JIMMY HOWARD, ET AL V. PEABODY COAL COMPANY, ET AL
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RENDERED : FEBRUARY 23, 2006
TO BE PUBLISHED
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s LJ
2005-SC-0327-WC
JIMMY HOWARD AND
DICK ADAMS, ATTORNEY
V.
APPELLANTS
APPEAL FROM COURT OF APPEALS
2004-CA-2477-WC
WORKERS' COMPENSATION BOARD NO . 03-01026
PEABODY COAL COMPANY; HON. J .
LANDON OVERFIELD, ADMINISTRATIVE
LAW JUDGE; HON . CHRISTOPHER H . SMITH;
AND WORKERS' COMPENSATION BOARD
APPELLEES
OPINION OF THE COURT
AFFIRMING
An Administrative Law Judge (ALJ) denied the claimant's attorney a fee for
services rendered in obtaining a Retraining Incentive Benefits (RIB) award on the
ground that that 803 KAR 25:125 did not authorize an attorney fee until such time as the
claimant received payments under the award pursuant to KRS 342 .732(1)(a)2 or 3. The
Workers' Compensation Board and the Court of Appeals affirmed . This appeal by the
claimant's attorney asserts that 803 KAR 25:125 violates public policy by discouraging
attorneys from taking RIB cases and also that it violates the equal protection clause of
the United States Constitution and Sections 1, 2, and 3 of the Kentucky Constitution by
unfairly discriminating against attorneys who represent injured workers . We affirm.
The claimant was born in 1952 . He testified that he earned a high school
diploma in 1970, after which he spent his entire work history in underground coal
mining. His last exposure to coal dust occurred on December 6, 2002, when he was
laid off. The record indicates that he entered into a subsequent contract with counsel
for representation on a workers' compensation claim. He and counsel agreed that any
attorney's fee would be paid in a lump sum and deducted from his weekly benefits until
the defendants recouped the amount of the fee, that the fee "shall be paid by the
employee from the proceeds of the Award [sic] or settlement," and that "If there is no
recovery of past or future benefits, there shall be no attorney's fee payable . . . ."
Based on x-ray reports from his medical experts, an AU determined that he
suffered from category 1 coal workers' pneumoconiosis and that there was no evidence
of pulmonary impairment . In addition to all other benefits payable under KRS
342 .732(1)(a), the claimant received a RIB award, in the amount of $103.25 per week,
for a period not to exceed 104 weeks, provided that he was "enrolled and actively and
successfully participating" as a student in compliance with KRS 342 .732(1)(a)2 or 3. No
appeal was taken from the decision .
It is undisputed that the claimant was not enrolled or participating as a student at
the time of his award or the subsequent motion requesting an attorney's fee . In denying
the motion, the ALJ explained that counsel was not entitled to a fee under 803 KAR
25:125 until such time as the claimant enrolled in a bona fide training or GED program
and received payments under the award. Shortly after the motion was denied, the
claimant filed a "Notice of Deferral" in which he stated that he suffered from an illness
unrelated to his pneumoconiosis and elected to defer the commencement of his award
for a period of 365 days.
Counsel asserts that 803 KAR 25:125 unlawfully discriminates against plaintiffs'
attorneys, that there is no substantial and justifiable reason for the classifications it
creates, and that it is not rationally related to a legitimate state interest . He argues that
although the regulation permits an employer's attorney to receive a fee without regard to
the outcome, it requires the worker's attorney fee to be contingent not only on obtaining
an award for the client but also on the client's subsequent enrollment and participation
as a student if the client is less than 57 years old . Counsel acknowledges that
discrepancies in the financial resources of workers and employers provide a rational
basis for KRS 342.320 to require the fee of a worker's attorney to be contingent on
obtaining a RIB award for the client. His complaint is that 803 KAR 25 :125 exceeds the
scope of KRS 342.320 by also requiring the attorney's fee to be contingent on the
worker's subsequent enrollment and participation as a student . He asserts that this
violates equal protection by discriminating against attorneys who represent workers in
RIB claims . He also asserts that it violates the public policy embodied in Chapter 342
and, more specifically, in KRS 342.732(1)(a) by discouraging attorneys from
undertaking such representation . He concludes that KRS 342.320(2)(a) should govern
the payment of attorney fees in RIB claims and that it entitles him to a'fee .'
KRS 342.732(1)(a)1 provides criteria for awarding a RIB. Relevant presently are
KRS 342 .732(1)(a)2 and 3, which provide criteria for paying benefits under the award .
As amended effective July 15, 2002, they provide as follows :
2. Except as provided in subparagraph 3 . of this paragraph, these
benefits shall be paid only while the employee is enrolled and
actively and successfully participating as a full-time student taking
In another argument, counsel asserts that the ALJ miscalculated the amount of the
claimant's award . This appeal was not taken from the award but from the decision in a
post-award motion for an attorney fee ; therefore, questions regarding the amount of the
award are not properly before the court.
2 KRS 342.732(1)(a)7 permits a worker who is age 57 or older on the date of last
exposure to receive an alternate benefit that does not require retraining, but it is
inapplicable due to the claimant's age .
the equivalent of twelve (12) or more credit hours per week in a
bona fide training or education program that if successfully
completed will qualify the person completing the course for a trade,
occupation, or profession and which program can be completed
within the period benefits are payable under this subsection . The
program must be approved under administrative regulations to be
promulgated by the executive director. These benefits shall also be
paid to an employee who is a part-time student taking not less than
the equivalent of six (6) nor more than eleven (11) credit hours per
week, except that benefits shall be an amount equal to thirty-three
and one-third percent (33-1/3%) of the employee's average weekly
wage as determined by KRS 342.740, but not more than thirtyseven and one-half percent (37-1/2%) of the state average weekly
wage, payable biweekly for a period not to exceed two hundred
eight (208) weeks.
3. These benefits shall also be paid biweekly while an employee is
actively and successfully pursuing a General Equivalency Diploma
(GED) in accordance with administrative regulations promulgated
by the executive director. These benefits shall be paid in the
amount of sixty-six and two-thirds percent (66- 2/3%) of the
employee's average weekly wage not to exceed seventy-five
percent (75%) of the state average weekly wage for a maximum
period not to exceed seventeen (17) weeks. These income benefits
shall be in addition to the maximum amount of retraining incentive
benefits payable under this paragraph.
KRS 342.732(1)(a)5 requires the period for payment of the benefit to commence no
later than 30 days after finality of the award but permits the worker to defer the
beginning of the period for up to an additional 365 days . However, if a worker does
defer payment for more than an additional 365 days, KRS 342.732(1)(a)10 provides for
benefits that would otherwise be payable to be reduced on a week-for-week basis for
each week they are deferred .
Counsel relies upon KRS 342.320, which addresses attorney's fees . As
amended effective July 15, 2002, it provides, in pertinent part, as follows :
(2) In an original claim, attorney's fees for services under this
chapter on behalf of an employee shall be subject to the following
maximum limits:
(a) Twenty percent (20%) of the first twenty-five thousand
dollars ($25,000) of the award, fifteen percent (15%) of the
next ten thousand dollars ($10,000), and five percent (5%) of
the remainder of the award, not to exceed a maximum fee of
twelve thousand dollars ($12,000) . This fee shall be paid by
the employee from the proceeds of the award or settlement .
(8) Attorney's fees for representing employers in proceedings under
this chapter pursuant to contract with the employer shall be subject
to approval of the administrative law judge in the same manner as
prescribed for attorney representation of employees . Employer
attorney's fees are subject to the limitation of twelve thousand
dollars ($12,000) maximum fees except that fees for representing
employers shall not be dependent upon the result achieved .
Employer attorney's fees may be paid on a periodic basis while a
claim is adjudicated and the payments need not be approved until
the claims resolution process is completed . Fees for legal services
in presenting a claim for reimbursement from the Kentucky coal
workers' pneumoconiosis fund shall not exceed one thousand
dollars ($1,000) . All such approved fees shall be paid by the
employer and in no event shall exceed the amount the employer
agreed by contract to pay.
KRS 342.320(1)(a) provides that attorney's fees "shall be subject to the approval
of an administrative law judge pursuant to the statutes and administrative regulations ."
KRS 342 .732(5) directs the Office of Workers' Claims to promulgate administrative
regulations "sufficient to effectuate the provisions relating to retraining incentive benefits
provided under subsection (1)(a) of this section ." Promulgated under KRS 340.260(1)
and KRS 342 .270(3) as well as under 342.732(5), 803 KAR 25:125 addresses the
calculation of an attorney fee for a RIB award under KRS 342.732(1)(a). It provides :
Section 1 .
(1) Awards for an attorney's fee involving retraining incentive
benefits shall be made in accordance with KRS 342.320 and
342 .040.
(2) If benefits are awarded for retraining pursuant to KRS
342.732(1)(a), an attorney shall file a motion to request an
attorney's fee.
(3) interim attorney's fees shall only be paid upon the review and
order of an administrative law judge .
(4)(a) Interim attorney's fee motions shall be filed not less than six
(6) months from the time the claimant is enrolled in a bona fide
retraining program or GED program .
(b) Interim attorney's fee motions may be filed :
1 . At six (6) months intervals following the first order for the
interim attorney's fee;
2 . At the completion of training ; or
3. Upon termination from the program.
Section 2 .
(1) A value shall be placed on the award, and an attorney's fee
shall be awarded if the claimant :
(a) Is enrolled and has been accepted in a bona fide training
program or GED program ; and
(b) Does not defer the beginning of benefits pursuant to KRS
342.732(1)(a) 5 .
(2) If the claimant has enrolled in a bona fide retraining program or
GED program, the value of the award shall be based upon the
number of weeks completed at the time the interim attorney's fee
motion is filed .
(3)(a) Any value computed for an attorney's fee shall be limited to
the number of weeks of the program completed multiplied by the
weekly benefits paid to the claimant .
(b) Costs of tuition, books, completion bonus and moving
expenses shall not be considered as part of the benefits in
computing the attorney's fee .
(4) An original award for retraining pursuant to KRS 342 .732(1)(a)
shall direct the employer and its insurance carrier or Coal Workers'
Pneumoconiosis Fund (CWPF), in claims brought under KRS
342 .792, to withhold a specified amount or percentage from each
benefit payment in accordance with the percentage limitations
specified in KRS 342.320(2)(a) .
(5) All interim fees awarded by an administrative law judge as
specified in subsection (4) of this section shall be paid directly to
the attorney in a lump sum by the employer, its insurance carrier or
the Coal Workers' Pneumoconiosis Fund (CWPF), subject to the
6
percentage limitations specified in KRS 342 .320(2)(x) .
(6) If the amount withheld by the employer, its insurance carrier or
the Coal Workers' Pneumoconiosis Fund (CWPF), as required by
subsection (4) of this section, is greater than the amount of the
attorney's fee for the interim period, the excess amount shall be
paid to the claimant .
Under KRS 342.732(1)(x), the entitlement to a RIB award and the entitlement to
benefits under the award are separate matters . Unlike the payment of benefits under
awards pursuant to KRS 342 .730 or KRS 342.732(1)(b)-(e), the payment of benefits
under a RIB award is contingent on the proof of additional facts . Faced with similar
statutes in Baker v. Shamrock Coal Co. . Inc., 985 S.W .2d 755, 756 (Ky. 1999), this
court distinguished authority supporting an argument that the attorney's fee should be
based on the worker's potential recovery and concluded that a fee was premature until
the worker was entitled to receive benefits under the award . We explained that the
worker was not entitled to a recovery until he met the conditions for benefits to be paid
and that the amount of his attorney's fee could not be determined until a benefit was
authorized . Furthermore, the fee could not be deducted from payments of benefits until
they were made .
Although the present version of KRS 342 .320(2)(x) bases the attorney's fee for a
workers' compensation claim on. the amount of the "award," it clearly requires the fee to
be "paid by the employee from the proceeds of the award or settlement." The purpose
of the RIB is to encourage coal workers whose pneumoconiosis presently causes no
respiratory impairment to find work outside the mining industry before their condition
worsens .
See Baker v. Shamrock Coal Co ., Inc . , supra ; Meade v. Spud Mining , 949
S .W .2d 584, 587-88 (Ky. 1997). Consistent with that purpose, KRS 342 .732(1)(x)2 and
3 condition the receipt of benefits under the award on enrollment and participation as a
student . KRS 342.732(1)(a)5 and 10 restrict the time within which benefits must be paid
or expire, thereby encouraging the recipient to do so promptly . As a result, a worker
who receives a RIB award must also demonstrate that he is entitled to receive benefits
under the award for there to be a recovery or proceeds from which to determine the
amount of an attorney's fee and from which to deduct the fee. Id .
Absent a properly supported finding that the claimant was enrolled and actively
participating as a student, he was not entitled to receive benefits under his RIB award .
For that reason, not only was counsel's motion for an attorney fee premature under the
terms of the employment contract, it was premature under KRS 342.320(2)(a) as well as
803 KAR 25:125 . Counsel has not challenged the constitutionality of KRS 342.320 ;
therefore, it is unnecessary for us to address the remainder of his arguments .
The decision of the Court of Appeals is affirmed .
All concur.
COUNSEL FOR APPELLANTS :
Dick Adams
Adams, Ramey & Burns
28 Court Street
P.O . Box 756
Madisonville, KY 42431
COUNSEL FOR APPELLEE,
PEABODY COAL COMPANY :
Peter J . Glauber
Boehl, Stopher & Graves, LLP
2300 Aegon Center
400 West Market Street
Louisville, KY 40202
COUNSEL FOR APPELLEE,
KENTUCKY LABOR DEPARTMENT:
Robert L. Whittaker
Kentucky Labor Department
1040 U.S . Hwy. 127 South, Suite 4
Frankfort, KY 40601-9979
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