OPINION ENTERED: MARCH 13, 2009
CLAIM NO. 06-01307 & 06-01037
MARY BELL, WIDOW AND
EXECUTRIX OF THE ESTATE
OF RODNEY BELL, DECEASED PETITIONER
VS. APPEAL FROM HON. R. SCOTT BORDERS,
ADMINISTRATIVE LAW JUDGE
CONSOL OF KENTUCKY, INC.
and HON. R. SCOTT BORDERS,
ADMINISTRATIVE LAW JUDGE RESPONDENTS
OPINION
AFFIRMING
* * * * * *
BEFORE: GARDNER, Chairman, COWDEN and STIVERS, Members.
COWDEN, Member. Mary Bell (“Bell”) appeals from the October 13, 2008 opinion and order on remand of Hon. R. Scott Borders Administrative Law Judge (“ALJ”) substituting Mary L. Bell as the real party in interest in place of Rodney D. Bell, deceased and as payee of the remaining benefits provided in a settlement agreement approved on April 25, 2007. The opinion and order on remand provided benefits were to be paid to the widow at 50% of the rate specified in the settlement agreement pursuant to KRS 342.730(3). Bell also appeals from the December 4, 2008 order denying Bell’s petition for reconsideration. On appeal, Bell argues 1) KRS 342.730 has no applicability in the determination of benefits paid in a settlement agreement; 2) KRS 342.265 and KRS 342.125 provides the exclusive remedy for disagreements which occur in the amount provided in settlement agreements; and 3) public policy is violated in applying KRS 342.730(3) to this case.
Rodney Bell filed claim No. 06-01037 alleging occupational hearing loss as a result of exposure to noise while employed by Consol of Kentucky, Inc. (“Consol”). Bell also filed claim No. 06-01307 alleging he sustained injuries to his spine, joints and limbs due to cumulative trauma while employed by Consol. In the same application, Bell alleged he fell off a tractor trailer, injuring his left wrist. By order dated January 2, 2007, the ALJ consolidated the claims.
The claims were settled by agreement approved April 17, 2007. The agreement provided Bell would receive $70.00 per week to be paid weekly for 425 weeks beginning February 1, 2006. In addition, the parties agreed to waive or buy out past medical benefits for $125.00, waive or buy out future medical benefits for $125.00, waive the rights to vocational rehabilitation for $125.00, and waive the right to reopen for $125.00. The parties noted the agreement was a compromised settlement of a disputed claim with no acceptance of liability by Consol. They further noted Consol had not paid medical expenses or temporary total disability benefits for the alleged injury or hearing loss.
On July 19, 2007, a motion to change payee of the settlement agreement was ostensibly filed by Rodney Bell. In support of the motion, it was stated Bell was killed in a motorcycle accident on July 4, 2007 and Mary Bell was the executrix and sole beneficiary of the estate. The motion requested the full amounts of any remaining settlement payments be made to her. Neither Mary Bell nor the estate was ever substituted as a party. Consol filed a response which elicited a reply from the petitioner.
By order dated August 3, 2007, the ALJ sustained the motion to change payee to substitute Mary L. Bell as the payee of the remaining benefits under the settlement. The ALJ’s order provided benefits were to be paid to the widow at 50% of the rate specified in the settlement agreement pursuant to KRS 342.730(3).
On August 13, 2007, a petition for reconsideration in the name of Rodney Bell was filed arguing the ALJ incorrectly ordered the remaining benefits to be paid at 50% of the rate specified in the settlement agreement because it was inconsistent with the terms of the agreement. The petitioner argued the periodic settlement agreement should be enforced and Consol should not be allowed to benefit from Bell’s untimely and unfortunate death at the expense of the widow and the estate. The ALJ denied the petition for reconsideration, specifically finding KRS 342.730(3)(a) applied and the benefits were properly reduced by 50%.
Bell appealed raising the same arguments presented in its current appeal. The Board affirmed the ALJ but noted it remained questionable whether the appeal was properly perfected by the filing of an appeal in the name of Rodney Bell. The Court of appeals reversed the Board, holding the ALJ lacked jurisdiction to address the merits of the motion to substitute payee. Since Mary Bell had not moved to be substituted as a party, the Court of Appeals held there was no proper motion before the ALJ for her to receive continuation benefits. The Court of Appeals remanded with directions to the ALJ to enter an order substituting Mary Bell as the real party in interest in place of Rodney Bell and thereafter to reissue his decision.
On remand, The ALJ ordered the widow, Mary Bell, substituted as the real party in interest in place of Rodney Bell and ordered her substituted as payee of the remaining benefits. Pursuant to KRS 342.730(3), the ALJ ordered benefits to be paid to the widow at 50% of the rate specified in the settlement agreement. The ALJ specifically found KRS 342.730(3)(a) applied to this case and benefits were properly reduced by 50% since the settlement agreement was approved by the ALJ and became legally enforceable as an award.
Bell filed a petition for reconsideration raising the same arguments she now raises on appeal. By order dated December 4, 2008, the ALJ overruled the petition for reconsideration finding it was nothing more than a reargument of the merits of the claim.
On appeal, Bell argues KRS 342.730(3) does not apply to settlement agreements and only applies to awards of income benefits by ALJs in opinions and awards. Bell points out the ALJ could never award what was bargained for in the settlement agreement in this case, including the waiver of medical expenses, waiver of vocational rehabilitation benefits and waiver of the right to reopen.
The petitioner also argues provisions of KRS 342.265 and KRS 342.125 apply to settlement agreements. The petitioner points out KRS 342.265(4) specifically provides, if parties have filed an agreement which has been approved by an Administrative Law Judge and compensation has been paid or is due in accordance therewith, and the parties thereafter disagree, either party may invoke the provisions of KRS 342.125 which remedy shall be exclusive. Bell stresses KRS 342.125 provides the settlement agreement may be reviewed on grounds of fraud, newly discovered evidence which could not have been discovered with the exercise of due diligence, mistake, or change of disability as shown by objective medical evidence of a worsening or improvement of impairment due to a condition caused by the injury since the date of the award or order. Bell argues these factors are exclusive. Bell notes Consol does not claim any of the above listed grounds to reduce Bell’s settlement. Bell contends Consol’s basis for reducing the settlement agreement is unfounded and the ALJ’s order must be overturned.
Finally, Bell argues applying KRS 342.730(3) to this settlement agreement would violate public policy. Citing Coalfield Telephone Company vs. Thompson, 113 S.W.3d 178 (2003), and Whitaker vs. Pollard, 25 S.W.3d 466 (Ky. 2000), Bell argues the terms of the settlement agreement must be upheld. Bell points out to hold the provisions of KRS 342.730(3) apply to settlement agreements would discourage settlements in workers’ compensation claims and there is a strong public policy favoring settlement in workers’ compensation claims. Bell stresses one of the benefits of settlement was he was guaranteed an amount of money over an agreed time period once the claim was settled and the agreement was approved. Bell points out the settlement agreement provided for a weekly payment that may have been lower than what the ALJ would have awarded in order to secure the payment for a set time period. The petitioner concludes by noting allowing Consol to skirt its obligation under the settlement agreement because of Bell’s untimely death is inequitable.
KRS 342.730(3) provides as follows as it applies to this issue:
Subject to the limitations contained in section (4) of this section, when an employee, who has sustained disability compensable under this chapter, and who has filed, or could have timely filed, a valid claim in his lifetime, dies from causes other than the injury before the expiration of a compensable period specified, portions of the income benefits specified and unpaid at the individual’s death, whether or not accrued or due to his death, shall be paid, under an award made before or after the death for the period specified in this section, to and for the benefit of the persons within the classes at the time of death and in the proportions and upon the condition specified in this section, and in the order named;
(a) to the widow or widower, if there is no child under the age of eighteen (18) or incapable of self-support, benefits at fifty percent (50%) of the rate specified in the award; (Emphasis added)
. . . .
An agreement approved by the Compensation Board, (now the Administrative Law Judge), acquires the force and affect of an award of the Board (ALJ). See Jude v. Cubbage, 251 S.W.2d 584 ((Ky. 1952); Heaston vs. Berndsen–Jones, Inc., 438 S.W.2d 795 (Ky. 1969). Pursuant to case law cited above, once the ALJ approved the settlement agreement on April 25, 2007, upon being subsequently apprised of Bell’s untimely death, the provisions of KRS 342.730(3) provide the mechanism for the payment of the remaining benefits to the applicable classes of persons eligible to receive these benefits. We therefore find no error in the ALJ’s award as to the remaining benefits as outlined in the opinion and order on remand of October 13, 2008 and the order entered on December 4, 2008.
Contrary to the arguments espoused by the petitioner, it is clear the provisions of KRS 342.265(4) and KRS 342.125 have no applicability to this claim. These provisions would only come into play if there was a disagreement between the parties as to the terms of the agreement. There appears to be no such disagreement in this case. As noted above, the language of KRS 342.730(3), which existed at the time of the injury, controls this case and mandates the benefits be reduced by 50% based on the documentation attached to the motion to change payee and the information contained in the Form 101.
Finally, applying KRS 342.730(3) to the facts of this case does not violate public policy. The language contained in the settlement agreement made no reference to the payment of benefits to a widow should Bell expire before the expiration of the 425 week term. Additionally, Bell waived his right to reopen the claim under KRS 342.125 in consideration of $125.00. If Bell had been interested in insuring benefits would be paid to the widow at the rate of 100% of the agreed upon weekly benefit, he could have bargained for the language in the settlement agreement extending benefits to the widow upon his death but the settlement contains no such provision. Absent the application of KRS 342.730(3) to the facts of this case, the terms of the settlement agreement provided nothing for the widow. Consequently, its application does not violate public policy but instead protects substituted parties such as Bell’s widow as the payee of the remaining benefits provided for in the settlement agreement.
Respondent Consol having tendered a brief by overnight mail through Federal Express on January 29, 2009 and said brief being timely filed pursuant to 803 KAR 25:010 section 1(4)(b), respondent’s motion to file late brief is overruled as moot.
Accordingly, the opinion and order on remand of October 13, 2008 and order of December 4, 2008 are hereby AFFIRMED.
ALL CONCUR.
COUNSEL FOR PETITIONER
HON KENNETH C SMITH III
PO BOX 321
CATLETTSBURG KY 41129
COUNSEL FOR RESPONDENT
HON A STUART BENNETT
PO BOX 2150
LEXINGTON KY 40588
ADMINISTRATIVE LAW JUDGE
HON R SCOTT BORDERS
8120 DREAM STREET
FLORENCE KY 41042
