Kentucky Court Report - SCOKY & COAKY

Employee failed to establish she was similarly situation to male employee in discrimination claim: EDUCATION CABINET V. SOLLY (SC 5/22/2008)

EDUCATION CABINET V. SOLLY
EMPLOYMENT:  DISCRIMINATION
2006-SC-000858-DG.pdf
PUBLISHED: REVERSING
OPINION BY NOBLE; SCHRODER NOT SITTING
FROM FRANKLIN COUNTY
DATE RENDERED: 5/22/2008

This case arises from an administrative appeal taken by Appellee, Donna Solly, against the Commonwealth of Kentucky Education Cabinet, formerly known as the Cabinet for Workforce Development, and the Kentucky Technical Education Personnel Board. Appellee was employed as a limited-status teacher at Caldwell Area Technology Center. Her employment was not renewed on August 22, 2002 after she was given notice in a non-renewal letter dated August 8, 2002. She alleges that her non-renewal was due to discrimination on the basis of sex. Because Appellee has not established that she was similarly situated to a male employee with whom she had previously had an affair, and because the reasons stated for her non-renewal are sufficiently non-discriminatory in any event, the Court of Appeals is reversed.

Mike Stevens, Ed.

GOVERNMENT RETIREMENT: KERS may discontinue retirement disability benefits if it determines employee was no longer incapacitated prior to his/her normal retirement date: KERS BOARD OF TRUSTEES v. EST. OF DAISEY CHANEY (COA 4/18/2008)

BOARD OF TRUSTEES V. EST. OF DAISEY CHANEY
GOVERNMENT RETIREMENT:  KERS may discontinue retirement disability benefits if it determines employee was no longer incapacitated prior to his/her normal retirement date
Commonwealth Of Kentucky
PUBLISHED: AFFIRMING
PANEL: MOORE PRESIDING; COMBS, CAPERTON CONCUR
FRANKLIN COUNTY
DATE RENDERED: 4/18/2008

The Board of Trustees of the Kentucky Employees Retirement Systems (KERS) appealed circuit court setting aside the Board’s order adopting a report and recommended order of a KERS hearing officer in which the officer recommended KERS suspend the retirement disability benefits of the decedent, Daisy Chaney.  KERS argued its hearing officer’s recommendation was supported by substantial evidence, thus concluding that the circuit court erred. However, finding that the hearing officer’s recommendation was not supported by substantial evidence, the COA AFFIRMED.

In her application, Chaney claimed that she was unable to perform her duties as a case worker due to her physical and mental condition. However, KERS’ medical review board denied Chaney’s application. Eventually, Chaney appealed her claim to the Disability Appeals Committee, which denied her application. After Chaney died, her estate continued her appeal.

Once KERS terminated Chaney’s retirement disability benefits, her estate filed a complaint with the Franklin Circuit Court seeking, pursuant to KRS 61.665(5) and KRS 13B.140, appellate review of the Board of Trustees’ final order adopting the hearing officer’s report. In the estate’s complaint, it argued that KERS’ termination of Chaney’s benefits was arbitrary, capricious and not supported by substantial evidence.

The circuit court noted that the record contained no evidence addressing whether Chaney’s mental condition improved, became worse or continued without change in the preceding two to three years in which Chaney did not seek counseling and further noted that KERS had asserted that Chaney’s condition was not permanent because she could have improved with twelve months of therapy.

The circuit court concluded that Dr. Ebben opined that Chaney could have recovered with appropriate treatment, but he never found that she had recovered. Thus, the circuit court denied KERS’ motion to alter, amend or vacate.

According to KERS, if Chaney’s mental condition was disabling, then she would have sought treatment for it as she did prior to being approved for benefits.

According to KRS Chapter 61, an employee of the Commonwealth may retire on disability if, since the last date of employment, the employee is mentally or physically incapacitated. An employee is incapacitated if he is unable to perform his job or a job of like duties and his incapacity is permanent. KRS 61.600(1) and (3)(a)-(c).

An employee’s incapacity will be considered permanent if it is expected to continuously last for a period of not less than twelve months from the employee’s last day of paid employment. KRS 61.600(5)(a).

Once an employee has been approved to receive retirement disability benefits, KERS may discontinue such benefits if it determines that, prior to the employee’s normal retirement date, he is no longer incapacitated. KRS 61.615(2).

KERS’ burden was not just to prove that Chaney experienced an improvement in her condition but that she experienced such an improvement she was no longer incapacitated as that term is defined in KRS 61.600.

Because the hearing officer’s report and recommended order were not
supported by substantial evidence, the Franklin Circuit Court correctly set aside the Board of Trustees’ order adopting the hearing officer’s recommendation. Consequently, the decision of the Franklin Circuit Court was affirmed.

Digested by Michael Stevens

Negligent misrepresentation claim in purchase of "service credit" against KERS not recognized at time of BOC claim: BOARD OF TRUSTEES OF KENTUCKY RETIREMENT SYSTEMS V. COMMONWEALTH OF KENTUCKY (COA 4/4/08)

BOARD OF TRUSTEES OF KENTUCKY RETIREMENT SYSTEMS V. COMMONWEALTH OF KENTUCKY
BOARD OF CLAIMS:  Negligent misrepresentation claim, sovereign immunity, and exhaustion of administrative remedies for purchasing retirement through KERS
Commonwealth of Kentucky
PUBLISHED: REVERSING
PANEL: MOORE PRESIDING; ACREE CONCURS; COMBS DISSENTS FILING SEPARATE OPINION
COUNTY: FRANKLIN
Date: 4/4/2008

This appeal centers around Vicki Knable's complaint filed with the Board of Claims in April 2005 against KERS regarding the purchase of “service credit” or “service.”

The purpose of purchasing service is to fund KERS for employer and employee retirement contributions that would have been paid over an employee's term of employment, so that the employee will be credited with years of service for determining eligibility for retirement. KRS 61.525(2)(b) allows a person who rejects membership to subsequently elect to become a member of KERS and was amended in 2004 to provide that purchases of service credit can only be made by members who are vested or have at least sixty months of service at the time of the purchase if they are under the age of sixty five. Knable fits into the latter category.

Knable believed that only past service fitting into this category had to be purchased by July 12 and thought the deadline did not apply to her so that she did not purchase any past service prior to the deadline.

After July 2004, when Knable attempted to purchase past service, KERS refused her request because she was not vested as she had not been a member of KERS for sixty months. This appeal followed (as well as a Board of Claims action).

Knable contends KERS' failure to honor the language in the May 2004 newsletter forced her to wait until she was a member for sixty months before allowing her to purchase any past service. Knable calculated that this would cause her to spend an extra $90,000.00 in order to purchase the past service that she wanted to buy, thereby, causing her damage. KERS moved to dismiss the BOC action pursuant to KRS 44.070 claiming the BOC only has jurisdiction over claims in which a person has suffered either personal injury or property damage as the result of negligence on the part of the Commonwealth.

COA ruled that KERS did not have to exhaust its administrative remedies before the BOC prior to filing its declaratory judgment action in that it is not necessary to have previously exhausted administrative remedies if the only issue being raised is subject matter jurisdiction, which is a legal question not dependent upon disputed facts.

The doctrine of exhaustion of administrative remedies defined as the “'proper judicial administration mandates judicial deference until after exhaustion of all viable remedies before the agency vested with primary jurisdiction over the matter.'”

There are two exceptions to the general and often relied upon rule that to appeal an agency's decision, one must previously exhaust all administrative remedies: 1) where a regulation is void on its face; or 2) where continuation of the administrative process would be an exercise in futility. The latter exception applies “when a complaint 'raises an issue of jurisdiction as a mere legal question, not dependent upon disputed facts, so that an administrative denial of the relief sought would be clearly arbitrary.'”

As a general rule, state agencies, carrying out integral state functions, have sovereign immunity. Waiver of this immunity is a matter of legislative grace.

COA held further that any construction of other statutes to result in a waiver of immunity which differs from the language of the Board of Claims Act is untenable. In various places throughout the Board of Claims Act, waiver of immunity is alluded to and in every instance an express waiver is required.

Accordingly, sovereign immunity must be expressly waived by the General Assembly. Its waiver cannot be assumed by the courts or even the BOC.

When enacted, the BOC was given exclusive jurisdiction over all claims for the negligent performance of ministerial acts by the Commonwealth or its agencies. The rub in the case at hand is obviously whether this jurisdiction includes negligent misrepresentation. BOC does not have jurisdiction over Knable's claim which is one of negligent misrepresentation and which was not adopted by the Kentucky Supreme Court until 2004 in Presnell Construction Managers, Inc. v. EH Construction, LLC, 134 S.W.3d 575 (Ky. 2004). Because negligent misrepresentation, which has elements separate from negligence, was not recognized as a tort at the time KRS 44.072 was enacted, and the General Assembly's not having expressly waived sovereign immunity to this tort after its adoption by the Kentucky Supreme Court, the BOC did not have jurisdiction over Knable's claim.

Accordingly, the BOC's order to the contrary is void, and the KERS' action for declaratory action was properly taken having raised jurisdiction as a legal question. COA reversed the circuit court, and remanded this case for entry of judgment consistent with this opinion.

Digested by Michael Stevens

 

Unemployment benefits; termination for "good cause" for drinking off premises before work: KENTUCKY UNEMPLOYMENT COMM. v. DURO BAG MANUFACTURING (COA 3/28/2008)

KY UNEMPLOYMENT INS. COMM. v. DURO BAG MANUFACTURING
EMPLOYMENT:  Unemployment benefits; termination for "good cause" for drinking off premises before work
2006-CA-002625
PUBLISHED: AFFIRMING
PANEL: WINE PRESIDING; DIXON, LAMBERT CONCUR
BOONE COUNTY
DATE RENDERED: 3/28/2008

Consuming alcohol off the premises and several hours before beginning work is sufficient to disqualify the claimant from receiving unemployment) benefits.  Not only does this unsatisfactory conduct constitute good cause for firing an employee but her single act of inappropriate behavior also meets the definition of misconduct under the Act to deny her unemployment benefits.  The Referee erred when he relied on KRS 189A.010(3)(a)which provides “[i ]f there was an alcohol concentration of less than 0.05 ...it shall be presumed that the defendant was not under the influence of alcohol” since this DUI statutory definition is not relevant in this case.

Digested by Michael Stevens

Agreement upon reduction in force including language "of any and all claims" includes subsequently discovered discrimination claim: HUMANA, INC. V. BLOSE (SC 3/20/2008)

HUMANA, INC. V. BLOSE
TORTS: Agreement upon reduction in force including language "of any and all claims" includes subsequently discovered discrimination claim
2006-SC-000783-DG.pdf
PUBLISHED: REVERSING
OPINION BY SCOTT
JEFFERSON COUNTY
DATE RENDERED: 3/20/2008

The Supreme Court reverses (Jefferson Cir. Ct.).

The appellee suffers from cerebral palsy and uses crutches for walking and balance. She worked for Humana from 1995 to 2001, when she was terminated due to an alleged reduction in force. She was given 12 weeks severance pay and 12 weeks continued health and dental benefits. She executed a release and agreement of "any and all claims" against Humana. In 2004, she filed an action alleging disability discrimination, violation of KRS Chapter 344 and outrageous conduct. She alleged that during her tenure at Humana she was constantly harassed, intimidated and treated outrageously, including being pushed; having her crutches kicked out from under her; and having paperwork moved so that she had to make efforts to retrieve it. She alleged she constantly complained, but her supervisor and human resources refused to take any action. She also alleged that she was not offered the opportunity to interview for other positions in the company when other employees were.

She further alleged that the release and agreement she signed was presented to her as a "confidentiality agreement" by her superviser on the day she was fired with a demand to sign it immediately unread and a denial of a copy for her records, on threat that she would not receive her last paycheck. The TC granted Humana's motion to dismiss. On appeal, the order dismissing the action was vacated and the case remanded to allow the appellee time to conduct discovery on the issues in the motions to dismiss and for summary judgment. The Court of Appeals also asserted that a release could not waive a statutory right, as alleged in this case.

The Supreme Court holds that, if the release is valid and enforceable, it is effective to waive a plaintiff's right to bring a claim, whether statutory or otherwise. Curtis v. Belden Electronic Wire and Cable, 760 S.W.2d 97 (Ky. App. 1988) is overruled to the extent it is in conflict with American General Life & Acc. Ins. Co. v. Hall, 74 S.W.3d 688 (Ky. 2002).

Digested by John E. Hamlet

New rule applied in retirement disability cases with opinion of a treating physician to be given greater weight than that of a government physician: CLAXON V. KENTUCKY RETIREMENT SYSTEMS (COA 2/1/2008)

CLAXON V. KENTUCKY RETIREMENT SYSTEMS
EMPLOYMENT: STATE RETIREMENTS BENEFITS: SUFFICIENCY OF MEDICAL EVIDENCE

2006-CA-002037
PUBLISHED: REVERSING AND REMANDING
PANEL:  HENRY PRESIDING; KELLER, TAYLOR CONCUR
COUNTY: FRANKLIN
DATE: 02/01/2008

Claxon appeals TC's denial of her motion to alter, amend or vacate its prior Order affirming the decision of the Kentucky Retirement Systems to deny her disability retirement benefits. Claxon had worked as a cook in the Greenup County School System before ending her employment in 2000 and applying for disability retirement benefits 9 months later. Her application was denied on initial consideration and reconsideration, and following a hearing during which testimony was heard, the Hearing Officer submitted his Order recommending denial due to her failure to establish her inability to work by objective medical evidence. The Disability Appeals Committee adopting this Order as final, which led to Claxon's action filed in Franklin Circuit Court. Following full briefing of the issues by the parties, the TC affirmed the final order denying the application. This appeal followed.

The COA begins by noting that the burden of proof during this administrative disability hearing was on Claxon, and that as fact finder the administrative agency is afforded great latitude in its evaluation of the evidence and testimony presented during the hearing. A reviewing court can thus only overrule the agency on factual issues if the agency's decision is arbitrary and capricious. In analyzing the hearing evidence, the COA found that the Officer's decision was not supported by substantial evidence and therefore was arbitrary. The COA first took issue with the apparent violation of Claxon's statutory right to inspect any medical reports submitted for consideration on behalf of the agency and respond to them prior to the hearing, as the agency tendered written reports from Dr. Burgess and Dr. Shraberg after the hearing. The COA also established a new rule of law in retirement disability cases by holding that the opinion of a treating physician shall be given greater weight than that of a government physician, which has been followed in the past in disability cases. The COA finally took issue with the Officer's failure to indicate in his Order why he gave greater weight to the agency's physicians than Claxon's treating physicians, and when considered in conjunction with the possible inadmissibility of the post-hearing reports, reversed and remanded the case back to the TC.

By Chad Kessinger, Schiller Osbourn Barnes & Maloney

COPD not found to be pre-existing condition in claim for government disability retirement: KENTUCKY RETIREMENT SYSTEMS V. BROWN (COA 12/28/2007)

KENTUCKY RETIREMENT SYSTEMS V. BROWN
EMPLOYMENT:  Government disability retirement
2006-CA-000296
PUBLISHED: AFFIRMING
PANEL: ACCRESS PRESIDING; DISCON, KELLER CONCUR
COUNTY: FRANKLIN
DATE RENDERED: 12/28/2007

In this appeal, the COA held that pre-employment smoking behavior was not a "condition" to deny disability for COPD.

Kentucky Retirement Systems (the Systems) appealed Franklin Circuit Court’s reversal of a decision of the Disability Appeals Committee of the Board of Trustees of the Kentucky Retirement Systems (the Board) that Barbara Brown did not qualify for disability retirement benefits under KRS1 61.600.  Mrs. Brown passed away from her disabling condition, chronic obstructive pulmonary disease or COPD, before the Franklin Circuit Court rendered its decision in this case. Her husband, Dillard Wayne Brown, chose to continue this action as executor of her estate.

Mrs. Brown had not been diagnosed prior to her employment with COPD, and although she had changes in her lungs suggestive of COPD, there was not yet a firm diagnosis and her diagnosis was  Mrs. Brown was suffering from “[a]cute bronchitis”. In 2001, she was first diagnosed with COPD and Mrs. Brown's condition worsened to the point that she was in need of oxygen virtually around the clock. Her last date of paid employment May 31, 2003.

When Mrs. Brown subsequently filed for disability retirement benefits the two conditions  of particular relevance was whether her disabling condition resulted directly or indirectly from disease, or condition which pre-existed membership and ifshe were able to perform her job, or a “job of like duties,” taking into consideration “any reasonable accommodation by the employer. 

The Systems' Medical Review Board examined Mrs. Brown's application and denied her benefits, concluding that her 30-year smoking habit was a “condition which pre-existed membership.”

The COA did not interpret the word “condition” contained in KRS 61.600(3)(d) as broadly as does the Systems. The “conditions” of the claimants in all prior cases addressing the pre-existing condition issue were capable of medical or psychiatric diagnosis. See, e.g., McManus (diabetes); Lindall v. Kentucky Retirement Systems, 112 S.W.3d 391 (Ky.App. 2003)(bipolar disorder). The legislature specifically used the phrase “bodily injury, mental illness, disease, or condition” in KRS 61.600(3)(d) to indicate medically and psychiatrically diagnosable maladies only and  interpreting the word “condition” to include preemployment smoking behavior would run entirely contrary to the legislature's policy prohibiting discrimination against employees merely “because the individual is a smoker[.]” KRS 344.040.

Although the COA found no reasonable accommodation available in this case, it did discuss the availability of leave without pay and sick leave, as well as other means, of reasonable accommodation.

Michael Stevens

Failure to preserve issue in disability benefits appeal: CAUDILL V. KENTUCKY RETIREMENT SYSTEMS (COA 11/9/2007)

CAUDILL V. KENTUCKY RETIREMENT SYSTEMS
EMPLOYMENT LAW:  FAILURE TO PRESERVE ISSUE ON APPEAL
2006-CA-000461
PUBLISHED: AFFIRMING
ACREE PRESIDING; CIXON AND KELLER CONCUR
COUNTY: FRANKLIN
DATE RENDERED: 11/09/2007

Judge Acree writing for the COA affirmed circuit court order affirming the decision of the Disability Appeals Committee of the Kentucky Employee Retirement Systems (KERS) which denied Caudill's request for disability benefits.  Caudill argued that KERS incorrectly construed statutory law to exclude cumulative trauma from the definition of injury. The circuit court affirmed the Disability Appeals Committee's decision because Caudill failed to prove that his injury did not predate his membership in the retirement systems.

KRS 61.600(3)(d) prohibits benefits from being awarded for an injury which results directly or indirectly from bodily injury, mental illness, disease, or condition which pre-existed membership in the system or reemployment, whichever is most recent. Caudill argued that his back injury was compensable because it was substantially aggravated by an injury or accident arising out of or in the course of employment.  KRS 61.600(4)(a). The hearing officer, noting that Caudill had never filed a workers' compensation claim or otherwise reported any work-related injury to KCRD, found that Caudill did not suffer an injury, within the definition of KRS 61.600(3)(b), during his employment by KRCD and commended that Caudill was not entitled to disability benefits from KERS.

The hearing officer found, as a matter of law, that Caudill did not meet his burden of proof by preponderance of the evidence that his back condition came into being
after his membership in the retirement systems.  Caudill failed to preserve this issue in earlier proceedings precludes its consideration in the present appeal.  Where “no request was made for such findings. . .  [COA does] not consider the issue on appeal.” Whicker v. Whicker, 711 S.W.2d 857, 860 (Ky.App. 1986).

Digest by Michael Stevens

Government Job Termination for Cause: MARTIN V. OSBORNE (COA 10/26/2007)

MARTIN V. OSBORNE
EMPLOYMENT:  TERMINATION OF JAIL EMPLOYEE FOR CAUSE
2005-CA-002363
PUBLISHED: AFFIRMING
PANEL: VANMETER PRESIDING; DIXON, GRAVES CONCUR
COUNTY:  DAVIESS
DATE RENDERED: 10/26/2007

COA affirmed jailer's termination of jail employee under KRS 71.060(2) which provides the jailer shall be responsible for the appointment and removal of jail personnel, and the jailer may dismiss his deputies at any time with cause. Although "cause" was not defined in KRS Chapter 71, the COA found that the claims of the jail employee's (Martin's)  ethical misconduct or the alleged sexual misconduct, if believed, constituted substantial legal cause for his termination,  as such conduct not only related to and affected the administration of his office, but also “directly affect[ed] the rights and interests of the public.”

Digested by Michael Stevens

Gov't Employment Termination: KELLEY V. MILLER (COA10/12/2007)

KELLEY V. MILLER
EMPLOYMENT LAW: GOVERNMENT JOB TERMINATION; COUNTY PLANNER NOT HIRED BY FISCAL COURT BUT JUDGE EXECUTIVE
2006-CA-001451
PUBLISHED: AFFIRMING
PANEL: VANMETER PRESIDING; DIXON, GRAVES CONCUR
COUNTY: MARSHALL
DATE RENDERED: 10/12/2007

COA affirmed summary judgment terminating employment of county planner Kelley in which the trial court concluded that if Kelley's employment was at the pleasure of the county judge/executive pursuant to KRS 67.711, that official also was vested with the authority to terminate Kelley's employment, and in the alternative if Kelley's appointment depended on the fiscal court's approval, his employment was void ab initio since fiscal court approval was never obtained for his hiring. Thus, it was unnecessary to obtain fiscal court approval for his firing from such unapproved employment.

The functions of county fiscal courts and county commissioners are governed by KRS 67.710 which specifies that a county judge/executive's responsibilities “include, but are not limited to,” the duty to [e]xercise with the approval of the fiscal court the authority to appoint, supervise, suspend, and remove county personnel (unless otherwise provided by state law)[.] KRS 67.710(7).


Kelley's job description clearly and repeatedly provides that the county planner must follow the directions of the county judge/executive, rather than those of the fiscal court and confirms that the county planner is appointed by, serves at the pleasure of, and is a member of the office of the county judge/executive.

As the fiscal court is given no role in the county planner's hiring, firing, or supervision, COA found no merit in Kelley's claim that his hiring was ratified by the fiscal court. The trial court did not err by entering summary judgment for appellees.

Digested by Michael Stevens