Opinion
NO. 2018-CA-001027-WC NO. 2018-CA-001114-WC
05-15-2020
KROGER APPELLANT v. CHERYL CATES; HONORABLE JEFF V. LAYSON, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES AND CHERYL CATES CROSS-APPELLANT v. KROGER; HONORABLE JEFF V. LAYSON, ADMINISTRATIVE LAW JUDGE; WORKERS' COMPENSATION BOARD; AND DANIEL CAMERON, ATTORNEY GENERAL OF KENTUCKY CROSS-APPELLEES
BRIEFS FOR APPELLANT/CROSS-APPELLEE KROGER: Sharlott K. Higdon Paducah, Kentucky BRIEFS FOR APPELLEE/CROSS-APPELLANT CHERYL CATES: Jeffery A. Roberts Murray, Kentucky
NOT TO BE PUBLISHED PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-17-01236 CROSS-PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-17-01236 OPINION
VACATING AND REMANDING APPEAL NO. 2018-CA-001027-WC AND AFFIRMING CROSS-APPEAL NO. 2018-CA-001114-WC
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BEFORE: JONES, TAYLOR, AND K. THOMPSON, JUDGES. TAYLOR, JUDGE: Kroger petitions and Cheryl Cates cross-petitions this Court to review a June 8, 2018, Opinion of the Workers' Compensation Board (Board) affirming the Administrative Law Judge's (ALJ) award of permanent partial disability benefits to Cates. We vacate and remand Appeal No. 2018-CA-001027-WC and affirm Cross-Appeal No. 2018-CA-001114-WC.
On August 15, 2015, Cates was employed by Kroger when she sustained a work-related shoulder injury. As a result, Cates filed a claim for workers' compensation benefits. Following a hearing, the ALJ rendered an Opinion, Award, and Order on February 9, 2018. Therein, the ALJ determined that Cates' work-related injury resulted in a permanent impairment rating of 16 percent. The ALJ awarded Cates permanent partial disability benefits. As Cates was born on July 17, 1949, the ALJ concluded that the permanent partial disability benefits would be subject to Kentucky Revised Statutes (KRS) 342.730(4). The ALJ noted that KRS 342.730(4) was recently declared unconstitutional by the Supreme Court in Parker v. Webster County Coal, LLC, 529 S.W.3d 759 (Ky. 2017) and believed that the version of KRS 342.730(4) effective April 4, 1994, controlled:
KRS 342.730(4) was amended in 1996 to mandate that all income benefits shall terminate as of the date upon which the claimant qualifies for regular Social Security retirement benefits. The Kentucky Supreme Court recently ruled that this provision of the statute was unconstitutional in the case of Parker v. Webster County Coal, 529 S.W.3d 759 (Ky. 2017). As a consequence of that decision, the award of PPD benefits in this case is for a period of 425 weeks.Opinion, Award, and Order at 10.
When a statute is ruled to be unconstitutional, the courts treat it as if it had never been enacted. Legislative Research Commission v. Fischer, 366 S.W.3d 905 (Ky. 2012). If the unconstitutional statute was enacted by amendment of an existing statute, the pre-amendment version is the law. Moseley v. Commonwealth Dept. of Highways, 489 S.W.2d 511 (Ky. 1972). Accordingly, the award of permanent partial disability benefits in this case shall be subject to the provisions of KRS 342.730(4) in effect as of April 4, 1994.
Both Kroger and Cates sought review with the Board. While the matter was pending before the Board, the Kentucky General Assembly amended KRS 342.730(4) on July 14, 2018. Under the amended KRS 342.730(4), income benefits would terminate when the employee reached the age of seventy or upon four years after the employee's injury, whichever occurred later in time. The Legislature also expressly provided that the amended KRS 342.730(4) should apply retroactively to all claims that had not been "fully and finally adjudicated" and had an injury/disease date on or after December 12, 1996.
By Opinion entered June 8, 2018, the Board affirmed the ALJ's opinion. The Board rejected Kroger's argument that the amended KRS 342.730(4) retroactively applied to Cates' award of income benefits.
Cates and Kroger filed petitions in this Court for review. By Order entered January 25, 2019, the Court of Appeals, sua sponte, placed these appeals and other appeals in abeyance pending the Supreme Court's decision in two appeals - Lanier v. University of Louisville, Appeal No. 2018-SC-000685-WC and Holcim v. Swinford, Appeal No. 2018-SC-000627-WC. Both appeals centered upon whether the amended KRS 342.730(4) should be given retroactive application.
By Order entered March 14, 2019, the Supreme Court dismissed Lanier v. University of Louisville, Appeal No. 2018-SC-000685-WC.
The Supreme Court eventually rendered an Opinion in Holcim v. Swinford, 581 S.W.3d 37 (Ky. 2019) and determined that the amended KRS 342.730(4) applied retroactively to pending cases as the Legislature had expressly provided therefor. The Court declined to reach the constitutionality of KRS 342.730(4) because the Attorney General was not properly notified of the constitutional challenge per KRS 418.075.
After the Opinion in Holcim was rendered, the Court of Appeals returned these appeals to the active docket for a decision on the merits. We shall initially address Kroger's arguments raised in its petition (Appeal No. 2018-CA-001027-WC) and then address Cates' arguments raised in her cross-petition (Cross-Appeal No. 2018-CA-001114-WC) for review.
No. 2018-CA-001027-WC
Kroger argues that the amended KRS 342.730(4) retroactively applies to limit the duration of Cates' income benefits. Following the holding in Holcim, 581 S.W.3d 37, we are compelled to conclude that the amended version of KRS 342.730(4) retroactively applies to Cates' claim as the Legislature expressly provided therefor. Thus, the Board erred by concluding otherwise.
No. 2018-CA-001114-WC
Cates contends that retroactive application of the amended version of KRS 342.730(4) is unconstitutional. Cates argues that the amended KRS 342.730(4) violates due process, equal protection, and is arbitrary. Cates believes that the amended KRS 342.730(4) improperly treats some older workers differently and constitutes an arbitrary classification:
First, retroactivity of the changes to KRS 342.730(4) by [House Bill] HB 2 is arbitrary and violation of the due process and equal protection provisions of the Kentucky Constitution, especially as applied to Cates. . . .
. . . .
Cates was injured on August 15, 2015, just a few weeks after her 66 birthday. The ALJ rendered his decision on February 9, 2018. Kroger has kept appealing this case for the sole purpose of keeping it alive until after July 14, 2018, the effective date of HB 2's changes to the Workers['] Compensation Act (1). HB 2 changed the law on July 14, 2014, nearly 3 years after Cates['] injury. To demonstrate how the legislature has treated similarly situated workers differently, let's compare Cates to hypothetical Claimant X, another 66 year old (the same age of Cates) injured on August 15, 2015 (the same day as Cates) whose claim was decided by the ALJ on February 9, 2018 (the same day as the ALJ decision in Cates) and awarded the exact same benefits as Cates. However, Claimant X's case was not appealed. Clearly, Claimant X and Cates are similarly situated. Claimant X would receive the full $113,616.12 of benefits awarded by the ALJ and get the full 425 weeks of the award, whereas Cates will only get 4 years of her award and lose $58,407.36. Clearly, the disparate treatment of similarly situated individuals by the retroactive application of the changes to [KRS] 347.730(4) violates Section 1, 2, and 3.
. . . .
Secondly, retroactivity for certain changes to the workers['] compensation statutes by HB 2 and not others
is also arbitrary and violation of the due process and equal protection provisions of the Kentucky Constitution. There are no references by the Legislature in HB 2 for any "emergency" need for retroactive application as set forth in Section 20 subparagraph 3, or for that matter, any provision of HB 2 being an "emergency". As such, the subject provision should not be permitted to be retroactive and should only apply to cases involving injuries occurring on or after July 14, 2018. In fact, while Section 20 states that some portions of HB 2 are remedial, it does not indicate that the changes to KRS 342.730(4) are even remedial.
Next, the classification of limited retroactivity violates the provisions of the Kentucky Constitution prohibiting special legislation. The amendment to KRS 342.730(4) applies to injured older workers, but not all injured workers. In fact, HB 2 made changes to other subsections on KRS 342.730, but those changes are not designated to be retroactive and only apply to injuries on or after July 14, 2018. As such, the retroactive application of KRS 342.730(4) is special legislation in violation of Section 59 and 60 of the Kentucky Constitution. Therefore, it should not be permitted to be retroactive and should only apply to cases involving injuries occurring after July 14, 2018.
In addition, the retroactivity of KRS 342.730(4) is unconstitutional because it violates due process under the 14[th] Amendment to the United States Constitution. In Goldberg v. Kelly, 397 U.S. 254, 262, 90 S. Ct. 1011, 1017, 25 L. Ed. 2d 287 (1970), the United States Supreme Court held that a person receiving welfare benefits under statutory and administrative standards defining eligibility for them has an interest in those benefits that is safeguarded by procedural due process.
Clearly, workers['] compensation in Kentucky has statutory and administrative standards defining eligibility for those compensation benefits.
It is true that to have property interest in a benefit, a claimant must have more than an abstract need or desire for it or a unilateral expectation of it. Instead, they must have a legitimate claim of entitlement to it. (See Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577; 92 S. Ct. 2710, 2709; 33 L. Ed. 2d 548 (1972)[)].Cates' Brief at 8-11.
Cates received an award from an ALJ. So, she has a legitimate claim of entitlement to the awarded benefits.
KRS 342.730(4) as effective July 14, 2018[,] has the effect of taking away benefits that were awarded to Cates by the ALJ. The ALJ awarded benefits to Cates based on the law in effect at the time of her injury and at the time of the ALJ's award.
It is generally understood that legislative enactments are presumed to be constitutional. Brooks v. Island Creek Coal Co., 678 S.W.2d 791, 792 (Ky. App. 1984). To comply with the equal protection clause and due process clause, our Supreme Court recognized that "[a] statute involving the regulation of economic matters or matters of social welfare [must be] . . . rationally related to a legitimate state objective." Wynn v. Ibold, Inc., 969 S.W.2d 695, 696 (Ky. 1998).
By its plain terms, KRS 342.730(4) terminates income benefits either when the claimant reaches seventy years of age or four years after injury, whichever occurs later in time. It is patently clear that KRS 342.730(4) treats injured elderly claimants differently from injured younger claimants. The reason for this disparate treatment rests upon the elderly claimants' entitlement to social security benefits and the corresponding objective of preventing duplication of benefits. See Parker, 529 S.W.3d at 768; Wynn, 969 S.W.2d at 697.
This difference in treatment under Kentucky Revised Statutes 342.730(4) was aptly explained by the Supreme Court in Parker v. Webster County Coal, LLC (Dotiki Mine), 529 S.W.3d 759, 768 (Ky. 2017) as follows:
[U]nder the statute, a worker who is injured more than 425 weeks (or 520 weeks under certain circumstances) before he or she reaches normal Social Security retirement age will receive all of the permanent partial disability income benefits to which he or she is entitled. A worker who is injured less than 425 weeks before he or she reaches normal Social Security retirement age will not receive all of the permanent partial disability income benefits to which he or she is entitled. (Footnote omitted.)
Previously, the Supreme Court has upheld the constitutionality of a workers' compensation statute limiting income benefits to claimants based upon age:
Keeping in mind that the purpose of workers' compensation legislation is to maintain a stream of income to disabled workers and their dependents, we are persuaded that avoiding a duplication of income benefits is a legitimate state objective and sound public policy. See Brooks v. Island Creek Coal Co., supra. At a time when workers become eligible for other forms of income replacement, not only does KRS 342.730(4) help avoid making it more profitable to be disabled than not, it also serves to reduce the overall cost of maintaining the workers' compensation system, thereby improving the economic climate for all the citizens of the state. We, therefore, conclude that KRS 342.730(4) complies with
the requirements of due process and equal protection and is constitutional.Wynn, 969 S.W.2d at 697.
Upon the same reasoning, we believe that the prevention of duplication of benefits constitutes a rational basis for treating injured elderly claimants differently from injured younger claimants in the amended KRS 342.730(4). As a rational basis exists, we conclude the classification contained in the amended KRS 342.730(4) does not violate the constitutional guarantees of equal protection or due process nor does it create an arbitrary classification.
Cates further asserts that the amended KRS 342.730(4) violated the constitutional prohibition as to special legislation contained in the Kentucky Constitution Sections 59 and 60. In support thereof, Cates maintains that KRS 342.730(4) applies to older injured workers but not to younger injured workers, thus creating the unconstitutional special legislation.
The Kentucky Supreme Court defines "[s]pecial legislation . . . [as] arbitrary and irrational legislation that favors the economic self-interest of the one or the few over that of the many." Zuckerman v. Bevin, 565 S.W.3d 580, 599 (Ky. 2018) (citation omitted). It has been recognized that "[a] statute which relates to persons or things as a class is a general law, while a statute which relates to particular persons or things of a class is special." Id. (citations omitted).
Here, the amended KRS 342.730(4) limits the duration of income benefits for injured workers who are seventy years old or older if their injury/disease occurred after December 12, 1996. Consequently, we conclude that KRS 342.730(4) similarly treats older workers as a class. And, as hereinbefore determined, there exists a reasonable basis for the classification. Thus, we conclude that the amended KRS 342.730(4) does not constitute special legislation.
Cates also maintains that retroactive application of the amended KRS 342.730(4) infringes upon her right to recover income benefits and unconstitutionally impairs her vested rights to those benefits. We disagree.
It is true that the "rights of the parties in respect to compensation for injuries [become] fixed and vested on the date of the injury." Schmidt v. South Cent. Bell, 340 S.W.3d 591, 594 (Ky. App. 2011) (quoting Thomas v. Crummies Creek Coal Co., 179 S.W.2d 882, 883 (Ky. 1944)). Herein, it is undisputed that Cates' work-related injury occurred on August 15, 2015. On that date, the version of KRS 342.730(4) in force provided that income benefits terminated when the claimant "qualified for normal old-age social security retirement benefits" or two years after the claimant's injury, whichever occurred later in time. Under the amended KRS 342.730(4), income benefits terminate when the claimant reaches seventy years old or four years after the claimant's injury, whichever occurs later in time. Therefore, Cates is actually entitled to benefits of a longer duration under the amended version of KRS 342.730(4). And, contrary to Cates' assertion, Cates did not have a vested right to income benefits unhampered by any version of KRS 342.730(4) or by the version of KRS 342.730(4) effective in 1994. Therefore, we hold that no vested right of Cates was adversely impaired by the retroactive application of KRS 342.730(4).
Cates further asserts that the amended KRS 342.730(4) is unconstitutional because the General Assembly did not comply with the dictates of Section 46 of the Kentucky Constitution. Cates maintains that the HB 2 (KRS 342.730(4)) was not read three times as mandated by Section 46:
The legislative record (2) for HB 2 shows that HB 2 received three readings in the House of Representatives on Feb. 15, 16, and 20, 2018, respectively. After the third reading on February 20, 2018, a floor amendment was made to HB 2 that was passed, floor amendment 2 (3). HB 2 then moved to the Senate. HB 2 received its first and second reading in the Senate on March 19 and 20, 2018. It was reported favorably from committee with a senate committee substitute on March 21, 2018. HB 2 received its third reading in the Senate on March 22, 2018[,] and it was passed with Senate Committee Substitute 1 and Senate Floor Amendment 1. Senate Committee Substitute 1 with Senate Floor Amendment 1 was sent back to the House. The House passed the Senate Committee Substitutive and floor amendment on March 27, 2018. There is no notation in the legislative record of the House having any readings of HB 2 after it came back from the Senate with a Senate Committee Substitute bill with Senate Floor Amendment 1, much less 3 readings.Cates' Brief at 13-14. So, after amendments to HB 2, Cates argues that the Kentucky House of Representatives was constitutionally required to conduct an additional three readings to comply with Kentucky Constitution Section 46.
In Bevin v. Commonwealth ex rel. Beshear, 563 S.W.3d 74 (Ky. 2018), the Kentucky Supreme Court held that a bill may be amended without three additional readings so long as the amendments related to the original text and title of the bill:
Of course, legislators may amend the text of a bill between its readings without running afoul of § 46. Ordinarily, the revised text is some variation of the original text and remains consistent with the theme reflected in the title of the bill. The complete elimination of all the words of the prior readings and their total replacement with words bearing no relationship to the title of the bill is a far different matter with respect to § 46 compliance. Hoover v. Board of County Comm'rs, Franklin County, 19 Ohio St.3d 1, 482 N.E.2d 575, 579 (1985) ("[A]mendments which do not vitally alter the substance of a bill do not trigger a requirement for three considerations anew of such amended bill. But, when the subject or proposition of the bill is thereby wholly changed, it would seem to be proper to read the amended bill three times, and on different days. . . .") (quotation marks and citations omitted); Magee v. Boyd, 175 So.3d 79, 114 (Ala. 2015) ("[I]t is clear that the substitute version of HB 84 was not read 'on three different days' in each house. However, we hold that an amended bill or a substitute bill, if germane to and not inconsistent with the general purpose of the original bill, does not have to be read three times on three different days to comply with § 63 [Alabama's the three readings requirement.]); State v. Ryan, 92 Neb. 636, 139 N.W. 235, 238 (1912) (allowing amendments to be introduced after the
legislative session ends so long as "the amendment is germane to the subject of the original bill and not an evident attempt to evade the Constitution"); State v. Hocker, 36 Fla. 358, 18 So. 767, 770 (1895) (explaining that three re-readings are unnecessary when the amendments in question are "made germane to [the bill's] general subject, either to the body of the bill or to its title").Id. at 91-92. There is no argument that the amendments to HB 2 were unrelated to the substance or title thereof. Consequently, we do not believe that Section 46 of the Kentucky Constitution was violated.
We view any remaining contentions of error as moot or without merit.
In sum, we hold that Cates failed to demonstrate the amended version of KRS 342.730(4) is unconstitutional. Therefore, in accordance with Parker, 529 S.W.3d 759, the amended version of KRS 342.730(4) retroactively applies to Cates' claim. Upon remand, the ALJ shall determine Cates' income benefits in accordance with the newly amended version of KRS 342.730(4).
For the foregoing reasons, we vacate and remand Appeal No. 2018-CA-001027-WC and affirm Cross-Appeal No. 2018-CA-001114-WC.
ALL CONCUR. BRIEFS FOR APPELLANT/CROSS-
APPELLEE KROGER: Sharlott K. Higdon
Paducah, Kentucky BRIEFS FOR APPELLEE/CROSS-
APPELLANT CHERYL CATES: Jeffery A. Roberts
Murray, Kentucky