Kentucky Supreme Court Rules Section of Workers’ Compensation Statute Unconstitutional

By Kevin Weaver

Parker v. Webster County Coal removes age limitations on workers’ compensation income benefits

In a decision with serious financial implications for Kentucky employers and workers’ compensation insurance carriers, the Kentucky Supreme Court declared KRS 342.730(4) to be unconstitutional because it treats people of the same age differently, namely those who qualify for Social Security retirement benefits and those who do not. That particular section of the statute previously directed that all income benefits under the Kentucky Workers’ Compensation Act terminated when injured employees actually qualified for Social Security old-age retirement benefits, not merely reached the necessary age.

The most notable exceptions to the age-related termination of workers’ compensation income benefits were teachers and non-qualifying aliens who are not eligible for Social Security retirement. In Kentucky, teachers do not qualify for Social Security retirement because they have their own retirement plan. Therefore, workers’ compensation income benefits for teachers and non-qualifying aliens never terminated due to age under KRS 342.730(4), while all other workers’ income benefits did.

As a result of Parker v. Webster County Coal, all permanent partial disability (PPD) income benefits will be paid a full 425 or 520 weeks regardless of an employee’s age at time of injury. More significantly, all permanent total disability (PTD) awards will be paid on a weekly basis at the rate of two-thirds of an employee’s average weekly wage for the employee’s lifetime.

One of many questions that the Parker decision poses is: Can previously decided claims that limited benefits under KRS 342.730(4) be reopened to claim additional benefits? The short answer is maybe if the statute of limitations for reopening for increased income benefits has not expired. The argument against allowing such reopenings is that KRS 342.730(4) had been found constitutional in two relatively recent Kentucky Supreme Court cases, McDowell v. Jackson Energy RECC, 84 S.W.3d 71 (Ky. 2002) and Keith v. Hopple Plastics, 178 S.W.3d 463, 466 (Ky. 2005).

Self-insured employers and insurance companies reasonably relied upon those cases in setting claims reserves and policy premiums. However, employers and insurance companies should expect a flurry of activity as plaintiffs’ attorneys attempt to reopen these claims and recover additional income benefits. We believe there is a basis to defend such reopenings, but these claims will result in previously unanticipated litigation fees and the final outcome of this issue is uncertain.

Parker is a huge decision that could cost employers and insurance companies millions and millions of dollars. Sturgill Turner attorneys are working with state legislators on a bill to revise KRS 342.730(4). The proposal is to amend the statue to provide for the termination of workers’ compensation income benefits when claimants reach the age set forth for Social Security old-age retirement benefits, regardless of whether they actually qualify for such benefits. Although the Kentucky Legislature may address this issue in the next special or regular session, Parker will affect employers and insurance companies in the short term.

Sturgill Turner’s workers compensation team will be monitoring the impact of the Parker decision and providing updates as they unfold.