Kentucky Retirement Systems v. Nancy Gauze ( 2020 )

RENDERED: SEPTEMBER 4, 2020; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2018-CA-001753-MR
KENTUCKY RETIREMENT SYSTEMS APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
v. HONORABLE PHILLIP J. SHEPHERD, JUDGE
ACTION NO. 16-CI-00066
NANCY GAUZE APPELLEE
OPINION
AFFIRMING
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BEFORE: ACREE, COMBS, AND MAZE, JUDGES.
COMBS, JUDGE: The Kentucky Retirement Systems (the Appellant) appeals an
opinion and order of the Franklin Circuit Court of October 25, 2018, reversing the
agency’s decision to deny disability benefits to Nancy Gauze (the Appellee).
Appellant argues that the Franklin Circuit Court erred by not dismissing the case
for lack of prosecution pursuant to CR1 77.02 and by re-weighing the evidence.
We disagree with both arguments. Thus, after our review, we affirm.
Gauze worked as a Food Service Manager for the Ashland
Independent School District for twenty-three years. Her duties included: (1)
preparing breakfast and lunch for Ashland Middle School students; (2) recording
inventory; (3) supervising food staff; and (4) stocking orders. She worked
approximately eight hours per day. Her job required her: (1) to stand or walk
during most of her shift; (2) to lift boxes of food products weighing as much as
forty pounds or more; and (3) to bend, stoop, and squat repeatedly. Over the
course of the years, Gauze testified that her legs and arms would often “go numb.”
Gauze requested and received accommodations from her employer.
Floor mats were laid on tile floors and she was provided non-skid shoes. A hand-
cart was made available to her for use in open areas. However, even with these
accommodations, Gauze was unable to perform all her duties. It became necessary
for co-workers to assist her. In light of her need of assistance, Gauze’s supervisor
expressed concern about her ability to do her job.
In order to remedy some of her conditions, Gauze planned physician-
recommended surgery. Her last day of physical work prior to her surgery was
December 18, 2013. On December 27, 2013, Gauze underwent surgery to address
1
Kentucky Rules of Civil Procedure.
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issues pertaining to: (1) lumbar spinal fusion; (2) rheumatoid arthritis; (3) lumbar
disc disease; (4) fibromyalgia; (5) cervical disk budge; (6) dizziness; and (7)
numbness. Her recovery was gradual. Her neurosurgeon eventually cleared her to
return to work, but he restricted her to lifting no more than fifty pounds -- and
doing so no more than twice a day. Gauze informed only her direct supervisor of
her restrictions. He advised her there was no “light duty” work available in the
school system for which she qualified. Light work” is defined in KRS2
61.600(5)(c)2 as follows:
Light work shall be work that involves lifting no more
than twenty (20) pounds at a time with frequent lifting or
carrying of objects weighing up to ten (10) pounds. A
job shall be in this category if lifting is infrequently
required but walking and standing are frequently
required, or if the job primarily requires sitting with
pushing and pulling of arm or leg controls. If the person
has the ability to perform substantially all of these
activities, the person shall be deemed capable of light
work. A person deemed capable of light work shall be
deemed capable of sedentary work unless the person has
additional limitations such as the loss of fine dexterity or
inability to sit for long periods.
She did not inform or consult with anyone else in the school system, including the
Human Resources Department. She simply resigned, and her last day of paid
employment was September 30, 2014.
2
Kentucky Revised Statutes.
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Gauze filed an application for early retirement benefits based on her
disability due to the issues listed above. She explained she was unable to lift and
stand for a long period of time. After reviewing her application, the Appellant’s
Medical Review Board recommended denial.
Gauze then requested and was granted an administrative hearing.
After the hearing, the hearing officer prepared findings of fact, conclusions of law,
and a recommended order upholding the Medical Review Board’s denial of
benefits. In relevant part, the recommended order states as follows:
Claimant has failed to establish disability based upon the
cumulative effect of her conditions. Claimant failed to
present her required restrictions to anyone else other than
her direct supervisor. The Record does not show whether
Claimant discussed her claim with Human Resources
prior to filing her notice of resignation as was
recommended by her physician. Regardless, Claimant
testified that she was given multiple accommodations,
and that her co-workers were there for assistance when
she needed it. None of Claimant’s treating physicians
provided statements which would render her conditions
debilitating. Claimant claimed that the majority of her
conditions were controlled medicinally, and the records
did not indicate that these medications were ever
discontinued. For these reasons, Claimant has failed to
establish disability based upon the cumulative effect of
her conditions.
(Record (R.) at 501-02). After the Appellant’s Disability Appeals Committee met,
the Appellant’s Board of Trustees adopted the hearing officer’s recommended
order.
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Contending that the record contained substantial evidence to show
that she was unable to perform her duties due to a disability, Gauze appealed to the
Franklin Circuit Court. Appellant filed its answer on February 5, 2016, but no
action was taken on the case for more than a year. The Clerk of the Franklin
Circuit Court issued a notice to dismiss for lack of prosecution. Gauze filed no
pleadings to show good cause why the case should not be dismissed, and she took
no other action to pursue her appeal. Nevertheless, the Franklin Circuit Court, sua
sponte, issued an order establishing a briefing schedule. Following the submission
of briefs, the Franklin Circuit Court reversed the Appellant’s final order, finding
that it was not supported by substantial evidence and ordering Appellant to
award Gauze disability benefits. This appeal followed.
KRS 13B.160 governs this Court’s review of a circuit court’s prior
review of a final order of an administrative agency. Therefore, our Court must
adhere to KRS 13B.150(2). We may not substitute our judgment for that of the
agency as to the weight of the evidence on questions of fact. KRS 13B.150(2).
Our review of an administrative action is generally focused on the question of
arbitrariness. Kaelin v. City of Louisville, 643 S.W.2d 590, 591 (Ky. 1982). If
substantial evidence exists to support the agency’s findings, those findings must be
upheld despite the presence of conflicting evidence. Ky. Comm’n on Human
Rights v. Fraser, 625 S.W.2d 852, 856 (Ky. 1981). Substantial evidence is
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“evidence of substance and relevant consequence, having the fitness to induce
conviction in the minds of reasonable men.” Ky. State Racing Comm’n v. Fuller,
481 S.W.2d 298, 308 (Ky. 1972). As the sole fact finder, an administrative agency
has broad discretion in evaluating the evidence. Aubrey v. Office of Attorney
General, 994 S.W.2d 516, 519 (Ky. App. 1998). However, its conclusions of law
are subject to our de novo review. Mill Street Church of Christ v. Hogan, 785
S.W.2d 263, 266 (Ky. App. 1990).
Appellant first argues that the circuit court erred by failing to dismiss
the case for lack of prosecution pursuant to CR 77.02(2). CR 77.02 is essentially a
“housekeeping rule” utilized to remove stale cases from a court’s docket. This rule
was created for use by trial courts – not by appellate courts. It provides as follows:
At least once each year trial courts shall review all
pending actions on their dockets. Notice shall be given
to each attorney of record of every case in which no
pretrial step has been taken within the last year, that the
case will be dismissed in thirty days for want of
prosecution except for good cause shown. The court
shall enter an order dismissing without prejudice each
case in which no answer or an insufficient answer to the
notice is made.
CR 77.02(2) (emphasis added). In the case before us, the Franklin Circuit Court
was functioning as an appellate court. KRS 61.645(14) (“Any person adversely
affected by a decision of the board . . . may appeal . . . to the Franklin Circuit
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Court”) (emphasis added). Because the Franklin Circuit Court was acting in an
appellate capacity, arguably CR 77.02 may not be applicable at all.
Regardless, a court always enjoys discretion in deciding whether or
not to dismiss a case for lack of prosecution. Trial courts have wide discretion in
dismissing cases under CR 77.02. Honeycutt v. Norfolk S. Ry. Co., 336 S.W.3d
133, 135 (Ky. App. 2011). The circuit court did not abuse its discretion
proceeding as it did.
Appellant next argues that the circuit court erred by re-weighing the
weight of the evidence. We disagree.
A court cannot substitute its judgment for that of an administrative
agency as to the weight given to evidence bearing on fact issues. KRS 13B.150(2).
The agency as trier of fact “is afforded great latitude in its evaluation of the
evidence heard and the credibility of witnesses appearing before it.” Bowling v.
Nat. Res. and Envtl. Prot. Cabinet, 891 S.W.2d 406, 409-10 (Ky. App. 1994).
With that guideline in mind, the circuit court observed that a
reviewing court may overturn an agency’s decision if the evidence in favor of the
party bearing the burden of proof “is so compelling that no reasonable person
could have failed to be persuaded by it.” Ky. Ret. Sys. v. Ashcraft, 559 S.W.3d
812, 816 (Ky. 2018) (citing McManus v. Ky. Ret. Sys., 124 S.W.3d 454, 458 (Ky.
App. 2003)). The circuit court reversed after “find[ing] the agency’s final order
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is . . . [w]ithout support of substantial evidence on the whole record . . . .” KRS
13B.150(2)(c).
At issue is the sometimes elusive -- if not necessarily subjective --
determination of what is truly substantial evidence. There is no doubt that there is
ample evidence in this record supporting both sides. However, the mere quantity
of evidence is not the test. As noted by both Ashcraft, supra, and McManus,
supra, the qualitative element of the evidence is critical, i.e., that it is “so
compelling” that “no reasonable person could have failed to be persuaded by it.”
Ashcraft, 559 S.W.3d at 816.
In the case before us, the circuit court carefully reviewed the
evidence, recounting in considerable detail the rigorous tasks that Gauze performed
daily in the course of her twenty-three years of service. She was on her feet almost
constantly for eight hours and performed a variety of functions, including heavy
lifting of food products to stock the cafeteria. The court observed as follows:
. . . However, according to the job descriptions in the
record, the heaviest items that she lifted unassisted were
frozen foods and sauces, which weighed approximately
thirty (30) to fifty (50) pounds. RO at 16; AR at 6, 9.
She was required to carry these and other items
approximately eighteen (18) feet and did so for roughly
two and a half (2.5) hours of each day. AR at 6, 9.
Gauze also testified that she lifted eighty (80) pounds of
frozen ground beef, thirty (30) pounds of corn, and thirty
(30) pounds of green beans. RO at 16. She testified that
her job required repetitive “lifting, bending, stooping,
[and] squatting.”
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When asked about “the physical effort requirements
for the employee to perform his or her job duties as of the
last day worked,” both Gauze and her employer noted
that the requirements were “[v]ery hard work on the
back, hands, arms, legs and feet.” AR at 6, 9. Her
supervisor also submitted a memo dated August 26,
2014, in which she explained that “[t]he Food Service
Manager position does not have a light duty. There is a
lot of lifting and standing. Employee must be able to
stand for a long period of time and lift product.”
Opinion and Order, Franklin Circuit Court, October 25, 2018, p. 2.
In a carefully-crafted, well-reasoned opinion, the court undertook a
thorough analysis of all the evidence in this case. Its opinion recited the elements
of KRS 13B.150(2) setting forth the statutory criteria that both govern and
circumscribe the role of a court reviewing a final order of an administrative
agency. The court reasoned that the quality of the evidence wholly supported the
conclusion that Gauze presented evidence so compelling that no reasonable person
could deny her eligibility for disability benefits.
The circuit court reasoned as follows in a portion of its opinion
entitled, “The Agency’s Decision is Not Supported by Substantial Evidence”:
Though the parties presented various arguments, this
case can be resolved under the “substantial evidence”
standard. The evidence available in the Administrative
Record reveals the following: Gauze suffered from
degenerative disc disease and underwent a L4-5
laminectomy, bilateral foramintotomies at L3-4, L4-5,
and L5-S1, excision of a left L4 synovial cyst, and
fosterolateral fusion surgery on December 27, 2013.
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Gauze’s neurosurgeon, Dr. Powell, did not release her to
return to work until August 6, 2014. He conditioned her
release on a fifty (50) pound lifting restriction, and she
was instructed not to lift more than twice a day. Dr.
Powell advised her that this lifting restriction must be
accommodated; otherwise, Gauze must seek permanent
disability status. However, due to the heavy and repeated
lifting required of a Food Service Manager, Gauze’s
employer could not accommodate the lifting restrictions
imposed by Dr. Powell. Accordingly, her last day of paid
employment was on September 30, 2014. Despite this
evidence, the Agency denied Gauze’s application and
now argues that the lifting restrictions imposed by
Gauze’s neurosurgeon were “minor.” [citations omitted].
However, Gauze’s employer indicated that she could not
accommodate the restrictions and stated that there was no
light duty work available for Gauze. This was supported
by the memo submitted by Gauze’s supervisor, the job
descriptions submitted by Gauze and her employer, and
the testimony of Gauze. Thus, the Court finds
Respondent’s characterization of the restriction as
“minor” to be wholly unpersuasive. It is clear that,
regardless of how “minor” the restriction, it could not be
accommodated.
The fact that the restriction could not be
accommodated is not altered by the presence of a
handcart or the assistance that Gauze previously received
from her coworkers. Though Respondent refers to these
forms of assistance to support its denial of Gauze’s
application, the record clearly indicates that Gauze
received such assistance prior to her surgery and the
resulting lifting restrictions. In addition, her supervisor
acknowledged that the handcart provided help only in
open areas of the kitchen and cafeteria; it could not be
used in tighter spaces. Furthermore, her supervisor
explained that each employee is expected to perform his
or her daily tasks and expressed concern upon
discovering that Gauze received help from her
coworkers. Of course, the record also contains the
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supervisor’s unequivocal denial of the request for
accommodation, which was joined by an Agency
Representative. No reasonable person would review
this evidence and fail to be persuaded that the lifting
restriction could not be accommodated.
The agency also places tremendous weight on the fact
that Gauze did not speak directly with or submit a written
accommodations request to Human Resources.
However, from even a cursory review of the record, it is
clear that Human Resources could not have
accommodated the lifting restrictions imposed by Dr.
Powell; at most, the department could have provided her
with a written denial of her accommodations request.
However, though the Agency places great weight on the
fact that the record lacks such a written denial, the Court
again notes that Gauze’s supervisor stated—in
unequivocal terms—that Gauze’s lifting restrictions
could not and would not be accommodated. Any
reasonable person viewing this evidence would
understand that Gauze’s accommodation request was
impossible to fulfill.
Opinion and Order, supra, pp. 9-11 (emphases added).
In summarizing the quantity and quality of the evidence, the circuit
court recapitulated both its substantial nature supporting Gauze and its quantitively
compelling nature:
Even without considering the cumulative effective of the
various other ailments suffered by Gauze, the Court finds
that the Agency erred in denying Gauze’s disability
benefit application. There is substantial evidence on the
record demonstrating that Gauze suffers from
degenerative disc disease and, since at least August 6,
2014, she has been limited to lifting fifty (50) pounds or
less, no more than twice a day. There is also substantial
evidence in the record to show that this restriction cannot
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and would not be accommodated. Thus, there is
substantial evidence, including objective medical
evidence, on the record to show that Gauze is and has
been permanently incapacitated from performing her job
as a Food Service Manager since her last day of paid
employment on September 30, 2014. The evidence is so
overwhelming as to compel a finding in Gauze’s favor.
For these reasons, this Court finds that the Agency’s
decision was not supported by substantial evidence and
the Final Order must be reversed.
Opinion and Order, supra, p. 12 (emphases added).
The Appellant premises its allegation of error on an improper “re-
weighing” of the evidence by the circuit court. Much discussion has focused on
the proper measure of discretion that a court reviewing administrative law matters
must accord to an agency. An agency’s discretion is broad indeed. But it is not
absolute or unfettered. Administrative determinations surely cannot be immune
from the scrutiny of a reviewing court without undermining and sabotaging the
guarantee of the right of at least one appeal under Section 115 of the Constitution
of Kentucky.
And so, as noted at the onset of this opinion, the question remains:
how does a reviewing court comply with its constitutional duty to conduct an
appeal if it is bound to accord to an agency what has become an almost
insurmountable level of deference to agency decisions? The answer has to be one
of finding the proper balance between deference to an agency as set forth by statute
and the constitutional guarantee of a meaningful appeal/review. And in order to be
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meaningful, an appeal must -- perforce -- entail a court’s review of the same
evidence that was initially weighed by an administrative body. Needless to say,
any judicial review could be characterized as “re-weighing” of the evidence. But
that characterization in this case is merely semantic.
All the evidence in this case was clear that Ms. Gauze suffered
severely debilitating injuries after 23 years of service to the Ashland Independent
School District. Yet in a highly conclusory and perfunctory order, the Kentucky
Retirement Systems found otherwise -- essentially by administrative fiat.
The Franklin Circuit Court meticulously reviewed the evidence -- as
was its duty. In its review, the Franklin Circuit Court correctly found repeatedly
that the agency’s order denying Gauze’s benefits clearly was not supported by
substantial evidence. Again, Section 115 of the Kentucky Constitution guarantees
one appeal as a matter of right to every litigant. No statute can override or
supersede that right of constitutional import. And we must presume that an appeal
shall be meaningful and honest rather than an act of perfunctory deference to an
agency decree -- where substantial evidence is merely recited rather than
demonstrated.
We are persuaded that the Franklin Circuit Court wholly complied
with its constitutional mandate to review the evidence in this case. We reject the
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argument that it engaged in an “improper re-weighing” of the evidence or
substitution of its judgment for that of the agency.
Consequently, we AFFIRM the opinion and order of the Franklin
Circuit Court reversing the decision of the Kentucky Retirement Systems.
MAZE, JUDGE, CONCURS.
ACREE, JUDGE, DISSENTS AND DOES NOT FILE SEPARATE
OPINION.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Leigh A. Jordan Davis Jerald Bryan LeMaster
Frankfort, Kentucky Somerset, Kentucky
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