Title: CHED JENNINGS V. MASONIC HOMES, INC., ET AL

State: kentucky

Issuer: Kentucky Supreme Court

Document:

~POR~'ANT'NQ7I~E NOT TO BEPUBLISHED OPINION THIS OPINIONISDESIGNATED "NOT TO BE PUBLISHED. f' PURSUANT TO THE RULES OF CIVIL PROCEDURE PROHULGATED BY THE SUPREME COURT , CR 76.28 (4) (c), THIS OPINION ISNOT TO BE PUBLISHED AND SHALL NOTBE CITED OR USED ASA UTHORITYINANYOTHER CASE INANY COURT OF THIS STATE. CHED JENNINGS V. Aix~rx~ae Court ~~ MASONIC HOMES, INC . ; FERRERI AND FOGLE ; HON . W. BRUCE COWDEN ; AND WORKERS' COMPENSATION BOARD 2006-SC-0026-WC AFFIRMING RENDERED : SEPTEMBER 21, 2006 NOT TO BE PUBLISHED APPEAL FROM COURT OF APPEALS 2005-CA-1097-WC WORKERS' COMPENSATION NO . 03-67175 MEMORANDUM OPINION OF THE COURT APPELLEES This appeal is taken by an attorney who represented a workers' compensation claimant . At issue are a statute and a regulation . KRS 342.310(1) permits an Administrative Law Judge (ALJ), the Workers' Compensation Board (Board), or a court to assess the whole cost of a proceeding upon a party who has brought, prosecuted, or defended it without reasonable ground . 803 KAR 25:010, § 24(2) permits the sanction to be assessed against an offending attorney or representative rather than a party . After concluding that the appellant prosecuted a frivolous appeal on his client's behalf, the Board directed the ALJ to sanction him . The Court of Appeals affirmed . Appealing, the attorney asserts that the regulation is invalid because it conflicts with the statute and exceeds its scope . He also asserts that the regulation violates public policy by creating a conflict between the interests of attorneys and the injured workers they represent . Having concluded that 803 KAR 25:010, § 24(2) is not inconsistent with Chapter 342, that the Office of Workers' Claims acted within the scope of its authority when adopting it, and that the regulation does not violate public policy, we affirm . With the assistance of counsel, Loretta Huff (the claimant) filed and prosecuted an application for workers' compensation benefits in which she alleged that her back became symptomatic when she attempted to rise from a chair while working . An AU determined subsequently that the claimant had a pre-existing, active condition and that any connection between symptoms from the condition and her work was coincidental ; therefore, she did not sustain a work-related injury. The attorney filed a petition for reconsideration asserting that the claimant was entitled to temporary total disability (TTD) and medical benefits despite the finding that she failed to meet the statutory definition of an injury . The AU denied it. Acting on the claimant's behalf, her attorney appealed . His brief to the Board did not assert that the evidence compelled a finding that the claimant sustained a work- related injury . Instead, it acknowledged that her injury "may not meet the statutory definition of permanent injury or withstand the work-relatedness and causation issues" but asserted that the AU committed reversible error by failing to consider her entitlement to medical and TTD benefits under Robertson v. United Parcel Service, 64 S.W.3d 284 (Ky. 2001) . After considering the merits, the Board found the appeal to be "contrived and disingenuous" and "prosecuted without reasonable grounds," noting that Robertson involved a work-related injury . The Board remanded the case to the AU with directions to determine the employer's costs in defending the appeal and to order the claimant's attorney to pay them . The attorney did not petition the Board for reconsideration or request an opportunity to show cause why he should not be sanctioned . He filed a petition for review in the Court of Appeals, naming the claimant and himself as petitioners . However, his sole argument was that KRS 342.310(1) explicitly provides for the assessment of costs against a "party;" therefore, the Board erred by assessing costs against him rather than his client. The Court of Appeals noted that the attorney's interests were adverse to the claimant's because he argued that sanctions could only be imposed upon her. Considering the attorney to be the appellant and the claimant to be only a nominal appellant, the court affirmed . Because the court found the petition for review to have arguably been made in good faith, it rejected the employer's request for additional sanctions . This appeal followed . In tacit acknowledgement that the Office of Workers' Claims has functions that are legislative as well as administrative and judicial in nature, KRS 342 .260(1) authorizes the Office to promulgate regulations for carrying out Chapter 342's provisions, provided that they are not "inconsistent" with Chapter 342 and with Chapter 13A . The Office has adopted 803 KAR 25:010, § 24(1), which acknowledges that KRS 342.310 permits costs to be assessed upon a determination that proceedings have been brought, prosecuted or defended without reasonable grounds, and has also adopted 803 KAR 25:010, § 24(2), which permits a sanction to be assessed against an offending attorney or representative rather than against a party . At issue is whether 803 KAR 25 :010, § 24(2) is a valid exercise of the Office's rulemaking power under KRS 342.260(1) . Administrative agencies such as the Office of Workers' Claims are creatures of statute and, therefore, are limited to the powers conferred by statute . We noted in Centre College v . Trzop , 127 S .W.3d 562, 66-67 (Ky. 2003), that the properly adopted regulations of an administrative agency have the full force and effect of law when they are consistent with the enabling legislation . We explained in Brown v. Jefferson County Police Merit Board , 751 S .W.2d 23, 25 (Ky . 1988), that because the rulemaking power of an administrative agency is a delegated legislative power, it is limited to the scope intended by the legislature as discerned from the relevant legislation . KRS 446.080 requires all statues to be "liberally construed with a view to promote their objects and carry out the intent of the legislature ." In Flying J Travel Plaza v . Commonwealth, Transportation Cabinet, Department of Highways , 928 S .W.2d 344 (Ky . 1996); Kentucky Association of Chiropractors, Inc . v . Jefferson County Medical Society, 549 S .W.2d 817 (Ky. 1977) ; Gateway Construction Company v. Wallbaum , 356 S.W.2d 247 (Ky . 1962), and numerous other cases, we have made it clear that the intent of a statute must be determined by looking to its language, without reading into the statute an intent that its language does not justify or surmising what might have been intended but not expressed . Although KRS 342 .260(1) authorizes the Office of Workers' Claims to regulate the processing of workers' compensation claims, other statutes within Chapter 342 contain procedural requirements with which a regulation must be consistent . The apparent goal of these statutes is to promote the prompt and efficient processing of claims . Some of the statutes are mandatory, while others are permissive. KRS 342.260(3) requires processes and procedures under Chapter 342 to be as summary and simple as reasonably possible . Other statutes contain mandatory deadlines for resolving claims . Among them are : KRS 342 .270(2) (an employer must file a claim denial or acceptance within 45 days of the scheduling order), KRS 342.275 (an AU must render a decision within 60 days after the final hearing), and KRS 342.285 (the Board must render a decision within 60 days after the last appellate brief is filed) . KRS 342 .310(1) is permissive . It allows costs to be assessed upon a party who has brought, prosecuted, or defended a proceeding without reasonable cause . It does not require them to be assessed upon an offending party or expressly prohibit them from being assessed upon an offending non-party. The attorney asserts that KRS 342 .310(1) limits the Office's authority and permits it to impose sanctions only against a party . We are convinced, however, that the statute's purpose is to discourage parties from bringing, prosecuting, or defending proceedings without reasonable ground . Inasmuch as Chapter 342 is silent regarding the imposition of sanctions against an offending non-party, we are not convinced that the legislature intended for KRS 342.310(1) to limit the Office's authority to regulate the prompt and efficient processing of claims by prohibiting a regulation that allows a party's attorney or representative to be sanctioned for conduct that obstructs the process . Like KRS 342.310(1), 803 KAR 25:010, § 24(2) is permissive . It allows an attorney or representative who brings, prosecutes, or defends a proceeding without reasonable ground to be sanctioned instead of the represented party. Sometimes a party demands the unreasonable ; however, the reality of litigation is that a party's attorney generally decides what arguments are to be made and files the necessary documents . Whether made by a party, an attorney, or another representative, frivolous arguments and filings obstruct the prompt and efficient processing of claims . The regulation discourages attorneys and other representatives from engaging in the practice and is within the scope of KRS 342.260(1), which authorizes the Office to adopt procedures necessary to carry out its work . We conclude, therefore, that 803 KAR 25:010, § 24(2) does not conflict with Chapter 342 or exceed the scope of the Office's regulatory authority . The attorney maintains that because his clients insist that unsuccessful claims be appealed to the Board, the regulation creates an attorney-client conflict and violates public policy . We disagree . Chapter 342 makes clear that it is the public policy of Kentucky to encourage the prompt and efficient resolution of workers' compensation claims and to discourage parties from bringing, prosecuting, or defending a proceeding without reasonable ground . This court governs the practice of law in Kentucky and has adopted SCR 3.130, the Kentucky Rules of Professional Conduct . Rule 3 .1 prohibits a lawyer from bringing or defending a proceeding or asserting or controverting an issue unless there is a basis for doing so that is not frivolous, and Rule 1 .2(e) requires a lawyer who knows that a client expects assistance that is not permitted by the Rules to inform the client about the limitations on a lawyer's conduct . Therefore, it is apparent under Chapter 342 and the Rules of Professional Conduct that a client who seeks a frivolous appeal and an attorney who prosecutes a frivolous appeal on a client's behalf violate the public policy of this state . We conclude, therefore, that 803 KAR 25:010, § 24(2) is consistent with public policy by discouraging attorneys from engaging in such conduct . As a final matter, the employer requests that sanctions be imposed against the claimant's attorney for taking a frivolous appeal to this Court . We note, however, that this appeal concerns a matter of first impression regarding the interpretation of KRS 342.260(1) and the scope of the Office's regulatory authority under KRS 342.310(1). For that reason, we deny the request . The decision of the Court of Appeals is affirmed . All concur. COUNSEL FOR CHED JENNINGS: Ched Jennings 239 South Fifth Street 412 Kentucky Home Life Bldg . Louisville, KY 40202 COUNSEL FOR MASONIC HOMES, INC .: James G . Fogle Denis S . Kline Ferreri & Fogle, PLLC 203 Speed Bldg . 333 Guthrie Green Louisville, KY 40202 COUNSEL FOR LORETTA MARIE HUFF : Loretta Marie Huff, Pro se 105 Mackie Lane Louisville, KY 40214