DOUGLAS K. HOESLI, Appellant/Cross-appellee, v. TRIPLETT, INC. and FEDERATED MUTUAL INSURANCE COMPANY, Appellees/Cross-appellants.
No. 109,448
Supreme Court of Kansas
November 20, 2015
361 P.3d 504
BILES, J.
Jan L. Fisher, of McCullough, Wareheim & LaBunker, of Topeka, argued the cause and was on the briefs for appellant/cross-appellee.
Dallas L. Rakestraw, of McDonald, Tinker, Skaer, Quinn & Herrington, P.A., of Wichita, argued the cause, and Vincent A. Burnett, of the same firm, was with him on the briefs for appellees/cross-appellants.
The opinion of the court was delivered by
BILES, J.: Under the Kansas Workers Compensation Act,
As explained below, we hold that Dickens must be overruled because its foundation rests on what was viewed as the legislature‘s subjective intent rather than conforming to the statutory language and correctly applying our longstanding caselaw for statutory interpretation. We reverse the Court of Appeal because it followed Dickens and its progeny. See Hoesli v. Triplett, Inc., 49 Kan. App. 2d 1011, 1023, 321 P.3d 18 (2014); see also Snider v. American Family Mut. Ins. Co., 297 Kan. 157, 168, 298 P.3d 1120 (2013) (Court of Appeals duty bound to follow Kansas Supreme Court precedent, absent some indication the Kansas Supreme Court is departing from its previous position).
FACTUAL AND PROCEDURAL BACKGROUND
Douglas K. Hoesli, a full-time maintenance worker with Triplett, Inc., was injured in a workplace accident for which he is entitled to workers compensation. Prior to his injury, Hoesli was receiving social security retirement benefits and earning additional employment income without a reduction in his social security because he had reached full retirement age. See
At the administrative level, controversy ensued over whether state law required Hoesli‘s workers compensation to be reduced by his social security retirement benefits because of the offset statute,
“If the employee is receiving retirement benefits under the federal social security act or retirement benefits from any other retirement system, program or plan which is provided by the employer against which the claim is being made, any compensation benefit payments which the employee is eligible to receive under the workers compensation act for such claim shall be reduced by the weekly equivalent amount of the total amount of all such retirement benefits, less any portion of any such retirement benefit, other than retirement benefits under the federal social security act, that is attributable to payments or contributions made by the employee, but in no event shall the workers compensation benefit be less than the workers compensation benefit payable for the employee‘s percentage of functional impairment.” (Emphasis added.)
K.S.A. 2010 Supp. 44-501(h) .
Based on the italicized language, the administrative law judge (ALJ) ruled the employer could use Hoesli‘s social security benefits to offset its workers compensation obligation. The ALJ awarded Hoesli payment for his permanent partial general disability only to the extent of his 13% functional impairment, or 53.95 weeks of benefits, because the weekly equivalent amount of Hoesli‘s social security benefits exceeded his weekly workers compensation. This adjustment was based on the statutory limitation that the offset
In that court, Hoesli argued the Board‘s permanent partial disability award was wrong because the offset statute did not apply and he should receive both streams of income, i.e., workers compensation and the social security retirement benefits in full, based on the reasoning underlying Dickens. Alternatively, Hoesli argued offsetting his workers compensation payments would violate the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution because the offset was not rationally related to the statute‘s purpose of preventing duplicative recovery of wage-loss benefits. In a cross-appeal, Triplett challenged the Board‘s refusal to address its claim that the ALJ erred by failing to apply the offset to Hoesli‘s temporary total disability benefits.
The Court of Appeals reversed the Board‘s offset, holding
Triplett petitioned this court for review of the panel‘s interpretation of the offset statute, which we granted. Hoesli did not cross-petition for review of the panel‘s decision declining to reach the merits of his constitutional claim. Jurisdiction is proper under
OFFSET IS REQUIRED BY K.S.A. 2010 SUPP. 44-501(h)
Triplett argues
Standard of Review
The Workers Compensation Board‘s decision is subject to appellate review under the Kansas Judicial Review Act,
Discussion
When a statute is plain and unambiguous, a court must give effect to its express language, rather than determine what the law should or should not be. Graham v. Dokter Trucking Group, 284 Kan. 547, 554, 161 P.3d 695 (2007). We determine legislative intent by first applying the meaning of the statute‘s text to the specific situation in controversy. See State v. Phillips, 299 Kan. 479, 495, 325 P.3d 1095 (2014) (first task in construing statute is to ascertain legislative intent through analysis of language employed, giving ordinary words their ordinary meanings). A court does not read into the statute words not readily found there. Whaley, 301 Kan. at 196; Graham, 284 Kan. at 554; see Casco v. Armour Swift-Eckrich, 283 Kan. 508, 525, 154 P.3d 494 (2007). When the language is unclear or ambiguous, the court employs the canons of statutory construction, consults legislative history, or considers other background information to ascertain the statute‘s meaning. Whaley, 301 Kan. at 196.
In this case, we must also consider the doctrine of stare decisis because our prior caselaw interpreting the statutory provision is at issue. This doctrine instructs that points of law established by a
In this instance, Triplett argues the Dickens court erroneously interpreted the statute and that subsequent caselaw has carried the error forward. This argument has been made to the Court of Appeals before. See Jones v. Securitas Sec. Services, No. 105,414, 2011 WL 6311105, at *3 (Kan. App. 2011) (unpublished opinion) (rejecting argument that Dickens should be reconsidered in light of trend of plain language statutory interpretation applied to Workers Compensation Act by Kansas Supreme Court).
In Hoesli‘s case, the panel acknowledged the plain language of
In Dickens, the injured worker had retired and then took a job intending to earn only as much as he could without causing a reduction in his social security retirement benefits. He later suffered a work injury for which he obtained workers compensation. But the Board ruled that compensation would be offset by his social security retirement benefits pursuant to
The problem with Dickens is that it ignored the legislature‘s intent as expressed in the statute‘s plain language in favor of the court‘s contrary perception of legislative purpose. In other words, it engaged maxims of statutory construction without discerning any uncertainty in the text. See State v. Paul, 285 Kan. 658, 661-62, 175 P.2d 840 (2008) (court resorts to maxims of construction when statute is ambiguous, i.e., contains language of doubtful or conflicting meaning and leaves uncertainty as to which of multiple meanings is proper).
Guided by this distorting light, the Dickens court determined that the offset was enacted “to prevent duplication of wage-loss benefits.” 266 Kan. at 1071. It then observed that Kansas’ Workers Compensation Act “has traditionally been viewed as ‘one unit in an overall system of wage loss protection, rather than something resembling a recovery in tort. ... [T]he conclusion follows that duplication of benefits from different parts of the system should not ordinarily be allowed.‘” 266 Kan. at 1070 (quoting Baker v. List and Clark Construction Co., 222 Kan. 127, 130, 563 P.2d 431 (1977)). The components of that system include workers compensation, unemployment compensation, and social security. See 14 Larson‘s Worker‘s Compensation Law § 157.01 (2015).
The Dickens court then reasoned that applying the offset under the facts of the case would conflict with the legislature‘s intent to prevent the duplication of benefits because the claimant‘s social security retirement benefits and workers compensation benefits were not duplicative. A worker, the court reasoned, suffers a “second wage loss” when he or she is injured while working to supplement social security retirement benefits. 266 Kan. at 1071.
No subsequent decision by this court has applied Dickens to relieve a workers compensation claimant from the offset; but shortly after Dickens, this court held the offset did apply to an injured worker whose social security disability benefits were involuntarily converted to social security retirement benefits when the claimant had reached retirement age. See Wishon v. Cossman, 268 Kan. 99, 991 P.2d 415 (1999). In that case, the worker had been simultane-
The Wishon court disagreed, reasoning that a worker who retires was no longer suffering wage loss because of injury but because of retirement—regardless of whether the retirement was forced or voluntary. 268 Kan. at 107. And because the claimant was receiving social security retirement benefits, the Wishon court concluded, “the plain language of
But a handful of Court of Appeals decisions have grappled with Dickens. The most significant is McIntosh v. Sedgwick County, 32 Kan. App. 2d 889, 897, 91 P.3d 545 (2004). In that case, the panel held the offset applied when a claimant continued full time employment after he began receiving social security retirement benefits and was subsequently injured before retiring. To reach that conclusion, the panel noted the caselaw applying
The Court of Appeals has addressed similar issues numerous times over the past several years and reached different outcomes depending on whether the injured worker proved he or she was both “retired” and receiving social security retirement benefits at the time of injury. See Farley v. Above Par Transportation, 50 Kan. App. 2d 866, 877, 334 P.3d 883 (Kan. App. 2014) (offset applied because there was insufficient evidence that the claimant, who was receiving social security retirement benefits at time of injury, had retired and returned to work before injury); Morales v. Wal-Mart, No. 107,526, 2013 WL 1010438, at *5 (Kan. App. 2013) (unpub-
The panel‘s decision in Hoesli‘s case represents an extension of Dickens and McIntosh because Hoesli was receiving social security retirement benefits but had not yet retired from his employment. Compare Hoesli, 49 Kan. App. 2d at 1023, with McIntosh, 32 Kan. App. 2d 889, 897 (offset applied on similar facts); see also Farley, 50 Kan. App. 2d at 877 (same). The panel acknowledged this addition to the fact pattern. Hoesli, 49 Kan. App. 2d at 1019-20.
The Hoesli court‘s rationale is straightforward. First, it observed that under the current version of the Social Security Act individuals may simultaneously receive social security retirement benefits and earn unlimited wages. Then, it concluded Hoesli‘s workers compensation benefits and social security benefits were not “duplicative” since the wages the workers compensation replaced and Hoesli‘s social security benefits were “two separate, distinct and independent revenue streams, that would have continued for the foreseeable future, but for the work-related injury.” 49 Kan. App. 2d at 1021.
Like the Dickens court, the Hoesli panel did not rely on the plain language of
After careful review of our caselaw, we conclude that Dickens and its progeny improperly give effect to a perceived legislative purpose underlying
Hoesli argues we must adopt the panel‘s construction of
Moreover, the court‘s duty to give effect to the plain language of an unambiguous statute is not diluted just because that effect renders the statute unconstitutional. See Brownsburg Area Patrons Affecting Change v. Baldwin, 714 N.E.2d 135, 139 (Ind. 1999) (“If a statute is unambiguous, then ‘courts must apply the plain language . . . despite perhaps strong policy or constitutional reasons
Having held that
K.S.A. 2010 SUPP. 44-501(h) COMPORTS WITH EQUAL PROTECTION
Hoesli claimed in the Court of Appeals that
Whether a statute violates equal protection is a question of law subject to de novo review. Barrett ex rel. Barrett v. U.S.D. 259, 272 Kan. 250, 255, 32 P.3d 1156 (2001); see State v. Cheeks, 298 Kan. 1, 4, 310 P.3d 346 (2013) (whether statute violates constitution is question of law); Miller v. Johnson, 295 Kan. 636, 646-47, 289 P.3d 1098 (2012) (same). The court presumes statutes are constitutional, and all doubts are resolved in favor of their validity. Miller, 295 Kan. at 646; Barrett, 272 Kan. at 255. The burden is on the party attacking the statute to demonstrate it violates equal protection. 272 Kan. at 256; see also In re Weisgerber, 285 Kan. 98, 102, 169 P.3d 321 (2007) (burden is on party challenging constitutionality).
Discussion
Equal protection claims regarding classifications within economic and social welfare legislation that are not drawn along suspect lines, such as race or gender, are analyzed using a rational basis test. See Fitzgerald v. Racing Ass‘n of Central Iowa, 539 U.S. 103, 107, 123 S. Ct. 2156, 156 L. Ed. 2d 97 (2003); Schweiker v. Wilson, 450 U.S. 221, 234, 101 S. Ct. 1074, 67 L. Ed. 2d 186 (1981). Under this test, a law will not be invalidated so long as the classification is “rationally related to legitimate government objectives.” Schweiker, 450 U.S. at 230.
“Insofar as the objective is concerned, a statutory discrimination will not be set aside if any set of facts reasonably may be conceived to justify it. The legislature‘s purpose in creating the classification need not be established.” Barrett, 272 Kan. at 256 (quoting State v. Mueller, 271 Kan. 897, Syl. ¶ 8, 27 P.3d 884 [2001]); see Dandridge v. Williams, 397 U.S. 471, 485, 90 S. Ct. 1153, 25 L. Ed. 2d 491 [1970]). A law “might predominantly serve one general objective . . . while containing subsidiary provisions that seek to achieve other desirable (perhaps even contrary) ends as well, thereby producing a law that balances objectives but still serves the general objective when seen as a whole.” Fitzgerald, 539 U.S. at 108. All that is required is that “there is a plausible policy reason for the classification, [and that] the legislative facts on which the classification is
But the relationship between the classification and the legislative objective it serves need not be narrowly tailored to the objective. A rational connection between the two will suffice. “‘[R]elevance is the only relationship required between the classification and the objective.‘” Barrett, 272 Kan. at 256 (quoting State v. Mueller, 271 Kan. 897, Syl. ¶ 8). This standard is met so long as “the statute produces effects that advance, rather than retard or have no bearing on, the attainment of the objective.” 272 Kan. at 256.
The classification at issue is based upon the receipt of retirement benefits, including social security. Under the statute, injured workers who do not receive such benefits are entitled to the full amount of workers compensation recoverable under the act, while those who do receive retirement benefits collect less workers compensation than they would otherwise be entitled to. See
This court has previously held this classification does not violate equal protection because it was determined to be rationally related to the legitimate government objective of preventing injured workers from receiving duplicative wage-loss benefits for single periods of wage loss. Injured Workers, 262 Kan. at 870, 872. Hoesli argues Injured Workers was decided before the 2000 amendments to the Social Security Act, which eliminated the earnings test that reduced the retirement benefits paid to certain wage-earning recipients aged 65 to 69. This earnings test could be viewed as a need-based adjustment to social security retirement benefits. Based on this change in the law, Hoesli claims Injured Workers’ rationale is now suspect.
But even after the 2000 amendments, social security retirement benefits still maintain their character as wage-loss benefits. The social security retirement system was enacted “to provide workers and their families with basic protection against hardships created by the loss of earnings due to . . . old age.” See Mathews v. De Castro, 429 U.S. 181, 185-86, 97 S. Ct. 431, 50 L. Ed. 2d 389 (1976). And the 2000 amendments merely “reduced from 70 to 65 the age
Even though the statutory classification may extend further than necessary to achieve its purpose by reaching workers compensation payments owed for injuries incurred during employment undertaken to supplement social security, it does not violate equal protection in doing so. See Massachusetts Bd. of Retirement v. Murgia, 427 U.S. 307, 316, 96 S. Ct. 2562, 49 L. Ed. 2d 520 (1976) (holding mandatory retirement age for uniformed state police rationally related to legitimate goal of protecting public by assuring police are physically prepared and noting no indication chosen age limit excluded so few officers that were in fact unqualified to render the age limit wholly unrelated to statutory objective; state need not adopt more precise, individualized method of assuring physical fitness). As explained in 14 Larson‘s Workers’ Compensation Law § 157.01 (2015):
“Wage-loss legislation is designed to restore to the worker a portion, such as one-half to two-thirds, of wages lost due to the three major causes of wage-loss: physical disability, economic unemployment, and old age. The crucial operative fact is that of wage loss; the cause of the wage loss merely dictates the category of legislation applicable. Now if a worker undergoes a period of wage loss due to all three conditions, it does not follow that he or she should receive three sets of benefits simultaneously and thereby recover more than his or her actual wage. The worker is experiencing only one wage loss and, in any logical system, should receive only one wage-loss benefit. This conclusion is inevitable, once it is recognized that workers’ compensation, unemployment compensation, nonoccupational sickness and disability insurance, and old age and survivors’ insurance are all parts of a system based upon a common principle. If this is denied, then all coordination becomes impossible and social legislation becomes a grab-bag of assorted unrelated benefits.”
We hold that social security retirement benefits under the Social Security Act did not lose their essential character as benefits to protect recipients from the loss of wages due to advanced age
Accordingly, we reverse the decision of the Court of Appeals and affirm the Board‘s decision as explained.