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NOT TO BE PUBLISHED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.
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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
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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
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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.
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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
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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).
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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.
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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.
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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
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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
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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.
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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
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