Court Opinion

ID: 9718307
Source: CourtListenerOpinion
Date Created: 2023-08-26 07:20:48.822593+00
Date Added: 2024-06-11T18:23:58.318997
License: Public Domain

COOPER, Justice,
dissenting.
On December 10, 1997, the Superintendent of Insurance for the state of Ohio filed a Complaint for Rehabilitation in the Franklin County, Ohio, Court of Common Pleas against The P.I.E. Mutual Insurance Company. P.I.E. was placed into rehabilitation on December 15, 1997. A liquidation hearing was scheduled for February 17, 1998 and later rescheduled for March 23,1998.
On January 26, 1998, House Bill 415 was introduced in the Kentucky House of Rep*612resentatives to amend KRS 304.36-080 and increase from $100,000.00 to $300,000.00 per claim the maximum liability of the Kentucky Insurance Guaranty Association (KIGA) for claims filed against insolvent insurers. House Bill 415 was passed by the House of Representatives on February 18, 1998 and by the Kentucky Senate on March 10,1998.
On March 16, 1998, a resolution of the P.I.E. board of directors to not oppose liquidation was filed in the Franklin County, Ohio, case. The final order of liquidation of P.I.E. Mutual was entered on March 23, 1998.1 At the time of its liquidation, P.I.E. Mutual was the largest medical malpractice insurer doing business in the Commonwealth of Kentucky. Thus, it is safe to assume that the General Assembly was aware of its pending liquidation and the potential effect of that liquidation on KIGA when it deliberated and enacted House Bill 415. Nevertheless, the General Assembly chose not to include in House Bill 415 either an emergency clause or any language declaring that the amendment of KRS 304.36-080 should be retroactively applied to claims accruing prior to its effective date. Since there was no emergency clause, the effective date of the amendment was July 15, 1998. Ky. Const. § 55.
Appellees all have medical malpractice claims against former insureds of P.I.E. Mutual which accrued prior to July 15, 1998. It is their fervent desire that the 1998 amendment of KRS 304.36-080 be declared retroactive so as to increase their respective potential recoveries against KIGA from $100,000.00 to $300,000.00. Presumably, this same plea was unsuccessfully lobbied in the General Assembly while that body was deliberating passage of House Bill 415. Nevertheless, the General Assembly determined that the amendment should not be given retroac-five effect. The majority of this Court now ignores that. mandate and declares the amendment retroactive by judicial fiat.
I. KRS 446.080(3).
The majority opinion repeats the error first committed in Peabody Coal Co. v. Gossett, Ky., 819 S.W.2d 33 (1991) of applying a common law rule of statutory construction to determine whether the General Assembly intended that a statute be given retroactive effect. In Kentucky, there is no need to resort to common law rules of construction, e.g., whether a statute is substantive, remedial, procedural, or otherwise, for the General Assembly has told us in no uncertain terms when a statute is to be construed as retroactive.
No statute shall be construed to be retroactive, unless expressly so declared.
KRS 446.080(3).
The statute does not say “[n]o statute, except those which are remedial or procedural, shall be construed to be retroactive ....” It simply says “[n]o statute shall be construed to be retroactive....” As Justice Lukowsky plainly put it in Hudson v. Commonwealth, Ky., 597 S.W.2d 610 (1980):
The legislature has proclaimed that it will expressly indicate those instances in which an act is retrospective in nature. It has not done so here.
Id. at 611.
In Peabody Coal Co. v. Gossett, supra, KRS 446.080(3) appeared to stand, as here, squarely in the way of the result the majority of the Court wished to reach in that case. Unable to find any Kentucky precedent to support the retroactive application of the statutory amendment at issue, the Court turned to 73 Am.Jur.2d Statutes § 354 (1974) to find a common law princi-*613pie of statutory construction that statutes which are remedial in nature may be applied retrospectively because they do not create new obligations or impose new duties with respect to transactions already passed. Significantly, except for New York, none of the jurisdictions cited by Am.Jur.2d in support of that proposition have statutes even remotely similar to KRS 446.080(8). Although New York has a statute virtually identical to KRS 446.080(3), N.Y. [Statutes] Law § 52 (McKinney 1999), it also has another statute expressly declaring that remedial statutes are an exception to that rule. N.Y. [Statutes] Law § 54 (McKinney 1999). In Kentucky, there is no statute creating an exception to KRS 446.080(3).
KRS 446.080(3) was originally enacted in 1892 as KS § 4592 and was a codification of the common law maxim that “a statute shall have a prospective operation only, unless its terms show clearly a legislative intention that it shall operate retrospectively.” Watts v. Commonwealth, 78 Ky. (1 Rodm.) 329, 331 (1880) (citing Cooley’s Constitutional Limitations 370). From the date of its enactment in 1892 until this Court’s 1991 decision in Peabody Coal Co. v. Gossett, supra, KRS 446.080(3) was consistently held to prohibit the retroactive application of any statute, whether substantive, remedial or procedural, unless specifically so declared in the statute. See, e.g., Beacon Ins. Co. of America v. State Farm Mut. Ins. Co., Ky., 795 S.W.2d 62 (1990); Purdy v. Palmore, Ky., 789 S.W.2d 12 (1990); Gould v. O’Bannon, Ky., 770 S.W.2d 220 (1989); University of Louisville v.. O’Bannon, Ky., 770 S.W.2d 215 (1989); Green River Dist. Health Dep’t v. Wigginton, Ky., 764 S.W.2d 475 (1989); Policemen’s & Firemen’s Retirement Fund v. Rothrock, Ky., 625 S.W.2d 577 (1981); Hudson v. Commonwealth, supra; Roberts v. Hickman County Fiscal Court, Ky., 481 S.W.2d 279 (1972); Crawford v. V. & C. Coal Co., Ky., 432 S.W.2d 403 (1968); Taylor v. Asher, Ky., 317 S.W.2d 895 (1958); Holliday v. Fields, 210 Ky. 179, 275 S.W. 642 (1925); Commonwealth v. Southern Pac. Co., 164 Ky. 818, 176 S.W. 375 (1915).
In Purdy v. Palmore, supra, decided only nineteen months before Peabody Coal Co. v. Gossett, the issue was whether a statutory amendment increasing the period of limitations within which to file a workers’ compensation claim could be applied retroactively to an injury occurring prior to the amendment. The opinion in Purdy addressed both the definition of “retroactive” and the operation and effect of KRS 446.080(3).
Both Webster’s Twentieth Century Unabridged Dictionary and Ballantine’s Law Dictionary define “retroactive” essentially the same way, that is, “acting or designed to act in regards to things past ... having application to or effect on things prior to its enactment.” It is apparent that the amendment to KRS 342.185 affected things prior to its enactment. In fact, appellees do not dispute this. Appellees attempt to get around it, as did the Court of Appeals, by saying it was procedural and not substantive. The General Assembly made no such distinction [in KRS 446.080(3) ]. It prohibited retroactive application of the statute unless the statute so declared. The amendment to KRS 342.185 did not so declare....
789 S.W.2d at 14.
In Beacon Ins. Co. of America v. State Farm Mut. Ins. Co., supra, decided only fourteen months before Peabody Coal, this Court refused to give retroactive application to the enactment of KRS 304.39-045 (permitting a “named driver” exclusion in a policy of liability insurance), despite explicitly conceding in the opinion that the Motor Vehicle Reparations Act (KRS Chapter 304.39) is “remedial” legislation. 795 S.W.2d at 63 (citing LaFrange v. United Servs. Auto. Ass’n, Ky., 700 S.W.2d 411 (1985)). Thus, within two years before *614its decision in Peabody Coal, this Court had held in two separate decisions that KRS 446.080(3) means what it says regardless of whether the newly enacted or amended statute is procedural (Purdy, supra) or remedial (Beacon, supra) in nature. Neither of those decisions were addressed or even acknowledged, much less overruled, in Peabody Coal.
The General Assembly is also well aware of the distinction between substantive legislation and that which is procedural or remedial, and clearly considers all three categories to be within the purview of KRS 446.080(3), i.e., not retroactive unless expressly so declared. In enacting the 1996 amendments to the Workers’ Compensation Act, the General Assembly specifically declared that substantive provisions were to be prospectively applied and that procedural provisions were to be retrospectively applied, and identified those provisions which were remedial and, thus, retroactive. KRS 342.0015 (1996 KyActs (1st ex. sess.) ch. 1 § 82). Having recognized that distinction and made that declaration in legislation enacted less than fifteen months before enacting House Bill 415, the General Assembly presumably would have included similar language in House Bill 415 if it had intended any portion of that legislation to be retroactively applied. Our task is not to “do equity,” but tó ascertain and give effect to the intent of the legislature. The legislature gave us KRS 446.080(3) as the tool to be used in performing that task. It is simply disingenuous to suggest that the absence of an express declaration in House Bill 415 that it be construed as remedial and retroactive manifests a legislative intent that it be so construed. KRS 446.080(3) does not require that the legislature expressly declare when a statute is not to be construed as retroactive. It requires that this Court not construe a statute as retroactive unless the legislature expressly so declares.
II. PEABODY COAL CO. v. GOSSETT.
The statutory amendment addressed in Peabody Coal was the 1987 amendment of KRS 342.125, the reopening provision of the Workers’ Compensation Act. Prior to the amendment, a worker could reopen his claim only if he could prove a change of physical condition. The amendment permitted a reopening if the worker could prove a change of occupational disability, a much less stringent burden of proof. The worker’s change of condition in Peabody Coal occurred after the effective date of the amendment; thus, the application of the amendment to the facts of that case could just as easily have been viewed as a prospective application. In fact, KRS 342.125(1) specifically provides that any modification of an award based on a change of conditions will be given only prospective effect. Recognizing that the law in effect on the date of injury controls a workers’ compensation case, Maggard v. International Harvester Co., Ky., 508 S.W.2d 777 (1974), the fact is that the decision in Peabody Coal did not affect any vested rights or obligations existing prior to the amendment. Specifically, it did not increase the maximum award recoverable by the claimant in that case.
Peabody Coal did not give, and we have never given, retroactive application to a statutory amendment which either increases or decreases the maximum limit of an award of compensation. Beth-Elkhorn Corp. v. Thomas, Ky., 404 S.W.2d 16 (1966), overruled on other grounds, Inland Steel Co. v. Terry, Ky., 464 S.W.2d 284 (1970), held that a post-injury amendment to KRS 342.316, which increased the maximum compensation allowable for disability due to occupational disease, could not be given retroactive application, because:
An increase in the maximum award allowable is a change in the substantive liability as opposed to a change in remedial procedure.
Id. at 18. This “substantive” versus “remedial” argument was first raised and rejected in Thomas v. Crummies Creek Coal Co., 297 Ky. 210, 179 S.W.2d 882 (1944).
*615It is argued by appellants that the amendment affects only the remedy, and not the substantial [sic] liability of the employer. But this argument is refuted by the very contention in support of which it is made, that contention being: that appellants are entitled to compensation by reason of the amendment, although it is admitted that, had the amendment not been enacted, they would not have been entitled thereto. The amendment, therefore, substantially extends the scope of the liability of the employer, and is not merely remedial in its nature.
Id, 179 S.W.2d at 883-84; see also, Leeco, Inc. v. Crabtree, Ky., 966 S.W.2d 951 (1998); General Elec. Co. v. Morris, Ky., 670 S.W.2d 854 (1984); Yocom v. Karst, Ky., 528 S.W.2d 697 (1975); Cantrell v. Stambaugh, Ky., 420 S.W.2d 677 (1967); Collier v. Hope Coal Co., Ky., 269 S.W.2d 278 (1954); Old King Mining Co. v. Mullins, Ky., 252 S.W.2d 871 (1952); Knott Coal Corp. v. Kelly, 313 Ky. 562, 232 S.W.2d 994 (1949); Yocom v. Gantley, Ky. App., 566 S.W.2d 176 (1978).
III. THE KIGA ACT.
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(l)(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 premi-urns 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 Hower-ton 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’ *616compensation 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.
IV. THE 1998 AMENDMENTS.
As in Beth-Elkhorn Corp. v. Thomas and Thomas v. Crummies Creek Coal Co., both supra, retroactive application of the 1998 amendment of KRS 304.36-080 alters the pre-existing rights and obligations of these parties, thus the amendment is substantive and not remedial. Specifically, retroactive application of the amendment will triple KIGA’s potential liability with respect to each pre-existing claim from $100,000.00 to $300,000.00. The same amendment which tripled KIGA’s liability exposure also doubled the maximum assessment levied to fund the payment of covered claims from 1% to 2% of net direct written premiums. 1998 KyActs ch. 99 § 5. The purpose of the increased assessment obviously was to fund the increased liability. But since each member is entitled to thirty days notice prior to assessment, the increased assessment by its very terms cannot be retroactively applied. Undoubtedly, that is why the General Assembly chose not to give retroactive effect to the increase in liability — the increased assessments needed to fund the increased liability are simply not there to pay a retroactive increase in liability. .
In Conco, supra, the Court of Appeals placed great significance on the fact that KRS 304.36-040 required the KIGA Act to be “liberally construed.” Thus, it is not insignificant that the same legislation which increased the limit of KIGA’s liability also deleted the word “liberally” from that statute. 1998 Ky.Acts ch. 99 § 3.
V. CONCLUSION.
The result reached by the majority in this case is directly contrary to the unambiguous mandate of KRS 446.080(3) and all of our existing precedents with respect to the issue addressed in this case. Our decision in Peabody Coal Co. v. Gossett, though incorrect in my view, would not support the result reached by the majority in this case even if it were correct. Accordingly, I would reverse the judgment of *617the Jefferson Circuit Court and overrule Kentucky Ins. Guar. Ass’n v. Conco, Inc., supra.
KELLER, J., joins this dissenting opinion.

. The chronology of events pertaining to P.I.E.’s bankruptcy and the enactment of House Bill 415 was obtained from the Order of Liquidation entered in Duryee v. The P.I.E. Mut. Ins. Co., No. 97CVH12-10867 (Franklin County, Ohio, Ct. of C.P., March 23, 1998), which is found in this record, the opinion rendered by the Ohio Court of Appeals in an appeal of that case, Duryee v. The PIE (sic) Mut. Ins. Co., No. 98AP-535, 1998 WL 832180 (Ohio Ct.App. Dec. 1, 1998), and the 1998 Kentucky House and Senate Journals.

. 1892 Ky.Acts ch. 107 § 14.