Daub v. Baker Concrete, No. 1999-SC-0700-WC.

• Decision Date: 24 August 2000
• Docket Number: No. 1999-SC-0700-WC.
• Citation: 25 S.W.3d 124
• Parties: Wayne C. DAUB and Fred Eller, Appellants, v. BAKER CONCRETE; Robert Whittaker, Director of Special Fund; A.B. Chandler, Attorney General; Donna Terry, Administrative Law Judge; and Workers' Compensation Board, Appellees.
• Court: United States State Supreme Court — District of Kentucky

25 S.W.3d 124

Wayne C. DAUB and Fred Eller, Appellants, v. BAKER CONCRETE; Robert Whittaker, Director of Special Fund; A.B. Chandler, Attorney General; Donna Terry, Administrative Law Judge; and Workers' Compensation Board, Appellees.

No. 1999-SC-0700-WC.

Supreme Court of Kentucky.

August 24, 2000.

Wayne C. Daub, Louisville, for Appellants.

Mary Ann Kiwala, Boehl, Stopher, & Graves, Louisville, for Appellee Baker Concrete.

David R. Allen, Labor Cabinet—Special Fund, Frankfort, for Appellee Whittaker.

Attorney General A.B. Chandler, III, John C. Dorsey, John L. Pendley, Assistants Attorney General, Uninsured Employers' Fund, Frankfort, for Appellee Chandler.

OPINION OF THE COURT

This workers' compensation appeal concerns whether the December 12, 1996, amendment to KRS 342.320(2)(a), which limits the maximum attorney fee for representing an injured worker before an arbitrator to $2,000.00, was properly applied to a claim which arose before the amendment's effective date. It also concerns whether the provision is constitutional.

The claimant was injured on May 13, 1996. On December 12, 1996, at the culmination of a special legislative session, a major revision of the Workers' Compensation Act became effective. On June 23, 1997, claimant contracted with an attorney for representation with regard to the claim. Under the procedure employed pursuant to the 1996 amendments to KRS 342.270(2), the claim was assigned to an arbitrator. At the time, KRS 342.270(3)(b) authorized an arbitrator to transfer to an Administrative Law Judge (ALJ) a claim which presented factual issues which the arbitrator concluded were best resolved by a hearing before an ALJ. There is no indication that any party sought to have the instant claim transferred to an ALJ. It was heard by an arbitrator.

The regulations promulgated pursuant to the 1996 amendments to the Act provided for an informal proceeding before an arbitrator in which proof was by medical report and lay affidavit and cross-examination was authorized only upon motion and a showing of good cause. 803 KAR 25:010, Section 8. A review of the record in the instant case indicates that the evidence submitted by the claimant consisted of one medical report and the claimant's six-page affidavit. The employer and the Special Fund each submitted a Form 111 in which they indicated their basis for denying the claim. In a written benefit review determination by the arbitrator, claimant prevailed and was awarded a total disability. The value of the award was approximately $295,765.70. Neither the employer nor the Special Fund appealed.

In requesting a fee of $15,000.00 (the maximum authorized on the date of injury), the claimant's attorney averred that he did not keep time records in contingent fee cases and that he had spent "the normal amount of time involved in reviewing medical reports and conferencing the claim with the Plaintiff as would be expected in a case of this magnitude." The arbitrator determined that the attorney's fee was limited to $2,000.00 pursuant to the version of KRS 342.320(2)(a) which became effective December 12, 1996, and awarded an attorney's fee in that amount. Claimant and his attorney appealed; however, both the ALJ and the Workers' Compensation Board affirmed the attorney fee award and noted their lack of authority to consider constitutional matters. Kentucky ABC Board v. Jacobs, Ky., 269 S.W.2d 189 (1954); Blue Diamond Coal Co. v. Cornett, 300 Ky. 647, 189 S.W.2d 963 (1945). The Court of Appeals affirmed the award, and this appeal followed.

On the date of injury, KRS 342.320(1) provided for a maximum attorney's fee of $15,000.00 to a worker's attorney, with the amount being based upon the amount of the award and factors such as the nature and complexity of the services rendered. It placed no limit on the maximum fee which could be paid to an employer's attorney. It provided that the date of injury or last exposure controlled the maximum attorney's fee except that the maximum attorney's fee for a working miner's claim pursuant to KRS 342.732(1)(a) was controlled by the date of the claim.

As amended effective December 12, 1996, KRS 342.320 provided, in pertinent part, as follows:

(2) Attorney's fees for services under this chapter on behalf of an employee shall be subject to the following maximum limits:

(a) Twenty percent (20%) of the award not to exceed two thousand dollars ($2,000) for services performed up to and including the date of a written determination by the arbitrator. This fee shall be paid by the employee from the proceeds of the award or settlement.

. . . .

(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.

(3) In approving an allowance of attorney's fees, the administrative law judge or arbitrator shall consider the extent, complexity, and quality of services rendered, and in the case of death, the Remarriage Tables of the Dutch Royal Insurance Institute. An attorney's fee may be denied or reduced upon proof of solicitation by the attorney. However, this provision shall not be construed to preclude advertising in conformity with standards prescribed by the Kentucky Supreme Court. The date of injury or last exposure shall control the applicable maximum attorney's fee.

(4) No attorney's fee in any case involving benefits under this chapter shall be paid until the fee is approved by the arbitrator or administrative law judge, and any contract for the payment of attorney's fees otherwise than as provided in this section shall be void.

. . . .

(8) Attorney's fees for representing employers in proceedings under this chapter pursuant to contract with the employer shall be subject to approval of the administrative law judge or arbitrator in the same manner as prescribed for attorney representation of employees. Employer attorney's fees are subject to the same limitations as to maximum fees at each level except that fees for representation before administrative law judges shall not exceed ten thousand dollars ($10,000) and fees for representation before arbitrators shall not exceed two thousand dollars ($2,000). Fees for representing employers shall not be dependent upon the result achieved. . . .

As enacted effective December 12, 1996, KRS 342.0015 stated, in pertinent part, as follows:

Procedural provisions of the 1996 Act, shall apply to all claims irrespective of the date of injury or last exposure, including, but not exclusively, the mechanisms by which claims are decided . . . . The provisions of . . . KRS 342.320 . . . are remedial.¹

The general rule is that an attorney's fee is governed by the law in effect on the date of injury because the worker's benefits, of which the attorney's fee is a function, are based upon the law in effect on the date of injury. See Hamilton v. Desparado Fuels, Inc., Ky., 868 S.W.2d 95 (1993). However, unlike prior amendments to KRS 342.320, the amendment which is presently at issue was enacted, at least in part, to correspond to the changes in the mechanism or procedure by which claims were decided. It has long been established that the legislature may change the procedure by which a legal right is enforced without impairing the obligation of existing contracts. See, General Refractories Co., Inc. v. Henderson, 313 Ky. 613, 232 S.W.2d 846 (1950). The procedural changes which were enacted in 1996 were an apparent attempt to expedite the resolution of workers' compensation claims, particularly those claims which were relatively uncomplicated. 803 KAR 25:010, Section 8, set forth a mode of procedure before an arbitrator which was informal, with proof based largely upon medical and vocational reports, lay affidavits, and responses to a limited number of written questions. It required a motion and a showing of good cause before cross-examination of a witness was permitted. It permitted the deposition of a party but only if the party agreed to be deposed. Only if a claim was heard by an ALJ, either upon transfer or de novo review, were formal proceedings authorized.

Consistent with the different types of procedure which were employed when litigating a claim before an arbitrator and before an ALJ, the amended version of KRS 342.320 contained different provisions with regard to attorney's fees. KRS 342.320(2)(a) provided for an attorney's fee of 20% of the worker's award, in an amount not to exceed $2,000.00, for litigating a claim through the written determination by an arbitrator; whereas, KRS 342.320(2)(b) provided for an additional attorney's fee of up to $10,000.00 in instances where the claim was decided by an ALJ. KRS 342.320(3) also required a consideration of the "extent, complexity and quality of services rendered" when awarding an attorney's fee. KRS 342.320(3) retained the provision, formerly contained in KRS 342.320(1), that the maximum attorney's fee was controlled by the date of injury or last exposure.

KRS 342.0015 made it clear that the legislature intended for the changes in the procedure by which claims were decided to apply to all claims pending on or after December 12, 1996, without regard to the date upon which they arose. KRS 342.0015 also made it clear that the legislature considered the amendments to KRS 342.320 to be remedial. In view of the legislature's express declaration, we conclude that the amendments to KRS 342.320 apply to all claims pending on or after December 12, 1996. KRS 342.320(2)(d) specifically addresses claims which arose before December 12, 1996, and, therefore, we conclude that it takes precedence over the more general provision of KRS 342.320(3) with regard to such claims. See Land v. Newsome, Ky., 614 S.W.2d 948 (1981); Heady v....