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Owsley v. Idaho Industrial Commission1/31/2005
2005 Opinion No. 15
District court judgment dismissing Industrial Commission ruling, reversed in part and affirmed in part.
This case involves a suit brought in district court by three injured workers against the Idaho Industrial Commission (Commission) and the Idaho Special Indemnity Fund (ISIF), alleging bias, prejudgment, and due process violations in the adjudication of their claims. The case comes to this Court on appeal from the district court's dismissal. We reverse in part and affirm in part.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff/Appellants Larry Owsley, Dan Daniels, and Richard Nelson Jr. (Claimants) suffered injuries and filed claims against the ISIF to be resolved by the Commission. The same attorney represented all three Claimants.
After investigating the claims and sending officials to interview the Claimants, the ISIF entered into lump sum settlement agreements (LSSA) with each of them. Pursuant to statute, the settlement agreements were submitted to the Commission for its approval. I.C. ยง 72-404. All three settlement agreements were denied. The Claimants and the ISIF contend that in the 25-year period for which there are computerized records, the Commission had never before rejected a settlement agreement.
The ISIF first learned of the Commission's decision by telephone, when a representative of the Commission contacted them. The Commission's representative informed the ISIF that the settlement agreements had been denied because the Commission had concluded the ISIF had no liability to the Claimants. The Claimants were similarly contacted by telephone, although for them, the calls from the Commission went to the office of their shared counsel. According to the Claimants' complaint, their counsel (or counsel's staff) was told by a Commission representative the Commission had rejected the settlement agreements because the ISIF had no liability to the Claimants, and should not pay the Claimants anything.
The Claimants filed suit against the Commission and the ISIF in district court, asserting that in announcing the ISIF was without liability the Commission had prejudged their claims "on the merits" without permitting an opportunity to be heard or present evidence, and thereby violated their right to due process. The complaint requested the district court (1) find Judicial Rule of Practice and Procedure Under Idaho Worker's Compensation Law XVIII unconstitutional, (2) enjoin the Commission from taking any further action with respect to the Claimant's claims, (3) award damages and fees, (4) devise an alternative process for adjudicating their claims that would exclude the Commission, or (5) approve the settlement agreements between the ISIF and the Claimants.
The district court granted a motion for a protective order requested by the Commission, and halted all discovery. The district court next granted the Commission's motion to dismiss the Claimants' action under I.R.C.P. 12(b). Although the Commission's motion referenced I.R.C.P. 12(b)(1), 12(b)(2), 12(b)(3) and 12(b)(6), in granting the motion the district court noted only jurisdictional issues, which come under 12(b)(1). Specifically, the district court "dismissed [the action] without prejudice under I.R.C.P. 12(b) for lack of jurisdiction over the subject matter; and failure to exhaust administrative remedies." In keeping with a ruling on a 12(b) motion, the district court did not consider material outside of the Claimant's amended complaint and construed the facts as alleged in favor of the Claimants.
The Claimants filed a timely appeal of the district court's dismissal. After the appeal was filed, the Commission approv
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