You are currently browsing the monthly archive for July, 2009.
The following post can also be viewed at the LexisNexis® Workers’ Compensation Law Blog
In the recent Kentucky Court of Appeals decision of Max and Erma’s v. Lane, designated to be published, employer Max and Erma’s received somewhat of a chiding by the Court for “misinterpreting” and “confusing” the law.
The facts were relatively straightforward. At the ALJ level below, claimant established her entitlement to benefits based on a functional impairment rating of 2%, and was awarded permanent partial disability benefits for 425 weeks based on that rating. However, with regard to past and future medical expenses, the ALJ found that claimant’s need for medical care was temporary and terminated medical benefits as of the date impairment was assessed. Claimant appealed and the Board reversed the ALJ, holding that future medical benefits are mandated per KRS 342.020(1) when there is a finding of a permanent impairment rating per the AMA Guides.
From that decision, Max and Erma’s appealed to the Court of Appeals, raising as the sole issue whether the Board erred in reversing the ALJ’s ruling regarding Lane’s eligibility for future medical benefits.
The court cited to KRS 342.020(1), FEI Installation, Inc. v. Williams, 214 S.W.3d 313 (Ky. 2007), and National Pizza Co. v. Curry, 802 S.W.2d 949 (Ky. App. 1991) for the proposition that an employer can be found responsible for reasonable and necessary medical treatment even in the absence of permanent impairment or curative effect.
It then noted that because a permanent impairment rating was assessed against Lane’s condition, KRS 342.020(1) “obligated Max & Erma’s to pay for any reasonable and necessary medical treatment for the cure and relief of Lane’s disability.”
The Court specifically noted that while Lane’s impairment was permanent, “so too is Max & Erma’s duty to pay for medical treatment…” As such, the court affirmed the Board’s reversal of the ALJ below.
The Court chided Max & Erma’s for attempting to rely on Mullins v. Mike Catron Construction/Catron Interior Systems, Inc., 237 S.W.3d 561 (Ky. App. 2007) for the proposition that an employer required to pay permanent income benefits should not in all circumstances be obliged for future medical benefits. The Court explained to Max & Erma’s that its reliance on Mullins was incorrect and distinguished Mullins noting that in the case before them a permanent disability award had been rendered making future medical benefits mandatory, not permissive as with Mullins. The court also cited to the Supreme Court case of FEI Installation, Inc. v. Williams, 214 S.W.3d 313 (Ky. 2007) which the Court of Appeals relied on for its holding in Mullins.
The Court took additional issue with Max & Erma’s second argument that Lane was not entitled to future medical benefits because the ALJ made no finding that future treatment would be “reasonably required.” To this argument, the Court noted
Max & Erma’s favors this Court with no authority directly supporting this proposition . . . [and] in so arguing . . . necessarily confuses one distinct type of proceeding with another: a proceeding to grant an award of future medical benefits, versus a proceeding to reopen an existing award of medical benefits on the grounds of a medical fee dispute.
Thus, finding no error in the Board’s reversal of the ALJ, the Court affirmed the Board’s opinion. All judges concurred.
Note: All cases cited above can be found at http://courts.ky.gov/
Why Twitter is 100000x better than Facebook. An intriguing, compelling and “that makes sense” kind of article for all those socializing in the “cloud.”
July 27, 2009 — KACo Sets Aside $250K to Brace for Audit
July 26, 2009 — Expensive Ad Campaigns — The Latest Controversy
July 25, 2009 — Jenkins resigns
July 23, 2009 — KACo takes away credit cards, calls for review
July 23, 2009 — KACo president to propose new expense policies
July 19, 2009 — Herald-Leader Editorial — Arnold Needs to ‘get Over’ Snowing Folks
July 17, 2009 — Arnold Defends KACo — “Get Over It,” He says
July 15, 2009 — Pike County Judge Executive Assails KACo
July 13, 2009 – No Refund for KACo’s Strip Club Charges
July 10, 2009 — More Charges for Escort Services Found on KACo Credit Cards
July 9, 2009 Herald-Leader Editorial
July 7, 2009 — Department of Insurance Makes Inquiries
The Kentucky Association of Counties (KACo), is a Kentucky non-profit organization which provides various services, including workers’ compensation insurance services, for its county members. While membership is voluntarily, all Kentucky counties are members. The Lexington Herald-Leader recently presented an in depth series on the questionable and wasteful spending of the organization and its top executives. The series has prompted the State Auditor to investigate KACo’s practices. This will not be the first time KACo has been under such scrutiny. The entire series can be read here.
Updates will be posted.
THIS POST CAN ALSO BE READ AT LEXISNEXIS
The recent case of Zurich v. Lexington Coal, from a substantive standpoint, involves a Chapter 11 Bankruptcy, but it still might prove instructive for underwriters of workers’ compensation policies.
In Zurich v. Lexington Coal, the insurance company sought priority in Bankruptcy Court over unsecured creditors on $14.5 million in prospective payments that it would eventually have to make on claims brought under an old workers’ compensation insurance policy with Lexington Coal. The policy in question was a ”deductible policy”, where claims are paid in full by the insured with the deductibles later being recouped from the debtor). Under that policy, Zurich agreed to pay the employer’s future workers’ compensation liabilities, with the employer agreeing to reimburse it for a percentage of such pursuant to the terms of the contract.
The issue at hand was whether the insurance company’s future payments constituted “administrative expenses” under the Bankruptcy Act, thereby affording their estimated future expenses priority over the debtor’s obligations to unsecured creditors under 11 U.S.C. 502 (b)(1)(A). In other words, did the creditor’s estimated future expenses under a workers’ compensation policy arise at the time the contract was made, or when those financial obligations actually come to fruition?
The United States Supreme Court elected not to grant Zurich’s petition for writ of certiorari, effectively affirming the United States 6th Circuit Court, the District Court and the Bankruptcy court all of which had previously determined that the administrative expense priority extends only to actual payments made during the debtor’s bankruptcy case, even if later payments arise in connection with a contractual obligation that originated prior to the bankruptcy claim.
