By: George T.T. Kitchen and Stephanie D. Ross

On April 27, 2017, the Supreme Court of Kentucky declared unconstitutional the provision of Kentucky’s Workers’ Compensation Act that terminates income benefits on the date the employee qualifies for normal old-age retirement benefits.  In Marshall Parker v. Webster County Coal, LLC, et al and Webster County Coal, LLC v. Marshall Parker, et al, claim number 2014-SC-000536-WC, the Supreme Court held that KRS 342.730(4) violates the Equal Protection clause.

KRS 342.730(4), which was enacted with the overhaul of Kentucky’s workers’ compensation system effective 12/12/96, reads as follows:

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 constitutionality of the statute had previously been upheld by the Supreme Court in 2002.  In Parker, supra, the Administrative Law Judge held the claimant, who was 68 on the date of injury and received two years of TTD benefits, was entitled to no additional income benefits.  Parker argued the limitation on income benefits constituted age discrimination and violated his due process and equal protection rights.

Leaning heavily on the fact Kentucky teachers who are never employed outside the public education system do not qualify for normal old-age retirement under Social Security, the court wrote:

"The focus of the parties (and of the  majorities  in our prior  decisions) is on the  perceived  discrimination  between  injured  older  workers  and  injured younger workers. This focus  is understandable  because,  under  the  statute,  a worker who is injured more than 425 weeks (or 520 weeks under certain circumstances) before he  or  she  reaches  normal  Social  Security retirement  age will  receive  all of the  permanent  partial  disability  income  benefits  to which  he or she is entitled.  A worker who is injured less than 425 weeks before he or she reaches normal Social Security retirement age will not receive all of the permanent partial disability income benefits to which he or she is entitled. 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.

However, the equal protection problem with KRS 342.730(4) is that it treats injured older workers who qualify for normal old-age Social Security retirement benefits differently than it treats injured older workers who do not qualify … This disparate treatment does not accomplish the goals posited as the rational bases for KRS 342.730(4). The statute does prevent duplication of benefits, but only for non-teachers because, while nearly every other worker is foreclosed from receiving "duplicate benefits,” teachers are not. (p. 12-14, Opinion of the Court by Justice Keller)

Finally, although Parker did not argue it, KRS 342.730(4) violates the prohibition against special legislation found in Section 59 of the Kentucky Constitution. "A special law is legislation which arbitrarily or beyond reasonable justification discriminates against some persons or objects and favors others." [Cites omitted] As set forth above, KRS 342.730(4) favors those who will not qualify for normal old-age Social Security retirement while discriminating against those who do qualify.

In conclusion, the Kentucky Supreme Court held:

Having reviewed the record and the arguments of the parties, we discern no rational basis or substantial and justifiable reason for the disparate treatment of two groups of injured older workers. Thus, KRS 342.730(4) violates the right to equal protection and is constitutionally infirm. (p. 17, Opinion of the Court by Justice Keller)

This case is a true game-changer in the duration of income awards.  Without the termination of benefits provided in KRS 342.730(4), employees who are near or past their Social Security retirement age are nevertheless entitled to a full 425 weeks or 520 weeks of PPD.  Permanent total disability awards are payable for the duration of that disability; i.e., the life of the claimant, unless the employer can prove on reopening a change of disability or return to work.

One of the stated goals of the 12/12/96 amendments, including the provision to terminate benefits for those employees who qualify for Social Security retirement, was “to remedy the competitive disadvantage that Kentucky's employers faced due to the high cost of securing worker's compensation insurance.” 1996 Ky.Acts. (1st Ex.Sess.), § 90.  This decision has the potential to cost Kentucky employers and insurance carriers millions of dollars.

If you have any questions regarding this decision or any other issue involving on the job injuries, call one of our Workers’ Compensation Practice Group lawyers.

This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.


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