How to Determine Permanent Partial Disability Benefits in Kentucky

Benefits for Permanent Partial Disability (PPD) in Kentucky are determined by statute, KRS 342.730. Normally, five factors are considered to determine the amount of PPD benefits:

• Impairment rating

• Average weekly wage

• Age (including retirement age cutoff)

• Education

• Return to work.

Benefits can also be enhanced by 30% if the employer committed an intentional safety violation, or decreased by 15% if the employee committed a safety violation. KRS 342.165. Attorney’s fees and enhanced past due interest can be obtained if there is an Unfair Claims Settlement Practice Act violation because of an unreasonable proceeding. KRS 342.310.

A shortcut to calculate benefits is found at the Department of Workers Claims (DWC) website:

http://www.labor.ky.gov/workersclaims/Pages/PPD-Calculator.aspx

The DWC website also has a calculator for interest on past due benefits:

http://www.labor.ky.gov/workersclaims/Pages/Publications.aspx

Web site calculators do not consider safety violations, retirement, and Unfair Claims Settlement Practices Act impact.

FACTORS/MULTIPLIERS of KRS 342.730

KRS 342.730 requires the Plaintiff to be placed into one of three categories for return to work purposes. Typically, these categories are called the one, two and three factors. The one factor applies when the Plaintiff returns to work at the same job, and earns the same wage or greater. The two factor applies when the Plaintiff has the physical capability of performing the same job, but does not return to it. Benefits double for the two factor. The three factor applies when the Plaintiff does not have the physical capability of returning to work at the old job, and benefits triple.

The application of these factors can be one of the most debated issues in a workers compensation claim for PPD, because there is a conflict in the statutory language used to determine which factor to apply. Therefore, more than one factor can apply in several situations. The pertinent language of the statute for each factor is below:

One Factor

KRS 342.730 (1)(c) 2. If an employee returns to work at a weekly wage equal to or greater than the average weekly wage at the time of injury, the weekly benefit for permanent partial disability shall be determined under paragraph (b) of this subsection for each week during which that employment is sustained….

Two Factor

KRS 342.730 (1)(c) 2… During any period of cessation of that employment, temporary or permanent, for any reason, with or without cause, payment of weekly benefits for permanent partial disability during the period of cessation shall be two (2) times the amount otherwise payable under paragraph (b) of this subsection.

Three Factor

KRS 342.730 (1)(c) 1. If, due to an injury, an employee does not retain the physical capacity to return to the type of work that the employee performed at the time of injury, the benefit for permanent partial disability shall be multiplied by three (3) times.

To resolve conflicts in the application of the factors, an analysis pursuant to Fawbush v. Gwinn, 103 S.W.3d 5, 12 (Ky. 2003) is required. Essentially, the ALJ must determine if the claimant is likely to continue to be employed at a certain average weekly wage for the foreseeable future in their occupation.

Fawbush and its progeny require the ALJ to make three essential findings of fact: 1) whether the claimant can return to the type of work performed at the time of the injury, 2) whether the claimant returned to work at an average weekly wage equal to or greater than his pre-injury average, and 3) whether the claimant can continue to earn that level of wages into the indefinite future. Baker v. Bauman Paper Co., Inc., 2013-CA-000851-WC (Ky. App. 2013)

The Kentucky Supreme Court recently outlined the application of the factors of KRS 342.730 in an unpublished decision, SidneyCoal Co., Inc. v. Brock, 2012-SC-000348-WC (Ky. 2013). In that case, the Court upheld an award of the three multiplier of KRS 342.730, even though the claimant had returned to work at his old job. The opinion reads:

Under KRS 342.730(1)(c)1, an injured employee who lacks the physical capacity to return to the work performed on the date of the injury may receive a triple income benefit, while KRS 342.730(1)(c)2 allows an employee who maintains the physical capacity to return to the same type of work and earn the same or greater wage to receive a double income benefit if at any time his wages drop below that level due to a work-related injury. If both sections of KRS 342.730(1)(c) are applicable to the claimant, then the ALJ must determine which section to apply.Fawbush v. Gwinn, 103 S.W.3d 5, 12 (Ky. 2003). “If the evidence indicates that a worker is unlikely to be able to continue earning a wage that equals or exceeds the wage at the time of injury for the indefinite future, the application of paragraph (c)1 is appropriate.” Id.; see alsoKentucky River Enterprises, Inc. v. Elkins, 107 S.W.3d 206, 211 (Ky. 2003). “[I]n determining whether a claimant can continue to earn an equal or greater wage, the ALJ must consider a broad range of factors, only one of which is the ability to perform the current job.” Adkins v. Pike County Board of Education, 141 S.W.3d 387, 390 (Ky. App. 2004).

Also, to obtain the two factor, the employee must return to work at his old job and earn the same wage. AK Steel Corp. v. Childers, 167 S.W. 3d 672 (Ky. App. 2005). Further, to qualify for the two factor, the employee has to return to work at the same wage or greater for at least a short period of time. Ball v. Big Elk Creek Coal Co., 25 S.W. 3d 115 (Ky. 2000).

In Chrysalis House, Inc. v. Tackett, 283 S.W.3d 671 (Ky. 2009), the Supreme Court held the reason for cessation of employment must be related to the disabling injury in order for the double income benefit to apply. In that case, the employee was apparently fired for misconduct unrelated to his injury, and disqualified from the two factor, even though he was no longer working at the defendant/employer.

The claimant testified that he found a blank money order in the Chrysalis parking lot and put it in his pocket. When two days passed with no one from Chrysalis claiming that they had lost the money order, he made it payable to himself and cashed it. He discovered subsequently that one of the residents alleged that a money order had been stolen. He left an anonymous note in her room, stating that the money would be repaid, and then repaid it. After Chrysalis discovered that he was the individual who had cashed the money order, Lisa Minton called him to her office and discharged him. About two weeks later, he found work with a temporary services business but earned less than he had at the time of the injury. Chrysalis House, Inc. v. Tackett, 283 S.W.3d 671, 672-673 (Ky. 2009).

There are other situations in which Courts have held the two multiplier applies. In Hogston v. Bell South Telecommunications, et al., 325 S.W.3d 314 (Ky. 2010), the Court stated: ” …we hold that KRS 342.730(l )(c)2 includes a cessation of employment due to the disabling effects of previous work-related injuries as well as the injury being compensated.”

Also, if the employer ceases to do business, or if the employee is laid off after return to work, the employee is entitled to the two factor. Randall v. C.W. Johnson Xpress, 2009-CA-001968-WC (Ky. App. 2011).