purposes of comp law. MCA 39-71-118(6) (employees who are leased to another company are “presumed to be under the control and employment” of the company to which they are leased). The 9th Circuit left undisturbed this Court’s findings that “Triple L maintained the right to exercise significant control over the detail of Oeleis’ work” and that it “retained exclusive supervisory control over all aspects of the bulk mail delivery operations and equipment, particularly including safety.” Triple L — not Phoenix — retained control over “all aspects” of Oeleis’s work. MCA 39-71-117(3). Oeleis qualifies as a Triple L employee for purposes of the WCA.

Second, Triple L misconstrues the nature of obligations under comp laws. Comp exclusions typically preclude coverage for injuries where an employer has an obligation under comp law that could have been handled through a comp claim. Producers Dairy (Haw. 1987). Whether an employer obtained comp is immaterial. To reward an employer for failing to abide by its statutory obligations would undermine public policy and create perverse incentives for employers. MCA 39-71-105. “Where an employer has failed to comply with the workers’ compensation statute, liability in actions for damages expressly permitted by the workers’ compensation statute in that situation” constitutes an obligation under workers’ compensation law. Tri-State (Wash. 1984). The insured in Evanston (C.D.Cal. 2010) had chosen not to obtain comp. The Court determined nevertheless that the policy barred coverage for the worker’s injuries “because the Policy at issue explicitly excludes [the insured’s] obligations under workers’ compensation law.”

Oeleis qualifies as Triple L’s employee under the WCA. MCA 39-71-118(1)(a). It owed him an obligation under the WCA to obtain comp. §401(1). It organized Phoenix in part to avoid higher comp rates after Jeffrey Love was injured while working for Triple L. Triple L now provides comp for its drivers and has admitted that not obtaining comp for Oeleis was a mistake. That it failed to obtain comp for him does not alter its obligations under the WCA. The Comp Exclusion in the State Farm policy bars Triple L’s coverage.

Triple L’s efforts to identify ambiguity in the policy are unavailing. It argues that “Insured” could mean either Triple L or Oeleis and that “Insurer” could mean either State Farm or some other insurer. An “obligation,” according to Triple L, means an obligation imposed on an insured “pursuant to a workers’ compensation or disability claim.” These purported inconsistencies differ markedly from the conflicting provisions in Holeman (Mont. 1998) and Mitchell (Mont. 2003). The policy in Holeman imposed contradictory requirements on claimants that made compliance with both provisions impossible. The policy in Mitchell contained limitations that contravened a consumer’s reasonable expectation of coverage and rose to the level of public policy violations. No such ambiguity exists here. A reasonable consumer would interpret “Insured” as Triple L, the listed insured in the State Farm policy. Triple L’s suggested interpretation of “obligation” mirrors its unsuccessful arguments as to applicability of the Comp Exclusion.

Summary judgment is granted for State Farm.

State Farm Mutual Auto Ins. v. Triple L, Penske Truck Leasing, and Oeleis, 44 MFR 287, 12/2/22.

Bradley Luck & Leah Handelman (Garlington, Lohn & Robinson), Missoula, for State Farm; Matthew Haus (Tarlow, Stonecipher, Weamer & Kelly), Bozeman, for Triple L; Mark Kovacich & Ben Snipes (Kovacich Snipes Johnson), Great Falls, for Oeleis.

SSD: Insufficient findings as to extent of migraines and wrist impairment, remanded for further findings… Kelley reversed… Johnston.

Ronald Trimp, 57, has 2 years of college and experience as a claims assistant and service rep for the VA, avionics manager for the Air Force, and cashier at Home Depot. He applied for SSD and disability insurance benefits 5/4/20 alleging that he became disabled 2/25/20 due to depression, glaucoma, RAD, PTSD, low back pain, left leg sciatica, headaches, confusion, COPD, right shoulder pain, limited motion in his right shoulder, left shoulder pain, weakness in his right wrist, numbness in both hands, and hypoxia. ALJ Michelle Kelley conducted a hearing and found that he had the severe impairments of COPD, lumbar DDD, left hip degenerative joint disease, wrists degenerative joint disease, migraines, mild neurocognitive disorder, PTSD, depression, and anxiety, but that he was not disabled because he had the RFC to perform jobs such as laundry worker, meat clerk, and store laborer. The Appeals Council denied his request for review. He appeals.

Trimp argues that Kelley erred at step 3 when she determined that his headache disorder did not medically equal Listing 11.02. A headache disorder meets 11.02 if the headaches occur at least once a week for 3 consecutive months despite adherence to prescribed treatment, their pain and symptoms are documented, and they significantly alter the claimant’s awareness or daily activity. Amanda G. (D.Mont. 2022); Radar (D.Idaho 2018). To determine whether a headache disorder is equal in severity & duration to the criteria in 11.02 an ALJ is to consider 1) the accepted medical source’s description of a typical headache event, 2) frequency of the headache events, 3) adherence to prescribed treatment; 4) side effects of the prescribed treatment, and 5) the limitations in functioning associated with the headache disorder. SSR 19-4p. If the ALJ concludes at step 3 that an impairment does not meet 11.02 she must discuss and evaluate the evidence that supported her decision. Lewis (9th Cir. 2001).

Kelley’s analysis under step 3 is flawed for 2 reasons. First, she failed to discuss and evaluate the medical evidence that supported her decision. She made no findings as to the nature & duration of Trimp’s migraines. She made no findings as to frequency of his migraines. She made no findings as to the treatment prescribed for the migraines. And she made to findings as to whether his migraines affected his awareness or daily activities.

Second, Kelley’s explanation for her decision reflects a misunderstanding of the medical equivalency evaluation that must be performed under Listing 11.02. She stated that Trimp’s headache disorder did not satisfy the criteria under 11.02 because she found no medical evidence of seizures or marked functional limitations. When applied to a headache disorder, 11.02 does not require medical evidence of a seizure. SSR 19-4p: Evaluating Cases Involving Primary Headache Disorders (2019 WL 4169635). The claimant need only show that the frequency, duration, and severity of headaches are medically equal to the criteria under Listing 11.02 for seizures.

On remand, Kelley should re-evaluate whether Trimp’s history of headaches satisfies Listing 11.02.

Kelley provides no indication whether she even considered the effect of Trimp’s wrist impairment when she made her RFC determination. She does not discuss the effect of the wrist impairment at all. The Court therefore cannot determine if her RFC assessment was based on a consideration of all of Trimp’s impairments.

Kelley’s error was not harmless. If she were to find that Trimp’s wrist impairment causes significant manipulative limitations she may conclude that he is unable to perform the jobs described at step 5. On remand, she should explain why his wrist impairment does not result in any work-related limitations.

Trimp v. SSA, 44 MFR 285, 11/14/22.

Eric Rasmusson (Rasmusson Law Offices), Missoula, of Counsel for Olinsky Law Group, for Trimp; Special AUSAs Erin Highland & Mark Smith.

SSD: ALJ Kelley failed to properly credit medical opinions, VE, Claimant’s testimony in denying benefits… remanded for immediate award… Morris.

Thomas Lehotsky received a 100% service-connected disability determination from VA. He applied for a period of disability and disability insurance benefits alleging disability beginning 6/1/18. ALJ Michele Kelley issued an unfavorable decision 5/26/21 and the Appeals Council denied his request for review. He seeks judicial review.

Kelley identified that Lehotsky had severe impairments of DDD, trochanteric bursitis, bilateral epicondylitis and degenerative joint disease bilateral elbows with mild ulnar neuropathy, right knee chondromalacia and medial meniscus tear, shoulder osteoarthritis, loose body, labral cyst, acromial impingement, tendinosis supraspinatus and bicipital tendons, and obesity, none of which met or medically equaled severity of a listed impairment. She found that he maintained the RFC to perform light work with some limitations and concluded that he was not disabled.

Lehotsky argues that Kelley erred starting at step 3 in the evaluation process because she improperly relied on his daily living activities in determining his RFC, resulting in an incomplete hypothetical posed to VE Ashley Bryars, and she failed to provide sufficient reasons for assigning little weight to his 100% VA rating. The Commissioner asserts that Kelley properly concluded that he was not disabled from 6/1/18 and that substantial evidence supported her assessment of his symptom allegations and she properly considered the VA medical evidence under the new regulations.

Evaluation of the medical opinion evidence remains subject to the amended regulations pertaining to claims filed after 3/27/17. Under the new regulations the ALJ “will no longer give any specific evidentiary weight to medical opinions; this includes giving controlling weight to any medical opinion.” These regulations do away with the traditional hierarchy between treating, examining, and non-examining physicians, and instead direct the ALJ to consider all medical opinions and prior administrative medical findings and evaluate their persuasiveness using listed factors including supportability, consistency, relationship with the claimant, specialization, and “other factors that tend to support or contradict a medical opinion or prior administrative medical finding.” Supportability and consistency represent the most important factors.

The regulations require the ALJ to articulate how persuasive they find all of the medical opinions and prior administrative medical findings and set forth “articulation requirements” for the evaluation. The ALJ must explain how they considered the supportability and consistency factors. The ALJ is generally not required to explain how they considered the remaining factors, but when the ALJ finds that 2 or more medical opinions are equally well-supported and consistent with the record but are not exactly the same, the ALJ must articulate how they “considered the other most persuasive factors.” The new regulations still require the ALJ to provide legally sufficient reasons supported by substantial evidence for finding a medical opinion unpersuasive. Sollars (D.Mont. 2021); Beason (C.D.Cal 2020).

Lehotsky claims disability based on DDD, left hip joint deterioration, neuromas in both feet, missing nerves in his left foot, bilateral shoulder dysfunction and pain, high blood pressure, high cholesterol, gastrointestinal reflux disease, and hyperthyroidism. Kelley found that these “impairments could reasonably be expected to cause Lehotsky’s symptoms” but that his statements as to their intensity, persistence, and limiting effects were “not entirely consistent with the medical evidence and other evidence in the record.” She concluded that the medical evidence did not support his claimed functional compromise. She considered his treatment records, the state agency medical consultants preparing his Disability Determination Services opinion, a VE, and testimony from Lehotsky.

Lehotsky argues that Kelley failed to properly consider the evidence underlying his 100% VA disability. Prior administrative findings and decisions do not bind an ALJ. §404.1504. The new regulations require that an ALJ consider only “the supporting evidence underlying the other government agency or nongovernmental entity’s decision.” The record does not include any of the supporting evidence underlying the VA rating. The Court will not review Kelley’s consideration of Lehotsky’s disability rating for this reason.

Medical records document Lehotsky’s chronic musculoskeletal pain, lumbar and cervical DDD, hip joint deterioration, shoulder deterioration, surgeries, and numerous injections and ablations. They show that these complaints predate and have continued past his alleged onset date. He underwent 2 diskectomies in 2003 & 2007 that failed to control his pain. Imaging from 6/17 showed moderate multi-level degenerative changes.

Lehotsky began regular treatments with Benefis Hospital pain management provider Dr. Spanbauer who recommended RF ablations. He has continued to receive RF ablations including in 5/19 and 10/20 that his provider noted failed to fully resolve his back pain.

Lehotsky’s records from June and August 2018 and 3/19 reveal that hip joint injections failed to control pain from his hip joint deterioration but provide only temporary, partial relief and that PT and medications do not relieve the pain at all. The 8/18 records also confirm that his chronic musculoskeletal, back, and hip pain continued, and Spanbauer ordered additional steroid and anesthetic injections.

Records from 2020 reveal Spanbauer’s assessment of Lehotsky’s back pain as lasting at least “three months of moderate to severe pain with functional impairment.” This assessment came after several years of Benefis treating his recurring pain. In sum, the treatment records and treating providers document his “chronic” pain including refractory hip joint pain that continues to return even after surgery, medications, chiropractic or PT, TENS units, psychological therapy, and bracing.

Kelley improperly discounted the opinions of Lehotsky’s treating physicians. She failed to address in any fashion how persuasive she found the opinions. She made no reference to the supportability and consistency factors in reviewing their notes. This failure runs afoul of §§ 404.1520(b)-(c) which sets forth the “articulation requirements” for evaluation of medical opinions. Her findings are thus not legally sufficient.

Kelley afforded disproportionate weight to non-treatment considerations such as Lehotsky’s purported ability to perform daily activities. She concluded that he is not disabled because he exercises, walks his dog, prepares & cooks meals, dresses & bathes without problems, completes household and yard work, shops several times a week, and participates in outdoor activities including watching high school sports and wildlife viewing near a river. She found his daily activities to be “inconsistent” with his claimed “functional compromise.” She failed to note that the record shows that he requires his wife’s assistance to cook meals that require standing in the kitchen. He does not attend outdoor sports often. His participation in outdoor activities results in significant pain that can persist for days after the event. He cannot stand more than 15 minutes. He cannot sit more than 30 minutes on a cushioned chair or 2-3 minutes on a firm surface. He spends 60% of his normal days in a recliner with his feet elevated to rest his back and feet. His exercise or “working out” consists of a PT program. These exercises consist of slowly walking on a treadmill with hand supports and stretching. He limits his weight to 2-1/2 pounds for his arms and 10 pounds for his legs. While he remains able to drive, his spouse transports him for some activities including to exercise.

“The fact that a Plaintiff regularly engages in some activity does not disprove a disability.” Contreras (S.D.Cal. 2020). The Court will not penalize disability claimants such as Lehotsky for attempting to live normal lives. Id. His daily activities ultimately support — rather than undermine — the contention that he is disabled. Garrison (9th Cir. 2014).

Kelley disregarded testimony from the VE that captured Lehotsky’s combination of impairments. Her first 2 hypotheticals involved a person with an ability to lift 10 pounds frequently, occasionally reach overhead, and walk, stand, and sit for 6 hours in an 8-hour day. The VE identified that such a person could work as a corrections officer, security guard, and switchboard operator and would lack transferrable skills for other jobs. Kelley’s 3rd hypothetical involved an ability to walk and stand 4 hours in an 8-hour work day. The VE identified switchboard operator as the only available position. Kelley’s final hypothetical concerned a requirement of “off-task” time for at least 20% of an 8-hour work day and 40-hour work week. The VE testified that these requirements would mean “there would be no work, past work or otherwise, for this individual.”

Kelley’s determination that Lehotsky could perform his past jobs as a correction officer, security guard, or switchboard operator inaccurately reflects his RFC. He requires frequent breaks from sitting & standing including the need to recline 60% of the day. The VE’s testimony establishes that these requirements render him unable to work. She committed legal error in failing to account for the VE’s testimony as to limitations & requirements that match Lehotsky’s circumstances.

Kelley thus committed the following independent errors, each constituting reversible error: failing to consider all evidence underlying the VA’s prior medical findings, misinterpreting non-treatment considerations to discount Lehotsky’s testimony, and failing to account for VE testimony demonstrating that Lehotsky’s combination of impairments ruled out work.

Remand for an immediate award of benefits is appropriate. The record has been fully developed. Further proceedings would serve no useful purpose. The record demonstrates that Kelley would have been required to find Lehotsky disabled from 6/1/18 had she properly credited the medical opinions sources, the VE, and Lehotsky’s testimony.

Lehotsky v. SSA, 44 MFR 286, 11/30/22.

Eric Rasmusson (Rasmusson Law Offices), Missoula, of Counsel for Olinsky Law Group, for Lehotsky; Special AUSAs Kelly Arefi & Mark Smith.

SSD/SSI: Medical opinions improperly discounted… Kelley reversed… Johnston.

Naomi Hale, 47, applied for SSD and SSI in 5/19 alleging that she became disabled in 3/15 due to DDD; back, neck, hand, wrist, arm, knee, and ankle problems; depression; migraines; and sleep apnea. ALJ Michele Kelley found following a hearing that Hale had severe impairments of cervical, thoracic, and lumbar DDD; CTS; knees osteoarthritis; status post bilateral knee total arthroplasty; trochanteric bursitis of the left hip; and obesity, but that she was not disabled because she had the RFC to perform her past work as an optician apprentice and other jobs existed in significant numbers. The Appeals Council denied her request for review. She seeks judicial review.

Substantial evidence supported Kelley’s conclusion that Hale’s migraines were not severe because they were controlled with medication and PT.

Substantial evidence supported Kelley’s conclusion that Hale’s depression was non-severe because it was rated as a mild impairment.

Substantial evidence supported Kelley’s conclusion that Hale’s urinary incontinence was not severe. She denied any urinary incontinence or bladder dysfunction at most of her medical appointments and while she did report some incontinence, the record contains no evidence that it caused work-related limitations that should have been included in the RFC assessment.

Hale argues that Kelley erred in discounting the opinions of NP Charlene Lewis, PT Sherri Gomes, and treating physician Jessica Bailey. The Revisions to Rules Regarding the Evaluation of Medical Evidence effective 1/18/17 require an ALJ to evaluate persuasiveness of all medical opinions based on:

1. supportability of the opinion;

2. consistence of the opinion;

3. the medical source’s relationship with the claimant;

4. the medical source’s specialization;

5. the medical source’s familiarity with other evidence in the record;

6. the medical source’s familiarity with SSD requirements.

Lewis stated that Hale would need to take unscheduled 15-minute breaks every 1-2 hours, avoid repetitive use of her hands, and be absent from work 3-4 times per month. Kelley found her opinions “not consistent with the many normal physical examination findings” or Hale’s “many activities of daily living.” However, she failed to properly apply the supportability factor to Lewis’s opinions. She failed to explain why they were inconsistent with her own treatment notes. She also failed to apply the consistency factor to Lewis’s opinions. She made no attempt to explain why her opinions were inconsistent with the other medical evidence and Hale’s daily activities. She rejected Lewis’s opinions without citing any inconsistent evidence. Her errors were not harmless. The vocational expert testified that Hale would not be able to sustain employment if she was “off task at least 20 percent of an 8-hour work day and a 40-hour work week.”

Gomes stated that Hale could only tolerate minimal work hours if the work involved repeated stresses and prolonged posturing. Kelley discounted her opinion because it was “vague and conclusory” and not supported by “specific function-by-function physical limitations in a work setting.” She failed to properly apply the supportability and consistency factors. She failed to explain why Gomes’s opinions were not supported by her own treatment notes or why they were inconsistent with the other medical and non-medical evidence. However, the error did not result in any prejudice to Hale because Kelley’s RFC assessment which allowed her to change positions every 30-60 minutes was consistent with Gomes’s opinions as to prolonged postures.

Bailey opined that “prolonged sitting in one position had been hard on [Hale] and [Hale] may need to limit her time at sitting” and she was “not able to work in any capacity at this time.” Kelley did not discuss either of these opinions. Bailey’s statement that Hale was unable to work in any capacity on 3/8/16 does not assess any specific work-related function and therefore does not qualify as a medical opinion under §404.1513(1)(2). Kelley was therefore not required to articulate how persuasive she considered the statement or otherwise address it. However, she erred by failing to address Bailey’s statement that “prolonged sitting in one position had been hard on [Hale] and [Hale] may need to limit her time at sitting.” This is a medical opinion. It addresses Hale’s ability to perform the physical demands of work activities. Kelley was therefore required to address the statement.

The error was not harmless. Kelley’s RFC assessment stated that Hale was capable of sitting “6 hours in an 8-hour workday, with normal breaks.” Had she addressed Bailey’s opinion regarding Hale’s inability to sit for prolonged periods it could have affected the RFC, the hypotheticals she posed to the vocational expert, and her ultimate disability determination.

It is not clear whether Hale is disabled. Remanded to properly apply the supportability and consistency factors to Lewis’s opinions and to address Bailey’s opinion regarding Hale’s inability to sit in one position for a prolonged period.

Hale v. SSA, 44 MFR 284, 10/25/22.

Eric Rasmusson (Rasmusson Law Offices), Missoula, for Hale; Special AUSA Mark Smith.

RACE/SEX/NATIONAL ORIGIN DISCRIMINATION claims by parents of bullied high school student dismissed for failure to exhaust administrative remedies… Christensen.

Owen Mercado’s parents sued Seeley Swan High School and Missoula Co. Public School District 1/21/21 alleging 15 incidents of racial, sexual, and national origin discrimination to which he was subjected by other students. (Owen’s paternal grandfather was from Puerto Rico but Owen was born in California). For example, they allege that other students called him the n-word, a border jumper, a faggot, and a “fuckboi.” The complaint also refers to incidents where he had items stolen and his vehicle was vandalized with drawings of penises and the word “faggot.” A Snapchat was taken of him with hand-drawn penises superimposed, he was attacked by an 8th grader, and he had a meme posted about him on Instagram. Plaintiffs allege that SSHS and Missoula Co. Public School District were made aware of these incidents and did nothing to investigate, stop, or prevent them and that some officials participated in or encouraged them. Plaintiffs advance 16 claims. Defendants request summary judgment. The allegations including whether the incidents occurred at all remain hotly contested. The Court need not wade into these disputed facts because Defendants’ summary judgment motion rests far more on the law and perhaps most importantly it is undisputed that Plaintiffs never exhausted administrative remedies.

Defendants raise a single over-arching argument in support of summary judgment on Plaintiffs’ state law claims — that claims brought under the Montana Human Rights Act fail because they never exhausted administrative remedies and the remaining state law claims are just legal recouchings of the same theories such they fall within its exclusivity and exhaustion requirements. Plaintiffs respond that the non-MHRA state law claims need not be administratively exhausted and in any event Defendants are equitably estopped from asserting an exhaustion defense. The Court disagrees.

The MHRA prohibits all sorts of discriminatory practices including denying anyone an education based on “race, creed, religion, sex, marital status, color, age, physical or mental disability, or national origin.” MCA 49-2-308(1)(a). It also prohibits Defendants from discriminating against an individual for opposing such discrimination or for aiding, abetting, inciting, compelling, or coercing such discrimination. §301. It also constitutes the exclusive remedy for those acts, §512(1), even if a litigant premises what is really an MHRA claim under other legal theories such as the Montana Constitution, Lay (Mont. 2015). To determine whether a claim that is not directly couched under the MHRA is governed by it the Court looks to the “gravamen” of the complaint. Id.

The gravamen of Plaintiffs’ complaint is that they were injured by Defendants’ failure to prevent sexual, racial, and national origin discrimination against Owen and that such discrimination essentially drove him out of SSHS and deprived him of educational opportunities. They argue that “a negligence claim” is not governed by the MHRA simply because “the negligence permitted the discriminatory conduct.” The Court disagrees and the Montana Supreme Court has held otherwise. Arthur (Mont. 2004) (rejecting “other tort claims” such as negligence-based claims or claims for negligent and intentional infliction of emotional distress “where those claims arose from” conduct prohibited by the MHRA). The Court recently expounded on this principle at length in a case in which Plaintiffs’ counsel is also counsel. Rhoten (D.Mont. 2021). All of Plaintiffs’ state law claims are bound by MHRA exclusivity procedures. This presents a significant impediment to their ability to prosecute those claims in this Court.

This is because the MHRA requires such claims to be brought “in conformance with the procedures set forth in the MHRA.” Id.; §49-2-512(1). And the MHRA only permits advancement of MHRA claims in a court after a complaint has timely been submitted to and rejected by the Human Rights Commission. §511(3)(a). Such complaints must be brought within 180 days following the actions complained of. §501(4)(a). Plaintiffs concede that that was never done and the time for doing so has passed. That means their state law claims are barred. (This exhaustion requirement does not generally extend to federal causes unless, as here, the court exercises supplemental jurisdiction over encompassed state law claims.)

Plaintiffs argue that Defendants should be equitably estopped from asserting the failure to exhaust defense because they “hoodwinked” parents into forfeiting their claims by not referring them to the Human Rights Bureau. They assert that Defendants “purposefully conceal” these exhaustion requirements from parents and capitalize on this “knowledge known only to them.” However, the Court cannot disregard the MHRA’s clear statutory directive prohibiting the judicial advancement of a discrimination claim “other than by the procedures specified in the Act.” Borges (Mont. 2018). North Star v. PSC (Mont. 2022) (equitable estoppel cannot be used to defeat argument that plaintiff failed to exhaust remedies specified by §2-4-702(1)(a)).

In any event, “equitable estoppel is not favored” and its application is “doomed” unless all 6 elements are established. Arthur. The Court need not discuss every element. The Court finds no evidence that Defendants engaged in conduct designed to conceal the MHRA’s exhaustion requirements to induce them to not properly advance their claims. They do not even argue that they failed to exhaust because Defendants somehow induced them into thinking exhaustion was unnecessary.

Plaintiffs also argue that exhaustion should be excused because filing an MHRA complaint would have been futile given Defendants’ repeated failure to act on previous complaints. However, a party’s belief that they might obtain an adverse disposition through the administrative process is insufficient to support a finding of futility. Mountain Water (Mont. 2005); Hathaway (Mont. 2021) (“The ‘mere possibility of an adverse outcome’ does not render the process futile.”). But this is all that Plaintiffs offer.

Based on the foregoing, the Court does not address Defendants’ argument that Plaintiffs cannot establish the injuries necessary to sustain their emotional distress claims.

Plaintiffs’ ADA claim argues that Defendants knew of Owen’s disabilities — depression and anxiety — but failed to afford reasonable accommodations. The focal point of this claim is Defendants’ failure to initiate procedures under IDEA. Plaintiffs’ failure to exhaust IDEA remedies forecloses their ADA claim. Courts should generally become involved in IDEA issues “only after a serious and thorough examination of the records of the proceedings undertaken by education professionals and the insights of those experts into the problems of the subject child.” Shields (Mont. 1997).

Plaintiffs’ §1983 claim is similar to all others and complains about Defendants’ alleged failure to respond to reports of discrimination against Owen. Defendants assert that Plaintiffs cannot demonstrate the policy, custom, or practice necessary to sustain the claim. Plaintiffs respond that they have alleged a sufficient number of discriminatory incidents, coupled with Defendants’ failure to investigate, such that a policy, custom, and practice has been established. However, there is no evidence that the actions were occasioned pursuant to an official policy. This is unsurprising because a public school district is obviously unlikely to officially adopt a policy of failing to respond to or prevent discrimination in its schools. Nor have Plaintiffs placed any evidence into the record establishing that the actions were the result of some longstanding practice or custom. That leaves the actions of a final policymaker — generally the superintendent or trustees. None of these officials are alleged to have been involved. The actions of certain principals are mentioned but there is no basis to conclude that they possessed any final policymaking authority.

Legal defects and shortcomings pervade Plaintiffs’ case. Thus summary judgment for Defendants is required. The Court does not mean to minimize the difficulties that Owen experienced at SSHS. Coming of age is a difficult experience only made more difficult by challenging interactions with one’s peers. However, the Court has no basis for affording legal relief.

(Plaintiffs demanded $2.4 million which the District rejected without counteroffer.)

Lechowski-Mercado v. Seeley Swan High School and Missoula Co. Public School Dist., 44 MFR 281, 8/15/22.

Lawrence Henke & David Vicevich (Vicevich Law), Butte, for Plaintiffs; Elizabeth Kaleva, Elizabeth O’Halloran, and Kevin Twidwell (Kaleva Law Office), Missoula, for Defendants.