Preview:

RENDERED: January 21, 2000; 10:00 a.m. NOT TO BE PUBLISHED

C ommonwealth O f K entucky C ourt O f A ppeals
NO. 1998-CA-002112-WC

MISTI ANN FRENCH and HER ATTORNEY GREGORY N. SCHABELL

APPELLANTS

v.

PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD ACTION NO. WC-97-00835

DORMAN PRODUCTS R&B, INC.; HON. ROBERT L. WHITTAKER, DIRECTOR OF SPECIAL FUND; HON. IRENE STEEN, ADMINISTRATIVE LAW JUDGE; HON. A.B. CHANDLER, III, ATTORNEY GENERAL; and WORKERS' COMPENSATION BOARD

APPELLEES

OPINION AFFIRMING ** ** ** ** ** BEFORE: GUIDUGLI, HUDDLESTON and McANULTY, JUDGES.

McANULTY, JUDGE: This appeal presents two questions concerning the approval of attorney's fees pursuant to KRS 342.320. First,

whether the 1996 amendment to the statute applies to a claim in which the injury occurred prior to the effective date of the amendment. Second, whether the statute is constitutional.

Appellant Misti Ann French ("French") filed a claim alleging that she suffered a work-related injury on July 22,

1996.

This claim was settled in arbitration.

Appellant Gregory

Schabell, French's attorney, then submitted a Motion for Attorney Fee requesting an award of $4,554.84, 20% of the recovered amount. The arbitrator fixed the award of attorneys fee at

$2,000.00, pursuant to the 1996 amendment to KRS 342.320. Appellants appealed to the ALJ who determined that although the injury occurred in July of 1996, the attorney-client employment contract was not entered into until March of 1997 and therefore the 1996 amendment applied. attorney fee of $2,000.00. Appellants appealed to the Workers' Compensation Board, arguing the application of the 1996 amendment to this claim and challenging the constitutionality of KRS 342.320. The Board The ALJ affirmed the

declined to rule on the appeal, stating that the only issue before it was the constitutionality of KRS 342.320 and it is without authority to rule on the constitutionality of a statute. We first conclude that the Board erred in determining that the sole issue before it was the constitutionality of KRS 342.320. The Appellants' brief to the Board does raise the

question of constitutionality pursuant to Section 19 of the Kentucky Constitution. However, it also submits case law to the

effect that the attorney fee for a workers' compensation claim is determined by the law in effect on the date of the injury. Hamilton v. Desparado Fuels, Inc., Ky., 868 S.W.2d 95 (1993). Therefore, the Appellants raised the issue of the application of the 1996 amendment to a claim in which the injury occurred before the effective date of the amendment.

-2-

Unfortunately for the Appellants, we cannot agree with their interpretation of the 1996 amendment to KRS 342.320 or that Hamilton is dispositive of this issue. Court stated as follows: We believe that what constitutes an authorized attorney's fee for prosecuting a claim for those particular benefits also should be determined by the law in effect on the date of the injury. A contract that provides otherwise is void. KRS 342.320(2). KRS 446.080(1) provides that statutes are to be liberally construed in order to promote their objectives and the legislative intent, and KRS 446.080(3) provides that no statute is to be applied retroactively absent an express legislative directive. In Peach v. 21 Brands Distillery, Ky. App., 580 S.W.2d 235 (1979), the court emphasized that the rule against the retroactive application of statutes should be strictly construed. Particularly where a statute creates new rights or duties, it should be presumed that the legislature intended for the statute's application to be prospective only. The 1990 amendment to KRS 342.320(1) exposes injured workers to liability for substantially greater attorney's fees in relation to the size of their awards than was authorized at the time the maximum amount of the award was fixed. We find no indication, whatever, that the legislature intended for the 1990 amendment to KRS 342.320 to apply retrospectively to awards of attorney's fees relative to injuries which occurred before its effective date. Id. at 97. In contrast to the situation in Hamilton and the 1990 In Hamilton, the Supreme

amendment to KRS 342.320, the 1996 amendments specifically provide that "the provisions of . . . 342.320 . . . are remedial." KRS 342.0015. In Napier v. Scotia Coal Company, Ky.,

874 S.W.2d 377 (1993), the Supreme Court held that because the 1988 amendments to KRS 342.320 were "remedial," they were to apply prospectively to those claims that arose after the -3-

effective date of the amendment.

In addition, the Court

concluded that the remedial amendments apply retrospectively to those claims that arose before its effective date in which the representation on a motion to reopen was undertaken on or after its effective date. Id. at 379.

As previously stated, French was injured before the effective date of the amendment. However, the attorney-client

employment contract was entered into after the effective date of the amendment. Based on Napier, supra, and the remedial language

in KRS 342.320, it is clear that the December 12, 1996 amendments apply retrospectively to Schabell's claim for attorney's fees. We find further strength for this conclusion in the language of the amended statute itself. in pertinent part as follows: (d) Attorney-client employment contracts entered into and signed prior to December 12, 1996, for injuries or date of last exposure occurring prior to December 12, 1996, shall not be subject to the conditions of paragraphs (a), (b), and (c) of this subsection, and the law existing at the date of the injury or last exposure to the hazards of an occupational disease shall apply. In other words, the amended statute specifically states that a contract entered into before the effective date concerning an injury which occurred before the effective date is not bound by the $2,000.00 limitation. This necessarily infers that a KRS 342.320(2)(d) states

contract entered into after the effective date is bound by the limitation. For the foregoing reasons we conclude that the ALJ properly limited the award of attorney fees to $2,000.00.

-4-

We now turn to Appellants' argument that the amended KRS 342.320 is unconstitutional. Appellants' discussion of this

issue is limited in their brief to one paragraph listing a plethora of provisions of the Kentucky Constitution they believe are violated by the statute in question, without further analysis or supporting case law. Among the provisions listed are Sections

2, 14, 19, 28, 29, 109, and 116. In deciding whether an act of the General Assembly is unconstitutional, we necessarily begin with the strong presumption in favor of constitutionality. Lewis, Ky., 619 S.W.2d 489, 493 (1981). United Dry Forces v.

The Supreme Court has

stated that the constitutionality of a statute dealing with economic matters "will be upheld if its classification is not arbitrary, or if it is founded upon any substantial distinction suggesting the necessity or the propriety of such legislation." Kentucky Harlan Coal Co. v. Holmes, Ky., 872 S.W.2d 446, 455 (1994). In addition, "[a] statutory classification in the area

of social welfare is not unconstitutionally arbitrary if it has a legitimate objective and is rationally related to that objective." (1985). Estridge v. Stovall, Ky. App., 704 S.W.2d 653, 655

Estridge further provides that due process or equal

protection are violated "`only if the resultant classifications or deprivations of liberty rest on grounds wholly irrelevant to a reasonable state objective.'" Id., citing Kentucky Assoc. of

Chiropractors, Inc. v. Jefferson County Medical Society, Ky., 549 S.W.2d 817 (1977). The gist of these cases is that appellate

review of the constitutionality of this statute will involve the

-5-

use of the rational basis test. Ky. App., 957 S.W.2d 290 (1997).

Edwards v. Louisville Ladder,

The purpose of KRS 342.320 "is to benefit the claimant in allowing him to satisfy his present debt to his attorney for representation in the case." A & K Coal Company v. Blankenship, Ky., 708 S.W.2d 638 (1986). This is a legitimate state objective

and we believe KRS 342.320 is rationally related to that purpose. As such, we hold that KRS 342.320 is constitutional. Finally, we do not believe that KRS 342.320 unconstitutionally regulates the legal profession or fees charged by attorneys. This is based on the fact that the Workers'

Compensation Statute is an option provided by the Legislature for workers. If a worker chooses to participate in the legislative

remedy, then his participation necessarily must be within the parameters set forth by the Legislature. ALL CONCUR. BRIEF FOR APPELLANT: Gregory N. Schabell Florence, KY BRIEF FOR APPELLEE, SPECIAL FUND: David W. Barr Louisville, KY

-6-



Download 1998-ca-002112.pdf

Kentucky Law