Opinion ID: 2360503
Heading Depth: 2
Heading Rank: 1

Heading: Interpretation of Wichita Code Section 2.28.150(d)(3)

Text: In arguing that the Retirement Board did not reasonably interpret Wichita Code Section 2.28.150(d)(3), Robinson insists that the phrase any amount received includes only the workers compensation benefits actually received by the injured employee after any attorney fees have been paid. Essentially, Robinson asserts that it was erroneous to use $125,000 in the calculation of the disability retirement benefits because she did not actually receive that amount, having elected to have her workers compensation award reduced by the amount of attorney fees related to the compensation hearing. In other words, she interprets the word received to mean net receipts as opposed to any amount awarded. See Faust v. Walker, 945 A.2d 212, 214 (Pa.Super.2008) (common meaning of `net proceeds' is `[t]he amount received in a transaction minus the costs of the transaction [such as expenses or commissions]'). In response, the Retirement Board suggests that the district court and this court should grant deference to its interpretation of the provision and that its interpretation was reasonable and consistent with commonly accepted rules of statutory interpretation. As to the first point, this court has previously stated that interpretation of a statute is a necessary and inherent function of an agency in its administration or application of that statute and that the legal interpretation of a statute by an administrative agency that is charged by the legislature with the authority to enforce the statute is entitled to great judicial deference. Mitchell v. Liberty Mut. Ins. Co., 271 Kan. 684, Syl. ¶ 4, 24 P.3d 711 (2001). Nevertheless, we have recently been reluctant to apply the doctrine of operative construction when faced with questions of law on undisputed facts. See Fieser v. Kansas Bd. of Healing Arts, 281 Kan. 268, 270-71, 130 P.3d 555 (2006). Instead, we have concluded that an administrative agency's interpretation of a statute is not conclusive, and final construction of a statute always rests with the courts. Graham v. Dokter Trucking Group, 284 Kan. 547, 554, 161 P.3d 695 (2007); Fieser, 281 Kan. at 270, 130 P.3d 555; Foos v. Terminix, 277 Kan. 687, 692-93, 89 P.3d 546 (2004). Hence, we do not grant deference to the Retirement Board's interpretation. Instead, the interpretation of Wichita Code Section 2.28.150(d)(3) presents a question of law over which we have unlimited review. See Double M Constr. v. Kansas Corporation Comm'n, 288 Kan. 268, 271, 202 P.3d 7 (2009). In conducting that review, a court applies the same rules to interpreting a municipal ordinance as we would when interpreting a statute. Weeks v. City of Bonner Springs, 213 Kan. 622, 629, 518 P.2d 427 (1974). Under those rules, when a statute or municipal ordinance is plain and unambiguous, the court must give effect to express language, rather than determine what the law should or should not be. This court will not speculate on legislative intent and will not read the provision to add something not readily found in it. If the provision's language is clear, there is no need to resort to statutory construction. Graham, 284 Kan. at 554, 161 P.3d 695; Steffes v. City of Lawrence, 284 Kan. 380, 386, 160 P.3d 843 (2007). Applying these rules to the interpretation of similar statutes, courts in California, Kentucky, and Washington as well as the Tenth Circuit Court of Appeals have rejected arguments similar to Robinson's. As we will discuss, the reasoning of these cases applies to our interpretation of Wichita Code Section 2.28.150(d)(3). In the California case of Garietz v. City of Oakland, 20 Cal.App.3d 115, 97 Cal.Rptr. 374 (1971), the claimants were former members of the police and fire departments who sustained a disability in the course of employment and subsequently applied for and received benefits under California labor codes. The claimants appealed when the City deducted the total amount of workers compensation benefits, including attorney fees, from the pension benefits. They pointed out that when the entire amount of the workers compensation award is deducted from the disability retirement allowance, the claimant is out of pocket the amount of workers compensation attorney fees. A city charter provided for the Police and Fire Retirement System, and the retirement provisions of the charter stated, in part: `It is the intention of this section that allowances granted to or on account of members of the System for injury, illness or death incurred in the performance of duty shall not be cumulative with benefits under the Labor Code of California awarded as the result of the same injury, illness, or death ... `(a) If the amount [of benefits awarded] is paid in one sum or in installments equal to or greater than such salary, retirement allowance, or other benefit, such member or dependant shall not receive any salary, retirement allowance, or other benefit until the total amount of the salary, retirement allowance, or other benefit which would otherwise be payable equals the total amount received under the Labor Code. `(b) If the amount [of benefits awarded] is paid in installments less than such salary, retirement allowance, or other benefit, the salary, retirement allowance or other benefit, shall be reduced so that the total salary, retirement allowance, or other benefit plus the amounts received under the Labor Code will equal the salary, retirement allowance or other benefit which would otherwise be due. `(c) In either case any award specifically granted for medical, surgical, or hospital expenses shall not reduce the salary, retirement allowance, or other benefit.' (Emphasis added.) Garietz, 20 Cal.App.3d at 118 n. 1, 97 Cal.Rptr. 374 (quoting city charter section 249[2]). The claimants contended that the language of the first paragraph prohibiting cumulative benefits and the emphasis on paid and received in the subdivisions created an ambiguity that had to be liberally construed in their favor to prohibit any deduction from including the amount of attorney fees. The claimants argued that in the absence of any language permitting the deduction of certain amounts, no deduction of workers compensation attorney fees should be allowed and that the City should bear the cost of the claimants' attorney fees. The California Court of Appeals noted that the state's Labor Code provided for certain liens against any sum ordered paid as compensation by the Workers' Compensation Appeals Board. In addition to attorney fees, the Labor Code provided that the Board may `determine and allow as liens against any sum to be paid as compensation' various other expenses incurred by or on behalf of the injured employee. Garietz, 20 Cal. App.3d at 118, 97 Cal.Rptr. 374 (quoting Labor Code Section 4903). The Garietz court determined that the legislature did not intend that only the net amount received by the employee may be considered in deducting the award from pension payment. If only the net amount received could be considered, not only would attorney fees have to be excluded, but other categories of statutory liens would also have to be excluded. The Garietz court further observed that the workers compensation provision of the Labor Code was in effect when the city charter was enacted; therefore, if there was any conflict between the city charter and the workers compensation provisions, the latter must prevail. Regardless, reading the city charter in this context, the Garietz court concluded there was no ambiguity. This conclusion was also supported by the notion that an employee is not entitled to a double recovery of indemnity for an industrial disability. Garietz, 20 Cal.App.3d at 119, 97 Cal.Rptr. 374. In the Kentucky decision of Rue v. Kentucky Retirement Systems, 32 S.W.3d 87 (Ky.App.2000), the claimant was unable to return to work after sustaining a back injury in the course of his employment as a mechanic with the Kentucky State Police. In addition to applying for disability retirement benefits, the claimant also applied for social security benefits and workers compensation benefits. The claimant appealed the retirement system's calculation of total benefits when it used the gross amount of his workers compensation award instead of the reduced amount he would actually receive after deducting attorney fees. The Kentucky Court of Appeals observed that the plain language of the applicable Kentucky statute stated that the monthly disability benefit was to equal the employee's final pay minus amounts received from federal social security or a workers compensation award. Spouses' and children's benefits were specifically excluded, but there was no mention of attorney fees. Noting that some specific exclusions were mentioned, the Rue court rejected the claimant's contention that the amount used in establishing the workers compensation component of the combined monthly benefit should be reduced by the amount of attorney fees related to the workers compensation proceeding. The Rue court reasoned that the statute was clear in providing which allowances were not to be considered in calculating benefits. The legislature was capable of wording the statute in such a way as to express the intent to reduce the amount of workers compensation attorney fees, but it did not do so. Additionally, the Rue court observed that Kentucky is not one of several states that treat attorney fees as an add-on or double benefit that the employer must pay in addition to the compensation award itself. Instead, under the Kentucky statutory scheme, the payment of legal fees remains at all times the personal responsibility of the claimant. This is true, said the Rue court, despite the fact that our statutes require approval of the fee and offer a claimant the option of paying that obligation `up-front' through reduced monthly benefit proceeds. Rue, 32 S.W.3d at 89. The court characterized the reduction of the claimant's workers compensation benefits as a mere voluntary election as to the manner he would pay that debt. Rue, 32 S.W.3d at 89. Also, permitting a claimant to reduce his or her compensation award in order to satisfy the attorney's entitlement to a fee is, in reality, offered as a convenience to the claimant. Rue, 32 S.W.3d at 89. Noting that other jurisdictions with similar statutory schemes have reached comparable results, the Rue court held that to allow the claimant to deduct only his net workers compensation award would provide a benefit not intended by the Kentucky Legislature. Rue, 32 S.W.3d at 89. In Regnier v. Dept. of Labor and Indus. of State of Washington, 110 Wash.2d 60, 749 P.2d 1299 (1988), the claimant was injured in the course of her employment, and she filed a claim for industrial insurance. The state's Department of Labor and Industries (Department) awarded her disability benefits. Subsequently, the claimant sought and obtained federal social security disability benefits for her injury. As a result, the Department reduced the claimant's state industrial insurance benefits under the language of the state statute which provided that industrial insurance benefits shall be reduced by an amount equal to the benefits payable under the federal old-age, survivors and disability insurance act, not to exceed a certain amount. Regnier, 110 Wash.2d at 63, 749 P.2d 1299. Although the claimant had incurred medical and legal expenses in obtaining her social security disability benefits, the district court upheld the decision of the Board of Industrial Insurance Appeals to deny any credit or exemption for the medical and legal expenses. On appeal, the claimant argued that in computing the reduction in state benefits, she should receive a credit for the medical and legal expenses she incurred in obtaining her federal benefits. This argument was based on 20 C.F.R. § 404.408(d), a regulation governing the computation of federal benefits in cases where a state has not enacted a statute regarding items that may be excluded when calculating a reduction. The claimant argued that this regulation excluded from the process actual legal and medical expenses incurred in gaining state benefits so that, in effect, the claimant would receive a credit. Regnier, 110 Wash.2d at 63, 749 P.2d 1299. The Washington Supreme Court rejected this notion, unconvinced that the federal regulation required an exemption for medical and legal expenses to be taken from the amount of the reduction in federal benefits. Moreover, even if such an exemption was available from a federal reduction procedure, there was no similar provision under Washington law. Regardless, the Regnier court pointed to the well-known rule that attorney fees may be recovered only where authorized by a statute, a private agreement between the parties, or a recognized equitable ground, none of which was present in the case. Regnier, 110 Wash.2d at 64, 749 P.2d 1299. Finding that the legislature has not seen fit to provide benefits to cover the expenses of establishing eligibility for disability benefits, the Regnier court held it would be inappropriate for the court to create such benefits. Regnier, 110 Wash.2d at 65, 749 P.2d 1299; cf. City of Clearwater v. Acker, 755 So.2d 597, 600 (Fla.1999) (increases in permanent total disability supplemental benefits paid by employer annually should not be included in calculation of disability benefit that is reduced by workers compensation benefits; recalculating reduction every year, so as to include increase in supplemental benefits, would frustrate intended purpose of supplemental benefits which was to give cost-of-living benefit to workers); Waterman v. Caprio, 983 A.2d 841, 843 n. 4 (R.I.2009) (workers compensation settlement, adjusted downward for 15 percent attorney fee, had to be deducted from retirement benefit payments). In a case discussed by the parties Trujillo v. Cyprus Amax Minerals Ret. Plan Comm., 203 F.3d 733 (10th Cir.2000)the Tenth Circuit Court of Appeals also considered whether attorney fees should be included in a deduction from disability benefits. There, the claimant brought a state court action under the Employee Retirement Income Security Act (ERISA), challenging the plan administrator's decision to reduce his disability retirement benefits by the total amount of the workers compensation settlement rather than the amount of the settlement minus attorney fees incurred in obtaining the settlement. After the action was removed to federal court, the federal district court ruled in favor of the claimant. On appeal, the Tenth Circuit held that the ERISA plan administrator did not act arbitrarily and capriciously in determining that the ERISA plan section, which stated that disability benefits would be reduced by the amount of workers compensation benefits payable to the participant, required the inclusion of the amount of attorney fees incurred by the participant in obtaining his or her workers compensation settlement. Drawing on definitions of payable in Black's Law Dictionary, the Tenth Circuit observed that payable could mean `capable of being paid,' `justly due,' or `legally enforceable.' Trujillo, 203 F.3d at 737 (quoting Black's Law Dictionary 1128 [6th ed. 1990]). Also, the court noted that attorney fees were not mentioned in the claimant's settlement, indicating that he agreed to pay fees out of the total award received. The Tenth Circuit rejected policy-based arguments advanced by the claimant. First, the claimant argued that the plan administrator's decision effectively required him to pay the cost of reducing his own benefits under the plan. Second, he contended that the plan administrator's decision would create irreconcilable conflicts between workers compensation attorneys and their clients and `make it impossible for injured workers to obtain adequate, conflict-free representation.' Trujillo, 203 F.3d at 738. The Tenth Circuit determined there was no authority to allow such policy arguments to trump the plan administrator's reasonable interpretation of the plan's language. Finally, the Tenth Circuit rejected the claimant's contention that the doctrine of unjust enrichment should preclude the plan administrator from deducting the entire amount of the workers compensation settlement without paying a share of the claimant's attorney fees. Trujillo, 203 F.3d at 738. Points from the analysis of these cases apply to the Wichita Code requirement that [a]ny amount received under the State Worker's Compensation Act be deducted from the disability retirement award. Wichita Code Section 2.28.150(d)(3). First, like the provisions considered in the other jurisdictions, the language is inclusive, referring to [a]ny amount. Second, like the California provision, the Wichita Code uses the term received. Black's Law Dictionary does not contain a definition of received, but Webster's New World Dictionary, Second College Edition, pp. 1884-85 (1974) defines the term as to get, accept, take, or acquire something; be a recipient. When that meaning is read in context of the entire phrase used in Wichita Code Section 2.28.150(d)(3), the meaning is much the same as the wording considered by the Tenth Circuit and other courts because it would be [a]ny amount the claimant gets, accepts, takes or acquires under the State Worker's Compensation Act. Under the Kansas Workers Compensation Act (Kansas Act), Robinson got, accepted, took, or acquired the entire $125,000 in workers compensation benefits. This common understanding is reflected in a September 2008 letter from Robinson's workers compensation attorney to opposing counsel, in which he stated: I have taken a fee of 25% of all temporary total disability checks received. The gross amount of those checks is $700.12 every two weeks. (Emphasis added.) Hence, the provision's language supports the Retirement Board's interpretation. Further, as with the provisions considered in the out-of-state cases we have discussed, the Kansas Act does not award attorney fees in addition to the workers compensation award or make the employer responsible for the attorney fees. The American Rule is well established in Kansas so that, in the absence of statutory or contractual authorization, each party to the litigation is responsible for his or her own attorney fees, and the Kansas Act does not create an exception. See Farm Bureau Mut. Ins. Co. v. Kurtenbach, 265 Kan. 465, 479-80, 961 P.2d 53 (1998) (the `American rule' ... which is well established in Kansas, is that in the absence of statutory or contractual authorization, each party to litigation is responsible for his or her own attorney fees); 8 Larson's Workers' Compensation Law § 133.01 (The obligation to bear one's own legal fees, then, has become established as a necessary evil, which each client must contrive to bear as cheerfully as he or she can.); see also Hodges v. Johnson, 288 Kan. 56, 70, 199 P.3d 1251 (2009) (In Kansas, courts are not permitted to award attorney fees without specific statutory authorization.). We also note that several provisions of the Kansas Act indicate that the award belongs to the claimant, not the attorney. As in the Kentucky statute, K.S.A. 44-536(b) provides that [a]ny claims for attorney fees not in excess of the limits provided in this section and approved by the director shall be enforceable as a lien on the compensation due or to become due. (Emphasis added.) Further, subject to exceptions not pertinent in this case, [a]ll attorney fees for representation of an employee ... shall be only recoverable from compensation actually paid to such employee. (Emphasis added.) K.S.A. 44-536(f). In other words, under the Kansas Act the entire award is deemed to be actually paid, awarded to, and received by the claimant, who is responsible for payment of his or her attorney fees. In addition, as with the Kentucky statute, the Kansas Act requires the filing of an attorney fee contract with the director of workers compensation and provides that both the contract and the claimed attorney fees must be reviewed and approved. K.S.A. 44-536(b). Once the contract is approved, the Kansas Act facilitates the payment of the attorney fees by allowing a deduction from the award that is sent directly to the attorneya type of bill payer service. K.S.A. 44-536. Yet, the claimant remains responsible for paying the attorney fees and discharging his or her obligation to the attorney. See Feissner v. Prince George's Co., 282 Md. 413, 417-18, 384 A.2d 742 (1978) (conducting comparable analysis, court concludes statutory lien for attorney fees merely alters the manner in which liability for fees is discharged; it makes employee no less responsible for payment of fee). Thus, a claimant gets, acquires, or takes the full amount of the award. An additional consideration discussed in the Kentucky case applies to our analysis of Wichita Code Section 2.28.150(d)(3). That consideration is that the provision specifically mentions one exception but does not mention attorney fees. Specifically, the Wichita Code provides that disability retirement benefits will not be reduced by the portion of the workers compensation award that is for medical expenses. As aptly noted by the Kentucky court when discussing that its exemption for spouses' and children's benefits was silent regarding attorney fees, neither an agency (in this case, the Retirement Board), a district court, nor an appellate court is free to add words to a statute or ordinance in order to enlarge the scope beyond that which can be gleaned from a reading of the words used by the drafters. Rue, 32 S.W.3d at 89; see Zimmerman v. Board of Wabaunsee County Comm'rs, 289 Kan. 926, 939-40, 218 P.3d 400 (2009) (when statute is plain and unambiguous, an appellate court merely interprets the language as it appears; it is not free to speculate and cannot read into the statute language not readily found there). Here, the Wichita Code makes no reference to excluding attorney fees and does not contain language regarding net proceeds. Hence, we conclude the Retirement Board's interpretation of Wichita Code Section 2.28.150(d)(3) was a reasonable interpretation in that it was consistent with principles of statutory interpretation and the interpretation of similar provisions by other courts. The Retirement Board's interpretation was not arbitrary or capricious. See Dillon Stores v. Board of Sedgwick County Comm'rs, 259 Kan. 295, Syl. ¶ 3, 912 P.2d 170 (1996) (defining arbitrary or capricious).