Kentucky Retirement Systems v. Bowens

• Decision Date: 23 April 2009
• Docket Number: No. 2007-SC-000509-DG.,2007-SC-000509-DG.
• Citation: 281 S.W.3d 776
• Parties: KENTUCKY RETIREMENT SYSTEMS, Appellant, v. Sandra BOWENS, Appellee.
• Court: United States State Supreme Court — District of Kentucky

281 S.W.3d 776

KENTUCKY RETIREMENT SYSTEMS, Appellant, v. Sandra BOWENS, Appellee.

No. 2007-SC-000509-DG.

Supreme Court of Kentucky.

April 23, 2009.

Michael Todd Butler, Jennifer A. Jones, Leigh Ann Jordan, Katherine I. Rupinen, Brown J. Sharp, II, Brian C. Thomas, James Eric Wampler, Kentucky Retirement Systems, Frankfort, KY, Counsel for Appellant.

Michael S. Endicott, Paintsville, KY, Counsel for Appellee.

Opinion of the Court by Justice SCOTT.

Appellant, the Board of Trustees of the Kentucky Retirement Systems, (hereinafter the "Board") appeals to this Court seeking relief from the opinion of the Court of Appeals. Specifically, Appellant argues the Court of Appeals erred: 1) by applying the "cumulative effect" rule, as enunciated in Dillon v. Celebrezze, 345 F.2d 753, 757 (4th Cir.1965), and 2) in adopting the "treating physician rule," pursuant to Houston v. Secretary of Health & Human Servs., 736 F.2d 365, 367 (6th Cir.1984). For the reasons discussed herein, we affirm the opinion of the Court of Appeals on application of the "cumulative effect" rule, but reverse its adoption of the "treating physician" rule.

Facts

Appellee, Sandra Bowens, was an employee of Johnson County Home Health for approximately nine years, from July 1995 until she went on leave under the Family Medical Leave Act (FMLA) in May 2004. As a home health aide, Appellee's duties included washing patients' hair, cooking their meals, cleaning their home, and bathing them.

In July 1997, she was involved in a motor vehicle accident during the course of her employment, as a result of which, she sustained a "flexion-hyperextension injury" to her neck. Her head, back, and arm were also injured in the accident. As a result of her injuries, she was reassigned to office work, where her duties included answering the phones, making charts, completing the mail log, ensuring maintenance of company vehicles, transporting documents, and inputting data into the computer system.

In March 2002, she was involved in a second motor vehicle accident. The record is unclear as to whether this accident occurred in the course of her employment. This accident resulted in a torn medial meniscus in her right knee, which would have required surgery to correct. Appellee did not undergo surgery to repair her meniscus, as she was diagnosed with cancer around January 2003.¹ This latter diagnosis resulted in a mastectomy of her left breast on February 7, 2003, followed by numerous radiation and chemotherapy treatments. Incredibly, during the course of her radiation and chemotherapy treatments, Appellee continued to work, often arriving before her co-workers, leaving to take her treatments, and then returning to the office for the rest of the day. She was unable to complete her chemotherapy, however, because of a bad reaction to it.

There were multiple physical side-effects of the radiation and chemotherapy. She suffered from fatigue, decreased mobility and swelling of her arm. She suffered from cognitive difficulties and loss of memory. She was often hoarse and coughed chronically. She also had her lymph nodes removed and suffered from radiation burn, causing her to forego the last five treatments of chemotherapy. Further, she suffered from arthritis in her back and her still unrepaired torn medial meniscus. In 2004, she was diagnosed with ataxia and asthma. She also complained of additional ailments including headaches, dizziness, fatigue, carpal tunnel syndrome, unsteadiness, and memory problems.

During her radiation and chemotherapy treatments, Appellee was granted an informal work accommodation. The accommodation limited the amount of time Appellee spent picking up documents and limited the amount of weight she was required to lift. This accommodation ended with her treatments.

Although she was still working at the time, Appellee applied for disability retirement on March 21, 2003, citing arthritis, breast cancer, and the injuries sustained from the two (2) motor vehicle accidents as the cause of her disability.² She continued to work, however, until May 26, 2004.

Her application for state benefits, however, was denied and an administrative hearing was held on June 24, 2004. The hearing officer thereafter recommended that Appellee's application for retirement benefits be denied and the Board adopted the hearing officer's Report and Recommended Order as its final administrative decision, denying Appellee's application for disability retirement benefits.

Appellee then filed a petition for judicial review in the Franklin Circuit Court. That court affirmed Appellant's final administrative decision. Appellee then filed an appeal to the Court of Appeals, which affirmed the decision of the Franklin Circuit Court in part, and vacated and remanded in part for further proceedings consistent with the application of the "cumulative effect" and "treating physician" rules as aforementioned. We granted discretionary review.

Law

"In its role as the finder of fact, an administrative agency is afforded great latitude in its evaluation of the evidence heard and the credibility of witnesses, including its findings and conclusions of fact." McManus v. Kentucky Retirement Systems, 124 S.W.3d 454, 458 (Ky.App. 2003) (internal quotation marks and citation omitted). Thus, "[a] reviewing court is not free to substitute its judgment for that of an agency on a factual issue unless the agency's decision is arbitrary and capricious." Id. at 458.

In determining whether an agency's action was arbitrary, the reviewing court should look at three primary factors. The court should first determine whether the agency acted within the constraints of its statutory powers or whether it exceeded them.... Second, the court should examine the agency's procedures to see if a party to be affected by an administrative order was afforded his procedural due process. The individual must have been given an opportunity to be heard. Finally, the reviewing court must determine whether the agency's action is supported by substantial evidence.... If any of these three tests are failed, the reviewing court may find that the agency's action was arbitrary.

Bowling v. Natural Resources and Environmental Protection Cabinet, 891 S.W.2d 406, 409 (Ky.App.1994) (internal quotation marks and citation omitted). "'Substantial evidence' means evidence of substance and relevant consequence having the fitness to induce conviction in the minds of reasonable men." Owens-Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky.1998) (citing Kentucky State Racing Comm'n v. Fuller, 481 S.W.2d 298, 308 (Ky.1972)). We review an agency's conclusions of law de novo. See Aubrey v. Office of Attorney General, 994 S.W.2d 516, 519 (Ky.App.1998).

Analysis

a. "Cumulative Effect" rule

Appellant argues the Court of Appeals erred in applying the "cumulative effect" rule and determining the hearing officer erred by failing to properly evaluate her injuries' combined effect upon Appellee. We disagree and uphold the Court of Appeals' application of the "cumulative effect" rule in this instance.

Appellee argued to both the Franklin Circuit Court and the Court of Appeals that Appellant failed to consider the "cumulative effect" of all of Appellee's medical problems in making its disability determination.³ In this regard, the Franklin Circuit Court found that, KRS 61.600 requires only a finding based on the examination of the objective medical evidence. The hearing officer's findings of fact were based on a careful examination of all of the objective medical evidence presented. This is all that the statute requires.

The Court of Appeals, however, reached a different conclusion, relying on Ashland Exploration, Inc. v. Tackett, 971 S.W.2d 832, 834 (Ky.App.1998) ("We see nothing in the amended statute which prevents the ALJ from considering the cumulative effects of a work-related injury and an occupational disease such that they may combine to render a claimant totally disabled."). Noting that, under KRS § 61.600(5)(a)(2), Appellee's incapacity must be based on objective medical evidence, as well as her "residual functional capacity and physical exertion requirements," the Court of Appeals found that KRS 61.600(5)(a)(2) evidences a legislative intent that the cumulative effect of a disability claimant's ailments must also be considered in assessing the claimant's eligibility for benefits. From a review of the record, the Court of Appeals did not believe the cumulative effects were so evaluated; nor do we.

KRS 61.600 provides, in part, that upon the examination of the objective medical evidence by licensed physicians pursuant to KRS 61.665, it shall be determined that: 1) the person, since his last day of paid employment, has been mentally or physically incapacitated to perform the job, or jobs of like duties, from which he received his last paid employment; 2) the incapacity is deemed to be permanent; and 3) the incapacity does not result directly or indirectly from bodily injury, mental illness, disease, or condition which pre-existed membership in the system or reemployment, whichever is most recent.

At issue here is whether Appellee was permanently incapacitated by her ailments. KRS 61.600 defines impairment as permanent "if it is expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months from the person's last day of paid employment in a regular full-time position." It further provides that "the determination of a permanent incapacity shall be based on the medical evidence contained in the member's file and the member's residual functional capacity and physical exertion requirements." A disability claimant's residual functional capacity:

shall be the person's capacity for work activity on a regular and continuing basis. The person's physical ability shall be assessed in light of the severity of the person's physical, mental, and other impairments. The person's ability to...