ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Donald R. Wright Gregory F. Zoeller
Rudolph, Fine, Porter & Johnson, LLP Attorney General of Indiana
Evansville, Indiana
Frances H. Barrow
Deputy Attorney General
Indianapolis, Indiana
______________________________________________________________________________
In the FILED
Indiana Supreme Court Nov 03 2009, 1:10 pm
_________________________________
CLERK
of the supreme court,
court of appeals and
tax court
No. 93S02-0812-EX-642
JAMES KOHLMEYER, Appellant (Plaintiff below),
v.
SECOND INJURY FUND, Appellee (Defendant below).
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Appeal from the Indiana Worker’s Compensation Board, No. C-147791
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On Transfer from the Indiana Court of Appeals, No. 93A02-0711-EX-1000
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November 3, 2009
Dickson, Justice.
Indiana's statutory worker's compensation scheme enables certain totally disabled work-
ers who have exhausted the maximum benefits from their employers to seek additional compen-
sation from the Second Injury Fund. The principal disputes in this case are (1) whether a work-
er's Social Security Act disability benefits are includable in calculating whether the worker quali-
fies to access the Second Injury Fund, and (2) whether the language in the award stipulation of
the worker and his employer, which was approved by the Worker's Compensation Board, is
binding upon the Board as to the worker's right to access benefits from the Second Injury Fund.
The underlying facts are undisputed. James Kohlmeyer (the worker) sustained a back
injury in October 1996 while working for H.B. Zachry Company (the employer). The worker
received temporary total disability benefits and medical services until the employer terminated
payments, concluding that the worker had reached a state of maximum medical improvement. In
October 1998 the worker filed a claim with the Indiana Worker's Compensation Board, challeng-
ing the cessation of his temporary total disability benefits and claiming entitlement to statutory
medical treatment.
The October 1998 claim was resolved on April 2, 2001, when the Board approved and
adopted a stipulation signed by the worker and the employer. Appellant's App'x at 11. Among
other things, the stipulation resolved the parties' dispute as to the worker's "right to recover bene-
fits for alleged permanent total disability and alleged future medical benefits," id. at 7, by stipu-
lating that the worker was permanently totally disabled as a result of his work injuries and that in
lieu of further medical care, the employer would pay the worker $85,000 in the form of lump
sums for unpaid temporary disability benefits, for part of his anticipated medical expenses, for
attorney fees and expenses, and for the purchase of annuity to provide payments of $1,000 per
month through August 1, 2006. The stipulation declared that this payment satisfied the worker's
"claims for worker's compensation disability benefits in coordination with social security bene-
fits," id. at 7, and that it was "calculated to be coordinated with [the worker's] receipt of Social
Security Disability benefits." Id. at 8. It appears that such coordination of benefits, allowing So-
cial Security Disability benefits to substitute for part of the benefits that might have been payable
by the employer, enabled the worker and his son to receive total payments "substantially in
excess" of those available solely under the Worker's Compensation Act.1 Appellant's Br. at 5,
see also Appellant's App'x at 16, 17. The stipulation also provided that "at the conclusion of five
hundred (500) weeks from the date of the injury plaintiff shall be eligible to petition the Worker's
Compensation Board of Indiana for second injury funds" and twice additionally expressly re-
served the worker's "right to apply for additional compensation from the Second Injury Fund."
Appellant's App'x. at 9.
In 2006 the worker applied to the Worker's Compensation Board for benefits from the
1
We note that when a worker receives both state worker's compensation and federal Social Security Dis-
ability benefits, the combined monthly benefits are capped at 80% of the worker's average pre-disability
earnings. 42 U.S.C. § 424a(a).
2
Second Injury Fund. At the ensuing hearing, the Single Hearing Member denied the worker's
claim, finding that 500 weeks of disability benefits at the worker's temporary total disability rate
would have totaled $154,665, that the total of temporary total disability payments made to the
worker "together with the payments received pursuant to the Agreement results in a total figure
no more than . . . $136,381.82," and that the worker thus "has not exhausted the maximum bene-
fits as defined in Indiana Code 22-3-3-13(h), a pre-condition to entry into the Second Injury
Fund." Id. at 19. The Single Hearing Member's decision was affirmed and adopted by the Full
Board. Id. at 23. The worker instituted this appeal against the Fund. The Court of Appeals af-
firmed. Kohlmeyer v. Second Injury Fund, 888 N.E.2d 281 (Ind. Ct. App. 2008). We granted
transfer.
1. Inclusion of Social Security Act Disability Benefits Under the Statute
The worker first contends that he is entitled to Second Injury Fund benefits because, in
addition to remaining totally disabled, his receipt of 500 weeks of disability payments "in the
amount of $165,405.43 with $29,023.61 of said amount being Social Security Disability pay-
ments" exceeds the $154,665.00 threshold required for him to qualify. Appellant's Br. at 8. The
Fund responds that the worker's entitlement to Second Injury Fund benefits requires that the eli-
gibility threshold be exhausted exclusively by "payments under the Worker's Compensation Act,
not from outside sources such as Social Security." Appellee's Br. at 4.
The relevant statutory subsections provide:
(h) If an employee who is entitled to compensation under IC 22-3-2 through IC 22-3-6
either:
(1) . . . ; or
(2) exhausts the employee's benefits under section 10 of this chapter;
then such employee may apply to the board, who may award the employee compensation
from the second injury fund established by this section, as follows under subsection (i).
(i) An employee who has exhausted the employee's maximum benefits under section 10
of this chapter may be awarded additional compensation equal to sixty-six and two-thirds
percent (66 2/3 %) of the employee's average weekly wage at the time of the employee's
injury, not to exceed the maximum then applicable under section 22 of this chapter, for a
period of not to exceed one hundred fifty (150) weeks upon competent evidence suffi-
cient to establish:
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(1) that the employee is totally and permanently disabled from causes and condi-
tions of which there are or have been objective conditions and symptoms proven
that are not within the physical or mental control of the employee; and
(2) that the employee is unable to support the employee in any gainful employ-
ment, not associated with rehabilitative or vocational therapy.
Ind. Code §§ 22-3-3-13(h)–(i) (emphasis added). The worker argues that the word "compensa-
tion" refers to Worker's Compensation disability payments but that the exhaustion of "benefits"
in subsection (h)(2) refers to "the exhaustion of the amount of benefits for permanent total disa-
bility, without designating a particular source of payment, in order for the interpretation of the
[Act] to be liberally construed in favor of employees and beneficiaries." Appellant's Reply Br. at
3.
To the contrary, we find that the unambiguous statutory language does not authorize
Second Injury eligibility to be calculated by including the receipt of benefits other than specific
benefits provided under the Act. Subsections (h)(2) and (i) each specifically condition eligibility
by requiring exhaustion of the employee's "benefits under section 10 of this chapter." Thus the
word "benefits" is expressly qualified by "under section 10 of this chapter." Section 10 pre-
scribes the calculation of benefits payable under the Act by an employer to an injured worker for
various injuries, including total permanent disability. Ind. Code § 22-3-3-10. It makes no refer-
ence to benefit payments from any source outside of the Act.
We conclude that the Indiana Worker's Compensation Act does not direct that the work-
er's receipt of Social Security Act benefits be included in determining his eligibility for Second
Injury Fund compensation.
2. Effect of Board's Approval of Stipulation
The worker alternatively argues that he is eligible for Second Injury Fund compensation
because of the Board's express approval of the stipulation resolving his worker's compensation
claims against his employer. As noted above, the agreed stipulation provided for the satisfaction
of the worker's "claims for worker's compensation disability benefits in coordination with social
security benefits," Appellant's App'x. at 7; recognized that the agreed settlement was "calculated
to be coordinated with [the worker's] receipt of Social Security Disability benefits," id. at 8; and
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provided that the worker "shall be eligible to petition the Worker's Compensation Board of Indi-
ana for second injury funds," twice also expressly reserving the worker's "right to apply for addi-
tional compensation from the Second Injury Fund." Id. at 9. The stipulation also declared that
the worker is "permanently totally disabled as a result of said work related injuries." Id. at 7.
The Board, by action of a Single Hearing Member, expressly found that the stipulation "should
be approved and adopted." Id. at 11.
The Fund acknowledges that the stipulation provided that the worker was permanently
totally disabled but argues in response that the Board's approval of the stipulation "was not a
finding that [the worker] was eligible for Second Injury Fund benefits or that he is permanently
totally disabled," but was only "for the purpose of resolving their differences and avoiding the
uncertainty and expense of litigation." Appellee's Br. at 6.
On this issue, this case parallels Mayes v. Second Injury Fund, 888 N.E.2d 773 (Ind.
2008). In Mayes, we found that the Worker's Compensation Board, by its approval of an agree-
ment between the employer and employee, subjected the Second Injury Fund to liability that
would not have existed absent such action by the Board.
In Mayes, a worker's eligibility for Second Injury Fund benefits was disputed on grounds
that a third party settlement had relieved the Fund of liability. We noted that "[a]n employer act-
ing outside the purview of the worker's compensation system does not have the unilateral author-
ity to bind the Second Injury Fund to an agreement to assume liability where liability would oth-
erwise terminate by statute," and that the Board would have the right to disapprove such agree-
ment. Id. at 778. Because the Board approved the agreement, however, we held that "the
Second Injury Fund has waived the right" to claim non-liability due to a statutory provision. Id.
As in Mayes, the Board here, in approving and adopting the parties' agreed stipulation
and ordering its implementation, thereby accepted the stipulated facts and waived its right to dis-
allow inclusion of the worker's Social Security Disability benefits in calculating whether the
worker had met the exhaustion of benefits prerequisite.
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The Fund also argues that the "the parties only agreed that [the worker] had the 'right to
apply for additional compensation from the Second Injury Fund,' not that he would be eligible."
Appellee's Br. at 6 (internal citation omitted). As can be seen in the previously quoted passages
from the approved stipulation, there is language expressly reserving the worker's right "to peti-
tion" and "to apply" for additional compensation from the Second Injury Fund. Appellant's
App'x at 9.
To receive compensation from the Second Injury Fund, a worker must not only have ex-
hausted the maximum benefits threshold but also must establish two additional statutory prere-
quisites:
(1) that the employee is totally and permanently disabled from causes and conditions of
which there are or have been objective conditions and symptoms proven that are not
within the physical or mental control of the employee; and
(2) that the employee is unable to support the employee in any gainful employment, not
associated with rehabilitative or vocational therapy.
Ind. Code § 22-3-3-13(i). While it may be argued that the first of these prerequisites is substan-
tially established by the approved stipulation's declaration that the worker was "permanently to-
tally disabled as a result of said work related injuries," Appellant's App'x. at 7, the second prere-
quisite is not addressed in the factual stipulation, leaving it for determination at the time of
Second Injury Fund application. It was thus reasonable for the language of the parties' agreed
stipulation of April 2001 to speak of the worker's future right to apply for Second Injury Fund
compensation. This is entirely consistent with language in paragraph 11 of the stipulation: "The
plaintiff acknowledges that the Board shall determine his eligibility for the second injury fund
benefits at such time as he may make an application for benefits for the second injury fund." Id.
at 9.
In settling his dispute with his employer, the worker negotiated an agreement under
which the employer avoided future medical expenses and the risk of full payment of the worker's
claim for permanent and total disability benefits. In return, the worker received the employer's
stipulation that the worker was totally and permanently disabled as a result of work related inju-
ries and that, combining payments from the employer and Social Security Disability benefits, the
worker had exhausted his maximum worker's compensation benefits from his employer and thus
6
was entitled to seek compensation from the Second Injury Fund.
As we observed in Mayes, where there is a "plausible dispute about whether the Board's
action constituted an approval, we conclude that its action should be treated as such in light of
the fact that the worker's compensation scheme is designed for the benefit of employees, a bene-
fit to be liberally construed." 888 N.E.2d at 777 (citing Hoffman v. Brooks Constr. Co., 220 Ind.
150, 157–58, 41 N.E.2d 613, 615–16 (1942)).
We find that the Worker's Compensation Board, by approving the parties' stipulation, de-
termined that the worker was permanently totally disabled from his work related injuries and that
the employer-paid worker's compensation benefits could be combined with the worker's Social
Security Disability benefits, thereby determining that the worker's combined benefits satisfied
the $154,665 threshold prerequisite for eligibility for additional compensation by the Second In-
jury Fund.
Conclusion
Although the Indiana Worker's Compensation Act does not direct that a worker's receipt
of Social Security Act benefits be included in determining his eligibility for Second Injury Fund
compensation, the Worker's Compensation Board's express approval of the parties' stipulation in
this case operates to establish that the worker, James Kohlmeyer, was permanently and totally
disabled from work related injuries and that he met the maximum benefits prerequisite for
Second Injury Fund eligibility. The Order of the Full Worker's Compensation Board, affirming
the Single Hearing Member's decision, is hereby reversed.
Shepard, C.J., and Sullivan, Boehm, and Rucker, JJ., concur.
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