1

No. 112,490

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

DANIEL ANTHONY BALLARD,

Appellant,

v.

DONDLINGER & SONS CONST. CO. and

ZURICH AMERICAN INSURANCE CO.,

Appellees.

SYLLABUS BY THE COURT

1.

Appellate courts have unlimited review of questions involving the interpretation or 

construction of a statute, owing no significant deference to an agency's or a board's

interpretation or construction.

2.

When a statute is plain and unambiguous, an appellate court must give effect to its 

express language rather than determine what the law should or should not be.

3.

When a worker's job duties aggravate or accelerate an existing condition or 

disease, the injured worker's compensation is statutorily limited to any increase in the 

amount of his or her functional impairment associated with the aggravation. 

4.

Both a permanent total disability and a permanent partial disability workers

compensation award must be calculated before any reduction for preexisting functional 

impairment can be made. 
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5.

Under K.S.A. 44-504(a), injured workers may receive workers compensation 

benefits from their employers without compromising their right to pursue independent 

legal actions against third parties potentially liable for the injuries. However, K.S.A. 44-

504(b) provides that in the event of a recovery from such a third party by the injured 

worker by judgment, settlement, or otherwise, the employer shall be subrogated to the 

extent of the compensation and medical aid provided by the employer to the date of such 

recovery and shall have a lien against the entire amount of such recovery, excluding any 

recovery determined by a court to be loss of consortium or loss of services to a spouse. 

Appeal from Workers Compensation Board. Opinion filed August 21, 2015. Affirmed in part,

reversed in part, and remanded with directions.

W. Walter Craig, of Derby, for appellant. 

John D. Jurcyk and Adam M. Brillhart, of McAnany, Van Cleave & Phillips, P.A., of Kansas 

City, for appellees.

Before STANDRIDGE, P.J., BRUNS, J., and HEBERT, S.J.

STANDRIDGE, J.: Following remand by our court, this workers compensation case 

is before us for the second time. Daniel Anthony Ballard appeals the order of the Workers 

Compensation Board (Board) awarding benefits after he suffered injuries while working 

for his former employer, Dondlinger & Sons Construction Company, Inc. (Dondlinger). 

Ballard contends the Board erred in (1) calculating his permanent total disability award 

pursuant to the methodology set forth in Payne v. Boeing Co., 39 Kan. App. 2d 353, 180 

P.3d 590 (2008), and (2) determining that Dondlinger was entitled to a subrogation credit 

against future compensation payments equal to the amount Ballard received from a thirdparty settlement.
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FACTS

Ballard began working for Dondlinger in 2003. In December 2007, Ballard injured 

his neck while working and later settled a disability claim with Dondlinger, which 

included a lump sum payment for a 25% permanent partial general disability. In October 

2010, Ballard was injured in an automobile accident while working for Dondlinger. As a 

result, Ballard aggravated his preexisting cervical condition and also injured his lumbar 

spine and left elbow.

Ballard filed a workers compensation application following his 2010 injury. The 

administrative law judge (ALJ) found that Ballard sustained a permanent partial work 

disability of 87.5%, based on a 100% wage loss and a 75% task loss. The ALJ also found 

that Ballard had a preexisting functional impairment of 25%. The ALJ then calculated the 

amount of Dondlinger's credit under K.S.A. 2010 Supp. 44-501(c) for Ballard's 

preexisting impairment and the corresponding reduction in Ballard's award. In doing so, 

the ALJ reduced Ballard's work disability to 62.5% by subtracting the 25% preexisting 

impairment from Ballard's 87.5% work disability. After factoring Ballard's reduced work 

disability into the permanent partial disability computation, the ALJ found that Ballard 

was still entitled to a statutorily capped, maximum award of $100,000.

Dondlinger filed an application for review by the Board. The Board affirmed the 

ALJ's findings in all respects. Dondlinger appealed to this court, arguing in relevant part 

that the Board erred in calculating the reduction in Ballard's award under K.S.A. 2010 

Supp. 44-501(c) for his preexisting functional impairment. Specifically, Dondlinger 

alleged that the four-step method approved by Payne to calculate the amount of Ballard's 

benefit should have been used. In Ballard v. Dondlinger & Sons Constr. Co., Inc., No. 

109,905, 2014 WL 1887654 (Kan. App. 2014) (unpublished opinion), a panel of this 

court affirmed in part, reversed in part, and remanded the case to the Board. Relevant to 

the present appeal, the panel held that the Board erred in calculating Ballard's 
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compensation award but rejected Dondlinger's argument that the methodology approved 

in Payne should be followed. Relying on the decision issued the same day in Ward v. 

Allen County Hospital, 50 Kan. App. 2d 280, 324 P.3d 1122 (2014), the panel concluded 

that K.S.A. 2010 Supp. 44-501(c) required the Board to reduce Ballard's $100,000 

statutorily capped award by his 25% preexisting functional impairment. Ballard, 2014 

WL 1887654, at *4-8.

While the prior appeal was pending before this court, two relevant events 

occurred. First, Ballard filed an application for review and modification of his workers 

compensation award. Following a hearing, the ALJ found that Ballard was now 

permanently and totally disabled as a result of the 2010 automobile accident. Second, 

Dondlinger filed with the ALJ a motion for allocation of third-party recovery based on 

Ballard's receipt of an insurance indemnity award from the other driver involved in the 

2010 accident. The ALJ denied the request due to the pending appeal. Dondlinger 

requested review by the Board of each of these rulings.

The Board, by order and agreement of the parties, consolidated the issue presented 

for decision on remand from the Court of Appeals—how to calculate Dondlinger's credit 

for Ballard's 25% preexisting functional impairment—with Dondlinger's request for 

review of the ALJ's rulings related to whether Ballard was permanently and totally 

disabled and whether Dondlinger was entitled to a subrogation credit based on Ballard's 

third-party recovery. First, the Board concluded that Ballard was permanently and totally 

disabled. Based on Ballard's permanent and total disability, a majority of the Board then 

followed the four-step method approved by Payne to calculate the amount of Ballard's 

award, which resulted in a total award of $68,457.45. The Board also found that 

Dondlinger was entitled to a subrogation credit in the amount of $29,240.02 against 

future medical and compensation benefits based on Ballard's settlement with the other 

driver involved in the 2010 accident. Two Board members dissented from the majority's 

calculation of Ballard's award. Instead of using the Payne methodology, the dissent 
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advocated for the calculation method used in Ward, which would result in a total award 

of $93,250.

ANALYSIS

On appeal, Ballard raises two challenges to the Board's order. First, Ballard 

contends the Board erred in calculating his permanent total disability award pursuant to 

the methodology set forth in Payne. Second, he argues the Board erred in determining 

that Dondlinger was entitled to a subrogation credit against future compensation 

payments equal to the amount of his third-party settlement.

The Kansas Judicial Review Act (KJRA), K.S.A. 77-601 et seq., governs this 

court's standard of review for cases under the Workers Compensation Act (Act), K.S.A. 

44-501 et seq. See K.S.A. 2014 Supp. 44-556(a); K.S.A. 2014 Supp. 77-618(a). The 

standard of review varies depending upon the issue raised. See K.S.A. 2014 Supp. 77-621 

(defining and limiting scope of review of administrative decisions under KJRA). Our 

review of Ballard's arguments on appeal involves statutory interpretation of certain 

provisions of the Act. Previously, Kansas courts generally gave deference to an 

administrative agency's interpretation of a statute that the agency administers, especially 

when the agency was one of special competence and experience. See, e.g., Coma 

Corporation v. Kansas Dept. of Labor, 283 Kan. 625, 629, 154 P.3d 1080 (2007). Now, 

however, the appellate courts no longer extend deference to an agency's statutory 

interpretation. Douglas v. Ad Astra Information Systems, 296 Kan. 552, 559, 293 P.3d 

723 (2013) (doctrine of operative construction has "been abandoned, abrogated, 

disallowed, disapproved, ousted, overruled, and permanently relegated to the history 

books"); In re Tax Appeal of LaFarge Midwest, 293 Kan. 1039, 1044, 271 P.3d 732 

(2012) (noting that the doctrine of operative construction has lost favor). Accordingly, 

appellate courts have unlimited review of questions involving the interpretation or 

construction of a statute, owing "'[n]o significant deference'" to an agency's or a board's 
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interpretation or construction. Ft. Hays St. Univ. v. University Ch., Am. Ass'n of Univ. 

Profs., 290 Kan. 446, 457, 228 P.3d 403 (2010). In workers compensation cases, the 

statutes in effect at the time of the claimant's injury govern the rights and obligations of 

the parties. As a result, we will apply the statutes in place when Ballard sustained his 

2010 aggravation injury. See Bryant v. Midwest Staff Solutions, Inc., 292 Kan. 585, 587-

89, 257 P.3d 255 (2011).

1. Calculating Ballard's permanent total disability award

Ballard argues the Board erred in calculating his permanent total disability award. 

Specifically, Ballard contends the Board's use of the Payne methodology to calculate 

Dondlinger's credit for his preexisting functional impairment is contrary to this court's 

directions on remand and contrary to legislative intent because it results in an unjust 

award.

Under the Act, the amount of compensation an injured worker is entitled to receive 

depends upon the nature of his or her disability. Casco v. Armour Swift-Eckrich, 283 Kan. 

508, 522, 154 P.3d 494 (2007). Claimants suffering from a permanent total disability are 

treated differently under the Act from those who have a permanent partial disability. 

Permanent partial disability awards are paid based upon the formula set forth in K.S.A. 

44-510e(a), and such payments shall not exceed 415 weeks. McIntosh v. Sedgwick 

County, 282 Kan. 636, 646, 147 P.3d 869 (2006). Permanent partial disability benefits are 

capped at $100,000. K.S.A. 44-510f(a)(3). Permanent total disability awards are paid 

based upon the formula set forth in K.S.A. 44-510c(a)(1). Such payments continue for the 

duration of the disability, subject to review and modification. K.S.A. 44-510c(a)(1). 

Permanent total disability awards are capped at $125,000. K.S.A. 44-510f(a)(1). 

When Ballard's appeal was before this court the first time, it was a permanent 

partial disability case. Relying on Ward, the panel held that the Board misinterpreted 
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K.S.A. 2010 Supp. 44-501(c), and, as a result, did not apply the correct standard to 

reduce Ballard's award due to his preexisting functional impairment. See Ballard, 2014 

WL 1887654, at *7-8. During the pendency of the appeal, however, the nature of 

Ballard's injury changed to a permanent total disability effective October 2, 2012. As 

such, the Board concluded on remand that rather than calculating Ballard's entire award 

pursuant to the methodology in Ward, his permanent total disability award should instead 

be calculated according to the methodology set forth in Payne. 

a. Payne and Ward

In order to properly evaluate the Board's ruling, we must review the Payne and 

Ward decisions in some detail. In Payne, decided in 2008, this court affirmed the ALJ's 

calculation of the claimant's compensation award. 39 Kan. App. 2d at 356-60. The ALJ 

calculated the claimant's compensation award by determining the amount of weeks it 

would have taken her to reach the statutory maximum award for a permanent total 

disability. Based on the statutory maximum of $125,000, it would have taken the 

claimant 299.76 weeks of payments at her average weekly rate of $417 before reaching 

the statutory maximum amount of $125,000. The claimant's medical evidence showed 

she had suffered 35% impairment to her body as a whole because of a preexisting back 

condition and 10% increased impairment due to a later work-related aggravation. 

The claimant's employer did not dispute that she was permanently and totally 

disabled but argued that her award should be reduced under K.S.A. 44-501(c) because of 

her preexisting 35% impairment (415 weeks x 35% = 145.25 weeks). "Subtracting these 

145.25 weeks from the 299.76 weeks of permanent total disability payments resulted in 

an award of 154.51 weeks, or $64,430.67, less amounts previously paid." 39 Kan. App. 

2d at 356. A majority of the Board affirmed the ALJ's calculation. The Payne court 

affirmed the Board's decision, concluding that the claimant was not entitled to the 
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statutory maximum because her compensation award had to be reduced by her 35% 

preexisting functional impairment. 39 Kan. App. 2d at 357-58. 

In Ward, decided in 2014, the claimant sought workers compensation benefits for 

a 2010 cervical spine injury she sustained while working at the hospital. The ALJ 

concluded that the claimant suffered a 75.75% permanent partial general disability and 

awarded the claimant permanent partial disability compensation for a 75.50% work 

disability up to the maximum compensation award of $100,000. On review, the Board 

reduced the award to reflect credit for the claimant's 15% preexisting functional 

impairment due to a 2003 cervical spine injury. Rather than reducing the claimant's 

award by 15%, a majority of the Board subtracted 15% from the claimant's work 

disability percentage. As a result, the majority determined that the claimant was entitled 

to compensation for a 60.75% work disability, which still resulted in her receiving the 

maximum compensation award of $100,000. One Board member dissented from the 

majority's calculation of the claimant's award as contrary to the plain language of K.S.A. 

44-501(c), which states that "[a]ny award of compensation shall be reduced by the 

amount of functional impairment determined to be preexisting." The dissent noted that in 

cases, like Ward's, where the work disability value exceeds the maximum compensation 

cap, the compensation award is not reduced, contrary to the legislative intent of K.S.A. 

44-501(c). Thus, in order to comply with the statutory directive, the dissent argued that 

the Board should have reduced the claimant's $100,000 award by the percentage of 

functional impairment (15%) to arrive at a reduced award of $85,000.

On appeal to this court, the Ward panel adopted the dissent's method of 

calculation. Citing the express language of K.S.A. 44-501(c), the panel concluded that the 

statute required that "a compensation award must be calculated before any reduction is 

made." 50 Kan. App. 2d at 290. Accordingly, the Ward panel held that the $100,000 

award had to be reduced by 15% to reflect the claimant's preexisting functional 

impairment. 50 Kan. App. 2d at 294. The Ward panel concluded its opinion by stating 
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that this method of calculation "should be applied in situations only when a claimant's 

work disability value exceeds the statutory maximum compensation cap and when 

claimant will reach or attain the statutory maximum compensation cap before the 

statutory maximum number of weeks have been exhausted." 50 Kan. App. 2d at 294. 

Judge Leben concurred with the majority opinion, "express[ing] no opinion on how 

K.S.A. 44-501(c) should be applied in other circumstances, such as when the award 

would not otherwise exceed the statutory maximum." 50 Kan. App. 2d at 294-95.

On the same day that Ward was decided, this court issued its opinion in two other 

permanent partial disability cases, Ballard's previous appeal and Jamison v. Sears 

Holding Corp., No. 109,670, 2014 WL 1887645 (Kan. App. 2014) (unpublished 

opinion). Both cases expressly declined to follow the Payne methodology in calculating 

the claimants' permanent partial disability awards and instead adopted the method set 

forth in Ward. See Ballard, 2014 WL 1887654, at *7-8; Jamison, 2014 WL 1887645, at 

*6-10.

b. The Board's ruling on remand

Following remand in the present case, the Board majority applied this court's 

directive with respect to Ballard's permanent partial disability award from October 19, 

2010 (the accident date), to October 2, 2012 (effective date of modification award), 

finding that Ballard was entitled to a total award of $75,000 ($100,000 statutory 

maximum minus 25% preexisting functional impairment) payable at the rate of $545 per 

week. From October 2, 2012, forward, however, the Board majority held that Ballard's 

permanent total disability award must be reduced by the credit for preexisting impairment 

methodology set forth in Payne, resulting in a total award of $68,457.45. The majority 

calculated Ballard's permanent total disability award as follows:
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"a. $125,000 (maximum for awards of permanent total disability) divided by the 

compensation rate of $545 equals 229.36 weeks.

"b. 25% of 415 weeks equals 103.75 weeks.

"c. 229.36 weeks minus 103.75 weeks equals 125.61 weeks.

"d. 125.61 weeks at $545 per week equals $68,457.45."

In reaching this decision, the majority noted that if Ballard had remained permanently 

partially disabled—rather than becoming permanently totally disabled as of October 2, 

2012—his total award would be $75,000, an inequitable result that appeared contrary to 

the legislative intent that claimants with permanent total disabilities should receive more 

compensation than claimants with permanent partial disabilities. See K.S.A. 44-

510f(a)(1) (maximum compensation benefits payable by employer for permanent total 

disability is $125,000); K.S.A. 44-510f(a)(3) (maximum compensation benefits payable 

by employer for permanent partial disability is $100,000). Nevertheless, the majority 

concluded that it was duty bound to follow Payne as binding precedent.

The dissenting Board members adopted the Ward method and calculated Ballard's 

award by subtracting his 25% preexisting functional impairment from the $125,000 

maximum award, which would equal $93,750. The dissent noted the inequity that would 

result in this case with the application of Payne, as an injured worker who is permanently 

and totally disabled would receive less compensation than if he was only permanently 

partially disabled. The dissent also provided an example showing how the Payne

calculation method penalizes workers with higher wages and weekly benefit rates, 

pointing out that it reduced Ballard's award by over 50%, but it would be reduced by 

much less if his weekly benefit rate was lowered from over $500 to $200. The dissent 

argued that, in either case, the Payne methodology is contrary to the intent of K.S.A. 

2010 Supp. 44-501(c) because it does not actually reduce the award by the amount of the 

claimant's preexisting functional impairment.
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c. Application of Payne to permanent total disability awards

For its part, Dondlinger asserts that the Board properly adjusted its method for 

calculating Ballard's permanent total disability award because permanent total disability 

claims should be treated differently from permanent partial disability claims, as 

evidenced by the fact that these claims are found in different statutory provisions and 

each type of award is subject to a different statutory cap. See K.S.A. 44-510c(a)(1) 

(compensation for permanent total disabilities); K.S.A. 44-510e(a) (compensation for 

permanent partial disabilities); K.S.A. 44-510f(a)(1) (capping permanent total disability 

awards at $125,000); K.S.A. 44-510f(a)(3) (capping permanent partial disability awards 

at $100,000).

Dondlinger is correct that permanent total disability and permanent partial 

disability claims are treated differently under the Act in some respects. Ward involved a 

permanent partial disability claim, and thus far, its holding has only been adopted in other 

permanent partial disability cases. See Ballard, 2014 WL 1887654, at *7; Jamison, 2014 

WL 1887645, at *9. But there appears to be no statutory justification for calculating an 

award involving preexisting functional impairment differently based on the type of claim 

involved. When a statute is plain and unambiguous,

"[o]ur Supreme Court, particularly in the area of workers compensation, has 

declared that 'an appellate court must give effect only to express statutory language, 

rather than speculating what the law should or should not be, and that we will not add 

something to a statute not readily found in it.'" Ward, 50 Kan. App. 2d at 289 (quoting 

Bergstrom v. Spears Manufacturing Co., 289 Kan. 605, 610, 214 P.3d 676 [2009]).

When a worker's job duties aggravate or accelerate an existing condition or 

disease, the injured worker's compensation is statutorily limited to any increase in the 

amount of his or her functional impairment associated with the aggravation. K.S.A. 2010 

Supp. 44-501(c) directs that "[a]ny award of compensation shall be reduced by the 
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amount of functional impairment determined to be preexisting." (Emphasis added.) 

Significantly, the Ward panel noted that "[a]lthough Payne involved a permanent total 

disability and the present appeal involves a permanent partial disability, the plain 

language of K.S.A. 44-501(c) does not distinguish between these two types of 

disabilities." 50 Kan. App. 2d at 292. Moreover, the reasons given for not applying Payne 

in permanent partial disability cases are equally applicable to permanent total disability 

cases.

First, Payne was decided in 2008 and employed the doctrine of operative 

construction, which required the court to defer to the Board's interpretation of the Act "if 

there [was] a rational basis for it." 39 Kan. App. 2d 353, Syl. ¶ 1. Now, however, our 

appellate courts no longer extend deference to an agency's statutory interpretation. See 

Douglas, 296 Kan. at 559 ("In dealing with a statute in a workers compensation appeal,

no deference is due the interpretation or construction given the statute by an ALJ or the 

Board."). Accordingly, cases relying on the doctrine of operative construction are no 

longer cited for issues involving statutory interpretation in administrative cases because 

appellate review is now unlimited. See Ft. Hays St. Univ., 290 Kan. at 457.

Second, the express language of K.S.A. 2010 Supp. 44-501(c) requires the award 

of compensation to be reduced by the percentage of the claimant's preexisting functional

impairment. In certain cases, the Payne methodology does not accomplish the legislative 

directive of reducing the award where it is capped at the statutory maximum. This could 

occur in either a permanent partial disability or a permanent total disability case. 

Third, Payne's formula for calculating credit can be inconsistent because the 

formula is "'based upon a variety of factors, including the average weekly wage and 

percentage of work disability.'" Ward, 50 Kan. App. 2d at 292. For example, the Payne

methodology may penalize injured workers who earn a higher rate of pay. As noted by 

the Board's dissent, in some instances, a lower paid injured worker with a preexisting 
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functional impairment would receive nearly all of the $125,000 maximum benefits, while 

a higher paid worker would receive significantly less.

Fourth and finally, application of the Payne methodology in this case leads to an 

inequitable result by awarding Ballard less for a permanent total disability than he would 

have received if he had continued to suffer only a permanent partial disability. Such a 

result is clearly contrary to legislative intent that a totally disabled worker should receive 

higher benefits than those workers who are only partially disabled. See K.S.A. 44-

510f(a)(1) and (a)(3).

In sum, the modification of Ballard's injury to a permanent total disability does not 

change the manner in which the award should be calculated to reflect his preexisting 

functional impairment. Payne should no longer be used to determine credit for 

preexisting functional impairment when calculating permanent total disability awards. 

Therefore, under Ward's methodology, both a permanent total disability and a permanent 

partial disability workers compensation award must be calculated before any reduction 

for preexisting functional impairment can be made. Because the Board used Payne to 

calculate Ballard's permanent total disability award, we must reverse and remand with 

directions that the Board apply K.S.A. 2010 Supp. 44-501(c) to reduce Ballard's 

$125,000 statutorily capped award by his 25% preexisting functional impairment, 

consistent with the calculation adopted in Ward.

2. Subrogation credit

Ballard argues the Board erred in determining that Dondlinger is entitled to a 

subrogation credit pursuant to K.S.A. 44-504(b) as a result of his third-party settlement 

recovery.
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K.S.A. 44-504(a) provides that injured workers may receive workers 

compensation benefits from their employers without compromising their right to pursue 

independent legal actions against third parties potentially liable for the injuries. K.S.A. 

44-504(b), however, grants employers subrogation rights for workers compensation 

benefits paid injured employees as against recoveries those employees might realize in 

third-party suits by permitting employers to intervene in these actions to protect their 

subrogation interests. K.S.A. 44-504(b) provides, in relevant part:

"In the event of recovery from such other person by the injured worker or the 

dependents or personal representatives of a deceased worker by judgment, settlement or 

otherwise, the employer shall be subrogated to the extent of the compensation and 

medical aid provided by the employer to the date of such recovery and shall have a lien 

therefor against the entire amount of such recovery, excluding any recovery, or portion 

thereof, determined by a court to be loss of consortium or loss of services to a spouse. 

The employer shall receive notice of the action, have a right to intervene and may 

participate in the action. The district court shall determine the extent of participation of 

the intervenor, including the apportionment of costs and fees. Whenever any judgment in 

any such action, settlement or recovery otherwise is recovered by the injured worker or 

the worker's dependents or personal representative prior to the completion of 

compensation or medical aid payments, the amount of such judgment, settlement or 

recovery otherwise actually paid and recovered which is in excess of the amount of 

compensation and medical aid paid to the date of recovery of such judgment, settlement 

or recovery otherwise shall be credited against future payments of the compensation or 

medical aid." 

Our Supreme Court has recognized that "[t]he intent of K.S.A. 44-504(b) is twofold: (1) 

to preserve injured workers claims against third-party tortfeasors and (2) to prevent 

double recoveries by injured workers." Wishon v. Cossman, 268 Kan. 99, 105, 991 P.2d 

415 (1999). As such, the court went on to hold that "K.S.A. 44-504(b) grants employers 

subrogation liens on tort recoveries by injured workers only to the extent that a worker's 
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recovery duplicates compensation and medical expenses paid by the employer under the 

Workers Compensation Act." 268 Kan. at 105-06.

Consistent with his rights under K.S.A. 44-504(a), Ballard filed a claim against the 

other driver involved in the 2010 automobile accident which caused his injuries. The case 

was settled for $100,000, the policy limit of the insurance carrier, State Auto. At the time 

of the settlement, Dondlinger had paid compensation and medical expenses related to 

Ballard's workers compensation claim totaling $55,848.81. Accordingly, State Auto 

issued two checks. The first check for $55,848.81 was made out to Ballard, Ballard's 

attorney, and Dondlinger's insurance carrier as a result of Dondlinger's subrogation lien. 

The second check for $44,151.19 was made out to Ballard and his attorney. It is 

undisputed that after deducting attorney fees and expenses, Ballard actually received 

$29,240.02.

Citing K.S.A. 44-504(b), the Board held that Dondlinger was entitled to a 

subrogation credit in the amount of $29,240.02 against any workers compensation 

benefits that accrued after Ballard's tort recovery or would accrue in the future. In other 

words, the Board ruled that Dondlinger was not required to resume benefit payments until 

the credited amount was exhausted.

Ballard contends the Board erred in determining that Dondlinger was entitled to a 

subrogation credit because there was no evidence presented indicating (1) a lien amount, 

(2) that Dondlinger had asserted its entitlement to a lien, or (3) that Dondlinger had 

addressed Ballard's loss of consortium or loss of services claims. As such, Ballard claims 

that Dondlinger has waived its right to any subrogation credit or potential lien.

Ballard's arguments misconstrue the clear distinction between subrogation liens 

and credits set forth in K.S.A. 44-504(b). The statutory language expressly gives an 

employer a subrogation interest in and lien "against the entire amount of [the employee]'s 
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recovery" from the third party, except for damages for loss of consortium. See K.S.A. 44-

504(b). The lien amount corresponds to "the extent of the compensation and medical aid 

provided by the employer" to the date of recovery. K.S.A. 44-504(b). It is undisputed that 

at the time of the settlement of Ballard's third-party claim, Dondlinger had paid 

compensation and medical expenses in the amount of $55,848.81. Thus, Dondlinger has a 

lien in this amount against Ballard's settlement recovery. And there is no statutory 

requirement that a lienholder file a notice of lien to be subrogated to recovery from a 

third party. Such subrogation and creation of a lien occurs automatically under K.S.A. 

44-504(b). Smith v. Russell, 274 Kan. 1076, 1086, 58 P.3d 698 (2002). Additionally, 

Ballard's loss of consortium or loss of services claims are without merit. K.S.A. 44-

504(b) gives an employer a subrogation interest in and lien against the entire amount of 

an employee's recovery from a third party except for damages for loss of consortium "to a 

spouse." Loss of consortium or loss of service to a spouse must be "determined by a 

court." K.S.A. 44-504(b). Here, there has been no such determination by a court. Nor is 

there any evidence in the record to establish that Ballard was married at the time of the 

2010 accident. Ballard suggests that his loss of consortium claim relates to his 

granddaughter who has cancer, but loss of consortium damage results from the 

deprivation of services, including care and companionship, suffered by the spouse of the 

physically injured party. See K.S.A. 2014 Supp. 23-2605.

Affirmed in part, reversed in part, and remanded to the Board with directions to 

calculate Ballard's permanent total disability award consistent with this opinion.