Case Title: James Kohlmeyer v. Second Injury Fund

Citation: 

Docket Number: 93S02-0812-EX-642

State: indiana

Court: Indiana Supreme Court

Date: 2009-11-03T00:00:00Z

Document:
ATTORNEY FOR APPELLANT  
 
 
 
ATTORNEYS FOR APPELLEE 
Donald R. Wright 
 
 
 
 
 
 
Gregory F. Zoeller 
 
 
 
Rudolph, Fine, Porter & Johnson, LLP 
 
 
 
Attorney General of Indiana 
Evansville, Indiana 
 
 
 
 
 
 
 
 
Frances H. Barrow 
 
 
 
 
 
 
 
 
Deputy Attorney General 
 
 
 
 
 
 
 
 
Indianapolis, Indiana 
______________________________________________________________________________ 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 93S02-0812-EX-642  
 
 
JAMES KOHLMEYER,   
 
 
 
Appellant (Plaintiff below), 
 
v. 
 
 
SECOND INJURY FUND, 
 
 
 
Appellee (Defendant below). 
_________________________________ 
 
Appeal from the Indiana Worker’s Compensation Board, No. C-147791   
_________________________________ 
 
On Transfer from the Indiana Court of Appeals, No. 93A02-0711-EX-1000   
_________________________________ 
 
November 3, 2009 
 
Dickson, Justice. 
 
 
Indiana's statutory worker's compensation scheme enables certain totally disabled work-
ers who have exhausted the maximum benefits from their employers to seek additional compen-
sation from the Second Injury Fund.  The principal disputes in this case are (1) whether a work-
er's Social Security Act disability benefits are includable in calculating whether the worker quali-
fies to access the Second Injury Fund, and (2) whether the language in the award stipulation of 
the worker and his employer, which was approved by the Worker's Compensation Board, is 
binding upon the Board as to the worker's right to access benefits from the Second Injury Fund.   
 
 
The underlying facts are undisputed.  James Kohlmeyer (the worker) sustained a back 
FILED
CLERK
of the supreme court,
court of appeals and
tax court
Nov 03 2009, 1:10 pm
 
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injury in October 1996 while working for H.B. Zachry Company (the employer).  The worker 
received temporary total disability benefits and medical services until the employer terminated 
payments, concluding that the worker had reached a state of maximum medical improvement.  In 
October 1998 the worker filed a claim with the Indiana Worker's Compensation Board, challeng-
ing the cessation of his temporary total disability benefits and claiming entitlement to statutory 
medical treatment.   
 
 
The October 1998 claim was resolved on April 2, 2001, when the Board approved and 
adopted a stipulation signed by the worker and the employer.  Appellant's App'x at 11.  Among 
other things, the stipulation resolved the parties' dispute as to the worker's "right to recover bene-
fits for alleged permanent total disability and alleged future medical benefits," id. at 7, by stipu-
lating that the worker was permanently totally disabled as a result of his work injuries and that in 
lieu of further medical care, the employer would pay the worker $85,000 in the form of lump 
sums for unpaid temporary disability benefits, for part of his anticipated medical expenses, for 
attorney fees and expenses, and for the purchase of annuity to provide payments of $1,000 per 
month through August 1, 2006.  The stipulation declared that this payment satisfied the worker's 
"claims for worker's compensation disability benefits in coordination with social security bene-
fits," id. at 7, and that it was "calculated to be coordinated with [the worker's] receipt of Social 
Security Disability benefits."  Id. at 8.  It appears that such coordination of benefits, allowing So-
cial Security Disability benefits to substitute for part of the benefits that might have been payable 
by the employer, enabled the worker and his son to receive total payments "substantially in 
excess" of those available solely under the Worker's Compensation Act.1  Appellant's Br. at 5, 
see also Appellant's App'x at 16, 17.  The stipulation also provided that "at the conclusion of five 
hundred (500) weeks from the date of the injury plaintiff shall be eligible to petition the Worker's 
Compensation Board of Indiana for second injury funds" and twice additionally expressly re-
served the worker's "right to apply for additional compensation from the Second Injury Fund."  
Appellant's App'x. at 9.    
 
 
In 2006 the worker applied to the Worker's Compensation Board for benefits from the 
                                                 
1 We note that when a worker receives both state worker's compensation and federal Social Security Dis-
ability benefits, the combined monthly benefits are capped at 80% of the worker's average pre-disability 
earnings.  42 U.S.C. § 424a(a).   
 
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Second Injury Fund.  At the ensuing hearing, the Single Hearing Member denied the worker's 
claim, finding that 500 weeks of disability benefits at the worker's temporary total disability rate 
would have totaled $154,665, that the total of temporary total disability payments made to the 
worker "together with the payments received pursuant to the Agreement results in a total figure 
no more than . . . $136,381.82," and that the worker thus "has not exhausted the maximum bene-
fits as defined in Indiana Code 22-3-3-13(h), a pre-condition to entry into the Second Injury 
Fund."  Id. at 19.  The Single Hearing Member's decision was affirmed and adopted by the Full 
Board.  Id. at 23.  The worker instituted this appeal against the Fund.  The Court of Appeals af-
firmed.  Kohlmeyer v. Second Injury Fund, 888 N.E.2d 281 (Ind. Ct. App. 2008).  We granted 
transfer.   
 
1.  Inclusion of Social Security Act Disability Benefits Under the Statute 
 
 
The worker first contends that he is entitled to Second Injury Fund benefits because, in 
addition to remaining totally disabled, his receipt of 500 weeks of disability payments "in the 
amount of $165,405.43 with $29,023.61 of said amount being Social Security Disability pay-
ments" exceeds the $154,665.00 threshold required for him to qualify.  Appellant's Br. at 8.  The 
Fund responds that the worker's entitlement to Second Injury Fund benefits requires that the eli-
gibility threshold be exhausted exclusively by "payments under the Worker's Compensation Act, 
not from outside sources such as Social Security."  Appellee's Br. at 4.       
 
 
 
The relevant statutory subsections provide:   
 (h) If an employee who is entitled to compensation under IC 22-3-2 through IC 22-3-6 
either: 
(1) . . . ; or  
(2) exhausts the employee's benefits under section 10 of this chapter;  
then such employee may apply to the board, who may award the employee compensation 
from the second injury fund established by this section, as follows under subsection (i).   
 
(i)  An employee who has exhausted the employee's maximum benefits under section 10 
of this chapter may be awarded additional compensation equal to sixty-six and two-thirds 
percent (66 2/3 %) of the employee's average weekly wage at the time of the employee's 
injury, not to exceed the maximum then applicable under section 22 of this chapter, for a 
period of not to exceed one hundred fifty (150) weeks upon competent evidence suffi-
cient to establish: 
 
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(1) that the employee is totally and permanently disabled from causes and condi-
tions of which there are or have been objective conditions and symptoms proven 
that are not within the physical or mental control of the employee; and 
(2) that the employee is unable to support the employee in any gainful employ-
ment, not associated with rehabilitative or vocational therapy.   
Ind. Code §§ 22-3-3-13(h)–(i) (emphasis added).  The worker argues that the word "compensa-
tion" refers to Worker's Compensation disability payments but that the exhaustion of "benefits" 
in subsection (h)(2) refers to "the exhaustion of the amount of benefits for permanent total disa-
bility, without designating a particular source of payment, in order for the interpretation of the 
[Act] to be liberally construed in favor of employees and beneficiaries."  Appellant's Reply Br. at 
3. 
 
 
To the contrary, we find that the unambiguous statutory language does not authorize 
Second Injury eligibility to be calculated by including the receipt of benefits other than specific 
benefits provided under the Act.  Subsections (h)(2) and (i) each specifically condition eligibility 
by requiring exhaustion of the employee's "benefits under section 10 of this chapter."   Thus the 
word "benefits" is expressly qualified by "under section 10 of this chapter."  Section 10 pre-
scribes the calculation of benefits payable under the Act by an employer to an injured worker for 
various injuries, including total permanent disability.  Ind. Code § 22-3-3-10.  It makes no refer-
ence to benefit payments from any source outside of the Act.     
 
 
We conclude that the Indiana Worker's Compensation Act does not direct that the work-
er's receipt of Social Security Act benefits be included in determining his eligibility for Second 
Injury Fund compensation.     
 
2.  Effect of Board's Approval of Stipulation 
 
 
The worker alternatively argues that he is eligible for Second Injury Fund compensation 
because of the Board's express approval of the stipulation resolving his worker's compensation 
claims against his employer.  As noted above, the agreed stipulation provided for the satisfaction 
of the worker's "claims for worker's compensation disability benefits in coordination with social 
security benefits," Appellant's App'x. at 7; recognized that the agreed settlement was "calculated 
to be coordinated with [the worker's] receipt of Social Security Disability benefits," id. at 8; and 
 
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provided that the worker "shall be eligible to petition the Worker's Compensation Board of Indi-
ana for second injury funds," twice also expressly reserving the worker's "right to apply for addi-
tional compensation from the Second Injury Fund."  Id. at 9.  The stipulation also declared that 
the worker is "permanently totally disabled as a result of said work related injuries."  Id. at 7.  
The Board, by action of a Single Hearing Member, expressly found that the stipulation "should 
be approved and adopted."  Id. at 11. 
 
 
The Fund acknowledges that the stipulation provided that the worker was permanently 
totally disabled but argues in response that the Board's approval of the stipulation "was not a 
finding that [the worker] was eligible for Second Injury Fund benefits or that he is permanently 
totally disabled," but was only "for the purpose of resolving their differences and avoiding the 
uncertainty and expense of litigation."  Appellee's Br. at 6.   
 
 
On this issue, this case parallels Mayes v. Second Injury Fund, 888 N.E.2d 773 (Ind. 
2008).  In Mayes, we found that the Worker's Compensation Board, by its approval of an agree-
ment between the employer and employee, subjected the Second Injury Fund to liability that 
would not have existed absent such action by the Board.   
 
 
In Mayes, a worker's eligibility for Second Injury Fund benefits was disputed on grounds 
that a third party settlement had relieved the Fund of liability.  We noted that "[a]n employer act-
ing outside the purview of the worker's compensation system does not have the unilateral author-
ity to bind the Second Injury Fund to an agreement to assume liability where liability would oth-
erwise terminate by statute," and that the Board would have the right to disapprove such agree-
ment.  Id. at 778.  Because the Board approved the agreement, however, we held that "the 
Second Injury Fund has waived the right" to claim non-liability due to a statutory provision.  Id.  
 
 
As in Mayes, the Board here, in approving and adopting the parties' agreed stipulation 
and ordering its implementation, thereby accepted the stipulated facts and waived its right to dis-
allow inclusion of the worker's Social Security Disability benefits in calculating whether the 
worker had met the exhaustion of benefits prerequisite.   
 
 
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The Fund also argues that the "the parties only agreed that [the worker] had the 'right to 
apply for additional compensation from the Second Injury Fund,' not that he would be eligible."  
Appellee's Br. at 6 (internal citation omitted).  As can be seen in the previously quoted passages 
from the approved stipulation, there is language expressly reserving the worker's right "to peti-
tion" and "to apply" for additional compensation from the Second Injury Fund.  Appellant's 
App'x at 9.   
 
 
To receive compensation from the Second Injury Fund, a worker must not only have ex-
hausted the maximum benefits threshold but also must establish two additional statutory prere-
quisites: 
(1) that the employee is totally and permanently disabled from causes and conditions of 
which there are or have been objective conditions and symptoms proven that are not 
within the physical or mental control of the employee; and  
(2)  that the employee is unable to support the employee in any gainful employment, not  
associated with rehabilitative or vocational therapy.   
Ind. Code § 22-3-3-13(i).  While it may be argued that the first of these prerequisites is substan-
tially established by the approved stipulation's declaration that the worker was "permanently to-
tally disabled as a result of said work related injuries," Appellant's App'x. at 7, the second prere-
quisite is not addressed in the factual stipulation, leaving it for determination at the time of 
Second Injury Fund application. It was thus reasonable for the language of the parties' agreed 
stipulation of April 2001 to speak of the worker's future right to apply for Second Injury Fund 
compensation.  This is entirely consistent with language in paragraph 11 of the stipulation: "The 
plaintiff acknowledges that the Board shall determine his eligibility for the second injury fund 
benefits at such time as he may make an application for benefits for the second injury fund."  Id. 
at 9.   
 
 
In settling his dispute with his employer, the worker negotiated an agreement under 
which the employer avoided future medical expenses and the risk of full payment of the worker's 
claim for permanent and total disability benefits.  In return, the worker received the employer's 
stipulation that the worker was totally and permanently disabled as a result of work related inju-
ries and that, combining payments from the employer and Social Security Disability benefits, the 
worker had exhausted his maximum worker's compensation benefits from his employer and thus 
 
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was entitled to seek compensation from the Second Injury Fund.   
 
 
As we observed in Mayes, where there is a "plausible dispute about whether the Board's 
action constituted an approval, we conclude that its action should be treated as such in light of 
the fact that the worker's compensation scheme is designed for the benefit of employees, a bene-
fit to be liberally construed."  888 N.E.2d at 777 (citing Hoffman v. Brooks Constr. Co., 220 Ind. 
150, 157–58, 41 N.E.2d 613, 615–16 (1942)).   
 
 
We find that the Worker's Compensation Board, by approving the parties' stipulation, de-
termined that the worker was permanently totally disabled from his work related injuries and that 
the employer-paid worker's compensation benefits could be combined with the worker's Social 
Security Disability benefits, thereby determining that the worker's combined benefits satisfied 
the $154,665 threshold prerequisite for eligibility for additional compensation by the Second In-
jury Fund.   
 
Conclusion 
 
 
Although the Indiana Worker's Compensation Act does not direct that a worker's receipt 
of Social Security Act benefits be included in determining his eligibility for Second Injury Fund 
compensation, the Worker's Compensation Board's express approval of the parties' stipulation in 
this case operates to establish that the worker, James Kohlmeyer, was permanently and totally 
disabled from work related injuries and that he met the maximum benefits prerequisite for 
Second Injury Fund eligibility.  The Order of the Full Worker's Compensation Board, affirming 
the Single Hearing Member's decision, is hereby reversed. 
 
  
 
  
 
Shepard, C.J., and Sullivan, Boehm, and Rucker, JJ., concur.