Bradley v. Commonwealth of Kentucky, 2009-SC-000135-WC (Kentucky Supreme Court 2009).  The Uninsured Employers Fund (UEF) is responsible for interest on all past due income benefits and is permitted to recover liquidated damages including interest from the uninsured employer.

Claimant was an undocumented laborer from Mexico who died as a result of a work injury. His uninsured employer was found to have violated six different federal safety regulations. The parties stipulated to a safety violation and agreed that benefits would be enhanced by 30% per the workers’ compensation statute.

On appeal, the UEF challenged its responsibility for the payment of interest on the lump sum death benefit, as well as the ALJ’s failure to reduce benefits by 50% under KRS 342.130, which the UEF claimed required reduction because the claimant’s nonresident child was the estate’s sole beneficiary.  Since the benefits were payable to the claimant’s estate, which did not exist in a foreign jurisdiction and was not an alien widow, widower, or child under KRS 342.130, the Court found KRS 342.130 inapplicable.

Regarding interest, the Court found the UEF responsible for the payment of interest, despite the UEF’s argument that as a state agency it was exempt from the payment of interest on public debts. The court viewed KRS 342.760 and KRS 342.790 as holding the UEF responsible for payment of death benefits as well as enhanced benefits with interest resulting from a safety violation. 

COMMENT:  The decision was a simple and correct one.  Were the UEF’s argument to have been accepted, such a holding would be as the Court concluded in violation of the “substance” of the workers’ compensation statute.  The UEF has the right of subrogation and can attach assets of the uninsured employer to recoup payments to the insured worker including interest.

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