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RENDERED: FEBRUARY 5, 2016; 10:00 A.M.
NOT TO BE
PUBLISHED
Commonwealth of Kentucky
Court of Appeals
FIRST CLASS SERVICES, INC.. APPELLANT
PETITION FOR REVIEW OF A DECISION
v. OF THE WORKERS’ COMPENSATION BOARD
ACTION NO. WC-13-74332
MIKE HELM;
HONORABLE R.
ROLAND CASE, ADMINISTRATIVE
LAW JUDGE; AND WORKERS’
COMPENSATION BOARD APPELLEES
OPINION
AFFIRMING
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BEFORE: JONES, J. LAMBERT, AND MAZE, JUDGES.
LAMBERT, J., JUDGE: First Class Services, Inc. (FCS) has petitioned this Court for review of the Workers’ Compensation Board’s (the Board) opinion holding that per diem payments for meals and lodging during Appellee Mike Helm’s best quarter should be included in calculating his average weekly wage (AWW). After careful review, we affirm.
Helm began his career as an over-the-road truck driver in the 1980s. Helm worked for FCS from October 15, 2012, through July 22, 2013, using a bulk tanker to haul plastic pellets. He was paid a percentage of the load, or “commission,” by FCS. Helm also received per diem payments, which he indicated were a daily allowance for meals, lodging, and general expenses. Payments from FCS to Helm were presented in payroll transaction detail forms, and items in the “payroll transaction detail” included commissions as well as meals reimbursement and lodging reimbursement.
On July 22, 2013, Helm suffered a work-related injury to his low back while loading a trailer. Helm’s hand slipped while pushing a large hose into the trailer, causing him to slip. As he caught himself, Helm jerked and twisted and felt a pop in his back. He described that he immediately felt “a fire down my right leg.” Helm gave notice to his dispatcher, and on July 23, 2013, he presented to the office of Dr. Robert Chambliss for treatment of his injury. A nurse practitioner at Dr. Chambliss’s office diagnosed Helm with acute lumbar-sacral strain and restricted Helm from work. On July 29, 2013, Helm returned to Dr. Chambliss, who continued to restrict Helm from work and referred him for a lumbar MRI.
That MRI, which was performed on July 31, 2013, showed a new right paramidline disk extrusion at L4-L5, which was impinging on the right L5 nerve root in the lateral recess, moderate L4 foraminal stenosis bilaterally, disk bulge at L3-L4 with mild central canal foraminal stenosis, and foraminal stenosis at L5-S1.
On August 7, 2013, Helm saw Dr. Thad Jackson, who diagnosed lumbago/low back pain and lumbar disc herniation, L4-L5 right. Dr. Jackson recommended a course of lumbar epidural steroid injections and restricted Helm from work through September 4, 2013.
FCS obtained an Independent Medical Evaluation (IME) with Dr. Thomas O’Brien, and thereafter terminated temporary total disability benefits (TTD) as of September 4, 2013, and did not authorize any further medical treatment. On September 12, 2013, Helm returned to Dr. Jackson, who restricted him from lifting anything heavier than thirty pounds and no excessive bending or twisting at the waist. Helm had to leave his employment with FCS in October 2013, because his medical restrictions precluded him from performing his job.
Helm found employment at Pegasus Transportation performing work as a driver with no loading/unloading requirements. Helm worked for Pegasus for a short period of time, earning the same or greater wages than he earned at FCS. However, he could not physically keep up the pace required of the job and could not make deliveries in the required amount of time, due to his need to stop and frequently take breaks as a result of his back symptoms. When the automatic logs showed he was making too many stops and was too slow in making deliveries, “they started complaining, so to keep my record looking good I had to quit.” Helm’s employment with Pegasus ceased in January 2014.
Thereafter, Helm found part-time work with Clear Springs, which required only driving (no loading/unloading) and allowed Helm to work at his own pace and take breaks as needed. Helm currently earns less than his pre-injury AWW while working for Clear Springs. Helm continues to experience low back pain and stiffness with symptoms radiating into his right leg, down to his toes. Helm cannot sit for more than 45 minutes, cannot walk for more than 30 minutes, cannot stand for more than 10 minutes and cannot lift more than 25-30 pounds. Helm cannot perform chores around his house, such as yard work, lawn care, and cutting wood, and he can no longer participate in hobbies he used to enjoy, such as boating, biking, and fishing.
Helm remains under the 30-pound lifting restriction set forth by Dr. Jackson. Further, he lacks the physical capacity to return to the job he was performing when injured because he cannot lift and carry the 75-pound hoses and cannot climb the tanks.
On January 10, 2014, Dr. Barefoot evaluated Helm, and on examination, noted tenderness to palpitation throughout the paralumbar musculature, weakness present in his right great toe on extension, decreased lumbar range of motion, and poor ability to squat. Dr. Barefoot diagnosed L4-L5 disc extrusion with a right L5 radiculopathy and opined, “within reasonable medical probability, the cause of Mr. Helm’s diagnosed condition is his work-related injury that occurred on July 22, 2013.” Further, “Mr. Helm may have had underlying pre-existing degenerative osteoarthritis in his lumbar spine prior to this workplace injury; however, at the time of his workplace injury in July of 2013, this condition was dormant and asymptomatic.”
Dr. Barefoot assessed 13% whole person impairment pursuant to the 5th Edition of the AMA Guides as a result of Helm’s July 22, 2013, work-related injury. He concluded, “I would apportion 100% of his current 13% whole person impairment to work relatedness in regards to his July 22, 2013, workplace injury.” Dr. Barefoot recommended that Helm proceed with lumbar epidural injections recommended by Dr. Jackson, noting, “it would seem that these injections as proposed by Dr. Jackson are both reasonable and necessary.” Regarding restrictions, Dr. Barefoot stated:
Mr. Helm would have marked difficulty with any job that required repetitive squatting, kneeling, crouching, and crawling. He would have difficulty with lifting and carrying heavy loads.
He must frequently move about for relief of pain and discomfort in his back. He would have difficulty climbing and descending stairs. He would have difficulty working on ladders or scaffolding. He would also have difficulty operating machinery with foot controls.
The ALJ issued an opinion, award, and order on August 15, 2014. The ALJ found that Helm sustained an injury as defined by the Act, which resulted in 13% whole person impairment. The ALJ found Helm retained the physical capacity to return to the type of work he performed at the time of the injury. Also, the ALJ found Helm had returned to work and earned an equal or greater wage, and then experienced a cessation of the greater wage because of the work injury. By order rendered September 23, 2014, the ALJ clarified the opinion and decided the multiplier of two, pursuant to Kentucky Revised Statutes (KRS) 342.730(1)(c)2, became effective February 1, 2014, after Helm’s cessation of employment with a subsequent employer, Pegasus.
The ALJ reviewed the quarter from October 26, 2012, through January 18, 2013, to determine Helm’s pre-injury average weekly wage. During that period, Helm received $6,186.90 as commissions. During the same period, based upon the “payroll transaction detail” forms, Helm received $2,392.00 as lodging reimbursement. (The ALJ found $2,496.00 was paid as lodging reimbursement during the quarter). Finally, during the same quarter, meals reimbursement totaled $3,363.00.
The ALJ concluded meals reimbursement should be included as wages in the calculation of Helm’s pre-injury average weekly wage, and lodging reimbursement should be excluded from the determination. The ALJ found commissions, meals reimbursement, and lodging reimbursement for the quarter of October 26, 2012, through January 18, 2013, totaled $11,942.19. The ALJ subtracted $2,496.00 for lodging reimbursement, which left $9,446.19 to be divided by thirteen weeks. The ALJ determined Helm’s pre-injury average weekly wage of $726.63 and calculated Helm’s temporary total disability rate as $484.42.
FCS filed a petition for reconsideration with request for correction of the calculation of average weekly wage. Specifically, FCS requested reconsideration of the inclusion of Helm’s meal reimbursement, which had not been reported as taxable income, in the calculation of average weekly wage. Helm did not petition for reconsideration of the ALJ’s exclusion of lodging reimbursement in the calculation of AWW.
FCS’s petition for reconsideration, with respect to the determination of average weekly wage, was denied by order entered September 23, 2014. On October 17, 2014, FCS filed its notice of appeal to the Board. On February 13, 2015, the Board affirmed in part, reversed in part, and remanded to the ALJ. The Board affirmed the ALJ’s inclusion of meals reimbursement in the calculation of pre-injury average weekly wage, and reversed the ALJ with respect to his determination that lodging reimbursement should be excluded from the calculations. On remand, the ALJ was directed to include the meals reimbursement and lodging reimbursement during Helm’s best quarter to calculate his pre-injury average weekly wage, and then amend the award for indemnity benefits accordingly. This petition for review now follows.
On appeal, FCS argues that reimbursement paid to an employee, but not reported for income taxes, should be excluded from the calculation of AWW. FCS contends the Board did not follow controlling precedent on the issue of whether per diem payments for meals and lodging should be included in calculating Helm’s average weekly wage. FCS argues that the Board decided
[T]he key distinction is whether the payment at issue represents a true employment-related expense reimbursed by the employer upon actual occurrence of the expense or a per diem paid regardless of whether it is used for its intended purpose, or whether any expenses [are] actually incurred. If the payments fall within the first category, it is not to be included as ‘wages’ in the calculation of AWW. If the payments fall within the second category it is to be included in calculating the AWW.
FCS argues that the Board did not rely upon existing precedent in its interpretation of “wages.”
KRS 342.140(6) defines wages as follows:
The term “wages” as used in this section and KRS 342.143 means, in addition to money payments for services rendered, the reasonable value of board, rent, housing, lodging, and fuel or similar advantage received from the employer, and gratuities received in the course of employment from others than the employer to the extent the gratuities are reported for income tax purposes.
(Emphasis added). Likewise, KRS 342.0011(17) states:
“Wages” means, in addition to money payments for services rendered, the reasonable value of board, rent, housing, lodging, fuel, or similar advantages received from the employer, and gratuities received in the course of employment from persons other than the employer as evidenced by the employee's federal and state tax returns[.]
(Emphasis added). In his treatise, Professor Larson states as follows:
In computing actual earnings as the beginning point of wage basis calculations, there should be included not only wages and salary but anything of value received as consideration for work, as, for example, tips, bonuses, commissions, and room and board, constituting real economic gain to the employee.
Larson’s Workers Compensation Law (2012) §93.01[2][a].
FCS argues that the Supreme Court of Kentucky’s interpretation of wages in Anderson v. Homeless Housing COA, 135 S.W.3d 405 (Ky. 2004), supports its argument that the payments should not have been included in the AWW calculation. However, in Anderson, the Court addressed the applicability of the exemption from coverage of the Act provided by KRS 342.650(3) to individuals who perform services for a religious or charitable organization in return for aid or sustenance only, and the case in no way addresses what constitutes “wages” in calculating a covered employee’s AWW. FCS only quoted a portion of the Court’s language in Anderson in its brief to this Court. Specifically, the Supreme Court stated:
The term ‘wages’ takes into account items that are reported on the employee’s income tax returns. It includes money; the reasonable value of board, rent, housing, lodging, fuel or other ‘similar advantage’ from the employer; and any ‘gratituties received in the course of employment’ from individuals other than the employer.
Id. at 413. The primary analysis concerned the construction of the term “sustenance” as used in KRS 342.650(3), not AWW.
FCS next argues that in Jackson v. Gentiva Health Services, 2013 WL 6795946 (Ky. App. 2013),[1] this Court followed the precedent set by the Supreme Court in Anderson. FCS contends that paystubs and wage records submitted by Gentiva Health Services confirmed mileage reimbursement paid to Jackson was excluded from her taxable income. FCS argues that meals reimbursement and lodging reimbursement paid by FCS to Helm were also excluded from his taxable income.
In Jackson, the ALJ excluded mileage reimbursement from the calculation of AWW. In addition to her regular pay, the claimant received mileage reimbursement at the rate of $2.50 per mile for her travels as a certified nurse’s assistant only when she submitted to her employer visit slips reflecting the patients she visited each day. The Board affirmed, stating “mileage reimbursement is paid to reimburse an employee for employment-related expenses, and it is not paid unless the mileage or travel is actually incurred. On the other hand, per diem is a set amount paid whether it is used for its intended purpose, or whether any expense is actually incurred.”[2] The Board also considered the fact the mileage reimbursement amounts were excluded from her taxable income and not reported by the Claimant on her taxable returns. The Board acknowledged that the income tax reporting requirement found in KRS 342.140(6) appears to modify only “gratuities received from third parties.” Since the mileage reimbursement represented a true employment-related expense and it was not reported as taxable income, the Board found no error in excluding it from the AWW calculation.
We agree with the Board’s analysis in Jackson and in the instant case that the income tax reporting requirement found in KRS 342.140(6) appears to modify only “gratuities received from third parties.” Thus, we decline to utilize FCS’s tax reporting approach, as that is not the Board’s demonstrated method of determining AWW. In its opinion in the instant case, the Board stated:
Based upon our review, the key distinction is whether the payment at issue represents a true-employment related expense reimbursed by the employer upon actual occurrence of the expense or a per diem paid regardless of whether it is used for its intended purpose, or whether any expense is actually incurred. If the payments fall within the first category, it is not to be included as “wages” in the calculation of AWW. If the payments fall within the second category it is to be included in calculating the AWW.
In this instance, the meals and lodging payments represent per diem payments to be included in calculating Helm’s AWW. We begin by noting both KRS 342.0011(17) and KRS 342.140(6) expressly mandate “the reasonable value of…lodging” shall be included in the employee’s AWW calculation. Likewise, both statutory definitions mandate “the reasonable value of board” received from the employer shall be included in the employee’s AWW calculation. As noted in by [sic] the Board in Comair, Inc. v. Susan Aubert, supra, Merriam Webster’s Dictionary defines ‘board’ as meaning ‘to provide with regular meals and often lodging usually as compensation.’
The Board went on to state:
We decline to adopt First Class’ argument the additional payments cannot be considered in calculating AWW unless it was reported as income for tax purposes, regardless of whether the Claimant received an economic gain. This hard line approach is in direct conflict with the Board’s previous holding that KRS 342.140(6) does not require “wages” other than gratuities to be reported on a state or federal income tax return in order to be counted for purposes of computation of an employee’s AWW. See also Larry Riley v. Louisville Metro Government, Claim Number 2010-90583, rendered February 15, 2013:
We acknowledge the last sentence of KRS 342.140(6) in discussing the income tax reporting requirement appears to modify only ‘gratuities received from third parties.’ However, the logical extension of the sentence is that when a certain payment…is subject to federal income tax, the payment should, particularly when it is a ‘similar advantage,’…be considered a ‘wage’ pursuant to KRS 342.0011(17) and KRS 342.140(6).
We agree with Helm that the Board properly concluded that meals and lodging payments represent per diem payments and should be included in calculating Helm’s AWW. The payments were paid to Helm regardless of whether he utilized them and were therefore not a reimbursement, but were instead a similar advantage as articulated in KRS 342.140(6) and KRS 342.0011(17). We are not persuaded by FCS’s reliance on Anderson or by this Court’s statements in Jackson, given the Board’s explanation of the statutory language at issue herein.
Based on the foregoing, we affirm the opinion of the Workers’ Compensation Board holding that the per diem payments to Helm for meals and lodging constituted economic gain to Helm and should have been included in the calculation of his average weekly wage.
ALL CONCUR.
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BRIEF FOR APPELLANT: R. Christion Hutson Paducah, Kentucky |
BRIEF FOR APPELLEE KEITH A. JORDAN: Christopher P. Evensen Paducah, Kentucky |
