Court Opinion

ID: 9961629
Source: CourtListenerOpinion
Date Created: 2024-04-19 14:07:49.869661+00
Date Added: 2024-06-11T08:21:13.338246
License: Public Domain

RENDERED: APRIL 12, 2024; 10:00 A.M.
                           NOT TO BE PUBLISHED

                   Commonwealth of Kentucky
                              Court of Appeals
                                  NO. 2023-CA-0824-MR

KENTUCKY PUBLIC PENSIONS
AUTHORITY ON BEHALF OF THE
KENTUCKY RETIREMENT
SYSTEMS AND THE COUNTY
EMPLOYEES RETIREMENT
SYSTEM                                                                       APPELLANTS

                   APPEAL FROM FRANKLIN CIRCUIT COURT
v.                 HONORABLE PHILLIP J. SHEPHERD, JUDGE
                           ACTION NO. 21-CI-00136

KANDI HALE                                                                       APPELLEE

                                         OPINION
                                        AFFIRMING

                                       ** ** ** ** **

BEFORE: COMBS, LAMBERT, AND MCNEILL, JUDGES.

COMBS, JUDGE: Appellant, Kentucky Public Pensions Authority on behalf of

the Kentucky Retirement Systems and the County Employees Retirement System

(the Retirement Systems),1 appeals from a decision of the Franklin Circuit Court

1
 On June 24, 2021, Appellant filed a notice of Respondent/Agency name change in the circuit
court, that effective April 1, 2021, the Kentucky Public Pensions Authority became responsible
reversing the denial of Appellee’s application for disability benefits. After our

review, we affirm the decision of the circuit court determining that Appellee was

entitled to disability benefits.

                The Appellee, Kandi Hale (Hale), was employed by City of Ashland.

Her membership date in the County Employees Retirement System (CERS) was

April 26, 1999; her last date of paid employment was December 6, 2019; and her

retirement date was January 1, 2020. Hale had more than 16 years of service

credit; accordingly, pre-existing conditions are not at issue.

                Most recently, Hale held the positions of Benefits Administrator/

ABC2 Administrator/Assistant City Clerk. Her duties were classified as light

work, which “involves lifting no more than twenty (20) pounds at a time with

frequent lifting or carrying of objects weighing up to ten (10) pounds.” KRS

61.600(5)(c)2. Hale was responsible for managing employee benefits, assisting the

HR director with all department functions, administering all alcoholic beverage

licenses within city limits, and assisting the City Clerk in her absence. Hale

worked eight hours per day, which involved standing/walking for two or three

hours per day and sitting for five or six hours with the option of alternating those

for the day-to-day administrative needs of the Kentucky Retirement System and the County
Employees Retirement System, including provision of legal services. Kentucky Revised Statutes
(KRS) 61.505(1)(c)3.
2
    Alcoholic Beverage Control.

                                             -2-
functions. Hale indicated that the heaviest items she had to lift were ordinance

books, which weighed about 15 pounds and were kept on a large bookshelf. Hale

would have to climb a ladder multiple times a day to retrieve the books, which

were awkward to handle -- especially while standing on the ladder.

              On May 28, 2019, Hale applied for disability retirement benefits

alleging disability due to multiple ailments: a heart attack, heart palpitations,

leaking heart valves, bladder cancer, levoscoliosis of the lumbar spine (causing

severe back pain), Baker’s cysts, potential arthritis, and stress and anxiety

problems. Based upon the recommendations of two of the three medical review

board members, Hale’s application was denied twice. She then requested an

evidentiary hearing.

              The hearing was conducted on September 2, 2020, and additional

medical records were submitted. On December 14, 2020, the hearing officer filed

Findings of Fact, Conclusions of Law, and Recommended Order. The hearing

officer recommended that Hale’s application be denied, concluding that Hale had

“failed to prove by a preponderance of the objective medical evidence that her

conditions, or the cumulative effect of these conditions, mentally or physically

incapacitated her on a permanent basis since or from her last day of paid

employment.”

                                          -3-
                Hale filed exceptions. Nonetheless, on January 22, 2021, the

Disability Appeals Committee of the Board of Trustees of the Kentucky

Retirement Systems (the Board) adopted the hearing officer’s recommended order

as its Final Order.3

               Hale then filed a petition for judicial review in Franklin Circuit Court.

By Opinion and Order entered December 16, 2022, the circuit court reversed the

decision of the Board. The Retirement Systems filed a motion to alter, amend, or

vacate, which the circuit court denied by Order entered on June 12, 2023. The

Retirement Systems appeals.

               At the outset of our analysis, we note the raison d’être for the

existence and role of the Retirement Systems: “[T]he purpose of disability

retirement benefits is to provide security for those who are unable to continue

working until normal retirement age due to injury or disease. Pensions serve as an

inducement to competent persons to enter and remain in public service.” Roland v.

Kentucky Retirement Systems, 52 S.W.3d 579, 583 (Ky. App. 2000). “All statutes

of this state shall be liberally construed with a view to promote their objects and

carry out the intent of the legislature . . . .” KRS 446.080(1).

3
 The Board’s sole modification to the order of the hearing officer was the addition of the words,
“pursuant to KRS 61.600(5)(c)[2.],” following the sentence on page 23 of the hearing officer’s
Recommended Order -- that Hale’s “position can best be described as light work[.]”

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                The criteria for disability retirement are set forth in KRS 61.600. The

statute requires a determination based upon objective medical evidence4 that since

her last day of paid employment, the applicant has been incapacitated from

performing her prior job or a job of like duties; that the incapacity results from

bodily injury, mental illness, or disease; and that the resulting condition is

permanent.5 KRS 61.600(3)(a)-(c). “The determination of a permanent incapacity

shall be based on the medical evidence contained in the member’s file and the

member’s residual functional capacity and physical exertion requirements.” KRS

61.600(5)(a)2.

                KRS 61.600(5)(b) provides that:

                The person’s residual functional capacity shall be the
                person’s capacity for work activity on a regular and
                continuing basis. The person’s physical ability shall be
                assessed in light of the severity of the person’s physical,
                mental, and other impairments. The person’s ability to

4
    KRS 61.510(33) defines “Objective medical evidence” as:

                reports of examinations or treatments; medical signs which are
                anatomical, physiological, or psychological abnormalities that can
                be observed; psychiatric signs which are medically demonstrable
                phenomena indicating specific abnormalities of behavior, affect,
                thought, memory, orientation, or contact with reality; or laboratory
                findings which are anatomical, physiological, or psychological
                phenomena that can be shown by medically acceptable laboratory
                diagnostic techniques, including but not limited to chemical tests,
                electrocardiograms, electroencephalograms, X-rays, and
                psychological tests[.]

5
  “An incapacity shall be deemed to be permanent if it is expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months from the person’s
last day of paid employment in a regular full-time position.” KRS 61.600(5)(a)1.

                                                -5-
            walk, stand, carry, push, pull, reach, handle, and other
            physical functions shall be considered with regard to
            physical impairments. The person’s ability to
            understand, remember, and carry out instructions
            and respond appropriately to supervision, coworkers,
            and work pressures in a work setting shall be
            considered with regard to mental impairments. Other
            impairments, including skin impairments, epilepsy,
            visual sensory impairments, postural and manipulative
            limitations, and environmental restrictions, shall be
            considered in conjunction with the person’s physical and
            mental impairments to determine residual functional
            capacity.

(Emphasis added.)

            With respect to the burden of proof, we note that “[t]he applicant has

the burden of proof, with the burden of persuasion being ‘met by a preponderance

of the evidence in the record.’ KRS 13B.090(7).” Kentucky Retirement Systems v.

Ashcraft, 559 S.W.3d 812, 817 (Ky. 2018).

            Where the fact-finder’s decision is to deny relief to the
            party with the burden of proof or persuasion, the issue on
            appeal is whether the evidence in that party’s favor is so
            compelling that no reasonable person could have failed to
            be persuaded by it. In its role as a finder of fact, an
            administrative agency is afforded great latitude in its
            evaluation of the evidence heard and the credibility of
            witnesses, including its findings and conclusions of
            fact. . . . A reviewing court is not free to substitute its
            judgment for that of an agency on a factual issue unless
            the agency’s decision is arbitrary and capricious.

McManus v. Kentucky Retirement Systems, 124 S.W.3d 454, 458-59 (Ky. App.

2003) (cleaned up). In Ashcraft, supra, our Supreme Court set forth a two-step

                                        -6-
approach for appellate review, holding that even if the Board’s decision is adverse,

“a reviewing court should first consider whether substantial evidence supports the

Board’s decision.” Id. at 822.

               The Retirement Systems argues that the circuit court misapplied the

law governing judicial review by re-weighing the evidence, by mistaking relevant

facts,6 by applying the “treating physician rule,” and by shifting the burden of

proof to the Retirement Systems. We disagree. It appears that Retirement Systems

misperceived the circuit court’s analysis.

               Ultimately, the circuit court concluded that the evidence was so

overwhelming that it compelled a finding in Hale’s favor as follows in relevant

part:

                      The record indicates that, starting in 2018, Hale
               began suffering from extensive pain in her knees and
               back which was growing progressively worse. The City
               accommodated her physical complaints with an
               orthopedic chair and a standing desk. Although the
               accommodation helped, Hale said it did not resolve her
               ongoing pain. She also began experiencing anxiety and
               depression and was taking medication regularly. Hale
               suffered a heart attack and was hospitalized in November

6
  This is a non-issue. Retirement Systems contends that the circuit court erred by finding that the
Board classified her job as sedentary. The circuit court correctly states at page 1 of its Opinion
and Order that “Hale’s position was characterized as light work . . . .” At page 12 of its Opinion
and Order, the circuit court does state that “though the Board classified her job as ‘sedentary’
since most of her time was spent sitting,” it appears that the circuit court was referring to the
medical review board. Indeed, Dr. Merz, the medical review board member, who twice
recommended approval of Hale’s application, incorrectly stated that she was “employed in a
sedentary position as a Benefits Administration Administrator . . .” in his June 4, 2019 and
August 29, 2019 approval letters.

                                                -7-
             2018. She also underwent surgery related to her previous
             bladder cancer diagnosis. Upon returning to work, Hale
             was in constant pain and could not concentrate on any of
             her usual work tasks. She iced her knees during the
             workday, but by the end of each day, her pain levels were
             extreme. It became obvious to her that she could no
             longer perform her many job responsibilities to the level
             that she and the City expected. As a result, she applied
             for disability. The standard for disability benefits is to
             determine if, since her last day of paid employment, Hale
             was physically or mentally incapacitated from
             performing her job or a job of like duties. Hale presented
             records and objective medical testimony that clearly
             showed she was disabled and unable to perform her job
             or any similar job.

             The circuit court also held that the Board erred in failing to consider

the stress of Hale’s job:

             The Court considers the stress level of a job to be a vital
             factor in determining whether an employee can perform
             her job. The testimony from Hale’s psychiatrist, Dr.
             Lance, leaves no doubt that Hale often felt overwhelmed,
             aggravated, and angry at work. She was assessed to have
             recurrent anxiety and recurrent major depression disorder
             that affected her ability to perform her job. The Court
             agrees with Hale that the Board erroneously failed to
             consider the stress of Hale’s job when determining that
             she was unable to perform her job duties.

(Citation to record omitted.)

             The circuit court further determined that:

                   Upon review of the record, it is clear to this Court
             that Hale’s alleged disability on the basis of a heart attack
             and heart blockages, heart palpitations, leaking heart
             valves, bladder cancer, levoscoliosis of the lumbar spine,
             Baker’s cysts, knee swelling and pain, arthritis, and stress

                                          -8-
                and anxiety are well documented by her treating
                physicians. Not only did Hale endure severe medical
                conditions daily, but she also frequently treated for her
                conditions and continued to treat after her last day of paid
                employment. Hale had several additional bladder
                surgeries, including the removal of the re-occurring
                cancerous tumors in March 2020.[7] Her heart treatment
                with Dr. Michelle Friday required and continues to
                require periodic assessment and medication adjustment.
                Hale also received epidural pain injections to help
                manage pain in her lower back. Cumulatively, the
                medical records clearly support Hale’s application for
                disability.

(Citations to record omitted) (bold-face emphasis added.)

                We agree with the circuit court’s sound reasoning. As this Court

explained in Kentucky Retirement Systems v. Parker, No. 2011-CA-000329-MR,

2012 WL 1447929, at *4 (Ky. App. Apr. 27, 2012):

                [A] “permanent incapacity” determination must be based
                on the medical evidence, residual functional capacity,
                and physical exertion requirements. KRS 61.600(5)(a)2.
                Further, Bowens[8] provides that the residual functional
                capacity analysis requires consideration of the
                “cumulative effect” of multiple ailments on a claimant’s
                capacity for work on a regular and continuing basis.

                Although the hearing officer in the case before us recited the

“cumulative effect language” in Finding of Fact No. 13, the statement is essentially

7
 As Hale notes in her brief, additional medical evidence was entered into the record after the
Retirement Systems medical examiners issued their reports.

8
    Kentucky Retirement Systems v. Bowens, 281 S.W.3d 776 (Ky. 2009).

                                               -9-
conclusory. “[S]uch a bare statement with no attendant analysis could be

perceived as mere lip service to the Bowens mandate.” Parker, 2012 WL 1447929,

at *5. The Board failed to adequately take into account Hale’s multiple ailments

with respect to their cumulative effect on her capacity for work.

             We also concur with the circuit court that “the Board erroneously

failed to consider the stress of Hale’s job when determining that she was unable to

perform her job duties.” KRS 61.600(5)(a)2. requires that “determination of a

permanent incapacity shall be based on the medical evidence contained in the

member’s file and the member’s residual functional capacity and physical

exertion requirements.” (Emphasis added.) KRS 61.600(5)(b) provides that the

applicant’s “residual functional capacity shall be the person’s capacity for work

activity on a regular and continuing basis” and mandates consideration of “[t]he

person’s ability to understand, remember, and carry out instructions and respond

appropriately to supervision, coworkers, and work pressures in a work

setting . . . with regard to mental impairments.” (Emphasis added.)

             We affirm the Opinion and Order of the Franklin Circuit Court.

             ALL CONCUR.

                                        -10-
BRIEFS FOR APPELLANTS:     BRIEF FOR APPELLEE:

Nathan W. Goodrich         Andrew K. Wheeler
Carrie B. Slayton          Richard W. Martin
Frankfort, Kentucky        Ashland, Kentucky

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