LEECO, INC. V. JIMMY MITCHELL; HON. ROBERT SPURLIN, ACTING DIRECTOR OF SPECIAL FUND; HON. THOMAS A. DOCKTER, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD
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RENDERED: April 2, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1997-CA-000818-WC
LEECO, INC.
APPELLANT
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS' COMPENSATION BOARD
ACTION NO. 94-038757
v.
JIMMY MITCHELL; HON. ROBERT SPURLIN,
ACTING DIRECTOR OF SPECIAL FUND;
HON. THOMAS A. DOCKTER,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS’ COMPENSATION BOARD
APPELLEES
OPINION
AFFIRMING IN PART, REVERSING IN PART AND REMANDING
** ** ** ** **
BEFORE:
GARDNER, JOHNSON AND MILLER, JUDGES.
JOHNSON, JUDGE:
Leeco, Inc. (Leeco) petitions this Court for
review of a February 28, 1997 opinion of the Workers'
Compensation Board (Board) which affirmed the Administrative Law
Judge's (ALJ) order wherein the ALJ found Jimmy Mitchell
(Mitchell) to be permanently totally disabled and apportioned 40%
of the liability to Leeco.
The ALJ found that the degree of
prior active occupational disability which existed immediately
prior to the subject injury was 20% and that the Special Fund was
liable for the remaining 40% of the total disability as the
result of previously dormant underlying conditions being aroused
into a state of disabling reality.
its petition:
Leeco raises three issues in
(1) whether the ALJ based his opinion upon an
incorrect interpretation of the evidence; (2) whether a workrelated prior active disability can be used to increase a partial
disability award to a total disability award; and (3) whether the
Supreme Court should overrule this Court’s decision in Southern
v. R.B. Coal Company, Ky.App., 923 S.W.2d 902 (1996), regarding
which party receives the benefits of the "tier down" provisions.
Since the Supreme Court has overruled Southern, supra, we must
reverse the Board on this issue and remand for further
proceedings.
We affirm on the other two issues.
Mitchell, who was born on November 20, 1953, sustained
a work injury on September 1, 1994, while working as a coal miner
for Leeco.
Mitchell testified that he felt a tearing sensation
in his back and pain when he was suddenly jerked while working on
a belt line.1
Following a period of conservative treatment,
Mitchell had surgery performed on his back by Dr. Phillip Tibbs
(Dr. Tibbs), a neurosurgeon.
Mitchell continued to experience
severe problems after the surgery, i.e., difficulty sitting,
standing, walking, bending and lifting.
As a result of his
condition, Mitchell also developed psychological problems which
required treatment.
In support of his claim, Mitchell presented the
testimony of his treating physician, Dr. James Templin (Dr.
1
Mitchell sustained work-related injuries to his back in
1989 and 1991, but did not file a claim for those injuries. He
was off work several months with each injury.
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Templin), who was an occupational medicine specialist.2
While
Dr. Templin referred Mitchell to Dr. Tibbs for surgery, Dr.
Templin continued as Mitchell's treating physician after the
surgery.
Dr. Templin expressed the opinion that Mitchell was
unable to do any activity which involved lifting, pushing,
pulling, twisting, turning, carrying or any extensive walking,
bending, stooping or kneeling.
He also restricted Mitchell from
riding on vibratory vehicles.
Dr. Templin restricted Mitchell to
a ten-pound limitation on repetitive lifting or carrying and
assessed him with a 15-19% functional impairment.
Dr. Templin
opined that Mitchell was totally disabled as far as his ability
to return to work or perform manual labor.
Dr. Tibbs assessed a 14% functional impairment to
Mitchell’s body as a whole and restricted Mitchell to lifting no
more than ten pounds on a frequent or an occasional basis and no
more than thirty pounds at any one time.
He also imposed the
restrictions of not standing or walking for more than six hours,
only occasional climbing, stooping, kneeling, crouching, and
bending and never crawling.
Dr. Daniel Primm (Dr. Primm), an orthopedic surgeon,
also examined Mitchell at Leeco's request and assessed a 15%
functional impairment.
He apportioned the disability rating to
include a pre-existing active component that dated back to
Mitchell's injury of 1989 and the re-injury of 1991.
2
Mitchell saw Dr. Templin for treatment at the request of
Leeco.
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Dr. Robert Granacher (Dr. Granacher), a psychiatrist,
examined Mitchell and stated that Mitchell read on a second grade
level and that he suffered from major depression.
He rated
Mitchell as suffering a 10% functional impairment, one-half of
which was due to his depression.
Dr. Sheila Dietrich (Dr.
Dietrich), a psychologist, examined Mitchell and opined that he
read on a third grade level and suffered from major depression
and anxiety.
She assessed Mitchell with a 20% functional
impairment rating and apportioned one-half of it to a preexisting condition.
In the ALJ’s opinion of August 1, 1996, the ALJ found
Mitchell to be 100% occupationally disabled.
The ALJ based his
finding upon Mitchell's testimony and upon the medical evidence
regarding physical and psychiatric conditions.
The ALJ stated in
pertinent part as follows:
As it relates to the medical evidence,
this Administrative Law Judge found the
evidence presented by Dr. Templin and Dr.
Tibbs to be most persuasive regarding
Plaintiff's functional impairment, between
15% to 19% according to Dr. Templin and 14%
according to Dr. Tibbs. When these
functional impairment ratings are combined
with the severe restrictions placed upon the
Plaintiff, with Dr. Tibbs' lifting
restriction of 10 pounds on a frequent or
occasional basis, as well as the other
limitations placed upon the Plaintiff,
regarding Plaintiff's physical injury, this
Administrative Law Judge finds support for
Dr. Templin's opinion that Plaintiff is
totally disabled as far as his ability to
return to his prior work or to perform any
type of manual labor. The fact that
Plaintiff has had surgery performed upon his
back by Dr. Tibbs after this injury, is
further evidence of the severity of the
Plaintiff's low back condition.
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* * * * *
When the Plaintiff's own credible
testimony is combined with that given by the
physicians referenced above, and the Osborne
v. Johnson[, Ky., 432 S.W.2d 800 (1968),]
factors are considered, including Plaintiff's
age, 42, limited educational abilities, and
past work experience, this Administrative Law
Judge finds that the Plaintiff has suffered
an injury of appreciable proportions which
equates to an occupational disability of
100%.
Leeco filed a petition for reconsideration arguing (1)
that the ALJ's award was based upon an incorrect interpretation
of the evidence, (2) that the ALJ failed to recognize the
applicability of the "tier down" provisions under Kentucky
Revised Statutes (KRS) 342.730(4), and (3) that the benefit of
the "tier down" provision should inure to the employer as well as
the Special Fund.
By order dated October 21, 1996, the ALJ amended his
opinion and award to include the applicability of the "tier down"
provisions pursuant to KRS 342.730(4), but the ALJ rejected
Leeco's argument regarding the interpretation of the evidence.
Leeco’s appeal to the Board included these same arguments plus
the argument that the ALJ had erred in awarding lifetime benefits
when a portion of the disability was caused by a non-compensable
injury.
In a February 28, 1997 opinion, the Board addressed each
of Leeco's arguments and affirmed the ALJ.
This petition for
review followed.
Our review of this case is conducted pursuant to
Western Baptist Hospital v. Kelly, Ky., 827 S.W.2d 685 (1992),
wherein the Supreme Court stated:
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"The function of further
review of the Board 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 687-688.
The first issues we address is Leeco’s claim that the
ALJ’s award was based upon an incorrect interpretation of the
evidence.
We believe the Board, through its opinion written by
Member Greathouse, correctly addressed this issue as follows:
Dr. Tibbs' report, functional capacity
assessment, initially states that Mitchell
retains the capacity to lift a maximum of 30
pounds. However, he restricted Mitchell to
no more than 10 pounds for frequently lifting
and/or carrying weight. He also felt that
Mitchell should only occasionally lift and/or
carry 10 pounds of weight. It is axiomatic
that the ALJ, as fact-finder, has the
prerogative to believe some parts of the
evidence and disbelieve other parts whether
from the same witness or the same parties'
total proof. Caudill v. Maloney’s Discount
Stores, Ky., 560 S.W.2d 15 (1977). As argued
by Leeco, it is true a party is entitled to
have his claim decided on the basis of
correct findings of basic facts. See Cook v.
Paducah Recapping Serv., Ky., 694 S.W.2d 684
(1985). However, the functional capacity
assessment portion of the Form 107 Medical
Report differentiates between maximum lifting
of weight at any one time, or frequently
lifting or even occasionally lifting. The
ALJ specifically relied on the most onerous
restrictions imposed by Dr. Tibbs, since
other evidence concerning his physical condition revealed significant functional impairment ratings with severe restrictions. This
was evidence of substance to adequately support the ALJ's finding of total occupational
disability. The argument by Leeco, here, is
simply not the kind of egregious mis-reading
of the evidence as was the case in Cook which
would warrant a modification of the ALJ's
decision based upon an erroneous
understanding of the evidence.
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Leeco's second argument is that the ALJ erred in
combining Mitchell's compensable work-related disability with his
non-compensable work-related disability to award a total
disability.
Leeco contends the Legislature in adopting KRS
342.730(a) and (d) specified that when a claimant combines a
prior, active, work-related disability with a partial disability
caused by the current injury, the claimant is limited to 520
weeks of benefits rather than lifetime benefits.
Leeco also
argues that Mitchell's failure to file a claim on his 1989 and
1991 injuries resulted in those injuries being non-compensable
and that the ALJ erred in using the disability from those noncompensable injuries in awarding total disability benefits.
Again, we believe the Board very ably addressed this issue as
follows:
Leeco next argues the ALJ erred in
awarding lifetime benefits because part of
the disability was caused by a noncompensable
injury. Leeco contends that KRS
342.730(1)(a), as amended, prohibits the
combination of a work-related injury with a
noncompensable injury to award lifetime
benefits.
KRS 342.730(1)(a), applicable at the time
of Mitchell’s injury, states:
“(a) For total disability due to a workrelated injury or occupational disease,
sixty-six and two-thirds percent (66-2/3%) of
the employee’s average weekly wage but not
more than one hundred percent (100%) of the
state average weekly wage and not less than
twenty percent (20%) of the state average
weekly wage as determined by KRS 342.740
during that disability. Nonwork-related
disability shall not be considered in
determining whether the employee is totally
disabled for purposes of this subsection.”
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Leeco argues that total disability can
only be awarded if it is due to the workrelated injury on which the claim is based.
In making this argument, Leeco points to the
provision of KRS 342.730(1)(d) which
specifically mentions prior work-related
active disability as a prerequisite to an
award of 520 weeks disability for a partial
award in excess of 50%.
We agree with Leeco to the extent it is
clear that the intention of KRS
342.730(1)(a), as amended was to do away with
some of the burdens on workers’ compensation
obligors which arose from the decision in
Teledyne-Wirz v. Willhite, Ky., 710 S.W.2d
858 (1986). However, the plain language of
the statute makes it clear that in
considering whether an individual is now
totally disabled, the ALJ is to exclude
nonwork-related disability. As the ALJ
clearly set forth in his Opinion, Mitchell’s
20% active disability was work-related though
not claimed otherwise. Accordingly, the
Board finds no error in the ALJ awarding
benefits for lifetime by including a 20% preexisting active work-related disability
[emphasis in original].
Leeco’s final argument is that the ALJ erred in failing
to apportion its liability according to the total dollar value of
the award rather than the total number of weeks of the award.
Leeco argues that this Court’s application of the "tier down"
provisions in Southern, supra, unfairly benefit only the Special
Fund.
In affirming the ALJ, the Board was required to follow
Southern, supra, which held that the reduction of benefits
occasioned by KRS 342.730(4) "inure[s] to the party responsible
for payment at the time of the reduction."
Id. at 903.
Like
Mitchell, the claimant's age in Southern was such that the
employer's liability for payment of benefits would cease long
before the claimant's sixty-fifth birthday with the result that
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the Special Fund would receive the whole benefit of the "tier
down" provision.
Since the Supreme Court in Leeco, Inc. v. Crabtree,
Ky., 966 S.W.2d 951 (1998), overruled Southern on this issue, we
must reverse the Board on this issue and remand for further
proceedings.
The relevant portion of the Supreme Court’s opinion
is as follows:
In 1994, as in 1982 and 1983 when the
claims in Island Creek Coal Co. v. Davis,
[Ky.App., 761 S.W.2d 179 (1988),] arose, the
defendants’ payment periods for a total
disability award were based on percentages of
the amount of benefits awarded during the
worker’s projected life expectancy. 803 KAR
25:035. The U.S. Decennial Life Tables which
are employed in determining a worker’s
projected life expectancy indicate that the
majority of men will live well into their
70’s and the majority of women well into
their 80’s. In other words, the projected
life expectancy of all individuals to whom
KRS 342.730(4) applies is significantly
greater than age 65. Therefore, like the
offset in Island Creek Coal Co. v. Davis,
supra, this provision will affect the total
amount of benefits payable during a worker’s
projected life expectancy. There, the offset
had the potential to shift a disproportionate
share of the award to the Special Fund’s
payment period. Here, if the construction of
KRS 342.730(4) which was adopted by the Court
of Appeals in Southern v. R.B. Coal Co.,
Inc., supra, is followed, a disproportionate
share of the award would be shifted to the
employer’s payment period. Unlike the
situation in Pickands Mather & Co. v.
Newberg, [Ky., 895 S.W.2d 3 (1995)], there is
no offset of gains and losses when all claims
are considered in the aggregate.
The Special Fund asserts that one of the
major purposes of the 1994 amendments to the
Workers’ Compensation Act was to control its
ever escalating liability and that, in
keeping with that goal, the legislature
intended for the benefit of KRS 342.730(4) to
accrue to the defendant in whose payment
-9-
period it occurs. It most instances that
would be the Special Fund.
We recognize that attempts to contain
Special Fund liability have been ongoing for
many years; however, we are not persuaded
that the sole intent behind every enactment
which serves to benefit the Special Fund is
the reduction of its liability. In
attempting to determine whether the
overriding legislative intent for enacting
KRS 342.730(4) was to benefit the Special
Fund, it is useful to remember that workers’
compensation legislation does not create a
quasi tort. Its purpose is to replace income
which is lost as a result of industrial
injury. Income benefits are but one unit in
a system of wage-loss protection, and other
sources of income replacement such as private
retirement benefits and old age Social
Security benefits eventually become available
to injured workers. A reduction in workers’
compensation benefits upon a worker’s
eligibility for an alternative form of income
replacement is consistent with the principle
of coordinating the various systems of wageloss protection in order to avoid a
duplication of benefits. See, Estridge v.
Stovall, Ky.App., 704 S.W.2d 653 (1986);
Larson, Larson’s Workers’ Compensation Law, §
97, et seq.
We believe that the primary purpose of
enacting KRS 342.730(4) was not so much to
benefit the Special Fund as to minimize a
duplication of benefits. This argument is
strengthened by the fact that, in 1996, the
legislature amended KRS 342.730(4) to provide
for the termination of income benefits after
a period of two years or after the worker
becomes eligible for old age Social Security
benefits, whichever last occurs. Acts 1996,
1st Ex.Sess., ch. 1, § 30. It is further
strengthened by the fact that the Special
Fund bears no liability for claims arising
after December 12, 1996. Acts 1996, 1st
Ex.Sess., ch. 1, § 3. We, therefore,
conclude that the primary purpose of KRS
342.730(4) was to avoid duplicating other
sources of income replacement, particularly
old age Social Security. In doing so, the
provision benefits both employers and the
Special Fund by reducing the value of all
total disability awards and many partial
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disability awards. Consistent with KRS
342.120(6) and (7), Island Creek Coal Co. v.
Davis, supra, and Whittaker v. Randall Foods,
Inc., [Ky., 895 S.W.2d 571 (1995)],
apportionment of the projected award should
not occur until after its value has been
computed.
In view of the foregoing, the decision in
Southern v. R.B. Coal Co., Inc., supra, is
overruled with regard to its effect on the
apportionment of liability for partial
disability awards and its effect on the
apportionment of benefits which fall due
during a worker’s projected life expectancy.
Since those benefits which accrue after a
worker outlives the projected life expectancy
are the sole liability of the Special Fund,
we agree that the Special Fund becomes
entitled to the full benefit of KRS
342.730(4) at that time. Accordingly, the
decision of the Court of Appeals in the
instant claim is affirmed, in part, and
reversed, in part. The claim is hereby
remanded to the ALJ for a computation of the
value of the projected lifetime award for the
1994 injury and for a subsequent
apportionment of liability between the
employer and the Special Fund.
966 S.W.2d at 954-956.
Thus, to conform with the mandate of Crabtree, we
reverse the Board in part and remand this matter to the ALJ to
re-calculate the total disability award.
In all other respects,
the Board is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE, MITCHELL:
Hon. Timothy J. Walker
London, KY
Hon. Phillip Lewis
Hyden, KY
BRIEF FOR APPELLEE, SPECIAL
FUND:
Hon. Judith K. Bartholomew
Louisville, KY
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