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 9  AN ACT concerning workers compensation; relating to attorney fees pay-
10    able thereunder; the workers compensation board; and the payment
11    of past due benefits; amending K.S.A. 20-2620, 44-536 and 44-5,120
12    and K.S.A. 1996 Supp. 20-2601, 44-551, 44-555c and 44-556 and re-
13    pealing the existing sections.
14
15  Be it enacted by the Legislature of the State of Kansas:
16    Section 1.  K.S.A. 20-2620 is hereby amended to read as follows: 20-
17  2620. (a) Each district magistrate judge holding such position on the ef-
18  fective date of this act may become a member of the retirement system
19  for judges on the first day of the payroll period of the fiscal year ending
20  June 30, 1994, only by filing with the board of trustees of the Kansas
21  public employees retirement system on or before the first day of the
22  payroll period of the fiscal year ending June 30, 1994, a written election
23  to become a member of the system. Failure to file such written election
24  shall be presumed to be an election not to become a member of the
25  system. Such election, whether to become a member or not to become a
26  member, shall be irrevocable. In addition, any such district magistrate
27  judge who makes the election previously provided in this section, may
28  elect to transfer such district magistrate judge's service credit from the
29  Kansas public employees retirement system as provided in subsection (e)
30  of K.S.A. 20-2601 and amendments thereto and subsection (c).
31    (b)  Each person who becomes a district magistrate judge on or after
32  the effective date of this act shall become a member of the retirement
33  system for judges on the first day such person holds the position of district
34  magistrate judge.
35    (c)  The board of trustees of the Kansas public employees retirement
36  system shall transfer to the credit of the district magistrate judge under
37  the retirement system for judges such amounts as may be presently cred-
38  ited to a district magistrate judge's account for contribution under the
39  Kansas public employees retirement system and an equivalent amount to
40  the employer's account for contributions for such district magistrate judge
41  whenever an application for conversion of service under the Kansas public
42  employees retirement system is received from a district magistrate judge.
43  Any district magistrate judge may purchase such service by electing such
SB 347
                                     

 1  purchase prior to retirement by means of a single lump sum payment or
 2  equal annual payments for not to exceed five years. The lump sum or
 3  annual payments shall be determined by the system's actuary by using
 4  the member's final average salary at the time of application, actuarial
 5  assumptions and tables currently in use by the system and the member's
 6  attained age. No participating employer shall pay all or any part of the
 7  cost of service credit purchased by a member under this section.
 8    (d)  Each workers compensation board member holding such position
 9  on the effective date of this act may become a member of the retirement
10  system for judges on the first day of the payroll period of the fiscal year
11  ending June 30, 1998, only by filing with the board of trustees of the
12  Kansas public employees retirement system on or before the first day of
13  the payroll period of the fiscal year ending June 30, 1998, a written elec-
14  tion to become a member of the system. Failure to file such written election
15  shall be presumed to be an election not to become a member of the system.
16  Such election, whether to become a member or not to become a member,
17  shall be irrevocable. In addition, any such workers compensation board
18  member who makes the election previously provided in this section, may
19  elect to transfer such member's service credit from the Kansas public em-
20  ployees retirement system as provided in subsection (e) of K.S.A. 20-2601
21  and amendments thereto and subsection(c).
22    (e)  Each person who becomes a workers compensation board member
23  on or after the effective date of this act shall become a member of the
24  retirement system for judges on the first day such person holds the posi-
25  tion of workers compensation appeals board member.
26    (f)  The board of trustees of the Kansas public employees retirement
27  system shall transfer to the credit of the workers compensation board
28  member under the retirement system for judges such amounts as may be
29  presently credited to a workers compensation board member's account
30  for contributions under the Kansas public employees retirement system
31  and an equivalent amount to the employer's account for contributions for
32  such workers compensation board member whenever an application for
33  conversion of service under the Kansas public employees retirement sys-
34  tem is received from a workers compensation board member. Any workers
35  compensation board member may purchase such service by electing such
36  purchase prior to retirement by means of a single lump sum payment or
37  equal annual payments for not to exceed five years. The lump sum or
38  annual payments shall be determined by the system's actuary by using
39  the member's final average salary at the time of application, actuarial
40  assumptions and tables currently in use by the system and the member's
41  attained age. No participating employer shall pay all or any part of the
42  cost of service credit purchased by a member under this section.
43    Sec. 2.  K.S.A. 44-536 is hereby amended to read as follows: 44-536.
SB 347
                                     

 1    (a) With respect to any and all proceedings in connection with any initial
 2  or original claim for compensation, no claim of any attorney for services
 3  rendered in connection with the securing of compensation for an em-
 4  ployee or the employee's dependents, whether secured by agreement,
 5  order, award or a judgment in any court shall exceed (1) a reasonable
 6  amount for such services or (2) the amount equal to the total of 25% of
 7  that portion of total compensation recovered and paid which is less than
 8  $10,001, 20% of that portion of total compensation recovered and paid
 9  which is greater than $10,000 and less than $20,001, and 15% of that
10  portion of the total amount of the compensation recovered and paid
11  which is in excess of $20,000 25% of the amount of compensation recov-
12  ered and paid, whichever is less, in addition to actual expenses incurred,
13  and subject to the other provisions of this section. Except as hereinafter
14  provided in this section, in death cases, total disability and partial disability
15  cases, the amount of attorney fees shall not be based upon compensation
16  exceed 25% of the sum which would be due under the workers compen-
17  sation act beyond 415 weeks of permanent total disability based upon the
18  employee's average gross weekly wage prior to the date of the accident
19  and subject to the maximum weekly benefits provided in K.S.A. 44-510c
20  and amendments thereto.
21    (b)  All attorney fees in connection with the initial or original claim
22  for compensation shall be fixed pursuant to a written contract between
23  the attorney and the employee or the employee's dependents, which shall
24  be subject to approval by the director in accordance with this section.
25  Every attorney, whether the disposition of the original claim is by agree-
26  ment, settlement, award, judgment or otherwise, shall file the attorney
27  contract with the director for review in accordance with this section. The
28  director shall review each such contract and the fees claimed thereunder
29  as provided in this section and shall approve such contract and fees only
30  if both are in accordance with all provisions of this section. Any claims
31  for attorney fees not in excess of the limits provided in this section and
32  approved by the director shall be enforceable as a lien on the compen-
33  sation due or to become due. The director shall specifically and individ-
34  ually review each claim of an attorney for services rendered under the
35  workers compensation act in each case of a settlement agreement under
36  K.S.A. 44-521 and amendments thereto or a lump-sum payment under
37  K.S.A. 44-531 and amendments thereto as to the reasonableness thereof.
38  In reviewing the reasonableness of such claims for attorney fees, the di-
39  rector shall consider the other provisions of this section and the following:
40    (1)  The written offers of settlement made prior to representation;
41    (2)  the time and labor required, the novelty and difficulty of the ques-
42  tions involved and the skill requisite to perform the legal services prop-
43  erly;
SB 347
                                     

 1    (3)  the likelihood, if apparent to the employee or the employee's de-
 2  pendents, that the acceptance of the particular case will preclude other
 3  employment by the attorney;
 4    (4)  the fee customarily charged in the locality for similar legal serv-
 5  ices;
 6    (5)  the amount of compensation involved and the results obtained;
 7    (6)  the time limitations imposed by the employee, by the employee's
 8  dependents or by the circumstances;
 9    (7)  the nature and length of the professional relationship with the
10  employee or the employee's dependents; and
11    (8)  the experience, reputation and ability of the attorney or attorneys
12  performing the services.
13    (c)  No attorney fees shall be charged with respect to compensation
14  for medical expenses, except where an allowance is made for proposed
15  or future treatment as a part of a compromise settlement. No attorney
16  fees shall be charged with respect to vocational rehabilitation benefits.
17    (d)  No attorney fees shall be charged in connection with any tem-
18  porary total disability compensation unless the payment of such compen-
19  sation in the proper amount is refused, or unless such compensation is
20  terminated by the employer and the payment of such compensation is
21  obtained or reinstated by the efforts of the attorney, whether by agree-
22  ment, settlement, award or judgment.
23    (e)  With regard to any claim where there is no dispute as to any of
24  the material issues prior to representation of the claimant or claimants
25  by an attorney, or where the amount to be paid for compensation does
26  not exceed the offer made to the claimant or claimants by the employer
27  prior to representation by an attorney, the fees to any such attorney shall
28  not exceed either the sum of $250 or a reasonable fee for the time actually
29  spent by the attorney, as determined by the director, whichever is greater,
30  exclusive of reasonable attorney fees for any representation by such at-
31  torney in reference to any necessary probate proceedings. With regard to
32  any claim where the amount to be paid for compensation does exceed
33  the written offer made prior to representation, fees for services rendered
34  by an attorney shall not exceed the lesser of (1) a reasonable amount for
35  such services or (2) the amount equal to the total of 25% of that portion
36  of the amount of compensation recovered and paid, which is in excess of
37  the amount of compensation offered to the employee by the employer
38  prior to the attorney's entry of appearance in the claim and which is less
39  than $10,001, 20% of that portion of the amount of compensation recov-
40  ered and paid, which is in excess of the amount of compensation offered
41  to the employee prior to the attorney's entry of appearance in the claim
42  and which is more than $10,000 and less than $20,001 and 15% of that
43  portion of the amount of compensation recovered and paid, which is in
SB 347
                                     

 1  excess of the amount of compensation offered to the employee prior to
 2  the attorney's entry of appearance in the claim and which is in excess of
 3  $20,000, as specified in subsection (a).
 4    (f)  All attorney fees for representation of an employee or the em-
 5  ployee's dependents shall be only recoverable from compensation actually
 6  paid to such employee or dependents, except as specifically provided
 7  otherwise in subsection (g) and (h).
 8    (g)  In the event any attorney renders services to an employee or the
 9  employee's dependents, subsequent to the ultimate disposition of the
10  initial and original claim, and in connection with an application for review
11  and modification, a hearing for additional medical benefits, an application
12  for penalties or otherwise, such attorney shall be entitled to reasonable
13  attorney fees for such services, in addition to attorney fees received or
14  which the attorney is entitled to receive by contract in connection with
15  the original claim, and such attorney fees shall be awarded by the director
16  on the basis of the reasonable and customary charges in the locality for
17  such services and not on a contingent fee basis. If the services rendered
18  under this subsection by an attorney result in an additional award of dis-
19  ability compensation, the attorney fees shall be paid from such amounts
20  of disability compensation. If such services involve no additional award
21  of disability compensation, but result in an additional award of medical
22  compensation, penalties, or other benefits, the director shall fix the proper
23  amount of such attorney's attorney fees in accordance with this subsection
24  and such fees shall be paid by the employer or the workers compensation
25  fund, if the fund is liable for compensation pursuant to K.S.A. 44-567 and
26  amendments thereto, to the extent of the liability of the fund. If the
27  services rendered herein result in a denial of additional compensation, the
28  director may authorize a fee to be paid by claimant or respondent.
29    (h)  Any and all disputes regarding attorney fees, whether such dis-
30  putes relate to which of one or more attorneys represents the claimant
31  or claimants or is entitled to the attorney fees, or a division of attorney
32  fees where the claimant or claimants are or have been represented by
33  more than one attorney, or any other disputes concerning attorney fees
34  or contracts for attorney fees, shall be heard and determined by the ad-
35  ministrative law judge, after reasonable notice to all interested parties and
36  attorneys.
37    (i)  After reasonable notice and hearing before the administrative law
38  judge, any attorney found to be in violation of any provision of this section
39  shall be required to make restitution of any excess fees charged.
40    Sec. 3.  K.S.A. 44-5,120 is hereby amended to read as follows: 44-
41  5,120. (a) The director of workers compensation is hereby authorized and
42  directed to establish a section to implement a system for monitoring, re-
43  porting and investigating suspected fraud or abuse by any persons who
SB 347
                                     

 1  are not licensed or regulated by the commissioner of insurance in con-
 2  nection with securing the liability of an employer under the workers com-
 3  pensation act or in connection with claims or benefits thereunder.
 4    (1)  Investigators for the section created in subsection (a) serve under
 5  the direction of the assistant attorney general as appointed under K.S.A.
 6  44-5,124, and amendments thereto, and are hereby vested with the power
 7  and authority of peace and police officers, in the execution of duties im-
 8  posed upon the director of workers compensation and the attorney general
 9  by this act and in enforcing the provisions of this act.
10    (2)  The investigators are deemed as enforcement agents for the divi-
11  sion of workers compensation fraud and abuse section, and shall have the
12  authority to make arrests, conduct searches and seizures, serve subpoenas,
13  and carry firearms while investigating violations of this act and during
14  the routine conduct of their duties as determined by the director or as-
15  sistant attorney general. In addition to the above, these enforcement of-
16  ficers shall have the authority to make arrests, conduct searches and sei-
17  zures and generally to enforce all the criminal laws of the state as
18  violations of those laws are encountered by such employees or agents
19  during the routine performance of their duties. In addition to or in lieu
20  of the above, these enforcement agents shall have the authority to issue
21  notices to appear pursuant to K.S.A. 22-2408 and amendments thereto.
22  No enforcement agent under this section shall be certified to carry fire-
23  arms under the provisions of this section without having first successfully
24  completed the firearm training course or courses as prescribed for law
25  enforcement officers under subsection (a) of K.S.A. 74-5604a and amend-
26  ments thereto. The director or the assistant attorney general may adopt
27  rules and regulation prescribing other training required for such enforce-
28  ment agents.
29    (b)   The commissioner of insurance is hereby authorized and directed
30  to establish a system for monitoring, reporting and investigating suspected
31  fraud or abuse by any persons who are licensed or regulated by the com-
32  missioner of insurance in connection with securing the liability of an em-
33  ployer under the workers compensation act or in connection with claims
34  thereunder.
35    (b) (c)  This section applies to:
36    (1)  Persons claiming benefits under the workers compensation act;
37    (2)  employers subject to the requirements of the workers compen-
38  sation act;
39    (3)  insurance companies including group-funded self-insurance plans
40  covering Kansas employers and employees;
41    (4)  any person, corporation, business, health care facility that is or-
42  ganized either for profit or not-for-profit and that renders medical care,
43  treatment or services in accordance with the provisions of the workers
SB 347
                                     

 1  compensation act to an injured employee who is covered thereunder; and
 2    (5)  attorneys and other representatives of employers, employees, in-
 3  surers or other entities that are subject to the workers compensation act.
 4    (c) (d)  The commissioner of insurance may examine the workers com-
 5  pensation records of insurance companies or self-insurers as necessary to
 6  ensure compliance with the workers compensation act. Each insurance
 7  company providing workers compensation insurance in Kansas, the com-
 8  pany's agents, and those entities that the company has contracted to pro-
 9  vide review services or to monitor services and practices under the work-
10  ers compensation act shall cooperate with the commissioner of insurance,
11  and shall make available to the commissioner any records or other nec-
12  essary information requested by the commissioner. The commissioner of
13  insurance shall conduct an examination authorized by this subsection in
14  accordance with the provisions of K.S.A. 40-222 and 40-223 and amend-
15  ments thereto.
16    (d) (e)  Fraudulent or abusive acts or practices for purposes of the
17  workers compensation act include, but are not limited to, willfully or
18  intentionally:
19    (1)  Collecting from an employee, through a deduction from wages or
20  a subsequent fee, any premium or other fee paid by the employer to
21  obtain workers compensation insurance coverage;
22    (2)  misrepresenting to an insurance company or the insurance de-
23  partment, the classification of employees of an employer, or the location,
24  number of employees, or true identity of the employer with the intent to
25  lessen or reduce the premium otherwise chargeable for workers com-
26  pensation insurance coverage;
27    (3)  lending money to the claimant during the pendency of the work-
28  ers compensation claim by an attorney representing the claimant, but this
29  provision shall not prohibit the attorney from assisting the claimant in
30  obtaining financial assistance from another source, except that (A) the
31  attorney shall not have a financial interest, directly or indirectly, in the
32  source from which the loan or other financial assistance is secured and
33  (B) the attorney shall not be personally liable in any way for the credit
34  extended to the claimant;
35    (4)  obtaining, denying or attempting to obtain or deny payments of
36  workers compensation benefits for any person by:
37    (A)  Making a false or misleading statement;
38    (B)  misrepresenting or concealing a material fact;
39    (C)  fabricating, altering, concealing or destroying a document; or
40    (D)  conspiring to commit an act specified by clauses (A), (B) or (C)
41  of this subsection (d)(4);
42    (5)  bringing, prosecuting or defending an action for compensation
43  under the workers compensation act or requesting initiation of an ad-
SB 347
                                     

 1  ministrative violation proceeding that, in either case, has no basis in fact
 2  or is not warranted by existing law or a good faith argument for the ex-
 3  tension, modification or reversal of existing law;
 4    (6)  breaching a provision of an agreement approved by the director;
 5    (7)  withholding amounts not authorized by the director from the em-
 6  ployee's or legal beneficiary's weekly compensation payment or from ad-
 7  vances from any such payment;
 8    (8)  entering into a settlement or agreement without the knowledge
 9  and consent of the employee or legal beneficiary;
10    (9)  taking a fee or withholding expenses in excess of the amounts
11  authorized by the director;
12    (10)  refusing or failing to make prompt delivery to the employee or
13  legal beneficiary of funds belonging to the employee or legal beneficiary
14  as a result of a settlement, agreement, order or award;
15    (11)  misrepresenting the provisions of the workers compensation act
16  to an employee, an employer, a health care provider or a legal beneficiary;
17    (12)  instructing employers not to file required documents with the
18  director;
19    (13)  instructing or encouraging employers to violate the employee's
20  right to medical benefits under the workers compensation act;
21    (14)  failing to tender promptly full death benefits if a clear and le-
22  gitimate dispute does not exist as to the liability of the insurance company,
23  self-insured employer or group-funded self-insurance plan;
24    (15)  failing to confirm medical compensation benefits coverage to any
25  person or facility providing medical treatment to a claimant if a clear and
26  legitimate dispute does not exist as to the liability of the insurance carrier,
27  self-insured employer or group-funded self-insurance plan;
28    (16)  failing to initiate or reinstate compensation when due if a clear
29  and legitimate dispute does not exist as to the liability of the insurance
30  company, self-insured employer or group-funded self-insurance plan;
31    (17)  misrepresenting the reason for not paying compensation or ter-
32  minating or reducing the payment of compensation;
33    (18)  refusing to pay compensation as and when the compensation is
34  due;
35    (19)  refusing to pay any order awarding compensation; and
36    (20)  refusing to timely file required reports or records under the
37  workers compensation act.
38    (e) (f)  Whenever the director or the commissioner of insurance has
39  reason to believe that any person has engaged or is engaging in any fraud-
40  ulent or abusive act or practice in connection with the conduct of Kansas
41  workers compensation insurance, claims, benefits or services in this state,
42  that such fraudulent or abusive act or practice is not subject to possible
43  proceedings under K.S.A. 40-2401 through 40-2421 and amendments
SB 347
                                     

 1  thereto by the commissioner of insurance, and that a proceeding by the
 2  director or the commissioner of insurance, in the case of any person
 3  licensed or regulated by the commissioner, with respect thereto would
 4  be in the interest of the public, the director or the commissioner of in-
 5  surance, in the case of any person licensed or regulated by the commis-
 6  sioner, shall issue and serve upon such person a statement of the charges
 7  with respect thereto and shall conduct a hearing thereon in accordance
 8  with the provisions of the Kansas administrative procedure act.
 9    (f) (g)  If, after such hearing, the director or the commissioner of
10  insurance, in the case of any person licensed or regulated by the com-
11  missioner, determines that the person charged has engaged in any fraud-
12  ulent or abusive act or practice, any costs incurred as a result of con-
13  ducting any administrative hearing authorized under the provisions of this
14  section may be assessed against the person or persons found to have
15  engaged in such acts. In an appropriate case to reimburse costs incurred,
16  such costs may be awarded to a complainant. As used in this subsection,
17  ``costs'' include witness fees, mileage allowances, any costs associated with
18  reproduction of documents which become a part of the hearing record
19  and the expense of making a record of the hearing.
20    (g) (h)  If, after such hearing, the director or the commissioner of
21  insurance, in the case of any person licensed or regulated by the com-
22  missioner, determines that the person or persons charged have engaged
23  in a fraudulent or abusive act or practice the director or the commissioner
24  of insurance, in the case of any person licensed or regulated by the com-
25  missioner, shall issue an order requiring such person to cease and desist
26  from engaging in such act or practice and, in the exercise of discretion,
27  may order any one or more of the following:
28    (1)  Payment of a monetary penalty of not more than $1,000 for each
29  and every act constituting the fraudulent or abusive act or practice, but
30  not exceeding an aggregate penalty of $2,500 for any six-month period;
31    (2)  redress of the injury by requiring the refund of any premiums
32  paid by and requiring the payment of any moneys withheld from, any
33  employee, employer, insurance company or other person or entity ad-
34  versely affected by the act constituting a fraudulent or abusive act or
35  practice;
36    (3)  repayment of an amount equal to the total amount that the person
37  received as benefits or any other payment under the workers compen-
38  sation act and any amount that the person otherwise benefited as a result
39  of an act constituting a fraudulent or abusive act or practice, with interest
40  thereon determined so that such total amount, plus any accrued interest
41  thereon, bears interest, from the date of the payment of benefits or other
42  such payment or the date the person was benefited, at the current rate
43  of interest prescribed by law for judgments under subsection (e)(1) of
SB 347
                                     

 1  K.S.A. 16-204 and amendments thereto per month or fraction of a month
 2  until repayment.
 3    (h) (i)  After the expiration of the time allowed for filing a petition for
 4  review of an order issued under this section, if no such petition has been
 5  duly filed within such time, the director at any time, after notice and
 6  opportunity for hearing in accordance with the provisions of the Kansas
 7  administrative procedure act, may reopen and alter, modify or set aside,
 8  in whole or in part, any order issued under this section, whenever in the
 9  director's opinion conditions of fact or of law have so changed as to re-
10  quire such action or if the public interest so requires.
11    (i) (j)  Upon the order of the director or the commissioner of insur-
12  ance, in the case of any person licensed or regulated by the commissioner,
13  after notice and hearing in accordance with the provisions of the Kansas
14  administrative procedure act, any person who violates a cease and desist
15  order of the director or the commissioner of insurance, in the case of any
16  person licensed or regulated by the commissioner, issued under this sec-
17  tion may be subject, at the discretion of the director or the commissioner
18  of insurance, in the case of any person licensed or regulated by the com-
19  missioner, to a monetary penalty of not more than $10,000 for each and
20  every act or violation, but not exceeding an aggregate penalty of $50,000
21  for any six-month period in addition to any penalty imposed pursuant to
22  subsection (g).
23    (j) (k)  Any civil fine imposed under this section shall be subject to
24  review in accordance with the act for judicial review and civil enforcement
25  of agency actions in the district court in Shawnee county.
26    (k) (l)  All moneys received under this section for costs assessed, which
27  are not awarded to a complainant, or monetary penalties imposed shall
28  be deposited in the state treasury and credited to the workmen's workers
29  compensation fee fund.
30    Sec. 4.  K.S.A. 1996 Supp. 20-2601 is hereby amended to read as
31  follows: 20-2601. As used in K.S.A. 20-2601 et seq. and amendments
32  thereto, unless the context otherwise requires:
33    (a)  ``Fund'' means the Kansas public employees retirement fund cre-
34  ated by K.S.A. 74-4921 and amendments thereto;
35    (b)  ``retirement system for judges'' means the system provided for in
36  the acts contained in article 26 of chapter 20 of the Kansas Statutes An-
37  notated and any acts amendatory thereof or supplemental amendments
38  thereto;
39    (c)  ``judge'' means any duly elected or appointed justice of the su-
40  preme court, judge of the court of appeals or judge of any district court
41  of Kansas, who serves in such capacity on and after the effective date of
42  this act and commencing with the first day of the first payroll period of
43  the fiscal year ending June 30, 1994, any district magistrate judge who
SB 347
                                     

 1  makes an election as provided in K.S.A. 20-2620 and amendments thereto
 2  or who is elected or appointed on or after July 1, 1993 and commencing
 3  with the first day of the first payroll period of the fiscal year ending June
 4  30, 1998, any workers compensation board member who makes an elec-
 5  tion as provided in K.S.A. 20-2620 and amendments thereto or who as-
 6  sumes office on or after July 1, 1998;
 7    (d)  ``member'' means a judge who is making the required contribu-
 8  tions to the fund, or any former judge who has made the required con-
 9  tributions to the fund and has not received a refund of the judge's ac-
10  cumulated contributions;
11    (e)  ``prior service'' means all the periods of time any judge has served
12  in such capacity prior to the effective date of this act except that district
13  magistrate judges and workers compensation board members who have
14  service credit under the Kansas public employees retirement system must
15  make application to the board and make payment as required by the board
16  to transfer service credit from the Kansas public employees retirement
17  system to the retirement system for judges;
18    (f)  ``current service'' means the period of service any judge serves in
19  such capacity from and after the effective date of this act;
20    (g)  ``military service'' means active service of any judge in any of the
21  armed forces of the United States or in the United States public health
22  service prior or subsequent to the effective date of this act, provided such
23  service commenced while such judge was holding the office of judge. The
24  board has the power to determine when a national emergency exists or
25  has existed for the purpose of applying this definition and provision;
26    (h)  ``total years of service'' means the total number of years served as
27  a judge, including prior service, military service and current service as
28  defined by this section, computed to the nearest quarter;
29    (i)  ``salary'' means the statutory salary of a judge;
30    (j)  ``final average salary'' means that determined as provided in sub-
31  section (b) of K.S.A. 20-2610 and amendments thereto;
32    (k)  ``beneficiary'' means any natural person or persons or estate des-
33  ignated by a judge in the latest designation of beneficiary received in the
34  retirement system office to receive any benefits as provided for by this
35  act. Except as provided in subsection (n), if there is no named beneficiary
36  living at the time of the judge's death, any benefits provided for by this
37  act shall be paid to: (1) The judge's surviving spouse; (2) the judge's
38  dependent child or children; (3) the judge's dependent parent or parents;
39    (4) the judge's nondependent child or children; (5) the judge's nonde-
40  pendent parent or parents; (6) the estate of the deceased member; in the
41  order of preference as specified in this subsection. Any payment made to
42  a named beneficiary shall be a full discharge and release to the system
43  from any further claims. Any payment made to a beneficiary as provided
SB 347
                                     

 1  in clauses (1), (2), (3), (4), (5) or (6) of this subsection, as determined by
 2  the board, shall be a full discharge and release to the system from any
 3  further claims. Whenever any payment is payable to more than one ben-
 4  eficiary such payment shall be made to such beneficiaries jointly. Any
 5  benefits payable to a beneficiary or beneficiaries who are minor children
 6  or incompetent persons shall be made in the name of the beneficiary or
 7  beneficiaries and delivered to the lawfully appointed conservator of such
 8  beneficiaries who was nominated by will or as otherwise provided by law,
 9  except that in those cases where the benefit involves only the payment of
10  the judge's accumulated contributions with interest as provided by this
11  act in an amount not to exceed $500, the board is hereby authorized in
12  its discretion without the appointment of a conservator or the giving of a
13  bond to pay such amount as is due to the minor or minors themselves,
14  any payment so made shall be a full discharge and release to the system
15  from any further claims. Designations of beneficiaries by a member who
16  is a member of more than one retirement system made on or after July
17  1, 1987, shall be the basis of any benefits payable under all systems unless
18  otherwise provided by law;
19    (l)  ``annuity'' means a series of equal monthly payments, payable at
20  the end of each calendar month during the life of a retired judge, of
21  which payments the first payment shall be made as of the end of the
22  calendar month in which such annuity was awarded and the last payment
23  shall be at the end of the calendar month in which such judge dies. The
24  first payment shall include all amounts accrued since the effective date
25  of the award of annuities, including a pro rata portion of the monthly
26  amount of any fraction of a month elapsing between the effective date of
27  such annuity and the end of the calendar month in which such annuity
28  began;
29    (m)  ``board'' means the board of trustees of the Kansas public em-
30  ployees retirement system;
31    (n)  ``trust'' means an express trust created by any trust instrument,
32  including a will, and designated by a member to receive benefits and other
33  amounts payable under K.S.A. 20-2607, 20-2610a and 20-2612, and
34  amendments thereto, instead of a beneficiary. A designation of a trust
35  shall be filed with the board. If there is a designated trust at the time of
36  the member's death, all benefits and other amounts payable under K.S.A.
37  20-2607, 20-2610a and 20-2612, and amendments thereto, shall be paid
38  to the trust instead of the member's beneficiary. If no will is admitted to
39  probate within six months after the death of the member or no trustee
40  qualifies within such six months or if the designated trust fails, for any
41  reason whatsoever, any benefits and other amounts payable under K.S.A.
42  20-2607, 20-2610a and 20-2612, and amendments thereto, shall be paid
43  to the member's beneficiary and any payments so made shall be a full
SB 347
                                     

 1  discharge and release to the retirement system for judges from any fur-
 2  ther claims;
 3    (o)  ``accumulated contributions'' means the sum of all contributions
 4  by a member to the retirement system for judges which are credited to
 5  the member's account, with interest allowed thereon after June 30, 1982;
 6  and
 7    (p)  except as otherwise provided in K.S.A. 20-2601 et seq. and
 8  amendments thereto, words and phrases used in K.S.A. 20-2601 et seq.
 9  and amendments thereto shall have the same meanings ascribed to them
10  as are defined in K.S.A. 74-4902 and amendments thereto.
11    Sec. 5.  K.S.A. 1996 Supp. 44-551 is hereby amended to read as fol-
12  lows: 44-551. (a) The duties of the assistant directors of workers com-
13  pensation shall include but not be limited to acting in the capacity of an
14  administrative law judge.
15    (b) (1)  Administrative law judges shall have power to administer
16  oaths, certify official acts, take depositions, issue subpoenas, compel the
17  attendance of witnesses and the production of books, accounts, papers,
18  documents and records to the same extent as is conferred on the district
19  courts of this state, and may conduct an investigation, inquiry or hearing
20  on all matters before the administrative law judges. All acts, findings,
21  awards, decisions, rulings or modifications of findings or awards made by
22  an administrative law judge shall be subject to review by the board upon
23  written request of any interested party within 10 days. Review by the
24  board shall be a prerequisite to judicial review as provided for in K.S.A.
25  44-556 and amendments thereto. On any such review, the board shall
26  have authority to grant or refuse compensation, or to increase or diminish
27  any award of compensation or to remand any matter to the administrative
28  law judge for further proceedings.
29    (2) (A)  If an administrative law judge has entered a preliminary
30  award under K.S.A. 44-534a and amendments thereto or an interlocutory
31  order, a review by the board shall not be conducted under this section
32  unless it is alleged that the administrative law judge exceeded the admin-
33  istrative law judge's jurisdiction in granting or denying the relief re-
34  quested at the preliminary hearing. Such an appeal from a preliminary
35  award or an interlocutory order may be heard and decided by a single
36  member of the board. Members of the board shall hear such preliminary
37  appeals on a rotating basis and the individual board member who decides
38  the appeal shall sign each such decision. The orders of the board on any
39  acts, findings, awards, decisions, rulings or modifications of findings or
40  awards shall be issued within 30 days from the date arguments were
41  presented by the parties.
42    (B)  If an order on review is not issued by the board within the ap-
43  plicable time period prescribed by subsection (b)(2)(A), medical com-
SB 347
                                     

 1  pensation and any disability compensation as provided in the award of
 2  the administrative law judge shall be paid commencing with the first day
 3  after such time period and shall continue to be paid until the order of
 4  the board is issued, except that no payments shall be made under this
 5  provision for any period before the first day after such time period. Noth-
 6  ing in this section shall be construed to limit or restrict any other remedies
 7  available to any party to a claim under any other statute.
 8    (C)  In any case in which the final award of an administrative law judge
 9  is appealed to the board for review under this section and in which the
10  compensability is not an issue to be decided on review by the board,
11  medical compensation shall be payable in accordance with the award of
12  the administrative law judge and shall not be stayed pending such review.
13  The employee may proceed under K.S.A. 44-534a and amendments
14  thereto and may have a hearing in accordance with that statute to enforce
15  the provisions of this subsection.
16    (c)  Each assistant director and each administrative law judge or spe-
17  cial administrative law judge shall be allowed all reasonable and necessary
18  expenses actually incurred while in the actual discharge of official duties
19  in administering the workers compensation act, but such expenses shall
20  be sworn to by the person incurring the same and be approved by the
21  secretary.
22    (d)  In case of emergency the director may appoint special local ad-
23  ministrative law judges and assign to them the examination and hearing
24  of any designated case or cases. Such special local administrative law
25  judges shall be attorneys and admitted to practice law in the state of
26  Kansas and shall, as to all cases assigned to them, exercise the same pow-
27  ers as provided by this section for the regular administrative law judges.
28  Special local administrative law judges shall receive a fee commensurate
29  with the services rendered as fixed by rules and regulations adopted by
30  the director. The fees prescribed by this section prior to the effective date
31  of this act shall be effective until different fees are fixed by such rules
32  and regulations.
33    (e)  All special local administrative law judge's fees and expenses shall
34  be taxed as cost in each case heard by such special local administrative
35  law judge and when collected shall be paid directly to such special local
36  administrative law judge by the party charged with the payment of the
37  same.
38    (f)  Except as provided for judicial review under K.S.A. 44-556 and
39  amendments thereto, the decisions and awards of the board shall be final.
40    Sec. 6.  K.S.A. 1996 Supp. 44-555c is hereby amended to read as
41  follows: 44-555c. (a) There is hereby established the workers compen-
42  sation board. The board shall have exclusive jurisdiction to review all
43  decisions, findings, orders and awards of compensation of administrative
SB 347
                                     

 1  law judges under the workers compensation act. The review by the board
 2  shall be upon questions of law and fact as presented and shown by a
 3  transcript of the evidence and the proceedings as presented, had and
 4  introduced before the administrative law judge. The board shall be within
 5  the division of workers compensation of the department of human re-
 6  sources and all budgeting, personnel, purchasing and related manage-
 7  ment functions of the board shall be administered under the supervision
 8  and direction of the secretary of human resources. The board shall consist
 9  of five six members who shall be appointed by the secretary in accordance
10  with this section and who shall each serve for a term of four years, except
11  as provided for the first members appointed to the board under subsec-
12  tion (f).
13    (b)  Each board member shall be an attorney regularly admitted to
14  practice law in Kansas for a period of at least seven years and shall have
15  engaged in the active practice of law during such period as a lawyer, judge
16  of a court of record or any court in Kansas or a full-time teacher of law
17  in an accredited law school, or any combination of such types of practice.
18    (c)  Each board member shall receive an annual salary compensation
19  and benefits in an amount equal to the salary that prescribed by law for
20  a district judge, except that the member who is the chairperson of the
21  workers compensation board shall receive an annual salary compensation
22  and benefits in an amount equal to the salary compensation and benefits
23  prescribed for a district judge designated as administrative judge of a
24  district court of Kansas. The board members shall devote full time to the
25  duties of such office and shall not engage in the private practice of law
26  during their term of office. No board member may receive additional
27  compensation for official services performed by the board member. Each
28  board member shall be reimbursed for expenses incurred in the perform-
29  ance of such official duties under the same circumstances and to the same
30  extent as judges of the district court are reimbursed for such expenses.
31    (d)  Applications for membership on the board shall be submitted to
32  the director of workers compensation. The director shall determine if an
33  applicant meets the qualifications for membership on the board pre-
34  scribed in subsection (b). Qualified applicants for the board will be sub-
35  mitted by the director to the workers compensation board nominating
36  committee for consideration.
37    (e)  There is hereby established the workers compensation board
38  nominating committee which shall be composed of two members ap-
39  pointed as follows:   The Kansas AFL-CIO and the Kansas chamber of
40  commerce and industry shall each select one representative to serve on
41  the workers compensation board nominating committee and shall give
42  written notice of the selection to the secretary who shall appoint such
43  representatives to the committee. In the event of a vacancy occurring for
SB 347
                                     

 1  any reason on the nominating committee, the respective member shall
 2  be replaced by the appointing organization with written notice of the
 3  appointment to the secretary of human resources within 30 days of such
 4  vacancy.
 5    (f) (1)  Upon being notified of any vacancy on the board or of the
 6  need to appoint a member pro tem under subsection (i), the nominating
 7  committee shall consider all qualified applicants submitted by the director
 8  for the vacant position on the board or the member pro tem position and
 9  nominate a person qualified therefor. The nominating committee shall
10  be required to reach unanimous agreement on any nomination to the
11  board. With respect to each person nominated, the secretary either shall
12  accept and appoint the person nominated by the nominating committee
13  to the position on the board for which the nomination was made or shall
14  reject the nomination and request the nominating committee to nominate
15  another person for that position. Upon receipt of any such request for
16  the nomination of another person, the nominating committee shall nom-
17  inate another person for that position in the same manner.
18    (2)  The first members of the board established by this section are
19  hereby appointed as follows:  Each person who was a member of the
20  workers compensation board which was in existence on January 12, 1995,
21  is hereby appointed, effective January 13, 1995, as a member of the board
22  established by this section. The term of office of each person so appointed
23  as a member of the board established by this section is for the period
24  equal to the remainder of the term of office such person had as of January
25  12, 1995, as a member of the workers compensation board which was in
26  existence on January 12, 1995.
27    (3)  Each member of the board shall hold office for the term of the
28  appointment and until the successor shall have been appointed. Succes-
29  sors to such members shall be appointed for terms of four years.
30    (4)  If a vacancy should occur on the board during the term of a mem-
31  ber, the nominating committee shall nominate an individual from the
32  qualified applicants submitted by the director to complete the remainder
33  of the unexpired portion of the term. With respect to each person so
34  nominated, the secretary either shall accept and appoint the person nom-
35  inated to the board or shall reject the nomination and request the nom-
36  inating committee to nominate another person for the position. Upon
37  receipt of any such request for the nomination of another person, the
38  nominating committee shall nominate another person for the position in
39  the same manner.
40    (g)  Following the completion of a term, board members who wish to
41  be considered for reappointment to the board shall be deemed to have
42  met the qualification requirements for selection to the board and shall
43  be considered for renomination by the workers compensation board nom-
SB 347
                                     

 1  inating committee.
 2    (h)  The members of the board shall annually elect one member to
 3  serve as chairperson.
 4    (i)  If illness or other temporary disability of a member of the board
 5  will not permit the member to serve during a case or in any case in which
 6  a member of the board must be excused from serving because of a conflict
 7  or, is otherwise disqualified with regard to such case, or if a need should
 8  otherwise occur, the director shall notify the workers compensation nom-
 9  inating committee of the need to appoint a member pro tem. Upon re-
10  ceipt of such notice, the committee shall act as soon as possible and
11  nominate a qualified person to serve as member pro tem in such case in
12  accordance with subsection (f). Each member pro tem shall receive com-
13  pensation at the same rate as a member of the board receives, prorated
14  for the days of actual service as a member pro tem and shall receive
15  expenses under the same circumstances and to the same extent as a mem-
16  ber of the board receives. Each member pro tem shall have all the powers,
17  duties and functions of a member of the board with regard to the case.
18    (j)  The board shall maintain principal offices in Topeka, Kansas, and
19  the board may conduct hearings at a courthouse of any county in Kansas
20  or at another location specified by the board. The secretary of human
21  resources shall provide a courtroom and other suitable quarters in To-
22  peka, Kansas, for the use of the board and its staff. When the board
23  conducts hearings at any location other than in Topeka, Kansas, the di-
24  rector shall make suitable arrangements for such hearings. Subject to the
25  provisions of appropriation acts, the director shall provide such supplies
26  and equipment and shall appoint such support personnel as may be nec-
27  essary for the board to fulfill the duties imposed by this act, subject to
28  approval by the secretary.
29    (k)  For purposes of hearing cases, the board may sit together or in
30  panels of two members or more, designated by the chairperson of the
31  board, except that an appeal from a preliminary award entered under
32  K.S.A. 44-534a and amendments thereto may be heard by a panel of one
33  member designated by the chairperson. All members of the board shall
34  determine each matter before the board. All decisions, reviews and de-
35  terminations by the board, except review of preliminary awards pursuant
36  to K.S.A. 44-534a and amendments thereto and interlocutory orders, shall
37  be approved in writing by at least three two board members. Whenever
38  the board enters a final order in any proceeding, the board shall make
39  written findings of fact and conclusions of law forming the basis of the
40  board's determination and final order. The findings of fact and conclu-
41  sions of law of the board shall be made a part of the final order. The
42  board shall mail a copy of the final order of the board to all parties to the
43  proceeding within three days following the issuance of the final order.
SB 347
                                     

 1    (l)  Commencing with the first day of the first payroll period of the
 2  fiscal year ending June 30, 1998, board members who make an election
 3  as provided in K.S.A. 20-2620, and amendments thereto, and board mem-
 4  bers who are elected or appointed on and after July 1, 1998, shall become
 5  members of the retirement system for judges and shall be subject to and
 6  covered by the provisions of article 26 of chapter 20 of the Kansas Statutes
 7  Annotated. For such purpose a board member shall be considered a dis-
 8  trict judge. If, upon entry into the retirement system for judges, a board
 9  member has prior service under the Kansas public employees retirement
10  system, any retirement benefits to which such judge was entitled under
11  the Kansas public employees retirement system and retirement benefits
12  under the retirement system for judges shall become vested whenever the
13  total service under both systems equals ten years, and upon such board
14  member's retirement, each such retirement system shall be liable for the
15  payment of retirement benefits under such system in the proportion that
16  the years of such board member's service under such system bears to such
17  board member's total years of service under both such systems.
18    Sec. 7.  K.S.A. 44-556 is hereby amended to read as follows: 44-556.
19    (a) Any action of the board pursuant to the workers compensation act,
20  other than the disposition of appeals of preliminary orders or awards
21  under K.S.A. 44-534a and amendments thereto, shall be subject to review
22  in accordance with the act for judicial review and civil enforcement of
23  agency actions by appeal directly to the court of appeals. Any party may
24  appeal from a final order of the board by filing an appeal with the court
25  of appeals within 30 days of the date of the final order. Such review shall
26  be upon questions of law.
27    (b)  Commencement of an action for review by the court of appeals
28  shall not stay the payment of any compensation due for the ten-week
29  period next preceding the board's decision and for the period of time
30  after the board's decision and prior to the decision of the court of appeals
31  on review from the date of the claims filing through the pendency of the
32  appeal so long as the amount paid does not exceed the amount awarded
33  by the board's decision.
34    (c)  If review is sought on any order entered under the workers com-
35  pensation act prior to October 1, 1993, such review shall be in accordance
36  with the provisions of K.S.A. 44-551 and this section and amendments
37  thereto, and any other applicable procedural provisions of the workers
38  compensation act, as all such provisions existed prior to amendment by
39  this act on July 1, 1993.
40    (d) (1)  If compensation, including medical benefits, temporary total
41  disability benefits or vocational rehabilitation benefits, has been paid to
42  the worker by the employer or the employer's insurance carrier during
43  the pendency of review under this section and the amount of compen-
SB 347
                                     

 1  sation awarded by the board is reduced or totally disallowed by the de-
 2  cision on the appeal or review, the employer and the employer's insurance
 3  carrier, except as otherwise provided in this section, shall be reimbursed
 4  from the workers compensation fund established in K.S.A. 44-566a and
 5  amendments thereto for all amounts of compensation so paid which are
 6  in excess of the amount of compensation that the worker is entitled to as
 7  determined by the final decision on review. The director shall determine
 8  the amount of compensation paid by the employer or insurance carrier
 9  which is to be reimbursed under this subsection (d)(1), and the director
10  shall certify to the commissioner of insurance the amount so determined.
11  Upon receipt of such certification, the commissioner of insurance shall
12  cause payment to be made to the employer or the employer's insurance
13  carrier in accordance therewith.
14    (2)  If any temporary or permanent partial disability or temporary or
15  permanent total disability benefits have been paid to the worker by the
16  employer or the employer's insurance carrier during the pendency of
17  review under this section and the amount of compensation awarded for
18  such benefits by the board is reduced by the decision on the appeal or
19  review and the balance of compensation due the worker exceeds the
20  amount of such reduction, the employer and the employer's insurance
21  carrier shall receive a credit which shall be applied as provided in this
22  subsection (d)(2) for all amounts of such benefits which are in excess of
23  the amount of such benefits that the worker is entitled to as determined
24  by the final decision on review or appeal. If a lump-sum amount of com-
25  pensation is due and owing as a result of the decision of the court of
26  appeals, the credit under this subsection (d)(2) shall be applied first
27  against such lump-sum amount. If there is no such lump-sum amount or
28  if there is any remaining credit after a credit has been applied to a lump-
29  sum amount due and owing, such credit shall be applied against the last
30  compensation payments which are payable for a period of time after the
31  final decision on review or appeal so that the worker continues to receive
32  compensation payments after such final decision until no further com-
33  pensation is payable after the credit has been satisfied. The credit allowed
34  under this subsection (d)(2) shall not be applied so as to stop or reduce
35  benefit payments after such final decision, but shall be used to reduce
36  the period of time over which benefit payments are payable after such
37  final decision. The provisions of this subsection (d)(2) shall be applicable
38  in all cases under the workers compensation act in which a final award is
39  issued by an administrative law judge on or after July 1, 1990.
40    (e)  If compensation, including medical benefits, temporary total dis-
41  ability benefits or vocational rehabilitation benefits, has been paid to the
42  worker by the employer, the employer's insurance carrier or the workers
43  compensation fund during the pendency of review under this section, and
SB 347
                                     

 1  the employer, the employer's insurance carrier or the workers compen-
 2  sation fund, which was held liable for and ordered to pay all or part of
 3  the amount of compensation awarded by the board, is held not liable by
 4  the final decision on the appeal or review for the compensation paid or
 5  is held liable on such appeal or review to pay an amount of compensation
 6  which is less than the amount paid pursuant to the award, then the em-
 7  ployer, employer's insurance carrier or workers compensation fund shall
 8  be reimbursed by the party or parties which were held liable on such
 9  appeal or review to pay the amount of compensation to the worker that
10  was erroneously ordered paid. The director shall determine the amount
11  of compensation which is to be reimbursed to each party under this sub-
12  section, if any, in accordance with the final decision on the appeal or
13  review and shall certify each such amount to be reimbursed to the party
14  required to pay the amount or amounts of such reimbursement. Upon
15  receipt of such certification, the party required to make the reimburse-
16  ment shall pay the amount or amounts required to be paid in accordance
17  with such certification. No worker shall be required to make reimburse-
18  ment under this subsection or subsection (d).
19    (f)  As used in subsections (d) and (e), ``employers' insurance carrier''
20  includes any qualified group-funded workers compensation pool under
21  K.S.A. 44-581 through 44-591 and amendments thereto or a group-
22  funded pool under the Kansas municipal group-funded pool act which
23  includes workers compensation and employers' liability under the workers
24  compensation act.
25    (g)  In any case in which any review is sought under this section and
26  in which the compensability is not an issue to be decided on review,
27  medical compensation shall be payable and shall not be stayed pending
28  such review. The worker may proceed under K.S.A. 44-534a and amend-
29  ments thereto and may have a hearing in accordance with that statute to
30  enforce the provisions of this subsection.
31    Sec. 8.  K.S.A. 20-2620, 44-536 and 44-5,120 and K.S.A. 1996 Supp.
32  20-2601, 44-551, 44-555c and 44-556 are hereby repealed.
33    Sec. 9.  This act shall take effect and be in force from and after its
34  publication in the statute book.