10 workers injured at 2 Ky. mines; probe launched – Latest News – Kentucky.com

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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 6^th 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.

The Kentucky DWC has announced that the mileage reimbursement rate beginning July 1, 2009 through September 30, 2009 is 42¢ per mile.

The Controller’s website has been updated to reflect this change.  Refer to the Controller’s web page for all related travel information at http://finance.ky.gov/internal/travel/

The Kentucky DWC has issued the new hospital fee schedule, which took effect June 5, 2009.

Click here for new hospital fee schedule.

Click here to read the DWC’s EDI News for June 2009.

Click here to follow Marcus Roland’s tweets live from CompEd.

Click here to see the January-March 2009 DWC Quarterly Activity Report

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.”