Larry Dunn v. Gary Slater D/B/A Carol Dale Contracting

• Court: Kentucky Supreme Court
• Decided: June 19, 2008
• Docket: 2007 SC 000202
• Status: Unknown

Opinion

IMPORTANT NOTICE NOT TO BE PUBLISHED OPINION

THIS OPINION IS DESIGNATED "NOT TO BE PUBLISHED ." PURSUANT TO THE RULES OF CIVIL PROCEDURE PROMULGATED BY THE SUPREME COURT, CR 76 .28(4)(C), THIS OPINION IS NOT TO BE PUBLISHED AND SHALL NOT BE CITED OR USED AS BINDING PRECEDENT IN ANY OTHER CASE IN ANY COURT OF THIS STATE; HOWEVER, UNPUBLISHED KENTUCKY APPELLATE DECISIONS, RENDERED AFTER JANUARY 1, 2003, MAY BE CITED FOR CONSIDERATION BY THE COURT IF THERE IS NO PUBLISHED OPINION THAT WOULD ADEQUATELY ADDRESS THE ISSUE BEFORE THE COURT. OPINIONS CITED FOR CONSIDERATION BY THE COURT SHALL BE SET OUT AS AN UNPUBLISHED DECISION IN THE FILED DOCUMENT AND A COPY OF THE ENTIRE DECISION SHALL BE TENDERED ALONG WITH THE DOCUMENT TO THE COURT AND ALL PARTIES TO THE ACTION. RENDERED : JUNE 19, 2008 NOT TO BE PUBLISHED

osill'urme Court of 2007-SC-000202-WC

LARRY DUNN APPELLANT

ON APPEAL FROM COURT OF APPEALS V. 2006-CA-001845-WC 2006-CA-001886-WC WORKERS' COMPENSATION BOARD NO . 01-69346

GARY SLATER, D/B/A CAROL DALE CONTRACTING ; HON . HOWARD E . FRASIER, JR ., ADMINISTRATIVE LAW JUDGE ; AND WORKERS' COMPENSATION BOARD APPELLEES

AND

2007-SC-000238-WC

GARY SLATER, D/B/A CAROL DALE CONTRACTING APPELLANT

ON APPEAL FROM COURT OF APPEALS V. 2006-CA-001845-WC 2006-CA-001886-WC WORKERS' COMPENSATION BOARD NO . 01-69346

LARRY DUNN; HON . HOWARD E. FRASIER, JR., ADMINISTRATIVE LAW JUDGE AND WORKERS' COMPENSATION BOARD APPELLEES

MEMORANDUM OPINION OF THE COURT AFFIRMING

An Administrative Law Judge (ALJ) determined at the reopening of a settled

award that the claimant did not retain the physical capacity to return to work as a heavy

equipment operator after his injury and that his permanent impairment rating had

increased since the settlement. The ALJ awarded a triple income benefit under KRS

342 .730(1)(b) and (1)(c)1 that was based on the present impairment rating . The award

accounted for the benefit compromised in the settlement by crediting the employer with

a triple benefit that was based on the impairment rating at settlement. The Workers'

Compensation Board and the Court of Appeals affirmed .

The claimant argues on appeal that the ALJ erred by crediting the employer for

an amount greater than the benefits that it paid under the settlement . The employer

argues in a cross-appeal that the ALJ erred by finding an increased permanent

impairment rating because no medical expert assigned a rating for both points in time.

We affirm. KRS 342.125(7) prohibits any statement contained in a settlement

from being viewed as an admission against interest at reopening. Special Fund v.

Francis, 708 S.W .2d 641 (Ky. 1986), explains that a finding may not be disturbed on

appeal if it is supported by substantial evidence, i .e. , if it is reasonable under the

evidence. The Court of Appeals did not err because the ALJ construed KRS 342.125

correctly and because substantial evidence supported the findings at issue.

The claimant crushed the middle three fingers of his left hand on November 7,

2001, while working for the defendant-employer as a heavy equipment operator. Dr.

Wolff treated the injury and performed surgery. He released the claimant to return to work on April 1, 2002, and released him from treatment in December 2002 . At that

time, he assigned a 4.5% permanent impairment rating but failed to address the

claimant's physical capacity to return to work as a heavy equipment operator. The

claimant found work in a cabinet-making business and did not return to coal mining.

The employer paid temporary total disability (TTD) benefits voluntarily until April

2, 2002. Without obtaining legal representation or filing an application for benefits, the

claimant agreed to settle the permanent disability claim for a lump sum that was based

on a 4.5% permanent impairment rating and calculated under KRS 342.730(1)(b) for a

period of 425 weeks. Dr. Wolffs December 16, 2002, report was the only medical

record attached to the Form 111 Agreement as to Compensation . An AU approved the

agreement on January 28, 2003

The claimant continued to experience pain and extreme sensitivity in the affected

fingers due to a thinning of the tissue in the fingertips . He also experienced chronic

skin breakdowns, particularly in the middle finger. Nonetheless, he declined a

suggested surgery because it would necessitate a difficult rehabilitation and offer

limited benefit . He filed a motion to reopen on May 13, 2005, alleging a worsening of

condition and increased disability . He supported the motion with a report and affidavit

from Dr. Johnson, who evaluated him at his attorney's request.

The employer objected . It argued that Dr. Johnson's report failed to state what

permanent impairment rating he would have assigned at settlement and, therefore,

failed to show that the rating had increased since the settlement .

Dr. Johnson's report summarized the medical records in detail, noting that Dr.

Wolff had assigned a 4.5% permanent impairment rating in December 2002 . Dr. Johnson also performed an exhaustive physical examination of the left hand and

fingers . He noted that the AMA Guides to the Evaluation of Permanent Impairment

permitted the claimant's permanent impairment rating to be assigned using two different

methods and that they instruct the evaluator to report the higher rating . Dr. Johnson

assigned a 16% permanent impairment rating based on tissue loss, loss of range of

motion, and skin characteristics or, in the alternative, a 13% rating based on a total

amputation of the affected digits . He recommended restrictions specific to the deficits

in the hand and stated that the claimant did not retain the physical capacity to return to

the type of work performed at the time of injury. Dr. Johnson's affidavit stated that the

claimant's medical condition had deteriorated since the settlement and that his pain and

restrictions had also increased, which resulted in a greater occupational disability.

An ALJ determined that the claimant made a sufficient prima facie case for

reopening under KRS 342 .125 and Stambaugh v. Cedar Creek Mining Co . , 488 S .W.2d

681 (Ky. 1972), and assigned the claim for further adjudication . The employer then

submitted a letter from Dr. Wolff, who evaluated the claimant in July 2005. A functional

capacity evaluation performed at that time yielded a 7% permanent impairment rating

based on loss of range of motion. The figure did not include a rating for tissue loss or

skin characteristics . Dr. Wolff recommended the use of gloves for cold protection and

digit gel caps to decrease sensitivity in the fingertips but added no impairment rating for

those deficits . In his opinion, the claimant could continue to work as a cabinetmaker

with no restrictions .

The claimant testified at the hearing that his difficulty gripping objects had

increased since the settlement and that the strength in his hand had decreased . The pain in his fingers had begun to extend into his hand and forearm, resulting in a

constant dull ache that increased if he used his fingers extensively when it was cold.

He stated that he continued to work as a cabinetmaker but earned less than at the time

of the injury .

The AU determined that the claimant proved a change of disability with objective

medical evidence of increased impairment. Noting that any statement in the settlement

was not binding at reopening, the AU determined from the evidence that the claimant's

permanent impairment rating was 4 .5% at settlement, based on Dr. Wolfs December

2002 report, and that it was 16% at reopening, based on Dr. Johnson's report. The AU

also determined that the claimant lacked the physical capacity to return to work as a

scoop operator after the injury . The claimant's award consisted of a triple income

benefit under KRS 342.730(1)(b) and (1)(c)1, payable from the date of the motion to

reopen for the balance of the compensable period . As modified on reconsideration, it

accounted for the benefits compromised in the settlement by permitting the employer to

credit a triple benefit for a 4 .5% permanent impairment rating under KRS 342 .730(1)(b)

and (1)(c)1 .

The claimant complains that AU permitted the employer to credit more benefits

than it actually paid under the settlement and argues that the employer did not assert

that it was entitled to a greater credit until its petition for reconsideration. He argues

that KRS 342.125(4) prohibits a reopening from affecting a previous order or award

regarding sums already paid and requires any change to be ordered from the date the

motion to reopen is filed . He concludes that the AU erred by crediting more than the

weekly benefit the settlement provided under KRS 342 .730(1)(b) . We disagree . The claimant did not litigate his initial claim ; he agreed to settle it. A settled

award is the product of a compromise ; therefore, the disability or permanent impairment

rating that it states may or may not be accurate . Whittaker v. Rowland, 998 S.W .2d

479 (Ky. 1999), Beale v. Faultless Hardware, 837 S.W.2d 893 (Ky. 1992), and Newberg

v. Davis, 841 S.W .2d 164 (Ky. 1992), explain that the parties to a settlement are

entitled to the benefit of their bargain and that KRS 342 .125(7) prohibits any statement

contained in a settlement agreement from being considered as an admission against

interest if the claim is reopened . As a consequence, the AU must compare the

worker's actual disability at settlement and reopening. If it has increased, the worker

receives additional benefits for the difference . The claimant's award contained a credit

that was patently erroneous under the findings of fact; therefore, the AU did not err in

correcting it on reconsideration.

The lump sum that the claimant received in the settlement compromised any

existing right to weekly benefits for a period of 425 weeks. Only part of that period had

elapsed when he filed the motion to reopen . As he points out, KRS 342 .125(4)

prohibits an award entered at reopening from affecting previously-paid sums and

requires it to be prospective, from the date of the motion.

The award that the claimant received at reopening did not violate KRS

342,125(4) because the AU left his initial award in place and entered a prospective

award that provided increased income benefits for the balance of the 425-week period .

As corrected on reconsideration, the prospective award credited the employer to the

extent that the ordered benefits duplicated those previously compromised in the

settlement . The AU based the credit on proper findings of fact concerning the claimant's permanent impairment rating and physical capacity as they actually existed

at the time of the settlement.

The employer asserts erroneously that the claimant failed to "establish a post-

award increase in permanent impairment rating necessary to support an increase in

benefits under KRS 342 .125 ." Dingo Coal Co . v. Tolliver, 129 S .W.3d 367 (Ky. 2004),

explains that KRS 342.125(1)(d) is procedural . It addresses the prima facie showing

necessary to prevail on the initial phase of a reopening but does not address the

substantive proof requirements to obtain additional benefits under KRS 342 .730(1).

Colwell v. Dresser Instrument Division, 217 S .W .3d 213 (Ky. 2006), explained

subsequently that KRS 342.125(1)(d) requires only greater "impairment ;" whereas, KRS

342 .730(1)(b) requires a greater "permanent impairment rating ." The decision also

explained that evidence of a greater permanent impairment rating constitutes objective

medical evidence of a worsening of impairment . The applicable standard for reviewing

the prima facie showing is whether the decision to reopen and order additional proof

was an abuse of discretion . Sexton v. Sexton , 125 S.W.3d 258, 272 (Ky. 2004),

describes such a decision as being "arbitrary, unreasonable, unfair, or unsupported by

sound legal principles ."

The employer relies on Hodges v. Sager Corp . , 182 S.W .3d 497 (Ky. 2005), in

which the worker filed her motion to reopen on the day before the statute of limitations

expired . She submitted no medical evidence and accompanied her motion to reopen

with a motion to hold the matter in abeyance until she obtained a medical report.

Noting that KRS 342.125(1)(d) requires a worker to support a motion to reopen with

"objective medical evidence" that permits impairment to be compared at the two relevant points in time, the court determined that to permit a worker to obtain such

evidence after the motion was filed and after the statute of limitations had run was an

abuse of discretion that prejudiced the employer. Nowhere does Hodges state that a

comparison must be shown with evidence from a single medical expert who assigns a

permanent impairment rating for each point in time .

The decision to order additional proof in the present case was not an abuse of

discretion . Dr. Johnson noted the permanent impairment rating that Dr. Wolff assigned

in December 2002 and assigned a permanent impairment rating at reopening . It

provided an ample prima facie showing of a worsening of "impairment" since the

settlement for the purposes of KRS 342 .125(1)(d).

KRS 342 .285 designates the ALJ as the finder of fact with the sole authority to

weigh the evidence. KRS 342 .730(1)(b) requires evidence of a greater permanent

impairment rating to support a greater income benefit at reopening . The parties do not

dispute that the claimant's permanent impairment rating at settlement was 4.5% .

Although Dr. Wolff testified that it was 7% at reopening, the employer has pointed to

nothing that compelled the ALJ to rely on Dr. Wolff. Dr. Johnson's testimony that the

claimant's permanent impairment rating at reopening was 16% provided substantial

evidence to support the increased award . The claimant's testimony and the medical

evidence adequately supported findings that he did not retain the physical capacity to

return to his previous work either at settlement or at reopening.

To summarize, we conclude that the ALJ did not err in awarding an income

benefit based on a 16% permanent impairment rating for the balance of the 425-week

period and tripling it under KRS 342 .730(1)(c)1 because substantial evidence supported the award . Nor did the ALJ err in crediting the employer at reopening for an amount

equal to the benefit for a 4.5% permanent impairment rating under KRS 342 .730(1)(b)

as tripled under KRS 342 .730(1)(c)1 . The settlement extinguished the employer's

liability for disability that existed at that time, and substantial evidence indicated that the

credit equaled the benefit for that disability.

The decision of the Court of Appeals is affirmed .

All sitting . All concur.

COUNSEL FOR APPELLANT, LARRY DUNN:

MCKINNLEY MORGAN MORGAN, MADDEN, BRASHEAR & COLLINS 921 SOUTH MAIN STREET LONDON, KY 40741

COUNSEL FOR APPELLEE, GARY SLATER, D/B/A CAROL DALE CONTRACTING

W . BARRY LEWIS LEWIS AND LEWIS LAW OFFICES 151 EAST MAIN STREET SUITE 100 P.O. BOX 800 HAZARD, KY 41702-0800