Opinion ID: 2105306
Heading Depth: 1
Heading Rank: 3

Heading: the kiga act.

Text: Like the Workers' Compensation Act, the Kentucky Insurance Guaranty Association Act, KRS 304.36-010, et seq., is entirely a creature of statute. Its stated purpose with respect to the issue being addressed in this case, is to minimize financial loss to claimants or policyholders because of the insolvency of an insurer, ... and to provide a means of funding the cost of such protection among insurers. KRS 304.36-020. The Act establishes a limit of liability per claim and provides for an annual assessment up to a maximum amount per member to pay covered claims. KRS 304.36-080(1)(a), (d). As first enacted, KRS 304.36-080 limited KIGA's liability for any one claim to $50,000.00, except that its liability for a workers' compensation claim was unlimited. The maximum annual assessment to fund the payment of covered claims was 1% of each member's net direct written premiums for the calendar year immediately preceding the assessment, subject to the requirement that the member be notified of the amount of the assessment not later than thirty days before its due date. 1972 Ky.Acts ch. 137 § 8. KRS 304.36-080 was amended in 1984 to delete the workers' compensation exception to the $50,000.00 limit. 1984 Ky.Acts ch. 322 § 15. In 1986, the statute was amended to increase the limit of liability from $50,000.00 to $100,000.00. 1986 Ky.Acts ch. 437 § 24. The statute was amended again in 1990 to reinstate the workers' compensation exception. 1990 Ky.Acts ch. 268 § 1. It was in the context of this legislative history that the Court of Appeals addressed two cases arising out of the 1985 bankruptcy of Ideal Mutual Insurance Company. In Collins v. Cumberland Gap Provision Co., Inc., Ky.App., 754 S.W.2d 864 (1988), the issue was whether KIGA was liable for payment of the full workers' compensation award for an injury which occurred in 1983, when the workers' compensation exception to the liability limit was still in the statute; or whether it was liable only for the $50,000.00 limit because Ideal Mutual's bankruptcy occurred in 1985 after the exception was deleted from the statute. Following a lengthy analysis of the applicable statutory provisions, Judge Wilhoit, writing for a unanimous panel which included Chief Judge Howerton and Judge McDonald, concluded: Under the statutes, therefore, the KIGA is obligated to pay only covered claims; a covered claim is an unpaid claim against an insolvent insurer; and an insolvent insurer is one which has been so found by a competent court of its domicile which has also ordered liquidation. The KIGA's liability to pay does not attach until an insurer is found to be insolvent by the appropriate court. In this case, that was in February 1985. At that time, the version of KRS 304.36-080 in effect did not exclude workers' compensation claims from the $50,000.00 limit to KIGA's obligation. Thus, we conclude that the KIGA's obligation to pay Mr. Collins is limited to $50,000.00. 754 S.W.2d at 866. In Kentucky Ins. Guar. Ass'n v. Conco, Inc., Ky.App., 882 S.W.2d 129 (1994), the work-related injury occurred in October 1984 after deletion of the workers' compensation exception from the statute. Thus, both the injury and Ideal Mutual's bankruptcy occurred during the period in which KIGA's liability for payment of a workers' compensation claim was limited to $50,000.00. Under the reasoning of Collins v. Cumberland Gap Provision Co., Inc., supra , the $50,000.00 liability limit clearly applied. However, by the time KIGA's payments reached the $50,000.00 limit, the 1990 amendment restoring the workers' compensation exception had gone into effect. Thus, the issue was whether the 1990 amendment should be given retroactive effect despite the clear mandate of KRS 446.080(3) to the contrary. In Conco , a different Court of Appeals panel seized upon the holding in Peabody Coal Co. v. Gossett and held that the 1990 amendment was remedial, thus could be retroactively applied to increase KIGA's maximum liability from $50,000.00 to an unlimited sum. As noted supra, Peabody Coal did not give retroactive effect to a statutory amendment increasing the maximum amount of compensation payable for a pre-existing claim; and we have always held that statutory amendments of that type are substantive, not remedial. Beth-Elkhorn Corp. v. Thomas, supra ; Thomas v. Crummies Creek Coal Co., supra . Thus, Conco clearly misapplied Peabody Coal and erroneously ignored all of our applicable precedents on this issue. Now, the majority of this Court cites Conco as authority for holding that the 1998 amendment of KRS 304.36-080, which increased KIGA's liability limit from $100,000.00 to $300,000.00, is remedial, thus can be retroactively applied to a pre-existing claima clear case of the tail wagging the dog.