Case Name: KENTUCKY INSURANCE GUARANTY ASSOCIATION, Appellant, v. Jordan JEFFERS, A Minor by and Through Her Next Friends Natural Guardians and Parents, David JEFFERS and Vickie Jeffers; Patricia Sebree, Individually and as Executrix of the Estate of Louis W. Sebree; Walter Lewis Individually and Co-Administrator of the Estate of Walter Ryan Lewis; Elizabeth Lewis Individually and Co-Administrator of the Estate of Walter Ryan Lewis; Daniel McCullah, Individually and as Guardian for Flossie McCullah; James A. Dienes, M.D.; Margarete Lockhard, Appellees, and Kentucky Academy of Trial Attorneys, Amicus Curiae
Court: Supreme Court of Kentucky
Jurisdiction: Kentucky
Decision Date: 2000-03-23
Citations: 13 S.W.3d 606
Docket Number: No. 98-SC-0770-TG
Parties: KENTUCKY INSURANCE GUARANTY ASSOCIATION, Appellant, v. Jordan JEFFERS, A Minor by and Through Her Next Friends Natural Guardians and Parents, David JEFFERS and Vickie Jeffers; Patricia Sebree, Individually and as Executrix of the Estate of Louis W. Sebree; Walter Lewis Individually and Co-Administrator of the Estate of Walter Ryan Lewis; Elizabeth Lewis Individually and Co-Administrator of the Estate of Walter Ryan Lewis; Daniel McCullah, Individually and as Guardian for Flossie McCullah; James A. Dienes, M.D.; Margarete Lockhard, Appellees, and Kentucky Academy of Trial Attorneys, Amicus Curiae.
Judges: LAMBERT, C.J., GRAVES, JOHNSTONE, STUMBO, and WINTERSHEIMER JJ. concur.
Reporter: South Western Reporter Third Series
Volume: 13
Pages: 606–619

Head Matter:
KENTUCKY INSURANCE GUARANTY ASSOCIATION, Appellant, v. Jordan JEFFERS, A Minor by and Through Her Next Friends Natural Guardians and Parents, David JEFFERS and Vickie Jeffers; Patricia Sebree, Individually and as Executrix of the Estate of Louis W. Sebree; Walter Lewis Individually and Co-Administrator of the Estate of Walter Ryan Lewis; Elizabeth Lewis Individually and Co-Administrator of the Estate of Walter Ryan Lewis; Daniel McCullah, Individually and as Guardian for Flossie McCullah; James A. Dienes, M.D.; Margarete Lockhard, Appellees, and Kentucky Academy of Trial Attorneys, Amicus Curiae.
No. 98-SC-0770-TG.
Supreme Court of Kentucky.
March 23, 2000.
Armer H. Mahan, Jr., Louisville, for appellant.
William B. Hoffman, Paul A. Casi II, Louisville, Douglas H. Morris II, Louisville, Larry B. Franklin, Louisville, Richard Hay, Somerset, Douglass Famsley, Louisville, Susan P. Spickard, Louisville, William J. Driscoll, Louisville, William R. Garmer, Lexington, for appellee.

Opinion:
GRAVES, Justice.
The sole issue before this Court is whether a Legislative provision amending the Kentucky Insurance Guaranty Association Act, KRS 304.36-010 et. seq., to increase the amount of coverage from $100,-000 to $300,000 in cases involving insolvent insurance companies is limited only to those cases in which the insolvency occurred after the effective date of the amended statute, or applies retroactively to all unresolved cases. We affirm the declaratory judgment of the Jefferson Circuit Court which ruled the amendment was remedial and had retroactive application.
PIE Mutual Insurance Company was a major medical malpractice insurance carrier providing professional liability insurance for numerous physicians in Kentucky. PIE was adjudged insolvent on March 23, 1998. Appellees are individuals who have medical malpractice claims against Kentucky physicians who were insured by PIE for acts of medical negligence. In all of these actions, the remedy sought is compensation for damages allowed under Kentucky law.
Kentucky established the Kentucky Insurance Guaranty Association (KIGA), KRS 304.36-010 et. seq., to cover claims made against insureds whose carrier becomes insolvent. This non-profit unincorporated legal entity requires insurance carriers of most types of insurance, licensed to operate in Kentucky, to be members of the association. The statutory coverage limit by KIGA was $100,000 prior to July 15, 1998. In House Bill 415, the 1998 General Assembly amended many parts of the KIGA Act. In addition to other portions of the amendment, House Bill 415 provides for an increase in the maximum coverage from $100,000 to $300,000 per covered claim. KRS 304.36-080(l)(a)(3). This amendment to the statute became effective on July 15,1998.
All of the actions concerning Appellees in this case were pending at the time House Bill 415 became effective. In all of the underlying malpractice actions, KIGA denied that the increased coverage applied to any PIE claims because PIE became insolvent before the effective date of House Bill 415.
The purpose of the KIGA Act, as amended, is:
[T]o provide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to the extent provided in this subtitle to minimize financial loss to claimants or policy holders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies, and to provide a means of funding the cost of such protection among insurers. KRS 304.36-020.
As amended, the statute provides in pertinent part as follows:
"Covered claim" means an unpaid claim, . which arises out of and is within the coverage . of an insurance policy to which this subtitle applies issued by an insurer, if the insurer becomes an insolvent insurer after June 16, 1972.... KRS 304.36-050(6)(a).
[KIGA] shall: (a) Be obligated to the extent of the covered claims existing prior to the order of liquidation.... The obligation shall be satisfied by paying to the claimant . (3) An amount not exceeding three hundred thousand dollars ($300,000) per claimant.... KRS 304.35-080(l)(a)(3).
[KIGA] shall: (c) Be deemed the insurer to the extent of its obligation on the covered claims and to that extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent, . KRS 304.36-080(l)(c).
Further, KRS 304.36-040, as amended, states: "This subtitle shall be construed to effect the purpose under KRS 304.36-020 which shall constitute an aid and guide to interpretation." By its own clear terms as amended, the entire statute applies to all open claims, that is, claims existing at the time of PIE's insolvency.
In Peabody Coal Company v. Gossett, Ky., 819 S.W.2d 33 (1991), this Court deeided the issue of retroactive application of a statute in the absence of express legislative guidance. Peabody involved an injured worker awarded workers' compensation benefits in 1981. Prior to 1987, the workers' compensation statute allowed the reopening of an award only for a change of physical condition. The General Assembly amended and enlarged the statute in 1987 for a reopening on a change of occupational disability. Even though there was no change in the injured worker's underlying medical condition, he became unemployed in 1984 and was unsuccessful for two years in obtaining other employment as a coal miner. Because of these changed circumstances in employability, the injured worker moved to reopen his 1981 claim under the 1987 amendment.
The Workers' Compensation Board initially denied his motion to reopen, but a successor board reversed and reopened the claim. The procedural history is succinctly stated in the Peabody opinion as follows:
The employer appealed to the Court of Appeals which affirmed the New [sic] Board's reversal. The Court of Appeals noted that it was presented a single issue of first impression: "Did the 1987 amendment to KRS 342.125 eliminate the reopening requirement that the injured worker establish a worsening of physical condition as a prerequisite to showing an increase in occupational disability?" The court also noted that as a collateral issue, it must determine whether, if no worsening of physical condition must be shown, KRS 342.125, as amended, applies to compensation cases which arose prior to the amendment's effective date, October 26, 1987. The court then concluded in the affirmative as to both issues.
Peabody, supra, at 34.
In Peabody, the issue concerning retro-activity was premised on KRS 446.080(3), which provides that "no statute shall be construed to be retroactive, unless expressly so declared." However, this Court reasoned:
A retrospective law, in a legal sense, is one which takes away or impairs vested rights acquired under existing laws, or which creates a new obligation and imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past. Therefore, despite the existence of some contrary authority, remedial statutes, or statutes relating to remedies or modes of procedure, which do not create new or take away vested rights, but only operate in furtherance of the remedy or confirmation of such rights, do not normally come within the legal conception of a retrospective law, or the general rule against the retrospective operation of statutes. In this connection it has been said that a remedial statute must be so construed as to make it effect the evident purpose for which it was enacted, so that if the reason of the statute extends to past transactions, as well as to those in the future, then it will be so applied although the statute does not in terms so direct, unless to do so would impair some vested right or violate some constitutional guaranty. 73 Am.Jur.2d Statutes § 354 (1974). (Footnotes omitted.)
Although KRS 446.080(3) states that, "[n]o statute shall be construed to be retroactive, unless expressly so declared," it can be seen from the above commentary that since the 1987 amendment to KRS 342.125 is remedial, it does not come within the legal conception of a retrospective law nor the general rule against the retrospective operation of statutes. We believe our holding on this issue is consistent with the provision contained in KRS 446.080(1) that "[a]ll statutes of this state shall be liberally construed with a view to promote their objects and carry out the intent of the legislature.... "
Peabody, supra, at 36.
The general rule is that a statute, even though it does not expressly state, has retroactive application provided the statute is remedial. This is a fundamental rule of statutory construction which does not invade the province of the legislature. Remedial means no more than the expansion of an existing remedy without affecting the substantive basis, prerequisites, or circumstances giving rise to the remedy.
Black's Law Dictionary, (6th ed.1990), defines remedial statute, and in the third paragraph provides a clear and unequivocal guideline for identifying remedial statutes:
The underlying test to be applied in determining whether a statute is penal or remedial is whether it primarily seeks to impose an arbitrary, deterring punishment upon any who might commit a wrong against the public by a violation of the requirements of the statute, or whether the purpose is to measure and define the damages which may accrue to an individual or class of individuals, as just and reasonable compensation for a possible loss having a causal connection with the breach of the legal obligation owing under the statute to such individual or class.
The Black's Law Dictionary definition is consonant with this Court's holding in Peabody, supra. This Court has described remedial statutes as those relating "to remedies or modes of procedure, which do not create new or take away vested rights, but only operate in furtherance of the remedy or confirmation of such rights." Id. at 36 (citing 73 Am.Jur.2d Statutes § 354 (1974)). .
A remedial statute is defined in the first full paragraph of 73 Am.Jur.2d Statutes § 11 (1974), titled "Statutes Regarded as Remedial," as follows:
Legislation which has been regarded as remedial in its nature includes statutes which abridge superfluities of former laws, remedying defects therein, or mis-chiefs thereof, whether the previous difficulties were statutory or a part of the common law. Remedial legislation implies an intention to reform or extend existing rights, and has for its purpose the promotion of justice and the advancement of public welfare and of important and beneficial public objects. The term applies to a statute giving a party a remedy where he had none, or a different one, before. Another common use of the term "remedial statute" is to distinguish it from a statute conferring a substantive right.
Both definitions of a remedial statute were approved by the Kentucky Court of Appeals in Kentucky Insurance Guaranty Association v. Conco, Inc., Ky.App., 882 S.W.2d 129 (1994). In Conco, a worker was injured in October 1984, while employed by Conco, Inc. The company had workers' compensation insurance with a carrier later adjudged to be insolvent, with the result being that KIGA assumed coverage. At the time of the insolvency, KIGA's coverage was limited by statute to $50,000. In 1990, the statute was amended to remove the cap from KIGA's coverage of workers' compensation claims. Based on the holding in Peabody, supra, the Court of Appeals held that the amendment removing the cap was remedial legislation which had retroactive application. Conco, supra, at 130.
Further, the Court of Appeals in Conco, affirmed a basic concept of statutory interpretation as set out in KRS 446.080(1), that "all statutes of this state shall be liberally construed with a view to promote their objects and carry out the intent of the Legislature." Conco, supra, at 130.
When a plaintiff sues a defendant, the plaintiff has no vested right in the defendant being insured or in the amount of insurance coverage. The insurance coverage is merely a means of providing funds for the judgment. Likewise, when an insurance company becomes insolvent, KIGA provides funds to satisfy a judgment. Thus, the judicial determination of whether a statutory amendment should be applied retroactively involves a two-step inquiry: (1) Is the amendment limited to the furtherance, facilitation, improvement, etc ., of an existing remedy; and (2) If so, does it impair a vested right. If the statute in question only serves to facilitate the remedy, and if no vested right is impaired, the amendment in question is then properly applied to preexisting unresolved claims if such application is consistent with the evident purpose of the statutory scheme.
The cardinal rule of statutory construction is to ascertain and give effect to the intent of the legislature. In Cabell v. Markham, 148 F.2d 737, 739 (2nd Cir.1945), Judge Learned Hand commented:
Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.
When the Kentucky Legislature pronounced in KRS 446.080(3) that laws should not be applied retroactively, it is presumed to have done so with the knowledge that this would be interpreted to apply to laws of substance only, and not those dealing strictly with the extent of remedy. More specifically, when the 1998 General Assembly increased the limits of KIGA liability, it is presumed to have done so in light of Peabody, supra, and particularly, in full appreciation that the increase in liability limits would be applied to existing eláims, just as an earlier identical amendment was so applied in Conco, supra.
Accordingly, given the intent of the legislature as manifested in the language of the KIGA Act itself, the policy underlying the statute, and past judicial interpretation of similar statutes, it is properly consistent to apply the statutory amendments to KRS 304.36-010 et. seq., to claims which existed at the time the legislature acted. This application should include the claims made by Appellees in this matter.
The KIGA Act does not create a vested right. It merely provides a remedy when there is a judgment. KIGA accords the necessary means to satisfy judgments in the event of insui'ance insolvency. Consequently, any amendments which provide an increase in the coverage for those judgments are remedial and applicable to pending cases.
According to 73 Am.Jur.2d Statutes, § 278 (1974), "It is a general rule of law that statutes which are remedial in nature are entitled to a liberal construction in favor of the remedy provided by law, or in favor of those entitled to the benefits of the statute." Southerland Statutory Construction, § 60.01 (5th ed.1992), lends further support for the liberal interpretation of remedial statutes. "Remedial statutes are liberally construed to suppress the evil and advance the remedy. The policy that a remedial statute should be liberally construed in order to effectuate the remedial purpose for which it was enacted is firmly established." Id.
Here, the evil which is to be suppressed is that some physicians, because of the financial insolvency of their chosen insurance company, will be unable to accord satisfaction to their injured patients. In addition, the injured patients have lost a definite source of funding for their judgments. KIGA is the remedy for such losses. Rather than make a fortress out of the dictionary, we should attempt to carry out the legislature's intended goal.
Accordingly, we affirm the judgment of the Jefferson Circuit Court, ruling that the amendments to the KIGA Act, KRS 304.36-010 et. seq., are remedial and have retroactive application.
LAMBERT, C.J., GRAVES, JOHNSTONE, STUMBO, and WINTERSHEIMER JJ. concur.
COOPER, J., dissents by separate opinion in which KELLER, J., joins.
KELLER, J., also dissents by separate opinion in which COOPER, J., joins.