April 13, 2001
TRIM MASTERS, INC. APPELLANT
NINA M. CECIL; SPECIAL FUND, ROBERT L. WHITTAKER, DIRECTOR; HON. SHEILA C. LOWTHER; WORKERS' COMPENSATION BOARD APPELLEES
PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD ACTION NO. WC-94-39993
BRIEF FOR APPELLANT: Thomas L. Ferreri
BRIEF FOR APPELLEE SPECIAL FUND: David R. Allen
BEFORE: BUCKINGHAM, EMBERTON, AND HUDDLESTON, JUDGES.
Trim Masters, Inc., petitions for review of an opinion by the Workers' Compensation Board (Board) which reversed an administrative law judge's (ALJ) opinion and order. We agree with the ALJ and thus reverse and remand.
On August 16, 1994, Nina M. Cecil sustained a work-related back injury in the course of her employment with Trim Masters. On August 29, 1996, an ALJ rendered an opinion and award which found Cecil to be totally and permanently occupationally disabled and awarded her benefits which were to be tiered down at the age of sixty-five. All income benefits were apportioned equally between Trim Masters and the Special Fund. The Board affirmed the award on January 17, 1997.
In December 1997, the workers' compensation insurance carrier began denying payment for medical treatments prescribed by Cecil's doctors. Cecil filed a motion to compel the carrier to pay for the implantation of a morphine pump. In November 1998, an ALJ issued an opinion and order directing Trim Masters and/or its insurance carrier to pay the expenses incurred for the implantation of the pump. In July 1999, Cecil and Trim Masters entered into a settlement agreement. Among other things, the settlement agreement specifically provided that Trim Masters and its insurance carrier reserved the right to proceed against the Special Fund for a calculation of the date when the obligation to pay income benefits will switch from Trim Masters to the Special Fund.
Trim Masters calculated the date for its last payment and the beginning of the Special Fund's payment period to be July 5, 2013. The Special Fund calculated that its payments would begin four years later, on July 1, 2017. On September 23, 1999, Trim Masters filed a motion pursuant to 803 KAR 25:075(3) requesting that the dispute between it and the Special Fund concerning the calculation and commencement date of the Special Fund's liability be resolved by an ALJ.
Trim Masters argued that the apportionment of benefits between it and the Special Fund should be based upon a division of actual dollars paid rather than a division of the number of weeks payable. Its interpretation of the statute (KRS 342.730) was consistent with the holding of the Kentucky Supreme Court in Leeco, Inc. v. Crabtree, Ky., 966 S.W.2d 951 (1998), and in Leeco, Inc. v. Smith, Ky., 970 S.W.2d 337 (1998). On the other hand, the Special Fund argued that the apportionment of benefits between it and Trim Masters should be based upon a division of the number of weeks payable. Its position was based upon the case of Southern v. R.B. Coal Co., Inc., Ky., 923 S.W.2d 902 (1996), which was the law in effect at the time of the original award. The Special Fund cited Keefe v. O.K. Precision Tool & Die Co., Ky. App., 566 S.W.2d 804 (1978), and argued that the subsequent interpretation of the law under the Leeco cases does not warrant the reopening of the award due to the doctrine of res judicata.
The arbitrator assigned to the case agreed with Trim Masters and followed the Leeco cases. Upon de novo review, the ALJ agreed with the arbitrator and ruled in favor of Trim Masters. However, on appeal to the Board, the Board reversed the ALJ and held that the doctrine of res judicata was applicable and that the apportionment of benefits between Trim Masters and the Special Fund should be calculated pursuant to the Southern case even though it had been overruled by the Leeco cases. In the Board's 2-1 decision, the dissenting opinion agreed that the doctrine of res judicata applied to rulings in workers' compensation cases. See Uninsured Employers' Fund v. Fox, Ky. App., 862 S.W.2d 902, 904 (1993). However, the Board's dissenting opinion further stated that the award in this case was not being disturbed and that the original ALJ's decision did not specify how the award should be apportioned.
We agree with the arbitrator, the ALJ, and the Board's dissenting opinion. In order for the doctrine of res judicata to be applicable, there must be final adjudication on the merits. See Vega v. Kosair Charities Committee, Inc., Ky. App., 832 S.W.2d 895, 896 (1992). The doctrine of res judicata is not applicable in this case because, although the original award allowed for apportionment and the age-related tier down, it did not specify how the award should be apportioned. Thus, that issue had not been adjudicated on the merits. Therefore, since the doctrine of res judicata was not applicable, the ALJ properly decided the case based upon the proper statutory interpretation in the Leeco cases rather than the interpretation in the Southern case which had been overruled.
The opinion of the Board is reversed and remanded for proceedings consistent with this opinion.