Court Opinion

ID: 6334103
Source: CourtListenerOpinion
Date Created: 2022-04-22 14:06:45.841606+00
Date Added: 2024-06-11T09:23:34.083202
License: Public Domain

RENDERED: APRIL 15, 2022; 10:00 A.M.
                       NOT TO BE PUBLISHED

               Commonwealth Of Kentucky
                         Court of Appeals

                            NO. 2018-CA-0641-WC

MARY ANN LEE                                                    APPELLANT

                 PETITION FOR REVIEW OF A DECISION
v.             OF THE WORKERS’ COMPENSATION BOARD
                       ACTION NO. WC-10-00770

FOUR STAR BLASTING MATS;
UNINSURED EMPLOYERS’ FUND;
HONORABLE R. ROLAND CASE,
ADMINISTRATIVE LAW JUDGE;
KENTUCKY WORKERS’ COMPENSATION
BOARD; AND KENTUCKY ATTORNEY
GENERAL                                                          APPELLEES

                                  OPINION
                                 AFFIRMING

                                ** ** ** ** **

BEFORE: LAMBERT, MAZE, AND K. THOMPSON, JUDGES.

LAMBERT, JUDGE: Mary Ann Lee has petitioned this Court for review of the

March 30, 2018, decision of the Workers’ Compensation Board related to the
application of Kentucky Revised Statutes (KRS) 342.730(4) to her award of

permanent total disability benefits. Based upon the Supreme Court of Kentucky’s

decisions in Cates v. Kroger, 627 S.W.3d 864 (Ky. 2021), and Dowell v. Matthews

Contracting, 627 S.W.3d 890 (Ky. 2021), we affirm.

             Lee began working for Four Star Blasting Mats in April 2004 as a

machine operator/laborer. On May 12, 2010, Lee (then aged 33) severely injured

her hands in the course and scope of her employment. Her hands were crushed,

causing her to lose her right hand and her left thumb. She immediately reported

her injury, and she filed an application for resolution of her injury claim on July

12, 2010. As Four Star Blasting Mats did not have workers’ compensation

insurance, the Uninsured Employers’ Fund (UEF) was added as a party. Following

the filing of proof and a hearing, the Administrative Law Judge (ALJ) entered an

opinion, award, and order on October 18, 2016, finding that Lee had been

permanently, totally disabled by the loss of use of her hands as a result of the work

injury. In addition to medical expenses, the ALJ awarded Lee permanent, total

disability income benefits (PTD) with a 30% enhancement for a safety violation

for a total for a total of $262.47 per week from the date of her injury “until [Lee]

reaches normal retirement age.” The ALJ noted that Lee raised an issue as to the

constitutionality of KRS 342.730(4) as it applied to her claim, which the ALJ did

not have the jurisdiction or authority to address.

                                          -2-
             Lee appealed the ALJ’s decision to the Workers’ Compensation

Board (the Board). She sought review based upon the Supreme Court of

Kentucky’s holding in Parker v. Webster County Coal, LLC (Dotiki Mine), 529

S.W.3d 759 (Ky. 2017), in which that Court found the limitation of benefits at

social security retirement age in the 1996 version of KRS 342.730(4) to be

unconstitutional. She also argued that she should not be subject to the tier-down

provision contained in the 1994 version of that statute. In an opinion entered

March 30, 2018, the Board vacated in part and remanded the ALJ’s award, holding

that the award of income benefits had been subject to the 1996 version of KRS

342.730(4), which the Supreme Court had declared to be unconstitutional in

Parker, supra, as it violated the equal protection clause. Therefore, the Board

vacated the portion of the ALJ’s award that awarded PTD benefits from the date of

injury until Lee reached normal retirement age, and it remanded Lee’s claim for

the entry of an award of PTD benefits subject to the tier-down provision in the

1994 version of KRS 342.730(4). This petition for review followed.

             This Court’s standard of review in workers’ compensation appeals is

well-settled in the Commonwealth. “The function of further review of the [Board]

in the Court of Appeals is to correct the Board only where [the] Court perceives the

Board has overlooked or misconstrued controlling statutes or precedent, or

                                        -3-
committed an error in assessing the evidence so flagrant as to cause gross

injustice.” Western Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992).

             After the Board entered its opinion, the General Assembly again

amended KRS 342.730(4), which now provides:

             All income benefits payable pursuant to this chapter shall
             terminate as of the date upon which the employee reaches
             the age of seventy (70), or four (4) years after the
             employee’s injury or last exposure, whichever last
             occurs. In like manner all income benefits payable
             pursuant to this chapter to spouses and dependents shall
             terminate as of the date upon which the employee would
             have reached age seventy (70) or four (4) years after the
             employee’s date of injury or date of last exposure,
             whichever last occurs.

The amendment was approved on March 3, 2018, and had an effective date of July

14 of that year. The current version of the statute includes a Legislative Research

Commission Note, which provides in relevant part as follows:

             Subsection (3) of Section 20 of that Act reads,
             “Subsection (4) of Section 13 [KRS 342.730(4)] of this
             Act shall apply prospectively and retroactively to all
             claims: (a) For which the date of injury or date of last
             exposure occurred on or after December 12, 1996; and
             (b) That have not been fully and finally adjudicated, or
             are in the appellate process, or for which time to file an
             appeal has not lapsed, as of the effective date of this
             Act.”

Lee argues that the retroactive application of the 2018 amendment to KRS

342.730(4) is unconstitutional as it negatively affects the amount of income

benefits she is entitled to receive. She argues that because her rights had become

                                         -4-
fixed and vested on the date of her injury, the General Assembly’s retroactive

change to a contract in derogation of her rights violated the contracts clause of the

United States Constitution and the Kentucky Constitution, citing Maze v. Board of

Directors for Commonwealth Postsecondary Education Prepaid Tuition Trust

Fund, 559 S.W.3d 354 (Ky. 2018).

             This appeal was placed into abeyance to permit the Supreme Court of

Kentucky to determine the constitutionality of the 2018 version of the statute. In

Cates v. Kroger, supra, and Dowell v. Matthews Contracting, supra, the Supreme

Court did so and upheld both its constitutionality and its retroactive application.

             In Cates, the Supreme Court set forth the legislative and legal history

of the amendments to KRS 342.730(4) to provide a context to its analysis:

                    Before we undertake our analysis, we review for
             context two of our recent holdings addressing the
             General Assembly’s efforts to establish an outer limit on
             the receipt of workers’ compensation income benefits. In
             Parker v. Webster County Coal, LLC, a majority of this
             Court invalidated the 1996 version of KRS 342.730(4).
             That statute read:

                    All income benefits payable pursuant to this
                    chapter shall terminate as of the date upon
                    which the employee qualifies for normal
                    old-age Social Security retirement benefits
                    under the United States Social Security Act,
                    42 U.S.C. secs. 301 to 1397f, or two (2)
                    years after the employee’s injury or last
                    exposure, whichever last occurs.

                                         -5-
       The majority in Parker found the statute
unconstitutional for two reasons: (1) the statute created
an arbitrary classification because the benefit cut-off date
was dependent upon when the recipient received old-age
social security benefits and (2) the statute was special
legislation because it favored those who would not
receive old-age social security benefits and disfavored
those who would receive such benefits. Importantly,
even though Parker invalidated the 1996 version of the
statute, it reaffirmed this Court’s prior precedent in which
we consistently held that treating older injured workers
differently from younger injured workers is rationally
related to the legitimate government interests in
preventing a duplication of benefits and saving money
for the workers’ compensation system. We said in
Parker,

      The rational bases for treating younger and
      older workers differently is (1) it prevents
      duplication of benefits; and (2) it results in
      savings for the workers compensation
      system. Undoubtedly both of these are
      rational bases for treating those who, based
      on their age, have qualified for normal
      Social Security retirement benefits
      differently from those who, based on their
      age, have yet to do so.

[Parker, 529 S.W.3d at 768.]

      Shortly after our holding in Parker, the General
Assembly in 2018 enacted a new version of KRS
342.730(4) to read:

      All income benefits payable pursuant to this
      chapter shall terminate as of the date upon
      which the employee reaches the age of
      seventy (70), or four (4) years after the
      employee’s injury or last exposure,
      whichever last occurs. In like manner all

                            -6-
                  income benefits payable pursuant to this
                  chapter to spouses and dependents shall
                  terminate as of the date upon which the
                  employee would have reached age seventy
                  (70) or four (4) years after the employee’s
                  date of injury or date of last exposure,
                  whichever last occurs.

                   This change purported to rectify the shortcomings
            of the 1996 version as identified in Parker by untethering
            the cessation of a claimant’s workers’ compensation
            income benefits from the receipt of old-age social
            security retirement benefits, a benefit that Parker
            identified as not available to Kentucky’s retired teachers.
            The new statute now limits the duration of benefits by
            linking cessation for all income beneficiaries to the later
            of two events (1) reaching age 70, or (2) four years after
            injury or last injurious exposure.

                   In Holcim v. Swinford[, 581 S.W.3d 37, 42 (Ky
            2019),] we addressed retroactive application of the 2018
            amendment. While not explicitly stated in the statute as
            codified, we found a clear legislative intent that the
            amendment apply retroactively to all claims where (1)
            the injury occurred after December 1997 and (2) has not
            been fully and finally adjudicated through the appellate
            process, or for which time to file an appeal has not
            lapsed, as of the effective date of the Act, July 14, 2018.
            We declined to address the constitutionality of its effect,
            or the constitutionality of the amendment’s text because
            those issued were not argued until after the Court of
            Appeals had rendered its opinion. The cases at hand now
            present the issue remaining after Holcim, which is the
            constitutionality of the amendment and its retroactive
            application.

Cates, 627 S.W.3d at 868-70 (footnotes omitted).

                                        -7-
             The Cates Court first held that the 2018 amendment to KRS

342.730(4) did not violate the equal protection clause under either the 14th

Amendment to the United States Constitution or §§ 1, 2, and 3 of the Kentucky

Constitution:

             [W]e find the 2018 amendment classifies recipients based
             only on age, entirely unrelated to their old-age social-
             security eligibility. This age classification prevents a
             duplication of benefits, which we have found, to be a
             legitimate state interest and applies to all those receiving
             workers’ compensation equally. So the current version
             of KRS 342.730(4) is not violative of the Equal
             Protection Clause because the age classification is
             rationally related to a legitimate state purpose.

Cates, 627 S.W.3d at 871. The Court then held that the retroactive application of

the 2018 amendment to KRS 342.730(4) did not create an arbitrary class of

litigants:

                    We find here no arbitrary exercise of legislative
             authority in the retroactive application of the amendment.
             After Parker, the General Assembly acted swiftly to
             amend the statute to fill the statutory gap with
             constitutional norms. The legislature “may amend the
             law and make the change applicable to pending cases,
             even when the amendment is outcome determinative.”
             Because the 1996 version had been invalidated and a new
             version enacted, the General Assembly was left to decide
             if pending claims would be governed by the 1994 version
             of the statute – a statute that had not been in effect for
             over 20 years – or to allow for current claims to be
             decided under the new amendment. The legislative body
             apparently chose the latter, and that choice was its
             prerogative.

                                         -8-
Id. at 871-72 (footnotes omitted).

             In Dowell, the Supreme Court addressed whether the 2018

amendment to KRS 342.730(4) violated the federal and state contracts clause.

                    Adams and Dowell both argue that applying the
             current version of KRS 342.730(4) to their claims
             violates the Contracts Clause of both the United States
             and Kentucky Constitution. Article 1, Section 10, Clause
             2 of the United States Constitution reads:

                   No State shall enter into any Treaty,
                   Alliance, or Confederation; grant Letters of
                   Marque and Reprisal; coin Money; emit
                   Bills of Credit; make any Thing but gold and
                   silver Coin a Tender in Payment of Debts;
                   pass any Bill of Attainder, ex post facto
                   Law, or Law impairing the Obligation of
                   Contracts, or grant any Title of Nobility.

             Similarly, Section 19 of the Kentucky Constitutions
             provides, “No ex post facto law, nor any law impairing
             the obligation of contracts, shall be enacted.”

627 S.W.3d at 894. However, the Supreme Court did not perform a contracts

clause analysis in this case “because the Workers’ Compensation Act (WCA) does

not constitute a contract between Kentucky workers and their employers or the

state. Instead, the WCA is a statutory scheme that may be amended as the General

Assembly chooses, provided it fits within our constitutional framework.” Id. at

894-95.

             The workers’ compensation system is controlled by the
             state and is governed by legislative enactments. It is not
             a contract on between employers and their employees.

                                         -9-
              Changes to the relevant statutes, therefore, do not create a
              Contracts Clause issue. While changes to statutes may
              result in other constitutional issues, such as a violation of
              due process or constitute special legislation, a Contracts
              Clause issue is impossible in this matter because there is
              simply no contract or contractual right for the statutory
              amendment to impair.

Id. at 896.

              The Supreme Court then addressed the retroactivity issue in the

context of a claimant’s right to a certain duration or amount of benefits received.

                     Dowell and Adams argue that applying the new
              version of KRS 342.730(4) is unconstitutional because
              they have a vested right to the benefits assigned to them
              by the ALJ and Workers’ Compensation Board. We
              have also briefly addressed this argument in a companion
              opinion, also rendered today, Cates v. Kroger. We will
              address it here to clarify that litigants like Adams and
              Dowell do not have a vested right to certain benefits.
              While they have a vested right to some benefits by
              statute, they do not have a vested right to “certain”
              benefits until their claim for benefits has been determined
              by final order.

                     A benefits-recipient’s right to compensation
              becomes fixed and vests on the date of the injury. The
              right to receive benefits is a substantive issue and the
              injury date is controlling under substantive law. We have
              long held “that where a suit has been instituted under a
              statute giving a cause of action and a right to maintain
              such action, and once the action has been prosecuted to
              final judgment, and the rights of the parties fixed, such
              rights then become vested in the judgment, and thereafter
              a legislature can pass no law which impairs the validity
              of the vested right thus obtained.” So, Dowell and
              Adams have a vested, substantive right to litigate their
              benefits, a right that cannot be taken away by statutes that

                                          -10-
have since come into existence since filing their claim.
But in contrast, their right to a certain duration or amount
of benefits has not vested and will not do so until they
receive a final decision of their claims. So, the 2018
amendment to KRS 342.730(4) “[does] not create new or
take away vested rights” of plaintiffs like Adams and
Dowell, and its retroactive application is constitutional.

        Because Adams’s and Dowell’s benefits have not
been completely litigated, their potential awards must
conform with the changes in the applicable law effective
during the litigation process. And in Holcim we found
that the legislature intended the law to apply to all claims
currently pending. So the 2018 amendment applies to
Dowell and Adams even though the only issue left to
litigate is the effect of the 2018 amendment on the
duration of their benefits. While we agree with Adams
that the 2018 amendment impairs his benefits award,
Adams had no vested right in the outcome of his claim
before the ALJ or the Board. As we stated in Martin v.
Warrior Coal, LLC, [671 S.W.3d 391, 397-98 (Ky.
2021),] the legislature intended for the 2018 amendment
of KRS 342.730(4) to apply to all pending appeals, and
Adams’s appeal was pending when the Court of Appeals
ruled. In fact, the case is still not fully litigated.

       Likewise, Dowell’s benefits claim was decided
after we had invalidated the 1996 amendment and the
ALJ and the Board resurrected the 1994 version of the
statute as applicable to Dowell’s claim. By the time
Dowell’s appeal reached the Court of Appeals, the 2018
amendment had become effective, and we had
determined the statute applied retroactively. So Dowell’s
benefits were not final then and are not now. Because
Dowell’s award is still being litigated, we find the 2018
amendment to KRS 342.730([4]) controls.

      As we stated in Cates v. Kroger, “we reiterate our
holding in Holcim that the legislature intended for the
new amendment to apply to all pending appeals with

                            -11-
              injury dates occurring after December 1996.” We are
              bound by the text of the statute and unless it conflicts
              with a constitutional provision, we must uphold the laws
              the legislature has enacted. Neither Adams nor Dowell
              had a vested right to certain benefits, only a right to some
              benefits that are to be determined under current law.

Dowell, 627 S.W.3d at 897-98 (footnotes omitted).

              The above-cited cases constitute binding authority of the Supreme

Court of Kentucky, which this Court must follow pursuant to Supreme Court Rule

(SCR) 1.030(8)(a) (“The Court of Appeals is bound by and shall follow applicable

precedents established in the opinions of the Supreme Court and its predecessor

court.”). Because Lee’s injury occurred after 1996 and her award of benefits is

still being litigated, the 2018 amendment to KRS 342.730(4) controls in this case.

              For the foregoing reasons, the opinion of the Workers’ Compensation

Board vacating the ALJ’s award is affirmed. On remand, the ALJ is directed to

amend Lee’s award of income benefits to comply with the 2018 version of KRS

342.730(4).

              ALL CONCUR.

                                          -12-
BRIEF FOR APPELLANT:          BRIEF FOR APPELLEE
                              UNEMPLOYED EMPLOYERS’
Stephanie N. Wolfinbarger     FUND:
Louisville, Kentucky
                              Andy Beshear
                              Attorney General of Kentucky
                              (Former)

                              James R. Carpenter
                              Assistant Attorney General
                              Frankfort, Kentucky

                            -13-