ROBERT L. WHITTAKER, DIRECTOR OF SPECIAL FUND V. NINA M. CECIL; TRIM MASTERS, INC.; SHEILA C. LOWTHER, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD
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RENDERED: JANUARY 17,2002
ORDERED PUBLISHED: MARC@, 2002
2001 -SC-O321 -WC
ROBERT L. WHITTAKER, DIRECTOR
OF SPECIAL FUND
V.
APPELLANT
APPEAL FROM COURT OF APPEALS
2000-CA-1778-WC
WORKERS’ COMPENSATION BOARD NO. 94-39993
NINA M. CECIL; TRIM MASTERS, INC.;
SHEILA C. LOWTHER, ADMINISTRATIVE LAW JUDGE;
AND WORKERS’ COMPENSATION BOARD
APPELLEES
MEMORANDUM OPINION OF THE COURT
REVERSING
After sustaining a work-related back injury, the claimant was awarded income
benefits for permanent, total disability, with a tier-down of benefits beginning at age 65.
The parties stipulated to 50% apportionment, and consistent with the then-current
interpretation of the law, the award provided that all income benefits were to be paid by
the employer for the initial 50% of the claimants life expectancy, with the Special Fund
paying all benefits thereafter. The award was affirmed by the Workers’ Compensation
Board (Board), and no further appeal was taken.
The claimant and her employer later agreed to settle its liability for the initial 50%
of the claimant‘s life expectancy, but referring to a post-award decision of this Court,
the employer reserved its right to proceed against the Special Fund with regard to the
manner of apportionment. Then, more than two and one-half years after the award
became final, the employer moved for a ruling on apportionment under
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803 KAR 25075, § 3, asserting that under the most recent interpretation of the law it
was liable only until it had paid half of the anticipated amount of benefits. The Special
Fund maintained, however, that further litigation of the matter was barred, pointing out
that the award was final, that it held the employer liable for the initial half of the number
of weeks of the claimant’s life expectancy, and that it was consistent with the
interpretation of the law that prevailed when it was entered. Although the Administrative
Law Judge (ALJ) adopted the employer’s position, a majority of the Board was of the
opinion that the doctrine of res iudicata precluded the employer from raising the issue
after the award was final. Following a decision by the Court of Appeals to reverse the
Board on the ground that the manner of apportionment was not adjudicated on the
merits in the initial proceeding, the Special Fund appeals.
KRS 342.730(4) became effective on April 4, 1994, several months before the
claimants injury. It is commonly referred to as the “tier-down” provision because it
required a periodic reduction in income benefits beginning at age 65. The claimant
injured her back on August 16, 1994; therefore, the tier-down provision governed her
award. On May 31, 1996, Southern v. R. B. Coal Co.. Inc., Ky.App., 923 S.W.2d 902
(1996), established that in a tiered-down award each defendant was responsible for the
income benefits that accrued during its apportioned share of the worker’s life
expectancy. Under the decision, the Special Fund profited from most or all of the
reduction in income benefits because its payment period came at the end of an award.
On August 29, 1996, approximately three months after the decision, the ALJ entered
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the claimant’s award, setting forth the number of weeks of her life expectancy and
ordering the employer to make the initial payments of income benefits “for the number
of weeks proportionate to its 50% liability according to the [claimant’s] life expectancy.”
The employer did not file a petition for reconsideration that asserted a patent error in
the manner of apportionment, and when appealing the award, the employer asserted
only that a finding of total disability was not supported by the evidence. It did not assert
an error in the manner in which the award was apportioned. The Board affirmed in
January, 1997, and the award having become final, an order awarding the claimant’s
attorney a fee was entered in April, 1997.
On April 16, 1998, we rendered our decision in Leeco v. Crabtree, Ky., 966
S.W.2d 951 (1998), overruling Southern v. R. B. Coal Co.. Inc., supra, and determining
that it was the anticipated amount of benefits that should be apportioned in a tiereddown award. See also, Leeco v. Smith, Ky., 970 S.W.2d 337 (1998). Thus, under
Leeco v. Crabtree, the employer and Special Fund would benefit proportionally from the
tier-down provision. Subsequently, on July 27, 1999, the claimant and the employer
entered into the post-award agreement, and on September 23, 1999, the employer
tmoved for a ruling on apportionment under 803 KAR 25075, § 3, a regulation that
permits an employer to challenge the Special Fund’s calculation of the employer’s credit
for commuted attorney’s fees.
In Keefe v. 0. K. Precision Tool & Die Co., Ky.App., 566 S.W.2d 804, 805
(1978), a worker sought to have his final award reopened in order to apply a
subsequent interpretation of the law that would have increased his benefit. Concluding
that the sought-after interpretation should apply only prospectively, the Court explained
that the doctrine of res iudicata (also known as the doctrine of the finality of judgments)
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is basic to our legal system and stands for the principle that once the rights of the
parties have been finally determined, litigation should end. Thus, where there is an
identity of parties and an identity of causes of action, the doctrine precludes further
litigation of issues that were decided on the merits in a final judgment. Newman v.
Newman, Ky., 451 S.W.2d 417,419 (1970). Although the doctrine does not act as a
bar in a subsequent proceeding if the issues or questions of law are different, a
corollary of the doctrine is that a party may not split a cause of action. As a result, a
final judgment precludes subsequent litigation not only of those issues upon which the
court was required to form an opinion and pronounce judgment but also of matters
included within those issues and matters that, with the exercise of reasonable diligence,
might have been raised at the time. U; Havs v. Sturqill, 302 Ky. 31, 193 S.W.2d 648,
650 (1946). The application of these principles to final workers’ compensation awards
is grounded in the fact that because there is an extensive procedure for taking appeals,
an award that has become final is enforceable as a final judgment under KRS 342.305
and should not be disturbed absent fraud, mistake, or other very persuasive reason that
would warrant a reopening under KRS 342.125. One such reason is a mistake in
applying the law as it existed on the date of injury. Wheatley v. Bryant Auto Service,
Ky., 860 S.W.2d 767, 769 (1993).
In the instant case, there is no dispute that on the date of injury KRS 342.1202
mandated equal apportionment of an award involving a preexisting condition of the
back, that KRS 342.730(4) required a tier-down of the award, or that the method for
apportioning a tiered-down award had yet to be addressed by the courts. Likewise,
there is no dispute that Southern v. R. B. Coal Co.. Inc., supra, was controlling authority
on the proper interpretation of KRS 342.730(4) at the time the award was entered.
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Although the ALJ did not cite to the decision, it is clear that the ordered apportionment
was consistent with the decision. What is truly in dispute is whether, having failed to
question the proper method of apportionment in either the initial proceeding or in its
appeal of the award, the employer may use 803 KAR 25075, § 3 as a pretext to obtain
what amounts to an amendment of the ordered apportionment. We are not persuaded
that it may do so.
Although it is clear that the method of apportionment that was set forth in
Southern v. R. B. Coal Co.. Inc., supra, and that was ordered by the ALJ in 1996 was
contrary to the view that the employer now espouses, the employer failed to challenge
the method of apportionment either in a petition for reconsideration or in its appeal to
the Board. After the award became final, it could be amended only by means of a
reopening. Unlike the situation in General Electric v. Morris, Ky., 670 S.W.2d 854
(1984) upon which the employer relies, this case did not involve a proper reopening
and a post-award change in the worker’s condition that the final award could not have
addressed. It involved an employer’s attempt to have a post-award interpretation of the
Jaw applied to a final award in the absence of a ground for reopening. Furthermore,
*that interpretation involved a question that could have been foreseen when the award
was entered, that should have been raised with the exercise of due diligence, and that
is properly viewed as coming within the decision on the merits. We note, for example,
that in Leeco v. Crabtree, supra, a question concerning the proper apportionment of a
tiered-down award was raised during litigation of the claim, and it was pursued on
appeal. Whereas, in the instant case, the employer simply failed to raise an argument
in the initial proceeding that the decision in Southern v. R. B. Coal Co., Inc., supra, was
erroneous and should be overruled.
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It is obvious that the ALJ who conducted the initial proceeding could not have
erred by failing to apply an interpretation of the law that occurred after his decision was
entered. Thus, our subsequent interpretation of the law in Leeco v. Crabtree, supra,
was not a basis for reopening this final award under the authority of Wheatlev v. Brvant,
supra, and amending it. The facts remain: 1.) that the ALJ applied the law on the date
of injury as it had been interpreted by the courts at the time of the award; 2.) that the
employer failed to assert in the initial proceeding that the amount of benefits rather than
the number of weeks of life expectancy should be apportioned; 3.) that with the
exercise of due diligence, the manner in which the award was apportioned should have
been raised in the initial proceeding; and 4.) that the manner of apportionment properly
came within the merits of the final award and was specifically addressed in its terms.
We conclude, therefore, that the award acted as a bar to further consideration of the
matter.
803 KAR 25:075 contains a formula for use by the Special Fund in calculating
the credit for benefits that were commuted to pay the worker’s attorney fee and a
formula for calculating the employer’s share. Although 803 KAR 25075, § 3 permits an
cemployer
to contest the Special Fund’s “application” of either formula, it does not
authorize a challenge to the terms of a final award. In the instant case, there is no
indication that the Special Fund’s calculation of either the employer’s share of the
commuted benefits or of the credit was inconsistent with the appropriate formula as
applied to the manner of apportionment that was ordered in the final award. Under
those circumstances, the motion should have been denied.
The decision of the Court of Appeals is reversed.
All concur.
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COUNSEL FOR APPELLANT:
David R. Allen
Labor Cabinet - Special Fund
1040 U.S. Hwy. 127 South, Suite 4
Frankfort, KY 40601-9979
COUNSEL FOR CECIL:
Robert L. Catlett, Jr.
325 West Main Street
Suite 2100
Louisville, KY 40202
COUNSEL FOR TRIM MASTERS:
Thomas L. Ferreri
James G. Fogle
Ferreri & Fogle
203 Speed Building
333 Guthrie Green
Louisville, KY 40202
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2001 -SC-O321 -WC
ROBERT L. WHITTAKER, DIRECTOR
OF SPECIAL FUND
V.
APPELLANT
APPEAL FROM COURT OF APPEALS
2000-CA-1778-WC
WORKERS’ COMPENSATION BOARD NO. 94-39993
NINA M. CECIL; TRIM MASTERS, INC.;
SHEILA C. LOWTHER, ADMINISTRATIVE LAW JUDGE;
AND WORKERS’ COMPENSATION BOARD
APPELLEES
ORDER
The motion of the appellant, Robert L. Whittaker, Director of Special Fund, to
publish the above-styled opinion that was rendered on January 17, 2002, 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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