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Under KRS 342.730(1)(c)2 if an employee returns to work at a wage equal or greater to his pre-injury wage and then experiences a period of cessation of that employment (temporary or permanent) for any reason, with or without cause, his weekly benefits shall double. The phrase “for any reason, with or without cause,” has been consistently interpreted to mean just that. Enter the Kentucky Supreme Court in Chrysallis House v. Tackett, 2008-SC-000221-WC, a to-be-published decision, addressing the plain meaning of KRS 342.730(1)(c)2 by re-defining just what “plain meaning” means .
In Tacket, the injured worker had returned to work at a wage equal or greater to his pre-injury wage. He then ceased working when his employer terminated him for stealing. He sought and obtained new employment, but at a lower wage. He reopened his claim alleging entitlement to the x2 factor under KRS 342.730(1)(c)2. The employer argued that Tacket was not entitled to double benefits because the cessation of work was attributable to a criminal act. The ALJ acknowledged that a criminal act was committed, but did not necessarily feel that the termination was related to the criminal act. Nonetheless, he found it irrelevant for purposes of application of the x2 multiplier.
The matter made it to the Supreme Court with Chrysallis House still arguing Ticket was not entitled to the x2 factor. The Supreme Court held:
KRS 342.730(1)(c)2 appears at first blush to provide clearly and unambiguously for a double benefit during a period of cessation of employment at the same or a greater wage “for any reason, with or without cause.” It is, however, a subsection of KRS 342.730(1), which authorizes income benefits to be awarded for “disability” that results from a work-related injury. We conclude for that reason that, when read in context, KRS 42.730(1)(c)2 permits a double income benefit during any period that employment at the same or a greater wage ceases “for any reason, with or without cause,” provided that the reason relates to the disabling injury.
In so finding, the court remanded the case to the ALJ for “a finding concerning whether employment at the same or a greater wage ceased for reasons related to his injury.”
Kentucky workers’ compensation practitioners were shocked by this decision, and realize they will now have to pursue an entirely new component of litigation in every claim involving potential application of the x2 factor, which will no doubt drive up workers’ compensation costs and stretch already overly burdened resources — at least until the Kentucky legislature addresses the matter.
FRANKFORT, KY (May 26, 2009) – A Stanton woman pleaded guilty to a felony count of mail fraud in United States District Court in Lexington after she, her husband and three Whitesburg area insurance agency employees gave false information to a workers’ compensation insurance carrier.
Tena Pennington, 44, will report to prison on June 30 and will serve a 15-month sentence. In addition, she must pay $272,362 in restitution to Kentucky Employers’ Mutual Insurance.
The case was investigated by the Kentucky Department of Insurance (DOI) Fraud Investigation Division, the United States Postal Inspection Service and the Internal Revenue Service Criminal Investigation Division.
According to court documents, Tena Pennington and John Pennington, her husband, worked with employees of CS&W Insurance to misrepresent the number of employees and the amount of payroll in John Pennington’s company, ZAG Resources Inc., and its connection to another Pennington company, JZ Trucking Inc. This resulted in lower workers’ comp premiums for John Pennington’s company.
Earlier this month, Thomas J. Childers, 60, of Hazard, and Karen Lynetta Fox-Burns, 56, of Whitesburg, both insurance agents, and Shannon Ranee Hogg, the daughter of Fox-Burns and a CS&W customer services representative, each pleaded guilty to a count of misprision of a felony (includes the act of concealing a felony), also in United States District Court in Lexington.
Childers, Fox-Burns and Hogg each received two-years probation, 100 hours of community service and a fine of $100. Childers was fined an additional $10,000.
John Pennington is scheduled to appear in court in November.
“This case was significant in the number of people and amount of money involved,” said DOI Commissioner Sharon P. Clark. “We are very pleased that the court sent a message that this type of fraud, which cheats the insurer and endangers employees, will not be tolerated.”
The publication of the Sixth Edition of the AMA Guides and its pronounced divergence from previous editions aroused a controversy of sorts within the Kentucky workers’ compensation community, not to mention other jurisdictions relying on the publication for determining the occupational disability of injured workers. For Kentucky in particular, KRS 342.730, requires that “the most recent edition of the Guides” is to be relied upon in determining impairment for the purpose of calculating occupational disability.
With the fervor over the Sixth Edition, the Kentucky legislature intervened.
In January of this year, Ouch! blogged on Senate Bill 199 in which the Kentucky Legislature instructed the Commissioner of the Department of Workers’ Claims to:
Study the feasibility and advisability of adopting the sixth edition of, ‘Guides to the Evaluation of Permanent Impairment,’ published by the American Medical Association, or of retaining the usage of the fifth edition of that publication. In conducting the study, the commissioner shall seek the input of groups representing labor, industry, commerce, and the medical and legal professions.
The issue was revisited during the 2009 Kentucky legislative session with House Bill 333, sponsored by B. Yonts, D. Butler, T. Turner, R. Webb, which proposed to “Amend KRS Chapter 342 to require use of the 5th edition of AMA guides; amend KRS 67A.460 to conform; repeal 2008 Acts Chapter 55.” The bill was later amended to require that recommendations relating to the adoption of the 6th edition or retention of the 5th edition of the AMA Guides be presented to the Kentucky Legislative Research Commission by January 4, 2010.
In particular, the Act mandates:
- That the Fifth Edition shall remain in effect until the 2010 regular session of the Kentucky general assembly for the purposes of its application to KRS 67A.460, 342.0011, 342.315, 342.316, 342.730, and 342.7305;
- The Commissioner of the Department of Worker’s Claims’ (DWC) shall study the feasibility and advisability of adopting the Sixth Edition or of retaining the usage of the Fifth Edition;
- The Commissioner is required submit a report summarizing his findings to the Legislative Research Commission by January 4, 2010;
- The Commissioner may by-pass the study and report requirements and adopt the Sixth Edition by administrative regulation if he determines “that the welfare of Kentucky’s workers would be materially enhanced by the adoption of the sixth edition.”
The full legislative history of HB 333 can be viewed here.
The full text of HB 333 can be accessed here.
This post can also be viewed at the LexisNexis Workers’ Compensation Law Center
