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HITE, FANNING & HONEYMAN L.L.P.

100 N. Broadway, Suite 950

Wichita, KS 67202

Kim R. Martens Telephone: 316-265-7741

Facsimile: 316-267-7803

May 17, 2007: Kansas Workers Compensation Law Update - Significant 2007 Pro-Employer Change To Kansas Workers Compensation Law From The Kansas Supreme Court, But Not From The Kansas Legislature.

1. Results of the 2007 Kansas legislative session.

The 2007 Kansas Legislative Session ended with no significant legislative change or amendment to the Kansas Workers Compensation Act. Controversial provisions put forward in past legislative sessions by both management and labor went nowhere in 2007. However, in light of the dramatic change to Kansas workers compensation law issued by the Kansas Supreme Court in the Casco opinion filed on March 23, 2007, and highlighted below, labor can be expected to attempt to introduce some legislative change to the Act in upcoming sessions. However, given the current Republican dominated make up of the Kansas House and Senate, successful passage of any legislation to reverse the effect of Casco appears unlikely at this time.

2. The 2007 Kansas Supreme Court dramatically reverses its 1931 decision of Honn v. Elliott, 132 Kan. 454, 295 Pac. 719 that was the foundation for the “parallel injury rule” that for 76 years served as the basis for bilateral upper-extremity and lower extremity disabilities to be compensated as a general body disability, instead of separate scheduled disabilities.

In Casco v. Armour Swift-Eckrich, ___ Kan. ___, 154 P.3d. 494 (2007 Kan. LEXIS 235), the Kansas Supreme Court issued a dramatic reversal of its own precedent, abandoning the 76 year old “parallel injury rule” that originated from its 1931 decision in Honn v. Elliott. In summary, the practical significance of Casco is it will likely result in an immediate and significant reduction in the disability compensation cost for employers of many pending and future bilateral upper-extremity and lower-extremity claims.

In place of a detailed technical legal analysis of the sweeping Casco decision, this limited discussion will focus on the likely practical effect this new change in the law will have on your existing and future bilateral upper-extremity and lower-extremity disability claims.

But first, in an effort to quell the shrill “sky is falling” cries from the claimant’s bar, that the Casco decision has tilted the earth off its axis, and eviscerated the essential “grand compromise” forming the basis for the entire Kansas Workers Compensation Act, remember what Casco does not change. Casco does not change the unlimited lifetime right to payment of all causally related, reasonable and necessary, medical expenses, for all bilateral upper and lower extremity injuries, free of any co-payments or deductibles for injured workers. Casco does nothing to ease the burden on employers of the cost of lifetime medical expenses for these injuries. What the Kansas Supreme Court has said Casco will accomplish is bring everyone back to a point that was originally intended by the legislature when it established the “schedule” of disabilities as the general rule, and “non-scheduled disabilities” (general body disabilities) as the exception for permanent partial disability compensation.

As a practical matter, the real issue involved here is whether “work disability” compensation benefits are available to injured workers with bilateral upper and lower extremity injuries. Prior to Casco, the routine bilateral carpal tunnel syndrome injury to a high wage earner in Kansas, such as a highly paid aircraft industry worker that does not return to work after the injury, would typically expose the employer to a maximum $100,000.00 permanent partial general body “work disability compensation” award. Under Kansas law, a general body disability award qualifies at minimum for an award based on the functional impairment, but that functional impairment percentage is but the mere floor, for the potential ultimate compensation award. Work disability compensation far in excess of the amount generated by the functional award would become available to the injured worker if he/she was not working at the time of the regular hearing, and that loss of employment was due to their bilateral carpal tunnel injury and disability.

A common pre - Casco 2007 work disability compensation award for a high wage aircraft or other industrial worker with bilateral carpal tunnel syndrome, which generates a 10% whole body impairment rating from the doctor, where the worker could not return to work after being issued permanent work restrictions, would be something similar to the following benefit computation: 415 maximum weeks of compensation x 50% work disability = 207.5 compensable weeks x $483 maximum compensation rate = $100,222,50. This amount would automatically be reduced down to the $100,000.00 cap for any permanent partial general body disability.

While upper-extremity injuries generate “scheduled disabilities” under the Kansas statute, following the 76 year old pre - Casco “Honn precedent,” workers compensation administrative law judges would never have given the time of day to an argument by an employer that permanent disability compensation for bilateral carpal tunnel syndrome should be limited to that available to two separate scheduled disabilities. The pre - Casco bilateral carpal tunnel syndrome awards would have almost always been calculated based on the much more economically generous general body work disability compensation entitlement.

After Casco, that same aircraft worker with a bilateral carpal tunnel syndrome injury with a functional impairment rating of 10% to each upper-extremity would likely receive something similar to the following permanent disability compensation benefit computation: Right Upper-Extremity: 190 maximum weeks x 10% impairment = 19 compensable weeks x $483 maximum weekly compensation rate = $9,177.00; Left Upper-Extremity: 190 maximum weeks x 10% impairment = 19 compensable weeks x $483 maximum weekly compensation rate = $9,177.00. Adding together the right and left awards would result in a total permanent scheduled disability compensation award of $18,354.00.

In summary, this hypothetical illustrates that the pre - Casco bilateral carpal tunnel syndrome disability compensation award would likely cost the high wage paying employer $100,000.00 in permanent disability compensation benefits; whereas, under the Casco separate schedule disability compensation award, the same set of injuries would cost the employer $18,354.00.

One post Casco caveat regarding single injury (as opposed to repetitive micro-trauma injury) bilateral carpal tunnel and other similar combination extremity disability claims - under the plain language of the Kansas permanent total disability compensation statute, such combination disability claims could potentially, under certain fact situations, be presumed to constitute a $125,000.00 permanent total disability compensation award. It can be expected that in certain currently pending, and future, bilateral upper and lower-extremity cases, claimants will utilize the plain language of the permanent total statute, and attempt to procure a $125,000.00 disability compensation award by invoking the permanent total disability presumption by putting on evidence that the worker is essentially and realistically unemployable from any type of substantial gainful employment because of the injury. It is critical in such currently pending cases, and future cases, for the employer to put on evidence to rebut the presumption by putting on evidence that the claimant is capable of engaging in some type of substantial and gainful employment.

Employers should also be on the alert for separate body part conditions to be “combined” into a “single injury” via the “secondary injury” theory. The “secondary injury” theory allows a subsequent, but separate, body part problem to be combined with the original injured body part via the “natural and probable consequence” rule to turn an otherwise inexpensive scheduled disability into a $125,000.00 permanent total disability compensation award. An example of this would be a left knee injury that later causes an aggravation of a preexisting right knee condition. Here the claimant would be favoring the original injury to the left knee, resulting in the “secondary” injury to the right knee by overcompensation. Under the “secondary injury” rule, the right knee problem becomes a compensable injury and the date of this right knee injury relates back to the date of the original left knee injury via the natural and probably consequence doctrine. The key for employers to avoid this often hidden but dangerous exposure is to always present lay and/or expert testimony that claimant is capable of engaging in some type of substantial and gainful employment.

In short, employers must now pay close attention to any bilateral or combination injury claims to see that they are properly compensated as separate scheduled disabilities, and if they are alleged as a single injury either directly, or indirectly through the “secondary injury” rule, that there is evidence to rebut the permanent total presumption that the claimant is incapable of engaging in any type of substantial and gainful employment.