Court Opinion

ID: 2732301
Source: CourtListenerOpinion
Date Created: 2014-09-11 16:08:04.848968+00
Date Added: 2024-06-11T10:02:48.934076
License: Public Domain

Updated: March 28, 2014

                                             No. 109,448

                  IN THE COURT OF APPEALS OF THE STATE OF KANSAS

                                        DOUGLAS K. HOESLI,
                                      Appellant/Cross-appellee,

                                                  v.

                  TRIPLETT, INC. and FEDERATED MUTUAL INSURANCE COMPANY,
                                   Appellees/Cross-appellants.

                                   SYLLABUS BY THE COURT

      1.
            The purpose of workers compensation is to replace some portion of wages an
      employee loses as a result of a work-related injury. The grant of a workers compensation
      award places the injured employee in a similar position in terms of income as the
      employee was prior to the injury.

      2.
            K.S.A. 2010 Supp. 44-501(h) provides that an employee's workers compensation
      award will be set-off by any retirement benefits he or she receives from a retirement
      benefits program, less any amount the employee contributed to his or her plan.

      3.
            The setoff provision in K.S.A. 2010 Supp. 44-501(h) seeks to eliminate any
      duplication of wage loss benefits received from different programs because workers
      compensation exists to replace some portion of the employee's wage loss due to injury.

                                                  1
4.
        The Senior Citizens Freedom to Work Act provides that there is no reduction in
Social Security retirement benefits due to wages regardless of the amount of wages
earned by individuals age 65 and older.

5.
        The change in federal Social Security law invalidates the rationale that Social
Security retirement benefits are a wage replacement for workers age 65 and older who
receive Social Security benefits and earn wages.

6.
        In accordance with federal law, a worker is entitled to receive full Social Security
benefits and full wages with the result that the two income streams exist fully
independent of each other and neither is duplicative of the other.

7.
        It is inconsistent with the purpose of the workers compensation setoff in 2010
Supp. 44-501(h) to apply the setoff in a case in which the employee's benefits accrue
regardless of whether any other income existed.

        Appeal from Workers Compensation Board. Opinion filed March 7, 2014. Affirmed in part,
reversed in part, and remanded.

        Jan L. Fisher, of McCullough, Wareheim & LaBunker, of Topeka, for appellant/cross-appellee.

        Vincent A. Burnett and Dallas L. Rakestraw, of McDonald, Tinker, Skaer, Quinn & Herrington,
P.A., of Wichita, for appellees/cross-appellants.

        Before GREEN, P.J., SCHROEDER, J., and JAMES L. BURGESS, District Judge
Retired, assigned.

                                                    2
       BURGESS, J.: Douglas K. Hoesli was injured at work and filed a workers
compensation claim. Because Hoesli—who was not yet retired but who was at full
retirement age—had already begun collecting Social Security retirement benefits, the
administrative law judge (ALJ) determined that the setoff provision in K.S.A. 2010 Supp.
44-501(h) should apply to his permanent partial disability award and reduce the award by
the amount of Social Security benefits he receives. The Workers Compensation Board
(Board) affirmed, but it refused to consider the setoff's applicability to Hoesli's temporary
total disability award because neither party had raised that issue prior to oral argument.
Hoesli appeals to this court, arguing both that the Board erred in applying the setoff and
also that the setoff is unconstitutional. Additionally, Hoesli's employer, Triplett, Inc.,
cross-appeals, contending that the Board erred in finding that it lacked jurisdiction to
consider the issue regarding Hoesli's temporary total disability.

                                            FACTS

       Sometime in 2008, Hoesli began working at Triplett as a truck driver. At that time,
Hoesli was 65 years old and not yet collecting Social Security benefits. In April 2008,
after Hoesli reached the age of 66, he began drawing his full Social Security benefit of
$1,820 a month. His Social Security benefit was not reduced or offset by his full-time
employment.

       Because of health problems involving dizziness and fainting, Hoesli transferred
from truck driving to the maintenance department at Triplett in 2009. In May 2010,
Hoesli fell off an extension ladder at one of Triplett's storage units while cleaning leaves
out of a gutter and sustained injuries to his back and chest. Doctors determined that
Hoesli suffered an L2 compression fracture but determined he could continue working on
light duty. Although doctors eventually cleared Hoesli for full-time work, Hoesli
continued to experience pain when participating in more strenuous job duties. Due to his
continued work difficulties, Hoesli submitted a resignation to Triplett in May 2011,

                                              3
indicating that he had "'decided to retire and help [his] wife.'" Triplett and Hoesli
proceeded to discuss his resignation and work out a solution in which Hoesli would
return to work on a part-time basis. In June 2011, Hoesli resumed working 2 days a week;
in September of the same year, he increased to 3 days a week. Although Hoesli continued
to have pain during activities involving heavy lifting, he continued working 3 days a
week even during the adjudication of his workers compensation case. It is unclear from
the record whether Hoesli still works at Triplett.

       While working for Triplett part-time in June 2011, Hoesli applied for a workers
compensation hearing based on his work injuries. A hearing was held on his application
on January 19, 2012. The parties stipulated to the existence of Hoesli's injuries and the
fact that those injuries arose out of and in the course of his employment, but they
disputed four major issues. A primary issue and the subject of this appeal involved the
applicability of the setoff provision present in K.S.A. 2010 Supp. 44-501(h), which
reduces an injured employee's compensation when he or she is also receiving retirement
benefits such as Social Security. Although Hoesli contended that modern changes to
federal Social Security law altered the setoff's applicability to his case, Triplett argued
that Kansas caselaw demanded application of the provision. After reviewing the relevant
caselaw, the ALJ stated:

               "This court is unable to identify any duplication of benefits between [Hoesli]'s
       social security old age benefits and his workers compensation benefits. They were two
       separate, distinct and independent revenue streams, that would have continued for the
       foreseeable future, but for the work-related injury. However . . . the later decision in [a
       prior Kansas case] . . . and the plain language of K.S.A. 44-501(h) appear to mandate
       application of the set-off."

       The ALJ then applied the setoff to Hoesli's permanent partial disability (PPD)
benefits but not to his 13% permanent partial functional impairment benefits. The ALJ

                                                     4
did not discuss the setoff's effect on Hoesli's temporary total disability (TTD)
compensation.

       Hoesli applied for review by the Board to determine, among other things, whether
the setoff should apply to his PPD award. The Board heard argument on November 6,
2012. Although the record is somewhat unclear, it appears that, at oral argument, Triplett
argued that the setoff applied to both Hoesli's PPD and TTD awards rather than just his
PPD award. The Board affirmed the ALJ's ruling regarding the application of the setoff to
the PPD award. Regarding the application of the setoff to Hoesli's TTD compensation,
the Board explained:

               "However, the ALJ did not address whether an offset of [Hoesli]'s social security
       benefits should be allowed against the TTD awarded [Hoesli]. The only limitation placed
       on the offset by K.S.A. 2009 Supp. 44-501(h) deals with [Hoesli]'s functional
       impairment. [Triplett] argues that the social security offset should apply to the payment
       of TTD as well as any permanent work disability, above the functional impairment
       awarded to [Hoesli]. However, this issue does not appear to have been raised to the ALJ
       at the time of the regular hearing nor in [Triplett]'s submission letter to the ALJ. Under
       K.S.A. 2009 Supp. 44-555(c) the Board is limited to deciding issues raised to and
       determined by the ALJ. That is not the case here on the TTD offset issue."

       Notably, however, the Board reviewed Triplett's argument and determined that
applying the offset to Hoesli's TTD award would run afoul of K.S.A. 2010 Supp. 44-
501(h). The Board ultimately declined to modify the award.

       On February 27, 2013, Hoesli subsequently filed a petition for judicial review of
the Board's decision regarding the setoff's applicability and also raising the issue of the
setoff's constitutionality. On March 18, 2013, Triplett filed a cross-petition for review,
appealing the Board's determination that it lacked jurisdiction to consider the setoff's
applicability to Hoesli's TTD benefits.

                                                    5
                                         ANALYSIS

Did the board err in applying the setoff provision in K.S.A. 2010 Supp. 44-501(h) to
Hoesli's permanent partial disability award?

        Hoesli argues that the Board erred by affirming the ALJ's application of the setoff
to his PPD award. Although Hoesli acknowledges that Kansas caselaw has repeatedly
applied the provision in circumstances similar to his, he primarily distinguishes these
cases due to recent changes in federal law. Triplett, however, argues that these cases are
not distinguishable and that not applying the setoff would run afoul of the statute's
purpose.

        Final orders of the Board are subject to review under the Kansas Judicial Review
Act (KJRA), K.S.A. 77-601 et seq. K.S.A. 2010 Supp. 44-556(a). Appellate courts have
an unlimited review of questions involving the interpretation or construction of a statute,
owing "'[n]o significant deference'" to the agency's or the Board's interpretation or
construction. Ft. Hays St. Univ. v. University Ch., Am. Ass'n of Univ. Profs, 290 Kan.
446, 457, 228 P.3d 403 (2010). The most fundamental rule of statutory construction is
that the intent of the legislature governs if that intent can be ascertained. Bergstrom v.
Spears Manufacturing Co., 289 Kan. 605, 607, 214 P.3d 676 (2009). An appellate court
must first attempt to ascertain legislative intent through the statutory language enacted,
giving common words their ordinary meanings. Northern Natural Gas Co. v. ONEOK
Field Services Co., 296 Kan. 906, 918, 296 P.3d 1106, cert. denied 134 S. Ct. 162 (2013).
When a statute is plain and unambiguous, an appellate court does not speculate as to the
legislative intent behind it and will not read into the statute something not readily found
in it. In re Tax Appeal of Burch, 296 Kan. 713, 722, 294 P.3d 1155 (2013).

        The statute at issue in this case, K.S.A. 2010 Supp. 44-501(h), provides in relevant
part:

                                              6
               "If the employee is receiving retirement benefits under the federal social security
       act or retirement benefits from any other retirement system, program or plan which is
       provided by the employer against which the claim is being made, any compensation
       benefit payments which the employee is eligible to receive under the workers
       compensation act for such claim shall be reduced by the weekly equivalent amount of the
       total amount of all such retirement benefits, less any portion of any such retirement
       benefit, other than retirement benefits under the federal social security act, that is
       attributable to payments or contributions made by the employee, but in no event shall the
       workers compensation benefit be less than the workers compensation benefit payable for
       the employee's percentage of functional impairment."

       More simply put, an employee's worker compensation award will be set off by any
retirement benefits he or she receives from a retirement benefit program, less any amount
the employee contributed to his or her plan. K.S.A. 2010 Supp. 44-501(h). This setoff
provision includes benefits received under the federal Social Security act. See K.S.A.
2010 Supp. 44-501(h).

       This court and our Kansas Supreme Court have considered the purpose and intent
of the setoff provision several times in its history. In the first case concerning the setoff
provision—which at that time was K.S.A. 1976 Supp. 44-510f(c)—this court reviewed
the purpose and rationale for workers compensation statutes. See Boyd v. Barton Transfer
& Storage, 2 Kan. App. 2d 425, 426-28, 580 P.2d 1366, rev. denied 225 Kan. 843 (1978).
There, the claimant, a retiree collecting Social Security benefits, had returned to work
part-time at a rate that would supplement his Social Security benefits without rendering
him ineligible. His workers compensation claim was denied because his Social Security
benefits exceeded what would be his workers compensation award. He appealed,
challenging the constitutionality of the setoff.

       In its decision, this court noted that the 1974 revision to the workers compensation
laws in Kansas "sought to eliminate any duplication of wage-loss benefits by different

                                                     7
programs" because workers compensation existed "'to replace some proportion of wage
loss.'" 2 Kan. App. 2d at 426-27. In gleaning the purpose of K.S.A. 1976 Supp. 44-
510f(c), this court specifically focused on Baker v. List and Clark Construction Co., 222
Kan. 127, 563 P.2d 431 (1977), which analyzed the constitutionality of a similar setoff
provision regarding death benefits received by dependents. In Baker, our Supreme Court
relied on a treatise on workers compensation and noted the following:

               "'Once it is recognized that workmen's compensation is one unit in an overall
       system of wage-loss protection, rather than something resembling a recovery in tort or on
       a private accident policy, the conclusion follows that duplication of benefits from
       different parts of the system should not ordinarily be allowed. . . .'"
               "'Wage-loss legislation is designed to restore to the worker a portion . . . of wages
       lost due to the three major causes of wage-loss: physical disability, economic
       unemployment, and old age. The crucial operative fact is that of wage loss; the cause of
       the wage loss merely dictates the category of legislation applicable. Now if a workman
       undergoes a period of wage loss due to all three conditions, it does not follow that he
       should receive three sets of benefits simultaneously and thereby recover more than his
       actual wage. He is experiencing only one wage loss and, in any logical system, should
       receive only one wage-loss benefit. This conclusion is inevitable, once it is recognized
       that [the three categories of benefits] are all parts of a system based upon a common
       principle.'" 222 Kan. at 130-31 (quoting 4A Larson, The Law of Workmen's
       Compensation §§ 97.00, 97.10 [1976]).

See Boyd, 2 Kan. App. 2d at 427.

       This court in Boyd determined that the purpose of K.S.A. 1976 Supp. 44-510f(c)
was much the same: to eliminate duplicative benefits. 2 Kan. App. 2d at 427. The court
stated that it would be reasonable if workers compensation terminated when the
employee retired because "[t]he worker would suffer only one wage loss, but continued
workmen's compensation after retirement would duplicate the wage-loss replacement of
the old age social security benefits which begin at that time." 2 Kan. App. 2d at 428.

                                                     8
       However, this court noted the difference between those individuals receiving
workers compensation who then later retire and those who, after retirement, returned to
work. Retirees who resume working, the court reasoned, "suffer a second wage loss when
they are injured in the course of their employment." 2 Kan. App. 2d at 428. To apply the
setoff to those individuals would "totally preclude any replacement of the wages which
they are entitled to earn over and above old age social security benefits," preventing not
wage duplication but rather the very wage replacement that workers compensation laws
exist to provide. 2 Kan. App. 2d at 428. Because a strict reading of the setoff provision
ran afoul of the "spirit and reason" of the workers compensation act in place at the time,
this court determined that the setoff did not apply to retirees who returned to work and
were then injured on the job. 2 Kan. App. 2d at 429.

       Our Supreme Court essentially adopted this reasoning in Dickens v. Pizza Co., 266
Kan. 1066, 974 P.2d 601 (1999), a case with facts very similar to the facts in Boyd.
There, our Supreme Court noted that the primary concern in cases applying the setoff to
retirees who later returned to work was the "disparate treatment of individuals such as
[the claimant in Dickens], seeking to supplement social security income, compared to
other social security beneficiaries." 266 Kan. at 1071. The court reaffirmed that although
the setoff aims to prevent duplicative benefits, there is no duplication of benefits when a
retired worker who is already receiving Social Security benefits returns to work, is
injured, and receives a workers compensation award. 266 Kan. at 1071.

       In 2004, this court revisited the rationale of Dickens in McIntosh v. Sedgwick
County, 32 Kan. App. 2d 889, 91 P.3d 545, rev. denied 278 Kan. 846 (2004). In that case,
the claimant began receiving Social Security benefits after turning 65 in the spring of
1999 but continued working full time. He scheduled an August retirement date but was
injured on the job a few months prior to retiring. The court determined that because the
claimant was not retired at the time of his injury as in Dickens, the income from his full-
time job "was not post-retirement income used to supplement his retirement income." 32
9
Kan. App. 2d at 897. In summarizing the function of the setoff provision, the court stated:
"The cases show two consistent patterns: (1) injury, then retirement: no duplication of
benefits allowed . . . and (2) retirement, then injury: multiple benefits allowed." 32 Kan.
App. 2d at 897. The court further explained that when an injury occurs before the
employee's retirement,

       "the appellate courts have consistently held that social security retirement benefits are
       designed to restore a portion of an employee's wages lost due to age and, therefore,
       duplicate workers compensation benefits, which are designed to restore a portion of an
       employee's wages lost due to injury." 32 Kan. App. 2d at 897.

       Because the claimant began receiving Social Security benefits before retirement
only in anticipation of "the wage loss that would result from his eventual retirement," the
court held that the setoff applied. 32 Kan. App. 2d at 897-98.

       Although our Supreme Court has not reconsidered the two-category approach
established in McIntosh, this court has continued to address cases in this manner. See
Jones v. Securitas Security Services, No. 105,414, 2011 WL 6311105 (Kan. App. 2011)
(unpublished opinion) (precluding application of the setoff to retiree injured at
postretirement job); Anderson v. Blue Ribbon Farm and Home, No. 97,618, 2007 WL
2301949 (Kan. App.) (unpublished opinion) (applying setoff to unretired employee
receiving Social Security benefits), rev. denied 285 Kan. 1173 (2007). Close in facts to
this case is a recent case before this court, Morales v. Wal-Mart, No. 107,526, 2013 WL
1010438 (Kan. App.) (unpublished opinion), rev. denied 298 Kan. ___ (October 17,
2013). There, the claimant began receiving Social Security benefits prior to reaching full
retirement age. A few months later, she was injured at work. The Board found that
because the claimant was receiving Social Security benefits prior to her injury, the setoff
could not apply. This court considered the holdings in Dickens and McIntosh and framed
the question as "whether [the claimant] retired before her employment at Wal-Mart and

                                                    10
her subsequent injury." Morales, 2013 WL 1010438, at *5. The court then went on to
explain:

               "The statutory exception set forth by Dickens is based on the rationale that
       workers who already are retired and receiving social security retirement benefits before
       starting work on a part-time job to supplement those benefits suffer a second wage loss
       when they are injured in the course of their employment." 2013 WL 1010438, at *5.

       Because there was no evidence showing that Morales had retired and that her
employment at Wal-Mart existed to supplement her retirement income, the court
determined that the setoff provision applied. 2013 WL 1010438, at *5.

       The ALJ's and the Board's decisions were each based on the rule established in
McIntosh and determined that because Hoesli had not yet retired, the setoff applied.
Hoesli admits that he worked at Triplett prior to receiving Social Security retirement
benefits and that he continued working after those benefits began. In fact, Hoesli referred
to retirement in his May 2011 resignation letter, demonstrating that up until that time, he
did not consider himself retired. Based on the principles in Dickens and McIntosh, it
seems clear that Hoesli falls into McIntosh's second category: he was an unretired
worker receiving Social Security benefits when injured on the job and, therefore, the
setoff would apply. See 32 Kan. App. at 897.

       However, Hoesli raises a novel argument regarding the interplay between the
setoff provision and federal Social Security law. Hoesli contends not that McIntosh and
Dickens were wrongly decided but rather that their application is altered by the Senior
Citizens' Freedom to Work Act of 2000, Pub. L. 106-182. See 42 U.S.C. §§ 402-403
(2006).The Act allows individuals age 65 and older to receive Social Security benefits
and continue to work without penalty or reduction in wages. See Merrill v. Utah Labor
Com'n, 223 P.3d 1089, 1097 (Utah 2009) (explaining effect of Senior Citizens' Freedom

                                                   11
to Work Act). Hoesli contends that, based on this change in federal law, his two sets of
benefits—that is, Social Security benefits and workers compensation benefits—are not
duplicative because he was entitled to both revenue streams prior to his injury and should
continue to be entitled to both streams after.

       Although the relationship between the setoff provision and this federal statutory
change is a matter of first impression in Kansas, other states have tackled the issue. In
Reesor v. Montana State Fund, 325 Mont. 1, 8, 103 P.3d 1019 (2004), when considering
a setoff provision similar to that in Kansas, the Montana Supreme Court explained the
federal statutory change as follows:

       "[S]ocial security retirement benefits are not wage loss benefits. There is no requirement
       that to be entitled to social security benefits a person must stop working. In 2000, the
       federal government enacted the Senior Citizen's Freedom to Work Act (42 U.S.C. 402)
       which eliminated the earnings limit for workers over the age of 65. Thus, there is no
       longer a reduction in social security retirement benefits due to wages regardless of the
       amount of wages earned by individuals age 65 and older."

       The Utah Supreme Court agreed with this position. See Merrill, 223 P.3d at 1097.
In fact, the court there noted that the change in federal Social Security law "invalidat[ed]
the rationale that social security retirement benefits are a wage replacement," and that
under the change, the benefits were "not simply wage-loss replacement benefits, but
serve[d] other, important purposes." 223 P.3d at 1097-98. Although that court did note
that other jurisdictions, including Kansas, construe Social Security benefits as wage
replacement benefits, the cases cited all predate the passage of the Senior Citizens'
Freedom to Work Act. See 223 P.3d at 1098 (citing Brown v. Goodyear Tire & Rubber
Co., 3 Kans. App. 2d 648, 652-55, 599 P.2d 1031 [1979]).

       Triplett contends that Hoesli's reliance on the 2000 federal act is a "'red herring'"
because "it does not abrogate the legislative purpose of [the setoff provision]—to prevent
                                                    12
duplication of wage loss benefits." Additionally, Triplett attempts to analogize Hoesli's
situation to that of the claimant in McIntosh by arguing that Hoesli's resignation letter in
May 2011 and brief time off work qualifies as retiring. Triplett essentially argues that
Hoesli's resignation letter proves he was injured before retiring and that when his hours
were reduced and he experienced wage loss the benefits became duplicative.

       Although Triplett's argument aligns itself with Kansas caselaw, it is illogical under
the federal Social Security scheme as modified in 2000. As the ALJ observed in his
order, there was no "duplication of benefits between [Hoesli]'s social security old age
benefits and his workers compensation benefits. They were two separate, distinct and
independent revenue streams, that would have continued for the foreseeable future, but
for the work-related injury." Whereas Hoesli's Social Security benefits may have
increased upon his injury and reduced hours under the old federal scheme, Hoesli—of
full retirement age—was permitted both to receive his full Social Security benefits and a
full-time salary from Triplett prior to his injury due to the 2000 federal statutory change.
As the two income streams existed fully independent of one another and Hoesli received
each without any limitation or reduction, it is difficult to justify relabeling one as
duplicative simply due to Hoesli's injury.

       Clearly, the plain language of K.S.A. 2010 Supp. 44-501(h) indicates that the
setoff applies to any individual receiving federal Social Security retirement benefits
irrespective of any other considerations. Recent cases indicate that our Supreme Court
"has emphasized that when a workers compensation statute is plain and unambiguous, an
appellate court must give effect to the statute's express language rather than determine
what the law should or should not be." Roles v. Boeing Co., 43 Kan. App. 2d 619, 632,
230 P.3d 771 (2010). However, legislative intent also plays a key role in questions of
statutory construction, and our Kansas appellate courts have considered the intent behind
our Kansas workers compensation statutes many times. See Bergstrom, 289 Kan. at 607.
It is counterintuitive to apply a statute that is intended "to eliminate any duplication of

                                              13
wage-loss benefits by different programs" in a case in which one program's benefits
accrued regardless of whether any other income existed. See Boyd, 2 Kan. App. 2d at
427. Under these facts, the setoff provision in K.S.A. 2010 Supp. 44-501(h) creates the
same problem that this court disapproved of in Boyd, running afoul of the statute's
purpose by "totally preclud[ing] any replacement of the wages which [an individual is]
entitled to earn over and above old age social security benefits." See 2 Kan. App. 2d at
428.

       Unlike in McIntosh, Hoesli had no retirement date in mind, which suggests he did
not begin collecting Social Security benefits in anticipation of "the wage loss that would
result from his eventual retirement." 32 Kan. App. 2d at 897. Instead, he began collecting
Social Security benefits when he reached his full retirement age and was entitled to do
so—and incidentally continued to work at Triplett. His 2010 injury limited his ability to
continue working full time, reducing one of his income streams. Although Hoesli never
retired, his choice to continue working past retirement age can be viewed as a decision to
supplement his Social Security benefits as in Dickens, 266 Kan. at 1071. Applying the
setoff provision in this case fails to protect Hoelsi from the wage loss he suffered after his
injury, ultimately running afoul of the purpose of workers compensation legislation. See
Baker, 222 Kan. at 131.

       Recent opinions by our Kansas Supreme Court indicate that the Dickens exception
continues to be good law, but they fail to express any clear approval or disapproval of the
two categories established in McIntosh. See, e.g., Robinson v. City of Wichita Retirement
Bd. of Trustees, 291 Kan. 266, 285-86, 241 P.3d 15 (2010). Based on McIntosh and those
unpublished opinions following it, the Board's decision in applying the setoff provision to
Hoesli's workers compensation award would be logical. However, application of the 2000
change to federal law creates a case of first impression in Kansas. Thus, looking at it in
conjunction with the purpose and intent behind our workers compensation laws in general

                                             14
and the setoff in particular, there is a reasonable basis to find that the setoff should not
apply and we should reverse the Board's determination.

       The final analysis boils down to several essential facts. At the time of Hoesli's
work-related injury, he was entitled to receive and was receiving two streams of income.
Neither source of income was subject to setoff or any other limitation. Hoesli would have
continued to receive both undiminished streams of income into the future but for his
work-related injury. The grant of a workers compensation award in this case would serve
to make Hoesli whole. It would replace an income he was legally receiving and would
place him in a position similar to the position he was in prior to his injury. To apply the
setoff would act as a penalty, placing Hoesli in a worse position than he was in prior to
the injury. To apply the K.S.A. 2010 Supp. 44-501(h) setoff would result in an outcome
inconsistent with the stated purpose of wage-loss replacement under our workers
compensation statutes. Therefore, we reverse the ruling of the Board.

       Hoesli also raises an issue concerning the constitutionality of the setoff provision
in K.S.A. 2010 Supp. 44-501(h). However, because we are reversing the Board's
determination, this second issue is rendered moot.

                                       CROSS-APPEAL

Should the setoff provision in K.S.A. 2010 Supp. 44-501(h) apply to Hoesli's temporary
total disability award?

       In cross-appealing the Board's decision, Triplett argues that the Board erred in
finding it lacked jurisdiction to consider the applicability of the K.S.A. 2010 Supp. 44-
501(h) setoff to Hoesli's TTD award. Triplett frames its argument in several different
ways, contending: (1) that applying the setoff to the TTD award simply amounts to
altering the overall award rather than determining a new issue; (2) that the Board's
standard of review allows it to hear the TTD issue for the first time on appeal; (3) that the

                                              15
setoff itself is the relevant issue, not the TTD benefits; (4) that the Board decided the
issue despite its jurisdictional concerns; and (5) that this issue involves a question of law
that may be decided on established facts. Hoesli rebuffs this claim, arguing that the Board
cannot hear an argument that was not introduced to and argued before the ALJ.

       As previously stated, appellate courts have an unlimited review of questions
involving the interpretation or construction of a statute. Ft. Hays St. Univ. v. University
Ch., Am. Ass'n of Univ. Profs, 290 Kan. 446, 457, 228 P.3d 403 (2010). Additionally,
whether jurisdiction exists is a question of law over which this court also exercises
unlimited review. Frazier v. Goudschaal, 296 Kan. 730, 743, 295 P.3d 542 (2013).

       The Board has "exclusive jurisdiction to review all decisions, findings, orders and
awards of compensation" by an ALJ in a workers compensation case. K.S.A. 2010 Supp.
44-555c(a). This review "shall be upon questions of law and fact as presented and shown
by a transcript of the evidence and the proceedings as presented, had and introduced
before the [ALJ]." K.S.A. 2010 Supp. 44-555c(a). On review, the Board is authorized to
make a number of dispositions, including granting or refusing compensation, increasing
or diminishing any award, or remanding the proceedings to the ALJ. K.S.A. 2010 Supp.
44-551(i)(1).

       Three of Triplett's arguments are by their nature intertwined. Pointing to K.S.A.
2010 Supp. 44-551(i)(1), Triplett categorizes application of the setoff to the TTD benefits
not as an independent issue for consideration but rather an alteration of the existing
award—and then bolsters that argument by disputing the claim that K.S.A. 2010 Supp.
44-555c(a) limits the scope of the Board's review. Triplett further contends that because
the setoff is the primary issue in the case, it was fairly before and decided by the ALJ.

       In so arguing, Triplett relies on Woodward v. Beech Aircraft Corp., 24 Kan. App.
2d 510, 515-16, 949 P.2d 1149 (1997), where this court observed that the Board is not

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limited "to issues raised in the written request for [Board] review." There, the parties
raised an issue before the Board at oral argument that, although considered and decided
by the ALJ, did not appear in their briefs. Similar to the Woodward case, neither party in
this case raised the TTD issue until oral argument in this case, However, neither party
raised the issue of the setoff's applicability to the TTD benefits before the ALJ either.
Moreover, the ALJ made no ruling regarding whether the setoff reached the TTD
benefits. As such, this case resembles Hunn v. Montgomery Ward, No. 104,523, 2011
WL 2555689 (Kan. App. 2011) (unpublished opinion), in which the employer raised a
jurisdictional issue before the Board after failing to raise the same before the ALJ. This
court reviewed K.S.A. 2010 Supp. 44-555c(a) and determined that "[b]ecause the
previously mentioned issue was not raised by [the employer] to the ALJ or decided by the
ALJ, it cannot be raised or decided by the Board." 2011 WL 2555689, at *5.

       Triplett attempts to combat this by pointing out that the K.S.A. 2010 Supp. 44-
501(h) setoff in general is a key issue in this case and was therefore briefed and heard
before the ALJ to a degree sufficient for the Board to consider the matter. But as Triplett
observes in its briefs—and as the Board implies in its discussion of whether the setoff
should apply to TTD benefits—the issue is more complicated than that. TTD and PPD
are two different types of benefits. Compare K.S.A. 44-510c(b)(2) with K.S.A. 44-510d.
TTD "exists when the employee, on account of the injury, has been rendered completely
and temporarily incapable of engaging in any type of substantial and gainful
employment" and require certain proof from health care providers, whereas PPD is
"partial in character but permanent in quality." (Emphasis added.) K.S.A. 44-510c(b)(2);
K.S.A. 44-510d(a). PPD occurs either pursuant to a schedule or to an award calculation
scheme that is wholly different from the calculation used for TTD benefits. Compare
K.S.A. 44-510d(a) and K.S.A. 44-510e(a) (PPD benefits) with K.S.A. 44-510c(b) (TTD
benefits). Due to these differences, applying the setoff to TTD benefits involves different
questions of law and statutory interpretation than applying it to PPD benefits—questions
not raised, heard, and decided before the ALJ. The existence of such questions also

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demonstrates that applying the setoff to Hoesli's TTD benefits is more complicated than a
mere mechanical application of a rule, removing it from being simply an award
modification pursuant to K.S.A. 2010 Supp. 44-551(i)(1).

       Furthermore, the specific issue of setting off TTD benefits to the extent of a
claimant's Social Security benefits appears to be a matter of first impression in Kansas.
No statute or case stands for the proposition that TTD benefits and PPD benefits should
be treated the same way under the setoff. It therefore cannot fairly be said that the ALJ's
finding that it applies to PPD benefits is similar enough to finding it applies to TTD
benefits to consider it a "question[] of law . . . presented and shown by a transcript of the
evidence and the proceedings as presented, had and introduced before the [ALJ]" under
K.S.A. 2010 Supp. 44-555c(a).

       Triplett also contends that the Board's discussion of the setoff's applicability to
TTD benefits constitutes a decision on the issue. Triplett points to the Board's discussion
of TTD benefits, noting that the Board concludes by stating that "[t]he Award will not be
modified to offset claimant's TTD by his weekly social security benefit." Triplett insists
this statement constitutes a decision of the issue on its merits.

       However, prior to its discussion, the Board affirmatively stated that it was "limited
to deciding issues raised to and determined by the ALJ," which was "not the case here on
the TTD offset." In Flax v. Kansas Turnpike Authority, 226 Kan. 1, 4, 596 P.2d 446
(1979), our Supreme Court noted that "'[d]ictum often develops in opinions from
comments upon arguments advanced by counsel for the respective parties'" and that it
"'may be respected but should not control a judgment in a subsequent case when the
precise point is presented, argued, and considered by the entire court.'" Although the
Board discussed the setoff's applicability, it was "not determinative of the issue[]" and
continues to not be so. See 226 Kan. at 4. Instead, the TTD issue was determined by the
Board finding that it lacked jurisdiction to consider Triplett's new argument.

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       Triplett finally contends that even if the Board lacked jurisdiction to determine the
TTD issue, the appellate court may consider it for the first time on appeal as it is a
question of law on established facts. Triplett raises this argument for the first time in its
reply brief, relying on Kansas caselaw that indicates that an issue may be raised for the
first time on appeal provided that it is a question of law to be decided on established
facts. See Pankratz Implement Co. v. Citizens Nat'l Bank, 281 Kan. 209, 228, 130 P.3d 57
(2006). However, as previously stated, this court's review of the Board's action is
controlled not by general principles of appellate procedure but by the KJRA. See K.S.A.
2010 Supp. 44-556(a). The KJRA limits when an individual "may obtain judicial review
of an issue that was not raised before the agency." K.S.A. 2010 Supp. 77-617. New issues
may only be raised upon a request for judicial review if: (1) the agency lacked
jurisdiction to grant a remedy; (2) the action subject to review is a rule and regulation and
the party requesting review was not a party during agency proceedings sufficient to raise
the issue before the agency; (3) the party requesting review was not notified of the
agency proceeding and the action in question is an order from that proceeding; or (4) the
interests of justice would be served by judicial review because either the controlling law
changed after the agency acted or the agency action occurred after the party requesting
review exhausted all feasible opportunities for agency relief. K.S.A. 2010 Supp. 77-
617(a)-(d).

       It appears on the face of the statute that none of the exceptions apply in this case.
As such, this court cannot hear the TTD issue for the first time on appeal.

       Because the ALJ did not hear the TTD issue, the Board properly concluded that it
lacked jurisdiction to consider it on appeal. Moreover, hearing this issue for the first time
on appeal would run afoul of the KJRA. As such, the Board's decision that it lacked
jurisdiction is affirmed.

       Affirmed in part, reversed in part, and remanded.

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