Douglas K. Hoesli, Appellant/Cross-appellee,
Triplett, Inc. and Federated Mutual Insurance Company, Appellees/Cross-appellants
Appeal from Workers Compensation Board.
Affirmed in part, reversed in part, and remanded.
BY THE COURT
1. The purpose of workers compensation is to replace some portion of wages an employee loses as a result of a work-related injury. The grant of a workers compensation award places the injured employee in a similar position in terms of income as the employee was prior to the injury.
2. K.S.A. 2010 Supp. 44-501(h) provides that an employee's workers compensation award will be set-off by any retirement benefits he or she receives from a retirement benefits program, less any amount the employee contributed to his or her plan.
3. The setoff provision in K.S.A. 2010 Supp. 44-501(h) seeks to eliminate any duplication of wage loss benefits received from different programs because workers compensation exists to replace some portion of the employee's wage loss due to injury.
4. The Senior Citizens Freedom to Work Act provides that there is no reduction in Social Security retirement benefits due to wages regardless of the amount of wages earned by individuals age 65 and older.
5. The change in federal Social Security law invalidates the rationale that Social Security retirement benefits are a wage replacement for workers age 65 and older who receive Social Security benefits and earn wages.
6. In accordance with federal law, a worker is entitled to receive full Social Security benefits and full wages with the result that the two income streams exist fully independent of each other and neither is duplicative of the other.
7. It is inconsistent with the purpose of the workers compensation setoff in 2010 Supp. 44-501(h) to apply the setoff in a case in which the employee's benefits accrue regardless of whether any other income existed.
Jan L. Fisher, of McCullough, Wareheim & LaBunker, of Topeka, for appellant/cross-appellee.
Vincent A. Burnett and Dallas L. Rakestraw, of McDonald, Tinker, Skaer, Quinn & Herrington, P.A., of Wichita, for appellees/cross-appellants.
Before Green, P.J., Schroeder, J., and James L. Burgess, District Judge Retired, assigned.
[49 Kan.App.2d 1012] Burgess, J.
Douglas K. Hoesli was injured at work and filed a workers compensation claim. Because Hoesli--who was not yet retired but who was at full retirement age--had already begun collecting Social Security retirement benefits, the administrative law judge (ALJ) determined that the setoff provision in K.S.A. 2010 Supp. 44-501(h) should apply to his permanent partial disability award and reduce the award by the amount of Social Security benefits he receives. The Workers Compensation Board (Board) affirmed, but it refused to consider the setoff's applicability to Hoesli's temporary total disability award because neither party had raised that issue prior to oral argument. Hoesli appeals to this court, arguing both that the Board erred in applying the setoff and also that the setoff is unconstitutional. Additionally, Hoesli's employer, Triplett, Inc., cross-appeals, contending that the Board erred in finding that
it lacked jurisdiction to consider the issue regarding Hoesli's temporary total disability.
Sometime in 2008, Hoesli began working at Triplett as a truck driver. At that time, Hoesli was 65 years old and not yet collecting Social Security benefits. In April 2008, after Hoesli reached the age of 66, he began drawing his full Social Security benefit of $1,820 a month. His Social Security benefit was not reduced or offset by his full-time employment.
[49 Kan.App.2d 1013] Because of health problems involving dizziness and fainting, Hoesli transferred from truck driving to the maintenance department at Triplett in 2009. In May 2010, Hoesli fell off an extension ladder at one of Triplett's storage units while cleaning leaves out of a gutter and sustained injuries to his back and chest. Doctors determined that Hoesli suffered an L2 compression fracture but determined he could continue working on light duty. Although doctors eventually cleared Hoesli for full-time work, Hoesli continued to experience pain when participating in more strenuous job duties. Due to his continued work difficulties, Hoesli submitted a resignation to Triplett in May 2011, indicating that he had " 'decided to retire and help [his] wife.'" Triplett and Hoesli proceeded to discuss his resignation and work out a solution in which Hoesli would return to work on a part-time basis. In June 2011, Hoesli resumed working 2 days a week; in September of the same year, he increased to 3 days a week. Although Hoesli continued to have pain during activities involving heavy lifting, he continued working 3 days a week even during the adjudication of his workers compensation case. It is unclear from the record whether Hoesli still works at Triplett.
While working for Triplett part-time in June 2011, Hoesli applied for a workers compensation hearing based on his work injuries. A hearing was held on his application on January 19, 2012. The parties stipulated to the existence of Hoesli's injuries and the fact that those injuries arose out of and in the course of his employment, but they disputed four major issues. A primary issue and the subject of this appeal involved the applicability of the setoff provision present in K.S.A. 2010 Supp. 44-501(h), which reduces an injured employee's compensation when he or she is also receiving retirement benefits such as Social Security. Although Hoesli contended that modern changes to federal Social Security law altered the setoff's applicability to his case, Triplett argued that Kansas caselaw demanded application of the provision. After reviewing the relevant caselaw, the ALJ stated:
" This court is unable to identify any duplication of benefits between [Hoesli]'s social security old age benefits and his workers compensation benefits. They were two separate, distinct and independent revenue streams, that would have continued [49 Kan.App.2d 1014] for the foreseeable future, but for the work-related injury. However . . . the later decision in [a prior Kansas case] . . . and the plain language of K.S.A. 44-501(h) appear to mandate application of the set-off."
The ALJ then applied the setoff to Hoesli's permanent partial disability (PPD) benefits but not to his 13% permanent partial functional impairment benefits. The ALJ did not discuss the setoff's effect on Hoesli's temporary total disability (TTD) compensation.
Hoesli applied for review by the Board to determine, among other things, whether the setoff should apply to his PPD award. The Board heard argument on November 6, 2012. Although the record is somewhat unclear, it appears that, at oral argument, Triplett argued that the setoff applied to both Hoesli's PPD and TTD awards rather than just his PPD award. The Board affirmed the ALJ's ruling regarding the application of the setoff to the PPD award. Regarding the application of the setoff to Hoesli's TTD compensation, the Board explained:
" However, the ALJ did not address whether an offset of [Hoesli]'s social security benefits should be allowed against the TTD awarded [Hoesli]. The only limitation placed on the offset by K.S.A. 2009 Supp. 44-501(h) deals with [Hoesli]'s functional impairment. [Triplett] argues that the social security offset should apply to the ...