GOVERNMENT RETIREMENT: KERS may discontinue retirement disability benefits if it determines employee was no longer incapacitated prior to his/her normal retirement date: KERS BOARD OF TRUSTEES v. EST. OF DAISEY CHANEY (COA 4/18/2008)

GOVERNMENT RETIREMENT:  KERS may discontinue retirement disability benefits if it determines employee was no longer incapacitated prior to his/her normal retirement date
Commonwealth Of Kentucky
DATE RENDERED: 4/18/2008

The Board of Trustees of the Kentucky Employees Retirement Systems (KERS) appealed circuit court setting aside the Board’s order adopting a report and recommended order of a KERS hearing officer in which the officer recommended KERS suspend the retirement disability benefits of the decedent, Daisy Chaney.  KERS argued its hearing officer’s recommendation was supported by substantial evidence, thus concluding that the circuit court erred. However, finding that the hearing officer’s recommendation was not supported by substantial evidence, the COA AFFIRMED.

In her application, Chaney claimed that she was unable to perform her duties as a case worker due to her physical and mental condition. However, KERS’ medical review board denied Chaney’s application. Eventually, Chaney appealed her claim to the Disability Appeals Committee, which denied her application. After Chaney died, her estate continued her appeal.

Once KERS terminated Chaney’s retirement disability benefits, her estate filed a complaint with the Franklin Circuit Court seeking, pursuant to KRS 61.665(5) and KRS 13B.140, appellate review of the Board of Trustees’ final order adopting the hearing officer’s report. In the estate’s complaint, it argued that KERS’ termination of Chaney’s benefits was arbitrary, capricious and not supported by substantial evidence.

The circuit court noted that the record contained no evidence addressing whether Chaney’s mental condition improved, became worse or continued without change in the preceding two to three years in which Chaney did not seek counseling and further noted that KERS had asserted that Chaney’s condition was not permanent because she could have improved with twelve months of therapy.

The circuit court concluded that Dr. Ebben opined that Chaney could have recovered with appropriate treatment, but he never found that she had recovered. Thus, the circuit court denied KERS’ motion to alter, amend or vacate.

According to KERS, if Chaney’s mental condition was disabling, then she would have sought treatment for it as she did prior to being approved for benefits.

According to KRS Chapter 61, an employee of the Commonwealth may retire on disability if, since the last date of employment, the employee is mentally or physically incapacitated. An employee is incapacitated if he is unable to perform his job or a job of like duties and his incapacity is permanent. KRS 61.600(1) and (3)(a)-(c).

An employee’s incapacity will be considered permanent if it is expected to continuously last for a period of not less than twelve months from the employee’s last day of paid employment. KRS 61.600(5)(a).

Once an employee has been approved to receive retirement disability benefits, KERS may discontinue such benefits if it determines that, prior to the employee’s normal retirement date, he is no longer incapacitated. KRS 61.615(2).

KERS’ burden was not just to prove that Chaney experienced an improvement in her condition but that she experienced such an improvement she was no longer incapacitated as that term is defined in KRS 61.600.

Because the hearing officer’s report and recommended order were not
supported by substantial evidence, the Franklin Circuit Court correctly set aside the Board of Trustees’ order adopting the hearing officer’s recommendation. Consequently, the decision of the Franklin Circuit Court was affirmed.

Digested by Michael Stevens

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