Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Labor and Industry was held on Tuesday, September 13, 2011, at 2:30 PM, in the Convention Center at Kentucky Dam Village State Resort Park. Representative Rick G. Nelson, Chair, called the meeting to order, and staff called the roll.
Present were:
Members: Senator Denise Harper Angel; Representatives John A. Arnold Jr., Will Coursey, C. B. Embry Jr., Bill Farmer, Dennis Horlander, Wade Hurt, Adam Koenig, Terry Mills, Rick G. Nelson, Michael J. Nemes, Tanya Pullin, Tom Riner, Jim Stewart III, and Brent Yonts.
Guests: Dwight Lovan, Commissioner, Department of Workers’ Claims
LRC Staff: Linda Bussell and Adanna Hydes
Representative Nelson recognized Representative Coursey to welcome members and guests to his district. Representative Nelson introduced Commissioner Dwight Lovan, Department of Workers’ Claims, to present an update on black lung in the workers’ compensation program.
Black Lung and Workers’ Compensation
Commissioner Lovan informed committee members that two cases addressing black lung (coal workers’ pneumoconiosis) claims will be argued before the Kentucky Supreme Court on Wednesday, September 14, 2011. The cases to be argued are Gardner v. Vision Mining (2009) and Joe Martinez v. Peabody Coal (2010). The Kentucky Court of Appeals found the provisions of KRS 342.316 regarding the consensus process and panel process used to determine eligibility for black lung benefits to be unconstitutional under the equal protection clause.
The consensus process has been in place since a legislative change in 2002 which modified the workers’ compensation reforms made in 1996. The consensus process is a two-tier process. The first step is the party consensus. The injured worker files a black lung claim and submits an x-ray and an x-ray reading. Then the defendant employer has 45 days to also secure an x-ray and reading. The two x-rays are in consensus if they are interpreted to be within the same major category and one minor category according to the International Labor Organization’s guides on the classification of x-rays to show pneumoconiosis.
Commissioner Lovan noted that a Kentucky Supreme Court finding in the 2008 case of Cain v. Lodestar Energy, Inc. determined that a portion of the consensus process was unconstitutional. In this case, an individual had a 2/1 and 1/1, which would not be consensus under the statute; it is unconstitutional not to award that individual benefits.
In the two-step process, if there is not party consensus the claim moves to the second step, the panel process. The x-rays are sent consecutively to three B readers. B readers are certified by the National Institute for Occupational Safety and Health as having special skills to interpret x-rays. There are 19 B readers who have agreed to be part of the process in Kentucky. Two of the three B readers must agree in order to reach consensus. If there is consensus, an additional report can be submitted by either party, but the report has to be related to one of the two x-rays used for consensus, no additional x-rays are submitted. This report is submitted to the administrative law judge who will make a determination of whether the individual is entitled to benefits for coal workers’ pneumoconiosis.
The standard to overrule the consensus by the B-readers is clear and convincing evidence. The administrative law judge must specifically state why consensus was not followed. Clear and convincing evidence is a big factor in the cases of Martinez and Gardner. The standard in most civil liability cases is a preponderance of evidence. The clear and convincing standard in case law is somewhere between a preponderance of the evidence and beyond a reasonable doubt. Reasonable doubt is the standard for criminal cases.
In the Gardner decision issued by the Kentucky Court of Appeals in April 2010, the court determined the clear and convincing standard used in black lung claims was different than the standard needed for all other occupational pneumoconiosis claims. The standard for black lung in terms of proof was much higher than for other pneumoconiosis or occupational diseases. It is the only occupational disease that uses a consensus panel that must be overcome by clear and convincing evidence.
The Martinez case followed in June 2010. While the Gardner case focused on the three member panel process, the Martinez case had a much broader holding saying the entire party consensus and panel consensus process is unconstitutional.
There was a previous case heard in the Supreme Court, Durham v. Peabody Coal, in 2009 which argued that the consensus process was unconstitutional; however, the case dealt with black lung claims versus traumatic injury claims. The court found a justifiable reason for application of different processes for black lung claims versus traumatic injury claims.
Based on the rulings by the Kentucky Court of Appeals, the Department of Workers’ Claims determined that it was fruitless to process black lung claims during the interim until there is a decision from the Supreme Court or until the decision from the Court of Appeals is final. The department has been placing black lung claims in abeyance, but is preparing to move forward by continuing to receive the two x-rays, one from the injured worker and one from the employer. There have been a few cases that have been voluntarily resolved. These cases mostly have been the more severe cases where there is little disagreement and tend to have party consensus. As of September 9, 2011, there were 282 claims in abeyance. The department is anticipating a decision from the Supreme Court after the first of the year, but there is no specific time line.
If the Supreme Court reverses the Court of Appeals and finds the process constitutional, the department will go back to what it has been doing since 2002 using the consensus process. If the Supreme Court affirms the Court of Appeals and find the process unconstitutional, then the department may go back to the statute that preceded the statute found to be unconstitutional, which would be the process in place from 1996 – 2002 which is the same as other occupational diseases. Presumptive weight is given to a university evaluator’s determination. There are potential complications to taking this approach because of differing award benefits between the time periods and some concerns that had been raised with the university evaluator system. The department is reviewing different options to be prepared when the Supreme Court renders a decision. It is possible also that the Supreme Court will provide a remedy with its decision and the department will proceed accordingly.
In response to questions from Representative Yonts, Commissioner Lovan stated based on his interpretation of the law no cases would be subject to reopening if the Supreme Court finds the process unconstitutional. Cases in the late seventies dealt with a similar situation in which some cases were placed in abeyance and some proceeded without pursuing an appeal. The issue was reversed by the Supreme Court. Some tried to reopen, but the Supreme Court ruled that this was not a mistake of law and their opportunity was to pursue an appeal and challenge the issue on appeal. They had not appealed, nor had their cases been placed in abeyance, so there was no remedy.
For clarification, Commissioner Lovan noted that the department does not make the determination of which of the two x-rays submitted is the better x-ray. Both x-rays are sent to the panel. The statute and regulation instruct the panelists to identify the x-ray they think is the best to read. There are not many depositions, testimony, or history in the consensus process, except there may be a distinction between an x-ray that shows coal workers’ pneumoconiosis as opposed to other types of occupational pneumoconiosis. Occupational history would be considered in these situations.
Commissioner Lovan said that Kentucky’s system does allow for digital x-rays, but requires plain x-ray films. It is voluntary to accept the digital film because only approximately half of the panelists, as of two years ago, had the equipment necessary to read digital films.
There being no further business the meeting was adjourned.