SCHMIDT (RICHARD) VS. COMP SOUTH CENTRAL BELL, ET AL.
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RENDERED: MAY 13, 2011; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2010-CA-000986-WC
RICHARD SCHMIDT
v.
APPELLANT
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS’ COMPENSATION BOARD
ACTION NO. WC-07-21899
SOUTH CENTRAL BELL;
HON. R. SCOTT BORDERS,
ADMINISTRATIVE LAW JUDGE;
AND WORKERS' COMPENSATION
BOARD
APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: LAMBERT, MOORE, AND NICKELL, JUDGES.
LAMBERT, JUDGE: Richard Schmidt has petitioned this Court for review of the
decision of the Workers’ Compensation Board (Board), which affirmed the
decision of the Administrative Law Judge (ALJ) finding that South Central Bell
was no longer responsible for the payment of future medical payments based upon
the $3,500.00 cap on the amount of medical expenses an employer must pay in the
version of Kentucky Revised Statutes (KRS) 342.020 in effect at the time of
Schmidt’s injury. Because we agree with Schmidt that the amendment to KRS
342.020 removing the cap was retroactive, and therefore applied to him, we reverse
the Board’s decision.
On August 6, 1962, thirty-year-old Richard Schmidt was working as an
installer/repairman for Southern Bell Telephone & Telegraph Co., now South
Central Bell.1 That day, Schmidt was involved in a work-related accident when his
arm came into contact with an energized telephone wire caused by a downed 7200volt power line. As a result, Schmidt suffered extensive burns to his right upper
and lower left extremities, among other areas. Ultimately, his entire right arm and
his left leg below the knee were amputated. He underwent several surgeries and
uses a prosthetic leg. Schmidt collected temporary total disability benefits at a rate
of $38.00 per week until he returned to work to a lighter but higher paying position
on November 4, 1963. Schmidt and South Central Bell reached an agreement as to
his compensation, which the old Workmen’s Compensation Board approved on
April 7, 1964. In doing so, the old Board awarded Schmidt $38.00 per week for a
total of $13,687.60 to be paid from the Subsequent Claims Fund. Schmidt retired
from South Central Bell in the 1970s and has not worked since his retirement.
1
For ease of understanding, we shall refer to the employer as South Central Bell in this opinion.
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In 1994, thirty years after the settlement agreement was approved, South
Central Bell filed a motion to reopen to contest medical expenses for what it
alleged to be excessive prescriptions for Valium and Demerol. The parties
eventually settled the matter, and the ALJ assigned to decide the medical fee
dispute closed the file in 1997.
On September 24, 2008, more than ten years later, South Central Bell filed
another motion to reopen to contest medical expenses. This time, South Central
Bell contended that the medications prescribed to Schmidt were unreasonable and
unnecessary for his treatment.2 Additionally, and for the first time, South Central
Bell raised the existence of the cap on medical expenses in the version of KRS
342.020 in effect at the time of Schmidt’s injury. Based upon that version, South
Central Bell argued that the medical expenses it had already paid exceeded the
$3,500.00 cap.
The motion to reopen was granted to the extent that it was assigned to an
ALJ for final adjudication, and the parties introduced proof into the record.
Specifically related to the issue before this Court, South Central Bell introduced an
affidavit from Sedgwick CMS claims representative Jeri Morris Long detailing the
medical expenses that had been paid on Schmidt’s behalf. As of December 29,
2008, $178,667.95 had been paid in medical expenses.
2
South Central Bell later supplemented its motion to reopen with a Drug Utilization Advisory
report dated July 18, 2008. The report showed that at that time, Schmidt was being prescribed
six medications to treat his complaints of pain, sleep problems, depression, anxiety, and
keratosis, and that the annual cost of those medications was $4,026.03.
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The parties filed briefs addressing their respective arguments. In his brief,
Schmidt contended that the earlier version of the statute was void as against public
policy and that the ongoing amendments to the statute were procedural meaning
that the lifting of the cap should be given retroactive application. In its brief, South
Central Bell pointed out that the legislature did not direct that the amendment to
KRS 342.020 would be applied retroactively, and it argued that equitable estoppel
and public policy arguments must fail.
In the opinion and order, the ALJ reviewed the applicable version of the
statute and subsequent amendments, and agreed with South Central Bell that the
statutory cap of $3,500.00 required the termination of South Central Bell’s
responsibility for future medical expenses. In so holding, the ALJ noted that the
rights of the parties under the Workers’ Compensation Act are controlled by the
law in existence at the time of the injury and then found that the amendment to the
statute eliminating the cap was not procedural or subject to retroactive application.
Accordingly, the ALJ determined that the version of the statute in effect at the time
of the 1962 injury, which included the cap on future medical expenses, applied.
Finally, the ALJ did not find any violation of public policy.
Schmidt perfected an appeal to the Board, raising the same issues as in his
brief before the ALJ. After thoroughly reviewing the applicable statute, the
amendments to that statute, and the law, the Board affirmed the ALJ’s decision.
The Board specifically held that the legislature never provided that any of the
amendments to the statute should have retroactive application and that the
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amendment removing the cap on future medical expenses was substantive in nature
because it affected the amount of medical expenses an employer would owe. This
petition for review follows.
Our review in this matter is premised on the Supreme Court of Kentucky’s
statement describing the role of this Court in workers’ compensation actions as set
forth in Western Baptist Hospital v. Kelly, 827 S.W.2d 685 (Ky. 1992). This
Court’s function is to correct a decision of the Board only where we perceive that
“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. For purposes of this appeal, we must determine whether
the Board misconstrued the controlling statutes and precedent related to the
application of KRS 342.020.
It is well settled that “[w]orkers’ compensation is a creature of statute, and
the remedies and procedures described therein are exclusive.” Williams v. Eastern
Coal Corp., 952 S.W.2d 696, 698 (Ky. 1997). It is also well settled that “[t]he
rights of the parties in respect to compensation for injuries [become] fixed and
vested on the date of the injury. Those rights [are] controlled by the law in
existence at that time[.]” Thomas v. Crummies Creek Coal Co., 297 Ky. 210, 179
S.W.2d 882, 883 (1944).
We begin our analysis by setting forth the version of KRS 342.020 (effective
June 16, 1960) that was in effect at the time of Schmidt’s injury in 1962:
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(1) In addition to all other compensation provided in this
chapter, the employer shall furnish for the cure and relief
from the effects of an injury or occupational disease,
such medical, surgical and hospital treatment, including
nursing, medical and surgical supplies and appliances, as
may reasonably be required at the time of the injury and
thereafter during disability, or as may be required for the
cure and treatment of an occupational disease, but not
exceeding a total expense to the employer of more than
twenty-five hundred dollars. If the employer fails to
furnish such treatment reasonably, he shall be liable for
the reasonable expense, within the limits of this section,
incurred by or on behalf of the employe in providing
such treatments. In an emergency, the employe may call
in any available physician or surgeon to administer any
first aid reasonably necessary at the expense of the
employer within the limits of this section. The board, in
its discretion, may apportion payments to be made under
this section between hospitals and physicians in cases
where their aggregate fees and charges would not exceed
the maximum for which the employer is liable.
(2) However, further medical, surgical and hospital
treatment, not to exceed an additional one thousand
dollars, may be ordered by the board upon application
and sufficient showing of justifiable need therefor.
(3) Where a compensable injury or occupational disease
results in the amputation of an arm, hand, leg or foot, or
the loss of hearing, or the enucleation of an eye or the
loss of teeth, the employer shall initially furnish in
addition to other medical, surgical and hospital treatment
enumerated in subsections (1) and (2) of this section, a
modern artificial member, and where required, proper
braces but the employer’s liability for such artificial
member or braces shall not, including his liability for
medical, surgical and hospital treatment, exceed twentyfive hundred dollars. [Emphasis added.]
There is no dispute that the version of the statute in effect in 1962 included a
$3,500.00 cap on medical expenses that an employer must pay.
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In its opinion, the Board includes newer versions of the statute that include
amendments made by the legislature in 1964 and 1972, which removed the medical
expenses cap. The Board accurately described the legislative history of the statute
as follows:
From a review of the legislative history of KRS
342.020, it is clear starting in 1964, the legislature had
amended paragraph (1) of KRS 342.020 to reflect that the
cap for employers’ liability for future medical expenses
incurred to treat injuries increased from $2,500.00 to
$3,500.00. The 1964 legislature also amended paragraph
(2) of KRS 342.020 when it provided that further
medical, surgical and hospital treatment may be ordered
by the old Board upon application and sufficient showing
of justifiable need. Finally, by 1972, the statutory cap
contained in KRS 342.020(1) was removed entirely to the
extent that the legislature required the employer to pay
for the cure and relief from the effects of the injury such
medical, surgical and hospital treatment, including
nursing, medical and surgical supplies and appliances as
may reasonably be required at the time of the injury and
thereafter during disability.
Schmidt contends that the amended version of the statute should apply to
him so that he would not be subject to the $3,500.00 statutory cap. We agree.
At the outset, we recognize that “[n]o statute shall be construed to be
retroactive, unless expressly so declared.” KRS 446.080(3). In its opinion, the
Board specifically noted that the legislature never provided in any version of the
statute that the amendments were to have retroactive application.
There is, however, an exception to this rule where the amendment represents
a procedural or remedial change only and is not substantive in nature:
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[L]egislation has been applied to causes of action which
arose before its effective date, in the absence of an
express declaration that the provision is to be so applied,
in those instances where the courts have determined that
the provision was remedial or procedural in nature and
that retroactive application of the provision was
consistent with the legislative intent. See KRS
446.080(1).
Spurlin v. Adkins, 940 S.W.2d 900, 901 (Ky. 1997). The Spurlin Court went on to
state:
Amendments have also been found to be remedial
where they corrected apparent oversights in the prior
law. . . .
By contrast, in instances where the amendment at
issue has affected the level of income benefits payable
for a worker’s occupational disability, the Court has
consistently determined that the amendment was
substantive in nature and that the law on the date of
injury or last injurious exposure controls. An amendment
which becomes effective after that date is considered to
be substantive in nature and may not be applied to claims
which arose before the amendment’s effective date.
Id. at 902.
In Peabody Coal Co. v. Gossett, 819 S.W.2d 33 (Ky. 1991), the Supreme
Court of Kentucky permitted retrospective application of the 1987 amendment to
the reopening statute, despite the legislature’s failure to specifically state so. In
this instance, the Court held that the amendment at issue was remedial and that it
was therefore subject to retroactive effect.
A retrospective law, in a legal sense, is one which
takes away or impairs vested rights acquired under
existing laws, or which creates a new obligation and
imposes a new duty, or attaches a new disability, in
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respect to transactions or considerations already past.
Therefore, despite the existence of some contrary
authority, remedial statutes, or statutes relating to
remedies or modes of procedure, which do not create
new or take away vested rights, but only operate in
furtherance of the remedy or confirmation of such rights,
do not normally come within the legal conception of a
retrospective law, or the general rule against the
retrospective operation of statutes. In this connection it
has been said that a remedial statute must be so construed
as to make it effect the evident purpose for which it was
enacted, so that if the reason of the statute extends to past
transactions, as well as to those in the future, then it will
be so applied although the statute does not in terms so
direct, unless to do so would impair some vested right or
violate some constitutional guaranty. 73 Am.Jur.2d
Statutes § 354 (1974) (Footnotes omitted.)
Peabody Coal Co, 819 S.W.2d at 36.
In Kentucky Ins. Guar. Ass’n v. Jeffers ex rel. Jeffers, 13 S.W.3d 606 (Ky.
2000), the Supreme Court relied on its prior holding in Peabody and extensively
addressed the difference between a remedial statute and a substantive one.
The general rule is that a statute, even though it
does not expressly state, has retroactive application
provided the statute is remedial. This is a fundamental
rule of statutory construction which does not invade the
province of the legislature. Remedial means no more
than the expansion of an existing remedy without
affecting the substantive basis, prerequisites, or
circumstances giving rise to the remedy.
Black’s Law Dictionary, (6th ed. 1990), defines
remedial statute, and in the third paragraph provides a
clear and unequivocal guideline for identifying remedial
statutes:
The underlying test to be applied in
determining whether a statute is penal or
remedial is whether it primarily seeks to
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impose an arbitrary, deterring punishment
upon any who might commit a wrong against
the public by a violation of the requirements of
the statute, or whether the purpose is to
measure and define the damages which may
accrue to an individual or class of individuals,
as just and reasonable compensation for a
possible loss having a causal connection with
the breach of the legal obligation owing under
the statute to such individual or class.
The Black’s Law Dictionary definition is
consonant with this Court’s holding in Peabody, supra.
This Court has described remedial statutes as those
relating “to remedies or modes of procedure, which do
not create new or take away vested rights, but only
operate in furtherance of the remedy or confirmation of
such rights.” Id. at 36 (citing 73 Am.Jur.2d Statutes §
354 (1974)).
A remedial statute is defined in the first full
paragraph of 73 Am.Jur.2d Statutes § 11 (1974), titled
“Statutes Regarded as Remedial,” as follows:
Legislation which has been regarded as
remedial in its nature includes statutes which
abridge superfluities of former laws,
remedying defects therein, or mischiefs
thereof, whether the previous difficulties were
statutory or a part of the common law.
Remedial legislation implies an intention to
reform or extend existing rights, and has for
its purpose the promotion of justice and the
advancement of public welfare and of
important and beneficial public objects. The
term applies to a statute giving a party a
remedy where he had none, or a different one,
before. Another common use of the term
“remedial statute” is to distinguish it from a
statute conferring a substantive right.
Both definitions of a remedial statute were
approved by the Kentucky Court of Appeals in Kentucky
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Insurance Guaranty Association v. Conco, Inc., Ky.App.,
882 S.W.2d 129 (1994).
Jeffers, 13 S.W.3d at 609-10.
In Kentucky Insurance Guaranty Association v. Conco, Inc., 882 S.W.2d
129 (Ky. App. 1994), we addressed a situation similar to the one before us and find
its statement of the law to be controlling. In Conco, KIGA assumed coverage
when Conco’s carrier became insolvent. At that time, a statutory cap was in place
that limited KIGA’s coverage of medical expenses to $50,000.00. That cap was
later lifted by amendment. Relying on Peabody, we held that this amendment
constituted remedial legislation and was therefore retroactive:
In Peabody Coal, the Kentucky Supreme Court
held that an amendment to a statute creating a new
standard for reopening workers’ compensation awards
was to be applied retrospectively, and that the general
rule against retrospective operation of statutes does not
apply to amendments that are remedial. Here, the subject
statute is remedial in nature since it “do[es] not create
new or take away vested rights, but only operate[s] in
furtherance of the remedy.” Peabody Coal, 819 S.W.2d
at 36, citing 73 Am.Jur.2d Statutes § 354 (1974). In
short, it is apparent to this Court that the legislature, in
amending the statute to remove the cap on KIGA’s
liability for workers’ compensation claims, intended to
enhance the protection of claimants such as Mr. Mercer
and employers such as Conco.
Conco, 882 S.W.2d at 131-32.
This interpretation is in line with the “basic concept of statutory
interpretation as set out in KRS 446.080(1), that ‘all statutes of this state shall be
liberally construed with a view to promote their objects and carry out the intent of
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the Legislature.’” Jeffers, 13 S.W.3d at 610, quoting Conco, 882 S.W.2d at 130.
See also Dingo Coal Co., Inc. v. Tolliver, 129 S.W.3d 367, 370 (Ky. 2004)
(holding that amendment to reopening statute had retroactive application, as the
amendment did not have any effect on the substantive proof requirement necessary
to obtain greater benefits, but merely changed a procedural requirement in whether
the motion to reopen would be granted); Moss v. Holloway Constr. Co., 644
S.W.2d 331, 332 (Ky. 1982) (holding that statute permitting coverage for
chiropractic services had retroactive application, as “[t]he change merely
procedurally designated a new source of treatment.”).
In the present matter, we hold that the amendments in 1964 and 1972
removing the statutory cap on future medical expenses represented a remedial,
procedural change as described in Conco. These amendments did not constitute
substantive changes in the law. On the contrary, the amendments at issue did not
create or take away any vested rights, but only operated to further Schmidt’s
remedy. Therefore, we hold that the amendments apply to Schmidt and that the
Board misconstrued the controlling statutes and law in upholding the ALJ’s
decision that South Central Bell was no longer responsible for the payment of his
future medical expenses.
For the foregoing reasons, the opinion of the Workers’ Compensation Board
upholding the ALJ’s decision is reversed, and this matter is remanded for further
proceedings in accordance with this opinion.
ALL CONCUR.
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BRIEF FOR APPELLANT:
Wayne C. Daub
Louisville, Kentucky
BRIEF FOR APPELLEE, SOUTH
CENTRAL BELL:
James B. Cooper
Lexington, Kentucky
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