Title: Brennan v. Kan. Ins. Guar. Ass'n
Citation: N/A
Docket Number: 102308
State: Kansas
Issuer: Kansas Supreme Court
Date: October 21, 2011

1 
 
 
 
IN THE SUPREME COURT OF THE STATE OF KANSAS 
No. 102,308 
JOHN M. BRENNAN, 
Appellee, 
 
v. 
 
KANSAS INSURANCE GUARANTY ASSOCIATION, 
Appellant. 
 
 
SYLLABUS BY THE COURT 
 
1. 
One stated purpose of the Kansas Insurance Guaranty Association Act, K.S.A. 40-
2901 et seq., is to avoid financial loss to claimants and policyholders due to insurance 
company insolvencies.  
 
2. 
The Kansas Insurance Guaranty Association is obligated to pay covered claims 
existing prior to the determination of an insurer's insolvency and any other claims arising 
within 30 days of that determination. 
 
3. 
The Kansas Insurance Guaranty Association Act was designed to put claimants 
and policyholders in the same position they would have occupied had the policyholders' 
insurance company remained solvent. 
 
 
 
 
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4. 
K.S.A. 2010 Supp. 40-2910 requires claimants seeking coverage from the Kansas 
Insurance Guaranty Association to first exhaust other available insurance claims. 
 
5. 
As originally enacted, the Kansas Insurance Guaranty Association Act did not 
require a claimant to first offset amounts paid or payable under a health insurance policy 
in determining liability to claimants. An amendment made in 2005 changed the original 
statute to broaden the offset provisions and was not intended to simply clarify them. 
 
6. 
Courts considering the constitutionality of a statutory amendment expressly 
requiring retroactive application must decide whether the amendment's retroactivity will 
affect vested rights, thereby violating due process.  
 
7. 
 
When determining whether a statutory amendment affects a vested right, courts 
consider: (a) the nature of the right at stake; (b) how the right was affected; and (c) the 
nature and strength of the public interest furthered by the legislation. The nature of the 
right at stake by itself is not determinative. It must be considered in light of the other 
factors. 
 
8. 
Under the facts of this case, the retroactivity provision in K.S.A. 2010 Supp. 40-
2910(a) adversely impacted a claimant's vested rights under the Kansas Insurance 
Guaranty Association Act by requiring an offset for health care benefits paid on that 
claimant's behalf. The retroactivity provision violated that claimant's due process rights. 
 
 
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9. 
Whether a court may sever an unconstitutional provision from a statute while 
leaving the remainder in force and effect depends on the legislature's intent. If after 
examining the statute a court can determine the act would have passed without the 
objectionable portion and operate effectively to carry out the legislature's intent with the 
portion stricken, the remainder of the valid law will stand.   
 
Appeal from Reno District Court; RICHARD J. ROME, judge. Opinion filed October 21, 2011. 
Affirmed.  
 
David A. Hanson, of Glenn, Cornish, Hanson & Karns, Chartered, of Topeka, argued the cause 
and was on the brief for appellant.  
 
Derek S. Casey, of Prochaska, Giroux & Howell, of Wichita, argued the cause, and James R. 
Howell, of the same firm, was with him on the briefs for appellee. 
 
The opinion of the court was delivered by 
 
BILES, J.:  This appeal arises from a medical malpractice lawsuit. John M. Brennan 
sued his physician, who had a $200,000 professional liability insurance policy. The 
insurer was declared insolvent after Brennan filed his claim but before he recovered. The 
Kansas Insurance Guaranty Association (KIGA) is a statutorily created entity that 
substitutes some coverage for certain claims against insolvent insurers. KIGA denied 
liability because Brennan received medical reimbursements from his personal health 
insurance policy that totaled more than the insolvent insurer's policy limits. 
 
The dispositive issue is whether Brennan's due process rights were violated by a 
retroactive statutory amendment permitting KIGA to offset Brennan's personal health 
insurance benefits against its liability on the insolvent insurer's policy. The district court 
 
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declared the statute's retroactive feature unconstitutional. As explained below, we agree 
that Brennan's due process rights were violated and find the statute may not be 
retroactively applied. 
 
FACTUAL AND PROCEDURAL BACKGROUND 
 
The facts are undisputed. In 2000, Brennan sued Jeff Thode, M.D., for medical 
malpractice, seeking $2.5 million in damages for injuries sustained during a 1999 
treatment. At that time, Dr. Thode's primary professional liability insurer was PHICO 
Insurance Company. That policy secured $200,000 in coverage. In addition, Dr. Thode 
carried $800,000 in secondary liability coverage with the Kansas Healthcare Stabilization 
Fund. The offset controversy arises because Brennan had his own health care insurance 
policy, which covered injuries caused by others. That policy paid $500,000 for treatments 
related to the injuries Brennan claimed from Dr. Thode's negligence.  
 
In 2002, a Pennsylvania court declared PHICO insolvent, placing the company 
into liquidation. It is uncontested that PHICO's insolvency triggered KIGA's statutory 
obligation to cover the insurer's obligations to the extent provided by the Kansas 
Insurance Guaranty Association Act (Guaranty Act), K.S.A. 40-2901 et seq. But in 2005, 
while Brennan's lawsuit against Dr. Thode remained pending, the legislature revised the 
Guaranty Act to expressly authorize KIGA to offset the association's liability with 
amounts paid by a claimant's medical insurance. The legislation retroactively applied that 
offset provision to all claims pending, but not yet paid, effective April 14, 2005. L. 2005, 
ch. 92, sec. 4 ("The provisions of this section, as amended, shall apply to all claims which 
have not been paid prior to the effective date of this act."). 
 
In September 2005, a settlement agreement was approved in Brennan's litigation 
against Dr. Thode, which dismissed Brennan's claim with prejudice in exchange for an 
 
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undisclosed payment by the Healthcare Stabilization Fund. But the agreement did not 
resolve the question about KIGA's ability to offset payments made by Brennan's health 
care policy. The district court retained jurisdiction over the $200,000 policy issued by 
PHICO. To facilitate a resolution to that dispute, Brennan and KIGA stipulated they 
would not raise procedural defenses or require Brennan to establish evidence of liability 
or damages. 
 
For reasons not clear in the record, KIGA did not formally intervene in Brennan's 
case until 2007. Both parties then filed cross-motions for summary judgment seeking a 
declaratory judgment on whether KIGA was obligated as a matter of law to pay Brennan 
for PHICO's $200,000 policy. There were no issues of material fact. 
 
In summary, the parties disputed whether the amendment changed the law or 
clarified it. KIGA argued the 2005 amendment did not change the law and KIGA had 
always been entitled under the preamended Act to offset the $500,000 paid by Brennan's 
health care policy against KIGA's liability on the insolvent malpractice policy. Brennan, 
on the other hand, argued KIGA was not entitled to the offset under the preamended 
statute and was statutorily obligated to pay the $200,000 from the moment PHICO was 
declared insolvent. Any retroactive application of the 2005 amendment, Brennan 
contended, violated his due process rights. He also made an equal protection argument, 
claiming the amended statute treated insured and uninsured claimants differently without 
a rational basis for the distinction. 
 
The district court agreed with Brennan on both due process and equal protection 
grounds and declared application of the revised statute unconstitutional. The district court 
found the 2005 amendment substantively changed the prior law by giving KIGA a right 
to offset its obligation with Brennan's medical insurance benefits that did not exist under 
the original Guaranty Act. The court held that retroactive application of the 2005 revision 
 
6 
 
 
 
violated due process. It also held there was no rational basis to treat claimants with 
insurance differently than those without insurance when determining whether KIGA was 
liable for the insolvent insurer's policy. 
 
The district court entered judgment against KIGA for $200,000. KIGA filed a 
timely notice of appeal. Jurisdiction is proper under K.S.A. 60-2101(b) (civil statute held 
unconstitutional). 
 
ANALYSIS 
 
Standard of Review 
 
Determining a statute's constitutionality is a question of law subject to unlimited 
review. But under the separation of powers doctrine, this court presumes statutes are 
constitutional and resolves all doubts in favor of a statute's validity. Courts must interpret 
a statute in a way that makes it constitutional if there is any reasonable construction that 
would maintain the legislature's apparent intent. State v. Laturner, 289 Kan. 727, 735, 
218 P.3d 23 (2009). 
 
A statute's interpretation also is a question of law subject to unlimited review. The 
legislature's intent governs if it can be ascertained. The first step is to decide whether the 
legislature's intent may be determined from the statute's plain language, giving ordinary 
words their ordinary meaning. If the legislature's intent is not clear from the statutory 
language, a court moves to the second analytical step by applying the canons of 
construction or examining legislative history. Double M Constr. v. Kansas Corporation 
Comm'n, 288 Kan. 268, 271-72, 202 P.3d 7 (2009). 
 
 
7 
 
 
 
In order to reach the merits, we will review the following:  (1) the Guaranty Act 
and the 2005 amendment at the heart of this controversy; (2) whether the 2005 
amendment had retroactive application; (3) whether the 2005 amendment affected 
Brennan's vested rights; and (4) remedy. We do not address the district court's equal 
protection ruling because our decision on the due process claim renders that exercise 
moot. 
 
Overview of the Guaranty Act and 2005 Amendment 
 
The Guaranty Act, K.S.A. 40-2901 et seq., was adopted in 1970. L. 1970, ch. 185, 
secs. 1-19. Its stated purpose is  
 
"to provide a mechanism for the payment of covered claims under certain insurance 
policies, to avoid excessive delay in payment and to avoid financial loss to claimants or 
policyholders because of the insolvency of an insurer, to assist in the detection and 
prevention of insurer insolvencies, and to provide an association to assess the cost of such 
protection among insurers." K.S.A. 40-2901. 
 
 
This purpose guides any interpretation of the Guaranty Act, and it is to be liberally 
construed to effect these stated purposes. K.S.A. 40-2901. The Act applies to property 
and casualty insurance, including the professional liability/medical malpractice insurance 
at issue in this case. K.S.A. 40-2902; K.S.A. 40-1102. It was based on the National 
Association of Insurance Commissioners' widely adopted Post-Assessment Property & 
Liability Insurance Guaranty Model Act. See Hetzel v. Clarkin, 244 Kan. 698, 701, 772 
P.2d 800 (1989). The Guaranty Act establishes KIGA as a nonprofit unincorporated legal 
entity whose membership statutorily comprises all insurers authorized to write insurance 
covered by the Guaranty Act. K.S.A. 40-2904. KIGA assesses annual fees against 
member insurers to pay its obligations. The assessment is based on a percentage of 
 
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insurer premiums. K.S.A. 40-2906(a)(3). KIGA uses the money it receives to cover 
claims against insolvent insurance companies. 
 
Two specific statutorily imposed duties arise once an insurer is determined to be 
insolvent. First, KIGA is deemed the insurer to the extent of its statutory obligation on 
the covered claims and has all rights, duties, and obligations of the insolvent insurer as if 
the insurer had not become insolvent. K.S.A. 40-2906(a)(2). Second, KIGA is obligated 
to pay covered claims existing prior to the insolvency determination and any other claims 
arising within 30 days after that determination. K.S.A. 40-2906(a)(1). In cases other than 
workers compensation, KIGA's obligation is limited to the face amount of the insolvent 
insurer's policy, up to a $300,000 cap. K.S.A. 40-2906(a)(1).  
 
But the Guaranty Act has always limited KIGA's obligations by requiring 
claimants seeking coverage from KIGA to first exhaust (offset) any rights under certain 
other available insurance claims. K.S.A. 40-2910. This is sometimes referred to as a 
"nonduplication of recovery" provision. See Hetzel, 244 Kan. at 702. Those exhaustion 
requirements were amended in 2005. L. 2005, ch. 92, sec. 4. The effect of that 
amendment, if any, is the subject of this dispute. Therefore, a review of both the original 
and amended statute is required because the success of Brennan's due process argument 
hinges on whether the 2005 amendment changed KIGA's obligation to Brennan after 
PHICO became insolvent. The statute in effect at the time PHICO was declared insolvent 
stated:  
 
"Any person having a claim against an insurer under any provision in an 
insurance policy other than a policy of an insolvent insurer which is also a covered claim 
shall be required to exhaust first his right under such policy. Any amount payable on a 
covered claim under this act shall be reduced by the amount of any recovery under such 
insurance policy." K.S.A. 40-2910(a).  
 
 
9 
 
 
 
 
At that time, the Act defined "covered claim" as  
 
"an unpaid claim, including one for unearned premiums, which arises out of and is within 
the coverage and not in excess of the applicable limits of an insurance policy to which 
this act applies issued by an insurer, if such insurer becomes an insolvent insurer after the 
effective date of this act and (1) the claimant or insured is a resident of this state at the 
time of the insured event; or (2) the property from which the claim arises is permanently 
located in this state. 'Covered claim' shall not include any amount due any reinsurer, 
insurer, insurance pool or underwriting association, as subrogation recoveries or 
otherwise." K.S.A. 40-2903(c). 
 
In 2005, the italicized language below was added to explicitly offset benefits from 
health insurance policies. L. 2005, ch. 92, sec. 4. It states:   
 
 
"Any person having a claim against an insurer under any provision in an 
insurance policy other than a policy of an insolvent insurer which is also a covered claim 
shall be required to exhaust first his right under such policy. A claim under an insurance 
policy shall include a claim under any kind of insurance, whether such claim is a first 
party or third party claim, and shall include, without limitation, accident and health 
insurance, workers' compensation, Blue Cross and Blue Shield and all other coverages 
except for policies of an insolvent insurer. Any amount payable on a covered claim under 
this act shall be reduced by the amount of any recovery under such other insurance 
policy." (Emphasis added.) K.S.A. 2010 Supp. 40-2910(a).  
 
The parties concede that if PHICO's insolvency had occurred after the 2005 
amendment became law, the offset in controversy here would not present a due process 
issue under the plain language of the amended statute. But since those are not our facts, 
we must next determine whether the legislature could reach back and reduce or eliminate 
KIGA's liability for pending claims with this statutory amendment. 
 
 
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Retroactive Application of the 2005 Amendment 
 
To comply with due process requirements, retroactive legislation cannot abolish a 
vested right. See Resolution Trust Corp. v. Fleischer, 257 Kan. 360, 365, 892 P.2d 497 
(1995). To decide whether the 2005 amendment's retroactive application violates 
Brennan's due process rights by extinguishing a vested right, we must first determine 
whether KIGA was entitled to offset its liability with Brennan's health insurance under 
the original statute. If the law did not change, Brennan's due process claim fails. But if we 
determine that the amendment changed KIGA's obligations from what it was at the time 
of PHICO's insolvency, we must then determine whether Brennan's right to payment 
vested prior to the statutory change.  
 
Brennan argues KIGA could not offset amounts paid or payable under a health 
insurance policy under the provision in effect at the time PHICO became insolvent. He 
contends the exhaustion requirement in place at that time was intended to keep the 
claimant in the same position he or she would have occupied absent the insurance 
company's insolvency. KIGA argues the statute always entitled it to offset health care 
policy payments and the 2005 amendments merely clarified this then-existing right, citing 
this court's decision in Hetzel to support that interpretation. KIGA also argues the 
Guaranty Act's purpose is limited to providing a safety net to protect the insured against 
insolvencies, so limitations on a claimant's recovery properly prevent duplicate recovery 
and maintain the Act's continued viability. To resolve these conflicting positions, we 
examine below the statute's explicit purpose and plain language, how other jurisdictions 
have viewed the same or similar statutory language, and whether the legislature 
expressed its original intent when it amended the law in 2005. 
 
 
 
 
11 
 
 
 
(a) Statutory Purpose   
 
We turn first to the statute's explicit language. The original K.S.A. 40-2910 
provisions required exhaustion when "[a]ny person [has] a claim against an insurer under 
any provision in an insurance policy other than a policy of an insolvent insurer which is 
also a covered claim." On its face, this language cannot mean what it explicitly says 
because the exhaustion requirement would apply to any "claim against an insurer" even in 
unrelated circumstances. For example, if Brennan had pending an automobile liability 
claim for damage to his car against an unrelated insurer, this statute on its face would 
require that KIGA receive an offset for the automobile claim before paying on the 
insolvent PHICO policy. KIGA concedes in its briefs and during oral argument that this 
is not permitted. But this example illustrates why the statute lacks the clarity KIGA 
contends exists. Indeed, courts across the country are in conflict about what the offset 
provision means.   
 
Our court first noted this conflict among jurisdictions in Hetzel, in which we 
observed that various states adopted identical language from the model act, but differing 
judicial interpretations existed. 244 Kan. at 702. After describing some of those 
differences, we relied upon the Kansas statute's legislative history to determine that 
KIGA could offset payments made under a claimant's uninsured motorist coverage. 
Hetzel, 244 Kan. at 701. In doing so, this court found the statutory language ambiguous. 
As such, we will continue to employ statutory construction rules and the statute's 
legislative history to determine the intent of the legislature and resolve Brennan's claim. 
 
The Guaranty Act specifically states it should be construed to effect its stated 
purposes. Two of those purposes are related to this claim:  (1) to provide a means for 
paying covered claims under certain insurance policies; and (2) to avoid excessive delay 
in payment and to avoid financial loss to claimants or policyholders because of an 
 
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insurer's insolvency. K.S.A. 40-2901. In Hetzel, this court adopted the statement of 
purpose identified in an Illinois decision, Lucas v. Illinois Ins. Guaranty Fund, 52 Ill. 
App. 3d 237, 367 N.E.2d 469 (1977). Hetzel, 244 Kan. at 703-04. It held:  
 
"'The statutory purpose is to place claimants in the same position that they would have 
been in if the liability insurer had not become insolvent. [Citation omitted.] The Act 
states that the Fund is intended to protect claimants against financial loss because of the 
insolvency of insurance companies. The difference between the amount of the insolvent 
insurer's policy limits and the amount paid to claimant by his own insurer is made up by 
the Fund. To permit a greater recovery than would have occurred had the insurance 
company remained solvent would both extend the Act beyond its purpose and offend 
public policy by giving the Act an interpretation which results in a windfall judgment.'"  
244 Kan. at 704 (quoting Lucas, 52 Ill. App. 3d at 239). 
 
In Hetzel, the plaintiff sued Charles Clarkin, claiming $750,000 in damages from a 
car accident. Clarkin had a $50,000 automobile insurance policy, but his insurer was 
insolvent. For her part, Hetzel had a $5,000 personal injury protection (PIP) policy and a 
$30,000 uninsured motorist policy. She settled with her uninsured motorist insurer for 
$25,000. She then claimed this settlement exhausted her uninsured motorist policy 
because that policy allowed her insurer to deduct the amount paid on the PIP policy. 
Clarkin moved to dismiss the suit against him, arguing K.S.A. 40-2910 required a 
claimant to first exhaust any right under other covered claims. And since Hetzel failed to 
fully exhaust her uninsured motorist benefits, Clarkin argued KIGA had no obligation to 
pay. This argument assumed Hetzel's uninsured motorist coverage had a $30,000 policy 
limit and that limit was not reduced by the $5,000 PIP policy. The district court agreed 
and dismissed Hetzel's claim. This court affirmed, holding that a claimant must exhaust 
his or her own uninsured motorist coverage and that KIGA may offset its liability by the 
amount the plaintiff could have recovered, i.e., the policy limits. 244 Kan. at 705-07.  
 
 
13 
 
 
 
The Hetzel result is understandable, given the Guaranty Act's stated statutory 
purpose when applied to uninsured motorist coverage. In those instances, a claimant 
should not be entitled to recover from KIGA under the insolvent insurer's policy and then 
use the fact that the insurer was insolvent to make a claim against claimant's own 
uninsured motorist coverage. A double recovery would result from the insolvency. 
 
But turning back to Brennan's case, the question is whether Hetzel's analysis 
applies to medical insurance benefits recovered from a claimant's own health care policy. 
We believe it does not. Looking first to the Guaranty Act's statutory purpose, Hetzel is 
easily distinguishable because uninsured motorist benefits are available to the insured 
when there is insolvency. In other words, had Clarkin's automobile insurer remained 
solvent, Hetzel would not have had a claim against her uninsured motorist policy. And 
allowing her to recover from both KIGA and her uninsured motorist coverage would 
result in a windfall because of that duplication. But a claimant receiving benefits under a 
health care policy would not receive a windfall. In fact, offsetting the claimant's medical 
insurance benefits would reduce the total coverage available. 
 
To use Brennan as an example, had Dr. Thode's insurer not become insolvent, 
there would have been $1,000,000 in professional liability insurance coverage to satisfy 
Brennan's claim. But under the statutory interpretation advanced by KIGA, the most 
Brennan could recover after the insolvency would be $800,000 because of the claimed 
offset. If permitted, such an offset would shift the burden created by the insurer's 
insolvency onto Brennan and his health care policy carrier instead of having KIGA bear 
the loss, which would in turn distribute the claim for the insolvent insurer among all 
solvent ones. This outcome cannot be reconciled with the statutory purposes expressed in 
the Guaranty Act. For that reason, we find the statutory purpose supports Brennan's 
argument that K.S.A. 40-2910 did not allow the offset before the 2005 amendment.   
 
 
14 
 
 
 
(b) Other Jurisdictions 
 
Most jurisdictions addressing whether their own guaranty fund may offset medical 
insurance benefits under an identical or substantially similar statute to the preamended 
version of K.S.A. 40-2910 have found no entitlement to offset medical insurance 
benefits. See Pritchett v. Clifton, 738 F.2d 319, 320-21 (8th Cir. 1984) (guaranty 
association was not entitled to offset amount injured party recovered under her medical 
insurance policy.); Connecticut Ins. Guaranty Assn. v. Zasun, 52 Conn. App. 212, 230, 
725 A.2d 406 (1999) (provision was intended "to apply only to prevent duplicate or 
windfall recoveries for losses sustained by an insured or a claimant resulting from insurer 
insolvency"); Indiana Ins. Guar. Ass'n. v. Blickensderfer,, 778 N.E.2d 439, 446 (Ind. 
App. 2002) ("the claim to be offset must be for the same loss as the claim asserted against 
[the guaranty association]").  
 
As Brennan notes, Pennsylvania enacted an amendment identical to the changes 
made by the Kansas Legislature in 2005, and Pennsylvania courts have addressed a 
medical insurance benefits offset under both the original and amended statutes. In Sands 
v. PA. Ins. Guaranty Ass'n, 283 Pa. Super. 217, 423 A.2d 1224 (1980), superseded by 
statute as recognized in Blickensderfer, 778 N.E.2d at 443 n.3, the Sands court held the 
guaranty association was not entitled to offset medical insurance benefits. 283 Pa. Super. 
at 225-26. The issue arose again after the amendment was enacted, and the Pennsylvania 
Supreme Court then allowed the offset for medical insurance benefits based on statutory 
language identical to the amendment enacted in Kansas. Bell v. Slezak, 571 Pa. 333, 346, 
812 A.2d 566 (2002). We note the Bell decision came several years before KIGA 
proposed the 2005 amendment to the legislature.  
 
Some decisions from other jurisdictions addressing this issue rely on expressly 
stated exclusion provisions not contained in the Kansas Guaranty Act. For example, 
 
15 
 
 
 
Alabama has held its guaranty association may not offset medical insurance benefits or 
workers compensation benefits because its guaranty act excludes disability, accident, and 
health insurance from its scope of coverage. See Alabama Ins. Guar. Ass'n v. Stephenson, 
514 So. 2d 1000, 1002-03 (Ala. 1987) (health insurance); Alabama Ins. Guar. v. Magic 
City Trucking, 547 So. 2d 849, 851-53 (Ala. 1989) (workers compensation benefits). But 
these decisions provide no support for, or against, the issue in Brennan's case. 
 
 
Finally, we concede there is limited support in other jurisdictions for finding an 
offset allowable under the preamended statute, but none of those cases are directly 
analogous. For example, in Illinois that state's guaranty fund was entitled to offset health 
insurance, but that decision was based on a different exhaustion provision that allowed 
offsets "if the claim under such other policy arises from the same facts, injury, or loss that 
gave rise to the covered claim against the Fund." Ill. Comp. Stat. ch. 215 § 5/546; Roth v. 
Illinois Insurance Guaranty Fund, 366 Ill. App. 3d 787, 796-98, 852 N.E.2d 289 (2006). 
And there are two states holding their guaranty funds were entitled to offset medical 
insurance benefits recovered from workers compensation insurers under provisions 
identical to the preamended Kansas statute. See Orren v. Smackover Nursing Home, 46 
Ark. App. 38, 40, 876 S.W.2d 600 (1994) (state guaranty fund not responsible for paying 
medical bills already paid by employee's health care insurance despite fact employer's 
workers compensation insurer was insolvent); Mosier v. Oklahoma Prop. and Cas. Ins., 
890 P.2d 878, 880 (Okla. 1995) (no language within the statute limiting the exhaustion 
requirement to instances preventing duplicate recovery).  
 
Overall, the majority of authority from other states persuasively supports our 
holding that the preamended Kansas statute did not allow an offset for health care 
benefits paid to a claimant. Given that the Kansas Guaranty Act was based on a model 
law, we find the rulings from our sister states with comparable statutory language 
 
16 
 
 
 
reinforcing in our conclusion. The remaining question is whether the legislature changed 
or clarified its intent as to the original enactment when it amended the statute. 
 
(c) Expression of Original Intent in 2005 
 
Determining whether the legislature intended to change or clarify an existing law 
while amending it is a difficult undertaking without an explicit statement of intent. 
Furthermore, the district court did not address KIGA's clarification argument. It relied 
solely on Hetzel to find that the original enactment only applied to duplicate recovery 
from double coverage and that KIGA would have owed Brennan benefits before the 2005 
amendment. 
 
Ordinarily, courts presume the legislature intends to make a substantive change 
when it revises an existing law, but this presumption's strength, weakness, or validity 
changes according to the circumstances. When an original statute is ambiguous, the 
legislative purpose may be to clarify the statute's ambiguities, not to change the law. 
Trees Oil Co. v. Kansas Corporation Comm'n, 279 Kan. 209, 229, 105 P.3d 1269 (2005) 
(citing State ex rel. Morrison v. Oshman Sporting Goods Co. Kansas, 275 Kan. 763, 773, 
69 P.3d 1087 [2003]). A statutory amendment may provide insight into the original 
enactment's legislative intent if that enactment was ambiguous. Amendments that 
construe or clarify a prior statute "'must be accepted as the legislative declaration of the 
meaning of the original act.'" Estate of Soupene v. Lignitz, 265 Kan. 217, 222, 960 P.2d 
205 (1998) (quoting 82 C.J.S., Statutes § 384[a], pp. 899-900.) Furthermore, "'an 
amendment making a statute directly applicable to a particular case is not a conclusive 
admission by the legislature that the statute did not originally cover [it].'" 265 Kan. at 222 
(quoting 82 C.J.S., Statutes § 384[b][2], pp. 906-07). But if the amendment contains a 
radical change to a statute's phraseology, it is generally perceived as a legislative 
 
17 
 
 
 
declaration that the original law did not "'embrace the amended provision.'" 265 Kan. at 
222 (quoting 82 C.J.S., Statutes § 384[b][2], pp. 906-07). 
 
 
The legislative history reflects that KIGA proposed the amendment at issue during 
the 2005 legislative session, and a KIGA representative advocated for its adoption before 
the Senate and House insurance committees. Minutes of the House Insurance Committee, 
February 17, 2005; Minutes of the Senate Financial Institutions and Insurance 
Committee, March 16, 2005. In written remarks distributed to both committees, KIGA 
self-described the proposed revisions as reinforcing the Guaranty Act's original intent to 
make KIGA the payor of last resort and providing clarification that the offset 
requirements apply to all related claims under other insurance, stating:  
 
 
"As in most states, current law in Kansas specifies that a claim that may be 
covered under several policies must first exhaust coverage under policies other than the 
insolvent insurer and that any covered claim payable by [KIGA] is reduced by any 
recovery from such other insurance. These provisions help assure that [KIGA] is the 
payor of last resort and also prevents the potential for a double recovery by the claimant. 
Our proposed amendments are intended to reinforce these concepts and clarify that the 
exhaustion and offset requirements apply to all claims under any kind of insurance, 
regardless of whether first party or third party claims, and including claims under 
accident and sickness insurance, health insurance and workers' compensation coverage 
similar to provisions adopted in some of the other states." (Emphasis added.) Minutes of 
the House Insurance Committee, February 17, 2005, attachment 6, p. 9.  
 
 
But this statement advocating adoption of the amendment is decidedly self-serving 
since KIGA was aware of the claims pending against it at the time, including Brennan's 
claim. And we note the amendment's text does not contain any declaration that the 
legislature intended to clarify the law. See In re Care & Treatment of Hunt, 32 Kan. App. 
2d 344, 361, 82 P.3d 861, rev. denied 278 Kan. 845 (2004) (courts may rely on a 
 
18 
 
 
 
legislative body's declaration but must do so cautiously if the declaration is not included 
in the amendment's text). Even so, KIGA's contention that the amendment is evidence of 
the original provision's meaning remains plausible given the law's ambiguous language 
containing a very broad exhaustion requirement. The problem with accepting this 
contention is that it contradicts the Guaranty Act's stated purpose, which includes 
protecting claimants and policyholders from the burdens caused by an insurer's 
insolvency. It also flies in the face of the legislative directive that the Guaranty Act be 
liberally construed to achieve its stated purposes. K.S.A. 40-2901.    
 
Accordingly, we hold the 2005 amendment changed the original statute to broaden 
the offset provisions and was not intended by the legislature to simply clarify already 
existing offsets. We turn next to addressing whether Brennan's right to the Guaranty Act's 
protections vested prior to the amendment's effective date.  
 
Statutory Amendment Affecting a Vested Right 
 
Generally, a statute operates prospectively unless there is clear language indicating 
the legislature intended it to operate retrospectively. Owen Lumber Co. v. Chartrand, 276 
Kan. 218, 220, 73 P.3d 753 (2003). Here, the legislature stated its intent to make the 
amendment retroactive in K.S.A. 2010 Supp. 40-2910(c) by applying the amendment to 
all claims not paid before the effective date of the amendment—just as KIGA had 
requested. But even when such legislative intent is clear, courts still must consider 
whether a statutory provision's retrospective application will affect vested rights, thereby 
violating due process. 276 Kan. at 220-21. 
 
The term "vested rights" describes rights that cannot be abolished by retroactive 
legislation. Resolution Trust Corp. v. Fleischer, 257 Kan. 360, 365, 892 P.2d 497 (1995). 
It is a conclusory term, and the vested rights analysis is inseparable from the ultimate due 
 
19 
 
 
 
process inquiry. See 257 Kan. at 364-65. Kansas courts consider the following three 
factors when determining whether legislation created a vested right:  
 
"(1) the nature of the rights at stake (e.g., procedural, substantive, remedial), (2) how the 
rights were affected (e.g., were the rights partially or completely abolished by the 
legislation; was any substitute remedy provided), and (3) the nature and strength of the 
public interest furthered by the legislation." 257 Kan. at 369. 
 
As to the first factor, Brennan argues the coverage provided by the Guaranty Act 
is remedial in nature. KIGA argues the amendment is either procedural or remedial 
because it provides a means for individuals to get claims against insolvent insurance 
companies paid by KIGA. Procedural laws relate to the "'machinery for carrying on the 
suit, including pleading, process, evidence, and practice' and 'the mode or proceedings by 
which a legal right is enforced, that which regulates the formal steps in an action.'" 257 
Kan. at 366. It is clear that this amendment was not procedural. But it is more difficult to 
determine whether the amendment was substantive or remedial.  
 
Substantive laws give or define the right, give the right or denounce the wrong, or 
create liability against a defendant for a tort committed. 257 Kan. at 366. The two most 
recent cases finding an amendment was substantive pertained to amendments 
extinguishing a cause of action. In Fleischer, the issue was whether the holder of an 
accrued tort action had a vested property right in that cause of action before it reached 
final judgment. This court held there was a vested right under the facts. 257 Kan. at 374. 
In Kelly v. VinZant, 287 Kan. 509, 197 P.3d 803 (2008), this court held an amendment 
eliminating a cause of action under the Kansas Consumer Protection Act against a 
medical provider for negligence was substantive because the amendment excluded a 
group previously liable under that Act. 287 Kan. at 521.  
 
 
20 
 
 
 
Remedial statutes "'reform or extend existing rights, and having for their purpose 
the promotion of justice and the advancement of public welfare and of important and 
beneficial public objects, such as the protection of the health, morals, and safety of 
society, or of the public generally.'" In re Estate of Brown, 168 Kan. 612, 617, 215 P.2d 
203 (1950).  K.S.A. 2010 Supp. 40-2910 is more appropriately characterized as 
reforming the terms of an existing right because it changed the types of coverage a 
claimant was required to exhaust—effectively broadening the circumstances in which 
KIGA is allowed to offset other insurance payments. It did not create or extinguish the 
previous statute's requirement that a person claiming a recovery from KIGA exhaust 
other insurance coverage. Therefore, we conclude it is a remedial statute.  
 
Historically, this finding would terminate the vested rights analysis because courts 
grouped procedural and remedial laws together under the rule that there is no vested right 
in any particular remedy or method of procedure. Fleischer, 257 Kan. at 366. But this 
court recognized that a remedial statute could affect a vested right in Owen Lumber Co. 
There the court held that the legislature may retroactively modify remedies by which 
rights are enforced, unless the modification has the practical effect of abolishing the right. 
276 Kan. at 225. We cited the following explanation from a commentator: 
 
"'The [United States Supreme] Court has recognized that the removal of all or a 
substantial part of the remedies for enforcing a private contract may have the same 
practical effect as an explicit denial of the right. Thus the relevant factor in determining 
the weight to be given to the extent to which a preexisting right is abrogated is not 
whether the statute abolishes rights or remedies, but rather the degree to which the statute 
alters the legal incidents of a claim arising from a preenactment transaction; the greater 
the alteration of these legal incidents, the weaker is the case for the constitutionality of 
the statute.' Hochman, The Supreme Court and the Constitutionality of Retroactive 
Legislation, 73 Harv. L. Rev. 692, 711-12 (1960)." 276 Kan. at 223.   
 
 
21 
 
 
 
Since a statute may be remedial and affect a vested right, the first factor is not 
determinative of the vested rights analysis. The first factor (the nature of the right) must 
be balanced against the others, including how the right was affected, whether a substitute 
remedy was provided, and the public interest furthered by the legislation. 276 Kan. at 
227. 
 
Applying these factors in concert supports a finding that Brennan had a vested 
right for three reasons. First, the statutory amendment extinguished Brennan's right to 
recover from KIGA and there was no substitute remedy with the insolvent insurance 
policy. Second, the Guaranty Act's stated purpose is to avoid financial loss to claimants 
or policyholders, and the entire statutory scheme is designed to cover the obligations of 
insolvent insurance companies while sharing the burden from those obligations among all 
member insurers. Third, the strong statutory language reciting that KIGA was "deemed 
the insurer to the extent of its obligations on the covered claims" and "obligated to the 
extent of the covered claims" indicate a statutory right arose at the time PHICO was 
declared insolvent. K.S.A. 40-2906(a)(1), (2). 
 
As a final point, KIGA argues the general principal that a plaintiff has no vested 
right in any rule of law to remain unchanged for his or her benefit. But in Fleischer, this 
court held that rule applies to prospective amendments, not to the retroactive application 
of legislation to an accrued and pending claim. 257 Kan. at 367-68. KIGA's argument is 
without merit. 
 
We find the 2005 amendment adversely impacted a vested right, thereby violating 
Brennan's due process rights. 
 
 
 
 
22 
 
 
 
Remedy for Unconstitutional Retroactive Amendment 
 
Our holding that the 2005 amendment's retroactive application violates due 
process requires us to determine next the proper remedy, i.e., whether the retroactivity 
provision is severable from the other statutory provisions enacted in 2005. In Felten 
Truck Line v. State Board of Tax Appeals, 183 Kan. 287, 300, 327 P.2d 836 (1958), this 
court stated the following test: 
 
 
"Whether the court may sever an unconstitutional provision from a statute and 
leave the remainder in force and effect depends on the intent of the legislature. If from 
examination of a statute it can be said that the act would have been passed without the 
objectionable portion and if the statute would operate effectively to carry out the 
intention of the legislature with such portion stricken, the remainder of the valid law will 
stand. Whether the legislature had provided for a severability clause is of no importance. 
This court will assume severability if the unconstitutional part can be severed without 
doing violence to legislative intent." 
 
We hold the retroactivity provision in the 2005 amendment is severable and 
Brennan's rights are governed by the preamended statute. Therefore, we affirm the district 
court's entry for judgment against KIGA without allowing an offset for Brennan's 
medical insurance benefits received. The remaining provisions in the 2005 amendment 
are unaffected by our holding. 
 
Having determined the retroactivity provision violates due process and Brennan's 
rights are governed by the preamended K.S.A. 40-2910, this court does not need to reach 
Brennan's equal protection argument. See Smith v. Kansas Dept. of Revenue, 291 Kan. 
510, 519, 242 P.3d 1179 (2010) (Appellate courts avoid making unnecessary 
constitutional decisions when there is a valid alternative ground for relief.).   
 
 
23 
 
 
 
Affirmed. 
 
DAVIS, C.J., and LUCKERT, J., not participating.  
 
GREENE, C.J., and MALONE, J., assigned. 1 
 
1REPORTER'S NOTE: Judge Thomas E. Malone and Chief Judge Greene, of the 
Kansas Court of Appeals, were appointed to hear case No. 102,308 vice Chief Justice 
Davis and Justice Luckert, respectively, pursuant to the authority vested in the Supreme 
Court by K.S.A. 20-3002(c).