NINA BLACKBURN, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF GARY BLACKBURN, DECEASED; LESLIE DWAYNE BLACKBURN, A DEPENDENT CHILD OVER THE AGE OF 18 INCAPABLE OF SELF SUPPORT v. LODESTAR ENERGY, INC.; KEMI; HON. KEVIN KING, ADMINISTRATIVE LAW JUDGE; KENTUCKY WORKERS' COMPENSATION BOARD; UNINSURED EMPLOYERS FUND KENTUCKY EMPLOYERS' MUTUAL INSURANCE LODESTAR ENERGY, INC.; ESTATE OF GARY BLACKBURN; THE UNINSURED EMPLOYERS' FUND; HON. KEVIN KING, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD
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AUGUST 19, 2005; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-001652-WC
NINA BLACKBURN, INDIVIDUALLY AND AS
EXECUTRIX OF THE ESTATE OF GARY
BLACKBURN, DECEASED; LESLIE DWAYNE
BLACKBURN, A DEPENDENT CHILD OVER THE
AGE OF 18 INCAPABLE OF SELF SUPPORT
v.
PETITION FOR REVIEW OF A DECISION OF
THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-01-72911
LODESTAR ENERGY, INC.; KEMI;
HON. KEVIN KING, ADMINISTRATIVE
LAW JUDGE; KENTUCKY WORKERS'
COMPENSATION BOARD; UNINSURED
EMPLOYERS FUND
AND:
APPELLANT
PETITION FOR REVIEW OF A DECISION OF
THE WORKERS’ COMPENSATION BOARD
ACTION NO. WC-01-72911
LODESTAR ENERGY, INC.;
ESTATE OF GARY BLACKBURN;
THE UNINSURED EMPLOYERS’ FUND;
HON. KEVIN KING, ADMINISTRATIVE
LAW JUDGE; AND WORKERS’
COMPENSATION BOARD
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
APPELLEES
NO. 2004-CA-001687-WC
KENTUCKY EMPLOYERS’ MUTUAL INSURANCE
v.
APPELLANTS
DYCHE, HENRY, AND TACKETT, JUDGES.
APPELLEES
HENRY, JUDGE:
Nina and Leslie Blackburn appeal from a July 21,
2004 Opinion of the Workers’ Compensation Board affirming a
death benefit determination by the Hon. J. Kevin King,
Administrative Law Judge (“ALJ”).
Their only issue on appeal is
whether the Board erred in its finding as to the appropriate
amount of death benefits payable.
Kentucky Employers Mutual
Insurance (“KEMI”) appeals from that same decision and presents
a number of challenges based upon the Board’s finding that it is
responsible for paying a 30% enhancement of compensation
pursuant to KRS1 342.165(1)2 and KRS 342.3753 due to safety
violations committed by its insured, Lodestar Energy, Inc.
Upon
review, we affirm as to both appeals.
1
Kentucky Revised Statutes.
2
“If an accident is caused in any degree by the intentional failure of the
employer to comply with any specific statute or lawful administrative
regulation made thereunder, communicated to the employer and relative to
installation or maintenance of safety appliances or methods, the compensation
for which the employer would otherwise have been liable under this chapter
shall be increased thirty percent (30%) in the amount of each payment. If an
accident is caused in any degree by the intentional failure of the employee
to use any safety appliance furnished by the employer or to obey any lawful
and reasonable order or administrative regulation of the commissioner or the
employer for the safety of employees or the public, the compensation for
which the employer would otherwise have been liable under this chapter, shall
be decreased fifteen percent (15%) in the amount of each payment.”
3
“Every policy or contract of workers' compensation insurance under this
chapter, issued or delivered in this state, shall cover the entire liability
of the employer for compensation to each employee subject to this chapter,
except as otherwise provided in KRS 216.2960, 342.020, 342.345, or 342.352.
However, if specifically authorized by the commissioner, a separate insurance
policy may be issued for a specified plant or work location if the liability
of the employer under this chapter to each employee subject to this chapter
is otherwise secured and provided that no employee transferred from one plant
or work location to another within the employment of the same employer shall
thereby lose any benefit rights accumulated under the average weekly wage
- 2 -
On October 3, 2001, Gary Blackburn was working an
extra shift for his employer, Lodestar Energy, Inc.
He was
asked to drive a spare fuel truck containing approximately 3,000
gallons of fuel into a strip mining pit known as the “Hell
Hole,” which can only be entered via a steep grade slope.
This
particular fuel truck was apparently used only when the regular
fuel truck was out of service.
A few minutes after Gary began his drive into the
“Hell Hole,” he was found lying on the side of the road
approximately 1,600 feet from the top of the slope, after he
apparently jumped out to escape the fuel truck.
He would later
die from injuries that he sustained while escaping the truck.
A
subsequent investigation by the United States Department of
Labor, Mine Safety and Health Administration (“MSHA”) revealed
that all six brakes of the fuel truck had maintenance defects
that resulted in severely reduced braking capacity.
There was
also evidence presented that mine management was aware that
these brakes would not effectively stop this vehicle on the
grade of road on which it was required to travel.
Citations
were consequently issued concerning the condition of the brakes.
At the time of the accident, Lodestar had a workers’
compensation insurance policy with KEMI.
Part One, Section E of
the policy, titled “Payments You Must Make,” specifies that
concept.”
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Lodestar is responsible for any payments made by KEMI on
Lodestar’s behalf that are in excess of the benefits regularly
provided under workers’ compensation law, including those
payments resulting from any serious or willful misconduct on
Lodestar’s part or from Lodestar’s failure to comply with a
health or safety law or regulation.
Part Two, Section C of the
policy, titled “Exclusions,” provides that there is no coverage
for bodily injury intentionally caused and/or aggravated by
Lodestar or for fines or penalties imposed for violation of
federal or state law.
Gary’s wife Nina and their son Leslie, a dependent
adult child, subsequently filed a claim for workers’
compensation benefits on behalf of themselves and Gary’s estate.
Along with basic death benefits, Nina and Leslie sought a 30%
safety penalty benefit pursuant to KRS 342.165 because of the
circumstances surrounding Gary’s death.
In June 2003, Nina and Leslie entered into a partial
settlement agreement with Lodestar for payment of basic death
benefits.
The partial settlement included an agreement that
Gary’s average weekly wage at the time of the incident in
question was $946.28.
The parties also agreed that the correct
rate of compensation payable to the beneficiaries was $530.07
per week, exclusive of any enhanced compensation payable due to
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any safety violations on Lodestar’s part.
The settlement
agreement was approved on June 26, 2003.
On September 24, 2003, Lodestar filed a motion to
amend the settlement agreement so as to include the amount of
its liability for weekly income benefits as an issue to be
decided by the ALJ.
Lodestar’s motion suggested that a mistake
had been made in calculating the appropriate maximum amount for
the beneficiaries’ weekly death benefit.
In a February 4, 2004 order, the ALJ ruled that the
correct death benefit rate was $238.53 per week for Nina and
$79.51 per week for Leslie, with the aggregate weekly amount
totaling $318.04.
Nina and Leslie filed a petition to
reconsider these calculations, but the ALJ did not grant relief.
The ALJ also ruled that Lodestar had intentionally violated a
safety regulation and therefore enhanced the compensation to be
paid to the Blackburns by 30% pursuant to KRS 342.165.
The ALJ
also concluded that KEMI was responsible for this 30%
enhancement under its insurance policy with Lodestar because KRS
342.375 provides that every workers’ compensation insurance
policy “shall cover the entire liability of the employer for
compensation to each employee” subject to the Act, and because
KRS 342.165 specifically refers to the 30% enhancement as
“compensation.”
The ALJ also noted that KRS 342.910(2) exempts
the guaranty funds from liability for any penalties or interest
- 5 -
assessed for any act or omission on the part of any person, but
that there is no exemption for “regular” insurance carriers such
as KEMI.
Accordingly, the ALJ ordered Lodestar and KEMI to pay
the Blackburns an additional $95.41 per week.
Following a
petition for reconsideration filed by the Blackburns,4 the ALJ’s
decision was subsequently appealed to the Workers’ Compensation
Board.
In a July 21, 2004 opinion, the Board held that the
ALJ properly calculated the appropriate weekly death benefit
owed to Nina and Leslie pursuant to KRS 342.750.
The Board
further agreed with the ALJ that KEMI was responsible for the
30% enhanced payment to the Blackburns, specifically because it
constituted a form of “compensation” under the plain language of
KRS 342.165.
An appeal to this court followed.
On appeal, Nina and Leslie argue that the ALJ and the
Workers’ Compensation Board erred in finding that $318.04 per
week was the appropriate award for the basic death benefit.
They instead assert that the award should be either $530.07 per
week or $397.55 per week.
The primary basis for Nina and
Leslie’s contentions is their belief that the ALJ and the Board
misapplied the provisions of KRS 342.750 in calculating the
appropriate death benefit award.
In particular, they contend
4
In a March 19, 2004 order, the ALJ denied the Blackburns’ petition as to the
issue of the appropriate calculations for the death benefit, but amended the
opinion to include a specific commencement date for enhanced compensation.
- 6 -
that the calculation of income benefits under KRS 342.750 should
begin with the actual “average weekly wage of the deceased” as a
base number as opposed to the “average weekly wage of the
state.”
KRS 342.750 deals with how income benefits are awarded
to a surviving spouse and dependent children in the event of a
work-related death.
As Nina and Leslie correctly note in their
brief, the benefits payable to said surviving spouse and
dependent children are generally based upon the “average weekly
wage of the deceased.” Of particular note here, KRS
342.750(1)(b) provides that a widow is entitled to 45% of the
average weekly wage of the deceased if a child is living with
her and an additional 15% for each child.
In this specific
instance, given that only one dependent child is involved, the
maximum aggregate benefit concerned is 60% of the applicable
“average weekly wage of the deceased.”
With this said, the initial language of KRS 342.750
also sets forth that the payable income benefits are “subject to
the maximum limits specified in subsections (3) and (4) of this
section.”
KRS 342.750(3) provides:
For the purposes of this section, the
average weekly wage of the employee shall be
taken as not more than the average weekly
wage of the state as determined in KRS
342.740. In no case shall the aggregate
weekly income benefits payable to all
beneficiaries under this section exceed the
- 7 -
maximum income benefit that was or would
have been payable for total disability to
the deceased, including benefits to his
dependants.
The parties agree that, in 2001, the “average weekly wage of the
state as determined in KRS 342.740” was $530.07.
KRS 342.750(4)
further provides, in relevant part:
The maximum weekly income benefits payable
for all beneficiaries in case of death shall
not exceed 75 percent of the average weekly
wage of the deceased as calculated under KRS
342.140, subject to the maximum limits in
subsection (3) above....
Under Nina and Leslie’s analysis of KRS 342.750, the
calculation for weekly death benefits would begin with Gary’s
average weekly wage, $946.28, as a base figure.
Pursuant to
subsection (4) of this statute, the beneficiaries would only be
entitled to a maximum of 75% of this amount per week, which
totals $709.71.
Since this amount exceeds the maximum limit set
forth by subsection (3), $530.07, the latter figure becomes the
maximum amount that could possibly be owed to the beneficiaries
per week.
From here, Nina and Leslie apply KRS 342.750(1)(b)
and calculate that 60% of $946.28, Gary’s actual weekly wage, is
$567.77.
Since this amount exceeds the determined maximum base
amount of $530.07, Nina and Leslie would be entitled to $530.07
per week.
Both the ALJ and the Workers’ Compensation Board
disagreed with the applicability of this methodology.
compelled to do the same.
- 8 -
We are
The purpose of review by this court is to correct the
Workers’ Compensation 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."
Huff Contracting v.
Sark, 12 S.W.3d 704, 707 (Ky.App. 2000), quoting Western Baptist
Hospital v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992).
With this
said, it is well established that interpretation and
construction of a statute is a matter of law for the court.
Floyd County Board of Education v. Ratliff, 955 S.W.2d 921, 925
(Ky. 1997).
“[A]ny analysis of a workers’ compensation issue is
necessarily an exercise in statutory interpretation.”
Williams
v. Eastern Coal Corp., 952 S.W.2d 696, 698 (Ky. 1997).
As a
general rule, we must interpret statutes according to their
plain meaning and in accordance with the intent of the
legislature.
Ratliff, 955 S.W.2d at 925.
“To determine
legislative intent, a court must refer to ‘the words used in
enacting the statute rather than surmising what may have been
intended but was not expressed.’ ... Similarly, a court ‘may not
interpret a statute at variance with its stated language.’"
McDowell v. Jackson Energy RECC, 84 S.W.3d 71, 77 (Ky. 2002),
quoting Hale v. Combs, 30 S.W.3d 146, 151 (Ky. 2000) (Citation
omitted); see also Commonwealth v. Allen, 980 S.W.2d 278, 280
(Ky. 1998) (Citations omitted).
“Put another way, ‘courts must
- 9 -
presume that a legislature says in a statute what it means and
means in a statute what it says ... [and][w]hen the words of a
statute are unambiguous, then, this first canon is also the
last: “judicial inquiry is complete.”’"
McDowell, 84 S.W.3d at
77, quoting Connecticut Nat'l Bank v. Germain, 503 U.S. 249,
253-54, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992).
From a reading of KRS 342.750 as a whole, particularly
the emphasis placed upon the limitations set forth by subsection
(3), it is apparent that the General Assembly intended that on
those occasions where the deceased’s average weekly wage, as
calculated under KRS 342.140, exceeds the average weekly wage of
the state, as determined in KRS 342.740, the latter figure is
the base amount that should be used as the beginning point in
the calculation of death benefits.
In this case, as the ALJ and
the Workers’ Compensation Board correctly determined, that
figure would be $530.07, with Nina and Leslie being collectively
entitled to 60% of this amount, $318.04, pursuant to KRS
342.750(1)(b).
Nina and Leslie’s argument that the base amount to be
used as a beginning point in calculations should be Gary’s
actual average weekly wage is simply irreconcilable with the
clear language of KRS 342.750, particularly the language in
subsection (3) specifying that “the average weekly wage of the
employee shall be taken as not more than the average weekly wage
- 10 -
of the state as determined in KRS 342.740.”
From a plain
reading of this language, we are compelled to conclude that a
deceased’s actual average weekly wage would only be used as a
beginning point in the calculation of benefits when that wage is
less than the “average weekly wage of the state.”
The
methodology Nina and Leslie argue should be used to calculate
benefits here has no basis whatsoever in the plain language of
KRS 342.750.
Accordingly, we affirm the decisions of the ALJ
and the Board as to the benefits to be paid to the Blackburns.
KEMI’s appeal seeks reversal of the ALJ and Board’s
decisions finding it liable for a 30% increase in the
Blackburns’ workers’ compensation award because of Lodestar’s
safety violations, pursuant to KRS 342.165 and KRS 342.375.
As
noted above, KEMI’s contract with Lodestar specifically excludes
coverage for incidents resulting from a failure to comply with
health or safety regulations.
However, the administrative
bodies below determined that KEMI could not rely on this
contract as a way to avoid payment of the 30% increase because
it constitutes “compensation” under KRS 342.165.
KEMI has
appealed the decision of the ALJ and the Board on four grounds:
(1) that the 30% enhancement under KRS 342.165 is a “penalty”
and not “compensation” for which it is responsible; (2) that KRS
342.165 violates the Equal Protection Clause of the 14th
Amendment of the U.S. Constitution; (3) that the Workers’
- 11 -
Compensation Board’s ruling makes KRS 342.375 unconstitutional
as it violates the Contracts Clause of the U.S. Constitution;
and (4) that KRS 342.165 violates KEMI’s due process rights
under the 14th Amendment of the U.S. Constitution because it
allows for the imposition of punitive damages without the
safeguard of judicial review.
We initially note that two of the contentions raised
by KEMI here—whether the 30% enhancement is “compensation” under
KRS 342.165 and whether the enhancement constitutes punitive
damages—have been addressed and answered by another panel of
this court in AIG/AIU Ins. Co. v. South Akers Mining Co., LLC,
2004 WL 2674303, No. 2004-CA-000729-WC (Nov. 24, 2004), a case
that is currently pending appeal to our Supreme Court.
In
addressing an argument by AIG that its contract provisions, not
KRS 342.165, should control in determining whether it should be
held liable for a safety violation penalty, the panel cited to
Beacon Ins. Co. of America v. State Farm Mutual Ins. Co., 795
S.W.2d 62 (Ky. 1990), for the proposition that “while the right
to contract is one of the most basic rights possessed by the
citizenry, this right must however yield to the public policy of
the state as declared by our General Assembly.”
Id. at 63.
panel further cited to a number of provisions within the
Workers’ Compensation Act to support the position that “the
whole of the Workers’ Compensation Act was intrinsically
- 12 -
The
designed to compensate injured workers,” AIG/AIU at *4,
including KRS 342.375(1), which provides that “[e]very policy or
contract of workers’ compensation insurance under this chapter,
issued or delivered in this state, shall cover the entire
liability of the employer for compensation to each employee
subject to this chapter, except as otherwise provided....”
AIG/AIU at *5-6 (Emphasis in original).
Based on these items,
the panel concluded that “the provision in the insurance policy
limiting AIG’s liability to South Akers does not control.”
AIG/AIU at *6.
We agree with this reasoning, and we reach a
similar conclusion.
AIG also raised the argument, as KEMI does here, that
the increase in compensation benefits provided for in KRS
342.165 is a “penalty” for the employer’s violation of the law;
therefore, since a “penalty” is not “compensation,” it is not
covered by workers’ compensation insurance.
The panel disagreed
with this assertion even though it acknowledged that the
consequence of the increase may be to penalize the employer of
the insurance carrier.
In doing so, the panel specifically
referenced the plain language of KRS 342.165(1), which indicates
that the increase in benefits is to be applied to compensate
employees for benefits “for which the employer would otherwise
have been liable.” AIG/AIU at *8.
We similarly agree that the
plain language of KRS 342.165(1) indicates that the increase in
- 13 -
benefits is to be considered an increase in compensation.5
Consequently, we must reject KEMI’s arguments to the contrary.
AIG’s final argument—again, an argument raised by KEMI
here—was that the increase in compensation set forth by KRS
342.165 is equivalent to punitive damages and, therefore, it
should not be held contractually liable.
Citing Black’s Law
Dictionary, the panel noted that punitive damages are generally
those damages “awarded in addition to actual damages when the
defendant acted with recklessness, malice, or deceit.”
With
this in mind, it noted that there was “nothing in the language
of KRS 342.165 to indicate that the legislature intended for the
increase in compensation to be punitive in nature” and, further,
that “KRS 342.165 refers to the ... increase only in terms of
compensation,” unlike other statutes where punitive damages are
explicitly mentioned, such as KRS 411.130(1).
AIG/AIU at *9.
Accordingly, the panel concluded that the increase in
compensation was not akin to punitive damages.
Again, we follow
the lead of our fellow panel and affirm its conclusion.
Accordingly, in conjunction with this court’s previous
rulings in AIG/AIU Ins. Co. v. South Akers Mining Co., LLC,
supra, we find that the 30% benefit enhancement to be paid the
Blackburns constitutes “compensation” that KEMI is entitled to
5
In an even more recent case, Realty Improvement Co., Inc. v. Raley, 2005 WL
1252300, No. 2004-CA-002447-WC (May 27, 2005), another panel of this court
reached a similar conclusion.
- 14 -
pay on behalf of Lodestar pursuant to the Act, and that this
enhancement does not constitute punitive damages of the type
implicating the 14th Amendment of the U.S. Constitution.
This
leaves for analysis KEMI’s assertions that KRS 342.165 violates
the Equal Protection Clause and that KRS 342.375 violates the
Contracts Clause.
We first address KEMI’s contention is that KRS 342.165
violates the Equal Protection Clause of the 14th Amendment to the
United States Constitution because it creates a disparity in the
percentage amount of additional compensation to be paid by an
employer (30%) or forfeited by an employee (15%), respectively,
for an intentional safety violation.
We begin by noting that
“acts of the legislature carry a strong presumption of
constitutionality.”
(Ky. 1998).
Wynn v. Ibold, Inc., 969 S.W.2d 695, 696
“A statute involving the regulation of economic
matters or matters of social welfare comports with both due
process and equal protection requirements if it is rationally
related to a legitimate state objective. The constitutionality
of a statutory classification will be upheld if the
classification is not arbitrary, or if it is founded upon any
substantial distinction suggesting the necessity or propriety of
the classification.”
Id., citing Kentucky Harlan Coal Co. v.
Holmes, 872 S.W.2d 446, 455 (Ky. 1994); Waggoner v. Waggoner,
846 S.W.2d 704 (Ky. 1992); Estridge v. Stovall, 704 S.W.2d 653,
- 15 -
655 (Ky.App. 1985).
Stated more succinctly, “[w]hen the statute
is a workers’ compensation statute, the issue becomes whether
there is a rational basis for the perceived discrimination.”
McDowell v. Jackson Energy RECC, 84 S.W.3d 71, 75 (Ky. 2002),
citing Steven Lee Enterprises v. Varney, 36 S.W.3d 391, 395 (Ky.
2000). KEMI has conceded here that its equal protection
challenge must be examined under the “rational basis” test.
Our courts have held that a “person challenging a law
upon equal protection grounds under the rational basis test has
a very difficult task because a law must be upheld if there is
any reasonably conceivable state of facts that could provide a
rational basis for the classification.”
Commonwealth ex rel.
Stumbo v. Crutchfield, 157 S.W.3d 621, 624 (Ky. 2005), citing
United States Railroad Retirement Board v. Fritz, 449 U.S. 166,
101 S.Ct. 453, 66 L.Ed.2d 368 (1980).
“[T]he General Assembly
need not articulate its reasons for enacting the statute, and
this is particularly true where the legislature must necessarily
engage in a process of line drawing.”
U.S. at 179, 101 S.Ct. at 461.
Id., citing Fritz, 449
“In fact, ‘[i]t is entirely
irrelevant for constitutional purposes whether the conceived
reason for the challenged distinction actually motivated the
legislature.
A legislative choice, under the rational basis
test, will not be subject to courtroom fact-finding and may be
based on rational speculation unsupported by evidence or
- 16 -
empirical data.’"
Id., citing F.C.C. v. Beach Communications,
Inc., 508 U.S. 307, 315, 113 S.Ct. 2096, 2102, 124 L.Ed.2d 211
(1993).
“We will accept at face value contemporaneous
declarations of governmental purposes, or in the absence
thereof, rationales construed after the fact, unless our
examination of circumstances forces us to conclude that they
could not have been a goal of the classification.”
Id., citing
Barket, Levy & Fine, Inc. v. St. Louis Thermal Energy Corp., 21
F.3d 237 (8th Cir. 1994).
“As long as reasons for the
legislative classification may have been considered to be true,
and the relationship between the classification and the goal is
not so attenuated as to render the distinction arbitrary or
irrational, the legislation survives rational basis scrutiny.”
Id. at 625, citing Haves v. City of Miami, 52 F.3d 918, 922 (11th
Cir. 1995).
“Thus, a party seeking to have a statute declared
unconstitutional is faced with the burden of demonstrating that
there is no conceivable basis to justify the legislation.”
Holbrook v. Lexmark International Group, Inc., 65 S.W.3d 908,
915 (Ky. 2001), citing Buford v. Commonwealth, 942 S.W.2d 909
(Ky.App. 1997).
Our Supreme Court has recognized that the purpose of
the penalty provision of KRS 342.165 “is to promote workplace
safety by encouraging workers and employers to follow safety
rules and regulations.”
Apex Mining v. Blankenship, 918 S.W.2d
- 17 -
225, 228 (Ky. 1996).6
KEMI argues that there is no available
authority that would give support as to why employers are now
penalized at a higher rate than employees for violations
pursuant to KRS 342.165.
However, we are inclined to disagree.
KRS 338.031, entitled “Obligations of employers and
employees” and commonly referred to as the “general duty”
clause, provides:
(1) Each employer:
(a) Shall furnish to each of his employees
employment and a place of employment which
are free from recognized hazards that are
causing or are likely to cause death or
serious physical harm to his employees;
(b) Shall comply with occupational safety
and health standards promulgated under this
chapter.
(2) Each employee shall comply with
occupational safety and health standards and
all rules, regulations, and orders issued
pursuant to this chapter which are
applicable to his own actions and conduct.
While this provision makes clear that employers and employees
are both obligated to comply with occupational and health
standards, it also specifically places an additional duty upon
employers to provide their employees with a work environment
free from recognized hazards likely to cause death or serious
6
It should be noted that the decision in Apex Mining was rendered before KRS
342.165 was amended by the 2000 General Assembly to increase an employer’s
penalty to 30% for a safety violation. At the time the case was decided,
both employers and employees were penalized 15%.
- 18 -
harm.7
Such a decision by the General Assembly reflects a policy
decision on its part that employers are in a better position
than employees to secure a safe and hazard-free place of
employment and, accordingly, have a duty to do so.
It stands to
reason that the General Assembly may view an employer’s
intentional violation of a safety rule as more egregious than an
individual employee’s—particularly given that employers have a
specifically defined duty to maintain a safe work environment—
and, accordingly, the punishment for such a violation should be
more substantial.
While KEMI may disagree with this
perspective, we cannot say that it is illogical or irrational
for purposes of “rational basis” analysis given the standards
that we are required to follow.
Consequently, we must reject
KEMI’s argument.
KEMI’s final assertion is that the Board’s ruling
imposing mandatory coverage of the 30% enhancement, without
exclusion, makes KRS 342.375 unconstitutional as a violation of
Article I, § 10, Clause 1 of the United States Constitution,
also known as the Contracts Clause, which provides that "no
state shall ... pass any bill of attainder, ex post facto law or
law impairing the obligation of contracts."
KEMI specifically
argues that the Board’s interpretation of “compensation” as
7
We also note that in Apex Mining, our Supreme Court clarified that the
violation of KRS 338.031(1)(a) that was presented by the facts of that case
sufficiently complied with the requirements of KRS 342.165 to justify the
imposition of a penalty. Apex Mining, 918 S.W.2d at 229.
- 19 -
including the 30% enhancement and its ruling that KRS 342.375
mandates that all “compensatory” liabilities arising under the
Workers’ Compensation Act are to be covered under an insurance
contract constitute a retroactive interference with contract in
violation of the Contracts Clause.
Again, however, we are
compelled to disagree.
The U.S. Supreme Court has made clear that the
Contracts Clause “is directed against legislative action only.”
Barrows v. Jackson, 346 U.S. 249, 260, 73 S.Ct. 1031, 1037, 97
L.Ed. 1586 (1953).
“It has been settled by a long line of
decisions, that the provision of section 10, article 1, of the
federal Constitution, protecting the obligation of contracts
against state action, is directed only against impairment by
legislation and not by judgments of courts.”
Tidal Oil Co. v.
Flanagan, 263 U.S. 444, 451, 44 S.Ct. 197, 198-99, 68 L.Ed. 382
(1924).
Of particular relevance here, the U.S. Supreme Court
has specifically clarified that “the provisions of the
Constitution of the United States for the protection of contract
rights are directed only against the impairment of them by
constitutions or laws adopted or passed subsequent to the date
of the contract from which such rights spring, and do not reach
decisions of courts construing constitutions or laws which were
in effect when the contract was entered into.”
- 20 -
Long Sault
Development Co. v. Call, 242 U.S. 272, 277, 37 S.Ct. 79, 81, 61
L.Ed. 294 (1916) (Emphasis added).
KEMI acknowledges in its brief that its insurance
contract with Lodestar was effectuated after KRS 342.375 was
enacted.
It instead takes issue with how the Board interpreted
this statute.
Given the U.S. Supreme Court’s ruling in Long
Sault, however, we do not believe that the Contracts Clause is
applicable here.
We also note our belief that the Board’s
interpretation of KRS 342.375 is reasonably derived from a plain
reading of the statute.
Accordingly, we must reject KEMI’s
argument.
The opinion and decision of the Workers’ Compensation
Board is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANTS,
NINA BLACKBURN AND LESLIE
BLACKBURN:
BRIEF FOR APPELLEE:
Michael Fleet Johnson
Pikeville, Kentucky
Stanley S. Dawson
Louisville, Kentucky
BRIEF FOR APPELLANT,
KENTUCKY EMPLOYERS’ MUTUAL
INSURANCE:
Thomas L. Ferreri
Louisville, Kentucky
- 21 -
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