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Bradley v. Kentucky Retirement Systems

Supreme Court of Kentucky

November 1, 2018



          COUNSEL FOR APPELLANT: John Hardin Gray Roy Church Gray III

          COUNSEL FOR APPELLEE: Katherine I. Rupinen



         Appellant Veronica Bradley, a member of the Kentucky Retirement Systems (KERS), [1] was denied disability retirement benefits by the KERS Board. Although the circuit court reversed the Board on judicial review, the Court of Appeals concluded that the standard for judicial reversal of the Board's decision in disability retirement cases had not been met and thus reversed and remanded for reinstatement of the Board's final decision denying Bradley's claim. On discretionary review, Bradley challenges the standard of judicial review set forth in the oft-cited McManus v. Kentucky Retirement Systems, 124 S.W.3d 454 (Ky. App. 2003), and expressly adopted by this Court in Kentucky Retirement Systems v. Brown, 336 S.W.3d 8 (Ky. 2011), as inconsistent with the disability retirement provisions of Kentucky Revised Statutes (KRS) Chapter 61 and administrative law provisions of KRS Chapter 13B, and as "inappropriate" for disability retirement cases.

         Today, in Kentucky Retirement Systems v. Ashcraft, 2017-SC-000345-DG, we reiterate the propriety of the McManus standard, while acknowledging that courts should make a threshold determination as to whether the Board's order is supported by substantial evidence as required by KRS 61.665(3)(d) before considering whether the applicant's proof was so compelling that it meets the high bar set by McManus. In this case, we restate the consistency of our approach with controlling statutes and conclude that the "inappropriateness" identified by Bradley is essentially a request to redesign the disability retirement process, something we are not at liberty to do. In addition to these general issues, Bradley maintains the Board's decision was not supported by substantial evidence and that the uncontradicted objective medical evidence proves she was disabled due to Lyme disease for twelve continuous months following her last day of paid employment. We disagree with Bradley on both counts and find that she has not met the standard for judicial reversal of the administrative decision by the Board, the fact-finder in the statutory process adopted by our General Assembly.


         Bradley worked for the Kentucky Auditor of Public Accounts from June 1, 1999, until December 31, 2010. After obtaining her CPA license in November 2000, she steadily advanced in the agency and eventually attained the supervisory position of Public Accounts Auditor V-IT. Her duties involved supervising junior staff, audit testing, data analysis, drafting reports, and training, all of which required strong intellect, skills, and mental stamina.

         In early 2009, Bradley had increasing difficulty in meeting the demands of her job, which marked the beginning of several mysterious health problems and symptoms, including constant pain, confusion, and difficulties in comprehension and communication. Bradley's job performance began to steadily decline, eventually leading to relief from her supervisory duties.

         On May 23, 2010, Bradley applied for KERS disability retirement benefits due to the physical and mental effects of Lyme disease, which she claimed had remained dormant from a tick bite in 2004. She also alleged she suffered from fibromyalgia, fatigue, and anxiety. Bradley submitted evidence, which was reviewed by three medical review board physicians and denied by all on August 13, 2010. The physicians found no compelling objective evidence of a cognitive abnormality or any evidence that Bradley had a functional incapacity for her sedentary job.

         Bradley again applied for disability benefits by submitting supplemental medical evidence through December 8, 2010. The second claim included notes from an infectious disease specialist and a neuropsychological evaluation, suggesting that Bradley has some problems with cognitive functioning. Two of the three reviewing physicians denied the claim, stating that there was no evidence of a physical disability that would prevent Bradley from performing work duties. The physicians also disagreed that Bradley truly suffered from chronic disseminated Lyme disease. The third physician recommended that Bradley's case be placed on hold until the neuropsychological evaluations could be reviewed by another physician. The claim was ultimately denied on January 20, 2011. On March 7, 2011, Bradley requested an administrative hearing.

         An administrative hearing was conducted on July 24, 2012. At this point, Bradley's application for disability benefits alleged diagnoses of chronic disseminated Lyme disease and fibromyalgia. At the administrative hearing, she testified that her claim was also based on fatigue and anxiety. Further, her objective medical evidence also set out a diagnosis of major depressive disorder. In his findings of fact and conclusions of law, the hearing officer determined that Bradley did not prove by a preponderance of the evidence that her anxiety was not a result of a pre-existing condition. Nor did Bradley prove that the fibromyalgia had resulted in permanent incapacity for her employment. However, the hearing officer found Bradley successfully proved by objective medical evidence that her conditions of Lyme disease, fatigue, and major depressive disorder physically and mentally incapacitated her on a permanent basis, and therefore prevented her from performing her job duties. The hearing officer recommended approval of Bradley's application for disability retirement benefits as to the Lyme disease, fatigue, and major depressive disorder on October 23, 2012.

         KERS filed exceptions to the hearing officer's recommendation, and on December 17, 2012, the Disability Appeals Committee (DAC) of the Board of Trustees of Kentucky Retirement Systems (Board) remanded the case to the hearing officer for additional findings. Specifically, the DAC ordered that Bradley undergo definitive diagnostic testing for Lyme disease and an evaluation of her cognitive function.

         After delays in medical testing, rescheduling, and telephonic status conferences, the hearing officer ultimately held another evidentiary hearing on October 14, 2014. During the hearing, Bradley submitted medical records from Dr. Lentz, a Lyme disease specialist, and a report from Dr. Price, a clinical neuropsychologist. Dr. Lentz supported Bradley's Lyme disease diagnosis, even though the blood test she conducted was negative for Lyme disease. Despite the results, Dr. Lentz reported that Bradley's continuing cognitive impairment was an effect of Lyme disease and doubted that Bradley would ever regain the sharp intellect she enjoyed before the onset of Lyme disease. Dr. Price reported that Bradley maintains normal cognitive functioning and did not find any cognitive or emotional limitations in Bradley's ability to work.

         The hearing officer again concluded that Bradley had shown by a preponderance of objective medical evidence that her Lyme disease, major depressive disorder, and fatigue physically and mentally incapacitated her and prevented her from performing job duties. KERS filed exceptions to the hearing officer's recommendation.

         In a final order dated March 31, 2015, the DAC of the Board rejected the hearing officer's recommendation on remand and denied Bradley's claim. The Board found that Bradley did not prove by objective medical evidence that she is permanently functionally incapacitated by chronic disseminated Lyme disease, fibromyalgia, generalized anxiety disorder, depression or fatigue. Further, the Board concluded that Bradley did not prove by objective medical evidence that her generalized anxiety disorder did not pre-exist her employment start date or that her generalized anxiety disorder is not directly or indirectly related to a condition which pre-existed her employment start date.

         In its findings, the Board discussed the inconsistencies in the medical evidence, namely Bradley's Lyme disease test results. The physicians who examined Bradley's claims for her initial applications questioned the Lyme disease diagnosis. Further, two of Bradley's treating physicians doubted the Lyme disease diagnosis. The Board also noted that when the case was remanded to the hearing officer for more findings, the blood test performed by Dr. Lentz was negative. Despite Dr. Lentz's report that the absence of Lyme disease in blood test results is not determinative of a patient having Lyme disease, the Board questioned Dr. Lentz's Lyme disease diagnosis, which was based primarily on Bradley's history and symptoms. The Board observed that Bradley told Dr. Lentz that she had a positive result on a Lyme disease test performed by Dr. Hoffman but did not provide Dr. Lentz with a copy of the lab work. The Board also stated that despite being asked to provide a copy of the lab work, the record contained no evidence of Dr. Hoffman's testing. Ultimately the Board determined that Dr. Lentz's statements were unreliable because they were remote in time from the onset of Bradley's symptoms and are directly contradicted by the neuropsychological examination performed by Dr. Price, who concluded that Bradley has normal cognitive function and no evidence of neurological decline.

         The Board also criticized the hearing officer for placing little weight on Dr. Price's report (because it was so far in time from Bradley's last day of paid employment) yet relying on Dr. Lentz's statements even though she did not begin treating Bradley until sixteen months after her employment ended and over three years after the onset of symptoms. Additionally, the Board did not find Bradley credible because of conflicting and incorrect information she provided to various doctors, and discrepancies in the objective medical evidence of record.

         After the Board's denial of her disability claim, Bradley appealed the decision to the Franklin Circuit Court. On March 24, 2016, the trial court entered an Opinion and Order reversing the KERS's denial of benefits. The trial court agreed with Bradley that the Board improperly stepped into the shoes of Bradley's doctors by re-evaluating the medical records and reports without the proper expertise to do so. The trial court stated that the Board's finding that Bradley failed to meet her burden of proving permanent incapacity is not supported by substantial evidence and that the record compels a finding in her favor.

         KERS appealed the trial court's decision to the Court of Appeals. On appeal, the Court of Appeals considered whether the trial court properly applied McManus, which sets forth the judicial standard of review for decisions of the KERS. McManus provides that "[w]here the fact-finder's decision is to deny relief to the party with the burden of proof or persuasion, the issue on appeal is whether the evidence in that party's favor is so compelling that no reasonable person could have failed to be persuaded by it." McManus, 124 S.W.3d at 458. In Bradley's case, the Court of Appeals answered this question in the negative. In a 2-1 decision, [2] the Court of Appeals determined that the trial court erred in applying a "substantial evidence" standard of review. Further, the Court of Appeals found that the medical evidence was conflicting and that the administrative agency is afforded great latitude in its role as fact-finder.

         We granted discretionary review to reexamine the appropriate standard for judicial review of denials of applications for state permanent disability retirement benefits in conjunction with the Ashcraft case also issued today, and to address the specific issues Bradley raises regarding ...

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