The General Assembly enacted sweeping reforms to the program in December 1996 upon call of a special session by the governor (House Bill 1).  Total cost in premium dollars of the Kentucky systems in 1996 was equivalent to four times the businesses’ state corporate income tax liability.  The Kentucky coal industry was in crisis.  Premiums in the coal industry had risen 89 percent in the preceding two years.  The number of workers receiving awards in the previous seven years had more than doubled, despite no evidence of increase in on-the-job injuries.

Legislation in the Workers’ Compensation Reform of 1996 was enacted, which focused on critical objectives of fairness to injured workers and affordability for employers who pay for the system.  Benefit levels were based on objective impairment ratings under the American Medical Association (AMA) Guides to Functional Impairment; benefit liability was terminated when an injured employee reached 65 years of age; “injury” was redefined to end subjective decision making by ALJs.  Guaranty funds were created for all self-insured employers to offset termination of benefits if employers became insolvent or bankrupt.

The General Assembly in 2000 (House Bill 992) increased benefit levels for traumatic injury by taking a worker’s age and educational level into account.  HB 992 also increased death benefits; enhanced penalties against employers for safety violations that result in work injury; reduced the dual level of adjudication by eliminating arbitrators; and reinstated the Workers’ Compensation Board for administrative appeal from ALJs before appeal to the appellate courts were authorized.  Additional refinement to the law was made during the 2002 General Assembly (House Bill 348) providing that coal miners who leave the coal mining industry and are determined to suffer from the occupational disease of coal worker’s pneumoconiosis (black lung) should have an opportunity to make transition to other employment by education and retraining programs.  Miners who are 57 years of age at the time of their last exposure to coal dust could be entitled to monetary indemnity payments.