Court Opinion

ID: 4572290
Source: CourtListenerOpinion
Date Created: 2020-10-02 14:06:04.633791+00
Date Added: 2024-06-11T13:30:47.348020
License: Public Domain

RENDERED: SEPTEMBER 25, 2020; 10:00 A.M.
                      NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2020-CA-0088-WC

KIMBERLY COFFEY                                                     APPELLANT

                 PETITION FOR REVIEW OF A DECISION
v.             OF THE WORKERS’ COMPENSATION BOARD
                       ACTION NO. WC-16-91920

MCCREARY COUNTY FISCAL COURT;
HON. GRANT S. ROARK, ADMINISTRATIVE
LAW JUDGE; AND WORKERS’ COMPENSATION
BOARD                                                                APPELLEES

                                    OPINION
                                   AFFIRMING

                                  ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; ACREE AND LAMBERT, JUDGES.

ACREE, JUDGE: Kimberly Coffey appeals from an opinion of the Workers’

Compensation Board which upheld an administrative law judge’s (ALJ) order

awarding her permanent total disability benefits and medical benefits, but limited
her award according to the newly-enacted Kentucky Revised Statute (KRS)

342.730(4). We affirm.

                                 BACKGROUND

             On November 27, 2018, a defective hydraulic lift was lowered onto

Coffey’s foot. She alleged a safety violation by her employer, McCreary County

Fiscal Court. Subsequently, McCreary County alleged a safety violation by

Coffey. Before the final hearing, Coffey filed a “Notice of Constitutional

Challenge” on February 26, 2019, asserting the retroactive application of the

current version of KRS 342.730(4) is unconstitutional. A final hearing was held on

June 4, 2019.

             The ALJ issued an opinion on August 5, 2019. In that opinion, the

ALJ determined Coffey sustained a permanent total disability stemming from

McCreary County’s violation of a safety regulation. Regarding Coffey’s

constitutional challenge, the ALJ stated it had no authority to rule on constitutional

issues, limited her award based on the statute, and preserved the issue for appellate

review. The Board made the same determination, and this appeal followed.

                            STANDARD OF REVIEW

             The Court reviews questions of law, such as the constitutionality of

statutes, using the de novo standard. U.S. Bank Home Mortgage v. Schrecker, 455
S.W.3d 382, 384 (Ky. 2014).

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                                         ANALYSIS

                Coffey argues the retroactivity of the current version of KRS

342.730(4) is unconstitutional and that she is entitled to full benefits for life

because the retroactivity provision is an unconstitutional ex post facto law. We

disagree.

                Our Supreme Court in Holcim v. Swinford held that the statute is

retroactive but did not address the constitutionality of the statute’s retroactive

application. 581 S.W.3d 37, 44 (Ky. 2019) (“the constitutionality of the statute is

not at issue before us”). Coffey places the issue squarely before this Court.

                Coffey claims the statute is unconstitutional because it violates the

Contract Clauses of the United States and Kentucky Constitutions. This is the

second time the issue was raised in this forum. Adams v. Excel Mining, LLC, No.

2018-CA-000925-WC, 2020 WL 864129 (Ky. App. Feb. 21, 2020).1 We believe

that Opinion, albeit unpublished, adequately addresses this issue, and we repeat

that analysis here.

                The prohibition against ex post facto laws found in the United States

Constitution and the Kentucky Constitution only applies to criminal matters.

Nicholson v. Judicial Ret. & Removal Comm’n, 562 S.W.2d 306, 308 (Ky. 1978).

However, Section 19(1) of the Kentucky Constitution and Article 1, Section 10,

1
    This case is currently on appeal to the Kentucky Supreme Court, No. 2020-SC-0137-WC.

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Clause 1 of the United States Constitution prohibit laws which impair the

obligation of contracts. This is Coffey’s argument. She claims retroactive

application of this statute infringes on her rights to recover workers’ compensation

benefits pursuant to the statute in effect at the time of her injury. In other words,

she agreed to take part in Kentucky’s workers’ compensation scheme and demands

she receive the benefits to which she was entitled at the time she was injured, not

pursuant to the new retroactive regulation.

             [A] constitutional prohibition against impairing the
             obligation of contracts . . . is not an absolute one to be read
             with literal exactness. The Contract Clause does not
             prevent a state from enacting regulations or statutes which
             are reasonably necessary to safeguard the vital interests of
             its people.

Maze v. Bd. of Directors for Commonwealth Postsecondary Educ. Prepaid Tuition

Tr. Fund, 559 S.W.3d 354, 368 (Ky. 2018) (citation omitted). When determining

whether a legislative act violates the contract impairment clause, we utilize the

following standard:

             (1) whether the legislation operates as a substantial
             impairment of a contractual relationship; (2) if so, then the
             inquiry turns to whether there is a significant and
             legitimate public purpose behind the regulation, such as
             the remedying of a broad and general social or economic
             problem; and (3) if, as in this case, the government is a
             party to the contract, we examine “whether that
             impairment is nonetheless permissible as a legitimate
             exercise of the state’s sovereign powers,” and we
             determine if the impairment is “upon reasonable

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                conditions and of a character appropriate to the public
                purpose justifying its adoption.”
Id. at 369.

                “The first step . . . is determining ‘whether the state law has, in fact,

operated as a substantial impairment of a contractual relationship.’” Id. at 369-70

(citations omitted).

                A significant consideration in this step of the analysis is
                the extent to which the industry subject to the contract has
                been regulated in the past. The rationale for this rule is
                thusly stated: “One whose rights, such as they are, are
                subject to state restriction, cannot remove them from the
                power of the State by making a contract about them.”
Id. at 370 (citations omitted). Here, we conclude the new law substantially

impairs Coffey’s benefits. Although the workers’ compensation scheme is heavily

regulated, past versions of KRS 342.730(4) have allowed a benefit recipient to

receive benefits for life. In fact, the 1994 version of the statute would have

allowed Coffey to receive benefits for life, although they were subject to reduction

from time to time. The current version terminates benefits once Coffey reaches 70

years of age.

                The second stage of the . . . analysis involves a
                determination of whether the newly-imposed conditions
                that impair the contract can be justified by a significant
                and legitimate public purpose. Among the purposes that
                justify such impairment is legislation aimed at the
                remedying of a broad and general social or economic
                problem.

                                             -5-
Id. at 371 (citations omitted). Significantly, the Kentucky Supreme Court found

that limiting the duration of benefits is justified by a legitimate public purpose.

The Court concluded that limiting the duration of benefits solves two economic

problems: “(1) it prevents duplication of benefits; and (2) it results in savings for

the workers’ compensation system.” Parker v. Webster County Coal, LLC (Dotiki

Mine), 529 S.W.3d 759, 768 (Ky. 2017). This is evident from the fact that a

duration limitation of benefits has been in effect in Kentucky since the 1996

version of KRS 342.730(4).

              The third stage of the . . . analysis examines whether the
              adjustment of “the rights and responsibilities of
              contracting parties [is based] upon reasonable conditions
              and [is] of a character appropriate to the public purpose
              justifying [the legislation’s] adoption.” Analysis under
              this prong varies depending upon whether the State is a
              party to the contract. When the State itself is not a
              contracting party, “[a]s is customary in reviewing
              economic and social regulation, . . . courts properly defer
              to legislative judgment as to the necessity and
              reasonableness of a particular measure.”

Maze, 559 S.W.3d at 372 (citations omitted). The contracts at issue here are not

between individuals and the state, but between an employee, an employer, and a

workers’ compensation insurance provider. We, therefore, defer to the judgment

of the legislature.

              We believe retroactive application of KRS 342.730(4) is reasonable

and appropriate. As previously stated, limiting the duration of benefits has been a

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part of the workers’ compensation system since 1996. Parker, supra, found the

particular manner of limitation which applied at that time to be unconstitutional.

The Kentucky Legislature had to act quickly to return the workers’ compensation

system to the status quo. Had the legislature not acted so, employees with pending

workers’ compensation claims between the rendering of Parker and the effective

date of the current version of KRS 342.730(4) could have claimed entitlement to

some amount of benefits for life. This would have placed a great financial burden

on the workers’ compensation system, employers, and insurers. Holcim v.

Swinford holds that the Kentucky Legislature specifically intended that the current

version of KRS 342.730(4) apply retroactively. 581 S.W.3d at 44. And this Court

is bound by that decision. Crittenden County Fiscal Court v. Hodge, 591 S.W.3d
424, 426 (Ky. App. 2019). Consequently, the statute’s limitation as to duration

applies to Coffey.

             Coffey makes one additional argument challenging the

constitutionality of the statute, which has also been addressed previously by this

Court. She contends the age limitation is unconstitutional.

             This issue is currently pending before the Kentucky Supreme Court as

a matter of right appeal from this Court’s decision in Donathan v. Town and

Country Food Mart, No. 2018-CA-001371-WC, 2019 WL 6998653, (Ky. App.

                                         -7-
Dec. 20, 2019). In that case, this Court applied the rational basis test to the statute

and concluded the statute was constitutional. We held as follows:

             The legislators enacted this version in response to Parker.
             We are also cognizant of the strong presumption of
             constitutionality afforded to legislative acts. Brooks v.
             Island Creek Coal Co., 678 S.W.2d 791, 792 (Ky. App.
             1984) (citations omitted). Accordingly, we find the
             statute, as enacted, does not treat similarly situated persons
             differently. The statute allows for the benefits to terminate
             upon reaching the age of 70, or four years after the
             employee’s injury, whichever occurs last. This stipulation
             rationally relates to the government’s basis for the
             legislation – to save taxpayer dollars allocated to the
             workers’ compensation system. It places a limit on the
             amount of benefits every person is awarded, not just a
             select group of individuals. Therefore, we find the statute
             constitutional.
Id. at *3. For these same reasons, we conclude the current version of KRS

342.730(4) is constitutional.

                                   CONCLUSION

             Based on the foregoing, we affirm the Board’s final opinion in this

case.

             ALL CONCUR.

 BRIEF FOR APPELLANT:                       BRIEF FOR APPELLEE:

 Mark D. Knight                             Marcel Smith
 Somerset, Kentucky                         Frankfort, Kentucky

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