Case Note: Garden Glen Farm vs. Bethany Taylor Balderas SC Published 5/14/2015

Workers Comp: An employer can’t receive credit for the full amount of a lump-sum workers compensation settlement to lower the amount of benefits due to a former employee whose case was reopened

48.  Workers Compensation, Reopened claim.
Garden Glen Farm vs. Bethany Taylor Balderas
SC Published 5/14/2015; Affirming COA
Questions Presented: Workers Compensation. Reopened Claim. When a settled claim is reopened, the monetary value of the original negotiated settlement may not reflect the claimant’s actual disability. The change in occupational disability should be calculated as the difference between the actual disability on the date of the settlement, as found by the ALJ, and the occupational disability at the time of reopening.

Earlier cash settlement doesn’t reduce workers comp benefits | Business Insurance An employer cant receive credit for the full amount of a lump-sum workers compensation settlement to lower the amount of benefits due to a former employee whose case was reopened, the Kentucky Supreme Court has ruled. Court records show that she was injured in November 2006 when a horse she was riding fell and rolled over her. She later negotiated a lump-sum workers comp settlement of $100,000, based partly on a disability impairment rating of 29%.

When “a settled claim is reopened, the monetary value of the original negotiated settlement may not reflect the claimant’s actual disability,” the ruling reads. “The change in occupational disability should be calculated as the difference between the actual disability on the date of the settlement, as found by the (administrative law judge), and the occupational disability at the time of reopening.”  From http://www.businessinsurance.com/

Appellant, Gardens Glen Farm, filed this appeal from a Court of Appeals decision to contest the Administrative Law Judge’s (“ALJ”) calculation of a credit for money paid to Appellee, Bethany Balderas, pursuant to a settlement. Gardens Glen argues that the ALJ erred by refusing to give it a dollar for dollar credit based on the lump sum settlement it entered into with Balderas. For the below stated reasons, we affirm the Court of Appeals. Balderas was injured when a horse she was exercising at Gardens Glen rolled over on her. Balderas sustained two fractured vertebra and underwent fusion surgery. She later returned to work. Balderas negotiated a lump sum settlement of $100,000 with Gardens Glen, which reflected a 29% impairment rating and a return to work factor of 1.5509453.

Balderas was injured when a horse she was exercising at Gardens Glen rolled over on her. Balderas sustained two fractured vertebra and underwent fusion surgery. She later returned to work. Balderas negotiated a lump sum settlement of $100,000 with Gardens Glen, which reflected a 29% impairment rating and a return to work factor of 1.5509453. Several years later, Balderas filed a motion to reopen alleging a worsening of her occupational disability. The motion was sustained. The ALT determined that Balderas met her burden of proof to show a worsening of her condition based on objective medical evidence. The ALJ found that the proper return to work factor at the time of the original award was one. She then found that Balderas’s whole body impairment at the time of her settlement was 29% and that it rose to 30% at the time of reopening. The ALJ also found that Balderas was entitled to the three multiplier, pursuant to KRS 342.730(1)(c), on reopening because she was no longer able to work as an exercise rider.

In this matter, the AU did not err in calculating the credit owed to Gardens Glen. The ALJ found that the rating used for the original settlement award, 29% whole body impairment, was an accurate reflection of Balderas’s original occupational disability. She also determined that the return to work factor at the time of the original award should be one instead of the 1.5509543 used in the settlement. The ALJ’s findings are supported by the record and indicate a credit for Gardens Glen of $180.42 per week. The AU then did not abuse her discretion by finding that Balderas’s whole body impairment on reopening rose to 30%. Taking the difference between the amount Balderas was entitled to on reopening ($456.25) and subtracting it from the value of her original award ($180.42), then factoring in the 99% cap, lead to an increase in her benefits of $275.83 per week. The ALJ did not abuse her discretion in so finding. For the above stated reasons, we affirm the decision of the Court of Appeals. All sitting. All concur.

Full text follows:

Defenses: Workers Compensation Exclusive Remedy and Up the Ladder

From Kenney v. Cemex, Inc., COA, NPO, 3/25/2011

In its motion for summary judgment, Cemex argued that Kenney was barred from bringing any tort claim against it because he received workers’ compensation benefits from HS Construction’s insurance carrier. Cemex relied on the exclusivity provision of the Kentucky Workers’ Compensation Act, KRS 342.690(1). In relevant part, the exclusivity provision states:
If an employer secures payment of compensation as required by this chapter, the liability of such employer under this chapter shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death. For purposes of this section, the term “employer” shall include a “contractor” covered by subsection (2) of KRS 342.610, whether or not the subcontractor has in fact secured the payment of compensation.

“The statute makes it plain that if [a company] is a contractor, it has no liability in tort to an injured employee of a subcontractor.” Fireman’s Fund Ins. Co. v. Sherman & Fletcher, 705 S.W.2d 459, 461 (Ky. 1986). This is referred to as “up-the-ladder” immunity. If a company meets the definition of “contractor” provided in the workers’ compensation statutes, then it is deemed to be an “up-the- ladder” employer of its subcontractors’ employees and, like any employer, is entitled to immunity from its employees’ tort actions. The statutes define a “contractor” as a “person who contracts with another . . . [t]o have work performed of a kind which is a regular or recurrent part of the work of the [person’s] trade, business, occupation, or profession.” KRS 342.610(2)(b).

Accordingly, the dispositive issue in this matter, and the focus of Kenney’s disagreement with Cemex, is whether the repairs Kenney was assigned to perform on the splitter gate at the 526 Ball Mill qualified as work that is a “regular” and “recurrent” part of Cemex’s business, per KRS 342.610(2)(b).
Kentucky jurisprudence further defines these terms. In General Elec. Co. v. Cain, 236 S.W.3d 579 (Ky. 2007), our Supreme Court held that, as used in the statute, “regular” and “recurrent” workis work that is customary, usual, or normal to the particular business (including work assumed by contract or required by law) or work that the business repeats with some degree of regularity, and it is of a kind that the business or similar businesses would normally perform or be expected to perform with employees.” Id. at 588.

The Court also stated that “‘regular’ means that the type of work performed is a ‘customary, usual or normal’ part of the premises owner’s ‘trade, business, occupation, or profession,’ including work assumed by contract or required by law.” Cain, 236 S.W.3d at 586-7. “Recurrent” means that the work is repeated, though not “with the preciseness of a clock.” Id. (quoting Daniels v. Louisville Gas and Elec. Co., 933 S.W.2d 821, 824 (Ky. App. 1996)).

The Sixth Circuit has held that work being done “periodically,” as an “ordinary part of plant maintenance,” is regular or recurrent. Granus v. North American Philips Lighting Corp., 821 F.2d 1253, 1257 (6th Cir. 1987). In Daniels, a panel of this Court held that emissions testing was a regular or recurrent part of a contractor’s business on the basis of its manager’s affidavit stating that testing had occurred on fourteen occasions in 28 years. Daniels, 933 S.W.2d at 824.

WORKERS COMPENSATION: Quebecor Book Company v. Mikletich (COA 1/22/2010)

Quebecor Book Company v. Mikletich
2009-CA-001370 01/22/2010 2010 WL 199300

Opinion by Chief Judge Combs; Judge Taylor and Senior Judge Henry concurred. The Court affirmed a decision of the Workers’ Compensation Board that affirmed an administrative law judge’s opinion and award of benefits to a worker for cumulative, work-related hearing loss. The Court held that the Board ruled correctly under the circumstances and statutory percentages unique to hearing loss by not applying the statutory limitation analysis codified in KRS 342.185. Since the worker would not have been eligible to receive income benefits unless and until he reached an 8% whole person impairment, pursuant to KRS 342.7305(2), and the employer had timely notice of the 6% disability that existed more than two years before the worker filed his claim, there was no legal or equitable basis to carve out from the final award that portion attributable to the earlier onset of the injury.

WORKERS COMPENSATION: Kentucky Associated General Contractors Self-Insurance Fund v. Lowther (COA 1/29/2010)

Kentucky Associated General Contractors Self-Insurance Fund v. Lowther
2008-CA-002090 01/29/2010 2010 WL 323199

Opinion by Senior Judge Lambert; Chief Judge Combs concurred; Judge Moore dissented by separate opinion. The Court affirmed a judgment of the circuit court upholding a penalty imposed by the executive director of the Kentucky Office of Workers’ Claims on an insurer and claims administrator for their failure to pay a claim. The Court held that after a final utilization review decision revealed a dispute, the obligor was required to file a Form 112 medical dispute within 30 days, whether services had been rendered and a bill sent, or whether pre-authorization had been denied. Because the insurer did not seek reopening of the claim, it was in violation of its duty under the workers’ compensation laws to promptly pay or contest the claim. Upon the proper determinations by the executive director that the insurer failed to attempt in good faith to promptly pay a claim in which liability was clear and that it failed to meet the appropriate time limits imposed by KRS Chapter 342, the Office of Workers’ Claims was authorized to impose a fine for each violation.

FAMILY LAW (Workers Compensation Settlement, marital property issue): Day v. Day (COA 12/11/2009)

Day v. Day
2008-CA-000133 12/11/2009 2009 WL 4722579

Opinion by Senior Judge Harris; Judges Lambert and VanMeter concurred. The Court affirmed an order of the trial court in a dissolution of marriage action determining that appellant’s entire workers’ compensation settlement was marital property and awarding appellee one-half of the settlement and setting appellant’s child support obligation. The Court held that the trial court did not abuse its discretion in determining that the entire workers’ compensation settlement was a marital asset and dividing it equally between the parties after it considered the factors required by KRS 403.190.

WORKERS COMPENSATION – Estoppel: Journey Operating, LLC v. Zurich American Insurance Company (COA 11/6/2009)

Journey Operating, LLC v. Zurich American Insurance Company
2009-CA-000279 11/06/09 2009 WL 3673007

Opinion by Senior Judge Lambert; Judges Clayton and Thompson concurred. The Court reversed an opinion and order of the Workers’ Compensation Board reversing a decision by the Chief Administrative Law Judge reopening a final decision and finding that an insurer was estopped from terminating benefits. The Court held that KRS 342.125 provided authority for reopening to protect the verity of the administrative proceeding. The Court distinguished the holding in Custard Ins. Adjusters, Inc. v. Aldridge, 57 S.W.3d 284 (Ky. 2001), as this was not simply an attempt to enforce the prior judgment but was necessary to determine whether the insurer had committed constructive fraud in the original proceeding.

WORKERS COMPENSATION: Bowerman v. Black Equipment Company (COA 10/2/2009)

Bowerman v. Black Equipment Company
2008-CA-000828 10/02/09 2009 WL 3162147 Released for publication
Opinion by Judge Nickell; Judge Caperton concurred; Judge Keller dissented by separate opinion.

The Court reversed and remanded an opinion of the Workers’ Compensation Board affirming the opinion and award of an Administrative Law Judge. The Court held that the reversal of prior dispositive factual findings rendered in an interlocutory opinion – absent the introduction of new evidence, fraud or mistake – was arbitrary, unreasonable, unfair and unsupported by sound legal principles. While the abatement of the claim pending maximum medical improvement did not mandate an award of temporary total disability (TTD) benefits, the ALJ’s original factual findings mandated an award under KRS 342.0011(11)(A) during the abatement of the claim.

Workers Comensation – Compensable period for permanent partial disability: Betty J. Sweasy v. Wal-Mart (SC 10/29/2009)

Betty J. Sweasy v. Wal-Mart; ALJ; & Workers’ Compensation Board
2009-SC-000219-WC October 29, 2009
Opinion of the Court. All sitting; all concur.

The Supreme Court reversed the Court of Appeals, holding that the compensable period for permanent partial workers’ compensation begins on the date the impairment arises. The Court of Appeals had previously ruled that KRS 347.730(1)(d) gave the ALJ discretion to award benefits beginning with the date the claimant reached maximum medical improvement (MMI). The Supreme Court held that neither the Court of Appeals nor the employer (the Appellee) could point to a reasonable basis for benefits to commence on any date other than when the impairment or disability arose.

Insurance – Workers Compensation coverage issue: Kentucky Associated General Contractors Self-Insurance Fund (KAGC) v. Music Construction, Inc. (SC 10/29/2009)

Kentucky Associated General Contractors Self-Insurance Fund (KAGC) v. Music Construction, Inc.
2008-SC-000795-DG October 29, 2009
Opinion of the Court. All sitting; all concur.

Employee suffered permanent and total disability from a trench collapse. KOSHA subsequently cited the employer for intentional safety violations. Because of these violations, employee sought and received a 30% enhancement to his disability award, as allowed under KRS 342.165(1). KAGC, the employer’s workers’ compensation insurance carrier (the Appellant), sued the employer for reimbursement of the amount of the increase in benefits, citing a specific exclusion in the contract of insurance. The trial court dismissed the suit for failure to state a claim. The Court of Appeals affirmed the dismissal, holding that under AIG/AIU v. South Akers Mining, the claim was barred. The Supreme Court reversed, noting that AIG/AIU did not apply since it was a workers’ compensation case involving a statutory requirement that carriers promptly pay all benefits. By contrast, the Court held this case was centered on a contract dispute where the injured worker has no stake or interest in the outcome. The Court remanded the case back to the circuit court.