Workers’
Compensation Board
OPINION
ENTERED: March 13, 2015
CLAIM NO. 201261717
DONNIE MOORE PETITIONER
VS. APPEAL FROM HON. ROBERT
L. SWISHER,
CHIEF ADMINISTRATIVE LAW JUDGE
FORD MOTOR COMPANY (KTP)
HON. ROBERT L. SWISHER,
CHIEF ADMINISTRATIVE LAW JUDGE RESPONDENTS
OPINION
AFFIRMING IN PART,
VACATING IN PART & REMANDING
*
* * * * *
BEFORE: ALVEY, Chairman, STIVERS and RECHTER, Members.
ALVEY,
Chairman. Donnie Moore (“Moore”) appeals
from the Opinion, Award, and Order rendered October 21, 2014 by Hon. Robert L.
Swisher, Administrative Law Judge (“ALJ”) awarding temporary total disability
(“TTD”) benefits, permanent partial disability (“PPD”) benefits, and medical
benefits for a work-related lumbar injury sustained on September 26, 2012. The ALJ determined Ford Motor Company
(“Ford”) is entitled to an offset credit for benefits paid pursuant to the Ford
Disability Retirement Plan. Moore also
seeks review of the November 17, 2014 order overruling his petition for
reconsideration.
On appeal, Moore argues
the ALJ erred in providing credit for the full amount of monthly disability
retirement benefits received by him because it is a hybrid plan. In the alternative, Moore argues the ALJ
should not have awarded a credit to Ford.
As a matter of law, the ALJ’s determination Ford is entitled to some
credit pursuant to KRS 342.730(6) for payments made to Moore under its
Disability Retirement Plan, is affirmed in part. We vacate in part, and remand for the ALJ to
determine whether the holding in Alcan Aluminum Corp. v. Stone, 276
S.W.3d 817 (Ky. 2009) is applicable to the case sub judice, and if so, for a determination of the appropriate
offset credit to which Ford is entitled.
Moore filed a Form 101
alleging he injured his back, buttocks and left knee on September 26, 2012
while working for Ford. Because the
medical evidence is irrelevant to the issue on appeal, it will not be
summarized.
Moore testified by
deposition on August 6, 2013 and at the hearing held August 26, 2014. Moore was born on September 15, 1958 and
resides in Louisville, Kentucky. He
began working for Ford in November 1999.
On September 26, 2012, Moore injured his low back and left knee while
working at Ford on the assembly line for which he subsequently received medical
treatment, including a three level fusion surgery performed on August 29,
2013.
Following the September
26, 2012 accident, Moore was restricted to light duty. Moore continued to work for Ford through
January 1, 2013, with the exception of November 26 and 27, 2012. During this time, Moore stated his work
consisted of sitting in the break room.
Moore has not worked since January 1, 2013, because Ford has no jobs
available within his restrictions.
At his August 6, 2013
deposition, Moore testified he received TTD benefits from January 2, 2013
through June 23, 2013. Once the TTD
benefits terminated, Moore began collecting benefits from Unicare[1] in
the gross amount of $694.00 and in the net amount of $652.00 on a weekly
basis. Moore testified he had also been approved
for Social Security disability benefits which he anticipated would begin in
December 2013.
At the August 26, 2014
hearing, Moore indicated he began receiving Social Security disability benefits
after his deposition, and continues to receive them. Moore no longer draws Unicare benefits. Moore stated he now receives “medical
retirement” or disability retirement benefits from Ford in the amount of
$767.00 per month which he began receiving on January 1, 2014.
By agreement of the
parties, Ford submitted the deposition testimony of Keith Murray (“Murray”), a
pension analyst for Ford, taken on July 30, 2014 for a different claim, Connie
Jones v. Ford Motor Company, Claim Number 2012-00198. Murray testified as a pension analyst, he is
required to understand all pension plans offered by Ford. Murray testified he is familiar with the
disability retirement benefit program, which is solely funded by Ford. Murray testified all benefit programs
available through Ford are contained in the Ford UAW Collective Bargaining
Agreement booklet. Article IV (Four) of
the booklet explains eligibility for disability retirement benefits, while
Article V (Five) explains how the benefits are calculated. Portions of Article V (Five) of the booklet
were introduced as an exhibit.
Murray testified
regarding the disability retirement benefit program. He explained a sick or ill Ford employee
typically applies for medical leave from the company. The medical leave is substantiated by the
disability insurance carrier, and if the employee is classified as permanently
and totally disabled, he or she can apply for disability retirement.
Murray testified Ford’s
disability retirement benefit program is different from its normal retirement
benefit program. A Ford employee becomes
eligible for normal retirement upon turning sixty-five years of age. A Ford employee is eligible for disability
retirement after completion of ten years of credited service and a finding he
or she is permanently totally disabled. A
Ford employee can apply for disability retirement at any age if he or she meets
the two requirements. Murray explained
the benefit amount would be the same under either the normal or disability
retirement program since there is no early age reduction under either plan.
Murray also stated Ford
offers “early age retirement.” An
employee is eligible for this program after completion of thirty years of
credited service with no age requirement, or he or she is at least fifty-five
years of age and has a minimum of ten years credited service. However, if the employee applies for early
age retirement before the age of sixty-two, an offset is applied to the pension
amount. Murray testified regarding the
advantage to the worker for receiving benefits pursuant to the disability
retirement plan as follows:
Q: Now, a worker who would be eligible under
both the disability retirement benefit program and the early age retirement
benefit program, would there be an advantage to applying under one of the
programs as opposed to the other program?
A: Yeah, again, depending on the years of
credited service, the disability retirement had no early age reduction, so for
somebody who’s age 55 with ten years applied for early age, it’s usually
referred to early age retirement, they’ll receive 57.9 percent of the
pension. Under disability retirement,
they would receive 100% of the pension, so there is a difference in the monthly
payment amounts.
After describing the
process an employee may undertake in being approved for disability retirement,
Murray discussed section 16 of Article Five dealing with deductions for
Workers’ Compensation.
Q: . . . Could I get you to refer to Section 16
of Article 5?
A: Yes.
Q: Do you
have a copy of that in front of you?
A: Yes, I
do.
Q: In that
particular section, down near the bottom, there were three subsections. The third one mentions that workers’ compensation
payments paid under a claim filed not later than two years after the breaking
of seniority. Do you know what they mean
by the breaking of seniority?
A: Yes. When you terminate your employment with Ford
Motor Company, you are no longer an employee of Ford.
Q: Now, in
a situation where we’re dealing with disability retirement benefits, is the
worker’s seniority broken?
A: For a
disability retirement? No, it’s not.
.
. . .
Q: If we
look at Section 16, it deals with deductions for workers’ compensation,
correct?
A: Correct.
Q: And in
that section, it states that you cannot make a deduction for workers’
compensation under the disability retirement benefit program if a claim for
workers’ compensation benefits has been filed less than two years before
seniority is broken.
So
in Ms. Jones’ situation, since her seniority has never been broken, then the
disability retirement benefits program cannot take a deduction for workers’
compensation benefits, correct?
A: Correct.
A benefit review
conference (“BRC”) was held on August 13, 2014.
The BRC order and memorandum reflects credit for disability retirement
as one of the contested issues.
In the October 21, 2014
opinion, the ALJ determined Moore sustained lumbar and left knee injuries as a
result of the September 26, 2012 work accident.
The ALJ found Moore sustained no more than a temporary sprain/strain
injury to his left knee resulting in no permanent impairment rating and which
requires no ongoing medical care or treatment.
The ALJ therefore dismissed Moore’s claim for permanent income and
medical benefits for the left knee.
Regarding the lumbar spine injury, the ALJ found Moore was entitled to
PPD benefits based upon a 25% impairment enhanced by the 3.2 multiplier. The ALJ awarded TTD benefits from November
26, 2012 through November 27, 2012 and again from January 2, 2013 through April
8, 2014, and provided Ford a credit for TTD benefits already paid. The ALJ awarded medical benefits for the
lumbar injury.
The ALJ made the
following findings regarding “Credit for disability retirement:”
Plaintiff testified that he receives
disability retirement benefits from Ford Motor Company in the amount of $767 a
month with those payments commencing January 1, 2014. The defendant/employer argues that it is
entitled to a credit against permanent disability benefits awarded in this
workers’ compensation proceeding to the extent of payments made under the
Disability Retirement Benefit Program.
It contends that that[sic] plan is exclusively employer-funded and that
there is no internal offset provision for workers’ compensation benefits. Plaintiff, for his part, initially questioned
whether disability arose from the September 26, 2012 injury but concedes in his
brief that “it appears from a review of the medical testimony that the
discussion was always as to the low back as opposed to any other medical
issues.” In this regard the ALJ notes
that the records/report of Dr. Waters has been submitted in evidence which the
ALJ understands was a report submitted to Ford Motor Company in conjunction
with plaintiff’s application for disability retirement benefits. Therein, Dr. Waters’ diagnoses and addresses
only low back pain and “status-post spinal fusion” with restrictions assigned
as to those diagnoses and offering a medical opinion that plaintiff is
suffering from a condition which totally and permanently prevents him from
engaging in his regular occupation. In
other words, although plaintiff testified and there is evidence in the record
as to prior injuries to the right shoulder, low back and right knee, the award
of disability retirement benefits was based solely on plaintiff’s lumbar spine
condition, all of which is attributable to the September 26, 2012, work injury.
KRS 342.730(6) states as
follows:
All income benefits otherwise payable
pursuant to this chapter shall be offset by payments made under an exclusively
employer-funded disability or sickness and accident plan which extends income
benefits for the same disability covered by this chapter, except where the
employer-funded plan contains an internal offset provision for workers’
compensation benefits which is inconsistent with this provision.
In order to obtain credit under this section
the defendant/employer must prove (1) the plan is exclusively employer-funded,
(2) that income benefits are made for the same disability covered by the
Workers’ Compensation Act; and (3) that the employer-funded plan does not
contain an internal offset provision for workers’ compensation benefits inconsistent
with the statute. In support of its
claim for credit, the defendant/employer submitted the deposition of Ford Motor
Company pension analyst Keith Murray which was taken in a parallel claim. Murray testified that the Disability
Retirement Benefit Program is solely funded by Ford Motor Company. Plaintiff does not contend otherwise. In addition, plaintiff testified that as part
of his disability retirement, paperwork was submitted by Dr. Waters which, as
addressed and summarized above, speaks only to plaintiff’s lumbar spine
condition and resulting fusion surgery.
There is no evidence that plaintiff was granted disability retirement on
the basis of any condition other than the lumbar spine injury he sustained on
September 26, 2012.
With respect to the issue of internal offset,
Keith Murray testified with respect to various provisions of the book entitled
“Benefit Plans and Agreements, Ford Motor Company and the UAW” including that
section of the retirement program dealing with disability retirement and any
potential offset by virtue of workers’ compensation benefits awarded. Murray was asked specifically about Article
V, Section 16 regarding the coordination of disability retirement benefits and
workers’ compensation benefits. In the
exhibit attached to Mr. Murray’s deposition, only part of Section 16 is
attached. Specifically, Section 16
indicates that the monthly benefit for disability retirement awarded shall be
reduced to the extent of workers’ compensation benefits payable “except that no
deduction shall be made for the following:” after which two subsections are
listed. Murray, however, referred to a
third subsection, a copy of which is not attached to his deposition, which he
testified creates an exclusion from the offset for workers’ compensation
benefits paid under a claim filed not later than two years after the breaking
of seniority. He explained that
seniority is broken when “you terminate your employment with Ford Motor
Company, you are no longer an employee of Ford.” In a situation dealing with disability
retirement benefits, a workers’ seniority is not broken. The ALJ infers from Mr. Murray’s testimony
that the plan documents do not provide for an offset or decrease in disability
retirement benefits by virtue of corresponding workers’ compensation benefits
when a claim for such benefits is filed within two years of the “breaking of
seniority.” First, it is unclear to the
ALJ whether plaintiff is or is not an employee of Ford. By implication, however, he remains an
employee of Ford since the receipt of disability retirement benefits does not
break one’s seniority according to Mr. Murray.
In any event, plaintiff testified that he last worked at Ford either in
December of 2012 or December of 2013 (his testimony in this regard being
unclear to the undersigned). Regardless,
however, even if he was no longer considered an employee of Ford at the earlier
date, December 2012, and his seniority was thereby “broken”, his claim was
filed on June 10, 2013, well within the two year period post-“breaking.” Accordingly, by the terms of the plan itself,
there is no reduction or offset in the Disability Retirement Benefits Plan
received under the Ford/UAW plan by virtue of his receipt of workers’ compensation
benefits herein.
In his brief, plaintiff does not argue that
the plan is technically deficient or non-compliant with KRS 342.730(6) but he
argues, instead, that the designation of the plan as providing a retirement
benefits takes it outside the scope of the credit section of the statute. As
plaintiff frames the issue, “the question becomes the significance of the
phrase ‘under an exclusively employer-funded disability or sickness and
accident plan’.” He contends that
nowhere in the definition is the word “retirement” used and no punctuation is
used to delineate other than that the reference in the statute is to a
disability or sickness and accident plan, a phrase which he contends is
commonly used to denote short term and long term disability policies. In the absence of the word “retirement” as
part of the definition in the statute, there should be no credit allowed.
To the undersigned’s review of reported
cases, this is a matter of first impression.
That said, the ALJ is not persuaded that the title of the plan or
description of plan benefits is the determinative factor in whether a credit is
allowed. The ALJ finds that the Ford
Disability Retirement Plan is an exclusively employer-funded disability plan as
contemplated by the statute. Whether
such benefits are denominated as retirement disability benefits as opposed to
temporary disability benefits or sickness/ accident disability benefits or
short term/long term disability benefits is a distinction without a
difference. The defendant/employer has
unilaterally funded a program providing benefits to compensate plaintiff for
disability arising from, in this case, the same injury for which workers’
compensation benefits are payable. The
disability retirement plan is, in essence, a long term disability plan simply
called another name. Regardless,
however, the ALJ finds as a matter of law that the Ford Disability Retirement
Plan is, under the facts presented in this claim, the type of disability plan
for which the employer is entitled to an offset against workers’ compensation
benefits. Accordingly, the ALJ finds,
based on plaintiff’s testimony with respect to his monthly benefit, that Ford
is entitled to a credit against its obligation to pay disability benefits
hereunder to the extent of $179.08 per week ($776 X 12 ÷ 52) for benefits payable
hereunder beginning and after January 1, 2014.
The ALJ awarded PPD
benefits in the sum of $507.96 per week from September 26, 2012. The ALJ found Ford was entitled to an offset
credit as follows:
2 . . . . Provided, however,
that the defendant/employer shall take credit against benefits for temporary
total and/or permanent partial disability at the rate of $179.08 per week from
and after January 1, 2014, by virtue of payments made to plaintiff under the
defendant/employer’s Disability Retirement Benefit Program. Should such disability retirement benefit
payments cease, however, the credit allowed hereunder will likewise terminate
at the time of such cessation.
Moore filed a petition
for reconsideration arguing the ALJ erred as a matter of law in finding the
disability retirement plan is the type of plan contemplated under KRS
342.730(6), since the statutory language does not include the word
“retirement.” The ALJ found Moore’s
petition a re-argument of the merits and therefore overruled it on November 17,
2014.
On appeal, Moore states
the parties and the ALJ mistakenly thought the issue of credit for disability
retirement was an issue of first impression.
He argues the Kentucky Supreme Court’s case of Alcan Aluminum Corp.
v. Stone, 276 S.W.3d 817 (Ky. 2009) is directly applicable. Moore states the Court in Stone
directed since disability plans are hybrid, combining the attributes of both a
disability and a retirement plan, offset credit is appropriate only to the
extent the disability retirement benefit exceeds the retirement benefit for
which the worker would have been eligible, because only that portion of the
benefit is attributable to the same disability covered by KRS Chapter 342. The balance is based upon the workers’ years
of service and other criteria. In his
brief, Murray argues the following:
Here,
fortunately the deposition of Keith Murray at page 10 establishes that
depending on the years of credit service, the disability has no early age
retirement, so for anybody who is age 55 with 10 years of service who applies
for early age retirement, and it is usually referred to as that, they will
receive 57.9% of the pension. Under a disability retirement, they receive
100%. So that is the difference in the
monthly payment amount. Claimant was
born on September 15, 1958 which means that in January of 2014, he was 55
years of age and he had worked for Ford since November 1999, so he had over the
10 years required for early retirement.
Accordingly, 42.1% is all of the credit that the Employer would be
entitled to. The ALJ therefore erred in
the amount of the credit as the ALJ took the full $776.00 per month x 12 and
divided by 52 weeks to get the credit of $179.08, when in fact based upon the
testimony of Keith Murray and the cited case, it should have only been 42.1% of
that or $75.39 per week.
Moore requests the
claim should be remanded to the ALJ for re-calculation of the credit in
accordance with Alcan Aluminum Corp. v. Stone, supra, or, in the
alternative, requests Ford be provided no offset credit.
On appeal, Ford states
if the Board determines Alcan Aluminum Corp. v. Stone, supra, is
applicable, then a remand for recalculation of the credit benefits would be
appropriate. However, it argues Moore
provides no basis for his argument no credit at all should be allowed.
KRS
342.730(6) requires a three part analysis before it applies to a particular
benefit, in this case disability retirement benefits. The plan must be exclusively employer funded, it must
extend income benefits for the same disability covered by workers'
compensation, and it must not contain an internal offset provision for workers'
compensation benefits.
In
this instance, the ALJ set forth the correct three part analysis, and made
specific findings of fact under each prong in determining Ford is entitled to a
credit. The ALJ relied upon Murray’s
testimony in finding the Disability Retirement Plan is solely funded by
Ford. This specific finding is not
challenged by Moore. The ALJ then
addressed the second prong of the analysis and determined no evidence
established Moore was granted disability retirement on the basis of
any condition other than the lumbar injury he sustained on September 26,
2012. This finding is not challenged by
Moore. The ALJ then outlined portions of
Murray’s testimony and the disability plan upon which he relied in determining
it does not contain an internal offset provision for workers’ compensation
benefits. This finding is not challenged
by Moore. Here, the ALJ appropriately
performed the proper three part analysis in determining Ford is entitled to a
credit. The testimony of Murray and
Moore, along with documentation attached to Murray’s deposition outlining the
disability retirement plan, constitutes the requisite substantial evidence
supporting of the ALJ’s determination Ford is statutorily entitled to at least
some offset.
Moore argues, based on the holdings in
Alcan Aluminum Corp. v. Stone, 276 S.W.3d 817 (Ky. 2009), the claim should be remanded to the ALJ
for recalculation of the amount of credit to which Ford is entitled. In Alcan Aluminum Corp. v. Stone, the
Claimant sustained a 2002 work-related injury, and his employer ultimately
determined he qualified for disability retirement. The Court noted the employer made all contributions
and paid all costs of the plan, which provided three types of benefits.
First, a worker
could retire at the normal retirement age, which was 65, and receive a benefit
based on a dollar amount multiplied by the number of years of service. Second,
a worker with ten or more years' service could retire early, at age 60 or
greater, and receive a discounted benefit. Third, a worker with 10 or more
years' service who met the medical criteria could receive a disability
retirement benefit that was calculated like the normal retirement benefit but
not discounted for an age less than 65. Id.
at 818.
The
Claimant elected to receive disability retirement benefits, which were greater
than the benefits he would have received had he elected early retirement. The ALJ determined the employer was entitled
to a dollar-for-dollar offset for disability retirement benefits, and the Board
reversed to the extent that
it limited the offset to the amount the benefit for disability retirement
exceeded the benefit the claimant would have been entitled had he taken early
retirement. The Court of Appeals
affirmed. Id.
The Kentucky
Supreme Court provided the following analysis in affirming the Court of
Appeals:
The employer emphasizes that the claimant receives
benefits under an exclusively employer-funded disability retirement plan. It
asserts that the Board and the Court of Appeals erred by limiting the offset
because KRS
342.730(6)
refers to “[a]ll income benefits” and does not limit the offset to “some
benefits” or “a portion of the benefits” paid for the same disability that
Chapter 342 covers. What the argument overlooks is that the employer-funded
plan at issue does not pay a disability benefit but a disability retirement
benefit. The difference is significant under KRS
342.730(6).
KRS
342.730(6)
prevents a duplication of the income-replacement benefits that an employer must
pay under Chapter 342 and a private, exclusively employer-funded disability or
sickness and accident plan. [footnote omitted]. Although
benefits paid under a private, exclusively employer-funded pension or
retirement plan also replace lost income, Chapter 342 does not provide an
offset for such benefits. Thus, KRS
342.730(6)
would not have entitled the employer to an offset if the claimant had elected
to receive early retirement benefits.
As the Board noted, disability retirement plans are
a hybrid, combining attributes of both a disability plan and a retirement plan.
When such a plan is at issue, KRS 342.730(6) permits
an offset to the extent that the disability retirement benefit exceeds the
retirement benefit for which the worker would have been eligible because only
that portion of the benefit is attributable to the same disability covered by
Chapter 342. The balance is based on the worker's years of service and/or other
criteria. Id. at 818-819.
Stone
is applicable to the issue regarding offset credit for payments made pursuant
to Ford’s Disability Retirement Plan. As the Court stated above,
“disability retirement plans are a hybrid.”
In this instance, Murray’s testimony establishes a worker is eligible
for disability retirement if they meet the minimum years of credited service
and are permanently and totally disabled.
Therefore, Ford’s plan is similar to the hybrid plan in Stone. The Court in Stone provides clear guidance
in calculation of offset credit pursuant to such a hybrid plan. “KRS 342.730(6) permits an offset to the extent that the
disability retirement benefit exceeds the retirement benefit for which the
worker would have been eligible because only that portion of the benefit is
attributable to the same disability covered by Chapter 342.” Id. at 819.
On
remand, the ALJ is directed to determine from the evidence the extent the
disability retirement benefit exceeds the early retirement benefit for which
Moore would have been eligible. The ALJ
is directed to recalculate the offset credit to which Ford is entitled. The ALJ is further directed to provide the
basis for his calculations.
Accordingly,
the October 21, 2014 Opinion, Award, and
Order and the November 17, 2014 order on petition for reconsideration by Hon.
Robert L. Swisher, Administrative Law Judge, are hereby AFFIRMED IN PART, VACATED IN PART.
This claim is REMANDED to
the ALJ for entry of an amended opinion and award in conformity with the views
expressed herein.
ALL
CONCUR.
COUNSEL
FOR PETITIONER:
HON WAYNE C DAUB
600 WEST MAIN ST, STE 300
LOUISVILLE, KY 40202
COUNSEL
FOR RESPONDENT:
HON PHILIP J REVERMAN JR
400 WEST MARKET ST, STE 2300
LOUISVILLE, KY 40202
CHIEF
ADMINISTRATIVE LAW JUDGE:
HON ROBERT L SWISHER
PREVENTION PARK
657 CHAMBERLIN AVENUE
FRANKFORT, KY 40601