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Supreme Court Rule: No TTD But Chrysalis House Is Overruled

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Supreme Court Rule: No TTD But Chrysalis House Is Overruled

We've been waiting for months for the Supreme Court to issue a decision addressing the temporary total disability (TTD) issue that has so many employers and carriers hot and bothered. On August 20, they finally did so. In the case of Livingood v. Transfreight, LLC, 2014-SC-000100-WC (To Be Published), the Supreme Court ruled on the issues of TTD and application of the 2X multiplier. It was a "good news, bad news" ruling, but an important one on both fronts.

To refresh memories, here are the key facts: Livingood suffered an injury to his left shoulder in September 2009 while working as a forklift operator for Transfreight. He underwent two surgeries and received TTD from November 2009 until March 2010, when he returned to work on modified duty, earning the same wages. He continued working until he underwent a third surgery in October 2010. He received TTD again from October 2010 through December 2010, returning to work without restrictions on December 13, 2010. On that date, he backed a forklift into a pole. He was terminated 10 days later due to that incident.

The first issue before the Supreme Court was TTD. The Administrative Law Judge (ALJ) found Livingood was not entitled to additional TTD from March 2010 through October 2010 (before his third surgery) because he did not satisfy the second prong of the test for TTD (i.e. he had returned to customary employment). The ALJ concluded that with the exception of one task, most of the activities Livingood did on light duty were ones he had performed before the injury; they were not "make-work." (75% was work he "customarily and regularly" performed pre-injury) Livingood appealed the ALJ's decision, which the Board and the Court of Appeals affirmed. The Supreme Court agreed. Though Livingood argued that Wise supported his argument, the Supreme Court distinguished it. In rejecting the notion that the work he was doing was not "customary", the Court stated

"[W]e reiterate today, Wise does not 'stand for the principle that workers' who are unable to perform their customary work after an injury are always entitled to TTD.' Livingood had the burden of proof on the issue. Where the ALJ finds against the party with the burden of proof, the standard of review on appeal is whether the evidence compelled a contrary finding....The Board and the Court of Appeals were not convinced that it did. Nor are we."

The second issue was the application of the 2X multiplier. The ALJ was not persuaded that Livingood was terminated for reasons related to the injury; thus, under Chrysalis House v. Tackett he declined to award double benefits. Again, the Board and the Court of Appeals affirmed. Though the Supreme Court agreed that the evidence did not compel a different result, it decided to reconsider its decision in Chrysalis House. It determined that the construction of KRS 342.730(1)(c)2 in Chrysalis House "does not effectuate the legislative intent [of the General Assembly]. Requiring that the cessation of employment at the same or greater wage must relate to the disabling injury does not promote the statute's obvious purpose of encouraging continued employment. Instead, it limits the statute's application." It noted that the phrase "if due to an injury" is included in the section permitting the 3X multiplier, but is absent from the section concerning the 2X multiplier. For this reason, the Court concluded that Chrysalis House was incorrect in holding that the cessation of employment must relate to the injury, and overruled it to that extent. But realizing that employee's should not benefit from their own wrongdoing (as was argued in Chrysalis House), and that the legislature would not intend a worker to receive such a double benefit from such actions, the Court ruled:

"We hold that KRS 342.730(1)(c)2 permits a double income benefit during any period that employment at the same or greater wage ceases "for any reason, with or without cause," except where the reason is the employee's conduct shown to have been an intentional, deliberate action with a reckless disregard of the consequences either to himself or to another."

Livingood's conduct was not of this nature, so he is entitled to the 2X multiplier. The claim was remanded for the ALJ to determine for certain whether he earned the same or greater wages; if so, the 2X is to be applied.

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Comment:

This case is important for two reasons. First, it shows us the Supreme Court is not receptive to nitpicking over the pre- and post-injury duties of a worker, and if they do not align exactly, TTD should be awarded. Rather, if a worker cannot perform his customary work he may be entitled to TTD, but is not always so entitled. Livingood's light duty work was mostly comprised of tasks he performed before he was hurt; this was enough to consider his light duty work "customary". While this will still require case-by-case analysis, it is a good start, and provides some relief from the draconian standard toward which we have been marching over the last year.

Second, though overruling Chrysalis House may seem like a bad thing, in truth it is in keeping with the statute. When that decision was issued in 2009, we were surprised that the Court went as far as it did in its holding. The argument made by the Appellant, in that case, was that the multiplier should not be awarded in cases where the plaintiff was terminated for wrongdoing (Mr. Tackett was caught stealing from Chrysalis House). The Court gave more relief than was sought at that time, and has now clearly thought better of it. While this will not make employers happy, it is the lesser of two evils. It is more important to have the standard for TTD brought back under control, as this issue will arise more often than the application of the 2X multiplier.

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