KY Supreme Court Says Statute Terminating Income Benefits at Age 70 is Constitutional

The Kentucky Supreme Court held the 2018 amendment to Ky. Rev. Stat. 342.730(4), which terminates workers’ compensation income benefits when the recipient reaches the age of 70 or four years from the date of injury or last injurious exposure, whichever event occurs last, is constitutional [Cates v. Kroger, 2021 Ky. LEXIS 311 (Aug. 26, 2021)]. The Court stressed that preventing a duplication of wage-loss protection programs and promoting the solvency of the workers’ compensation system were legitimate state interests. Applying the rational basis test, the Court found that the 2018 amendment cured the defects in the earlier version of the statute that had been found to be unconstitutional.

Background

Cates and Bean brought separate appeals in which they argued that the 2018 amendment was unconstitutional under the state and federal Equal Protection Clauses because it discriminated based on the income-benefits recipient’s age. They also argued the statute was unconstitutional special legislation because it applied only to older income-benefits recipients.

In both cases, panels of the Court of Appeals upheld the constitutionality of the statute’s age classification on equal protection grounds as being rationally related to a legitimate state interest in preventing workers’ compensation income-benefits recipients from receiving duplicate payments in the form of retirement benefits. The panels also rejected the special-legislation challenges to the statute, holding that the statute treated all older income-benefits recipients alike.

The Court’s Decision in Parker

Before it turned to the contentions of Cates and Bean, the Court reviewed for context two recent holdings. In the first, Parker v. Webster County Coal, LLC, 529 S.W.3d 759 (Ky. 2017), a majority of this Court invalidated the 1996 version of KRS 342.730(4) for two reasons:

1. The statute created an arbitrary classification because the benefit cut-off date was dependent upon when the recipient received old-age social security benefits and
2. The statute was special legislation because it favored those who would not receive old-age social security benefits and disfavored those who would receive such benefits.

The Court stressed, however, that even though Parker invalidated the 1996 version of the statute, it reaffirmed the Court’s prior precedent in which the Court consistently held that treating older injured workers differently from younger injured workers was rationally related to the legitimate government interests in preventing a duplication of benefits and saving money for the workers’ compensation system.

Shortly after Parker, the Kentucky General Assembly enacted a new version of KRS 342.730(4), which purported to rectify the shortcomings of the 1996 version as identified in Parker by untethering the cessation of a claimant’s workers’ compensation income benefits from the receipt of old-age social security retirement benefits, a benefit that Parker identified as not available to Kentucky’s retired teachers. The new statute now limits the duration of benefits by linking cessation for all income beneficiaries to the later of two events:

1. Reaching age 70, or
2. Four years after injury or last injurious exposure.

Rational Basis Test

The Court continued that, as in Parker, it remained convinced that preventing a duplication of wage-loss protection programs and promoting the solvency of the workers’ compensation system were legitimate state interests. Accordingly, it proceeded with a rational basis review of the current statute. It said that the fatal flaw identified by the Parker majority—the disparate treatment of those who will receive old-age social-security versus those not entitled to social security, for example, teachers—was no longer an issue with the new version of the statute. Rather, the statute now treated alike all those who receive workers’ compensation benefits.

The Court stressed that the 2018 amendment classifies recipients based only on age, entirely unrelated to their old-age social-security eligibility. This age classification prevents a duplication of benefits, which the Court had earlier found to be a legitimate state interest and applied to all those receiving workers’ compensation equally. So the current version of KRS 342.730(4) was not violative of the Equal Protection Clause because the age classification was rationally related to a legitimate state purpose. The Court added that the retroactive application of KRS 342.730(4) did not take away Cates’s or Bean’s vested right to benefits. Accordingly, the Court affirmed the Court of Appeals in both cases.