RENDERED: AUGUST 26, 2016; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
FRESENIUS MEDICAL CARE HOLDINGS, INC. APPELLANT
PETITION FOR REVIEW OF A DECISION
v. OF THE WORKERS’ COMPENSATION BOARD
ACTION NO. WC-14-00607
TAMORAH
MITCHELL; HON. DOUGLAS
W. GOTT, ADMISTRATIVE LAW JUDGE; AND
WORKERS’ COMPENSATION BOARD APPELLEES
AND NO. 2015-CA-000599-WC
TAMORAH MITCHELL APPELANT
PETITION FOR REVIEW OF A DECISION
v. OF THE WORKERS’ COMPENSATION BOARD
ACTION NO. WC-09-73099
FRESENIUS MEDICAL CARE HOLDINGS, INC.;
HON. DOUGLAS W. GOTT, ADMINISTRATIVE
LAW JUDGE; AND WORKERS’
COMPENSATION BOARD APPELLEES
OPINION
AFFIRMING
IN PART AND
REVERSING IN PART
** ** ** ** **
BEFORE: JONES, D. Lambert, AND Thompson, JUDGES.
D. LAMBERT, JUDGE: This matter is before
the Court following petitions for judicial review by two parties of rulings by
the Workers’ Compensation Board and the Administrative Law Judge (“ALJ”) to
whom it remanded the matter. The
Appellant in the first appeal, 2015-CA-000598-WC, is the employer, Fresenius
Medical Care Holdings, Inc. (hereinafter “Fresenius”). The Appellee in the first appeal, and the
Appellant in the second appeal, 2015-CA-000599-WC, is the injured employee,
Tamorah “Tammy” Mitchell.
The
Court will address both appeals in a single opinion as they have a common
nucleus of operative fact and require the same standards of appellate
review.
I. FACTUAL AND PROCEDURAL HISTORY
The
facts giving rise to the petitions originated in November 2009, when Mitchell
was in her personal vehicle returning home to Paducah from a work-related
meeting in Louisville. Mitchell’s
husband at the time, Todd Mitchell, drove while Mitchell rode in the front
passenger seat. Traveling at an
estimated 80-85 miles per hour, Todd swerved to avoid a deer in the road,
overcorrected, and lost control. The
Mitchells’ vehicle struck another and rolled over an embankment several times
before coming to rest. There was some
question regarding whether Mitchell was wearing a seatbelt at the time.
Mitchell
sustained several significant injuries in the wreck. She sustained multiple right tibial
fractures, which required surgery that resulted in the aggravation of a
previously dormant degenerative joint disease in her knee, in addition to
leaving her with traumatic arthritis.
She also suffered hematomas and seromas in her left lower leg, which
required surgical evacuation, debridement, and skin grafting on multiple
occasions, and also aggravated the previously dormant degenerative joint
disease in her left knee. Mitchell also
suffered an orbital “blowout” fracture which entrapped two ocular muscles,
resulting in persistent double vision, eye pain, headaches, dizziness, and
nausea.
The
vehicle was covered by an insurance policy issued by Travelers Insurance, which
is not a party to this appeal. The
policy limited recovery for bodily injury of $250,000 per person. The policy also covered damages caused by
uninsured and underinsured motorists in the amount of $250,000 each. Mitchell paid slightly more than half of the
premium amount from her earnings.
Mitchell
filed for divorce from Todd approximately six months after the accident, and
also filed a civil action against him seeking damages resulting from his
negligence. Mitchell later settled the
civil action for the liability policy limits.
Though the settlement release specifically noted that the settlement was
not full satisfaction, it released Todd from further liability.
Mitchell
participated in a benefit review conference (“BRC”), which resulted in an order
resolving some claims and reserving others for later resolution by an
Administrative Law Judge (“ALJ”). Mitchell’s
claim for workers’ compensation benefits was approved for the right knee
replacement surgery in an interlocutory opinion by the ALJ on September 4,
2012. An orthopedist had recommended
replacement of both knees, but he required Mitchell lose significant weight
before he would perform the surgery.
Consequently, Mitchell had lap band surgery and successfully lost over
one hundred pounds. The matter was
placed in abeyance while she continued to lose weight and consider the left
knee replacement, which the ALJ had determined was not ripe for decision. On September 27, 2013, during this period of
abeyance, she experienced another work-related injury, this time a broken right
ankle. As required by Kentucky Revised
Statutes (KRS) 342.270(1), the ankle claim was consolidated with her
pre-existing unresolved claims for workers’ compensation benefits. Having already undergone multiple surgeries
and infection abatement procedures on her knees, and carefully considering the
risks, Mitchell later elected not to undergo the knee replacement surgeries.
On
August 8, 2014, the ALJ issued an Opinion, Award, and Order resolving the
reserved issues, as well as addressing the issues presented in the BRC and
interlocutory order again. In that
order, the ALJ made findings and conclusions on several issues, but this appeal
only pertains to four issues. The first
issue is Mitchell's impairment rating, which the ALJ concluded was 51%, based
primarily on the testimony of Dr. Warren Bilkey. The second issue was whether Fresenius was
entitled to a statutory reduction in the benefits awarded to Mitchell based on
her failure to wear a seatbelt, which the ALJ declined to impose. The third issue was the calculation of Mitchell's
permanent partial disability (“PPD”) benefits.
The final issue was whether Fresenius was entitled to a subrogation
credit against Mitchell's tort recovery, and, if so, the calculation
thereof. The ALJ determined that
Fresenius was not, as a matter of law, entitled to subrogation credit, but
nevertheless proceeded to perform calculations related to the amount of the
subrogation credit.
Both
parties moved the ALJ to reconsider. The
ALJ issued another ruling, though the only change made by the ALJ was to
increase the length of time for which Mitchell would be entitled to future lost
wages in PPD, and then recalculate the total award accordingly.
Both
parties then appealed different aspects of the ALJ's ruling to the Workers'
Compensation Board (hereinafter “the Board”).
The Board reversed and remanded the ALJ's ruling as it related to Mitchell's
impairment rating. The Board affirmed
the ALJ's ruling as it related to the denial of the reduction of benefits for
failure to wear a seatbelt. The Board
reversed on the issue of Fresenius's entitlement to a subrogation credit and
also as to the calculation thereof.
These appeals followed.
II. ANALYSIS
A. STANDARD OF REVIEW
The
standard of appellate review of an administrative decision is a very
deferential one. “On appeal, our
standard of review of a decision of the Workers’ Compensation Board ‘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.’” Pike
County Bd. of Educ. v. Mills, 260 S.W.3d 366, 368 (Ky.App. 2008) (quoting Western Baptist Hosp. v. Kelly, 827
S.W.2d 685, 687-688 (Ky. 1982). A
claimant bears the burden of proving every element of a workers’ compensation
claim. Id. (citing Wolf Creek
Collieries v. Crum, 673 S.W.2d 735 (Ky.App. 1984).
When
reviewing a workers’ compensation claim, KRS 342.285 designates the ALJ as the
fact-finder. KRS 342.285(1). This provision has been construed to grant
the ALJ “the sole discretion to determine the character, quality, weight,
credibility, and substance of the evidence, and to draw reasonable inferences
from the evidence.” Bowerman v. Black
Equipment Co., 297 S.W.3d 858, 866 (Ky.App. 2009). Though KRS 342.285(2)(d) establishes a clear
error standard of review for findings of fact, the Board should not “substitute
its judgment for that of the [ALJ] as to the weight of evidence in questions of
fact[.]” Id. (quoting Shields v.
Pittsburgh & Midway Coal Mining Co., 634 S.W.2d 440, 441 (Ky.App.
1982). An ALJ is entitled to believe or
disbelieve all or parts of the evidence presented for review. Caudill
v. Maloney’s Discount Stores, 560 S.W.2d 15 (Ky. 1977). “In short, appellate courts may not
second-guess or disturb discretionary decisions of an ALJ unless those
decisions amount to an abuse of discretion.” Bowerman, at 866 (citing Medley
v. Bd. of Educ., Shelby County, 168 S.W.3d 398, 406 (Ky.App. 2004)). “If the reviewing court concludes the rule of
law was correctly applied to facts supported by substantial evidence, the final
order of the agency must be affirmed.” Kentucky
Unemployment Ins. Comm'n v. Cecil, 381 S.W.3d 238, 246 (Ky. 2012) (citing Brown
Hotel Co. v. Edwards, 365 S.W.2d 299 (Ky. 1962)). However, a reviewing court is entitled to
substitute its judgment for that of the agency where the agency's ruling is
based on an “incorrect view of the law.” Kentucky Bd. of Nursing v. Ward,
890 S.W.2d 641, 642 (Ky.App. 1994).
B. APPEAL NO. 2015-CA-000598-WC
Fresenius
appeals two of the Board's rulings.
Fresenius's first assignment of error is the ruling of the Board which
reversed and remanded the ALJ's finding that the impairment rating as it
related to Mitchell's eye injury as insufficiently supported. The second error alleged by Fresenius is the
Board's affirmation of the ALJ's finding that Mitchell’s alleged failure to
wear a seatbelt did not merit a reduction in benefits under KRS 342.165(1).
1. THE BOARD EXCEEDED ITS AUTHORITY IN
REMANDING THE MATTER TO THE ALJ ON THE ISSUE OF IMPAIRMENT RATING ASSOCIATED
WITH THE EYE INJURY
The
evidence presented to the ALJ on the issue of Mitchell’s impairment rating
consisted of multiple witnesses. Mitchell
testified that she experienced double vision, which had worsened over
time. Mitchell’s medical expert, Dr.
Warren Bilkey, a physical rehabilitation specialist, testified to both her
lower extremity impairment and her visual impairment. However, it was Bilkey’s testimony concerning
the impairment resulting from the eye injury which gave rise to the
controversy.
Bilkey
testified that he had reviewed the conclusions of another physician, an
ophthalmologist, Dr. Taylor,[1] in
making his own assessment of Mitchell’s total body disability. Bilkey’s testimony indicated that Taylor’s
report reflected a “20% vision disability,” which is not a recognized
impairment rating under the American Medical Association’s published guidelines
for assessing impairment levels. Bilkey
concluded that Taylor intended to rate the impairment at a 20% total body
impairment, and factored it into his assessment. Bilkey ultimately concluded that Mitchell’s
total body impairment was 61%.
Though
the evidence of Mitchell’s ocular difficulties was undisputed, the ALJ found
Bilkey’s testimony as to the eye injury not to be credible owing to an
“insufficient foundation” without further elaboration. Consequently, the ALJ did not factor Mitchell’s
visual impairment into its calculation establishing a 51% impairment rating.
The
Board vacated the finding of 51% impairment and remanded the matter back to the
ALJ. The Board first noted that under
Rule 703 of the Kentucky Rules of Evidence, a testifying physician is entitled
to rely on the findings of another physician.
Bilkey was a competent physician, and his findings admissible, therefore
Taylor’s reports were not strictly necessary.
The Board further noted that an ALJ must provide an adequate explanation
for rejecting uncontroverted medical evidence, and the Board believed the ALJ
in this instance had failed to do so. Commonwealth v. Workers’ Compensation Bd. of
Ky., 697 S.W.2d 540 (Ky.App. 1985).
This
Court disagrees with the Board. While the
record established an eye injury and permanent symptoms resulting therefrom,
including loss of ocular motility and visual acuity, the ALJ justified the
ruling on the basis that even Bilkey was unsure whether Taylor’s assessment had
been consistent with established AMA guidelines. The ALJ’s ruling did reject the uncontested
medical proof, but provided sufficient justification. The Board inappropriately substituted its
judgment for that of the fact-finder when remanding the issue for further
proceedings.
2. THE BOARD ACTED APPROPRIATELY WHEN AFFIRMING
THE ALJ’S RULING AS IT RELATES TO THE PENALTY
PROVISION OF KRS
342.165(1)
The
evidence relating to whether Mitchell was wearing a seatbelt at the time of the
accident can be described as inconsistent.
Mitchell testified that she had been told she was wearing her seatbelt
at the time. The accident report, which was
introduced into the hearing record without objection by Fresenius, stated that
she had been wearing her seatbelt. The
evidence as to the nature of her injuries was inconsistent as well. Dr. Steven McCullough, Mitchell’s primary
care provider and her work supervisor, testified that she would have suffered
the same injuries regardless of the seatbelt, due to the rollover nature of the
crash. Fresenius’s expert, Dr. Michael
Voor, a professor of both biomedical engineering and medicine, testified Mitchell
would not have sustained the right tibial fractures had she worn a seatbelt,
and her facial and left leg injuries would have been “possible,” but were
“unlikely” to have been as severe.
Neither is a trained accident reconstruction expert.
KRS 342.165(1) states, in relevant part, as follows:
If an accident is caused in any degree
by the intentional failure of the employee to use any safety appliance
furnished by the employer or to obey any lawful and reasonable order or
administrative regulation of the commissioner or the employer for the safety of
employees or the public, the compensation for which the employer would
otherwise have been liable under this chapter shall be decreased fifteen
percent (15%) in the amount of each payment.
Fresenius
argued that Mitchell violated KRS 342.165(1) by an alleged violation of KRS
189.125(6). The ALJ found KRS
342.165(1) not to apply in this situation.
Specifically, the ALJ found that any alleged negligence on the part of
the employee in failing to wear a seatbelt does not give rise to the
application of the penalty provisions of KRS 342.165(1). The ALJ cited Tetrick v. Frashure, 119 S.W.3d 89 (Ky.App. 2003), in which this
Court held that KRS 189.125(6) did not impose a duty on passengers to wear
seatbelts; it merely imposes a duty upon drivers to do so. Absent a duty, there can be no
negligence.
The
Board found the ALJ correctly applied the law, but also noted that, despite
Fresenius’s assertion to the contrary, the evidence reflected a factual dispute
concerning whether Mitchell wore the seatbelt at all. As noted above, the cases of Bowerman, Shields, Caudill, and Medley, all support the proposition that
the ALJ, as the fact-finder, is entitled to discretion when to afford
appropriate weight to the evidence. The
Board even went so far as to reason that the case law supported the ALJ’s
decision even assuming the factual findings were erroneous.
This
Court entirely agrees with both the reasoning and the result of the Board’s
ruling.
C. APPEAL NO. 2015-CA-000599-WC
In
the second appeal before us, Mitchell seeks review of two rulings by the
Board. She first argues that the Board
erred in reversing the ALJ’s ruling that Fresenius was entitled to a
subrogation credit. The Board further
erred in its calculation of the subrogation credit to which Fresenius would be
entitled.
1. FRESENIUS IS NOT ENTITLED TO A
SUBROGATION CREDIT AGAINST MITCHELL’S TORT RECOVERY
Subrogation
in workers’ compensation claims is governed by KRS 342.700, which states as
follows:
Whenever an injury for which
compensation is payable under this chapter has been sustained under
circumstances creating in some other person than the employer a legal liability
to pay damages, the injured employee may either claim compensation or proceed
at law by civil action against the other person to recover damages, or proceed
both against the employer for compensation and the other person to recover
damages, but he shall not collect from both.… If compensation is awarded under
this chapter, the employer, his insurance carrier, the special fund, and the
uninsured employer's fund, or any of them, having paid the compensation or
having become liable therefor, may recover in his or its own name or that of
the injured employee from the other person in whom legal liability for damages
exists, not to exceed the indemnity paid and payable to the injured employee,
less the employee's legal fees and expense.
KRS 342.700(1).
Mitchell
argued before both the ALJ and the Board that Fresenius should not be entitled
to a credit against her recovery in the civil action. Indeed, the Kentucky Supreme Court held in State Farm Mut. Ins. Co. v. Fireman’s Fund
American Ins. Co., 550 S.W.2d 554 (Ky. 1977), that because an insured has
no obligation to his or her employer’s compensation insurance carrier to insure
a personal vehicle, then the compensation insurance carrier has no right to the
proceeds of the employee’s personal policy.
She also relied on two cases, which stand for the proposition that an
employer is not entitled to subrogation for first-party tort settlements
obtained from the injured employee’s own personal insurance carrier. Jewell
v. Ky, School Bd. Ass’n, 309 S.W.3d 232 (Ky. 2010), G & J Pepsi-Cola Bottlers, Inc. v. Fletcher, 229 S.W.3d 915
(Ky. 2007).
Mitchell
also advanced a policy-based argument that Todd should be considered a first
party within the meaning of KRS 342.700.
This is consistent with long-standing common law doctrine of unity of
person in marriages, whereby a “husband and wife… constitute[e] in law but one
person.” Hoffman v. Newell, 60 S.W.2d 607, 609 (Ky. 1932); Elliott v. Nichols, 67 Ky. 502, 504 (Ky.
1868) (“Husband and wife, for most purposes, hav[e] but one united legal
existence[.]” See generally Nelson v.
Mahurin, 994 S.W.2d 10 (Ky.App. 1998)). While Mitchell and Todd were not
married at the time of the civil action, they were married at the time of the
crash and share a child in common.
The
evidence reflected that Mitchell paid the majority of the premiums securing the
policy through their joint account, and it was not a benefit of her
employment. The Jewell Court noted that “[a] payment made in performance of a
contractual obligation is not a payment of ‘damages.’ Hence the liability of an
insurance company under its uninsured motorist coverage cannot be the ‘legal
liability for damages’ mentioned in [KRS 342.700(1)].” Jewell at 235 (quoting State
Farm). The ALJ ruled as a matter of
law that because this was a personal automobile liability policy, Fresenius was
not entitled to a subrogation credit.
The
Board, however, was not swayed by Mitchell’s argument. It held that while KRS 342.700 permits an
injured employee to pursue a tort claim against a third-party tortfeasor, it
also prohibits the injured employee from obtaining a windfall by allowing the
employer a credit against any elements of damage which would be duplicated in
any workers’ compensation recovery. KRS
342.700(1), Krahwinkel v. Commonwealth
Aluminum Corp., 183 S.W.3d 154, 158 (Ky. 2005). Particularly, the Board noted that a workers’
compensation carrier has a right to subrogation against benefits paid on behalf
of a third-party tortfeasor. Zurich American Ins. Co v. Haile, 882
S.W.2d 681 (Ky. 1994), Waters v. Transit
Auth. of River City, 799 S.W.2d 56 (Ky.App. 1990).
We
agree with Mitchell that Todd, for the purpose of the tort action, was a
first-party insured rather than a third-party tortfeasor.
We
therefore conclude that the Board incorrectly reversed the ALJ’s ruling. The ALJ’s ruling relied on case law applicable
to the facts of the case and was thus not reversible error.
2. THE ISSUE OF CALCULATING THE SUBROGATION
CREDIT IS MOOT
In
light of this Court’s conclusion that Fresenius is not entitled to a
subrogation credit against Mitchell’s tort recovery, the issue of calculating
the value of that credit is moot, and any further analysis by the Court on this
issue is obviated.
III. CONCLUSION
This Court, having reviewed the record and finding no reversible error, we hereby AFFIRM IN PART, and REVERSE IN PART, the Board’s ruling in Appeal No. 2015-CA-000598-WC, and REVERSE the Board’s ruling in Appeal No. 2015-CA-000599-WC.
ALL CONCUR.
BRIEF FOR APPELLANT: F. Allon Bailey Patrick J. Murphy Lexington, Kentucky |
BRIEF FOR APPELLEE: Craig Housman Paducah, Kentucky Dwight T. Lovan Frankfort, Kentucky |
[1] As the Board pointed out in its opinion, Dr. Taylor’s first name is unknown, as Dr. Taylor’s report was never introduced into the record.