PHOENIX MANUFACTURING, AS INSURED BY AIK SELECTIVE SELF-INSURANCE FUND V. SALLIE JOHNSON; PHOENIX MANUFACTURING COMPANY, AS INSURED BY LIBERTY MUTUAL INSURANCE GROUP; ROBERT L. WHITTAKER, DIRECTOR OF SPECIAL FUND; J. LANDON OVERFIELD, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD
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RENDERED: DECEMBER 20,200l
200 1 -SC-O2 18-WC
PHOENIX MANUFACTURING
BY AIK SELECTIVE SELF-INSURANCE FUND
V.
APPEAL FROM COURT OF APPEALS
2000-CA-0146-WC & 2000-CA-0271 -WC
WORKERS’ COMPENSATION BOARD NO. 92-50798
SALLIE JOHNSON; PHOENIX MANUFACTURING
COMPANY, AS INSURED BY LIBERTY MUTUAL
INSURANCE GROUP; ROBERT L. WHITTAKER,
DIRECTOR OF SPECIAL FUND; J. LANDON OVERFIELD,
ADMINISTRATIVE LAW JUDGE; AND WORKERS’
COMPENSATION BOARD
APPELLEES
OPINION OF THE COURT
AFFIRMING IN PART. REVERSING IN PART. AND REMANDING
The claimant injured the same area of her lower back in 1989 and in 1992 while
working for the defendant-employer. She later settled the claims with the Special Fund
and with the insurance carrier that covered the employer’s liability for each of the
respective injuries, but after undergoing surgery for a herniated disc, she moved to
reopen the claims. An Administrative Law Judge (ALJ) later determined that the
claimant’s disability had increased since the settlement and had become total, that half
of each injury was due to the arousal of a degenerative condition, and that a
progression of each injury was equally responsible for the ultimate disability. Liability
for income benefits was apportioned 25% to Liberty Mutual Insurance Group (the 1989
carrier), 25% to AIK Selective Self Insurance Fund (the 1992 carrier), and 50% to the
Special Fund; whereas, liability for medical benefits was apportioned equally to the two
carriers. The questions presented by this appeal concern whether the Workers’
Compensation Board (Board) and the Court of Appeals properly affirmed the finding of
increased disability since the settlement, whether they properly determined that the
1992 carrier should have been held responsible for all medical benefits, and whether
the Court of Appeals properly determined that the 1992 carrier and the Special Fund
should have been held equally responsible for all income benefits.
In 1989, the claimant injured her lower back while picking up rolls of cloth to put
them on a pallet. Dr. Brooks prescribed physical therapy and later released her to
return to work without restrictions, which she did. Although a flare-up of symptoms in
1990 caused her to miss seven months of work, she worked without incident until 1992
when she again injured her back while lifting. This injury caused more severe
symptoms, and although Drs. Brooks and Gumbert both thought that she could perform
light to sedentary work, the claimant was convinced that she could not.
The claims for the two injuries were consolidated, and on April 4, 1994,
agreements to settle the claims were approved by an ALJ. With regard to the 1989
injury, the parties agreed to income benefits based upon a 37.5% disability, with liability
apportioned 20% to the 1989 carrier and 17.5% to the Special Fund. The agreement
also provided, in pertinent part, as follows:
The insurance carrier for the 1989 injury and adjusting agency for the
1992 injury for the Defendant-Employers [sic] agree that each will be
responsible for one-half of the Plaintiffs medical expenses related to
treatment of her work related injured [sic], with the Plaintiff being required
to submit her medical bills and expenses to the adjusting agency for the
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employer for the’November 26, 1992, injury who shall in turn pay same
and be entitled to reimbursement for one-half of the medical expenses it
has paid on behalf of the Plaintiff.
The agreement was signed by the attorneys for the 1989 and 1992 carriers, the
claimant, her attorney, and an attorney for the Special Fund. A separate agreement
concerning the 1992 injury provided for income benefits for a 40% disability, with 20%
to be paid by the 1992 carrier and 20% by the Special Fund.
On April 3, 1998, the claimant moved to reopen the settlements, asserting that
she had undergone surgery in 1996 and that her condition had worsened to the point
that she was totally disabled by increased pain and numbness in her right leg. She
testified to the deterioration of her condition between 1994 and the reopening.
Dr. Brooks treated the claimant after both injuries and testified that her
symptoms and loss of range of motion were much more severe in 1992. He assigned a
15% functional impairment, attributing 8% to the 1992 injury (4% to the injury and 4% to
the arousal of the degenerative condition) and 7% to the 1989 injury (3.5% to the injury
and 3.5% to the arousal of the degenerative condition). In his opinion the claimant’s
condition had worsened since 1994, and she was now totally disabled.
Dr. Keifer testified that he had performed surgery to repair a large herniated disc
at L5-Sl . He indicated that medical records revealed some evidence of disc bulging
and a possible protrusion in 1989. He thought that the herniation resulted from
degenerative disc disease that existed even before the 1989 injury but that although the
injury did not directly cause the herniation, it did contribute to the progression of the
underlying degenerative condition. In his opinion, the claimant’s need for surgery and
her current impairment were due to the work-related injuries and their arousal or
aggravation of the pre-existing degenerative changes.
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Testifying for the employer, Dr. Ensalada reviewed the medical records. In his
opinion, there was no evidence of a worsening of the claimant’s condition from the 1989
injury. Recent changes in her lumbar spine were not a result of the 1989 injury, and the
1996 surgery was not necessitated by the 1989 injury.
After reviewing the evidence, the ALJ determined that the claimant sustained an
increase in occupational disability since the settlement, that it was entirely due to the
effects of her injuries, that she had become totally disabled, and that she had no preexisting active disability. Pointing to Dr. Keifer’s testimony, the ALJ noted that the
claimant had pre-existing dormant nondisabling degenerative disc disease before either
injury and that “both injuries aroused the dormant condition and created the condition
which required surgical treatment.” Therefore, based upon Dr. Keifer’s opinions and
the settlement agreement, the ALJ concluded that both carriers were equally liable for
the surgery and related medical care. Likewise, based on Dr. Keifer’s testimony, the
ALJ attributed the claimant’s increased disability to a combination of the two injuries
and to a “progression of the injured state of Plaintiffs lumbar disc which was caused by
the work-related injuries.”
Although recognizing that the entire 425week period following the 1989 injury
had already expired, the ALJ pointed out that the claimant’s disability “is not caused by
a subsequent intervening event after her settlement but the natural progression of her
injury” and that in a reopening, she could recover an award for total disability against
the 1989 carrier. Therefore, because the ALJ was persuaded that the 1989 injury
accounted for half of the claimant’s total disability, the ALJ concluded that the 1989
award could be reopened. As a result, each carrier was held liable for 25% of the total
disability award, and the Special Fund was held liable for the remaining 50%.
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The employer points out that the claimant asserted a total disability during
litigation of the initial claims and argues that she was no worse off at reopening than
she was when she settled the claims. Nonetheless, both the Board and the Court of
Appeals have affirmed the finding that the claimant’s occupational disability increased
between the settlement and reopening, pointing to testimony by Drs. Brooks and
Gumbert as being substantial evidence that the claimant could perform light to
sedentary work in 1994 but was totally disabled at reopening. They also viewed the
testimony as supporting a finding that the percentages of disability for which the claims
were settled were accurate. Having reviewed the evidence and the arguments of the
parties, we conclude that the carriers have failed to establish that any relevant
testimony was overlooked or misunderstood or that the view of the evidence that was
taken by the ALJ was so unreasonable that it must be viewed as being erroneous as a
matter of law. Western Baptist Hosoital v. Kellv, Ky., 827 S.W.2d 685 (1992); Special
Fund v. Francis, Ky., 708 S.W.2d 641, 643 (1986). Under those circumstances, the
findings were properly affirmed on appeal.
Noting that the 425week period for which income benefits were authorized for
the 1989 injury had expired before the claims were reopened, the Board determined
that the 1989 carrier could be held liable for additional income benefits only if a
worsening of the 1989 injury, by itself, would have been sufficient to result in total
disability. See Hodakin v. Webb, KY., 221 S.W.2d 664 (1949). In view of the fact that
the record contained no evidence to support a finding with regard to the matter, a
majority of the Board remanded for the taking of further proof. However, relying on
Whittaker v. Fleminq, KY., 25 S.W.3d 460 (2000), (Fleminq II), and Flemina v. Windchy,
KY., 953 S.W.2d 604 (1997) (Fleming I), the Court of Appeals reversed the Board
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concerning the carriers’ liability for income benefits, determined that the 1992 carrier
was liable for the employer’s entire 50% of the award, and determined that a remand
for the taking of further proof was erroneous and unnecessary.
In Fleming I, we determined that a workers’ compensation defendant could not
be held liable for any additional occupational effect that results from the fact that a
subsequent disabling injury is superimposed on the injury for which the defendant is
liable. We explained, therefore, that where a worker was rendered totally disabled after
sustaining successive injuries, each of which by itself was only partially disabling, the
award for the first injury was payable as a partial disability for 425 (or 520) weeks.
w,KY., 912
However, we also reaffirmed the principle of Cam
S.W.2d 25 (1995), that where a partially disabling injury occurs within the compensable
period of a previous work-related injury, and the combined effects of the injuries render
the worker totally disabled, the worker is entitled to be compensated for his entire
disability. We determined, therefore, that benefits for total disability were payable after
the second injury and that the prior, active disability that resulted from the first injury
should be excluded from the award only to the extent that any partial disability benefits
~ overlapped the period of total disability. The claim arose before December 12, 1996,
and, therefore, we viewed the liability that resulted from excluding only the overlapping
benefits rather than the percent of disability that was caused by the first injury as being
a form of “excess disability” and as being the liability of the Special Fund. Fleminq II
pointed out, however, that when enacting KRS 342.1202, the legislature limited the
Special Fund’s liability in a back injury claim to 50%, regardless of the extent to which a
prior back condition contributed to the worker’s ultimate disability.
The instant case involved a reopening, and although the 1992 injury occurred
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within the compensable period of the 1989 injury, the period had expired by the time the
claims were reopened. Under those circumstances, there were no overlapping partial
disability benefits to credit against the total disability award. Thus, the Court of Appeals
correctly determined that the entire liability fell equally to the 1992 carrier and the
Special Fund and that there could be no exclusion for prior, active disability.
The final matter at issue concerns whether the equal apportionment of medical
expenses between the carriers was properly reversed by the Board. Contrary to the
views that were expressed by the Board and the Court of Appeals, we are not
persuaded that Derr Construction Co. v. Bennett, KY., 873 S.W.2d 824 (1994) controls
these facts. In Derr v. Bennett we rejected an argument that the Special Fund could be
held responsible for a portion of the expenses for medical treatment of a gradual injury
simply because it was sustained in multiple employments. Although we recognized that
it might seem harsh to place all liability for future medical treatment on the last
employer in such circumstances, we noted that KRS 342.020 referred only to the
employer and not to the Special Fund.
Derr did not address the liability of an employer’s successive
insurance carriers. Furthermore, of particular significance in the instant case is the fact
that, when settling the claims in 1994, the carriers agreed to share medical expenses
equally. Nothing in Derr v. Bennett would support releasing the 1989 carrier from its
agreement to reimburse the 1992 carrier for half of the claimant’s medical expenses,
and nothing in the agreement limited its effect to medical expenses that were
outstanding at the time. The ALJ determined that the claimant’s surgery was
necessitated by the combined effects of the injuries and specifically referred to the
settlement agreement when apportioning liability equally between the carriers. Under
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the circumstances, we find no error in the ALJ’s decision to do so. To that extent we
reverse the decision ofthe Court of Appeals and reinstate the decision of the ALJ.
The decision of the Court of Appeals is affirmed, in part, and reversed, in part,
and the claim is remanded to the ALJ for the entry of an award of total disability for
which the 1992 carrier and the Special Fund bear equal liability.
Lambert, C.J., and Graves, Johnstone, Keller, Stumbo, and Wintersheimer, JJ.,
concur.
Cooper, J., concurs, in part, and dissents, in part, by separate opinion.
COUNSEL FOR APPELLANT:
Carla Foreman Dallas
1701 South Third Street
Louisville, KY 40208
COUNSEL FOR APPELLEE JOHNSON:
John F. Anderson
Cole, Cole & Anderson, PSC
P. 0. Box 250
Barbourville, KY 40906
COUNSEL FOR APPELLEE PHOENIX
MANUFACTURING AS INSURED BY
LIBERTY MUTUAL INSURANCE GROUP:
W. Barry Lewis
151 East Main Street, Suite 100
P. 0. Box 800
Hazard, KY 41702-0800
COUNSEL FOR APPELLEE WHIT-I-AKER:
Joel D. Zakem
Labor Cabinet - Special Fund
1047 U.S. Highway 127 South, Suite 4
Frankfort, KY 40601-9979
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RENDERED: DECEMBER 20,200l
ORDERED PUBLISHED: MARCH 21,2002
2001-SC-0218-WC
PHOENIX MANUFACTURING COMPANY, AS INSURED
BY AIK SELECTIVE SELF-INSURANCE FUND
V.
APPELLANT
APPEAL FROM COURT OF APPEALS
2000-CA-0146-WC & 2000-CA-0271-WC
WORKERS’ COMPENSATION BOARD NO. 92-50798
SALLIE JOHNSON; PHOENIX MANUFACTURING
COMPANY, AS INSURED BY LIBERTY MUTUAL
INSURANCE GROUP; ROBERT L. WHITTAKER,
DIRECTOR OF SPECIAL FUND; J. LANDON OVERFIELD,
ADMINISTRATIVE LAW JUDGE; AND WORKERS’
COMPENSATION BOARD
APPELLEES
OPINION CONCURRING. IN PART, AND DISSENTING. IN PART
BY JUSTICE COOPER
I dissent from the majority opinion insofar as it reaffirms the holdings in Fleminq
v. Windchy, Ky., 953 S.W.2d 604 (1997) and Whittaker v. Fleming, Ky., 25 S.W.3d 460
(2000) per my dissents in those cases and in Spurlin v. Brooks, Ky., 952 S.W.2d 687
(1997).
2001 -SC-O21 8-WC
PHOENIX MANUFACTURING COMPANY, AS INSURED
BY AIK SELECTIVE SELF-INSURANCE FUND
APPELLANT
APPEAL FROM COURT OF APPEALS
2000-CA-0146-WC & 2000-CA-0271 -WC
WORKERS’ COMPENSATION BOARD NO. 92-50798
V.
SALLIE JOHNSON; PHOENIX MANUFACTURING
COMPANY, AS INSURED BY LIBERTY MUTUAL
INSURANCE GROUP; ROBERT L. WHITTAKER,
DIRECTOR OF SPECIAL FUND; J. LANDON OVERFIELD,
ADMINISTRATIVE LAW JUDGE; AND WORKERS’
COMPENSATION BOARD
APPELLEES
ORDER
The motion of the appellee, Robert L. Whittaker, Director of Special Fund, to
publish the above-styled opinion that was rendered on December 20, 2001, is hereby
granted. The first page of the opinion has been changed to reflect the foregoing and is
attached hereto.
ENTERED: March 21,2002.
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