COMMONWEALTH OF KENTUCKY, UNINSURED EMPLOYERS' FUND V. DENNIS BRADLEY, ADMINISTRATOR
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RENDERED : DECEMBER 17, 2009
TO BE PUBLISHED
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2009-SC-000135-WC
DENNIS BRADLEY, ADMINISTRATOR
FOR THE ESTATE OF CARMELO
ANGEL ISIDORO MAYO
V.
APPELLANT
ON APPEAL FROM COURT OF APPEALS
CASE NO . 2008-CA-001623-WC
WORKERS' COMPENSATION BOARD NO . 04-00917
COMMONWEALTH OF KENTUCKY,
UNINSURED EMPLOYERS' FUND;
HONORABLE MARCEL SMITH,
ADMINISTRATIVE LAW JUDGE ; AND
WORKERS' COMPENSATION BOARD
AND
2009-SC-000136-WC
COMMONWEALTH OF KENTUCKY,
UNINSURED EMPLOYERS' FUND
V.
APPELLEES
CROSS-APPELLANT
ON APPEAL FROM COURT OF APPEALS
CASE NO . 2008-CA-001623-WC
WORKERS' COMPENSATION BOARD NO . 04-00917
DENNIS BRADLEY, ADMINISTRATOR
FOR THE ESTATE OF CARMELO
ANGEL ISIDORO MAYO ;
BRUCE RECTOR, GUARDIAN FOR
ALEXANDRA DEL CARMEN DORANTES
MEDIA, A CHILD ; GARY WISE;
HONORABLE MARCEL SMITH,
ADMINISTRATIVE LAW JUDGE ; AND
WORKERS' COMPENSATION BOARD
CROSS-APPELLEES
OPINION OF THE COURT
AFFIRMING IN PART AND REVERSING IN PART
An Administrative Law Judge (ALJ) awarded a lump sum death benefit to
Carmelo Angel Isidoro Mayo's estate' and income benefits2 to his minor child,
Alexandria del Carmen Dorantes Mejia, a citizen and resident of Mexico . The
ALJ ordered the Uninsured Employers' Fund (UEF) to pay all benefits in the
event that Mayo's employer failed to do so, including the 30% enhancement
provided by KRS 342 .165(1) and interest accrued on past-due benefits . The
Workers' Compensation Board affirmed.
Mayo's estate appeals and the UEF cross-appeals from the Court of
Appeals' decision affirming in part and reversing in part. The court held that
KRS 342 .130 does not apply to a lump-sum death benefit and that although
interest accrues on the benefit, sovereign immunity prohibits the UEF from
paying interest.
We affirm to the extent that KRS 342 .130 does not apply to Mayo's estate
and that interest accrues on past-due death benefits. We reverse with respect
to the UEF's liability for interest on past-due income benefits, which include
death benefits. We view KRS 342 .760(4) and KRS 342 .790(3) as holding the
UEF responsible for interest on past-due income benefits and as permitting the
UEF to recover liquidated damages from the uninsured employer with interest.
1
KRS 342.750(6) .
2 KRS 342.750(1) .
Mayo, an undocumented laborer from Mexico, died on December 3,
2002, when the unreinforced trench in which he was working collapsed.
Evidence indicated that he had lived in the United States and worked for Garry
Wise for at least five years at that time. The Kentucky Office of Occupational
Safety and Health investigated the circumstances of Mayo's death and
determined that Wise failed to comply with six different federal safety
regulations. The administrator of Mayo's estate and the guardian/ conservator
of his minor child, Mejia, sought workers' compensation benefits under KRS
342 .750 . The UEF was joined as a party because Wise failed to purchase
workers' compensation insurance or to qualify as a self-insurer .
The parties took proof, after which they stipulated that a safety violation
occurred and that benefits must be enhanced by 30% . They disputed whether
the UEF bore liability for the enhancement. The ALJ awarded Mayo's estate a
lump-sum death benefit under KRS 342 .750(6) and a 30% enhancement under
KRS 342 .1.65(1), with interest from the date of Mayo's death through the date
of payment under KRS 342 .040(1) . The ALJ also awarded Mejia, through her
guardian/ conservator, an income benefit under KRS 342 .750(l), which was
enhanced by 30% under KRS 342 .165(1) but then reduced by 50% under KRS
342 .130 based on her status as a non-resident alien dependent.
Mejia's benefits are no longer at issue because the UEF's notice of appeal
to the Board named only the administrator of Mayo's estate and the ALJ as
parties . Thus, the only issues properly before the Board concerned the UEF's
responsibility to Mayo's estate for interest on the lump-sum death benefit and,
in the alternative, whether the benefit should have been reduced by 50% under
KRS 342 .130. The UEF argued that KRS 342 .130 required the lump-sum
death benefit to be reduced by 50% because Mejia was the sole beneficiary of
Mayo's estate ; that interest did not accrue under KRS 342 .040(1) because a
death benefit was not an income benefit; and that sovereign immunity
prohibited the UEF from paying interest in any event.
Death Benefits
Chapter 342 authorizes income benefits to permit disabled workers to
continue to provide the necessities of life for themselves and their dependents.
If an injured worker dies before receiving all of the income benefits awarded,
KRS 342 .'730(3) permits portions of the benefits to be continued to surviving
dependents . KRS 342 .750 authorizes more generous benefits when a workrelated injury results in death.
KRS 342 .750(1) provides the widow or widower, children, and certain
other surviving dependents with income benefits that are based on percentages
of the deceased's average weekly wage . Moreover, if the worker's death occurs
within four years of the work-related injury, KRS 342.750(6) provides the
worker's estate with a lump-sum benefit from which the cost of burial and
other expenses shall be paid .
KRS 342.130
The ALJ reduced Mejia's income benefit by 50% under KRS 342 .130
because she was Mayo's non-resident alien minor child but did not reduce the
lump-sum death benefit payable to Mayo's estate . The UEF relies on Maryland
Casualty Co. v. Chammo3 to argue that the ALJ erred by failing to reduce the
lump sum. We disagree.
KRS 342 .130 requires compensation paid "to alien dependent widows,
widowers and children, not residents of the United States" to be 50% of the
amount that would be payable to residents. It also prohibits compensation to
non-resident alien parents, brothers and sisters . Nowhere does the statute
refer to compensation payable to an estate. Champs concerned the
constitutionality of an early version of KRS 342 .130 and whether the nonresident aliens claiming benefits proved that they were actually the deceased
worker's widow and dependent children. Chamos did not determine that KRS
342 .130 governs compensation that is payable to a deceased worker's estate.
As the Board pointed out, Mayo had lived and worked in Kentucky for at
least five years when he died . His administrator is a Kentucky resident and his
estate was probated in Kentucky . KRS 342 .130 has no application to the
lump-sum death benefit because it is payable to his estate, which does not
exist in a foreign jurisdiction and is not an alien widow, widower, or child.
Interest
The court determined in Realty Improvement Co ., Inc . v . Raley4 that a
deceased worker's estate is a "person" for the purposes of KRS 342 .750(6) and
3 203 Ky. 820, 263 S.W. 370 (1924) .
4
194 S .W.3d 818, 822 (Ky. 2006) .
that the lump-sum benefit is a form of income benefit that is subject to
enhancement under KRS 342 .165(l) . The court reasoned that KRS 342 .750
refers explicitly to "income benefits," that the benefit is based on the state's
average weekly wage, and that the "goals of KRS 342 .165(1) are to encourage
workplace safety as well as to compensate those who are victims of intentional
safety violations ." 5 Although Realty Improvement did not address interest
because it was not at issue, we conclude that interest accrues on a lump-sum
death benefit under KRS 342 .040(1) just as it does on other past-due income
benefits awarded under Chapter 342 .
The UEF's Responsibility for Interest
The Court of Appeals relied on the principle stated in Commonwealth,
Department of Transportation, Bureau of Highways v. Lamb6 that the
Commonwealth and its agencies are exempt from paying interest on public
debts unless a statute or contract explicitly authorizes interest . The court
determined that the UEF bears no responsibility for interest on a lump-sum
death benefit because no statute specifically waives its immunity or specifically
requires it to pay interest on past-due income benefits . We reverse because we
conclude that the court construed the relevant statutes too narrowly.
The statute under which a plaintiff claims recovery must authorize
interest,7 but the general interest on judgment statute (KRS 360 .040) does not
5 Id .
6 549 S.W.2d 504, 507 (Ky. 1976) .
7 Kentucky Department of Corrections v. McCullough, 123 S.W.3d 130, 140 (Ky. 2003)
(no postjudgment interest against Commonwealth in unlawful-retaliation claim
apply to state agencies absent an explicit declaration by the legislature or an
explicit contract provision to that effect .$ Nonetheless, the court looks beyond
a statute's surface to its substance when determining if it authorizes a state
agency to pay interest .
The court determined in Commonwealth, Department of Highways v.
Youn
9
that the general interest statute applied to a Board of Claims award
because KRS 44.140(2) (now KRS 44 .140(5)) provided that a circuit court
judgment rendered on appeal from the award "shall have the same effect and
be enforceable as any other judgment of the court in civil causes ." The court
reasoned that, in substance, KRS 44 .140(2) provided for all of the attributes of
any other judgment to follow the circuit court's judgment on appeal. We view
KRS 342 .760 and KRS 342 .790 as holding the UEF responsible for the
uninsured employer's entire liability for income benefits, including interest on
past-due benefits, and as permitting the UEF to recover liquidated damages
from the employer with interest .
KRS 342.760(3) funds the UEF with all fines and penalties collected
under Chapter 342, and KRS 342 .760(1) provides explicitly that "all moneys
and securities in the fund shall be held in trust by the commissioner of the
8
9
because Kentucky Civil Rights Act permitted plaintiff to recover costs but failed to
provide for interest).
Powell v. Board of Education of Harrodsbur , 829 S .W.2d 940, 941 (Ky. App . 1991) .
380 S.W.2d 239, 241 (Ky. 1964) . See Bush v. Commonwealth, Department of
Highways, Transportation Cabinet, 777 S.W.2d 608, 609 (Ky. App . 1989)
(distinguishing Young from eminent domain case that involved no provision similar
to KRS 44 .140(2), which expressly provided that judgment on Board of Claims
award would be "enforceable as any other judgment.") . See also Powell v. Board of
Education of Harrodsburg, 829 S.W.2d at 941 .
Department of Labor and shall not be considered a part of the general funds of
the state." When an employer defaults on its compensation liability due to its
failure to comply with KRS 342 .340, 1 0 KRS 342 .760(4) holds the UEF
responsible for paying benefits and subrogates the UEF "to all the rights of the
person receiving such compensation from the fund."
Realty Improvement" established that a deceased worker's estate is a
person for the purposes of KRS 342.750 and that a lump-sum death benefit is
a form of income benefit. Among the rights of a "person receiving
compensation" is the right to an award that includes interest on past-due
income benefits as provided by KRS 342 .040(1) . Thus, the UEF's responsibility
and its right of subrogation under KRS 342.760(4) include the portion of the
award that represents interest.
KRS 342 .790(3) provides that when an employer fails to pay
compensation "according to the terms of [an] award, the award shall constitute
a liquidated claim for damages against that employer in an amount commuted
to a lump sum." It also provides that the Attorney General shall institute a
civil action against the employer to collect the lump sum amount "with
interest." Thus, having paid an award, the UEF is entitled to a judgment
against the uninsured employer for the liquidated damages with interest.
to KRS 342.340 requires employers to secure workers' compensation liability by
purchasing insurance or qualifying as a self-insured . Whitehead v. Davis, 692
S.W.2d 801, 803 (Ky. 1985), explained that the UEF does not guarantee payment
from defaulting employers who have complied with KRS 342 .340, from insolvent
insurance companies, or from underinsured employers. Thus, the UEF was not
liable where an employer qualified as a self-insured but later became insolvent.
11 194 S.W.3d at 822 .
The decision of the Court of Appeals is affirmed in part and reversed in
part, and the decision of the ALJ is reinstated .
All sitting. All concur.
COUNSEL FOR APPELLANT/ CROSS-APPELLEE,
Dennis Bradley, Administrator for the
Estate of Carmelo Angel Isidoro Mayo:
Stephen Randall Chappell
Mark Joseph Hinkel
Landrum 8s Shouse
P.O. Box 951
Lexington, KY 40588-0951
COUNSEL FOR APPELLEE/ CROSS-APPELLANT,
Commonwealth of Kentucky,
Uninsured Employers' Fund:
Charles Davis Batson
Assistant Attorney General
1024 Capital Center Drive
Frankfort, KY 40601
COUNSEL FOR CROSS-APPELLEE,
Bruce Rector, Guardian for Alexandra
Del Carmen Dorantes Mejia, a child:
Mark Joseph Hinkel
Landrum 8v Shouse
P .O . Box 951
Lexington, KY 40588-0951
COUNSEL FOR CROSS-APPELLEE,
Gary Wise, Pro se:
Gary Wise
2908 Jason Court
Lexington, KY 40503
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