REVIEW FROM COURT OF APPEALS CASE NO. 2016-CA-000114-MR
FRANKLIN CIRCUIT COURT NO. 14-CI-00498
COUNSEL FOR APPELLANT: Katherine I. Rupinen Leigh Davis
Carrie Slayton Jillian Leigh Hall Anne Caroline Bass
COUNSEL FOR APPELLEE: Charles Ed Massey
incapacitated member of the Kentucky Retirement Systems
apply for disability retirement pursuant to Kentucky Revised
Statute (KRS) 61.600. If the statutorily-created medical
review panel recommends that the member's disability
retirement application be denied, the applicant may then
request a formal hearing before a hearing officer who will
issue a recommended order to the KERS Board of Trustees, the
administrative body charged with making the final decision.
This case, initially brought by Ronald Ashcraft, a former
employee of the Grant County Board of Education,
presents an oft- recurring issue regarding the role of the
courts on judicial review of KERS's final decision as to
a member's entitlement to disability retirement. KRS
61.665(5). Having concluded that the Court of Appeals'
disposition of this case is not consistent with the
controlling statute and our stated standard of review for
disability retirement matters, we reverse.
September 2000, Ashcraft became a member of the County
Employees Retirement System, which is administered by KERS.
The Grant County Board of Education employed Ashcraft as an
HVAC technician, a position classified as "medium
work." As an HVAC technician, Ashcraft was
responsible for maintaining the HVAC systems in Grant County
schools and carrying all tools required to repair and install
equipment. On August 1, 2011, Ashcraft sustained a
work-related injury to his neck, upper back, and shoulders
when a 29-pound vacuum pump fell from above and struck him
between the shoulder blades.
September 2011, Ashcraft was diagnosed with cervical and
lumbar strain and with tension headaches from muscle
contractions. After seeking treatment, Ashcraft was initially
given work activity restrictions on lifting and pulling. He
was also placed on light and modified duty at work.
filed for disability benefits on June 8, 2012, and his
application was denied by a majority of the review panel on
August 24, 2012. The reviewing physicians noted a lack of
objective medical evidence in the record. Ashcraft again
applied for disability benefits and supplemented the record
with a workers' compensation examination performed by Dr.
Vaughn on August 30, 2012. Dr. Vaughn reported his objective
findings of pain in the cervical and lumbar areas, but that
the findings were due to degenerative changes compatible with
Ashcraft's age. Dr. Vaughn believed that Ashcraft could
return to work with a 50-pound lifting restriction and that
Ashcraft's total impairment was 10 percent, due to his
cervical and lumbar impairments. Ashcraft also tendered
evidence from his orthopedist, indicating this physician
placed him on light duties without strenuous exertion, and
the opinion of another physician who stated that Ashcraft
could not return to his previously-held position. The medical
review panel eventually denied his second application for
benefits in a 2-1 decision rendered December 19, 2012.
even though Ashcraft was permitted to perform modified duty
for some time, he was ultimately taken off work by one of his
physicians. After exhausting his Family and Medical Leave Act
(FMLA) time and sick leave, his last date of paid employment
was October 18, 2012. In a letter dated October 25, 2012, the
Grant County Board of Education terminated Ashcraft because
no accommodations were available for light duty work in his
job classification as an HVAC technician. His employer stated
that even though Ashcraft was given modified duties for five
months, the job description for an HVAC technician required
the ability to lift up to 70 pounds.
requested an administrative hearing, which was held on
October 1, 2013. The hearing officer determined that Ashcraft
submitted sufficient objective medical evidence to support
his assertion that the cumulative effect of his neck, upper
back, and lower back pain, and pain in his left hip and leg
physically incapacitated him on a permanent basis. In the
report dated December 18, 2013, the hearing officer
recommended granting Ashcraft's disability benefits
application, with review in two years. KERS filed exceptions
to the hearing officer's recommendation.
Disability Appeals Committee (DAC) of the Board of Trustees
of the Kentucky Retirement Systems (Board) met on February
21, 2014, and on March 27, 2014,  to consider the hearing
officer's recommendation. After fully considering the
administrative record, the DAC denied Ashcraft's
application for disability benefits. In its findings, the DAC
noted that two physicians (Vaughn, Lyon), a vocational
consultant (Crystal) and an exercise physiologist (Pounds)
determined that Ashcraft could lift up to 50 pounds, which is
the stated requirement for "medium duty work" as
outlined in KRS 61.600(5)(c). The DAC found that Ashcraft did
not prove by a preponderance of objective medical evidence
that he was functionally incapacitated from performing the
HVAC technician job or a job of like duties. Additionally,
the DAC pointed out that Ashcraft himself stated that he
would still be able to do many jobs that did not require
bending over or kneeling down to work, as the HVAC technician
the DAC denied his claim, Ashcraft appealed to the Franklin
Circuit Court. In an order entered December 28, 2015, the
trial court affirmed the final order of the Board. The trial
court concluded that the Board's decision was supported
by substantial evidence and that, upon judicial review,
Ashcraft had failed to show that the evidence was so
overwhelming as to compel a finding in his favor. The trial
court cited the McManus standard, which 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 v.
Ky. Retirement Sys., 124 S.W.3d 454, 458 (Ky. App.
2003). As the trial court noted, Ashcraft had the burden of
proof in making his claim for KERS disability benefits.
appeal to the Court of Appeals, that court reversed, having
concluded that substantial evidence compelled a finding in
Ashcraft's favor. The appellate court remanded the case
to the trial court with instructions that that court order
the Board to reinstate the hearing officer's
granted discretionary review to reexamine the appropriate
standard for judicial review of denials of applications for
state permanent disability retirement benefits, and to
address the deference accorded to the fact-finding agency
pursuant to KRS 13B.150. Additional facts relevant to the
specific issues presented are discussed below.
The KERS Board Is the Fact-Finder and Its Final Decision Must
Be Supported by Substantial Evidence
person whose retirement is administered by KERS may seek
disability retirement when he or she is physically or
mentally incapacitated to perform his or her job, or jobs of
like duties. KRS 61.600(3). A medical review panel
consisting of three physicians appointed by the KERS Board
evaluates the medical evidence submitted in support of the
application and recommends either approval or denial. KRS
61.665. If two or more examiners recommend approval,
"the system [KERS] shall make retirement payments in
accordance with the retirement plan selected by the
person." KRS 61.665(2)(e). If two or more examiners
recommend denial, the applicant may file additional
supporting medical information for further consideration or
file a request for a formal hearing. KRS 61.665(2)(f). If a
formal hearing is requested, KERS may require the applicant
to submit to one or more medical or psychological
examinations. KRS 61.665(3)(c).
hearing is conducted by a hearing officer in accordance with
KRS Chapter 13B. KRS 61.665(3). The applicant has the burden
of proof, with the burden of persuasion being "met by a
preponderance of the evidence in the record." KRS
13B.090(7). Pursuant to statute and regulations, the hearing
officer is required to make a report and recommended order
containing findings of fact and conclusions of law, and the
parties are allowed to file exceptions. KRS 13B.110; 105 Ky.
Admin. Reg. 1:215, § 5.
hearing officer's report and recommended order and any
exceptions are submitted to the KERS Board, which is
authorized to establish an appeals committee "to act
upon the recommendations and reports of the hearing officer .
. . ." KRS 61.665(4). The Board's final order
"shall be based on substantial evidence appearing in the
record as a whole and shall set forth the decision of the
board and the facts and law upon which the decision is
based." KRS 61.665(3)(d).
review of the KERS disability retirement decision is
controlled by KRS 13B.150, with subsection (2) setting forth
the standard of review.
The Court shall not substitute its judgment for that of
the agency as to the weight of the evidence on questions of
fact. The court may affirm the final order or it may
reverse the final order, in whole or in part, and remand the
case for further ...