LUCY KEITH V. HOPPLE PLASTICS, ET AL
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RENDERED : NOVEMBER 23, 2005
CORRECTED : DECEMBER 13, 2005
TO BE PUBLISHED
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2004-SC-0451-WC
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LUCY KEITH
V.
APPELLANT
APPEAL FROM COURT OF APPEALS
2003-CA-1129-WC
WORKERS' COMPENSATION BOARD NO. 00-81283
HOPPLE PLASTICS ; HON . R. SCOTT BORDERS,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS' COMPENSATION BOARD
APPELLEES
OPINION OF THE COURT
AFFIRMING
It is undisputed that the claimant's work-related injury occurred when she was 68
years old and eligible for Social Security retirement benefits . Leaving an argument that
KRS 342.730(4) was unconstitutional for the courts to decide, an Administrative Law
Judge (ALJ) determined that the statute limited the duration of the claimant's partial
disability award to the difference between 102 weeks and the duration of the temporary
total disability (TTD) benefits she had already received . The claimant's sole argument
on appeal was that KRS 342.730(4) violates the equal protection clause of the United
States Constitution and/or Section 3 of the Kentucky Constitution . Hence, the Workers'
Compensation Board (Board) affirmed under Blue Diamond Coal Co . v. Cornett , 189
S .W .2d 963 (Ky. 1945) . The Court of Appeals affirmed, noting that the constitutionality
of the statute had been upheld previously in McDowell v. Jackson Energy RECC, 84
S.W.3d 71, 76 (Ky. 2002). We affirm .
S.W.3d 71, 76 (Ky. 2002). We affirm . The claimant was born in 1932.' She sustained
a work-related wrist fracture on June 9, 2000, and later filed an application for workers'
compensation benefits . Among other things, she asserted that she was unable to return
to the work in which she was injured. She testified that she had not returned to any
other type of work and received social security retirement benefits of $922.00 per
month . It was undisputed that the injury resulted in a 7% disability rating. An AU
determined that the claimant lacked the physical capacity to perform the work she had
performed at the time of the injury; therefore, she was entitled to an enhanced income
benefit of $33.28 per week by operation of KRS 342.730(1)(c)1 . Noting the claimant's
testimony that she was receiving social security retirement benefits and the parties'
stipulation that she had received 76.53 weeks of TTD benefits, the ALJ determined that
KRS 342.730(4) limited the duration of permanent income benefits to 27.57 weeks.
The claimant asserts that she is entitled to receive 425 weeks of partial disability
benefits following her TTD award rather than the 27 .57 weeks the ALJ awarded. She
argues that although the purpose of temporary and permanent total disability benefits is
to replace lost income, the purpose of partial disability benefits is to compensate the
worker for having received a permanent injury . Therefore, the General Assembly had
no rational basis for treating partially disabled workers differently based on age .
Attempting to distinguish McDowell v. Jackson Energy , supra , and Wynn v. (bold , 969
S .W.2d 695 (Ky. 1998), she asserts that the court's rationale for concluding that income
When deposed, she testified that although her application indicated that she was born
in 1934, her birth certificate stated 1932 .
2 Although the ALJ determined that the claimant was entitled to a total of two years (104
weeks) of income benefits, the sum of 76.53 and 27 .57 equals 104.10. Neither party
appears to have brought the discrepancy to the ALJ's attention .
-2-
benefits duplicated Social Security retirement benefits was that the workers received
temporary total or permanent total disability rather than permanent partial disability .
Several statutes are relevant to the issues this appeal presents . As defined in
KRS 342 .0011(12) :
"Income benefits" means payments made under the provisions of
this chapter to the disabled worker or his dependents in case of
death, excluding medical and related benefits .
KRS 342.730(1) provides formulae for calculating "income benefits for disability" and
bases the benefit on the worker's average weekly wage and disability, whether it be
total (subsection a) or partial (subsections b-e). KRS 342.730(1)(d) provides 425 weeks
of "income benefits" to workers with a partial disability of less than 50% . As amended
effective December 12, 1996, KRS 342 .730(4) provides, in pertinent part, as follows :
All income benefits payable pursuant to this chapter shall terminate
as of the date upon which the employee qualifies for normal oldage Social Security retirement benefits under the United States
Social Security Act, 42 U .S.C. secs. 301 to 1397f, or two (2) years
after the employee's injury or last exposure, whichever last occurs.
The 1994 version of KRS 342.730(4), commonly referred to as the "tier down,"
applied to "any income benefits awarded under . . . this section," i.e . , to partial as well
as total disability benefits . In Leeco, Inc. v. Crabtree , 966 S .W.2d 951 (Ky. 1998), the
court noted that workers' compensation income benefits are but one of several forms of
wage-loss protection, one of which is social security. Addressing the duplication of
benefits that occurs when a worker is eligible for more than one form of income
replacement, the court stated:
A reduction in workers' compensation benefits upon a worker's
eligibility for an alternative form of income replacement is consistent
with the principle of coordinating the various systems of wage-loss
protection in order to avoid a duplication of benefits .
Id ., 966 S.W.2d at 955 (citations omitted) . It concluded that the primary purpose
of KRS 342.730(4) was to avoid duplicating other forms of income replacement,
particularly social security retirement benefits . Id.
Shortly after Leeco, Inc. v. Crabtree , supra, was decided, in Wynn v. (bold , 969
S .W .2d at 697, the court observed that reducing income benefits at an age when
workers became eligible for other forms of income replacement avoided a duplication of
benefits . It also reduced the overall cost of workers' compensation, thereby improving
the economic climate for all citizens of the commonwealth . Id. Finding those to be
legitimate state objectives and sound public policy, the court determined that the statute
complied with the requirements of due process and equal protection . Contrary to the
claimant's assertion, Wynn v. lbold, supra , did not specify whether the worker's disability
was partial or total.
The 1996 version of KRS 342 .730(4) is unambiguous in stating that it applies to
"[a]Il income benefits payable under this chapter ." Although KRS 342 .730(1) refers to
partial disability benefits as "income benefits" and although partial disability benefits
clearly come within the definition of income benefits, the claimant asserts that KRS
342 .730(4) applies only to total disability benefits, be they permanent or temporary .
She argues that totally disabled individuals cannot work; therefore, their benefits replace
lost income like social security retirement benefits do . In contrast, partially disabled
workers are able to earn an income ; therefore, permanent partial disability benefits are
not designed to replace income but to compensate the worker for having received a
permanent injury . This argument is based on the erroneous premise that benefits
awarded for total and partial disability have different purposes.
The Workers' Compensation Act does not create a quasi tort. Adkins v. R & S
Body Co . , 58 S.W .3d 428, 431-32 (Ky. 2001); Leeco, Inc. v. Crabtree , supra . Workers'
compensation is a form of social welfare legislation . Its purpose is to require employers
to provide necessary medical treatment for workers who are injured in the course of
their employment and to replace some of the income they will lose, thereby enabling
them to meet their own essential needs and those of their dependents . Adkins v. R & S
Body Co. , supra .: Wvnn v. lbold , supra ; Leeco, Inc. v. Crabtree , supra ; Workmen's
Compensation Board of Kentucky v. Abbott, 278 S .W . 533 (1925) ; see also , Newberg v.
Sarcione , 865 S .W.2d 317, 319 (Ky. 1993) .
In a case involving social or economic legislation where no fundamental right is
at stake and no suspect class is implicated, a statute will comply with the Fourteenth
Amendment's right to equal protection if it furthers a legitimate state objective and there
is any conceivable rational basis for the classes it creates . Heller v. Doe, 509 U .S. 312,
113 S .Ct. 2637, 125 L.Ed.2d 257 (1993); Dandridge v. Williams , 397 U .S. 471, 90 S .Ct .
1153, 25 L.Ed.2d 491 (1970) ; Popplewell's Alligator Dock No . 1, Inc . v. Revenue
Cabinet , 133 S .W .3d 456, 466-67 (Ky. 2004); Commonwealth v. Howard, 969 S.W .2d
700, 703 (Ky. 1998) . Legislative acts are presumed to be valid; therefore, the burden is
on one attacking a statute to show the negative . Heller v. Doe, supra ; Lenhausen v.
Lake Shore Auto Parts Co. , 410 U.S. 356, 364, 93 S .Ct. 1001, 1006, 35 L.Ed.2d 351
(1973); Delta Air Lines, Inc. v. Commonwealth of Kentucky Revenue Cabinet, 689
S .W .2d 14 (Ky. 1985) . Although the court may impose procedural safeguards on the
administration of a statute, its role is not to second-guess the statute's wisdom .
Dandridge v. Williams , supra . Equal protection does not require there to be a perfect fit
between means and ends. Heller v. Doe, supra ; Dandridge v. Williams , supra ;
Commonwealth v. Howard , supra . Nor does it concern whether the statute fulfills ideal
social or economic objectives or whether it could have been more just and humane .
Dandridge v. Williams , supra . The standards for determining if a legislative
classification complies with principles of equal protection found in Sections 1-3 and
59(24) of the Kentucky Constitution are essentially the same . Commonwealth v.
Howard , supra ; Delta Air Lines, Inc. v. Commonwealth of Kentucky Revenue Cabinet ,
supra .
Like their pre-1996 counterparts, the 1996 versions of KRS 3.42 .0011(11)(b) and
KRS 342.730(1)(c) anticipate that an individual will experience a loss of present and/or
future income yet retain the ability to work, perhaps to continue in the same job.
Although impairment is a prominent factor in determining the amount of a worker's
partial disability under KRS 342.730(1)(b) and (c), the ability to perform physical labor
clearly is affected by the amount of impairment an injury has caused. Although the
method used in the 1996 statute may imperfectly measure an individual worker's loss,
partial disability benefits continue to be awarded on the basis of occupational disability
rather than impairment . Adkins v. R & S Body Co . , supra. Like all other income
benefits, they continue to be paid periodically as set forth in KRS 342.040(1). We are
aware of nothing, and the claimant has pointed to nothing, to convince us that partial
disability benefits are qualitatively different from total disability benefits or that the
legislature viewed them as being different .
3 Subsection (c) was amended effective July 14, 2000, which was shortly after the
claimant's injury. As amended, KRS 342.730(1)(c)3 recognizes the effects of education
and advancing age on a worker's post-injury earning capacity . Among other things, it
provides an additional multiplier for partially disabled workers more than 50, 55, or 60
years of age.
In McDowell v. Jackson Energy RECC, supra , the court addressed an argument
that the 1996 version of KRS 342 .730(4) was unfair to workers who were eligible for
social security retirement benefits and denied them equal protection on the basis of their
age . Noting that an equal protection challenge "presupposes that a statute is
discriminatory, thus perceptually unfair," the court explained that fairness "is an aspect
of public policy reserved to the legislature" and that the court's function is to determine
whether a statute is constitutional . Id ., 84 S.W.3d at 74. The standard for doing so is
whether there is a rational basis for the perceived discrimination, i .e . , whether the
statute is rationally related to a legitimate state purpose . ld . ; see also Steven Lee
Enterprises v. Varney, 36 S .W.3d 391, 395 (Ky. 2000).
The McDowell court viewed the purpose of KRS 342.730(4) as being the same
as that of the pre-1996 "tier down," which survived an equal protection challenge in
Wynn v. (bold , supra . Both provisions sought to avoid a duplication of income
replacement benefits, thereby reducing the cost of workers' compensation and
improving the economic climate for all of the state's citizens'. The court noted that
coordinating systems of wage-loss protection by requiring an offset for duplicative
income replacement benefits or placing a ceiling on combined benefits was viewed
widely as being sound public policy. Arthur Larson and Lex K. Larson, 9 Larson's
Workers' Compensation Law ยง 97 .35(a) and (b) (Matthew Bender 1997).
Relying on Richardson v. Belcher, 404 U.S. 78, 92 S .Ct. 254, 30 L.Ed .2d 231
(1971), the McDowell court noted that the United States Supreme Court rejected an
equal protection challenge to a section of the Social Security Act that permitted social
security disability benefits to be reduced by virtue of overlapping state workers'
compensation benefits . It also noted that social security disability benefits are
converted to social security retirement benefits at age 65. The McDowell court found no
distinction for the purposes of a rational basis analysis between the offset required by
the Social Security Act and KRS 342.730(4)'s reverse offset in which workers'
compensation benefits are offset by social security retirement benefits . It concluded
that like the statute at issue in Richardson v. Belcher, supra , KRS 342 .730(4) did not
deny affected workers equal protection because its purpose provided a rational basis for
any perceived discrimination .
Legislative acts carry a strong presumption of constitutionality . Lenhausen v.
Lake Shore Auto Parts Co . , supra ; Brooks v. Island Creek Coal Co. , 678 S .W .2d 791,
792 (Ky. 1984) ; Delta Air Lines, Inc. v. Commonwealth of Kentucky Revenue Cabinet ,
supra ; United Dry Forces v. Lewis , 619 S.W .2d 489 (Ky. 1981) ; Sims v. Board of
Education of Jefferson County , 290 S.W .2d 491 (Ky. 1956) . The claimant has asserted
that KRS 342 .730(4) is unfair to partially disabled workers who are eligible for social
security retirement. She has, however, failed to show that it has no conceivable rational
basis.
The principle of terminating workers' compensation benefits when workers
become eligible for normal old-age social security benefits is not new to Kentucky.
Brooks v. Island Creek Coal Co . , supra . Nor is the concept of coordinating different
forms of wage-loss protection or of avoiding making it more profitable to be disabled
than not. See Richardson v. Belcher, 404 U .S . at 83; McDowell v. Jackson Energy
RECC , supra ; Wynn v. (bold , supra ; and Leeco v. Crabtree , supra . Although KRS
342.730(4) discriminates against workers who are eligible for both workers'
compensation disability benefits and normal social security retirement benefits, it
advances a legitimate state interest in coordinating forms of income replacement
benefits and avoiding a duplication of benefits. Although it discriminates against
partially disabled workers who are eligible for social security retirement benefits, it
advances a legitimate state interest in preventing workers who are eligible for old-age
social security benefits and only partially disabled from ultimately receiving greater
workers' compensation benefits than similarly-situated workers who are totally disabled .
We conclude, therefore, that KRS 342 .730(4) is rationally related to a legitimate state
interest and that it is constitutional when applied to either total or partial disability
awards . See McDowell v. Jackson Energy , supra .
The decision of the Court of Appeals is affirmed .
Cooper, Johnstone, Roach, and Wintersheimer, JJ ., concur. Scott, J ., dissents
by separate opinion in which Lambert, C.J., and Graves, J. join .
COUNSEL FOR APPELLANT :
James Russell Garvin
Brown, Lippert, Heile & Evans
1950 Federated Building
7 West 7th Street
Cincinnati, OH 45202
COUNSEL FOR APPELLEE :
Walter A. Ward
James Owen Fenwick, III
Clark & Ward
World Trade Center
333 West Vine Street, Suite 1100
Lexington, KY 40507
RENDERED : NOVEMBER 23, 2005
TO BE PUBLISHED
,*uyrrmr Courf of '~RrufurhV
2004-SC-0451-WC
LUCY KEITH
V.
APPELLANT
APPEAL FROM COURT OF APPEALS
2003-CA-1129-WC
WORKERS' COMPENSATION BOARD NO. 00-81283
HOPPLE PLASTICS ; HON . R. SCOTT BORDERS,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS' COMPENSATION BOARD
APPELLEES
Dissenting Opinion by Justice Scott
Lucy Keith was born in 1932 and was employed by Hopple Plastics as an
assembler for her entire working life. At the time of the injury that ended her
career, she was 68 years old, earning $475 .60 per week, and planning to
continue in her job for another four to five years . That ended with her injury .
Unable to continue to perform her job, she retired and began to collect $230.50
per week ($922 .00 per month) in social security retirement benefits plus $33 .28
per week for her disability . Simply stated, the injury prevented her from earning
an income on which she could live and left her with combined benefits on which
she could not. Worse yet, although KRS 342.730(1)(b) and (d) provide for 425
weeks of partial disability benefits, KRS 342.730(4) limited Lucy to 27.57 weeks
because she was eligible for social security retirement . Convinced that KRS
342.730(4) denies her equal protection, I would hold that KRS 342.730(4) is
unconstitutional and reverse .
The majority's reason for approving KRS 342.730(4) under the rational
basis test is that it avoids a duplication of equivalent benefits and that total and
partial disability benefits are the same . Its rationale fails to confront the actual
purpose for KRS 342.730(4), which is to save money for employers . Not only
does the state have no legitimate interest in doing so by depriving elderly
workers who are partially disabled of workers' compensation benefits based
solely on their eligibility for social security retirement, the two types of benefits
are not equivalent .
The majority has equated workers' compensation benefits with social
security retirement benefits . Granted, there are some similarities . However, as
the dissent in McDowell v. Jackson Energy RECC, 84 S.W.3d 71, 79 (Ky. 2002),
correctly pointed out, the rationale and source of funding for the two programs
belie their overlap . So does the basis for calculating benefits .
Workers' compensation is employer-funded, placing on industry the cost
of the injuries it causes and providing it with an incentive to promote workplace
safety . Benefits compensate a worker for a reduction in earning capacity due to
an injury at a rate that is commensurate with the resulting disability . As defined
in KRS 342 .0011(11)(b), a partially disabled worker remains able to work. The
partial disability benefit calculation in KRS 342.730(1)(b) and (c) takes into
account that some partially disabled workers like Lucy will never again be able to
perform the type of work they performed at the time of their injury or to earn as
much as they did at that time. Also accounting for the reality that some partially
disabled workers are able to return to work and earn the same or greater wage, it
encourages a return to employment by permitting such workers to collect a lesser
benefit but providing for a greater benefit during periods that they are unable
earn the same or greater wage.
Although the social security program is mandatory for factory workers
such as Lucy, it does not include all workers who are covered by Chapter 342.
Participating employers contribute to social security retirement, but it is a benefit
that a worker earns and to which the worker contributes . It provides income for
elderly workers without regard to disability, in an amount based on the value of
the contributions to the worker's account and the age at which the worker starts
to draw benefits . Eligibility for normal benefits is based on having achieved a
designated age and having made at least the minimum number of contributions.
The longer an individual continues to work and contribute to their account, the
greater their monthly benefit will be .
The apparent purpose of social security retirement has changed over the
years. Its initial purpose was to provide income for workers over 65, who were
near the end of their life expectancy. They were likely to be unable to work due
to advancing age and failing health, and the benefit prevented them from
becoming dependent on the public . In 2002, when KRS 342 .730(4) terminated
Lucy's partial disability award, life expectancies were much longer . The Social
Security Act permitted workers who were 65 or older to receive their full benefit
and continue to work, thereby encouraging them to remain in the workforce . See
McDowell v. Jackson Energy RECC, 84 S .W.3d at 77. Therefore, the benefit
became more of a return on investment or contractual benefit than a social
welfare benefit. Id .
Many individuals who have participated in the social security program now
choose to work beyond the normal retirement age . Like Lucy, many must do so
because their social security retirement benefit alone is inadequate for their
essential needs . The principles of requiring industry rather than the public to
bear the cost of industrial injuries and providing employers with an incentive to
promote workplace safety apply no less to such workers than they do to workers
who are ineligible for social security retirement. Equal protection demands that
they be treated the same .
$33 .28 a week is not much compared to the $475.00 a week she earned
prior to her injury ; nor is it a fair substitute for her lifelong loyalty to her job and
employer. Yet, it's all she got - and KRS 342.730(4) took it away.
I dissent for Lucy Keith .
Lambert, C.J., and Graves, J ., join this dissent .
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