Court Opinion

ID: 4661209
Source: CourtListenerOpinion
Date Created: 2021-02-18 16:07:13.317894+00
Date Added: 2024-06-11T08:02:12.031173
License: Public Domain

RENDERED: FEBRUARY 18, 2021
                                                          TO BE PUBLISHED

                 Supreme Court of Kentucky
                                 2020-SC-0055-WC

CHARLES MARTIN                                                         APPELLANT

                   ON APPEAL FROM COURT OF APPEALS
v.                         NO. 2018-CA-1430
              WORKERS’ COMPENSATION BOARD NO. WC-17-01688

WARRIOR COAL LLC; HON. JEFF V.                                         APPELLEES
LAYSON, ADMINISTRATIVE LAW
JUDGE; AND WORKERS’
COMPENSATION BOARD

                 OPINION OF THE COURT BY JUSTICE HUGHES

                                      AFFIRMING

      Prior to revision by the 2017 Kentucky General Assembly, KRS1 342.040

provided for 12% interest on workers’ compensation income benefits that were

due but unpaid. After an amendment effective June 29, 2017, the statute now

provides for an interest rate of 6% on due but unpaid benefits except in those

instances where non-payment was “without reasonable foundation.”2

Appellant Charles Martin experienced a compensable injury on April 1, 2016,

filed a claim in October 2017 and was awarded income benefits by an

Administrative Law Judge (ALJ) on April 27, 2018. Although both the ALJ and

the Workers’ Compensation Board concluded that the 12% interest rate

      1   Kentucky Revised Statute.
      2 In 2018 the General Assembly added a provision that if delayed payment is

caused by the employee, no interest shall be due. See infra n.7.
continues to apply to that portion of Martin’s benefit award attributable to the

period prior to the June 29, 2017 effective date of the statutory amendment,

the Court of Appeals reversed, finding the 6% interest rate applicable to all of

Martin’s due but unpaid benefits. Having carefully considered the legislative

act by which the General Assembly amended KRS 342.040, we conclude that,

absent the aforementioned “without reasonable foundation” exception, the

legislative intent was to make all portions of any income benefits award entered

after June 29, 2017 subject to the 6% interest rate. Therefore, we affirm the

Court of Appeals.

                FACTUAL AND PROCEDURAL BACKGROUND

      Charles Martin filed a claim for work-related injuries as a result of his

employment with Warrior Coal. In an April 27, 2018 Opinion and Order, the

ALJ found that Martin sustained work-related cumulative trauma to his left

shoulder on April 1, 2016 and awarded benefits. With respect to interest, the

ALJ ordered that “all unpaid installments of compensation awarded herein

shall carry interest at the rate of 12% per annum on all due and unpaid

installments of such compensation through June 28, 2017 and 6% per annum

on all due and unpaid installments of such compensation on or after June 29,

2017.” The ALJ applied the 6% interest rate on unpaid installments beginning

June 29, 2017 to comply with House Bill 223 enacted by the 2017 General

Assembly. 2017 Ky. Acts ch. 17.

      Warrior Coal petitioned for reconsideration of several issues, including

the ALJ’s decision to award interest at the 12% rate for all unpaid installments

                                        2
due prior to June 28, 2017. The ALJ declined reconsideration. On Warrior

Coal’s appeal, the Workers’ Compensation Board affirmed on all three issues

raised, including the ALJ’s interest award. Consistent with its earlier opinions,

the Board held that the legislature did not express or imply its desire that the

2017 amendment of KRS 342.040 reducing the interest rate from 12% to 6% be

applied retroactively. On Warrior Coal’s further appeal to the Court of Appeals,

the employer prevailed on a single issue, the applicable interest rate. Relying

on recently-decided Holcim v. Swinford, 581 S.W.3d 37 (Ky. 2019), the Court of

Appeals found that Martin’s entire award is subject to the 6% interest rate.

Martin now appeals to this Court, seeking reversal of the appellate court’s

ruling on that issue and reinstatement of interest as awarded by the ALJ.

                                      ANALYSIS

      Martin argues that KRS 342.040, as amended, is not expressly

retroactive and therefore prior decisions of this Court regarding workers’

compensation benefits and general rules of statutory construction apply.

Citing Campbell v. Young, 478 S.W.2d 712 (Ky. 1972), Martin maintains that

since interest is owed from the date it is due until it is paid, the 12% interest

rate in effect at the time of his compensable injuries applies to his award,3

regardless of when an award by an ALJ is rendered. He also contends that as

reflected in KRS 446.080(3) and Commonwealth Department of Agriculture v.

      3  To be clear, Martin does not maintain that the entirety of his award is subject
to 12% interest but rather, as the ALJ ruled, those portions attributable to the period
prior to June 29, 2017.

                                           3
Vinson, 30 S.W.3d 162, 168 (Ky. 2000), the general rule is that a statute

making a substantive change in the law, like the amendment at issue, is to be

strictly construed and given prospective effect. As to Holcim, Martin insists

that case is distinguishable from his case because it makes no mention of any

retroactive application of KRS 342.040.

      Legislative intent is paramount when construing a statute. Univ. of

Cumberlands v. Pennybacker, 308 S.W.3d 668, 684 (Ky. 2010) (“our first

guiding principle in statutory construction is to ascertain and effectuate

legislative intent”). Thus, we first consider whether the General Assembly

clearly manifested its intent to apply the 6% interest rate in newly revised KRS

342.040 to benefits due and unpaid prior to its effective date. As in Holcim, we

are confronted with language in the legislative act – specifically in Section 5 of

2017 Kentucky Acts Chapter 17 – that was not subsequently codified in the

statute but rather placed within a Legislative Research Commission (LRC) Note.

         I. THE GENERAL ASSEMBLY’S INTENT IS CONTROLLING

      Elementary considerations of fairness support the longstanding

“principle that the legal effect of conduct should ordinarily be assessed under

the law that existed when the conduct took place.” Landgraf v. USI Film Prods.,

511 U.S. 244 (1994) (quoting Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494

U.S. 827, 855 (1990) (Scalia, J., concurring)). In Kentucky, this principle is

embodied in KRS 446.080(3) which provides that “[n]o statute shall be

construed to be retroactive, unless expressly so declared.” The general rule in

Kentucky is that “the amended version of a statute [is not] applied retroactively

                                         4
to events which occurred prior to the effective date of the amendment unless

the amendment expressly provides for retroactive application.” Vinson, 30

S.W.3d at 168 (citing KRS 446.080(3) and Kentucky Indus. Util. Customers, Inc.

v. Kentucky Utils. Co., 983 S.W.2d 493 (Ky. 1998)). However, as explained in

Peabody Coal Co. v. Gossett, 819 S.W.2d 33, 36 (Ky. 1991), a case addressing a

statutory change in the standard for reopening a workers’ compensation

award, a statute does not operate “retroactively” just because it is applied in a

case pending before the statute’s enactment. Accord Landgraf, 511 U.S. at

269. Kentucky law differentiates between a statute which operates

“retroactively” and a statute with a temporal reach predating its enactment.

      In Peabody, we said:

      A retrospective law, in a legal sense, is one which takes away or
      impairs vested rights acquired under existing laws, or which
      creates a new obligation and imposes a new duty, or attaches a
      new disability, in respect to transactions or considerations already
      past. Therefore, despite the existence of some contrary authority,
      remedial statutes, or statutes relating to remedies or modes of
      procedure, which do not create new or take away vested rights, but
      only operate in furtherance of the remedy or confirmation of such
      rights, do not normally come within the legal conception of a
      retrospective law, or the general rule against the retrospective
      operation of statutes. In this connection it has been said that a
      remedial statute must be so construed as to make it effect the
      evident purpose for which it was enacted, so that if the reason of
      the statute extends to past transactions, as well as to those in the
      future, then it will be so applied although the statute does not in
      terms so direct, unless to do so would impair some vested right or
      violate some constitutional guaranty. 73 Am.Jur.2d Statutes § 354
      (1974). (Footnotes omitted.)

819 S.W.2d at 36.

                                        5
      The Peabody Court thus concluded that “since the 1987 amendment to

KRS 342.125 is remedial, it does not come within the legal conception of a

retrospective law nor the general rule against the retrospective operation of

statutes.” Id.

      Having identified the amendment to KRS 342.040(1) as substantive,

Martin relies on the presumption against retroactivity of substantive laws.

Citing Hamilton v. Desparado Fuels, Inc., 868 S.W.2d 95, 97 (Ky. 1993), and

Vinson, 30 S.W.3d at 168, he argues that the clear declaration in KRS

446.080(3) against retroactivity should be strictly construed, particularly when

dealing with substantive legislative amendments which are presumed to be

prospective, as compared to remedial amendments which do not fall within the

general rule against retroactive application. Toward that end, Martin also cites

Stovall v. Couch, 658 S.W.2d 437 (Ky. App. 1983), a case in which the Court of

Appeals did not apply an amended interest rate “retroactively,” as support for

his proposition that an amendment of interest rates on unpaid benefits is

substantive legislation. However, even a cursory reading of Stovall reveals that

it did not address whether the interest rate amendment at issue was

substantive or remedial.

      Stovall dealt with the 1982 amendment of the KRS 342.040 interest rate

on unpaid income benefit installments, increasing it from 6% to 12%, the

reverse of the interest rate change before us in the 2017 amendment. The

Workers’ Compensation Board awarded Couch interest at the rate of 12% on all

due and unpaid installments. Id. at 437. Before the Court of Appeals, the

                                        6
employer and Stovall (Special Fund) argued that application of the 12% interest

rate on all due and unpaid benefits was an improper retroactive application of

the amendment. Id. Agreeing with that proposition, the Court of Appeals

upheld the application of the 6% rate until the amendment’s effective date and

application of the 12% rate thereafter. Id. at 438. The appellate court reached

that conclusion based on the statute’s plain wording – the interest rate

increase “on each installment from the time it is due until paid,” went into

effect July 15, 1982 – which indicated nothing beyond a prospective

application. Id. at 437-38.4 In the current context, we view Stovall as a case

applying the general rule that an amended statute is ordinarily interpreted as

       4 In Stovall, the Court of Appeals relied on Campbell v. Young, 478 S.W.2d at

713 (Ky. 1972). Stovall described Campbell as holding that interest was due from the
date the claim for compensation was filed. 658 S.W.2d at 438. Campbell instead
holds that interest was due according to KRS 342.040’s plain language. See 478
S.W.2d at 713. KRS 342.040 then provided:

      Time of payment of compensation. Except as provided in KRS 342.020
      and 342.030 no compensation shall be payable for the first seven days of
      disability unless disability continues for a period of more than two weeks
      in which case compensation shall be allowed from the first day of
      disability. All compensation shall be payable on the regular pay day of
      the employer, commencing with the first regular pay day after seven days
      after the injury or disability resulting from an occupational disease, with
      interest at the rate of six percent per annum on each installment from
      the time it is due until paid.

Id. The Campbell Court, quoting Maryland Casualty Co. v. Reeves, 70 S.W.2d 992 (Ky.
1934), emphasized that the statute “states in clear and unambiguous language that all
compensation shall be payable with interest at the rate of 6 per cent per annum on
each installment from the time it is due until paid” and reversed the judgment
upholding the Board’s decision that interest was due from the date the claim was filed.
Id.
       Stovall and Campbell have only recently been cited in other unpublished Court
of Appeals cases also addressing the 2017 amendment of KRS 432.040. Given the
language in Section 5 of 2017 Kentucky Acts Chapter 17, resort to Stovall and
Campbell is unnecessary.
                                          7
operating prospectively in the absence of language which “clearly manifests

[the legislature’s] intent” to the contrary. See Vinson, 30 S.W.3d at 168.

      While Martin acknowledges this general rule as expressed in KRS

446.080(3), he overlooks the fundamental principle of statutory interpretation

embodied in the rule, namely that when the General Assembly clearly

expresses its intent, that intent is controlling. Univ. of Louisville v. Rothstein,

532 S.W.3d 644, 648 (Ky. 2017); Bell v. Bell, 423 S.W.3d 219, 223 (Ky. 2014).

Thus, no matter the context – regardless of whether we are addressing

substantive or remedial legislative amendments – when the General Assembly

clearly states legislation is to have retroactive effect or otherwise prescribes its

temporal scope or reach, we give effect to the intent of the General Assembly,

see Vinson, 30 S.W.3d at 168; Commonwealth ex rel. Conway v. Thompson, 300

S.W.3d 152, 166–67 (Ky. 2009), unless to do so would impair some vested right

or violate some constitutional guaranty, see Peabody, 819 S.W.2d at 36;

Kentucky Ins. Guar. Ass’n v. Jeffers ex rel. Jeffers, 13 S.W.3d 606, 610 (Ky.

2000).

      When a case implicates a . . . statute enacted after the events
      in suit, the court’s first task is to determine whether [the
      General Assembly] has expressly prescribed the statute’s
      proper reach. If [the General Assembly] has done so, of course,
      there is no need to resort to judicial default rules. When,
      however, the statute contains no such express command, the court
      must determine whether the new statute would have retroactive
      effect, i.e., whether it would impair rights a party possessed when
      he acted, increase a party's liability for past conduct, or impose
      new duties with respect to transactions already completed. If the
      statute would operate retroactively, our traditional presumption
      teaches that it does not govern absent clear [legislative] intent
      favoring such a result.

                                          8
Landgraf, 511 U.S. at 280 (emphasis added); see Thompson, 300 S.W.3d at 167

(“Optimally, the General Assembly will state clearly that it intends legislation to

have retroactive effect, . . . . [When there is] a failure to state [so] explicitly . . .

a reviewing court may discern the General Assembly’s intent for legislation to

have a retroactive effect by using traditional tools for statutory interpretation.”).

       Here, the General Assembly unambiguously expressed the temporal

reach of its amendment of the interest rate in KRS 342.040. As Warrior Coal

argues and as reflected in an LRC Note to the statute, 2017 Kentucky Acts

Chapter 17, Section 5 provides that “[KRS 342.040, as amended, shall] apply to

all [workers’] compensation orders entered or settlements approved on or after

June 29, 2017, the effective date of that Act.”5 By applying the amendment to

orders and settlements approved on or after the Act’s effective date, the General

Assembly made clear that the date of an award or settlement is controlling,

even though that award may encompass events which occurred before the

statute was amended and made effective. Notably, this legislative statement

regarding temporal application is not codified in the statute itself in the official

         5 Because a workers’ compensation award does not create a vested right until it

is final, this reference is to final awards, following exhaustion of all appeals, if any are
taken. See Johnson v. Gans Furniture Indus., Inc., 114 S.W.3d 850, 855 (Ky. 2003)
(“Final workers’ compensation awards are subject to the principles of the finality of
judgments . . . .”); Hampton v. Flav-O-Rich Dairies, 489 S.W.3d 230, 234 (Ky. 2016)
(“[A] Board opinion is final if it divests a party of a vested right by setting aside an
ALJ’s award or by authorizing or requiring the entry of a different award on remand. . .
. When the Board vacate[s] the ALJ’s opinion, that opinion cease[s] to exist, and [the
claimant] [is] divested of his . . . award.”); 803 Kentucky Administrative Regulation
25:010, § 25 (“Time for Payment of Benefits in Litigated Claims. (1) If a disputed claim
is litigated and an opinion, order, or award is entered awarding benefits to a claimant
and no appeal is taken that prevents finality of the opinion, order, or award, payment
shall be made in accordance with this subsection.”).
                                             9
version of the Kentucky Revised Statutes, but rather appears in an uncodified

LRC Note that follows the text of the statute. We must determine the effect of

this uncodified legislative expression, a task we undertook in a similar case

approximately eighteen months ago, Holcim v. Swinford.

      II. AS IN HOLCIM, THE EXPRESS LEGISLATIVE INTENT MUST BE
          GIVEN EFFECT EVEN IF IT IS NOT CODIFIED IN THE STATUTE

      In Holcim, 581 S.W.3d 37, this Court addressed the effect of a Legislative

Research Commission Note that embodied the specific language of one section

of a Kentucky Act, legislated language clearly expressing the temporal reach of

an amendment to a workers’ compensation statute but not codified within the

official version of the Kentucky Revised Statutes. In short, it presented the

same legislative language scenario that we confront in this case. Before

turning to Holcim and its precedential value, we look first at the statute at

issue in this case.

      As amended in 2017, KRS 432.040(1) states in pertinent part:

      Except as provided in KRS 342.020, no income benefits shall be
      payable for the first seven (7) days of disability unless disability
      continues for a period of more than two (2) weeks, in which case
      income benefits shall be allowed from the first day of disability. All
      income benefits shall be payable on the regular payday of the
      employer, commencing with the first regular payday after seven (7)
      days after the injury or disability resulting from an occupational
      disease, with interest at the rate of six percent (6%) per annum
      on each installment from the time it is due until paid, except
      that if the administrative law judge determines that a denial, delay,
      or termination in the payment of income benefits was without

                                        10
      reasonable foundation, the rate of interest shall be twelve percent
      (12%)[6] per annum.[7]

(Emphasis added.)

      This version of KRS 342.040(1) was the result of 2017 Kentucky Acts

Chapter 17, Section 2, which established the 6% interest rate on income

benefit payments, a reduction from the prior interest rate of 12%. In Section 5

of that same Act the General Assembly provided: “Section 2 of this Act shall

apply to all [workers’] compensation orders entered or settlements approved on

or after the effective date of this Act.” As noted, the directive in Section 5,

rather than being codified within the KRS 342.040 text, is stated in a

Legislative Research Commission Note appearing below the official version of

the statute. The LRC Note reads: “Legislative Research Commission Note (6-

29-17): 2017 Ky. Acts ch. 17, sec. 5 provided that amendments made to this

statute in 2017 Ky. Acts ch. 17, sec. 2 apply to all [workers’] compensation

      6 Along with the interest rate amendment at issue in this case, 2017 Kentucky

Acts Chapter 17, Section 2 also created one other amendment within KRS 432.040(1)
by changing this interest rate, previously 18%, to 12%.
      7KRS 432.040(1)’s second sentence was amended in 2018. As amended, its
second sentence currently reads:

      All income benefits shall be payable on the regular payday of the
      employer, commencing with the first regular payday after seven (7) days
      after the injury or disability resulting from an occupational disease, with
      interest at the rate of six percent (6%) per annum on each installment
      from the time it is due until paid, except that if the administrative law
      judge determines that the delay was caused by the employee, then no
      interest shall be due, or determines that a denial, delay, or termination
      in the payment of income benefits was without reasonable foundation,
      then the rate of interest shall be twelve percent (12%) per annum.
                                          11
orders entered or settlements approved on or after June 29, 2017, the effective

date of that Act.”

      In Holcim, we considered a similar situation. There we addressed the

amendment of a different provision of the Workers’ Compensation Act, the

statute regarding termination of a worker’s income benefits at age 70 or four

years after injury or last exposure, whichever last occurs. As amended in

2018, KRS 342.730(4) reads:

      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.

Holcim, 581 S.W.3d at 42.

      Although the statute on its face says nothing regarding retroactive or

prospective application, the Legislative Research Commission Note appearing

below the official version of KRS 342.730(4) clearly does:

      This statute was amended in Section 13 of 2018 Ky. Acts ch. 40. . .
      . Subsection (3) of Section 20 of that Act reads, “Subsection (4) of
      Section 13 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.

Id. at 43.

                                        12
      In Holcim, this Court concluded that pursuant to KRS 7.131(3), the

Legislative Research Commission Note’s content regarding the temporal reach

of KRS 342.730(4) did not need to be codified within the official version of the

statute to be effective because the language in the Act regarding retroactivity is

temporary, i.e., it applies solely to cases which “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 [the] Act.” Id. at 44. The statute we

relied on, KRS 7.131(3), states that “[i]n maintaining the official version of the

Kentucky Revised Statutes, the Commission may omit all laws of a private,

local, or temporary nature.” Consequently, the unanimous Holcim Court

concluded that the General Assembly had expressly authorized what had

occurred, the non-codification of a statement of legislative intent regarding the

temporal reach of the statute because that language had only temporary

significance. With the passage of time – a relatively brief period of time at

that – the language would become surplusage and unnecessary. Nonetheless,

the legislature had expressed its intent and that intent was properly preserved

in the accompanying LRC Note.

      Finding Holcim instructive in this case, the Court of Appeals concluded

that the General Assembly’s express language in the non-codified section of the

2017 Kentucky Act clearly stated its intention with respect to the amendment

of KRS 342.730. In short, the amendment applies to all awards entered after

the statute’s June 29, 2017 effective date, regardless of the period for which

the income benefits were payable, rendering Martin’s entire income benefits

                                        13
award subject to the amended 6% interest rate. Martin attempts to distinguish

Holcim as a case dealing only with the retroactive effect of a statute controlling

duration of income benefit awards, and thus having nothing to say about

interest or the law that governs interest on such awards. While Martin would

understandably prefer not to dwell on Holcim’s analysis regarding the effect of

non-codified language taken directly from a legislative act and preserved in an

LRC Note, we find that analysis equally compelling here.

      As explained in Holcim, if language is properly characterized as a

permanent law of a general nature then under KRS 7.131(2) it must be codified

in the official version of the Kentucky Revised Statutes to be effective under

KRS 7.138(2). Id. On the other hand, under KRS 7.131(3), if the language is

properly characterized as a law of a temporary nature, there is no requirement

that the language must be codified in the official version of the Kentucky

Revised Statutes in order to be relied on. Id. The non-codified language at

issue in Holcim, clarifying that the amendment applied to cases which “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 [the] Act,”

was plainly temporary. Id. We explained:

      For any new injuries and claims, the retroactivity of the Act will not
      be an issue. Therefore, the language is only relevant to a
      particular time frame and once cases arising during that time
      frame are fully adjudicated, it will be unnecessary. Therefore, due
      to the temporary nature of the language regarding retroactivity in
      the Act, codification was not required.

Id.

                                        14
      The non-codified language at issue here is similar in nature. The

language set forth in Section 5 of the 2017 Kentucky Act and repeated almost

verbatim in the LRC Note is relevant to those cases in which compensable

injuries occurred prior to the Act’s effective date but for which orders are

entered and settlements are approved on or after June 29, 2017. For

compensable injuries occurring on or after June 29, 2017, this “temporal

scope” language is not necessary. Because of the temporary nature of the

language, codification was not required to give it effect. Stated broadly, if the

General Assembly passes a bill with clear language regarding the bill’s

temporal reach, the legislature has expressed its intent regarding

retroactive/prospective application regardless of whether that clear language

finds its way into the actual statute. Legislative intent is legislative intent.

Based on the General Assembly’s non-codified but express language regarding

its intent with respect to the 6% interest rate set forth in the 2017 amendment,

we conclude that the entirety of Martin’s benefit award is subject to the

amended 6% interest rate.

                                   CONCLUSION

      For the reasons stated above, we affirm the Court of Appeals.

      Minton, C.J.; Conley, Keller, Nickell, and VanMeter, JJ., concur.

Lambert, J., dissents without separate opinion.

                                         15
COUNSEL FOR APPELLANT:

McKinnley Morgan
Morgan Collins Yeast & Salyer

COUNSEL FOR APPELLEE,
WARRIOR COAL LLC:

Morgan Jenkins Fitzhugh
Hassman & Fitzhugh, PLLC

ADMINISTRATIVE LAW JUDGE:

Jefferson Vimont Layson, III

WORKERS’ COMPENSATION BOARD:

Michael Wayne Alvey, Chairman

                                16