Montana

Automobile Total Loss Thresholds

Total Loss Formula (TLF).

Insurer determines if the vehicle is a total loss. It is “salvage vehicle” if insurer decides it is uneconomical to repair, considering parts and labor. Mont. Code Ann. § 61-3-211.

Deductible Reimbursement

Automobile and Property: Insurer has duty to determine if insured is made whole before it subrogates, including recovery of insured’s deductible. Montana is a true “insured whole” state when it comes to deductibles. Deductibles must be fully demanded and reimbursed before the insurer can subrogate.

Deductible must be demanded and reimbursed before insurer can subrogate.

Related Case Law: Ferguson v. Safeco Ins. Co. of America, 180 P.3d 1164 (Mont. 2008).

Diminution of Value

First Party: Where the policy limits the insurance company’s liability to the actual cost of replacement of the property damaged or destroyed, “replacement” means the restoration of the property to its condition prior to the injury. Such restoration may or may not be accomplished by repair or replacement of broken or damaged parts. There is not a complete restoration of the property unless there has been no diminution in value after repair of the car. Courts have differed in their construction of similar limitation clauses and will probably continue to do so, so long as policies are couched in language tending toward uncertainty and confusion. Eby v. Foremost Ins. Co., 374 P.2d 857 (Mont. 1962).

Third Party: No court decisions regarding recovery directly allow recovery of diminution in value of a damaged vehicle in a third-party claim. In Hop v. Safeco Ins. Co. of Illinois, 261 P.3d 981 (Mont. 2011), the Supreme Court intimated that the availability of third-party recovery of inherent diminution in value damages is still an open question in Montana, finding in that particular case, that the diminution in value claim was not ripe for adjudication because the Supreme Court had not yet addressed the question of whether insurers in Montana have an obligation to pay residual diminished value claims.

First Come, First Served: Subrogating Multiple Claims in Excess of Policy Limits

In UIM settings, the limits of the tortfeasor’s policy are divided among the multiple claimants, in an equal pro-rata share, for the purpose of considering exhaustion. Augustine v. Simonson, 940 P.2d 116 (Mont. 1997).

Funeral Procession Traffic Laws

Montana law is not specific with regard to right-of-way for the escort vehicle at intersections, but states that the driver of the funeral escort vehicle may direct the other vehicles in the procession to proceed through an intersection or make any other movements despite any traffic control device. Once the lead escort vehicle has entered an intersection lawfully, all other vehicles may proceed without regard to the traffic signal. This implies that the lead funeral escort vehicle can disregard a red traffic signal. Montana requires pedestrians and other vehicles, except emergency vehicles and when a police officer directs otherwise, to yield the right-of-way to funeral processions. Mont. Code Ann. § 61-8-380.

Imputing Contributory Negligence of Driver to Vehicle Owner

Imputed Contributory Negligence Law:  Contributory negligence of driver cannot be imputed to owner in owner’s suit against tortfeasor for damages to vehicle, unless driver is agent of owner. Smith v. Babcock, 482 P.2d 1014 (1971).

Where husband-passenger and wife-driver were not engaged in joint venture, latters contributory negligence will not be imputed to former. Sumner v. Amacher, 437 P.2d 630 (Mont. 1968).

Vicarious Liability/Family Purpose Doctrine:  No Vicarious Liability Statute.

Montana does not recognize the Family Purpose Doctrine. A family relationship alone cannot create liability in one family member for another family member’s negligence related to operation of a family vehicle. Clawson v. Schroeder, 63 Mont. 488, 208 P. 924 (1922); Styren Farms, Inc. v. Roos, 2011 MT 299, 363 Mont. 41, 265 P.3d 1230 (2011).

Sponsor Liability for Minor’s Driving:  Mont. Code Ann. § 61-5-108(2): A minor’s application for a drivers’ license must be signed by parent or adult willing to assume liability for result of minor’s negligence, unless a policy of insurance is in place to provide coverage for said minor.

Laws Regarding using Cell Phones/Headphones/Texting While Driving

Cell Phone/Texting:  No Applicable Laws

Other Prohibitions:  No Applicable Laws

Comments:  Several cities and counties have passed cell phone, hand-held, and texting bans.

Baker, Montana bans all use of hand-held cell phones while driving, unless it is hands-free.

Billings, Montana bans all hand-held cell phone use, but hands-free is allowed.

Helena, Montana bans all use of hand-held cell phones, but hands-free is allowed.

Missoula, Montana prohibits text messaging while driving.

Whitefish, Montana prohibits texting and the use of hand-held cell phones.

Hamilton, Montana prohibits the use of hand-held cell phones and texting while driving.

Great Falls, Montana prohibits texting and the use of hand-held cell phones while driving.

Columbia Falls, Montana prohibits texting and hand-held cell phones while operating a motor vehicle.

Butter-Silver Bow and Anaconda-Deer Lodge Counties prohibit texting and use of hand-held cell phones while driving.

Loss Of Use

Loss of Use: Yes. The owner can recover loss of use damages for being deprived of the use of the damaged vehicle, but only for the period of time reasonably necessary in making repairs or purchasing a replacement. Gammel v. Dees, 498 P.2d 1204 (Mont. 1972). The proper measure for loss of use damages is the reasonable rental value of a comparable vehicle for the period of time necessary for replacement, regardless of whether another vehicle is actually rented. Lenz Const. v. Cameron, 674 P.2d 1101 (Mont. 1984). Another case says the applicable time period is the amount of time necessary to find a replacement vehicle. McPherson v. Kerr, 636 P.2d 1101 (Mont. 1981). Loss of use is recoverable for the period of time reasonably necessary for replacement when the vehicle is a total loss. Gammel v. Dees, supra; Lenz Const. Co. v. Cameron, supra.

Lost Profits: Yes. Plaintiff may be entitled to lost earning during the time reasonably required by him to repair or replace vehicle. McPherson v. Kerr, supra. Lost profits/business interruption claim cannot be speculative. Lenz Const. v. Cameron, supra.

Med Pay/PIP Subrogation

Med Pay: In Montana, § 33-23-201 permits “reasonable subrogation clauses” in auto policies. Under Montana public policy, an insured must be made whole before an insurer can pursue subrogation provided under an auto policy’s subrogation clause, and nothing in § 33-23-201 permitting “reasonable subrogation clauses” alters that equitable doctrine. However, equitable subrogation is still considered against public policy. Allstate Ins. Co. v. Reitler, 628 P.2d 667 (Mont. 1981).

Even a right of contractual subrogation is conditioned upon the insured being made whole for all elements of damages, including payment of attorneys’ fees, regardless of any Plan language to the contrary. See Mont. Stat. § 516.120(2) (2007). Montana remains one of the toughest states to subrogate in because it has a very strict made whole policy. The burden is on the insurer to prove that the insured has been made whole. Swanson v. Hartford Ins. Co. of Midwest, 46 P.3d 584 (Mont. 2002).

PIP: Same as Med Pay.

Made Whole: Doctrine applies. Cannot be overridden with Plan language. Swanson, supra.

Statute of Limitations: The three (3) year personal injury statute of limitations runs from the date of the insured’s accident. Mont. Stat. § 27-2-204.

Owner Liability For Stolen Vehicles

Key In The Ignition Statutes: Mont. Code Ann. § 61-8-357.

Common Law Rule: N/A

Payment of Sales Tax After Vehicle Total Loss

First-Party Claims:   No state sales tax. No applicable statute, case law, or regulation governing recovery of sales tax. Mont. Code Ann. § 27-1-306 states that the insured can only recover the cash value of the vehicle immediately prior to the accident.

Third-Party Claims:  No applicable statute, case law, or regulation governing recovery of sales tax.

Pedestrian and Crosswalk Laws

Statute:

Mont. Code Ann. § 61-8-502: Vehicle must yield to pedestrian in crosswalk. Pedestrian must not leave curb so close to vehicle that it has no time to stop. Vehicles can turn right when pedestrian is in crosswalk if pedestrian is not in vehicle’s half of crosswalk.

Mont. Code Ann. § 61-8-508: Except in an authorized crosswalk, a person who is under the influence of alcohol or any drug may walk or stand in the public right-of-way, but not on a roadway or a shoulder.

Mont. Code Ann. § 61-8-503: Pedestrians must yield to vehicles when crossing outside crosswalk, must use crosswalk at intersections with traffic control devices.

Mont. Code Ann. § 61-8-504: Vehicles must still use due care to avoid pedestrian. Vehicle must use proper caution upon viewing a confused, incapacitated, or intoxicated person on roadway.

Summary: Fact that pedestrian was crossing outside crosswalk does not absolve driver of duty of reasonable care to avoid pedestrian. Sorrells v. Ryan, 129 Mont. 29, 281 P.2d 1028 (Mont. 1955). Pedestrian must exercise greater care when crossing roadway at point other than crosswalk. Carey v. Guest, 78 Mont. 415, 258 P. 236 (Mont. 1927).

Rental Car Company Physical Damage and Loss of Use Claims

Recovery From Renter: Recovery of physical damage and loss of use are not prohibited or otherwise regulated. Terms of rental agreement control. Collision Damage Waivers not regulated.

Recovery From Third-Party: Nothing specifically stating car rental company can recover loss of use. Generally, owner can recover loss of use damages for being deprived of the use of damaged vehicle, but only for the period of time reasonably necessary in making repairs. Stahl v. Farmers Union Oil Co. of Richland, 399 P.2d 763 (Mont. 1965). The proper measure for loss of use damages is the reasonable rental value of a comparable vehicle for the period of time necessary for replacement, regardless of whether another vehicle is actually rented. Lenz Constr. Co. v. Cameron, 674 P.2d 1101 (Mont. 1984). Another case says the applicable time period is the amount of time necessary to find a replacement vehicle. Hop v. Safeco Ins. Co. of Illinois, 261 P.3d 981 (Mont. 2011).

Rental Car Company’s Liability Insurance Primary or Excess

Summary: No case or statutory law dealing specifically with car rental companies. Terms of rental agreement and renter’s liability policy should be compared to determine which is primary.

Slower Traffic Keep Right

Statute: Mont. Code Ann. § 61-8-321 and Mont. Code Ann. § 61-8-311(1).

Summary: Drivers must drive in the right lane and use the left lane for passing only. Drivers must drive in the right lane expect when overtaking and passing another vehicle proceeding in the same direction under the rules governing the passing movement; when the right half of a roadway is closed to traffic while under construction or repair; upon a roadway divided into three marked lanes for traffic under the rules applicable on a divided roadway; upon a roadway designated by official traffic control devices for one-way traffic; when the operator of a vehicle is complying with the provisions of Mont. Code Ann. § 61-8-346; when an obstruction exists making it necessary to drive to the left of center of the roadway; or when a police vehicle or authorized emergency vehicle is performing a job-related duty as provided in Mont. Code Ann. § 61-8-107. A motor vehicle may not be driven at a speed slow enough to impede or block the normal and reasonable movement of traffic. May use left lane to allow entering traffic to merge when travelling at a “speed greater than the traffic flow.”

Sudden Medical Emergencies While Driving

Sudden Emergency Doctrine. The Sudden Emergency Instruction will be given if (1) the emergency actually or apparently existed, (2) the perilous situation was not created by the person confronted, (3) alternative courses of action were open to such person or there was an opportunity to take action to avert the threatened casualty, and (4) the action taken might have been taken by a person of reasonable prudence in the same or similar situation. Eslinger v. Ringsby Truck Lines, Inc., 636 P.2d 254, 259 (Mont. 1981).

Since the passage of Montana’s comparative negligence statute in 1975, the defense of contributory negligence is available to a driver who has violated a traffic statute, and it is for the jury to determine the comparative degree of negligence. Reed v. Little, 680 P.2d 937, 939 (Mont. 1984).

Suspension of Drivers’ Licenses

Administrative Suspension: Montana’s Motor Vehicle Insurance Responsibility and Verification Act do not address administrative suspensions of drivers’ licenses.

Judgment: Upon receiving the certified copy of the judgment, the Department will suspend the driver’s license of the judgment debtor. Mont. Code. Ann. §61-6-122(1). Suspension will continue until the judgment is stayed, satisfied in full, or an installment agreement is entered into. The suspension lasts six (6) years. Mont. Code. Ann. § 61-6-123.

Contact Information: State of Montana, Department of Justice, Driver Services, P.O. Box 201430, Helena, MT 59620-1430, (406) 444-3933, https://dojmt.gov/driving/

Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles

Authority: Mont. Admin. R. 23.19.202.

Summary: If non-OEM parts are used during the repair, the invoice must clearly state that fact, unless the non-OEM part was a remanufactured part that comes with a new part warranty.

Municipal/County/Local Governmental Immunity and Tort Liability

Legal Authority: 

Montana Tort Claims Act:  Mont. Stat. §§ 2-9-101 through 2-9-114 (1973).  “Political subdivision” includes counties, cities, municipalities, school districts, etc.  Mont. Stat. § 2-9-101.

Notice Deadlines:  Claim must first be presented in writing to the clerk or secretary. The Department must grant or deny the claim within 120 days.  Upon receipt of the claim, the statute of limitations is tolled for 120 days.  Mont. Stat. § 2-9-301.

Claims/Actions Allowed:  Political subdivision is subject to liability for its torts and those of its employees acting within the scope of employment or duties whether arising out of a governmental or proprietary function.  Mont. Stat. § 2-9-102.  No immunity for operating motor vehicle, aircraft, or other transportation.  Mont. Stat. § 2-9-111.

Comments/Exceptions:  Political subdivision shall not be liable for certain legislative, judicial, and gubernatorial actions.  Mont. Stat. §§ 2-9-111 through 2-9-113.  See Mont. Stat. § 2-9-108 for other exceptions.

Damage Caps:  $750,000 Per Claim.  $1.5 Million Per Occurrence.  Mont. Stat. § 2-9-108.  The State and other governmental entities are immune from exemplary and punitive damages.  Mont. Stat. § 2-9-105.  Insurer may agree by written endorsement to provide coverage to the governmental agency in amounts in excess of the statutory amount.  Mont. Stat. § 2-9-108.

State Sovereign Immunity And Tort Liability

Tort Claims Act: Montana Tort Claims Act. Mont. Stat. §§ 2-9-101 through 2-9-114 (1973).

Notice Deadlines:  Complaint must first be presented in writing to Department of Administration. The Department must grant or deny the claim within 120 days. Upon receipt of the claim, the statute of limitations is 120 days. Mont. Stat. § 2-9-301.

Claims/Actions Allowed:  State is subject to liability for its torts and those of its employees acting within the scope of employment or duties whether arising out of a governmental or proprietary function. Mont. Stat. § 2-9-102.

Comments/Exceptions:  The State shall not be liable for certain legislative, judicial, and gubernatorial actions. Mont. Stat. §§ 2-9-111 through 2-9-113. See Mont. Stat. § 2-9-108 for other exceptions.

Damage Caps:  The State is not liable for tort claims in excess of $750,000 for each claim and $1.5 million for each occurrence. Mont. Stat. § 2-9-108.  The State and other governmental entities are immune from exemplary and punitive damages. Mont. Stat. § 2-9-105.

Anti-Indemnity Statutes

Prohibits Intermediate Indemnity. Prohibits Additional Insureds. Applies to Construction Contracts or Agreements. Mont. Rev. Code § 28-2-2111.

Contract can require that an insurance policy specific to the project be purchased by a party to the contract.

Contribution Actions

Modified Joint and Several Liability. Joint and several liability, unless a particular defendant is 50% or less at fault, then several. Mont. Stat. § 27-1-703; Newville v. Dept. of Family Services, 883 P.2d 793 (Mont. 1994).

Joint tortfeasors have a right to contribution. Contribution may be sought in the underlying action or as a separate action. Mont. Stat. § 27-1-703; Consolidated Freightways v. Osier, 605 P.2d 1076 (Mont. 1979). There is a three (3) year statute of limitations from the date of settlement or payment of judgment. Mont. Stat. § 30-3-122(7). A person who has settled a claim with a defendant without a lawsuit having been filed may not bring an action for contribution against a joint tortfeasor under § 27–1–703. A settling defendant may not bring a subsequent, separate, contribution action against a person that was not a party in the underlying action. Montana does not recognize a common law right of indemnity where the negligence of the party seeking indemnification was remote, passive, or secondary, compared to the active negligence of the party from whom indemnity is sought. Metro Aviation, Inc. v. United States, 305 P.3d 832 (2013).

Contributory Negligence/Comparative Fault

Modified Comparative Fault: 51% Bar. Damaged party cannot recover if it is 51% or more at fault. If 50% or less at fault, it can recover, although its recovery is reduced by its degree of fault.  Plaintiff’s negligence, if less than total defendant’s portion of fault, will reduce his recovery. Mont. Stat. § 27-1-702.

Dog Bite Laws

Dog owner will be held strictly liable for damages caused by their dog, if the incident occurred in an incorporated town or city. Mont. Code Ann. § 27-1-715.

Economic Loss Doctrine

Parental Responsibility

Willful Misconduct. Liability imposed on parents when child willfully or maliciously damages property (does not apply to damages done to businesses). Mont. Stat. § 40-6-237.

Minor’s Driving. A minor’s application for a drivers’ license must be signed by parent or adult willing to assume liability for result of minor’s negligence, unless a policy of insurance is in place to provide coverage for said minor. Mont. Stat. § 61-5-108.

The limit of liability is $2,500.00. Child must be under 18-years-old.

Spoliation

Tort of Spoliation: Montana courts have adopted the torts of both intentional and negligent spoliation against third parties. Negligent spoliation of evidence consists of the following elements: (1) existence of a potential civil action; (2) legal or contractual duty to preserve evidence relevant to that action; (3) destruction of that evidence; (4) significant impairment of the ability to prove the potential civil action; (5) causal connection between the destruction of the evidence and the inability to prove the lawsuit; (6) significant possibility of success of the potential civil action if the evidence were available; and (7) damages. Gentry v. Douglas Hereford Ranch, Inc., 1998 Mont. 182, 290 Mont. 126, 962 P.2d 1205 (Mont. 1998); Oliver v. Stimson Lumber Co., 297 Mont. 336, 345-354, 993 P.2d 11, 18-23 (Mont. 1999). Intentional spoliation consists of the following elements: (1) the existence of a potential lawsuit; (2) the defendant’s knowledge of the potential lawsuit; (3) the intentional destruction of evidence designed to disrupt or defeat the potential lawsuit; (4) disruption of the potential lawsuit; (5) a causal relationship between the act of spoliation and the inability to prove the lawsuit; and (6) damages. Id.

Under Montana law, the tort of spoliation of evidence (whether intentional or negligent) requires “the existence of a potential lawsuit.” Oliver v. Stimson Lumber Co., 297 Mont. 336, 993 P.2d 11, 21 (Mont. 1999). Spoliation of evidence can only occur in connection with some other lawsuit; it is intrinsically bound up in the same transaction as the underlying lawsuit. Smith v. Salish Kootenai College, 378 F.3d 1048, 1058 (9^th Cir. Mont. 2004).

Statute of Limitations

Personal Property2 YearsMont. Stat. § 27-2-207

Personal Property/Due to Tort3 YearsMont. Stat. § 27-2-204 and Ritland v. Rowe, 861 P.2d 175 (Mont. 1993)

Personal Injury/Death3 YearsMont. Stat. § 27-2-204

Breach of Contract/Written8 YearsMont. Stat. § 27-2-202

Breach of Contract/Oral5 YearsMont. Stat. § 27-2-202

Breach of Contract/Sale of Goods4 YearsMont. Stat. § 30-2-725

Statute of Repose/Personal Injury & Wrongful Death                                                            3 Years

Mont. Stat. § 27-2-204

Statute of Repose/Real Property10 YearsMont. Stat. § 27-2-208*

Breach of Warranty/Express4 YearMont. Stat. § 30-2-725

Breach of Warranty/Implied3 YearsYears Bennett v. Dow Chem. Co., 713 P.2d 992 (Mont. 1986)

Workers’ Comp Third Party Case3 YearsMont. Code Ann. § 39-71-412

Strict Product Liability3 YearsMont. Stat. § 27-2-204

Strict Product Liability/Negligence/Personal Injury3 YearsMont. Stat. § 27-2-204

Strict Product Liability/Negligence/Property Damage2 Years2 Years. Mont. Stat. § 27-2-207

Statute of Limitations Exceptions

*10 Years from completion of improvement of real property. This has been interpreted to apply to damage caused by a defective product that is related to the improvement. Mont. Stat. § 27-2-208.

Health and Disability Insurance

Statute of Limitations: 3 Years. Mont. Code Ann. § 27-2-204(1),(2).

Subrogation of Medical and Disability Benefits are allowed. Mont. Code Ann. § 33-30-1101; Mont. Code. § 33-22-1601. However, this grant of subrogation is still subject to made-whole. Mont. Code Ann. § 33-22-1602(4). Made Whole* and Common Fund Doctrines apply. Ferguson v. Safeco Ins. Co. of Am., 180 P.3d 1164 (Mont. 2008) (*Made whole includes attorneys’ fees); Mountain West Farm Bur. Mut. Ins. Co. v. Hall, 38 P.3d 825 (Mont. 2001); Mont. Code Ann. § 33-22-1602.

Admissibility of Expert Testimony

Admissibility Standards: Daubert

Case/Statutory Law:  State v. Moore, 885 P.2d 457 (Mont. 1994).

Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims

Duty To Disclose: Possibly.

Failure To Disclose A Basis For Bad Faith: The trial court in Wilkie v. Hartford Underwriters Insurance Company, 494 P.3d 892 (Mont. 2021) Court concluded that the dispute was rendered moot when the Sprouts produced the policy to Wilkie. It held that neither exception to the mootness doctrine applied, stating only that it had relied on “the argument and authority cited by [The Hartford and the Sprouts.]” The court expressed concern that “[i]ssuing a ruling with regard to the specific facts presented in this case would amount to an advisory opinion.” It added, “[I]f [Wilkie] believes The Hartford’s conduct rises to the level of bad faith, [Wilkie] may pursue that action. This Court will not provide an advisory opinion as a steppingstone [sic] to that litigation.” This appears to leave the issue open. The duty to reveal policy limits encompasses two separate legal issues:

(1) whether there is a statute, regulation, or case decision which compels a liability carrier to reveal policy limits when requested to do so; and

(2) whether a failure to reveal policy limits when asked can serve as the basis for a subsequent bad faith case should there be a verdict in excess of policy limits.

The 9^th Circuit in Bateman answered the first issue. It is anticipated that, following remand, the trial court in Wilkie will address the second.

Comments: The 9^th Circuit has ruled that within the limited confines of Montana’s Unfair Trade Practices Act, there was no duty to disclose liability policy limits in response to third-party claimants’ requests and no violation of the UTPA for same. Bateman v. National Union Fire Ins. Co. of Pittsburgh, Pa., 423 Fed.Appx. 763 (9^th Cir. 2011) (unreported), on remand 2011 WL 13202359. In Wilkie v. Hartford Underwriters Ins. Co., 494 P.3d 892 (Mont. 2021), the court stopped short of announcing there was a duty to reveal policy limits, but reversed a case that had been dismissed and sent it back to the trial court.

Recording Conversations

All-Party Consent: It is unlawful to record an in person or electronic communication without the consent of all parties except under certain circumstances namely elected or appointed public officials or public employees when the recording occurs in the performance of an official duty; individuals speaking at public meetings; and individuals given warning of or consenting to the recording. Mont. Code Ann. § 45-8-213.

Product Liability Law

Statute of Limitations/Repose: 3 years for personal injury and wrongful death. Mont. Stat. § 27-2-202. Discovery Rule applies.

Liability Standards: Negligence, Strict Liability, Warranty.

Fault Allocations: Modified Comparative. Mont. Stat. § 27-1-702.

Non-Economic Caps/Limits On Actual Damages: No.

Punitive Y/N and Limits: Yes (Limits).

Heeding Presumption?: No.

Innocent Seller Statute: No. (Upstream Indemnity). Mont. Stat. § 27-1-719.

Joint and Several Liability: Yes, if > 51%. Mont. Stat. § 27-1-703.

Available Defenses: Assumption of Risk; Misuse; Alteration; Learned Intermediary; Inherently Unsafe Products; State of the Art; Government Contractor Defense; Presumption; Alcohol/Drugs; Sophisticated User.

Restatement 2^nd or 3^rd?: Neither.

“Matching Regulations” And Laws Affecting Homeowners Property Claims

Statute/Regulation: It is the position of the insurance commissioner that when a loss requires replacement of building materials that the materials must be replaced with similar quality, kind, texture, and colored materials such that there is a reasonable match with any existing materials. In the event that materials which meet these criteria are not available, the existing materials must be replaced to achieve a match. This applies to interior and exterior losses. July 6, 2009 “Advisory Memorandum” issued by Commissioner of Securities and Insurance, Monica J. Lindeen.

Caselaw: None.

Comments: The Montana Commissioner of Insurance has issued two separate memorandums stating that it is the Commission’s opinion that damaged materials must be replaced with materials of like kind and quality and that, if no such materials are available, the existing materials must be replaced to make a match. See MT Memorandum 8-20-2003 (MT INS BUL), 2003 WL 25759819 (MT INS BUL) MT Memorandum August 20, 2003.

Condominium/Co-Op Waiver of Subrogation Laws

Premiums for insurance on the building are common expenses and the association must allow unit owners to obtain their own insurance. However, nothing in the statute mentions waiver of subrogation. Mont. Code Ann. § 70-23-612.

Damage to Property Without Market Value

Service Value:  “We note that replacement cost should only be used when no market value can be established.” State v. Dunkerson, 76 P.3d 1085 (Mont. 2003).

Intrinsic Value:  Where the absence of the market value of property destroyed is shown, considerable range of investigation should be permitted in fixing the actual value of same as a basis for determining damages. Eablonski v. Close, 225 P. 129 (Mont. 1924).

Sentimental Value:  Can recover the difference in market value at the place before and after injury. But, if repair is possible, and this cost is less than the diminution in value under the general test, this cost plus the value of the loss of use may be employed as the measure. In either case, the recovery ordinarily may not exceed the value of the property just before it was damaged. Spackman v. Ralph M. Parsons Co., 414 P.2d 918 (Mont. 1966).

General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims

Payment And Depreciation Of GCOP/Sales Tax: No applicable case law, statutes, administrative rules, or other guidance with regard to the calculation and/or depreciation of GCOP.

Landlord/Tenant Subrogation

Montana adheres to the rule that no right of subrogation can arise in favor of an insurer against its own insured since, by definition, subrogation exists only with respect to rights of insurer against third persons to whom insurer owes no duty. Home Ins. Co. v. Pinski Bros., Inc., 500 P.2d 945 (Mont. 1972). However, there have been no cases addressing whether a tenant is considered an implied co-insured.

Anti-Subrogation Rule

An insurer has no right of subrogation against its own insured. Home Ins. Co. v. Pinski Brothers, Inc., 500 P.2d 945 (Mont. 1972). This is true both as to the named insured and as to any party to whom coverage is extended under the policy terms; an additional insured is entitled to the same protection as the named insured. Truck Ins. Exchange v. Transport Indem. Co., 591 P.2d 188 (Mont. 1979). A homeowner’s insurer cannot seek subrogation against a family member who is a guest of insured since it is, in effect, seeking to recover from the insured himself. Continental Ins. Co. v. Bottomly, 817 P.2d 1162 (Mont. 1991). In Pinski Brothers, Inc., a building was heavily damaged after an explosion occurred during renovations. The building’s insurer was precluded from subrogating against the renovation’s architect because the same insurer covered the architect under a separate liability policy. In Bottomly, Gene Bottomly negligently burned down a cabin that was used by the extended Bottomly family as a vacation home. The only named individual on the cabin’s homeowner’s policy was Gene’s brother, Rich Bottomly, who received compensation from Continental Insurance (“Continental”) after the cabin was burned down. Continental’s subsequent subrogation action against Gene was blocked by the Court on the basis that allowing subrogation against Rich’s guest at the cabin would be akin to allowing subrogation against Rich himself.

Criminal Restitution

Montana statute expressly states that victims can recover restitution from liable criminal defendants. The statute also defines a “victim” who has sustained a loss, “including a person suffering an economic loss,” which includes an insurer. Mont. Code Ann. § 46‐18‐241. The Montana Supreme Court has said that this restitution statute contains no provision requiring an offset in the defendant’s favor, or indicating that a victim should receive less from the defendant where subrogation is involved. State v. Fenner, 325 P.3d 691 (Mont. 2014). Montana’s restitution statutes reflect intent to “require an offender to make full restitution to any victim who has sustained pecuniary loss.” It said that the issue of subrogation has no bearing on the amount of restitution that an insured/victim must pay. While the restitution statutes include an insurer as a victim to the extent that it has paid reimbursement for the loss, there is no provision requiring deduction of any such reimbursement from the amount the offender must be ordered to pay. Mont. Code Ann. § 46–18–243(2)(a)(iv).

In State v. Lodahl, 2021 WL 2660080 (Mont. 2021), the Supreme Court held that the Montana State Workers’ Compensation Fund was a “victim” under § 46–18–243(2)(a)(iv). The Fund was an insurance company that compensated the victim for her qualifying losses, including medical expenses and lost wages, which resulted from the assault. 

Made Whole Doctrine

Montana remains one of the toughest states to subrogate in as a result of its strict made whole policy. It’s the public policy in Montana that an insured must be totally reimbursed for all losses as well as costs, including attorney’s fees involved in recovering those losses, before the insurer can exercise any right of subrogation, regardless of contract language to the contrary. Ferguson v. Safeco Ins. Co. of Am., 180 P.3d 1164 (Mont. 2008); Swanson v. Hartford Ins. Co. of Midwest, 46 P.3d 584 (Mont. 2002); Skauge v. Mountain States Tel. & Tel. Co., 565 P.2d 628 (Mont. 1977); Mont. Code Ann. § 33-23-203(2) (1997) (held unconstitutional to the extent that it allowed auto insurer to charge premiums for non-existent UIM coverage); Hardy v. Progressive Specialty Ins. Co., 67 P.3d 892 (Mont. 2003); Oberson v. Federated Mut. Ins. Co., 126 P.3d 459 (Mont. 2005); Blue Cross & Blue Shield of Montana, Inc. v. Montana State Auditor, 218 P.3d 475 (Mont. 2009). In fact, courts have held that an insurer may not collect subrogation without first determining that its insurer has been made whole. Ferguson, supra. In Skauge, the Court held that: “When the sum recovered by the insured from the tortfeasor is less than the total loss and thus either the insured or the insurer must to some extent go unpaid, the loss should be borne by the insurer for that is a risk the insured has paid it to assume.” Skauge, 565 P.2d at 632; Mont. Code Ann. § 33-30-1102(4) (1987).

The Made Whole Doctrine, as established in Skauge requires that an insured be “made whole” before an insurer can assert its subrogation rights. This meant that, not only must the insured recover all of her losses but also all costs of recovery as well, such as attorney’s fees and costs of litigation. When the sum recovered by the insured from the tortfeasor is less than the total loss sustained by the insured, and thus either the insured or insurer must to some extent go unpaid, the loss should be borne by the insurer for that is a risk the insured has paid it to assume. Swanson, supra.

Montana courts have even ruled that an insurer is precluded from bringing a subrogation action when the insured has independently negotiated a settlement agreement with a tortfeasor for less than the insured’s total loss. Id. In Swanson, the court ruled that the subrogated insurer had no subrogation rights, even though the third-party liability insurance limits exceeded the amount of the settlement reached between the insured and third party. Unfortunately, this ruling allows an insured to negotiate a settlement with a tortfeasor without regard to the carrier’s subrogation rights. By agreeing to settle for an amount less than the total amount of damages sustained by the insured, the tortfeasor insulates itself from further subrogation liability. Id.

Montana is an anti-subrogation state with respect to Med Pay benefits made under an auto insurance policy. Youngblood v. American States Ins. Co., 866 P.2d 203 (Mont. 1993). The Montana Supreme Court has expanded the Made Whole Doctrine to place a duty on a subrogating insurer to affirmatively determine whether the insured has been made whole before it subrogates. Ferguson, supra; Poppleton v. United Services Automobile Ass’n, 2011 Mont. Dist. LEXIS 52 (18^th Dist. 2011). In that case, Ferguson was in an auto accident, and her insurer, Safeco, paid for the total loss of the vehicle, less the deductible, but did not pay for several other losses Ferguson had sustained. Safeco never provided her with any notice that it would seek subrogation; never investigated, inquired or made a determination as to whether Ferguson was made whole for her losses; and never reimbursed Ferguson for her uncovered losses including her deductible, unpaid rental car expenses, and attorneys’ fees. Based on those egregious facts, the Supreme Court erroneously interpreted Swanson to establish a duty on the part of a subrogating carrier to determine if the insured was made whole before it subrogated. Ferguson sued Safeco and certified a class action lawsuit, claiming Safeco engaged in “a common scheme of deceptive conduct,” by taking subrogation recoveries without an investigation into and determination of whether the insureds have been made whole. That class action suit was pending as of the date of this publication. A health service corporation’s right of subrogation may not be enforced until the injured party has been made whole. Mont. Code Ann. § 33-30-1102 (1987). As seen, this includes only non-profit corporations and would not include a traditional health insurer.

Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule

Collateral Source Rule: In 2021, Montana enacted SB 251 which abrogates the common law Collateral Source Rule, court decisions, and all prior statutes applicable to determining the amounts recoverable by plaintiffs as damages for medical services or treatment. MCA § 27-1-308(1). An award may not exceed amount actually paid to healthcare providers. MCA § 27-1-308(2)(a). Award at trial also limited to charges incurred and owing to healthcare providers for reasonable and necessary medical services or treatment, and/or are necessary to provide for any future reasonable and necessary medical services or treatment. MCA § 27-1-308(2)(b-c). Jury can’t consider any bills billed but resolved by way of contractual discount, price reduction, disallowance, gift, write-off, or otherwise not paid.” MCA § 27-1-308(3). “If prior to trial a defendant, a defendant’s insurer or authorized representative, or any combination of the three, pays any part of the financial obligation for medical services or treatment provided to the plaintiff, then prior to the entry of judgment the court shall reduce the sum awarded to the plaintiff at trial by the amount of the payment or other collateral source as defined in 27-1-307(1).” MCA § 27-1-308(4).

Recovery OF Medical Expenses Rule: Damages recoverable from the person at fault for the reasonable value of medical services or treatment in actions arising from bodily injury or death are set forth in 27-1-308. MCA § 27-1-202. Private Insurance: No authority under the law amended in 2021. But see Elliott v. Goulet, 2012 WL 8530906 (Mont. Dist. Ct. 2012) (Trial Order).

Medicare/Medicaid: No authority under the law amended in 2021. Elliott v. Goulet, 2012 WL 8530906 (Mont. Dist. Ct. 2012) (Trial Order). Montana state courts have yet to address this issue, but federal court decision held that medical expenses written-off by Medicaid are irrelevant for proving reasonable medical expenses. Chapman v. Mazda Motor of America, Inc., 7 F.Supp.2d 1123 (D. Mont. 1998). After the 2021 amendment, § 27-1-308(2)(a)-(b) now reads:

…a plaintiff’s recovery may not exceed amounts actually: (a) paid by or on behalf of the plaintiff to health care providers that rendered reasonable and necessary medical services or treatment to the plaintiff; [and] (b) necessary to satisfy charges that have been incurred and at the time of trial are still owing and payable to health care providers for reasonable and necessary medical services or treatment rendered to the plaintiff.

The bill expressly made the amendment applicable to claims that accrue on or after its effective date. Gibson v. U.S., 499 P.3d 1165 (Mont. 2021) (good summary of treatment of Collateral Source Rule in Montana).

Related Law/Comments: After SB 251, for the first time, Montana recognizes a contractual right to subrogation for previously unrecoverable amounts paid from a collateral source. “Except for subrogation rights specifically granted by state or federal law or provided by contract, there is no right to subrogation for any amount paid or payable to a plaintiff from a collateral source if for an award entered as provided in subsection (2).” MCA § 27-1-308(5). Voluntary payments made to plaintiff under a Med Pay provision of defendant’s liability policy are not credited against the judgment under the “voluntary payments” statute providing for credits against judgments of prior voluntary payments, Mont. Stat. § 26-1-706; O’Hern v. Pankratz, 19 P.3d 807 (Mont. 2001). Liability carrier has an obligation to pay an injured third-party’s medical expenses until final settlement when liability is reasonably clear. The failure of an insurer to know this rule can lead to serious adverse consequences, including possible bad faith. Ridley v. Guaranty National Insurance Company, 951 P.2d 987 (Mont. 1997).

Employee Leasing Laws

An employee leasing company and its client company are both considered employers and immune from third-party actions under the exclusive remedy provision of the Workers’ Compensation Act. Mont. St. § 39-8-207.

Hospital Lien Laws

Statute: Montana Code Ann. §§ 71-3-1111 – 1118. Physician, Nurse, Physical Therapist, Occupational Therapist, Acupuncturist, Chiropractor, Dentist, Psychologist, Licensed Social Worker, Licensed Professional Counselor, Hospital, Optometrist, Naturopathic Physician, Podiatrist, Ambulance Service, Rehabilitation Facility, Long-Term Care Facility, and Outpatient Center for Surgical Services Lien Act.

Perfecting Lien: To perfect a lien in Montana under the Act, a healthcare provider must serve written notice upon the person and upon the insurer, if any, stating the nature of the services, for whom and when they were rendered, the value of the services, and that a lien is claimed. § 71-3-1115

Comments: Workers’ compensation benefits are excluded. § 71-3-1118. The Act specifically mentions that the lien is created against both a liable party and if a person is insured or a beneficiary under insurance. § 71-3-1112. Notice is also preserved if an action has been commenced and the lien notice is filed in the office of the clerk of court in which the action is pending. § 71-3-1116.

OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases

OCIP Law: No statute or case law specifically dealing with effect of OCIP/CCIP.

Statutory Employer Law: Montana requires that an employer who contracts with an independent contractor to perform work of a kind which is a regular or recurrent part of the work of such employer is liable for payment of the workers’ compensation benefits to the employees of a subcontractor which has not done so. Mont. Stat. § 39-71-405. Despite this statute, the employer/general contractor is not entitled to immunity under the Exclusive Remedy Rule as a “statutory employer,” even though he is compelled to provide workers’ compensation benefits. Trankel v. State, Dept. of Military Affairs, 938 P.2d 614 (Mont. 1997).

Comments: Montana has not adopted Professor Larson’s “statutory employer” concept and has backed away from the rationale that the statutory employer-employee extension by the legislature is for the benefit of the employee and that such a benefit conferring a liability on the employer is co-existent with immunity from common law liability. After § 39-71-405 was amended to allow owners or general contractors who did pay benefits for a subcontractor to recover such payments from the actual employer, so the quid pro quo underlying Larson’s statutory employer concept has gone away. Webb v. Montana Masonry Constr. Co., 761 P.2d 343 (Mont. 1988).

Recovery Of Increased Workers’ Compensation Premiums By Employer

Recovery For Increased Premiums? Undecided.

Statute/Case Law: No.

Rule Summary: There is no authority or precedent regarding the attempted recovery of damages for increased workers’ compensation insurance premiums by an employer from a third-party tortfeasor.

Which Workers’ Compensation “Benefits” Can Be Subrogated?

There is no precedent or discussion in case law regarding whether nurse case management fees or other allocated costs which may benefit the employer and/or employee can be recovered in subrogation. Section 39-71-414 describes a workers’ compensation carrier’s subrogation interest as follows:

…the insurer is entitled to subrogation for all compensation and benefits paid or to be paid under the Workers’ Compensation Act. Mont. Stat. § 39-71-414.

As of April 1, 2019, Montana requires compliance with ODG Guidelines. See the state of Kentucky and the Preamble above for an argument that the subrogated carrier can recover the “case manager’s” fee for development of a “treatment plan,” utilizing the ODG guidelines.

Workers’ Compensation Subrogation Waiver Endorsements

Subrogation Statute: Mont. Stat. § 39-71-412

Waiver Allowed? Nothing in the Montana Workers’ Compensation Act or applicable case law prohibits the use or efficacy of a waiver of subrogation.

Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: The effect of a waiver of subrogation on the carrier’s rights, including its right to enforce its statutory lien, has not yet been decided.

Other Applicable Law: None.

Workers’ Compensation

Statute of Limitations:    3 Years. Mont. Code Ann. § 39-71-412.

Can Carrier Sue Third Party Directly:  Yes, after 1 year. The plaintiff must give notice.

Right to Intervene:  Yes?

Recovery from UM/UIM Benefits:  Yes.

Subrogation Against Medical Malpractice:  Undecided.

Subrogation Against Legal Malpractice:  Undecided.

Recovery Allocation/Equitable Limitations:  First money lien, subject to the Made Whole Doctrine.

Employer Contribution/Negligence:  No.

Attorney’s Fees/Costs:  Pro-rata, unless the carrier waives 50%.

Future Credit:  Future Credit Statute repealed in 2005.

Auto No-Fault:  No.

Workers’ Compensation Claims by Undocumented Employees

Y/N/U:  Y

Statute:  The statute encompasses all workers, and expressly includes “aliens” both “legal” and “illegal” and gives their legal status. Mont. Code Ann. § 39-71-118(1)(a).

Case Law:  Undecided