             IMPORTANT NOTICE
        NOT TO BE PUBLISHED OPINION

THIS OPINION IS DESIGNATED "NOT TO BE PUBLISHED."
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                                                    RENDERED: APRIL 2, 2015
                                                      NOT TO BE PUBLISHED

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                               2014-SC-000391-WC


QUAD/GRAPHICS, INC.                                                  APPELLANT



                   ON APPEAL FROM COURT OF APPEALS
V.                    CASE NO. 2013-CA-002063-WC
                  WORKERS' COMPENSATION NO. 12-01160



MARIO HOLGUIN;
HONORABLE EDWARD D. HAYS,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS' COMPENSATION BOARD                                          APPELLEES



                  MEMORANDUM OPINION OF THE COURT

                                  AFFIRMING

      Appellant, Quad/Graphics, Inc., ("Quad") requests review of a Court of

Appeals decision which affirmed the denial of an offset for light duty wages

paid to Appellee, Mario Holguin, for a period he was awarded temporary total

disability ("TTD") benefits. Quad argues that the Court of Appeals, Workers'

Compensation Board ("Board"), and Administrative Law Judge ("ALJ") erred by

denying it an offset because it is unfair to pay full TTD benefits to Holguin

when he is also being paid regular wages. For the below stated reasons, we

affirm the Court of Appeals.

      Holguin suffered a work-related injury at Quad when the tip of the third

finger on his left hand was severed by a machine. The finger tip was
successfully reattached by surgery that day. Holguin was then released to "one

handed duty" and returned to work the next day. He was placed in several

light duty jobs by Quad from December 28, 2011 through February 12, 2012.

The light duty work performed by Holguin during this period included checking

books for printing errors, painting the facility, and odd jobs. Cynthia Maynard,

Quad's safety coordinator, testified that the work performed by Holguin would

not have been assigned to an employee under normal conditions. She stated

the jobs were assigned to Holguin in an attempt to find work which he could

complete within the constraints of his physical restrictions. While on light

duty, Holguin was not allowed to work overtime like he was accustomed. Quad

contended that the wages paid to Holguin were not bona fide, but were paid as

a benefit to him and should be treated as being paid in lieu of TTD benefits.

      The ALJ awarded Holguin TTD benefits from December 28, 2011, to

February 12, 2012. The ALJ found that Holguin had not reached maximum

medical improvement and that he was not able to physically perform his

customary work during that time period. See Central Kentucky Steel v. Wise,

19 S.W.3d 657 (Ky. 2000). The ALJ further stated:

            The next question is whether [Quad] is entitled a credit for
      the continuation of wages or pay that was paid by [Quad] to
       [Holguin] against the [TTD] benefits owed to [Holguin]. [Quad]
      acknowledged that the continuation of pay was for 40 hours only
      and that no overtime was permitted. It is undisputed that
       [Holguin] previously worked substantial overtime . . . [Quad]
      argues that [Holguin's] work assignments did not constitute bona
      fide work and thus argued that the principles enunciated in
      Millersburg Military Institute v. Puckett, 260 S.W.3d 339 (Ky. 2008)
      are not applicable. [Quad] argues that the pay received by
       [Holguin] was a gift.



                                        2
                The burden is on the employer when seeking a credit against
         its workers' compensation liability. The Act contains two bases for
         an offset of the employer's liability to pay workers' compensation
         income benefits by non-compensation income benefits paid to the
         employee. KRS 342.730(5) provides for an offset or credit for
         unemployment benefits paid to the employee. Clearly, this
         exception is not applicable in this case. KRS 342.730(6) provides
         that certain payments made under a non-compensation disability
         plan funded solely by the employer may offset the employer's
         statutory obligation to pay [TTD] benefits. However, the plan must
         qualify and comply with the statute. In the case at hand, the
         policy or program of [Quad] does not comply with this statutory
         provision. [Quad] makes no attempt to show that its light duty
         policy bears any resemblance with a program that is attempting
         compliance with the statute. Based on the facts and
         circumstances of this case, the ALJ finds that the money paid by
         [Quad] to Mr. Holguin during the period of time in question cannot
         possibly qualify for a credit against the obligatory payments of
         [TTD] benefits to which [Holguin] was entitled.

(Emphasis in original). A petition for reconsideration was filed by Quad but

denied.

         Quad appealed the denial of an offset for the wages it paid Holguin to the

Board. The Board affirmed and found as a matter of law that Holguin was paid

bona fide wages.' The Court of Appeals affirmed, and this appeal followed.

         The ALJ has the sole discretion to determine the quality, character, and

substance of the evidence and to draw all reasonable inferences from that

evidence. Paramount Foods, Inc. v. Burkhardt, 695 S.W.2d 418 (Ky. 1985). The

Board's review of the ALJ's opinion was limited to determining whether the



1   The Board determined Holguin received bona fide wages because to be paid he had to
     show up for work. However. we note that Millersburg Military Institute states that
     wages are bona fide when "they were paid ostensibly for labor and because the
     evidence did not permit a reasonable finding that the employer intended to pay
     them in lieu of workers' compensation benefits." 260 S.W.3d at 342 (emphasis
     added).
evidence was sufficient to support his findings, or if the evidence compels a

different result.   Western Baptist Hospital v. Kelly, 827 S.W.2d 685, 687 (Ky.

1992). "The function of further review of the [Board] in the Court of Appeals is

to correct the Board only where the Court perceives the Board has overlooked

or misconstrued controlling statutes or precedent, or committed an error in

assessing the evidence so flagrant as to cause gross injustice." Id. at 687-88.

Additionally, "an employer seeking credit against its workers' compensation

liability has the burden to show a proper legal basis for the request."

Millersburg Military Institute, 260 S.W.3d at 342.

      KRS 342.730 provides two circumstances where an employer can receive

a credit against its TTD benefits obligation. KRS 342.730(5) allows an offset for

unemployment benefits paid during a period in which TTD or permanent total

disability benefits were paid. KRS 342.730(6) provides for an offset for

payments made under a qualifying employer-funded disability or sickness and

accident plan. Quad does not argue it is entitled to a credit under these

statutes and the AU found that neither provision applied in this matter.

Those findings are supported by the record.

      However, Quad does argue that it should receive an offset against the

TTD benefits obligation it owes Holguin for the period he received light duty

wages because the work he performed was not bona fide. Quad argues that it

voluntarily paid Holguin his regular salary and benefits in lieu of paying him

TTD benefits and should receive a credit as granted in Triangle Insulation and

Sheet Metal Co. v. Stratemeyer, 782 S.W.2d 628 (Ky. 1990). In that matter a



                                          4
credit for voluntary payments paid against past-due income benefits on a dollar

for dollar basis was allowed as long as future income benefits were not affected.

See Millersburg Military Institute, 260 S.W.3d at 342. Quad argues that if it

does not receive the offset, Holguin receives an unfair and unnecessary

windfall. Quad contends that without an offset for the light duty wages,

employers will stop placing its injured employees on light duty work and the

result will force employees to live off of reduced TTD benefits.

      While Quad makes a good Public policy argument in favor of receiving an

offset, the workers' compensation statutes do not allow for a credit like the one

requested in this situation. "Workers' compensation is a statutory creation.

Thus, the proper forum for the argument is the legislative."       Rager v. Crawford

& Co., 256 S.W.3d 4, 6 (Ky. 2008). Quad has failed to satisfy its burden to

present a proper legal basis for its offset request.   Millersburg Military Institute,

260 S.W.3d at 342.

      Thus, for the above stated reasons, we affirm the opinion of the Court of

Appeals.

      All sitting. All concur.




                                          5
COUNSEL FOR APPELLANT,
QUAD/GRAPHICS, INC.:

Jo Alice Van Nage11
Lori VanHoose Daniel
Patrick Joseph Murphy, II


COUNSEL FOR APPELLEE,
MARIO HOLGUIN:

Larry Duane Ashlock




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