State News : Kentucky

Kentucky Workers’ Compensation Case Law Update

By H. Douglas Jones, Esq. and Margo Menefee, Esq., JSB Attorneys, PLLC

Employee v. Independent Contactor and Economic Realities Test

Oufafa v. Taxi, LLC d/b/a Taxi 7, et. al., (2022-SC-0003-W, not final) Supreme Court of Kentucky

Taxi 7 generates revenue by leasing taxis to its drivers, which it identifies as independent contractors. Claimant sought to work for Taxi 7 in 2016, meeting with the office’s head, providing his license, resume and background check. He passed a drug test and was given two documents to fill out. In one document, Claimant acknowledged in his own handwriting that he was not an employee and not entitled to workers’ compensation benefits.

Taxi 7 only allows the leased cabs to be used for Taxi 7 rides. It operates a dispatch system and cab drivers are penalized for declining rides. Customers could either pay with a credit card, which would go through Taxi 7’s processing system, or could pay the driver directly.

Claimant filed for workers' compensation benefits after being shot while driving. The ALJ found Claimant was an independent contractor and Taxi 7 was a taxicab leasing company utilizing the factors outlined in Ratliff v. Redmon and Chambers v. Wooten’s IGA Foodliner.

The appellate Board reversed, finding that the ALJ incorrectly concluded that Taxi 7 was a taxicab leasing company rather than a taxicab company that employed the Claimant as a driver. The Court of Appeals reversed the Board, stating that the ALJ’s finding of fact that Taxi 7 was a taxicab leasing business and Claimant was not an employee was supported by the facts and not clearly erroneous. The Court of Appeals held on its own that the Claimant was an independent contractor by relying on the definition of “work” as tied directly to renumeration as defined in KRS 342. The Court of Appeals further emphasized that Taxi 7’s income was unaffected by how much or little the lessees work.

Vacating the ALJ’s decision, and striking down the Court of Appeals’ reasoning, the Supreme Court of Kentucky adopted the economic realities test to determine whether a worker is an employee or independent contractor, remanding the claim to the ALJ for a determination consistent with that test.

Medical Fee Dispute – Burden of Proof

Perry County Board of Education v. Campbell, et. al. (2022-SC-0119-WC, not final)

Claimant worked for school district and was in the school gym hanging a banner when he hit his head on a duct and fell on April 11, 2018, alleging injury to his head, shoulder and knee. Radiology report indicated mild changes in the right knee from arthritis and possible fracture. One month later, a follow-up appointment indicated softening of cartilage of patella and partial dislocation. Non-surgical treatment was unsuccessful and a right knee arthroscopy with partial meniscectomy was performed on November 6, 2018, after which Claimant was released to full duty. His knee pain persisted, and a total knee replacement was recommended following his September 16, 2019 office visit. The employer denied the knee replacement on reasonableness and necessity grounds as well as causation, citing to pre-existing arthritic changes. The employer presented three medical opinions finding the knee replacement not

reasonable nor necessary for treatment of the work injury. Claimant presented an opinion from Dr. Madden diagnosing total knee replacement surgery and chronic knee pain. Dr. Madden stated Claimant’s complaints were caused by the work injury, but he did not explicitly state whether the osteoarthritis or need for a total knee replacement were causally related to work injury. He further stated that the work injury required surgical repair and that failing to provide the recommended treatment would worsen his condition. The ALJ found the total knee replacement compensable. The employer appealed, arguing the ALJ improperly relied on inferences instead of medical opinion to determine the knee replacement was causally related to the work injury and to find it was reasonable and necessary.

The Court of Appeals affirmed, finding the ALJ as fact finder has sole authority to judge the weight, credibility, substance and inferences to be drawn from evidence. First, although there was prior arthritis, all of the medical records indicated the Claimant had no prior right knee problems, so the ALJ’s determination that the arthritis was dormant and aroused into a disabling reality by the work injury was supported by substantial evidence. Second, the Court of Appeals approved the ALJ’s use of a patchwork of evidence, including treating doctor’s notes’ Claimant’s testimony, timeline of events, and inferences from Dr. Madden’ s report, to determine the knee replacement was causally related to the work injury as well as reasonable and necessary. The Court concluded that the Claimant bore the burden of proving the compensability of the knee surgery, he was successful, and the determination was supported by substantial evidence.

Should you have any questions or wish to discuss any related matters, please contact us at your convenience.

H. Douglas Jones, Esq. – djones@jsbattorneys.com, 859.594.4200

Margo Menefee, Esq. – mmenefee@jsbattorneys.com, 859.594.4200