Court Opinion

ID: 9783687
Source: CourtListenerOpinion
Date Created: 2023-08-30 19:59:33.866711+00
Date Added: 2024-06-11T07:35:31.952276
License: Public Domain

SCOTT, J.,
dissenting:
I must necessarily dissent from the majority’s opinion because the opinion endangers the financial footing of the Kentucky Workers’ Compensation Act (“Act”), KRS 342.0011, et seq., in that it misperceives the evidentiary basis necessary under Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476 (Ky.1991) and its progeny, for a finding that an employee has voluntarily rejected coverage under the Act. In fact, the evidentiary basis for a summary judgment finding that an employee has voluntarily rejected coverage under the Act is much greater than the majority surmises and cannot be met by the evidence adduced to date in this case.
Thus, I fear the majority’s decision will, in the future, severely reduce the premiums paid to support Kentucky’s workers’ compensation program, while, at the same time, Kentucky’s compensation carriers are required by statute to assume the entire workers’ compensation liability of the employer, KRS 342.375, even though the true voluntariness of an employee’s rejection will not be determined until a later date when he or she files a claim. By this time, of course, a good number of the “fly by night” employers seeking means by which to avoid payment of their full compensation premiums will be gone or insolvent — leaving the unfunded liability to the compensation carriers that support Kentucky’s program.
Like other states’, Kentucky’s workers’ compensation program “is social legislation, the purpose of which is to compensate workers who are injured in the course of their employment for necessary medical treatment and for a loss of wage-earning capacity, without regard to fault.” Adkins v. R & S Body Co., 58 S.W.3d 428, 430 (Ky.2001). Thus, “[t]he statutory language should be liberally construed to promote the objectives and carry out the intent of the legislature.” Ronald W. Eades, 18 Ky. Prac., Workers’ Comp. § 1:3 (2010-2011). “This principle of protecting the interests of the injured worker is [the] basic tenet of workers’ compensation law.” Id. As this Court noted in Firestone Textile Co. Div., Firestone Tire and Rubber Co. v. Meadows:
*204It is an important public interest that injured employees shall receive, and employers shall be obligated to pay, for medical expenses, rehabilitative services and a portion of lost wages. Injured employees should not become public charges. If that is the public policy of Kentucky, and it is, then action on the part of an employer which prevents an employee from asserting his statutory right to medical treatment and compensation violates that policy.
666 S.W.2d 730, 733-34 (Ky.1983). Inherent in this statutory scheme are payment of workers’ medical benefits, KRS 342.020, both temporary and permanent, partial and total income benefits (including rehabilitation and retraining rights), KRS 342.040, 342.710, 342.732, and 342.730, as well as death and survivor benefits, KRS 342.730(3), 342.750.
Significant to this scheme:
Every employer under [the Act] shall either insure and keep insured its liability for compensation ... in some corporation, association, or organization authorized to transact the business of workers’ compensation insurance in this state or shall furnish to the commissioner satisfactory proof of its financial ability to pay directly the compensation in the amount and manner and when due as provided for in this chapter. In the latter case, the commissioner shall require the deposit of an acceptable security, indemnity, or bond to secure, to the extent the commissioner directs, the payment of compensation liabilities as they are incurred.
KRS 342.340. Moreover,
KRS 342.365 requires that a carrier issuing a policy against liability under [the Act] must agree to pay promptly “all benefits conferred by this chapter and all installments of the compensation that may be awarded or agreed upon” and that the carrier’s agreement “shall be construed to be a direct promise by the insurer to the person entitled to compensation, enforceable in his name.” KRS 342.375 provides that every policy or contract of insurance “shall cover the entire liability of the employer for compensation to each employee subject to [the Act].”
AIG/AIU Ins. Co. v. South Akers Mining Co., LLC, 192 S.W.3d 687, 688 (Ky.2006) (emphasis added). “This assures that injured workers or their surviving dependents will receive all of the benefits to which they are entitled.” Id.
Admittedly, KRS 342.395(1) allows an employee to reject coverage under the Act, but such an election is never effective unless it is, in fact, made voluntarily. KRS 342.395(1) (“The commissioner ... shall not give effect to any rejection of this chapter not voluntarily made by the employee.”). Moreover, “[a]n employer shall not require an employee to execute a rejection of this chapter as either a condition to obtain employment or a condition to maintain employment.” KRS 342.395(2). Thus, to be effective, an employee’s rejection of coverage under the Act requires much more than just a decision, an execution, and transmittal of the written notice.
The prerequisites for a voluntary rejection were first analyzed in Tri-Gem Coal Co. v. Whitaker, 661 S.W.2d 785 (Ky.App.1983). In Whitaker, the worker “testified that he read and understood the form and was aware that he was rejecting workers’ compensation coverage. He also testified that he understood accident coverage would be provided by Great Fidelity Insurance Company.” Id. at 785. Several months later, however, he sustained an injury at work which left him almost sightless in his left eye. Thereafter, “he filed a claim with the Workers’ Compensation Board which found that he had not volun*205tarily rejected workers’ compensation coverage and awarded benefits to him based on a 50% occupational disability.” Id. at 785-86 (emphasis added).
Although the employee testified that signing the rejection form was a prerequisite to employment and several other employees testified to the same effect, there was
[Ajlso testimony from other employees that either a representative from the insurance company or a supervisor for Tri-Gem presented information comparing benefits under the Great Fidelity policy to benefits under the Act. They were to choose between the two coverages. They testified that they, as a group, chose the Great Fidelity plan because the benefits were better than those under the Act.
Id. at 786 (emphasis added). In finding “[t]he evidence as a whole is of sufficient quality and quantity to support the decision of the Board that Whitaker’s rejection was not voluntary,” the court noted:
There is no authority, statutory or otherwise, providing guidelines to determine whether a rejection is voluntarily made. The Board relied on an opinion by the Attorney General, OAG 77-527, which concluded that it would be highly unusual for every employee to reject the Act, and that such a situation could indicate that employment was conditioned upon rejection. Obviously this type rejection would not be a voluntary one as contemplated by the statute.
Id. at 786 (emphasis added).
We next addressed the issue in Karst Robbins Mach. Shop, Inc. v. Caudill, 779 S.W.2d 207 (Ky.1989). In Caudill, we noted “[tjhat Caudill, under no coercion, did sign the Form 4 notice of rejection was not disputed; but the evidence conflicted as to whether this employee, possessed of ‘extremely limited literary skills,’ executed the document with an informed understanding of its import sufficient to render his rejection truly voluntary.” Id. at 208 (emphasis added). In affirming the Court of Appeals in its belief that the rejection was not voluntary, we held:
It is not dispositive, in our view, to decide that the signature was freely given; the statute requires that rejection of the act be voluntary. Like the Court of Appeals, we believe that among the elements of a voluntary rejection, as contemplated by the legislature, is a substantial understanding of the nature of the action and its consequences.
Id. at 208-09.
We again considered the issue in Watts v. Newberg, 920 S.W.2d 59 (Ky.1996). In Newberg,
[T]he employer gave [the] claimant and fellow employees ... the choice of remaining on the employer’s workers’ compensation coverage with a 20 percent reduction in wages or rejecting the provisions of the Workers’ Compensation Act and accepting a new employer-provided benefit package with no decrease in wages. The meeting with the employees resulted in the wholesale signing of rejection notices by the employees.
Id. at 59 (emphasis added). Thereafter, the worker filed a workers’ compensation claim for disability benefits due to a work-related injury occurring after his alleged rejection. The compensation carrier (through the employer) then raised the defense that he had executed and filed a written notice of rejection which excluded him from coverage under the employer’s workers’ compensation insurance. The claimant responded by arguing that his rejection was not voluntary, and, therefore, did not constitute a valid rejection. In his action, the claimant acknowledged:
*206[T]hat he understood that the insurance offered as a substitute for workers’ compensation coverage was promoted as being just as good as workers’ compensation coverage, although, in reality, the new policy did not provide for any benefits for partial disability. This being the case, claimant contended that he would not have knowingly waived his right to recover for permanent partial disability in lieu of a policy providing only for benefits for total disability. In addition, he argued that the employer did not set forth the differences between workers’ compensation coverage and the proposed disability coverage so as to allow him to gain a substantial understanding of the consequences of signing the rejection.
Id. at 60. Analyzing the contrasting evidence introduced, we held that: “[t]he evidence in this case shows that claimant did not have a substantial understanding of the effect of his rejection, as he understood that the substitute coverage offered by the employer was just as good as coverage under the Workers’ Compensation Act.” Id. at 61.
The progression of our analysis of the requirements necessary for a finding of a “voluntary rejection” of coverage under the Act as discussed above, is significant in two respects. First, the worker’s rejection requires more than the execution and transmittal of the rejection form — the worker “must have a substantial understanding of the nature of the action and its consequences.” Id. Secondly, such a determination does not normally occur until many years later, following the employee’s realization of the detriments of his or her election and his or her pursuit of the appropriate compensation claim. This, of course, is after the dissipation of the coercive elements surrounding the initial rejection. It should not go unnoticed that in each of the cases discussed above, the workers’ compensation carrier contested (in the employer’s name) its obligation of coverage to the rejecting worker and, in each case, it lost.
Thus, in instances such as are addressed by the majority in this case, we have three interrelated components of Kentucky’s compensation scheme. First, the employer must be covered or be an approved self-insured. KRS 342.340(1). Secondly, the scheme is financially supported by employer premiums paid to the participating carriers, along with special fund assessments on these premiums. See KRS 342.0011(24), (25), and (28); KRS 342.122(1).5 And, thirdly, each worker must have a protected right to voluntarily reject such coverage. KRS 342.395; see also Plunkett v. Jones, 452 S.W.2d 373, 374 (Ky.1970) (“The original Workmen’s Compensation Act was held to be unconstitutional because of its compulsory aspects.”).
Thus, in order to maintain a viable statutory scheme covering Kentucky’s workers, all the interrelated elements must be kept in balance. Participation must be such as to keep the employers’ premiums at an affordable level, while also sufficient to support the participating workers’ compensation carriers that basically administer the program. More importantly, the premiums must be such as to support medical, income, rehabilitative, and retraining needs of the injured workers, as well as death benefits to their survivors, while, at the same time, protecting the right of the worker to make a true, voluntary rejection of coverage under the program, when a fair determination is made that it is, in fact, their informed choice.
*207My complaint with the majority opinion is that it upsets this precarious balance by allowing an employer — without presenting proof of each individual’s voluntary and informed rejection — to reduce its premiums to a level incapable of sustaining a compensation program statewide, while, at the same time, the participating carriers, by virtue of KRS 342.375, have to accept the liabilities of coverage for each of the employer’s workers, who are later found to have been coerced or misled in their rejections.
It is this divergence between the majority’s summary judgment standard announced here — which excuses employers’ premiums — and our “voluntariness” standard established for compensation review, which then traps the carrier into a coverage for which it has not been compensated — that endangers Kentucky’s compensation coverage of its workers.
The majority inadvertently creates this divergence by its approval of the trial court’s grant of summary judgment on behalf of Blackstone Mining, by misapplying Steelvest, 807 S.W.2d 476, and by holding that the Court of Appeals “failed to credit the presumptive validity of the signed rejection notices, and, correspondingly, failed to recognize that the burden shifted to Travelers to present affirmative evidence sufficient to show that there was an issue of fact regarding the validity of the notices.” (Emphasis added).
The majority applies Steelvest as if it validated the federal practice of summary judgments. In fact, it did not! Under the federal standard, the initial burden of showing that no genuine issue of material fact exists:
[D]oes not necessarily require the movant to produce evidence showing the absence of a genuine issue of material fact, but only that he show that there is an absence of evidence possessed by the respondent to support an essential element of his case. [Yet, ujnder the present practice of Kentucky courts, the movant must convince the court, by the evidence of record, of the nonexistence of an issue of material fact.
Secondly, under the federal scheme, the test for summary judgment is the same as that for a directed verdict. In Kentucky, we have clearly held that the consideration to be given to the two motions is not the same and that a ruling on a summary judgment is a more delicate matter and that its inquiry requires a greater judicial determination and discretion since it takes the case away from the trier of fact before the evidence is actually heard.
Thirdly, under the federal summary judgment standard, the “scintilla” rule applies and summary judgment will be granted to the movant unless there is evidence on which a jury could reasonably return a verdict in the respondent’s favor. Under the Kentucky standard, we conclude that the movant should not succeed unless his right to judgment is shown with such clarity that there is no room left for controversy. See, Isaacs v. Cox, Ky., 431 S.W.2d 494 (1968). Only when it appears impossible for the non-moving party to produce evidence at trial warranting a judgment in his favor should the motion for summary judgment be granted.
Finally, under both the Kentucky and the federal approach, a party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial.
Id. (internal citations omitted, emphasis added). Moreover, “[t]he trial court must view the evidence in the light most favorable to the nonmoving party, and summary *208judgment should be granted only if it appears impossible that the nonmoving party will be able to produce evidence at trial warranting a judgment in his favor.” Lewis v. B & R Corporation, 56 S.W.3d 432, 436 (Ky.App.2001) (citing Steelvest, 807 S.W.2d at 480-82).
Here, the evidence of record established that of Blackstone Mining Company’s thirty employees, twenty-three signed forms rejecting coverage under the Act. These twenty-three employees tendering rejection notices received substitute coverage under a disability income policy issued by Massachusetts Mutual Life Insurance Company (policy). Yet, this policy does “not provide any benefit for any injury or sickness which existed during the 12 months before the issue date”; nor, are benefits “allowed under this policy if disability is due to a cause which is not covered.” Moreover, the policy contains additional limitations for pre-existing conditions in an attached rider, which provides:
This rider does not provide any benefit for any disability which begins within two years after the Issue Date of this rider if:
• That disability is caused, or contributed to, by any injury which occurred or sickness which first manifested itself before that Issue date; and
• The injury or sickness was not disclosed in the application for this rider.
For the purpose of this provision “injury” and “sickness” shall mean only those for which, during the 12 months before the Issue Date of this rider:
• Medical advice or treatment was recommended by or received from a physician; or
• The Insured had symptoms that would cause an ordinarily prudent person to seek diagnosis, care, or treatment.
If disability begins after two years from the Issue Date of this rider, we will not reduce or deny a claim for benefits on the ground that a disease or physical condition had existed before that Issue Date. However, if that disease or physical condition was excluded by name or specific description when disability began, then that exclusion will apply.
Additionally, under the policy, disability income payments are measured by the loss of income actually suffered by the worker, with the exception that only losses of twenty percent or greater are payable. Nor does his policy provide for payments of medical benefits.6 Thus, contrasting with the coverages required for workers’ compensation policies, the Massachusetts Mutual policy does not provide disability income payments for permanent or partial disabilities unrelated to income loss. This contrasts directly with the claimant’s position in Newberg, that “he would not have knowingly waived his right to recover for permanent partial disability in lieu of a policy providing only for benefits for total disability.” 920 S.W.2d at 60.
In fact, looking at the evidence in a light most favorable to the opposing party— Travelers — the fact that twenty-three of the thirty employees of the company filed rejection forms indicates, at a minimum, company involvement in the rejections. Yet, the majority ignores the evidentiary implication of this fact even though large-scale rejections have been legally recognized as a badge (indicator) of improper *209company involvement. OAG 77-527, OAG 78-465 (“The Workmen’s Compensation Board shall not give effect to any rejection of this chapter not voluntarily made by the employee.”). Moreover, the fact that most of the jobs available at Blackstone were at an executive level indicates that these were competitive premium positions to be sought after by the available and qualified workforce. This is aside from the question of whether the Massachusetts Mutual policy covers “black lung” benefits. The policy does not even mention “black lung.”
As to why the twenty-three rejected coverage, only Blackstone’s president and one of its other officers gave deposition testimony on this during discovery. The president testified that his employees were given an unqualified choice, while the officer, Dean Thacker, testified that he evaluated the two options and voluntarily chose Massachusetts Mutual as the better plan. No other evidence was presented as to why each of the twenty-two other employees rejected the policy, or whether, in fact, each employee had a “substantial understanding of the nature of [his] action and its consequences.” Newberg, 920 S.W.2d at 61.
This leaves us in a situation where twenty-two of the twenty-three employees are free in the future to file, workers’ compensation claims in the event they can prove they did not understand the consequences of their selection.7 To the extent this occurs, Travelers will then have to pay their benefits because its policy is statutorily mandated to cover the entire liability of Blackstone Mining. KRS 342.375. This is the case even though Travelers has not received any premiums for this risk of coverage — and, in the event that Blackstone Mining is insolvent or no longer in existence at the time of the claim, Travelers will never recover the premiums.
Thus, by affirming the trial court’s summary judgment finding that all of the rejections were voluntary based only upon the testimony of Blackstone’s president and one of its officers (one of the twenty-three), the majority has, in fact, adopted a standard of proof for the voluntariness of a rejection different than the one we actually employ in compensation cases to determine whether or not the rejection was voluntary.
Of course, one could argue that every compensation carrier could take a preemptive action similar to Travelers and then take every rejecting employee’s deposition to establish an estoppel bar for future claims. Yet, such an argument imposes a costly enforcement option on the participating compensation carriers alien to the statutory scheme, not to mention the evidentiary burden. It also imposes it during the work relationship, when the coercive atmosphere is still likely to exist and constrain the employee’s testimony.
The better standard, and one consistent with our current compensation standard, would be to require the employer, if questioned, to produce proof of each individual’s reasons, and each employee’s understanding of the consequences of the rejection, and, then, were the Court to make a determination that the premium was not due because the rejection was, in fact, voluntary based upon the testimony of the employee, the employee would be estopped to challenge the determination at a later date. This way, the employer would not have to pay the premiums and the compensation carrier would not have to carry the statutorily mandated, yet unfunded, risk of coverage. Moreover, the cost to the employer to produce such evidence would be much lower than that of *210the carrier.8 Only such a consistent standard can maintain the status quo, and the balance necessary for an effective workers’ compensation program in Kentucky.
Thus, I would affirm the Court of Appeals’ and remand this matter to the trial court for further proceedings.9

. Additionally, the Special Fund is currently being supported by coal severance tax revenues. Beshear v. Haydon Bridge Co., Inc., 304 S.W.3d 682 (Ky.2010).

. As the parties did not discuss this aspect in their briefs, it is not known whether there were other insurance policies providing medical benefits.

. Presumably, estoppel would bar the company officer, Dean Thacker, who did testify.

. No affidavits or depositions of the twenty-two other employees were submitted of record in this case.

. Upon a remand, the summary judgment for the two employees testifying could stand, yet, until the final conclusion of the matter, they would remain interlocutory decisions.