TERESA JOHNSON V GANS FURNITURE INDUSTRIES, INC . ; HON . IRENE STEEN, ADMINISTRATIVE LAW JUDGE ; ROBERT L . WHITAKER, DIRECTOR OF SPECIAL FUND ; HON . BEN CHANDLER, ATTORNEY GENERAL ; AND WORKERS' COMPENSATION FUND
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RENDERED: September 18, 2003
TO BE PUBLISHED
ixprrxrre Courf of
2002-SC-0542-W
TERESA JOHNSON
V
PELCgNT
APPEAL FROM COURT OF APPEALS
2002-CA-0181-WC
WORKERS' COMPENSATION BOARD NO . 79-01171
GANS FURNITURE INDUSTRIES, INC. ;
HON . IRENE STEEN, ADMINISTRATIVE LAW
JUDGE ; ROBERT L. WHITAKER, DIRECTOR OF
SPECIAL FUND; HON . BEN CHANDLER, ATTORNEY
GENERAL ; AND WORKERS' COMPENSATION FUND
APPELLEES
OPINION OF THE COURT
AFFIRMING
This appeal by a workers' compensation claimant asserts that the December 12,
1996, version of KRS 342 .125(8) is unconstitutional and that it should not be applied
retroactively to awards that were entered before its effective date . She maintains that
by limiting the time for reopening an award that was entered before December 12,
1996, the provision deprives her of a vested right to reopen at any time in violation of
Sections 14, 54, and 241 of the Kentucky Constitution . She also maintains that the
1996 amendments to KRS 342 .125 violate Section 59(24) because they treat workers
and employers differently with respect to the right to reopen a final award and because
they treat various groups of injured workers differently . Although our reasoning differs
from that of the Court of Appeals, we affirm .
The claimant was injured in 1978 and settled her claim in 1982 for a lump sum
that represented a 33 .6% occupational disability. In October, 1994, she moved to
reopen, but the motion was dismissed for lack of prosecution . On July 23, 2001, she
again moved to reopen on the ground of a change of disability, submitting an affidavit in
which she stated that a post-award worsening of her physical condition had caused her
to become totally disabled . The motion was dismissed, however, on the ground that it
was not filed before December 12, 2000 . KRS 342 .125(8) . Affirming a decision by the
Workers' Compensation Board, the Court of Appeals determined that the provision is
constitutional .
As effective July 14, 2000, KRS 342 .125 provides, in pertinent part, as follows :
(1) Upon motion by any party or upon an administrative law judge's
own motion, an administrative law judge may reopen and review any
award or order on any of the following grounds :
(a) Fraud ;
(b)
Newly-discovered evidence which could not have been
discovered with the exercise of due diligence;
(c) Mistake; and
(d) Change of disability as shown by objective medical evidence of
worsening or improvement of impairment due to a condition caused
by the injury since the date of the award or order.
(3)
Except for reopening solely for determination of the
compensability of medical expenses, fraud, or conforming the award
as set forth in KRS 342 .730(1)(c)2 ., or for reducing a permanent total
disability award when an employee returns to work, or seeking
temporary total disability benefits during a period of an award, no
claim shall be reopened more than four (4) years following the date
of the original award or order granting or denying benefits, and no
party may file a motion to reopen within one (1) year of any previous
motion to reopen by the same party .
(8) The time limitation prescribed in this section shall apply to all
claims irrespective of when they were incurred, or when the award
was entered, or the settlement approved. However, claims decided
prior to December 12, 1996, may be reopened within four (4) years of
the award or order or within four (4) years of December 12, 1996,
whichever is later, provided that the exceptions to reopening
established in subsections (1) and (3) of this section shall apply to
these claims as well.
Several aspects of the 1996 amendments to KRS 342 .125 have been the
subject of previous appeals to this Court . In Meade v. Reedy Coal Co . , Ky., 13 S .W.3d
619 (2000), the injuries that gave rise to the underlying claim occurred before
December 12, 1996, and an award was entered before that date . At the time of the
award, KRS 342 .125 permitted reopening "at any time" upon the requisite showing.
Effective December 12, 1996, KRS 342 .125(3) and (8) were amended to prohibit the
reopening of an award within two years of its entry (or of the party's previous motion to
reopen), to limit the period of reopening to within four years of the original award, and to
limit the period for reopening previously-decided claims to within four years of
December 12, 1996 . The appeal concerned whether Mr. Meade was entitled to reopen
his pre-December 12, 1996, award within two years of its entry.
In resolving the various arguments that were presented, the Court determined
that KRS 342.125(8) expressed a clear legislative intent to limit the reopening of a preDecember 12, 1996, award to within four years of December 12, 1996, but did not
reveal an intent for the two-year waiting period to govern the reopening of such awards .
Therefore, because Meade's award was the product of a pre-December 12, 1996,
settlement, the two-year waiting period did not apply. The award could be reopened
upon the requisite proof at any time within four years of December 12, 1996 .
In Brooks v. University of Louisville Hospital , Ky., 33 S.W.3d 526 (2000), we
determined, however, that where an award for a pre-December 12, 1996, injury was
entered after December 12, 1996, the two-year waiting period did apply. We also
determined that the provision did not violate Section 4, 54, or 241 of the Kentucky
Constitution and that because neither a worker nor an employer was permitted to
reopen an award within two years upon an allegation of a change in disability, it did not
violate Section 59(24). Subsequently, in McCool v. Martin Nursery & Landscaping , Ky.,
43 S .W.3d 256 (2001), we rejected an argument that applying the provision to a preDecember 12, 1996, award violated Article 1, Section 10 of the United States
Constitution or Sections 13, 19, and 242 of the Kentucky Constitution by depriving a
worker of a vested property right. Our rationale for the decisions was that the right to
be compensated for a post-award increase in disability was inchoate until such time as
the increase occurred . Where the increase occurred after December 12, 1996, the
right to be compensated did not vest until after that date and, therefore, no vested right
was affected by applying the two-year waiting period to the award .
As a general rule, the courts have held that the law in effect on the date of injury
controls the rights and obligations of the parties . See Maggard v. International
Harvester Co. , Ky., 508 S .W.2d 777 (1974) . But unlike the provisions concerning the
grounds for reopening that are found in KRS 342.125(1), the four-year limitation on
reopening that is found in KRS 342.125(8) is a statute of limitation . See Woodland Hills
Mining Inc . v. McCoy, Ky., 105 S .W.3d 446 (2003) . More accurately, KRS 342 .125(8)
is both a statute of limitation and repose because, by limiting the time for taking action,
it may extinguish a cause of action before it arises. Although a statute of repose may
not abolish or diminish the legal remedies for common-law causes of action for
personal injuries or death that existed prior to the adoption of the 1891 Kentucky
Constitution without violating Sections 14, 54, and 241, no such constraint exists with
regard to a statutory cause of action such as workers' compensation . Wright v . Oberle-
Jordre Co . . Inc. , Ky., 910 S .W.2d 241 (1995) . In fact, the very right to reopen what
amounts to a final judgment by virtue of a postjudgment change of condition is a
peculiarity of Chapter 342 .
As we pointed out in Brooks , supra, and Mccool , supra, limitations on the time
for taking action relate to the remedy and may be enlarged or restricted without
impairing vested rights . See Stone v. Thompson , Ky., 460 S .W.2d 809, 810 (1970) .
Although an amendment that extends the period of limitation may be applied to a claim
in which the period has not already run, it may not be applied to revive a claim that has
expired without impairing vested rights . See Beth-Elkhorn v. Thomas , Ky ., 404 S .W.2d
16 (1966) ; Kiser v. Bartley Mining Co. , Ky., 397 S.W.2d 56 (1965) . Likewise, an
amendment may not extinguish an existing cause of action by shortening the period of
limitations to a time that has already run or is unreasonably short without impairing
vested rights . In contrast, an amendment that leaves a reasonable time in which to
assert a claim does not impair a vested right. See Crawford v. V. & C . Coal Co. , Ky.,
432 S .W.2d 403 (1968) .
The claimant's award was entered before December 12, 1996, at which time
there was no limitation on the period for reopening. Although she did not file her latest
motion to reopen until 2001, she asserts that her post-award worsening of physical
condition occurred before December 12, 1996 . On that basis, she maintains that her
right to increased compensation vested before the amendment's effective date and that
the amendment impaired her vested right to increased benefits .
Unlike her present appeal, the claimant's motion to reopen did not allege that her
post-award worsening of condition occurred before December 12, 1996. In any event, it
has long been established that a worker's right to benefits for a post-award increase in
disability vests when a motion to reopen is filed, without regard to when the increased
disability began . Rex Coal Co. v. Campbell, 213 Ky. 636, 281 S.W. 1039 (1926) .
Furthermore, even if the claimant's right to increased benefits had vested before
December 12, 1996, KRS 342 .125(8) afforded her a four-year period after December
12, 1996, in which to assert a right to increased compensation . Because we are
persuaded that four years was a reasonable amount of time in which to require that an
existing claim for increased benefits be asserted or lost, we are not convinced that the
amendment impaired a right to compensation that vested before December 12, 1996 .
See Crawford v . V. & C . Coal Co. , supra .
KRS 342 .125(8) provides that although claims decided before December 12,
1996, may be reopened within a period of four years after December 12, 1996, the
"exceptions to reopening established in subsections (1) and (3)" apply to those claims
as well as to claims decided later. KRS 342.125(1) does not characterize any ground
for reopening as an "exception," but KRS 342.125(3) provides an exception to the fouryear limitation where the purpose for reopening is to determine the compensability of
medical expenses, to determine whether fraud has occurred, to conform the award as
set forth in KRS 342 .730(1)(c)2, to reduce a permanent total disability award in an
instance where the injured worker returns to work, or to permit an injured worker to seek
temporary total disability (TTD) benefits within the period of an award .
The claimant's final argument is that KRS 342 .125(3) violates Section 59(24) of
the Kentucky Constitution . She asserts that it permits employers to reopen at any time
for a reduction in benefits but permits a worker to reopen for a period of only four years
for an increase in benefits . Furthermore, she maintains that it creates discriminatory
classes by treating workers who improve differently from those whose condition
worsens. She maintains that there is no rational justification for creating such classes
and, therefore, that the provision is unconstitutional .
Final workers' compensation awards are subject to the principles of the finality of
judgments and are enforceable in circuit court. KRS 342.305. But, unlike other final
judgments, they may be reopened on the motion of either party under certain, specified
conditions. Among those conditions is a post-award change of disability .
KRS 342.125(1). The 1996 Extraordinary Session culminated in a comprehensive
revision of Chapter 342 in an attempt to assure that benefits were promptly delivered, to
remedy the failure to reduce the unfunded liability of the Special Fund, and to remedy
the competitive disadvantage that Kentucky's employers faced due to the high cost of
securing worker's compensation insurance, all of which are legitimate governmental
purposes. 1996 Ky. Acts (1st Ex. Sess.), ยง 90. In view of what the legislature viewed
as an emergency situation, the amendments took effect immediately upon approval of
the governor . Id .
Under the 1996 Act, neither a worker nor an employer may reopen a preDecember 12, 1996, award after December 12, 2000, solely upon an allegation of a
change of disability . KRS 342 .125(3) specifies, however, that reopening is permitted at
any time to reduce a total disability award when the recipient returns to work. It also
permits reopening at any time when a partially disabled worker seeks TTD benefits
during the period of an award .
Section 59(24) of the Kentucky Constitution prohibits the legislature from passing
special legislation . The purpose of the provision is to prevent special privileges,
favoritism, and discrimination and to ensure equality under the law. "A special law is
legislation which arbitrarily or beyond reasonable justification discriminates against
some persons or objects and favors others ." Board of Education of Jefferson Co . v.
Board of Education of Louisville, Ky., 472 S.W.2d 496, 498 (1971) . The
Commonwealth's power to legislate public policy in the area of employer/employee
relations derives from its police power as well as the community interest in regulating
the safety of the workplace and in requiring employers to provide for injured workers
and their dependents so that they do not become a burden on the community .
Workmen's Compensation Board of Kentucky v. Abbott, 212 Ky . 123, 278 S .W. 533
(1925) . Legislative classifications that are based upon the police power must further
objectives relevant to that power. Schoo v . Rose , Ky., 270 S .W.2d 940 (1954) . In
order for a law to be viewed as being general for the purposes of Section 59, it must
apply equally to all in a class, and there must be distinctive and natural reasons
inducing and supporting the classification . Furthermore, in order to subclassify a
natural class of persons, the subclassification must be based upon some reasonable
and substantial difference in kind, situation, or circumstance that bears a proper relation
to the purpose of the statute . Id.
In view of the presumption that legislative acts are
constitutional, the claimant has the burden to show that the classes which KRS
342 .125(3) creates are improper. See Kentucky Harlan Coal Co . v. Holmes, Ky., 872
S .W.2d 446 (1994) .
The claimant asserts that KRS 342.125(3) violates Section 59(24) by giving
employers and workers different rights with regard to reopening . She notes that an
employer may reopen the award of a totally disabled worker at any time if the individual
returns to work. Whereas, a worker such as herself, who receives a partial disability
award and later becomes totally disabled, may not reopen more than four years postaward . Although some may view the claimant and her employer as being members of a
similarly situated class by virtue of their common status as parties to a final workers'
compensation award, the fact remains that they are opponents in the underlying
litigation . In instances where a worker receiving benefits for permanent, total disability
returns to work, a stated purpose of the amendments is furthered by permitting the
employer to reopen for a reduction in the award . This serves to reduce the cost of
workers' compensation insurance for Kentucky employers, improving their competitive
status and, thereby, improving the economic climate for all citizens of the
Commonwealth. In contrast, where a worker reopens and receives an increased
award, the cost is increased . We conclude, therefore, that the separate classification of
the worker and employer is reasonable, bears a proper relation to the purpose of the
amendments, and is permissible under Section 59(24) .
The claimant also asserts that she has become permanently and totally disabled
since her initial award, that KRS 342.125(3) discriminates against her, and that it
violates Section 59(24) by treating various groups of injured workers differently . She
points out that although totally disabled workers who improve and return to work are
subject to having their awards reopened and reduced at any time, partially disabled
workers who later become totally disabled may not reopen after four years . Thus,
members of the former group are permitted to receive benefits to which their disability
no longer entitles them, while members of the latter group are prevented from receiving
benefits commensurate with their disability. Furthermore, partially disabled workers
who later experience a total disability that only is temporary may reopen throughout the
period of their award and receive greater benefits ; whereas, partially disabled workers
who later become permanently and totally disabled may not reopen after four years .
It is obvious that the impact of a disability on the injured worker's wage-earning
-9-
capacity is affected by whether the disability is partial or total, whether it is temporary or
permanent, and whether the worker's condition remains stable, improves, or worsens.
Furthermore, different types of awards have a different impact on workers'
compensation costs . Thus, in attempting to accomplish its purpose, the legislature had
legitimate reasons to treat totally and partially disabled workers differently, to treat those
whose disability is temporary differently from those whose disability is permanent, and
to treat workers whose condition improves differently from those whose condition
worsens .
Permanent total disability awards are payable for life and are based upon as
much as 100% of the state's average weekly wage . Whereas, permanent partial
disability awards are payable for 425 or 520 weeks and are based upon up to 75% of
the state's average weekly wage . A period of TTD generally is of relatively short
duration and usually occurs immediately after an injury . It is apparent, therefore, that
permanent total disability awards are likely to have the most significant impact on
insurance costs . Whereas, TTD awards, particularly those that are entered more than
four years after the initial award, are likely to have the least. Because the reopening of
a permanent partial disability award may, and often does, result in the entry of an award
for permanent total disability, KRS 342 .125(3) furthers the goals of the 1996
amendments by limiting the period for reopening. Likewise, it furthers the legislative
goal by permitting a reopening at any time to reduce a permanent total disability award
if the recipient has returned to work.
Although KRS 342.125(3) creates an exception to the four-year period where a
partially disabled worker experiences a post-award period of TTD, the cost of permitting
reopening at any time during the period of the award rather than for only four years is
-1 0-
not likely to be great. Furthermore, it is consistent with the philosophy underlying
Chapter 342 to encourage partially disabled workers who experience periods of TTD to
do what is necessary to recover their health and then return to work. Although KRS
342 .125(3) treats workers whose total disability is temporary differently from those
whose total disability is permanent, the financial impact of the two types of awards is
significantly different, and the net effect of the provision is to further the legislative
purpose .
Although a partially disabled worker whose condition worsens after four years
may not reopen and receive greater benefits, no exception permits reopening after four
years to reduce the award of a partially disabled worker whose condition improves. We
note, however, that nearly half of the duration of a partial disability award has expired
after four years . Keeping in mind that reopenings involve litigation costs, it is apparent
that the savings, if any, from reducing partial disability awards at that point are not likely
to be great. Thus, it was unnecessary for the legislature to create an exception in the
latter instance in order for KRS 342 .125(3) to accomplish its purpose .
By limiting the time for reopening to a period of four years after the initial award
unless one of the exceptions applies, KRS 342.125(3) has the net effect of reducing the
cost of workers' compensation insurance and increasing the competitiveness of
Kentucky employers, a purpose that is legitimate . Moreover, the classifications that
KRS 342 .125(3) creates are reasonable and bear a proper relation to the purpose of
the amendments . We conclude, therefore, that the provision does not violate
Section 59(24) .
The decision of the Court of Appeals is affirmed .
All concur.
COUNSEL FOR APPELLANT :
Wayne C. Daub
730 W . Main Street
Suite 200
Louisville, KY 40202
COUNSEL FOR APPELLEE,
GANS FURNITURE :
Timothy P. O'Mara
Middleton & Reutlinger
2500 Brown & Williamson Tower
Louisville, KY 40202
COUNSEL FOR APPELLEE,
SPECIAL FUND :
David W. Barr
Labor Cabinet - Special Fund
1047 U .S . Hwy. 127 South
Suite 4
Frankfort, KY 40601-9979
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