KRS 342.0011: Definitions for chapter.

As used in this chapter, unless the context otherwise requires:

(1) "Injury" means any work -related traumatic event or series of traumatic events,

including cumulative trauma, arising out of and in the course of employment which

is the proximate cause prod ucing a harmful change in the human organism

evidenced by objective medical findings. "Injury" does not include the effects of the

natural aging process, and does not include any communicable disease unless the

risk of contracting the disease is increased by the nature of the employment.

"Injury" when used generally, unless the context indicates otherwise, shall include

an occupational disease and damage to a prosthetic appliance, but shall not include

a psychological, psychiatric, or stress-related change in the human organism, unless

it is a direct result of a physical injury;

(2) "Occupational disease" means a disease arising out of and in the course of the

employment;

(3) An occupational disease as defined in this chapter shall be deemed to arise out of

the employment if there is apparent to the rational mind, upon consideration of all

the circumstances, a causal connection between the conditions under which the

work is performed and the occupational disease, and which can be seen to have

followed as a natural incident to the work as a result of the exposure occasioned by

the nature of the employment and which can be fairly traced to the employment as

the proximate cause. The occupational disease shall be incidental to the character of

the business and not independent of the relationship of employer and employee. An

occupational disease need not have been foreseen or expected but, after its

contraction, it must appear to be related to a risk connected with the employment

and to have flowed from that source as a rational consequence;

(4) "Injurious exposure" shall mean that exposure to occupational hazard which would,

independently of any other cause whatsoever, produce or cause the disease for

which the claim is made;

(5) "Death" means death resulting from an injury or occupational disease;

(6) "Carrier" means any insurer, or legal representative thereof, authorized to insure the

liability of employers under this chapter and includes a self-insurer;

(7) "Self-insurer" is an employer who has been authorized un der the provisions of this

chapter to carry his own liability on his employees covered by this chapter;

(8) "Department" means the Department of Workers' Claims administratively attached

to the Office of the Governor;

(9) "Commissioner" means the commissioner of the Department of Workers' Claims;

(10) "Board" means the Workers' Compensation Board;

(11) (a) "Temporary total disability" means the condition of an employee who has not

reached maximum medical improvement from an injury and has not reached a

level of improvement that would permit a return to employment;

(b) "Permanent partial disability" means the condition of an employee who, d ue

to an injury, has a permanent disability rating but retains the ability to work;

and

(c) "Permanent total disability" means the condition of an employee who, due to

an injury, has a permanent disability rating and has a complete and permanent

inability to perform any type of work as a result of an injury, except that total

disability shall be irrebuttably presumed to exist for an injury that results in:

1. Total and permanent loss of sight in both eyes;

2. Loss of both feet at or above the ankle;

3. Loss of both hands at or above the wrist;

4. Loss of one (1) foot at or above the ankle and the loss of one (1) hand at

or above the wrist;

5. Permanent and complete paralysis of both arms, both legs, or one (1)

arm and one (1) leg;

6. Incurable insanity or imbecility; or

7. Total loss of hearing;

(12) "Income benefits" means payments made under the provisions of this chapter to the

disabled worker or his dependents in case of death, excluding medical and related

benefits;

(13) "Medical and related benefits" me ans payments made for medical, hospital, burial,

and other services as provided in this chapter, other than income benefits;

(14) "Compensation" means all payments made under the provisions of this chapter

representing the sum of income benefits and medical and related benefits;

(15) "Medical services" means medical, surgical, dental, hospital, nursing, and medical

rehabilitation services, medicines, and fittings for artificial or prosthetic devices;

(16) "Person" means any individual, partnership, limited partnership, limited liability

company, firm, association, trust, joint venture, corporation, or legal representative

thereof;

(17) "Wages" means, in addition to money payments for services rendered, the

reasonable value of board, rent, housing, lodging, f uel, or similar advantages

received from the employer, and gratuities received in the course of employment

from persons other than the employer as evidenced by the employee's federal and

state tax returns;

(18) "Agriculture" means the operation of farm pre mises, including the planting,

cultivation, producing, growing, harvesting, and preparation for market of

agricultural or horticultural commodities thereon, the raising of livestock for food

products and for racing purposes, and poultry thereon, and any wo rk performed as

an incident to or in conjunction with the farm operations, including the sale of

produce at on-site markets and the processing of produce for sale at on-site markets.

It shall not include the commercial processing, packing, drying, storing, or canning

of such commodities for market, or making cheese or butter or other dairy products

for market;

(19) "Beneficiary" means any person who is entitled to income benefits or medical and

related benefits under this chapter;

(20) "United States," when used in a geographic sense, means the several states, the

District of Columbia, the Commonwealth of Puerto Rico, the Canal Zone, and the

territories of the United States;

(21) "Alien" means a person who is not a citizen, a national, or a resident of the U nited

States or Canada. Any person not a citizen or national of the United States who

relinquishes or is about to relinquish his residence in the United States shall be

regarded as an alien;

(22) "Insurance carrier" means every insurance carrier or insuran ce company authorized

to do business in the Commonwealth writing workers' compensation insurance

coverage and includes the Kentucky Employers Mutual Insurance Authority and

every self-insured group operating under the provisions of this chapter;

(23) (a) "Severance or processing of coal" means all activities performed in the

Commonwealth at underground, auger, and surface mining sites; all activities

performed at tipple or processing plants that clean, break, size, or treat coal;

and all activities performe d at coal loading facilities for trucks, railroads, and

barges. Severance or processing of coal shall not include acts performed by a

final consumer if the acts are performed at the site of final consumption.

(b) "Engaged in severance or processing of coal " shall include all individuals,

partnerships, limited partnerships, limited liability companies, corporations,

joint ventures, associations, or any other business entity in the Commonwealth

which has employees on its payroll who perform any of the acts st ated in

paragraph (a) of this subsection, regardless of whether the acts are performed

as owner of the coal or on a contract or fee basis for the actual owner of the

coal. A business entity engaged in the severance or processing of coal,

including but not limited to administrative or selling functions, shall be

considered wholly engaged in the severance or processing of coal for the

purpose of this chapter. However, a business entity which is engaged in a

separate business activity not related to coal, for which a separate premium

charge is not made, shall be deemed to be engaged in the severance or

processing of coal only to the extent that the number of employees engaged in

the severance or processing of coal bears to the total number of employees.

Any employee who is involved in the business of severing or processing of

coal and business activities not related to coal shall be prorated based on the

time involved in severance or processing of coal bears to his total time;

(24) "Premium" for every self-insured group means any and all assessments levied on its

members by such group or contributed to it by the members thereof. For special

fund assessment purposes, "premium" also includes any and all membership dues,

fees, or other payments by members of the gro up to associations or other entities

used for underwriting, claims handling, loss control, premium audit, actuarial, or

other services associated with the maintenance or operation of the self -insurance

group;

(25) (a) "Premiums received" for policies effective on or after January 1, 1994, for

insurance companies means direct written premiums as reported in the annual

statement to the Department of Insurance by insurance companies, except that

"premiums received" include s premiums charged off or deferred, and, on

insurance policies or other evidence of coverage with provisions for

deductibles, the calculated cost for coverage, including experience

modification and premium surcharge or discount, prior to any reduction for

deductibles. The rates, factors, and methods used to calculate the cost for

coverage under this paragraph for insurance policies or other evidence of

coverage with provisions for deductibles shall be the same rates, factors, and

methods normally used by th e insurance company in Kentucky to calculate

the cost for coverage for insurance policies or other evidence of coverage

without provisions for deductibles, except that, for insurance policies or other

evidence of coverage with provisions for deductibles ef fective on or after

January 1, 1995, the calculated cost for coverage shall not include any

schedule rating modification, debits, or credits. For policies with provisions

for deductibles with effective dates on or after January 1, 1995, assessments

shall b e imposed on premiums received as calculated by the deductible

program adjustment. The cost for coverage calculated under this paragraph by

insurance companies that issue only deductible insurance policies in Kentucky

shall be actuarially adequate to cover the entire liability of the employer for

compensation under this chapter, including all expenses and allowances

normally used to calculate the cost for coverage. For policies with provisions

for deductibles with effective dates of May 6, 1993, through Dec ember 31,

1993, for which the insurance company did not report premiums and remit

special fund assessments based on the calculated cost for coverage prior to the

reduction for deductibles, "premiums received" includes the initial premium

plus any reimburse ments invoiced for losses, expenses, and fees charged

under the deductibles. The special fund assessment rates in effect for

reimbursements invoiced for losses, expenses, or fees charged under the

deductibles shall be those percentages in effect on the eff ective date of the

insurance policy. For policies covering covered employees having a co -

employment relationship with a professional employer organization and a

client as defined in KRS Chapter 336, "premiums received" means premiums

calculated using the e xperience modification factor of each client as defined

in KRS Chapter 336 for each covered employee for that portion of the payroll

pertaining to the covered employee.

(b) "Direct written premium" for insurance companies means the gross premium

written le ss return premiums and premiums on policies not taken but

including policy and membership fees.

(c) "Premium," for policies effective on or after January 1, 1994, for insurance

companies means all consideration, whether designated as premium or

otherwise, for workers' compensation insurance paid to an insurance company

or its representative, including, on insurance policies with provisions for

deductibles, the calculated cost for coverage, including experience

modification and premium surcharge or discount, prior to any reduction for

deductibles. The rates, factors, and methods used to calculate the cost for

coverage under this paragraph for insurance policies or other evidence of

coverage with provisions for deductibles shall be the same rates, factors, and

methods normally used by the insurance company in Kentucky to calculate

the cost for coverage for insurance policies or other evidence of coverage

without provisions for deductibles, except that, for insurance policies or other

evidence of coverage with p rovisions for deductibles effective on or after

January 1, 1995, the calculated cost for coverage shall not include any

schedule rating modifications, debits, or credits. For policies with provisions

for deductibles with effective dates on or after January 1, 1995, assessments

shall be imposed as calculated by the deductible program adjustment. The cost

for coverage calculated under this paragraph by insurance companies that

issue only deductible insurance policies in Kentucky shall be actuarially

adequate to cover the entire liability of the employer for compensation under

this chapter, including all expenses and allowances normally used to calculate

the cost for coverage. For policies with provisions for deductibles with

effective dates of May 6, 1993, thr ough December 31, 1993, for which the

insurance company did not report premiums and remit special fund

assessments based on the calculated cost for coverage prior to the reduction

for deductibles, "premium" includes the initial consideration plus any

reimbursements invoiced for losses, expenses, or fees charged under the

deductibles.

(d) "Return premiums" for insurance companies means amounts returned to

insureds due to endorsements, retrospective adjustments, cancellations,

dividends, or errors.

(e) "Deductible program adjustment" means calculating premium and premiums

received on a gross basis without regard to the following:

1. Schedule rating modifications, debits, or credits;

2. Deductible credits; or

3. Modifications to the cost of coverage from incept ion through and

including any audit that are based on negotiated retrospective rating

arrangements, including but not limited to large risk alternative rating

options;

(26) "Insurance policy" for an insurance company or self -insured group means the term

of insurance coverage commencing from the date coverage is extended, whether a

new policy or a renewal, through its expiration, not to exceed the anniversary date

of the renewal for the following year;

(27) "Self-insurance year" for a self -insured group mean s the annual period of

certification of the group created pursuant to KRS 342.350(4) and 304.50-010;

(28) "Premium" for each employer carrying his own risk pursuant to KRS 342.340(1)

shall be the projected value of the employer's workers' compensation clai ms for the

next calendar year as calculated by the commissioner using generally -accepted

actuarial methods as follows:

(a) The base period shall be the earliest three (3) calendar years of the five (5)

calendar years immediately preceding the calendar year for which the

calculation is made. The commissioner shall identify each claim of the

employer which has an injury date or date of last injurious exposure to the

cause of an occupational disease during each one (1) of the three (3) calendar

years to be used as the base, and shall assign a value to each claim. The value

shall be the total of the indemnity benefits paid to date and projected to be

paid, adjusted to current benefit levels, plus the medical benefits paid to date

and projected to be paid for the life of the claim, plus the cost of medical and

vocational rehabilitation paid to date and projected to be paid. Adjustment to

current benefit levels shall be done by multiplying the weekly indemnity

benefit for each claim by the number obtained by dividi ng the statewide

average weekly wage which will be in effect for the year for which the

premium is being calculated by the statewide average weekly wage in effect

during the year in which the injury or date of the last exposure occurred. The

total value of the claims using the adjusted weekly benefit shall then be

calculated by the commissioner. Values for claims in which awards have been

made or settlements reached because of findings of permanent partial or

permanent total disability shall be calculated u sing the mortality and interest

discount assumptions used in the latest available statistical plan of the

advisory rating organization defined in Subtitle 13 of KRS Chapter 304. The

sum of all calculated values shall be computed for all claims in the base

period;

(b) The commissioner shall obtain the annual payroll for each of the three (3)

years in the base period for each employer carrying his own risk from records

of the department and from the records of the Department of Workforce

Development, Education and Labor Cabinet. The commissioner shall multiply

each of the three (3) years of payroll by the number obtained by dividing the

statewide average weekly wage which will be in effect for the year in which

the premium is being calculated by the statewide average weekly wage in

effect in each of the years of the base period;

(c) The commissioner shall divide the total of the adjusted claim values for the

three (3) year base period by the total adjusted payroll for the same three (3)

year period. The value so calculated shall be multiplied by 1.25 and shall then

be multiplied by the employer's most recent annualized payroll, calculated

using records of the department and the Department of Workforce

Development data which shall be made available for this purpo se on a

quarterly basis as reported, to obtain the premium for the next calendar year

for assessment purposes under KRS 342.122;

(d) For November 1, 1987, through December 31, 1988, premium for each

employer carrying its own risk shall be an amount calcula ted by the board

pursuant to the provisions contained in this subsection and such premium

shall be provided to each employer carrying its own risk and to the funding

commission on or before January 1, 1988. Thereafter, the calculations set

forth in this subsection shall be performed annually, at the time each employer

applies or renews its application for certification to carry its own risk for the

next twelve (12) month period and submits payroll and other data in support

of the application. The employer and the funding commission shall be notified

at the time of the certification or recertification of the premium calculated by

the commissioner, which shall form the employer's basis for assessments

pursuant to KRS 342.122 for the calendar year beginning on January 1

following the date of certification or recertification;

(e) If an employer having fewer than five (5) years of doing business in this state

applies to carry its own risk and is so certified, its premium for the purposes

of KRS 342.122 shall be based on the lesser number of years of experience as

may be available including the two (2) most recent years if necessary to create

a three (3) year base period. If the employer has less than two (2) years of

operation in this state available for the premiu m calculation, then its premium

shall be the greater of the value obtained by the calculation called for in this

subsection or the amount of security required by the commissioner pursuant to

KRS 342.340(1);

(f) If an employer is certified to carry its own risk after having previously insured

the risk, its premium shall be calculated using values obtained from claims

incurred while insured for as many of the years of the base period as may be

necessary to create a full three (3) year base. After the employer is certified to

carry its own risk and has paid all amounts due for assessments upon

premiums paid while insured, the employer shall be assessed only upon the

premium calculated under this subsection;

(g) "Premium" for each employer defined in KRS 342.630 (2) shall be calculated

as set forth in this subsection; and

(h) Notwithstanding any other provision of this subsection, the premium of any

employer authorized to carry its own risk for purposes of assessments due

under this chapter shall be no less than t hirty cents ($0.30) per one hundred

dollars ($100) of the employer's most recent annualized payroll for employees

covered by this chapter;

(29) "SIC code" as used in this chapter means the Standard Industrial Classification

Code contained in the latest edition of the Standard Industrial Classification Manual

published by the Federal Office of Management and Budget;

(30) "Investment interest" means any pecuniary or beneficial interest in a provider of

medical services or treatment under this chapter, other t han a provider in which that

pecuniary or investment interest is obtained on terms equally available to the public

through trading on a registered national securities exchange, such as the New York

Stock Exchange or the American Stock Exchange, or on the N ational Association

of Securities Dealers Automated Quotation System;

(31) "Managed health care system" means a health care system that employs gatekeeper

providers, performs utilization review, and does medical bill audits;

(32) "Physician" means physicia ns and surgeons, audiologists holding a doctorate in

audiology, psychologists, optometrists, dentists, podiatrists, and osteopathic and

chiropractic practitioners acting within the scope of the license or other credentials

required by his or her specialty of practice in the United States jurisdiction in which

he or she is authorized to practice;

(33) "Objective medical findings" means information gained through direct observation

and testing of the patient applying objective or standardized methods;

(34) "Work" means providing services to another in return for remuneration on a regular

and sustained basis in a competitive economy;

(35) "Permanent impairment rating" means percentage of whol e body impairment

caused by the injury or occupational disease as determined by the "Guides to the

Evaluation of Permanent Impairment";

(36) "Permanent disability rating" means the permanent impairment rating selected by

an administrative law judge times t he factor set forth in the table that appears at

KRS 342.730(1)(b); and

(37) "Guides to the Evaluation of Permanent Impairment" means, except as provided in

KRS 342.262:

(a) The fifth edition published by the American Medical Association; and

(b) For psychological impairments, Chapter 12 of the second edition published by

the American Medical Association.