Opinion
NO. 2012-CA-001728-WC
03-08-2013
MONTGOMERY COUNTY FIRE DEPARTMENT APPELLANT v. PHILLIP WELCH; KENTUCKY EYE INSTITUTE HEARING SERVICES; HONORABLE ROBERT L. SWISHER, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES
BRIEF FOR APPELLANT: K. Lance Lucas Florence, Kentucky BRIEF FOR APPELLEE, PHILLIP WELCH: Charles Johnson Winchester, Kentucky
NOT TO BE PUBLISHED
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-86-03431
OPINION
AFFIRMING
BEFORE: CLAYTON, LAMBERT, AND VANMETER, JUDGES. LAMBERT, JUDGE: Montgomery County Fire Department ("MCFD") has petitioned this Court for review of the decision of the Workers' Compensation Board ("the Board") affirming the decision of the Administrative Law Judge ("ALJ") in its medical fee dispute. The issue is whether MCFD's failure to list the issue of waiver or bar pursuant to Kentucky Revised Statutes (KRS) 342.270(1) as an issue before the ALJ at the benefit review conference precludes MCFD from raising the issue in a petition for reconsideration or on appeal to the Board. Because we agree that MCFD failed to properly raise this issue, we affirm.
Phillip Welch, a volunteer fireman with MCFD, was severely injured in a house fire on January 10, 1986, when a container of gasoline in a kitchen exploded, causing him to incur severe burns to half of his body, including his head, face, abdomen, and extremities. As a result of his injuries, he was hospitalized several times and underwent multiple surgeries. Welch filed an application for adjustment of injury claim in December 1990. The parties settled Welch's claim, and the ALJ approved the settlement agreement in February 1992. Pursuant to the settlement agreement, the parties agreed that Welch was totally and permanently occupationally disabled and had been since the date of the work injury, and Welch received a lump sum payment of $120,000.00 in full and complete settlement of his claim. MCFD was to "remain liable for reasonable and necessary medical expenses pursuant to the Act, to the extent that they are directly related to his burn injuries of January 10, 1986."
In July 2011, MCFD filed a motion to reopen to resolve a medical fee dispute related to Welch's request for hearing aids through his provider, Kentucky Eye Institute Hearing Services. Based upon several medical records indicating that Welch did not report a history of hearing loss following the accident, MCFD specifically disputed that his need for hearing aids was causally related to his 1986 work injury. The Chief ALJ joined Kentucky Eye Institute and granted MCFD's motion to reopen to the extent that Welch and Kentucky Eye Institute were required to respond or present evidence to rebut MCFD's prima facie showing of non-compensability. Welch responded by filing the medical records of Dr. L. William Roberts, who had treated Welch since 1988 and related his hearing impairment and tinnitus to the explosion he experienced in the 1986 work injury. The Chief ALJ then referred the matter to an AJL for final adjudication of the motion to reopen.
Proof was filed, and the matter was assigned for a benefit review conference. MCFD and Welch filed their respective statements of proposed stipulations, notice of contested issues, designation of evidence, and witness list. For the contested issues, both MCFD and Welch listed whether Welch's hearing loss and his need for hearing aids were causally related to the 1986 work injury. Following the benefit review conference in January 2012, the sole contested issue identified was whether treatment of Welch's hearing loss was causally related to his work injury. The ALJ held a final hearing that month, confirming that the compensability of the treatment of hearing loss on the basis of causation was the sole issue reserved for adjudication, and heard live testimony from Welch. The parties filed briefs arguing their respective positions related solely to the causation issue.
In March 2012, the ALJ rendered an opinion, award, and order detailing Welch's testimony and the medical proof introduced by the parties. The ALJ resolved the medical fee dispute in favor of Welch, finding that he had satisfied his burden of proof that his hearing loss was directly and causally related to the 1986 work injury and that he was entitled to an award of medical benefits to treat that condition, including bilateral hearing aids.
MCFD filed a petition for reconsideration of the ALJ's opinion, award and order, arguing for the first time that because Welch did not include hearing loss on his original application or in his settlement, he was barred from doing so twenty-five years later. The ALJ denied MCFD's petition, stating, in pertinent part:
Turning to the defendant's argument that any claim for hearing loss is barred because it was not asserted at the time of litigation of the underlying claim, the ALJ notes that the defendant did not raise that issue in its motion to reopen and did not preserve waiver or bar under KRS 342.270(1) as interpreted in Slone v. Jason Coal Co., 902 S.W.2d 820 (Ky. 1995) as a contested issue at the BRC. The issue of bar/waiver, therefore, was not before the ALJ in this medical fee dispute.
On appeal to the Board, the sole issue MCFD raised was whether the ALJ misapplied the law in not finding that Welch had waived his right to claim hearing loss pursuant to KRS 342.270(1) because he failed to raise this in his original claim. Welch argued that MCFD waived the statute of limitations defense by failing to raise it in either its motion to reopen or at the benefit review conference, citing Kentucky Rules of Civil Procedure (CR) 8.03. The Board affirmed the ALJ's decision in an opinion rendered September 11, 2012, agreeing with the ALJ that MCFD failed to properly raise the issue of waiver or bar prior to the entry of the ALJ's decision. The Board specifically cited to 803 Kentucky Administrative Regulations (KAR) 25:010 § 13(14), which provides that following a benefit review conference, "[o]nly contested issues shall be the subject of further proceedings." Accordingly, MCFD could not raise the issue in a petition for reconsideration or on appeal to the Board. This petition for review, in which MCFD makes the same argument, now follows.
In Western Baptist Hospital v. Kelly, 827 S.W.2d 685 (Ky. 1992), the Supreme Court described the role of the Court of Appeals in reviewing decisions in workers' compensation actions. "The function of further review of the WCB 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 committed an error in assessing the evidence so flagrant as to cause gross injustice." Id., at 687-88. With this standard in mind, we shall review MCFD's petition for review.
MCFD contends that the ALJ misinterpreted Slone v. Jason Coal Co., 902 S.W.2d 820 (Ky. 1995), to state that KRS 342.270 was an affirmative defense that must be raised or it will be waived. It then states that the Board did not address this argument on appeal, but rather the Board held that the issue was not before the ALJ because it was not listed as a contested issue. On the other hand, Welch relies upon CR 8.03 ("In pleading to a preceding pleading, a party shall set forth affirmatively . . . statute of limitations . . . and any other matter constituting an avoidance or affirmative defense") and Com., Dept. of Highways v. Chinn, 350 S.W.2d 622, 623 (Ky. 1961) ("Ordinarily under CR 12.03 a statute of limitation must be pled and a failure so to do constitutes a waiver of that defense"), to argue that MCFD waived its opportunity to present a statute of limitations defense. We agree that MCFD failed to preserve the statute of limitations defense.
First, we believe that MCFD has misinterpreted the ALJ's statement regarding Slone and KRS 342.270 in the order denying the petition for reconsideration. MCFD spent the majority of its brief to the Board as well as its petition for review before this Court distinguishing Slone and arguing that it does not state that KRS 342.270 is an affirmative defense that must be raised. However, the ALJ cited Slone only to describe the joinder requirement that was codified in KRS 342.270(1). In Slone, the Supreme Court of Kentucky held that "a motion to reopen pursuant to KRS 342.125 may not be based on a condition known to the claimant during the pendency of his original claim but which he did not present." Slone, 902 S.W.2d at 822. The year after Slone was rendered, the Legislature codified this holding in KRS 342.270(1), which provides:
If the parties fail to reach an agreement in regard to compensation under this chapter, either party may make written application for resolution of claim. The application must be filed within two (2) years after the accident, or, in case of death, within two (2) years after the death, or within two (2) years after the cessation of voluntary payments, if any have been made. When the application is filed by the employee or during the pendency of that claim, he or she shall join all causes ofKRS 342.270(1) (emphasis added). See Ramsey v. Sayre Christian Village Nursing Home, 239 S.W.3d 56, 59 (Ky. 2007) ("KRS 342.270(1) codifies the decision in Slone v. Jason Coal Co., supra. It requires a claim to be filed within two years of the date of accident and requires all known causes of action to be joined to the claim or waived."). Therefore, the ALJ in this case was merely stating that MCFD failed to preserve this issue - whether Welch would be barred by application of KRS 342.270(1) and Slone from seeking medical benefits on reopening because he failed to bring his hearing loss claim along with his injury claim in his original application - by listing it as a contested issue at the BRC. And MCFD's failure to preserve the issue is precisely the issue that the Board addressed in its opinion.
action against the named employer which have accrued and which are known, or should reasonably be known, to him or her. Failure to join all accrued causes of action will result in such claims being barred under this chapter as waived by the employee.
We agree with the Board that MCFD is precluded from raising the issue of whether Welch is entitled to medical coverage for hearing loss pursuant to KRS 342.270(1) because MCFD failed to raise or preserve this issue until after the ALJ had issued his opinion, award, and order.
KRS 342.275(1) provides the procedure for benefit review by the ALJ, including the conference:
The commissioner shall promptly issue notice of the assignment of the claim to an administrative law judge, time for presentation of proof and of the time and placeAnd KRS 342.270(3) provides for the promulgation of administrative regulations by the commissioner to establish the procedures for resolving workers' compensation claims. The process established for the adjustment of claims is set forth in 803 KAR 25:010, as explained in Walters v. Ashmark, Inc., 2011 WL 5880958 at *3 (2011-SC-000181-WC) (Ky. Nov. 23, 2011):
of a benefit review conference. The administrative law judge may confer informally with the parties for the purpose of defining and narrowing the issues, discussing settlement, and considering other relevant matters that may aid in the disposition of the case.
803 KAR 25:010, §§ 13(1), (2), and (7) explain that the BRC conference is an informal proceeding of which no transcript is made, the purpose of which is to expedite the processing of a claim and, if possible, avoid the need for a hearing. Other subsections of the regulation direct the parties to attempt to resolve controversies and disputed issues; narrow and define disputed issues; and facilitate a prompt settlement. They direct the ALJ to prepare a stipulation of all contested and uncontested issues, which the parties and the ALJ sign, i.e., the BRC Memorandum. Subsection 14 provides, "Only contested issues shall be the subject of further proceedings."
803 KAR 25:010 § 5 establishes what a defendant/employer is required to do to protect any possible defenses, including filing a Form 111 notice of claim denial or acceptance pursuant to § 5(2)(a); subsection (2)(b) provides that "all allegations of the application shall be deemed admitted" if a Form 111 is not filed. Subsection (2)(d) provides that the defendant/employer must file a "special answer" in order to raise any "special defenses:"
In addition to the Form 111, a defendant shall file a special answer to raise any special defenses in accordance with this paragraph.(Emphasis added.) KRS 342.125(4) provides that "[r]eopening and review under this section shall be had upon notice to the parties and in the same manner as provided for an initial proceeding under this chapter."
1. A defendant may incorporate special defenses that have been timely raised in the Form 111.
2. A "special answer" shall be filed within:
a. Forty-five (45) days of the scheduling order; or3. A special defense shall be waived if not timely raised.
b. Ten (10) days after discovery of facts supporting the defense if discovery could not have been had earlier in the exercise of due diligence.
4. A special defense shall be pleaded if the defense arises under:
a. KRS 342.035(3), unreasonable failure to follow medical advice;
b. KRS 342.165, failure to comply with safety laws;
c. KRS 342.316(7) or 342.335, false statement on employment application;
d. KRS 342.395, voluntary rejection of KRS Chapter 342;
e. KRS 342.610(3), voluntary intoxication or self-infliction of injury;
f. KRS 342.710(5), refusal to accept rehabilitation services; or
g. Running of periods of limitations or repose under KRS 342.185, 342.270, 342.316, or other applicable statute.
Therefore, pursuant to the administrative regulations promulgated by the commissioner, MCFD was required to identify the waiver or bar defense as set forth in KRS 342.270(1) as a special or affirmative defense and identify it as a contested issue at the benefit review conference in order to preserve the issue for further proceedings. MCFD did neither. Instead, the only issue MCFD raised prior to and at the benefit review conference was whether Welch's hearing loss was causally related to his 1986 work injury. MCFD did not identify the bar or waiver defense until after the ALJ had issued its opinion, which was clearly too late in the process. Therefore, we must hold that neither the Board nor the ALJ misconstrued the applicable law in holding that MCFD failed to properly preserve the application of KRS 342.270(1) as an issue before the ALJ.
For the foregoing reasons, the opinion of the Workers' Compensation Board is affirmed.
ALL CONCUR. BRIEF FOR APPELLANT: K. Lance Lucas
Florence, Kentucky
BRIEF FOR APPELLEE, PHILLIP
WELCH:
Charles Johnson
Winchester, Kentucky