Willoughby v. Goodyear Tire & Rubber

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NOT DESIGNATED FOR PUBLICATION

No. 115,898

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

TAMMY LEE WILLOUGHBY,
Appellant,

v.

GOODYEAR TIRE AND RUBBER,
and
LIBERTY MUTUAL INSURANCE, CO.,
Appellees.


MEMORANDUM OPINION

Appeal from Workers Compensation Board. Opinion filed February 17, 2017. Reversed and
remanded with directions.

Bruce Alan Brumley, of Topeka, for appellant.

Timothy A. Shultz, and Alison J. St. Clair, of Goodell, Stratton, Edmonds & Palmer, L.L.P., of
Topeka, for appellees.

Before HILL, P.J., GREEN, J., and BURGESS, S.J.

Per Curiam: Tammy Willoughby, an employee of Goodyear Tire and Rubber
(Goodyear), injured her right knee in the course of her employment on August 14, 2013.
This was the third time she had experienced a work-related injury to her right knee while
employed by Goodyear. Her two previous workers compensation claims were each
settled for a rating of 10% partial permanent impairment. There was no settlement of this
third claim. The Division of Workers Compensation determined that Willoughby suffered
a 10% loss of use of her right leg and ordered corresponding compensation. Goodyear
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appealed to the Kansas Workers Compensation Board (Board), which ultimately
determined that Willoughby had actually suffered a 20% right lower extremity functional
impairment. In its deliberations, the Board sua sponte interpreted the American Medical
Association Guidelines (Guidelines) to combine Willoughby's two prior 10% awards into
a 19% preexisting impairment rating, and pursuant to K.S.A. 2015 Supp. 44-501(e)(2)(A)
then reduced Willoughby's award to $0. Willoughby appealed. We reverse and remand
with directions.

FACTUAL AND PROCEDURAL BACKGROUND

Willoughby, an employee of Goodyear, injured her right knee in the course of her
employment on August 14, 2013. She was diagnosed with a tear to the right medial
meniscus and underwent corrective surgery and rehabilitation. She filed a claim for
workers compensation. Goodyear disputed the nature and extent of Willoughby's injury
and denied that any impairment occurred. Willoughby and Goodyear were not able to
come to a settlement in the case. After reviewing testimony, on December 7, 2015, the
administrative law judge (ALJ) determined that Willoughby suffered a 10% loss of use of
the right leg and ordered a corresponding monetary and medical treatment award.

The August 2013 incident marked the third time Willoughby had experienced a
work-related injury to her right knee while employed by Goodyear: her two previous
injuries were in 2010 and 2011, and both required corrective surgery. Willoughby's
workers compensation claims from the 2010 and the 2011 injuries were each settled for a
rating of 10% partial permanent impairment.

Goodyear appealed the ALJ's December 2015 award of 10% for Willoughby's
August 2013 right knee injury to the Board. After considering the record used by the
ALJ, the Board ultimately determined that Willoughby had actually suffered a 20% right
lower extremity functional impairment. In its deliberations, the Board then sua sponte
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interpreted the Guidelines to combine Willoughby's prior 2010 and 2011 10% settlements
into a 19% preexisting impairment rating. Then, pursuant to K.S.A. 2015 Supp. 44-
501(e)(2)(A), the Board reduced Willoughby's award to $0. Willoughby's impairment
rating was increased by the Board from the ALJ's 10% rating to a 20% rating, but then
reduced to a noncompensable level by the Board's interpretation of the Guidelines and
subsequent application of a statutory reduction. Willoughby appealed.

ANALYSIS

The Kansas Judicial Review Act defines the scope of judicial review of state
agency actions unless the agency is specifically exempted from application of the statute.
K.S.A. 2015 Supp. 77-603(a); Ryser v. State, 295 Kan. 452, 458, 284 P.3d 337 (2012).
An appellate court exercises the same limited review of the agency's action as does the
district court—as if the appeal had been made directly from the agency's action. Kansas
Dept. of Revenue v. Powell, 290 Kan. 564, 567, 232 P.3d 856 (2010); Johnson v. Kansas
Employment Security Bd. of Review, 50 Kan. App. 2d 606, 610, 330 P.3d 1128 (2014),
rev. denied 302 Kan. 1010 (2015).

THE BOARD VIOLATED PROVISIONS OF K.S.A. 2015 SUPP. 77-621(c)

A court reviewing an administrative action shall grant relief only if it determines
that the agency violated one or more of the provisions of K.S.A. 2015 Supp. 77-621(c).
Willoughby explicitly seeks review under K.S.A. 2015 Supp. 77-621(c)(4), which
provides relief in the event the Board erroneously interpreted or applied the law.
Throughout her appeal brief, Willoughby also impliedly argues that the Board violated
other provisions of K.S.A. 2015 Supp. 77-621(c), in that the Board acted beyond its
jurisdiction conferred by any provision of law; that the Board engaged in an unlawful
procedure or failed to follow prescribed procedure; that the Board did base its decision
upon facts or information not supported by the appropriate standard of proof by evidence
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that is substantial in light of the record as a whole; and that the Board's action was
unreasonable, arbitrary, or capricious.

On appeal, the burden of proving the invalidity of the agency action rests with the
party asserting such invalidity. K.S.A. 2015 Supp. 77-621(a)(1); In re Equalization
Appeal of Wagner, 304 Kan. 587, 597, 372 P.3d 1226 (2016) (tax appeal); Golden Rule
Ins. Co. v. Tomlinson, 300 Kan. 944, 953, 335 P.3d 1178 (2014) (Kansas Insurance
Department agency decision). Here, the burden of proving the Board violated provisions
of K.S.A. 2015 Supp. 77-621(c) rests with Willoughby. Willoughby has met her burden.

The Board Exceeded Its Authority and Misapplied the Law

Willoughby argues that the Board exceeded its statutory authority when it
combined her two prior settlements of 10% each into a composite 19% preexisting
impairment rating and then used that 19% preexisting impairment rating to reduce her
current 20% impairment rating to a noncompensable level. If an issue turns on an
interpretation of a statute, the court reviews de novo without deference to the decision of
the Board. See Hoesli v. Triplett, Inc., 303 Kan. 358, 362, 361 P.3d 504 (2015); Powell,
290 Kan. at 567.

Under K.S.A. 2015 Supp. 44-501(e), the reduction of disability compensation is
required by the amount of impairment determined to be preexisting:

"Where workers compensation benefits have previously been awarded through
settlement or judicial or administrative determination in Kansas, the percentage basis of
the prior settlement or award shall conclusively establish the amount of functional
impairment determined to be preexisting. Where workers compensation benefits have not
previously been awarded through settlement or judicial or administrative determination in
Kansas, the amount of preexisting functional impairment shall be established by
competent evidence." (Emphasis added.)
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Willoughby's settlements for her previous injuries were conclusively established
by the earlier settlement awards of 10%: once in 2010 and again in 2011. Willoughby's
award was to be reduced by the current dollar value attributable under the Workers
Compensation Act to the percentage of functional impairment determined to be
preexisting. K.S.A. 2015 Supp. 44-501(e)(2)(A).

At the core of this appeal is the percentage of functional impairment that was
determined to be preexisting for the purpose of reducing Willoughby's award. If the
combination of the two previous settlements of 10% each was proper and does equate to
19%, as the Board determined, then Willoughby's 20% impairment award equates to $0.
If, however, the functional impairment determined to be preexisting is established by the
prior settlement, then Willoughby's prior settlement of 10% is the basis for the
preexisting impairment reduction from her current impairment rating of 20%. This would
leave Willoughby at a compensable level of 10% for her new permanent partial
impairment.

A Plain Reading of the Statute Is Required

Willoughby argues for a plain reading of K.S.A. 2015 Supp. 44-501(e). Under that
statute, "the percentage basis of the prior settlement or award shall conclusively establish
the amount of functional impairment determined to be preexisting." (Emphasis added.)
K.S.A. 2015 Supp. 44-501(e)(1). It is a fundamental rule of statutory construction that the
intent of the legislature governs if that intent can be ascertained. Hoesli, 303 Kan. at 362.
An appellate court must first attempt to ascertain legislative intent through the statutory
language enacted, giving common words their ordinary meanings. Ullery v. Othick, 304
Kan. 405, 409, 372 P.3d 1135 (2016). When a statute is plain and unambiguous, an
appellate court should not speculate about the legislative intent behind that clear
language, and it should refrain from reading something into the statute that is not readily
found in its words. Ullery, 304 Kan. at 409; Hoesli, 303 Kan. at 362. The meaning of
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K.S.A. 2015 Supp. 44-501(e) is perfectly clear. Willoughby’s preexisting functional
impairment was conclusively established by the prior proceedings. There was no need or
legal basis for the Board to go beyond that determination.

The parties extensively argue the Board's utilization of a hypothetical that
questioned the plain meaning of K.S.A. 2015 Supp. 44-501(e). The Board engaged in this
hypothetical to demonstrate that a plain reading of the statute could leave Willoughby
injuring her knee on five separate occasions, settling each claim for 10%, and then only
ever having to suffer a 10% reduction in her subsequent impairment ratings. This is a
speculative hypothetical. The courts must construe statutes to avoid unreasonable or
absurd results and presume that the legislature does not intend to enact meaningless
legislation. Milano's Inc. v. Kansas Dept. of Labor, 296 Kan. 497, 501, 293 P.3d 707
(2013).

The Board's reasoning around its hypothetical is flawed for a number of reasons:
(1) Board failed to justify departing from the ordinary and unambiguous language of the
statute ("shall conclusively establish" the preexisting impairment); (2) Board failed to
recognize that an approved settlement is a final action in a separate claim that should not
be functionally relitigated years later; and (3) Board failed to consider the opposite effect
of its hypothetical (e.g., that five injuries with ever-increasing sua sponte Board-
combined impairment rate reductions could lead to the unreasonable and absurd
conclusion that Willoughby's knee had a less than zero impairment, in other words
suggesting that her knee was completely healthy). There may have been an argument to
be made in the previous proceedings that Willoughby's functional impairment should
have been calculated at 20%. That argument was never made and a conclusive
determination of 10% was made.

Additionally, Goodyear (appropriately) relied on the plain language of the statute
to avoid having to put forward any evidence regarding Willoughby's previous impairment
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ratings. Goodyear acknowledged throughout its brief that "the percentage basis of
preexisting impairment is conclusively established by previous settlement [10%]."
Likewise, the Board acknowledged that the statute conclusively established the amount of
functional impairment determined to be preexisting and, thus, did not require that
Goodyear demonstrate the level of Willoughby's preexisting impairment.

The Board cannot have it both ways. Since a plain reading of the statute does not
require that Goodyear establish Willoughby's preexisting impairment rating, then that
rating conclusively established by the previous settlement must be recognized for all
purposes. As Goodyear proffered no evidence to dispute that previous settlement or to
establish that it should have been something different than 10%, a plain reading of the
statute dictates that the appropriate impairment rating for Willoughby's preexisting
condition is 10% for the further application of the statute's clause regarding the award
reduction.

There Is No Competent, Substantial Evidence to Support a Preexisting Rating of 19%

Willoughby argues that it was improper for the Board to use the Guidelines to
combine her 2010 and 2011 settlements into one impairment rating to establish her
preexisting impairment for the purpose of reducing her award. While Willoughby does
not explicitly acknowledge the Board's action as taking judicial or administrative notice
sua sponte of the Guidelines, in fact, that is what the Board did.

Judicial notice may be taken without request by a party of "specific facts and
propositions of generalized knowledge which are capable of immediate and accurate
determination by resort to easily accessible sources of indisputable accuracy." K.S.A. 60-
409(b)(4). In this case, although referenced by several of the experts called upon to opine
regarding Willoughby's injuries and impairment ratings, neither party requested that the
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ALJ or Board take judicial notice of the Guidelines and no such determination was made.
Consequently, the Guidelines are not a part of the record.

Prior to taking judicial notice of information, a judge shall afford each party a
reasonable opportunity to present any information relevant to the propriety of taking
judicial notice. K.S.A. 60-410(a). In this case, neither party was given notice that the
Board planned to utilize the Guidelines outside of acknowledging the expert testimony
that referenced those Guidelines. Neither party was given an opportunity to present
information relevant to the propriety of the Board taking judicial notice of those
Guidelines. It was not until the Board's order was complete that the parties were aware
that the Board planned to incorporate the Guidelines and its interpretation of them into its
analysis. While the Guidelines could arguably fit into the category of information
envisioned by K.S.A. 60-409(b)(4), the record is silent as to whether they do, in fact,
meet that standard. Nevertheless, the Board referenced the Guidelines in its order, and the
Board's interpretation of those Guidelines was the ultimate determining factor in this
case. Not only did the Board sua sponte take judicial notice of the Guidelines, it
interpreted them in its analysis of the case in a manner that was dispositive. Neither the
Guidelines nor the Board's interpretation of them amount to substantial evidence.

Substantial evidence refers to evidence possessing something of substance and
relevant consequence to induce the conclusion that the award was proper, furnishing a
basis of fact from which the issue raised could be easily resolved. Ward v. Allen County
Hospital, 50 Kan. App. 2d 280, 285, 324 P.3d 1122 (2014). The 19% functional
impairment determination was not a factual finding based on evidence. It was a
determination the Board came to as part of its reliance on information that is not in the
record. This is not substantial competent evidence.



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Conclusion

The Board failed to follow the provisions of K.S.A. 2015 Supp. 77-621(c). It acted
beyond its authority in creating a combined preexisting impairment rating for
Willoughby's right knee. It used that improper rating to erroneously interpret and apply
K.S.A. 2015 Supp. 44-501(e)(2)(A). When it failed to follow the clear meaning of the
K.S.A. 2015 Supp. 44-501(e)(1), the Board failed to follow prescribed procedures
regarding the application of statutes. It failed to follow proper procedures for admission
of evidence and taking judicial notice of evidence. The Board based its decision upon
information not part of the record. See K.S.A. 2015 Supp. 77-621(c)(2), (4), (5), and (7).
The Board's order regarding the statutory reduction is reversed, and the case is remanded
with instructions to apply only the 2011 10% preexisting impairment rating to the
reduction of Willoughby's 20% current impairment rating in accordance with K.S.A.
2015 Supp. 44-501(e)(2)(A).

Reversed and remanded with directions.