Opinion
NO. 2019-CA-001757-WC
05-01-2020
ANTHONY HELTON APPELLANT v. TM POWER ENTERPRISES, INC.; HON. GRANT S. ROARK, ADMINISTRATIVE LAW JUDGE; and WORKERS' COMPENSATION BOARD APPELLEES
BRIEF FOR APPELLANT: Peter J. Naake Louisville, Kentucky BRIEF FOR APPELLEE TM POWER ENTERPRISES, INC.: Douglas A. U'Sellis Louisville, Kentucky
NOT TO BE PUBLISHED PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-15-81290 OPINION
AFFIRMING
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BEFORE: COMBS, KRAMER AND K. THOMPSON, JUDGES. KRAMER, JUDGE: Anthony Helton appeals a decision of the Workers' Compensation Board ("Board") affirming a July 8, 2019, opinion and order of an administrative law judge ("ALJ") that determined KRS 342.730(4), as amended July 14, 2018, applied retroactively to terminate his award of income benefits from TM Power Enterprises, Inc., ("TM Power") when he reaches the age of seventy. Upon review, we affirm.
Kentucky Revised Statute.
Helton was injured at work on June 9, 2015. He asserted a workers' compensation claim against his employer, TM Power Enterprises, Inc. Ultimately, he was assigned an 88% permanent impairment rating and was presumed totally and permanently disabled due to his injury. See KRS 342.0011(11)(c)5. The parties eventually settled most of Helton's claim, agreeing he was entitled to receive weekly benefit payments of $420.79 along with continuing medical treatment. During the pendency of Helton's claim, however, Parker v. Webster County Coal, LLC (Dotiki Mine), 529 S.W.3d 759 (Ky. 2017), was decided by the Kentucky Supreme Court. There, it was determined that the version of KRS 342.730(4) in effect at the time of Helton's injury was unconstitutional because it violated principles of equal protection. That version provided in relevant part:
All income benefits payable pursuant to this chapter shall terminate as of the date upon which the employee qualifies for normal old-age 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.Id. at 766.
When the Kentucky Supreme Court deemed this provision unconstitutional in Parker, it did so on narrow grounds. The Court noted this provision had been unsuccessfully challenged before by litigants who had argued it violated the so-called "jural rights doctrine," principles of due process, and equal protection. But, "equal protection" was the only reason the Parker Court cited in favor of its conclusion that the provision was unconstitutional. Summarizing its conclusion in that regard, the Court explained:
The problem with KRS 342.730(4) is that it invidiously discriminates against those who qualify for one type of retirement benefit (social security) from those who do not qualify for that type of retirement benefit but do qualify for another type of retirement benefit (teacher retirement).Id. at 769 (footnote omitted).
On July 14, 2018, while Helton's claim remained pending, a new version of KRS 342.730(4) was enacted in response to Parker. This version simply limited payment of income benefits to the date on which the employee reaches the age of seventy (70).
Helton thereafter filed a "Notice of Constitutional Challenge," asserting that the application of the new version of KRS 342.730(4) to his claim violated the contracts clauses of the Kentucky and United States Constitutions. After filing his notice, Helton settled his claim but reserved the overarching issue of whether the duration of his benefits was properly limited by the new version of KRS 342.730(4). On April 23, 2019, Helton then filed a "Motion For Ruling On Issues Not Decided By Settlement Agreement" requesting the ALJ to determine the duration of his benefits pursuant to KRS 342.730(4). Helton's arguments were three-fold. First, he contended the July 2018 amendment to KRS 342.730(4) could not have retroactive effect because the General Assembly had not specifically stated it was designed to have retroactive effect and because it impaired the vested rights of injured workers. See KRS 446.080(3). Second, as indicated, Helton asserted that any retroactive application of the amended version of KRS 342.730(4) would violate the contracts clauses of the Kentucky and United States Constitutions. Third, Helton argued that if the present version of KRS 342.730(4) is invalid, it is severable; and that other portions of the act - or prior versions of KRS 342.730(4) that could otherwise take effect instead - should effectively entitle him to workers' compensation benefits for the duration of his disability, which is his lifetime.
But, by way of an order entered July 8, 2019, the ALJ determined KRS 342.730(4) was intended to have retroactive effect and thus limited payment of Helton's benefits to Helton's seventieth birthday. Helton then appealed to the Board. During the pendency of his appeal, the Kentucky Supreme Court rendered Holcim v. Swinford, 581 S.W.3d 37 (Ky. 2019), which confirmed the ALJ's interpretation and application of KRS 342.730(4). Id. at 41-44. Accordingly, the Board affirmed, determining that "whether the amended version of KRS 342.730(4) has retroactive effect has been decided," and that the third argument Helton had raised before the ALJ was therefore moot.
The ALJ and Board did not address Helton's constitutional arguments, however, because an administrative tribunal has no authority to determine the constitutionality of a statute. See Blue Diamond Coal Co. v. Cornett, 300 Ky. 647, 189 S.W.2d 963 (1945).
In his present appeal before this Court, Helton has wisely abandoned his argument that KRS 342.730(4) was not designated by the General Assembly to have retroactive effect. Rather, his focus is upon the constitutionality of that provision. Helton believes KRS 342.730(4) is unconstitutional and has no effect upon his claim for workers' compensation benefits because, in his view, it is an ex post facto law in conflict with the contracts clauses of the Kentucky and United States Constitutions.
Much of Helton's brief is dedicated to the argument both the ALJ and Board previously deemed moot, i.e., his assertion that if the present version of KRS 342.730(4) is invalid, it is severable; and that other portions of the act - or prior versions of KRS 342.730(4) that could otherwise take effect instead - should effectively entitle him to "lifetime benefits." Considering our disposition of this matter, it is unnecessary to address his assertion.
We disagree. As Helton points out, Section 19(1) of the Kentucky Constitution and Article 1, Section 10, Clause 1 of the United States Constitution prohibit laws which impair the obligation of contracts. But, they do not "prevent a state from enacting regulations or statutes which are reasonably necessary to safeguard the vital interests of its people." Maze v. Bd. of Directors for Commonwealth Postsecondary Educ. Prepaid Tuition Tr. Fund, 559 S.W.3d 354, 368 (Ky. 2018) (citation omitted). When determining whether a legislative act violated the contract impairment clause, we are to utilize the following standard:
In the recent case of Adams v. Excel Mining, LLC, No. 2018-CA-000925-WC, 2020 WL 864129 (Ky. App. Feb. 21, 2020) (unpublished), a panel of this Court considered and rejected substantially the same argument Helton offers in this appeal. Adams is currently pending review, but we agree with its reasoning and reach the same result.
(1) whether the legislation operates as a substantial impairment of a contractual relationship; (2) if so, then the inquiry turns to whether there is a significant and legitimate public purpose behind the regulation, such as the remedying of a broad and general social or economic problem; and (3) if, as in this case, the government is a party to the contract, we examine "whether that impairment is nonetheless permissible as a legitimate exercise of the state's sovereign powers," and we determine if the impairment is "upon reasonable conditions and of a character appropriate to the public purpose justifying its adoption."Id. at 369.
"The first step . . . is determining 'whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.'" Id. at 369-70 (citations omitted). Here, Helton notes that past versions of KRS 342.730(4) have allowed a benefit recipient to receive benefits for life. Specifically, the 1994 version of that statute allowed claimants to receive benefits for life, although they were subject to reduction from time to time. As TM Power points out, however, the new version of KRS 342.730(4) enhanced, rather than impaired, the benefits Helton otherwise would have received; whereas the version of KRS 342.730(4) in effect at the time Helton was injured would have terminated his benefits on his sixty-seventh birthday (i.e., the date he would qualify for normal old-age Social Security retirement benefits), the latest version does not terminate his benefits until his seventieth birthday.
The second stage of the . . . analysis involves a determination of whether the newly-imposed conditions that impair the contract can be justified by a significant and legitimate public purpose. Among the purposes that justify such impairment is legislation aimed at the remedying of a broad and general social or economic problem.Id. at 371 (citations omitted). In this respect, the Kentucky Supreme Court has found that limiting the duration of benefits is justified by a legitimate public purpose. The Court found that limiting the duration of benefits solves two economic problems: "(1) it prevents duplication of benefits; and (2) it results in savings for the workers' compensation system." Parker, 529 S.W.3d at 768. This is evident from the fact some version of limiting the duration of benefits has been in effect in Kentucky since the 1996 version of KRS 342.730(4).
The third stage of the . . . analysis examines whether the adjustment of "the rights and responsibilities of contracting parties [is based] upon reasonable conditions and [is] of a character appropriate to the public purpose justifying [the legislation's] adoption." Analysis under this prong varies depending upon whether the State is a party to the contract. When the State itself is not a contracting party, "[a]s is customary in reviewing economic and social regulation, . . . courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure."Maze, 559 S.W.3d at 372 (citations omitted). The contracts at issue here are not between individuals and the state, but between an employee, an employer, and a workers' compensation insurance provider. We, therefore, will defer to the judgment of the legislature.
Considering the above, we believe retroactive application of KRS 342.730(4) is reasonable and appropriate. As previously stated, limiting the duration of benefits has been a part of the workers' compensation system since 1996. Parker found the limitation which applied at that time to be unconstitutional. 529 S.W.3d 759. The Kentucky Legislature needed to act quickly to return the workers' compensation system to the status quo. Had the legislature not acted, employees who still had workers' compensation claims which were not final between the rendering of Parker and the effective date of the current version of KRS 342.730(4) could have been entitled to some amount of benefits for life. This would have placed a large financial burden on the workers' compensation system, employers, and insurers. Holcim holds that the Kentucky Legislature specifically intended that the current version of KRS 342.730(4) apply retroactively. 581 S.W.3d 37. As we have found it is constitutional, we conclude that it applies in this case. Accordingly, we AFFIRM.
ALL CONCUR. BRIEF FOR APPELLANT: Peter J. Naake
Louisville, Kentucky BRIEF FOR APPELLEE TM POWER
ENTERPRISES, INC.: Douglas A. U'Sellis
Louisville, Kentucky