TRENDING TOPICS IN KENTUCKY WORKERS COMPENSATION

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1 TRENDING TOPICS IN KENTUCKY WORKERS COMPENSATION PRESENTED BY: POHL & AUBREY, P.S.C. 271 WEST SHORT STREET, SUITE 100 LEXINGTON, KENTUCKY (859) NORTH HURSTBOURNE PARKWAY, SUITE 110 LOUISVILLE, KENTUCKY (502)

2 INTRODUCTION Contained in this outline is a summary of topics addressed by presentation. Both this outline and the oral presentation are meant to provide general knowledge and information with respect to the Kentucky Workers Compensation Act. This information is meant only as a general guide to understanding the Act, and is not a substitute for specific legal advice referencing any particular case or claim. We encourage that legal advice be secured with respect to any specific concerns or questions that may arise during the pendency of any matter. We hope that you find this information helpful, and we appreciate the opportunity to provide assistance to your company in the defense of matters arising in Kentucky. CONTEST OF MEDICALS Following an award or settlement (which holds open medical benefits), it is the employer who bears the burden of going forward with a Medical Fee Contest. There are two primary bases for proceeding with a Medical Fee Dispute. The first concerns causation/work-relatedness. If a charge is submitted for payment, and there is concern that the charge does not relate to work injury, we have the right to investigate compensability. The employee and the provider should be put on notice of our investigation in this regard, and any request for additional information should be made. Investigation may include the need for a peer review and/or independent medical exam. If it is determined by medical opinion that the treatment is not caused by nor related to the original work injury, 2

3 obligation exists under the Act for the filing of a Motion to reopen to contest the charge. When the issue concerns the reasonableness and necessity of medical care and treatment, but not compensability from a causation standpoint, procedure requires securing a utilization review report. Utilization Review is set forth in the Rules, and the time restraints should be followed accordingly. The vendor completing the utilization review will secure an initial report concerning compensability, and any party may request secondary review. Medical Fee Contests must be filed within thirty days of the secondary review in the event that the charge is contested. There has been debate as to whether the ALJ, who initially reviews the Medical Fee Dispute, can summarily rule on same, even if some proof time is allotted. In Twin Resources, LLC v. Workman, Ky. 394 S.W.3d 417 (2013), ALJ Landon Overfield issued an initial ruling on a Medical Fee Dispute filed by the employer, giving all parties 45 days to submit evidence. Nothing was submitted by the plaintiff or provider, and the ALJ entered Summary Order in favor of the employer. The Court held that while an ALJ has the authority in certain circumstances to summarily rule on the Motion, if the employer provides a reasonable basis for the reopening, it should be assigned to an ALJ for full litigation. We assume that, based upon the comments by the Court, the ALJ can only summarily overrule the Motion if there is not sufficient evidence presented by the employer. 3

4 What we have found is that Medical Fee Disputes are typically now being assigned to an ALJ for adjudication once the Motion is filed. The Department of Workers' Claims has been designating certain judges for Medical Fee Disputes over the past year. SAFETY PENALTY APPLICATION We are seeing formal filings by plaintiff containing allegation of safety penalty on a more frequent basis. The Act changed in 1996, giving plaintiffs enhanced benefits if the injury was caused by the intentional failure of the employer to abide by a known safety rule or regulation; however, the judges, until recently, have not been particularly inclined to award same. Under previous Acts, if there was a safety violation, benefits to the employee were increased by 15%. This was increased to 30% in Any violation by the employee still results in only a 15% reduction. This half of the equation did not change. Evidence of actual intent to harm an employee has never been necessary. The issuance of a citation by OSHA is prima facie showing of a violation of a statute. The element of intent refers to intent to violate the statute rather than intent to harm the employee. Intent can be inferred from the facts of each case. The more obvious the safety violation, the less proof is necessary to prove intent. In an early case after the statutory amendment, Brusman v. Newport Steel Corp., Ky., S.W.3d 514 (2000), the Court found that a steel company violated the OSHA general duty provision requiring employers to furnish employees a place of employment which was free from recognized hazards causing or likely to 4

5 cause death or serious harm. This supported a finding for imposition of the 15% (now 30%) penalty. The Court stated that it was the responsibility of the ALJ to determine whether a violation of a statute or administrative regulation has occurred. The Courts were relatively quiet for a number of years until the holding last year in Hornback v. Hardin Memorial Hospital, Ky. 411 S.W.3d 220 (2013). In that case, the claimant, a hospital custodian, was injured when while hospital staff attempted to remove him from a stuck elevator, the elevator dropped several floors. The hospital had on a file a pamphlet labeled How to Operate Elevators Under Emergency Conditions. The ALJ awarded the enhanced 30% penalty under the theory that the hospital failed to follow their own safety warnings about assisting an individual in a frozen or stuck elevator. What is troubling about this case is that the Court seems to moving towards a negligent rather than intentional standard for awarding the enhancement modifier. PAYMENT OF TEMPORARY TOTAL DISABILITY Temporary total disability is defined as the condition of an employee who has not reached maximum medical improvement from an injury and has not reached a level of improvement that would permit a return to employment. This is a definition, not a description. Both elements must be met in order for the employee to qualify for temporary total disability. If the employee is capable of returning to work, but has not yet reached maximum medical improvement, the employee should not be deemed temporarily totally disabled. 5

6 The definition does not refer to the employee s customary work. Common sense should be used, however, in defining the period of temporary total disability for each individual employee. In Central Kentucky Steel v. Wise, Ky., 19 S.W.3d 657 (2000), the employer terminated temporary total disability benefits when a physician released plaintiff to return to light duty work even though the employer was unable to accommodate the light duty restrictions. The employer argued that temporary total disability benefits may be terminated as soon as a worker is released to perform any type of work. Quite frankly, this is consistent with the Act, which says that temporary total disability is payable when two conditions are met: the claimant has not reached MMI and the claimant is not able to return to any form of gainful employment. The court stated, however, that it would not be reasonable to terminate the benefits of an employee when he is released to perform minimal work but not the type that is customary or that he was performing at the time of his injury. We do not believe that this means that in all cases temporary total disability benefits must be continued when the employer does not have light duty work available. It does mean, however, that if the claimant has not reached MMI, and the employee has only performed heavy manual labor for our insured, and no light duty is available, we still owe TTD benefits. The language in Wise, supra, provides a window of opportunity to argue that if an employee is released to return to some type of work for which he has prior skills or training, even if the 6

7 employer does not have light duty work available, we no longer owe TTD (more on that below). The issue regarding temporary total disability has expanded over the past year. Argument is now regularly being propounded by the plaintiff s bar to the effect that TTD benefits are payable even if the employee returned to light duty work, if that light duty work did not constitute customary employment. The argument is that we are not entitled to a credit for the payment of wages because there is no provision in the Act permitting such a credit, and there is case law to the effect that bona fide wages are not payments which are credited under any circumstance. Defense s position, of course, is that if an employee works, he is not entitled to TTD. Incredibly, there does appear to be a trend towards accepting the plaintiff s position in this regard. In a recent Board decision from May of last year, it was decided that an employee of a temporary service, who was asked to do menial tasks around the office of the local temp agency, was not performing customary or real work. The Board ordered payment of TTD without credit for claimant s earnings. That decision is now on appeal to the Kentucky Court of Appeals. There is no hard and fast rule of law at this point. If the employer has a job, however, which is typically not performed separate and apart from the placement by the injured worker, the concern arises. The catch phrase for allowance of a credit for money paid to a claimant, which is not truly TTD, is money paid in lieu of compensation. Therefore, if an employer does provide 7

8 menial work to an employee, it should be documented that it is being done so in lieu of paying temporary total disability compensation. Finally, there is often concern as to whether the employee who is restricted, but not at maximum medical improvement, is owed TTD if he does not return to work, but the employer has work available. In an unpublished Court of Appeals decision from November, 2013, the suggestion was that TTD is owed if the employee is not at MMI, and is not back to work. This is true regardless of whether the employer has attempted to make accommodations, and the employee failed to cooperate. Indeed, in the unpublished Court of Appeals decision, the employee could have returned to work had he not been suspended for insubordination. We believe that if there is a legitimate offer to plaintiff of light duty work, which is declined by the plaintiff, we continue to have a good faith basis to deny TTD. What the Courts now seem to be saying, however, is that the balance tips heavily in favor of the employee on this issue. GOING AND COMING RULE The general rule of law is that injuries which occur while the employee is in route to or from work are not compensable. Essentially, the rule is an extension of the general principle that employers should only be responsible for injuries which arise out of and in the course of employment. An employer has no control over public streets, and plaintiff is not performing any activity which is in direct furtherance of his employment while driving to or from work. 8

9 One exception to the general going and coming rule is with respect to employer premises. It was held many years ago that if the employee is injured on property which is owned or maintained by the employer, and the employee was not doing something outside the course of his employment, compensation attaches. This rule is expanded to include parking garages which are neither owned nor maintained by the employer, but it is where the employer has instructed the employee to park. Recently published was Jackson Purchase Medical Association v. Crossett, Ky. 412 S.W.3d 170 (2013). Essentially, the case expanded the liability of employers with respect to parking lots. The claimant parked her car in a space designated for employees and walked along a public sidewalk to the office complex where she worked. Before entering the building, she slipped and fell due to accumulation of snow. The Court held that because plaintiff had parked where she was told to park, the injury was compensable. Essentially, what the Court is saying is that it does not matter what type of hazards the employee may face between the assigned parking spot and the actual premises of her employer; the injury is compensable if the employee parked where she was supposed to park and was making her way into work. Another interesting holding was in Gaines Gentry Thoroughbreds v. Mandujano, Ky. 366 S.W.3d 456 (2012). In that case, the employee was a horse groom, who accompanied the owner of the farm to sales in New York. He performed the duties of his job as required while in New York, but was injured in an accident on the way home to Kentucky. The accident was deemed work- 9

10 related. In summary, traveling employees are treated differently than employees who work at one location. If the work exposes the employee to the hazards of the road, the injury, while traveling, is deemed work-related. In Hanik v. Christopher & Banks, Inc., 434 S.W.3d 20 (Ky. 2014), the issue was whether the back parking lot constituted an employer s operating premise. Claimant, Hanik, filed for benefits after slipping on black ice in a parking lot on January 9, Hanik had parked in a lot behind the employer s store, which was leased from a shopping mall. The lot provided no access for customers directly to the store. The leased building was U-shaped, with parking within the U-shape, and parking behind the stores. The walk to and from the back parking lot was long and inconvenient. Evidence was that some employees were told to park in the back lot, some were told to park there during holidays, and others were not told where to park. Furthermore, the manager testified that the employer was not responsible for maintaining the parking lot and did not have control over it. In reviewing case law about operating premises, the Supreme Court set out factors for determining if a parking facility is within an employer s operating premises. The Court summarized the factors as: 1) whether the employer, either directly or indirectly, owns, maintains, or controls the parking facility or a portion thereof; 2) whether the employer designated where in the parking facility its employees are to park; 3) whether the employee parked in the designated area; and 4) whether the employee was taking a reasonable path from his/her car to his/her work station when injured. 10

11 The Court found this situation did not meet the test and the injury was not work-related. The Supreme Court affirmed the ALJ s conclusion that the back lot was not part of the employer s operating premises. CONCURRENT EMPLOYMENT If an employee is working under concurrent contracts with two or more employers, and the employer has knowledge of the other work, the general rule is that wages are stacked for compensation purposes. The concurrent employment must be of the nature which is covered under the Workers Compensation Act. If the concurrent employment is in the agricultural field, or involves independent contractor work on the part of the employee, same is not included in the wage calculation. If the employee, who holds two jobs, is able to return to his regular work, (regardless of whether it was the work on which he was injured), temporary total disability benefits cease. If the employee is only capable of returning to the lesser job, temporary total disability benefits remain payable, but at a rate less the earnings at the lesser job. Consequently, if the employee cannot return to either job, TTD benefits are payable at the stacked rate, considering earnings from both jobs. In the recently decided Pro Services v. Wilson, Ky. 391 S.W.3d 382 (2013), the claimant was injured on a job that only paid $80.00 per week. He gave vague and mostly unsubstantiated testimony regarding another job he held, and this was rejected by the ALJ. In its holding, the Court remanded the case to the ALJ for further findings on this issue. It recited the basic law that an 11

12 employee is entitled to combination of wages from concurrent employment, if the employment is of the type covered under the Workers Compensation Act, and the employer, with whom the employer was injured, was aware of the concurrent job. PSYCHIATRIC DISABILITY Substantial change in the law in 1996 included language that injury shall not include a psychological, psychiatric, or stress related change in the human organism, unless it is a direct result of a physical injury. The idea behind this amendment to the Act was to prevent litigation of so-called mental-mental cases. This had become costly to industry by The Courts have continued to debate the issue with respect to when psychiatric claims might arise, and that debate has primarily centered around cases involving police officers. In Lexington Fayette Urban County Government v. West, Ky. Supreme Court (rendered August 23, 2001), the issue concerned interpretation of the portion of the Workers Compensation Act which denies compensation in true mental-mental cases. Here the employee, a police officer, was originally involved in a 1989 knife-wielding incident, in which she was physically assaulted. Over the years, she developed post-traumatic stress disorder, which became increasingly symptomatic following the original work-related injury. A claim was not filed until It was dismissed by the ALJ, but deemed compensable by the Kentucky Court of Appeals. The Court ruled that a series of traumatic events causing psychological problems was envisioned by the 12

13 legislature when they limited psychiatric disability to that arising out of physical injury. The Supreme Court concurred with the decision of the Court of Appeals. Most recently, the Court decided Kentucky State Police v. McCray, Ky. 415 S.W.3d 103 (2013). This was also a case involving a police officer. The claimant had been called to a domestic disturbance, and during the course of events, had to discharge his weapon. While waiting for back-up, he reportedly developed paranoia and anxiety. He alleged in his workers compensation claim that he was unable to work as an officer because of severe PTSD. He admitted that there was never any trauma. His case was dismissed, and the dismissal was affirmed by the Kentucky Court of Appeals. While psychiatric claims continue to be somewhat troubling, the holding in the McCray case does bring some common sense back to the equation. In short, there must be some evidence of actual physical contact. It does not have to be much, but in McCray the Court ruled that without any, there could be no claim. HEARING LOSS The Workers' Compensation Act allows for benefits to be paid based upon occupational hearing loss. Per the Act, however, disability is not paid for impairment of less than 8%, and there is no impairment percentage paid for tinnitus. Primary question has been determining employer on the risk when an employee works for multiple companies during the course of his lifetime. In the 2012 case of Greg s Construction v. Keeton, Ky. 385 S.W.3d 420 (2012), the claimant worked for three employers during the two year statutory period. Before coming to work for the last employer, his hearing loss had been 13

14 rated by one evaluator at 17%. After filing the last claim against a third employer, a new university evaluation took place. It resulted in an impairment of 12%. Argument was that the claimant s work for the third employer did not cause or contribute to cause any hearing loss. The Court ruled against the third employer, despite these factual findings, stating that the employee proved entitlement to a work-related hearing loss, and the entire liability for both income and medical benefits was rightfully placed on the employer with whom the claimant was last injuriously exposed to hazardous noise. SETTLEMENT Settlement may be entered into at any time, and may include resolution of all or any issues presented by the claim. Subsequent agreements may be entered into to allow for settlement of future indemnity benefits after an Opinion and Award or for settlement of future medicals. The discount rate used in settlements is amended every year, and for 2014 it is (commuted compensable period for 425 weeks). A number of interesting issues have arisen over the last couple of years with respect to settlements. In Hudson v. Cave Hill Cemetery, Ky. 331 S.W.3d 267 (2011), the Supreme Court agreed that a settlement for a lump sum amount on a full and final basis without any agreement between the parties as to the portion of the lump sum that would be allocated to a Medicare Set-Aside is not an enforceable agreement. 14

15 In Richey v. Perry Arnold, Inc., Ky. 391 S.W.3d 705 (2012) plaintiff moved to reopen a case from a prior lump sum settlement allowing for payment of $15, for a complete resolution of indemnity benefits. When the employee later required surgery, TTD benefits were not instituted. The Court held that a Settlement Agreement is the contract between the parties, and the terms are binding. When a term is ambiguous, the question is whether the intent of the parties can be determined by the language used. The Court affirmed the right to settle all indemnity benefits, including TTD and said that the language for a complete resolution of indemnity benefits was sufficient to encompass settlement of future TTD. Typically the dollar amount of a settlement is not an issue unless it is an extreme scenario. For example, an ALJ would probably question a $ medical settlement in a fusion case. We have rarely seen this arise, but in the Richey case, the Court commented on the adequacy of consideration. It concluded that the amount agreed upon, $15,500.00, was sufficient compensation under the facts. Plaintiff had undergone an arthroscopic shoulder surgery and subacromial decompression as a result of the work injury. The Richey case represents a trend in Kentucky to not disturb Settlement Agreements that are negotiated at arm s length and approved by an Administrative Law Judge. There simply must be consideration for all elements of the claim, and clear terms. In Basin Energy Co. v. Howard, 447 S.W.3d 179 (Ky. App. 2014), the Court considered the meaning of dismissal language in an Agreement. The 15

16 claimant, Howard, filed a Form 101 seeking workers compensation benefits from Basin Energy. Subsequently, a Form 101 was prepared, and approved by the ALJ. The settlement said that Howard did not waive his right to future medical expenses for an open medical obligation involving his cervical and lumbar strain and right shoulder impingement syndrome, and that future medical expenses remained open. On July 2009, the ALJ granted the motion to approve the Form 101, ending with the language: IT IS HEREBY ORDERED that the Plaintiff s claim will be and same is hereby ordered DISMISSED with prejudice AS SETTLED. There was with prejudice language contained in the body of the settlement. The issue was whether the ALJ and Board had subject matter jurisdiction on reopening. In short, did the dismissal language extinguish the claim despite reference to open medicals. The Court of Appeals said the with prejudice language did not prevent an ALJ from hearing the case on reopening. The Court of Appeals also noted that the Form 101 explicitly left open medicals for Howard s shoulder and back. The only way to adjudicate that issue would be to reopen the case, which the Appellate Court explained survives irrespective of a dismissal with prejudice. MERGER DOCTRINE KRS (1) states that when an Application for Resolution of Injury Claim has been filed, the employee must join all causes of action against the named employer which have accrued and which are known, or should 16

17 reasonably be known, to him or her. This is a simple rule which has had a complicated existence. In Saint Joseph Hospital v. Frye, 415 S.W.3d 631 (Ky. 2013), the claimant suffered a work-related injury to her cervical and lumbar spine on January 3, She continued to work while undergoing treatment. Claim was filed on January 3, On April 9, 2009, the ALJ held a Final Hearing. On April 23, 2009, Frye fell at work, allegedly suffering a second injury. On June 2, 2009, the ALJ rendered a final opinion, addressing the January, 2008 injury only. The ALJ dismissed under the merger doctrine. The Board concluded that a claim is no longer pending after the date of the Final Hearing because the practice regulations do not provide a mechanism for reopening proof in a claim after a hearing has taken place. The Court of Appeals affirmed. The Kentucky Supreme Court affirmed. In reviewing case law, it distinguished this case from Kroger Co. v. Jones, 125 S.W.3d 241 (Ky. 2004). Jones states that a claim remains pending until the appellate process is exhausted. Jones 125, S.W.3d 245. The Court said that in Jones, the parties litigated the issue of compensability, whereas Frye could not for her second claim. The Court said the ALJ was not permitted to amend Frye s existing claim. The Supreme Court concluded that the ALJ could not have reopened the original claim because the first claim was not pending between the date of hearing and the rendering of the opinion, due to the language of the regulations 17

18 and statutes. Suggestion is that claims stop pending when the Hearing concludes. EXTRATERRITORIAL JURISDICTION The Act allows for injuries which occur outside of Kentucky to be brought in Kentucky under certain scenarios. If the employee regularly works at or from an employer s place of business in Kentucky, or if no principal localization, the employment contract was signed in Kentucky. If neither, residency controls. In Kentucky Employers Mut. Ins. v. Burnett, 432 S.W.3d 733 (Ky. App. 2014), the Court considered the concept of substantial contacts. The claimant, Burnett, sought benefits based upon a work injury occurring in 2011 in Indiana, where Burnett fell, and injured both heels. Burnett started working at Deck Doktor in 2009 in Indiana, where he lived. The owner of Deck Doktor organized the business in Kentucky, but did not have an office location in Indiana or Kentucky. Burnett and Deck Doktor eventually discussed a full-time position at a dinner in Kentucky. The Court of Appeals allowed for jurisdiction, relying upon Haney v. Butler, 990 S.W.2d 611 (Ky. 1999). In Haney, the Supreme Court said that KRS (5) construed a place of business to mean that an employer must either lease or own a location in the state at which it regularly conducts its business affairs, and the subject employee must regularly work at or from that location. The Court found because Burnett and Deck Doktor regularly conducted their business affairs in Kentucky, jurisdiction attached. 18

19 CONCLUSION Please do not hesitate to contact us should issues arise regarding claim matters. We are pleased to assist with any questions or concerns. 19