Keller v. Liberty Northwest, Inc., 246 P.3d 434

Keller seeks rescission of two WC settlements arguing mutual mistake as to the nature and extent of her injury (scapular winging and long thoracic nerve injury).
WC Court denied rescission, holding Keller failed to prove Liberty had no knowledge of the correct diagnosis at the time of settlement.
Settlements involved indemnity benefits (~$27,582.64) and medical benefits (~$7,500); medical benefits settlement covered a disputed breast reduction issue.
Medical history showed initial diagnoses of thoracic strain and scapular dysfunction, later MRIs revealed disc protrusions, and 2008 electrodiagnostic testing identified chronic right long thoracic neuropathy with winging.
Dr. Ross and Dr. Beck ultimately diagnosed long thoracic nerve palsy; Beck linked winging to nerve injury, undiagnosed until 2008.
Supreme Court remanded to WC Court to apply the correct mutual-mistake standard and make necessary factual findings, noting the prior improper burden and the potential materiality of the misdiagnosis.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the WC Court erred in requiring no knowledge by Liberty of Keller's scapular winging/long thoracic injury.	Keller argues mutual mistake exists even if Liberty knew of possible injuries.	Liberty contends no mutual mistake because knowledge of the correct condition prevents mutual error.	Reversed; remanded for proper burden and factual findings.
Whether Keller can rescind based on mutual mistake as to nature and extent of injury.	Settlements premised on misdiagnosis; mutual mistake should render consent ineffective.	No mutual mistake shown under proper standard; evidence insufficient.	Remanded for factual development and application of correct standard.

Kienas v. Peterson, 624 P.2d 1 (Mont. 1980) (mutual mistake as to exact nature or extent of injury may rescind)
Weldele v. Medley Dev., 738 P.2d 1281 (Mont. 1987) (misdiagnosis can support mutual mistake)
Kimes v. Charlie’s Family Dining & Donut Shop, 759 P.2d 986 (Mont. 1988) (mutual mistake as to injury can invalidate settlement)
Wolfe v. Webb, 824 P.2d 240 (Mont. 1992) (mutual mistake doctrine applied to WC settlements)
Gamble v. Sears, 337 Mont. 354 (2007 MT 131) (standard for reviewing WC Court findings in mutual-mistake context)
Kruzich v. Old Republic Ins. Co., 188 P.3d 983 (Mont. 2008) (limits on mutual-mistake analysis when no factual mischaracterization at settlement)
Sollie v. Peavey Co., 686 P.2d 920 (Mont. 1984) (mutual-mistake inquiry contextualized; materiality of misdiagnosis matters)
South v. Transportation Ins. Co., 913 P.2d 233 (Mont. 1996) (material fact essential to contract; definition of mistake)
S. v. Transportation Ins. Co., 913 P.2d 233 (Mont. 1996) (materiality and mutual-mistake doctrine in WC context)