Joann Conn v. Ingram Micro

• Court: Court of Appeals of Kentucky
• Decided: April 14, 2022
• Docket: 2021 CA 000657
• Status: Unknown

Opinion

RENDERED: APRIL 15, 2022; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals

NO. 2021-CA-0657-WC

JOANN CONN APPELLANT

PETITION FOR REVIEW OF A DECISION v. OF THE WORKERS’ COMPENSATION BOARD ACTION NO. WC-18-82691

INGRAM MICRO; HONORABLE JONATHAN R. WEATHERBY, ADMINISTRATIVE LAW JUDGE; AND WORKERS’ COMPENSATION BOARD APPELLEES

OPINION AFFIRMING

** ** ** ** **

BEFORE: COMBS, GOODWINE, AND LAMBERT, JUDGES.

LAMBERT, JUDGE: JoAnn Conn has petitioned this Court for review of the

decision of the Workers’ Compensation Board (the Board) affirming the opinion

and order of the Administrative Law Judge (ALJ) awarding her permanent, partial

disability benefits pursuant to the 2018 version of Kentucky Revised Statutes (KRS) 342.730(4). The sole issue on appeal addresses the constitutionality of this

statute, including whether it may be retroactively applied. Because the Supreme

Court of Kentucky has upheld the constitutionality and retroactive application of

the 2018 version of KRS 342.730(4), we affirm.

Conn, who was born on August 29, 1952, began working for Ingram

Micro in 2008. She injured her right shoulder in a work-related accident on March

31, 2018, after which she developed compensatory symptoms in her left shoulder.

She filed an application for resolution of her injury claim on March 24, 2020. At

the time she filed her claim, Conn continued to work for Ingram Micro. Following

the benefit review conference, the contested issues were the amount of benefits

Conn was entitled to be awarded, the constitutionality of KRS 342.730(4), and

whether she was entitled to a multiplier. The ALJ found that Conn had sustained a

13% whole person impairment due to her shoulder impairments and that she was

permanently, partially disabled as a result. The ALJ also found that Conn did not

retain the ability to perform the same type of work that she did prior to the injury.

Therefore, Conn was entitled to the three multiplier pursuant to KRS

342.730(1)(c)1. By application of the 2018 version of KRS 342.730(4), the ALJ

stated that Conn’s permanent, partial disability (PPD) benefits were to terminate as

of the date she reached the age of 70.

-2- Conn appealed the constitutionality issue to the Board, which affirmed

in an opinion entered May 14, 2021. Conn argued that she was entitled to 425

weeks of PPD benefits pursuant to the 1994 version of KRS 342.740 as the

Supreme Court found the 1996 version, which included an old age Social Security

cutoff, to be unconstitutional in Parker v. Webster County Coal, LLC (Dotiki

Mine), 529 S.W.3d 759 (Ky. 2017), superseded by statute as stated in Cates v.

Kroger, 627 S.W.3d 864 (Ky. 2021). Retrospective application of the 2018

version of the statute, she argued, violated her equal protection rights and the

contracts clause of the United States and Kentucky Constitutions. The Board noted

that the Supreme Court of Kentucky had determined in Holcim v. Swinford, 581

S.W.3d 37 (Ky. 2019), that the amended 2018 version of KRS 342.730(4) had

retroactive application. Therefore, it affirmed the ALJ’s award of benefits subject

to the 2018 version of the statute. This petition for review now follows.

On appeal, Conn seeks review of the constitutionality of the 2018

amendment to KRS 342.730(4) and its retroactive application. She argues that the

version of KRS 342.730(4) in effect at the time of her injury controlled and that

her rights had become fixed and vested on that date. Ingram Micro disputes

Conn’s arguments and also asserts that she failed to properly preserve the

-3- constitutionality issue by not joining the Attorney General until she filed her brief

with the Board.1

This Court’s standard of review in workers’ compensation appeals is

well-settled in the Commonwealth. “The function of further review of the [Board]

in the Court of Appeals is to correct the Board only where [the] Court perceives the

Board has overlooked or misconstrued controlling statutes or precedent, or

committed an error in assessing the evidence so flagrant as to cause gross

injustice.” Western Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992).

While this petition was pending, the Supreme Court rendered two

opinions addressing the current version of KRS 342.730(4). In Cates v. Kroger,

627 S.W.3d 864 (Ky. 2021), and Dowell v. Matthews Contracting, 627 S.W.3d 890

(Ky. 2021), the Supreme Court upheld the constitutionality of the current version

and its retroactive application as we shall set forth below.

In Cates, the Supreme Court set forth the legislative and legal history

of the amendments to KRS 342.730(4) to provide a context to its analysis:

Before we undertake our analysis, we review for context two of our recent holdings addressing the General Assembly’s efforts to establish an outer limit on the receipt of workers’ compensation income benefits. In Parker v. Webster County Coal, LLC, a majority of this Court invalidated the 1996 version of KRS 342.730(4). That statute read:

1 Any error in preservation is moot as the Supreme Court has spoken on this issue.

-4- 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.

The majority in Parker found the statute unconstitutional for two reasons: (1) the statute created an arbitrary classification because the benefit cut-off date was dependent upon when the recipient received old-age social security benefits and (2) the statute was special legislation because it favored those who would not receive old-age social security benefits and disfavored those who would receive such benefits. Importantly, even though Parker invalidated the 1996 version of the statute, it reaffirmed this Court’s prior precedent in which we consistently held that treating older injured workers differently from younger injured workers is rationally related to the legitimate government interests in preventing a duplication of benefits and saving money for the workers’ compensation system. We said in Parker,

The rational bases for treating younger and older workers differently is (1) it prevents duplication of benefits; and (2) it results in savings for the workers compensation system. Undoubtedly both of these are rational bases for treating those who, based on their age, have qualified for normal Social Security retirement benefits differently from those who, based on their age, have yet to do so.

[Parker, 529 S.W.3d at 768.]

-5- Shortly after our holding in Parker, the General Assembly in 2018 enacted a new version of KRS 342.730(4) to read:

All income benefits payable pursuant to this chapter shall terminate as of the date upon which the employee reaches the age of seventy (70), or four (4) years after the employee’s injury or last exposure, whichever last occurs. In like manner all income benefits payable pursuant to this chapter to spouses and dependents shall terminate as of the date upon which the employee would have reached age seventy (70) or four (4) years after the employee’s date of injury or date of last exposure, whichever last occurs.

This change purported to rectify the shortcomings of the 1996 version as identified in Parker by untethering the cessation of a claimant’s workers’ compensation income benefits from the receipt of old-age social security retirement benefits, a benefit that Parker identified as not available to Kentucky’s retired teachers. The new statute now limits the duration of benefits by linking cessation for all income beneficiaries to the later of two events (1) reaching age 70, or (2) four years after injury or last injurious exposure.

In Holcim v. Swinford[, 581 S.W.3d at 42,] we addressed retroactive application of the 2018 amendment. While not explicitly stated in the statute as codified, we found a clear legislative intent that the amendment apply retroactively to all claims where (1) the injury occurred after December 1997 and (2) has not been fully and finally adjudicated through the appellate process, or for which time to file an appeal has not lapsed, as of the effective date of the Act, July 14, 2018. We declined to address the constitutionality of its effect, or the constitutionality of the amendment’s text because those

-6- issue[s] were not argued until after the Court of Appeals had rendered its opinion. The cases at hand now present the issue remaining after Holcim, which is the constitutionality of the amendment and its retroactive application.

Cates, 627 S.W.3d at 868-70 (footnotes omitted).

The Cates Court first held that the 2018 amendment to KRS

342.730(4) did not violate the equal protection clause under either the 14th

Amendment to the United States Constitution or §§ 1, 2, and 3 of the Kentucky

Constitution:

[W]e find the 2018 amendment classifies recipients based only on age, entirely unrelated to their old-age social- security eligibility. This age classification prevents a duplication of benefits, which we have found, to be a legitimate state interest and applies to all those receiving workers’ compensation equally. So 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.

Cates, 627 S.W.3d at 871. The Court then held that the retroactive application of

the 2018 amendment to KRS 342.730(4) did not create an arbitrary class of

litigants:

We find here no arbitrary exercise of legislative authority in the retroactive application of the amendment. After Parker, the General Assembly acted swiftly to amend the statute to fill the statutory gap with constitutional norms. The legislature “may amend the law and make the change applicable to pending cases, even when the amendment is outcome determinative.” Because the 1996 version had been invalidated and a new

-7- version enacted, the General Assembly was left to decide if pending claims would be governed by the 1994 version of the statute – a statute that had not been in effect for over 20 years – or to allow for current claims to be decided under the new amendment. The legislative body apparently chose the latter, and that choice was its prerogative.

Id. 871-72 (footnotes omitted).

In Dowell, the Supreme Court addressed whether the 2018

amendment to KRS 342.730(4) violated the federal and state contracts clause.

Adams and Dowell both argue that applying the current version of KRS 342.730(4) to their claims violates the Contracts Clause of both the United States and Kentucky Constitution. Article 1, Section 10, Clause 2 of the United States Constitution reads:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Similarly, Section 19 of the Kentucky Constitutions provides, “No ex post facto law, nor any law impairing the obligation of contracts, shall be enacted.”

627 S.W.3d at 894. However, the Supreme Court did not perform a Contracts

Clause analysis in this case “because the Workers’ Compensation Act (WCA) does

not constitute a contract between Kentucky workers and their employers or the

state. Instead, the WCA is a statutory scheme that may be amended as the General

-8- 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. While changes to statutes may result in other constitutional issues, such as a violation of due process or constitute special legislation, a Contracts Clause issue is impossible in this matter because there is simply no contract or contractual right for the statutory amendment to impair.

Id. at 896 (footnote omitted).

The Supreme Court then addressed the retroactivity issue in the

context of a claimant’s right to a certain duration or amount of benefits received.

Dowell and Adams argue that applying the new version of KRS 342.730(4) is unconstitutional because they have a vested right to the benefits assigned to them by the ALJ and Workers’ Compensation Board. We have also briefly addressed this argument in a companion opinion, also rendered today, Cates v. Kroger. We will address it here to clarify that litigants like Adams and Dowell do not have a vested right to certain benefits. While they have a vested right to some benefits by statute, they do not have a vested right to “certain” benefits until their claim for benefits has been determined by final order.

A benefits-recipient’s right to compensation becomes fixed and vests on the date of the injury. The right to receive benefits is a substantive issue and the injury date is controlling under substantive law. We have long held “that where a suit has been instituted under a statute giving a cause of action and a right to maintain

-9- such action, and once the action has been prosecuted to final judgment, and the rights of the parties fixed, such rights then become vested in the judgment, and thereafter a legislature can pass no law which impairs the validity of the vested right thus obtained.” [City of Paris v. Kentucky Utils. Co., 280 Ky. 492, 133 S.W.2d. 559, 561 (1939).] So, Dowell and Adams have a vested, substantive right to litigate their benefits, a right that cannot be taken away by statutes that have since come into existence since filing their claim. But in contrast, their right to a certain duration or amount of benefits has not vested and will not do so until they receive a final decision of their claims. So, the 2018 amendment to KRS 342.730(4) “[does] not create new or take away vested rights” of plaintiffs like Adams and Dowell, and its retroactive application is constitutional.

Because Adams’s and Dowell’s benefits have not been completely litigated, their potential awards must conform with the changes in the applicable law effective during the litigation process. And in Holcim we found that the legislature intended the law to apply to all claims currently pending. So the 2018 amendment applies to Dowell and Adams even though the only issue left to litigate is the effect of the 2018 amendment on the duration of their benefits. While we agree with Adams that the 2018 amendment impairs his benefits award, Adams had no vested right in the outcome of his claim before the ALJ or the Board. As we stated in Martin v. Warrior Coal, LLC, [671 S.W.3d 391, 397-98 (Ky. 2021),] the legislature intended for the 2018 amendment of KRS 342.730(4) to apply to all pending appeals, and Adams’s appeal was pending when the Court of Appeals ruled. In fact, the case is still not fully litigated.

Likewise, Dowell’s benefits claim was decided after we had invalidated the 1996 amendment and the ALJ and the Board resurrected the 1994 version of the statute as applicable to Dowell’s claim. By the time Dowell’s appeal reached the Court of Appeals, the 2018

-10- amendment had become effective, and we had determined the statute applied retroactively. So Dowell’s benefits were not final then and are not now. Because Dowell’s award is still being litigated, we find the 2018 amendment to KRS 342.730([4]) controls.

As we stated in Cates v. Kroger, “we reiterate our holding in Holcim that the legislature intended for the new amendment to apply to all pending appeals with injury dates occurring after December 1996.” We are bound by the text of the statute and unless it conflicts with a constitutional provision, we must uphold the laws the legislature has enacted. Neither Adams nor Dowell had a vested right to certain benefits, only a right to some benefits that are to be determined under current law.

Dowell, 627 S.W.3d at 897-98 (footnotes omitted).

The above-cited cases constitute binding authority of the Supreme

Court of Kentucky, which this Court must follow pursuant to Supreme Court Rule

(SCR) 1.030(8)(a) (“The Court of Appeals is bound by and shall follow applicable

precedents established in the opinions of the Supreme Court and its predecessor

court.”). Because Conn’s injury occurred after 1996 and her award of benefits is

still being litigated, the 2018 amendment to KRS 342.730(4) controls in this case.

For the foregoing reasons, the opinion of the Workers’ Compensation

Board affirming the ALJ’s award is affirmed.

ALL CONCUR.

-11- BRIEF FOR APPELLANT: BRIEF FOR APPELLEE INGRAM MICRO: Stephanie N. Wolfinbarger Louisville, Kentucky Rodney J. Mayer Louisville, Kentucky

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