Opinion
No. 2007-CA-001677-WC.
February 8, 2008.
Petition for Review of a Decision of The Workers' Compensation Board, Action No. WC-04-84315.
John C. Morton, Henderson, Kentucky, Brief for Appellant.
M. Michele Cecil, Daniel Caslin, Owensboro, Kentucky, Brief for Appellee.
Before: NICKELL, THOMPSON, and VANMETER, JUDGES.
OPINION
Under KRS 342.730(6), an offset is allowed against workers' compensation benefits for income benefits paid from certain employer-funded disability or accident and sickness plans. When Jackie Stone ceased working for Alcan Aluminum due to a total, permanent disability, he elected to receive benefits under Alcan's disability retirement benefits plan. The issue we must resolve in this case is whether the benefits paid to Stone under the plan met the requirements of KRS 342.730(6). We affirm the Workers' Compensation Board's opinion which held that Alcan is entitled to a credit "only in the amount Stone receives in excess of the early retirement benefit."
Kentucky Revised Statutes.
The material facts of this case are relatively straightforward and not disputed. Stone was totally occupationally disabled due to a cervical injury sustained while working for Alcan. At that time, Alcan had three retirement plan options: normal, early and full disability. Under the normal retirement plan, at age 65, an employee could retire and receive a defined benefit calculated by a dollar amount times years of service. Under the early retirement plan, an employee who had reached the age of 60 could retire and receive a discounted amount. The full disability retirement plan available to an employee who met certain medical criteria, was calculated similarly to the normal retirement benefit, without the discount for early retirement. In this case, Stone opted to receive $990.54 per month in disability retirement benefits, which is 15% more than he would have received under early retirement.
While this case has a somewhat tortured procedural history, we believe it only necessary to recount that in his final order, the Administrative Law Judge held that Alcan's disability pension plan met the requirements of KRS 342.730(6) and that Alcan was therefore entitled to a dollar for dollar offset against Stone's workers' compensation benefits. On appeal, the Board reversed, holding that Alcan should receive an offset only for the amount that Stone's disability pension exceeds the pension to which he would have been entitled under Alcan's early retirement. Alcan appeals.
KRS 342.730(6) provides:
All income benefits otherwise payable pursuant to this chapter shall be offset by payments made under an exclusively employer-funded disability or sickness and accident plan which extends income benefits for the same disability covered by this chapter, except where the employer-funded plan contains an internal offset provision for workers' compensation benefits which is inconsistent with this provision.
We believe the rationale of the Board reflects the intent and purpose of the statute, and we therefore adopt and quote from their opinion at length:
In Dravo Lime Co., Inc. v. Eakins, 156 S.W.3d 283 (Ky. 2005), the court stated that KRS 342.730(6) "was enacted to address situations where an employer-funded plan permits benefits without regard to the cause of the recipient's disability and fails to contain an offset for workers' compensation benefits." Id. at 291. The court also stated the purpose of KRS 342.730(6) was to prevent workers from receiving duplicate private disability and workers' compensation benefits.
In A. Larson, Larson's Workers' Compensation Law § 156.02 (2007), the impropriety of duplicate benefits is recognized, and states:
Wage-loss legislation is designed to restore to the worker a portion, such as one-half to two-thirds, of wages lost due to the three major causes of wage-loss: physical disability, economic unemployment, and old age. The crucial operative fact is that of wage loss; the cause of the wage loss merely dictates the category of legislation applicable. Now if a worker undergoes a period of wage loss due to all three conditions, it does not follow that he or she should receive three sets of benefits simultaneously and thereby recover more than his or her actual wage. The worker is experiencing only one wage loss and, in any logical system, should receive only one wage-loss benefit. (footnote omitted.) This conclusion is inevitable, once it is recognized that workers' compensation, unemployment compensation, nonoccupational sickness and disability insurance, and old age and survivors' insurance are all parts of a system based upon a common principle.
Here, Stone is no longer employable at Alcan because of his total disability from a work injury and he is entitled to the total occupational disability benefits awarded by the ALJ. None of the testimony addresses the reality that if Stone had chosen the early retirement provision rather than disability retirement he would not be faced with the present situation. He would receive his full, albeit discounted, retirement benefits plus his workers' compensation benefits. To avoid duplication of payment of benefits for the work injury, Alcan should receive credit for the amount Stone is paid under the plan above what his early retirement benefits would have been had he not chosen the disability retirement benefit.
The Workers' Compensation Board's Opinion and Order is affirmed.
ALL CONCUR.