Opinion ID: 2408445
Heading Depth: 1
Heading Rank: 3

Heading: credits

Text: Virtually every workers' compensation award contains standard language awarding the employer credit for any payments of compensation heretofore paid. Compensation means income benefits and medical payments made pursuant to the provisions of the workers' compensation act. KRS 342.0011(14). Thus, credit against an award has always been allowed for voluntary payments of workers' compensation income benefits paid prior to the rendition of the award. E.g., Western Casualty and Surety Co. v. Adkins, Ky.App., 619 S.W.2d 502 (1981); Cottrell v. Alton Box Board Co., Ky. App., 510 S.W.2d 19 (1974); American Radiator & Standard Sanitary Corp. v. Crawford, 310 Ky. 711, 221 S.W.2d 684 (1949). This simply recognizes that the employer has pre-paid a portion of the benefits subsequently awarded to the injured worker, and that otherwise there would be a disincentive for the employer to voluntarily provide benefits needed by the employee during the pendency of the litigation. (Often, the only issue being litigated is the apportionment of the award between the employer and the Special Fund.) The only debate in this regard has been whether the credit should be allowed on a dollar-for-dollar basis or only on a week-for-week basis. E.g., Triangle Insulation and Sheet Metal Co. v. Stratemeyer, Ky., 782 S.W.2d 628 (1990); General Electric Corp. v. Morris, Ky., 670 S.W.2d 854 (1984). Most employers provide benefit packages for their employees in addition to the statutorily mandated workers' compensation coverage, some of which, especially medical and hospitalization plans, are duplicative of workers' compensation benefits. See Pierce v. Russell Sportswear Corp., Ky.App., 586 S.W.2d 301 (1979), which held that an employer was not relieved of payment of medical bills under KRS 342.020(1) merely because the same bills had already been paid by another insurer, absent evidence that the payor retained a right of subrogation which could subject the employer to double payment. Other examples include sickness and accident disability plans, e.g., South Central Bell Telephone Co. v. George, Ky.App., 619 S.W.2d 723 (1981), salary continuation plans, e.g., Beth-Elkhorn Corp. v. Lucas, Ky.App., 670 S.W.2d 480 (1983), short term disability plans, e.g., Gatliff Coal Co. v. Evans, Ky., 896 S.W.2d 608 (1995), and, as here, long-term disability retirement pension plans, e.g., GAF Corporation v. Barnes, supra ; American Standard v. Boyd, Ky., 873 S.W.2d 822 (1994). Many such plans contain provisions which integrate their benefits with workers' compensation benefits, i.e., the pension plan benefits are offset to the extent that they are duplicated by workers' compensation benefits. E.g., Whayne Supply Co. v. Dugger, Ky.App., 918 S.W.2d 234 (1996); Gatliff Coal Co. v. Evans, supra ; Eastern Coal Corp. v. Mullins, Ky.App., 845 S.W.2d 27 (1993). As a result of these contractual provisions, the workers' compensation payments are credited against the pension benefits, but not vice versa. South Central Bell Telephone Co. v. George, supra . Prior to 1996, only one case had held that payments made pursuant to an employee benefit plan could be credited against workers' compensation benefits. In Beth-Elkhorn Corp. v. Lucas, supra , the salary continuation plan paid Lucas his full salary during his absence from work. Finding it determinative that the plan was fully funded by the employer, the Court of Appeals held that Beth Elkhorn is entitled to benefit from its own generosity. Id. at 482. In addition to being an oxymoron, this statement was unsupported by any then-existing provision of KRS chapter 342. Nor is there any statutory support for the dicta we proclaimed in American Standard v. Boyd, supra , and repeated in GAF Corporation v. Barnes, Ky., 906 S.W.2d 353 (1995), that credit should be allowed against workers' compensation benefits to the extent that they are duplicative of benefits provided by another noncontributory benefit package provided by the employer. [2] In Conkwright v. Rockwell International, Ky.App., 920 S.W.2d 90 (1996), the Court of Appeals reluctantly followed this dicta and allowed such a credit. Two of the three judges on that panel wrote separate concurring opinions imploring us to rethink this issue. Presumably, employers have their own motivations for providing largess for their employees. No one claims that workers' compensation benefits are intended to fully compensate an employee for the loss of his ability to labor an earn money. [3] If a generous employer wants to supplement workers' compensation benefits with other employee benefit packages, even to the extent that disability retirement becomes more lucrative than employment, who are we to object? An employer who wishes to avoid that result can do so simply by writing into his disability plan a provision integrating its benefits with workers' compensation benefits, just as Eastern has integrated the benefits of this plan with social security benefits. However, no matter how many private benefit packages an employer provides for his employees, those benefits cannot be applied to reduce income benefits mandated by the workers' compensation act absent some statutory authority to do so. Accordingly, we withdraw the dicta set forth in American Standard and GAF, supra , which would imply that a credit for an employer-funded disability pension benefit might sometimes be authorized, and we overrule Beth-Elkhorn v. Lucas, supra , and Conkwright v. Rockwell International, supra . The opinion of the Court of Appeals is affirmed in that it disallows prospective credit for future benefits and reversed and remanded to disallow Eastern's claim for credit for past due benefits. All concur.