Sunday, April 30, 2017

A Kentucky Constitutional Decision

The Kentucky Supreme Court issued an intriguing decision on April 27, 2017, Parker v. Webster County Coal, 2014-SC-000526WC. The Court concluded that Kentucky's workers' compensation law is unconstitutional regarding permanent partial disability benefits foreclosure by eligibility for social security benefits. Upon release, there were some excited statements about "age discrimination." The case is not about age discrimination, but the Fourteenth Amendment and "equal protection" are implicated.

To reach its interesting conclusion, the Court expressly overruled controlling precedent. Throughout its procedural history, it appears that Kentucky judges consistently followed the law as the Court had interpreted it. The Supreme Court then changed the law and reversed. In that alone, the case is intriguing. A major role of appellate courts is to bring consistency and predictability to the law. When courts are haphazard and erratic, public confidence is eroded, and both the people and the law suffer. 

The Court noted that KRS 342. 730(4) states in pertinent part that:
All income benefits payable pursuant to this chapter shall terminate as of the date upon which the employee qualifies for normal old-age Social Security retirement benefits under the United States Social Security Act, 42 U.S.C. secs. 301 to 1397f, or two (2) years after the employee's injury or last exposure, whichever last occurs.
The Court then detours into a discussion of age, disparate impact, and discrimination. The detour contributes to the initial confusion about this being an age discrimination case. The Court note the effect of Social Security is therefore that
a worker who is injured more than 425 weeks . . . before he or she reaches normal Social Security retirement age will receive all of the permanent partial disability income benefits to which he or she is entitled. A worker who is injured less than 425 weeks before he or she she reaches normal Social Security retirement age will not receive all of the permanent partial disability income benefits to which he or she is entitled. 
At the time of his injury, Claimant was 68 years of age and qualified for Social Security retirement. Therefore, after receiving "two years of temporary total disability benefits," he was deemed not entitled to any additional income benefits, including the temporary partial entitlement described. Claimant therefore was adversely affected by this limitation. 

The Claimant asserted that this difference in benefits is unconstitutional, citing "his right to due process," his "jural rights, and the Equal Protection Clauses of the United States and Kentucky Constitutions." The Court conceded that it had concluded the statute to be constitutional both in 1994 and 2002. See McDowell v. Jackson Energy RECC, 84 S.W.3d 71 (Ky. 2002); and Keith v. Hopple Plastics, 178 S.W.3d 463 (Ky. 2005). 

The Court espoused its respect and reverence for:
the strong presumption of constitutionality afforded to legislative acts.
the value of precedent 
and the doctrine of stare decisis
And then elected to ignore it all. I have commented on Kentucky's interesting take on stare decisis before in Stare Decisis, Goodgame, Livingood, and Westphal. The importance of stare decisis is discused in Kentucky, Stare Decisis, and Noncompliance Standards, but the importance of stare decisis is perhaps more of a general concept than a paradigm in Kentucky. 

While acknowledging stare decisis, the Parker Court noted that its allegiance is not absolute. It said that the "Court is not assigned the duty of maintaining the watch as the law ossifies," (meaning "to become hardened or conventional and opposed to change," according to Mirriam Webster). The Court then defended its decision to "re-visit McDowell," by noting that it had previously retreated from other precedent (in 2011). The implication is essentially "two wrongs make a right," and having legal abandoned principle once must make it right to do so repeatedly. 

The Court concluded that KRS 342.730(4) patently treats "older workers . . . differently from their younger counterparts." But, it recognized that "nearly all legislation differentiates in some manner between different classes of persons," and provided an overview of the three levels of scrutiny courts employ in a constitutional analysis such as this. This was interesting because those constitutional maxims are sometimes provided minimal discussion or respect in other state's court analyses.

The Parker Court reminded that 
Workers' compensation statutes concern matters of social and economic policy. As a result, such a statute is not subject to strict or [intermediate] scrutiny and therefore must be upheld if a 'rational basis' or 'substantial and justifiable reason' supports the classifications that it creates.
And, that proving the absence of such "rational basis" is "a steep burden; however, it is not an insurmountable one." The "rational basis" the Court held exists in this case is two-fold:
(1) it prevents duplication of benefits; and
(2) it results in savings for the workers' compensation system. 
The Court therefore did not find that a distinction based upon age was unconstitutional. However, that long discussion of the subject (arguably unnecessary since the Court elected another outcome of this appeal) likely led to the initial reactions concluding this is an "age discrimination" case.

Thus, the Court aptly identified the potential standards, correctly selected the applicable standard, enunciated the presumption of constitutionality, noted two acceptable rational bases, and rejected the Claimant's allegation of age discrimination. Poised on the precipice of a (perhaps boring) affirmance in Parker, following its established precedence in McDowell and Keith, and respecting stare decisis, the Parker majority instead made a 180 degree turn and concluded this Kentucky statute is unconstitutional for reasons unpled and untried. 

The Court concluded that the distinction between people of the same age rendered the Kentucky statute unconstitutional. It explained that this statute treats those who qualify for "normal old-age Social Security retirement benefits differently than it treats injured older workers who do not qualify" for that benefit program. 

The distinction failed, according to the Parker Court, to account for employees such as Kentucky's teachers, who "do not participate in Social Security." It is noteworthy that no teachers were involved in this case, and the "teacher disparity" does not appear to have been pled or argued until the Parker majority cited it as rationale. The Court concluded that "there is no rational basis for treating all other workers in the Commonwealth differently than teachers." The dissenting opinion takes issue with the Court insinuating this "teacher" argument into determination of law, viewing the present analysis "through the 'lens' of teacher retirement," an issue not before the Court. 

Florida similarly relies on Social Security regarding some indemnity benefits in section 440.15(1), Fla. Stat. This constraint does not apply to "permanent partial" benefits as were under consideration in Kentucky, the "Permanent Impairment Income" defined in section 440.15(3), Fla. Stat. But, for "Permanent Total Disability": 
Entitlement to such benefits shall cease when the employee reaches age 75, unless the employee is not eligible for social security benefits under 42 U.S.C. s. 402 or s. 423 because the employee’s compensable injury has prevented the employee from working sufficient quarters to be eligible for such benefits, notwithstanding any age limits.
Thus, the Florida statute's reliance on "social security benefits" might be similarly interpreted. Two 70 year old Florida employees might be treated differently, based upon ineligibility for social security for this specific reason. The Kentucky decision founds unconstitutionality on a distinction between the vast majority of employees and a very small minority, teachers. The minority in the Florida distinction would likely be even smaller, a point which could be pertinent.

The Kentucky distinction for teachers is patently more broad than the Florida law distinction. It positively affects some population of Kentucky teachers, and perhaps a few more. There are a reasonable number of people (some state workers in seven states), including teachers in at least ten states, who do not have to participate in social security according to USA Today. It notes that there are also exceptions in the Social Security Act for certain federal employees, ministers, and others. 

According to TeacherPension.org, the original legislative enactment of Social Security did not cover state employees, including teachers. When Social Security was changed in the 1950s, to allow state employee coverage, most states opted-in to the national scheme. But, a few did not and that is why teachers and state workers in some jurisdictions remain entitled to pension plans instead of Social Security. Through those decisions, Kentucky teachers are not eligible for Social Security.

Nationally, it is predicted that about 3% of workers will never receive social security. Of that three percent, two large populations are workers that do not contribute for sufficient periods of employment (81.6%), because of sporadic employment or beginning their employment too late in life. The state and local workers that are exempt from social security due to statutory provision and participation in other pension plans (including Kentucky teachers) is estimated at 11.4% of that 3% of retirees, according to MarketWatch. That is three-tenths of one percent of workers that are not eligible for social security because of statutory pension exceptions. 

The Parker Court logic is that two people (a mechanic and a teacher) might each be 70 years old on the day they suffer an accident. Each might thereafter seek "permanent partial benefits" or "PPD." The employee qualified for "normal old-age Social Security retirement benefits," presumably the Claimant (or the hypothetical mechanic), would cease to qualify for PPD, while the teacher, minister or others in the 3/10 of 1% would continue to receive PPD because of their individual failure to qualify for Social Security (despite their eligibility for the pension benefits that are a statutory alternative, and thus the potential for recovering double benefits). Theoretically, the result would include in "others" those whose work history has not satisfied the "quarters" of employment requirement for Social Security retirement (which is the presumably smaller population addressed by the Florida statute).

Kentucky Chief Justice Minton dissented in Parker, and was joined by two other Justices. The decision is thus a 4 to 3 majority. Justice Minton raises several interesting points. First, that the statute has not been changed, and the Court has previously held it passes constitutional muster. On the grounds of stare decisis, he would affirm. He notes that the precise issue was decided in 2002 and that the only change since has been in who sits on the Court. 

Justice Minton reminded the Court that "age is not a suspect classification' for purposes of the Fourteenth Amendment," coincidentally citing a Florida case. Notably, the majority agreed with that premise, and did not find age discrimination pertinent in this case. The recurrent discussion of age discrimination in the dissent only serves to reinforce the misperception that Parker is an age discrimination decision. 

Justice Minton contends that "the real question" is more likely "whether there is a good reason to continue to exempt" teachers from KRS 342.730(4). However, he notes that "simply is not before the court." He concedes that the PPD statute does not reach a perfect result, in fact he is critical of it. But, he contends that "the possibility that a classification might result in some practical inequity does not cause the statute to fail." He notes that "in exercise of its constitutional powers, a legislature is 'free to choose to remedy only part of a problem," and in the process may be "neglecting the others" (the 3/10 of 1%). He concludes that the state ignoring the teachers is merely the "underinclusiveness doctrine at work," and that it should not impair the statute. 

You will decide which side of these arguments is "right." In many jurisdictions, one might say that "right" is not an issue. One might say "the state's highest court has ruled and that is that, the law is now settled." But in Kentucky precedent has recently demonstrated fluidity, and stare decisis may merely be a quaint colloquialism in the Bluegrass state, where United We Stand and Divided We Fall. 




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