Opinion
2020-SC-0510-WC
12-16-2021
KIMBERLY COFFEY APPELLANT v. MCCREARY COUNTY FISCAL COURT; HONORABLE GRANT S. ROARK, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES
COUNSEL FOR APPELLANT: Mark D. Knight COUNSEL FOR APPELLEE: Marcel Smith Fogel Keller Walker, PLLC ADMINISTRATIVE LAW JUDGE: Hon. Grant S. Roark WORKERS' COMPENSATION BOARD: Michael W. Alvey Chairman
NOT TO BE PUBLISHED
ON APPEAL FROM COURT OF APPEALS NO. 2020-CA-0088 WORKERS' COMPENSATION BOARD NO. WC-16-91920
COUNSEL FOR APPELLANT: Mark D. Knight
COUNSEL FOR APPELLEE: Marcel Smith Fogel Keller Walker, PLLC
ADMINISTRATIVE LAW JUDGE: Hon. Grant S. Roark
WORKERS' COMPENSATION BOARD: Michael W. Alvey Chairman
MEMORANDUM OPINION
I. BACKGROUND
Kimberly Coffey had worked for the McCreary County Road Department for eighteen years as a secretary/dispatcher when she suffered a crushing injury to three toes on March 2, 2016. Coffey testified she had gone into the garage area to place some paperwork in an ambulance when a hydraulic lift malfunctioned and dropped the vehicle onto her foot. It took her coworkers five to ten minutes to pry the lift from Coffey's foot. As a result of the work injury, Coffey developed Complex Regional Pain Syndrome with a psychological component. She filed a workers' compensation claim against her employer, the McCreary County Fiscal Court. On August 5, 2019, the Workers' Compensation Administrative Law Judge (ALJ) determined Coffey is permanently and totally disabled as a result of the work injury. After a petition for reconsideration was filed, the ALJ ruled that Coffey's benefits would terminate at the age of seventy pursuant to Kentucky Revised Statutes (KRS) 342.730(4). The day before the ALJ ruled on the petition for reconsideration, this Court rendered its decision in Holcim v. Swinford, 581 S.W.3d 37 (Ky. 2019), holding the 2018 amendment to KRS 342.730(4) was retroactive. Coffey also raised constitutional issues regarding the retroactivity of the statute in her petition for reconsideration, but the ALJ had no authority to address them and passed them for further appellate review.
Coffey appealed the ALJ's decision to the Workers' Compensation Board and the Board affirmed, also acknowledging Coffey's challenge to the constitutionality of the amendment and its retroactive application. Like the ALJ, the Board lacked authority to rule on the constitutionality of the statutory amendment. Coffey then appealed to the Court of Appeals, which affirmed her award and held KRS 342.730(4) was constitutional as written and as applied to Coffey's claim. Coffey now appeals to this Court, arguing: (1) KRS 342.730(4) violates the equal protection clauses of the United States and Kentucky Constitutions, as written and as retroactively applied; (2) KRS 342.730(4) violates Kentucky's constitutional provisions prohibiting special legislation; (3) retroactive application of KRS 342.730(4) denies her due process rights; and (4) KRS 342.730(4) violates her rights under the contracts clauses of the United States and Kentucky Constitutions. For the following reasons, we hold that KRS 342.730(4) is constitutional as written and as applied and affirm the Court of Appeals.
II. ANALYSIS
KRS 342.730(4) concerns the termination of workers' compensation benefits. In Parker v. Webster Cnty. Coal, LLC (Dotiki Mine), 529 S.W.3d 759 (Ky. 2017), this Court found the then-current 1996 version of KRS 342.730(4) unconstitutional on equal protection grounds. The 1996 version of the statute tied the termination of workers' compensation benefits to the time at which the employee qualified for old-age Social Security benefits. This Court held this was an arbitrary distinction with no rational relation to a legitimate state interest. Id.
In Holcim, 581 S.W.3d at 41, this Court considered whether a 2018 version of KRS 342.730(4) could be applied retroactively. Quoting a Legislative Research Commission comment beneath the statute, we held in Holcim that the amendment "applies to those cases which 'have not been fully and finally adjudicated, or are in the appellate process, or for which time to file an appeal [h]as not lapsed, as of the effective date of this Act.'" Id. at 44.
Whereas the pre-Parker version of KRS 342.730(4) linked workers' compensation benefit termination to the time at which the worker qualified for old-age Social Security benefits (and thereby violated an individual's right to equal protection under the law by arbitrarily treating similarly-situated individuals differently), the 2018 version of the statutory subsection links the termination of benefits to the injured employee attaining a particular age. Under the amendment, a claimant's benefits terminate on his or her seventieth birthday or four years after his or her work injury or exposure, whichever occurs later. Coffey argues this statute is constitutionally infirm on multiple grounds.
A. Equal Protection
Coffey first argues the amendment to KRS 342.730(4) violates her rights to equal protection under the law, as guaranteed by the United States and Kentucky Constitutions. The basis for her argument is that the amendment treats older injured workers and younger injured workers differently.
The 14th Amendment of the United States Constitution and Sections 1, 2, and 3 of the Kentucky Constitution contain the respective federal and state equal protection clauses. Their "goal . . . is to 'keep[ ] governmental decision makers from treating differently persons who are in all relevant respects alike.'" Vision Mining, Inc. v. Gardner, 364 S.W.3d 455, 465 (Ky. 2011) (quoting Nordlinger v. Hahn, 505 U.S. 1, 10 (1992)). Because "[w]orkers' compensation statutes concern matters of social and economic policy," if a rational basis or substantial and justifiable reason supports the classifications they create, we must uphold it. Id. at 466 (citing Cain v. Lodestar Energy, Inc., 302 S.W.3d 39, 42 (Ky. 2009)). "In sum, we will uphold the age limitation here so long as it rationally relates to a legitimate state objective." Cates v. Kroger, 627 S.W.3d 864, 871 (Ky. 2021).
As this Court has stated, "acts of the legislature carry a strong presumption of constitutionality." Wynn v. Ibold, Inc., 969 S.W.2d 695, 696 (Ky. 1998). "Doubts regarding constitutionality must be resolved in favor of upholding the law." Cates, 627 S.W.3d at 870. Furthermore, "the principle of reducing workers' compensation benefits at an age when workers typically become eligible for alternative forms of income replacement is not new to Kentucky." Wynn, 969 S.W.2d at 696.
We took up the constitutionality of the 2018 amendment to KRS 342.730(4) in Cates, holding, "the current version of KRS 342.730(4) is not violative of the Equal Protection Clause because the age classification is rationally related to a legitimate state purpose." 627 S.W.3d at 871. We do not depart from that recent holding today.
As this Court held in Parker, "[t]he rational bases for treating younger and older workers differently [are]: (1) it prevents duplication of benefits; and (2) it results in savings for the workers' compensation system." 529 S.W.3d at 768. Four years later, we stated, "we remain convinced that preventing a duplication of wage-loss protection programs and promoting the solvency of the workers' compensation system are legitimate state interests." Cates, 627 S.W.3d at 870. We are unpersuaded to deviate from this position by Coffey's arguments that KRS 342.730(4) does not prevent duplicative income replacement benefits, avoid duplicative governmental benefits, or provide a savings for the workers' compensation system; nor are we convinced that savings to the workers' compensation system is not a valid basis to uphold a statute in the face of an equal protection argument. Again, today, we hold the statute passes the rational basis test as it "treats alike all those who receive workers' compensation benefits." Id. at 871.
Coffey argues that even if the statutory amendment were constitutional on equal protection grounds (as we have held), it is unconstitutional to apply the statute retroactively to her claim, as her injury occurred before the effective date of the amendment. However, "[t]he legislature 'may amend the law and make the change applicable to pending cases, even when the amendment is outcome determinative.'" Id. (quoting Bank Markazi v. Peterson, 578 U.S. 212 (2016)). Here, this Court declared one version of the statutory subsection unconstitutional and the legislature passed a new subsection, providing for retroactive effect-and the legislature was within constitutional bounds in so doing.
B. Special Legislation
Coffey next argues KRS 342.730(4) violates Kentucky's constitutional provisions regarding special legislation. Specifically, she points to the prohibitions in Section 59 of the Kentucky Constitution, which state, in pertinent part:
The General Assembly shall not pass local or special acts concerning any of the following subjects, or for any of the following purposes, namely:
. . . .
Fifth: To regulate the limitation of civil or criminal causes.
. . . .
Twenty-fourth: To regulate labor, trade, mining or manufacturing.
Coffey links this argument to her equal protection argument-essentially arguing the legislation discriminates against older workers and favors business owners in an attempt to save employers money on workers' compensation insurance premiums. She also argues older workers are discriminated against because, if they receive permanent partial disability benefits, they will not receive the entirety of their awards, unlike younger injured workers. This is another attempt at making the same argument under a different veil. We reject it, too, as all injured workers' benefits terminate at age seventy under the amendment.
This Court addressed a similar special legislation argument in Cates, holding the amended statutory subsection was not special legislation as it did not apply "to a particular individual, object or locale." 627 S.W.3d at 872 (citing Calloway Cnty. Sheriff's Dep't v. Woodall, 607 S.W.3d 557, 573 (Ky. 2020)). In Cates, we stated "[t]he argument that the statute differentiates between older and younger workers is a classification argument, which is properly considered under sections 1, 2, and 3 of the Kentucky Constitution." Id. And, just as in Cates, we reiterate: "KRS 342.730(4) is simply not special legislation." Id.
C. Due Process
Coffey also argues the retroactive application of KRS 342.730(4) stripped her of her property right to workers' compensation benefits in violation of due process rights, as she did not receive prior notice or a hearing. We addressed this issue in Cates, holding the claimants had no vested right in the duration and amount of their benefits "until they have received a final judgment in their favor." 627 S.W.3d at 873. The same is true here. Because Coffey had no vested right in the duration of her benefits, a statute terminating them at a specific age did not deny her due process.
D. Contracts Clause
Finally, Coffey argues the retroactive application of KRS 342.730(4) denies her rights under the contracts clauses of the federal and state constitutions. Both the Constitution of the United States and the Kentucky Constitution protect citizens of our Commonwealth from the state's infringement on their right to contract. Article 1, Section 10, Clause 2 of the United States Constitution reads, in pertinent part, "[n]o State shall . . . pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts . . . ." Likewise, Section 19 of the Kentucky Constitution provides, "[n]o ex post facto law, nor any law impairing the obligation of contracts, shall be enacted." Coffey argues KRS 342.730(4) violates these contracts clauses.
In Dowell v. Matthews Contracting, 627 S.W.3d 890, 895 (Ky. 2021), this Court stated if "the fundamental premise of a Contracts Clause analysis-the existence of a contract-is absent . . . our analysis ends." See Gen. Motors Corp. v. Romein, 503 U.S. 181, 190 (1992) (holding Contracts Clause inapplicable because the employer and employee did not assent to specific statutory terms). Therefore, we must first determine whether a contract exists in this case.
Coffey "point[s] to no contract or place within the statutory scheme where [she is] guaranteed certain benefits that were mutually assented to and bargained for." Dowell, 627 S.W.3d at 895. This Court has held "the Workers' Compensation Act (WCA) does not constitute a contract between Kentucky workers and their employers or the state." Id. at 894. Rather than providing contractual rights, we explained, "the WCA is a statutory scheme that may be amended as the General Assembly chooses, provided it fits within our constitutional framework." Id. at 894-95. "The workers' compensation system is controlled by the state and is governed by legislative enactments. It is not a contract . . . between employers and their employees. Changes to the relevant statutes, therefore, do not create a Contracts Clause issue." Id. at 896.
Since the Workers' Compensation Act does not constitute a contract, "a complete Contracts Clause analysis is unnecessary." Id. at 894. The protections of the clauses simply do not apply. "Because the WCA does not form a contract, there are no contractual rights that the amendment to KRS 342.730(4) could infringe." Id. at 895. Just as in Dowell, we hold there was no contracts clause violation.
III. CONCLUSION
For the foregoing reasons, we affirm the Court of Appeals.
All sitting. All concur.