Request By:
Mr. Ed W. Hancock
Deputy Secretary for Legal Affairs
Department of Transportation
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Martin Glazer, Assistant Attorney General
This is in reply to your letter of September 14, 1978, in which you seek the opinion of this office as to how attorney fees and discount thereon are commuted from a worker's award under Workmen's Compensation law. You point out that the rate of discount is controlled by KRS 342.150 (presently 4 percent), that pursuant to KRS 342.730 an employee is paid 66 2/3 of his average weekly wage during such disability and that KRS 342.320 requires the attorney fees to be paid in lump sum by commuting an employee's final payments. You attach a hypothetical situation involving an employee who is 43 years of age, totally and permanently disabled with 125 weeks previously paid and attorney fees of $6,500.
The payment of the attorney fees is a partial lump sum for a particular purpose. Therefore, it would have to be commuted in the same fashion as any other partial or total lump sum. The basic life expectancy under the American Experience Table of Mortality indicates that a worker who is injured at age 43 would have a life expectancy of 26 additional years and that 26 x 52 weeks would give him a life expectancy of 1,352 weeks. Without going into the details of your computation, we agree that there would be 139 weeks of discount on the attorney fees of $6,500 based upon a life expectancy of 1,352 weeks less 125 weeks previously paid (1,227).
The 139 weeks discount on the attorney fee multiplied by $112 per week would amount to $15,568 discount fee on the $6,500 attorney fees. This would leave a balance under your computation of $67,380.82, after deducting discount, attorney fees, and past due weeks. That figure divided by $112 would leave a remaining figure of 601.6145 weeks. Assuming, therefore, that no further lump sums would be paid and the employee remained totally disabled during this period, he could be paid for an additional 601.6145 weeks. When he reached that period, he would no longer be paid any sums of money until he reached 1,352 weeks from the date of his injury (or last exposure) and continued living beyond that period and continued being disabled. At that point, he would begin receiving $112 per week.
If there were to be no break in the payment to the employee and the attorney fees and discount not deducted from the period of his life expectancy, then the attorney fees would be paid not out of the award but in addition to the award.
KRS 342.320 provides in part:
"(1) All fees of attorneys . . . shall be subject to the approval of the board . . . nor would any attorneys fee be allowed or approved exceeding an amount equal . . . of the remainder of the amount recovered as actuarily determined on past and future benefits according to the American Experience Table of Mortality and the Remarriage Tables of the Dutch Royal Insurance Institute . . . ." (Emphasis supplied)
Therefore, the attorney fees would have to be based on a percentage of some fixed amount and that fixed amount is the mortality rate of the person and his life expectancy at the date of his injury or last exposure. It is true that subsection (2) of that section provides that attorney fees shall be commuted from the "final payments of compensation payable under the award. . . ." At the time the attorney fee is figured, there is no maximum time period to be considered than the mortality rate of the individual employee because it cannot be known at that time that a person may live beyond his normal mortality date. To use a more simple example, let us assume that at the time an individual is injured, he has a life expectancy of 40 years and that the attorney fees, discount and past payments amount to ten years payments. There remains a period of 30 years in which the employee would be entitled to receive payment. At the end of 30 years, payment would cease. If the employee were lucky enough to live past his 40th year from the date of injury and assuming he remains totally disabled, then his payments would begin again at the end of the 40th year until his death or until he was no longer disabled.
If it were to be construed that regardless of the attorney fees, discount and past payments, his compensation during disability would continue uninteruptedly for 40 years, then the attorney fees would not be paid out of the award but would be paid in addition to the award. That certainly was not the intention of KRS 342.320 in authorizing lump sum payments of attorney fees and would, in effect, increase an award beyond the maximum allowable by KRS 342.730.
This example may best be illustrated by the following diagram: 40 yrs life expectancyPast DueEmploye ReceivesAtty Fee[Illegible Word]Amt.& Int.Payments Weekly& Discount45 years[Illegible Word]Actual3 years30 yearsPaid inEmployeDeathadvance 7receivesPaid toyrs.to atty.paymentEmployeweeklyEmploye re-ceives nodirect payment