RENDERED: November 19, 1999; 10:00 a.m.

NOT TO BE PUBLISHED

C o m m o n w e a l t h O f K e n t u c k y

C o u r t O f A pp e a l s NOS. 1998-CA-001811-MR and 1998-CA-001944-MR

SARAH J. HUNLEY APPELLANT

APPEAL FROM HARLAN CIRCUIT COURT v. HONORABLE RON JOHNSON, JUDGE

ACTION NO. 97-CI-00836

APPALACHIAN REGIONAL HEALTHCARE, INC., and KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION APPELLEES

OPINION REVERSING * * * * * * * * * *

BEFORE: BUCKINGHAM, HUDDLESTON, and SCHRODER, Judges.

BUCKINGHAM, JUDGE. This case presents the question of whether the Harlan Circuit Court erred in reversing a decision of the Kentucky Unemployment Insurance Commission ("KUIC") awarding unemployment compensation benefits to Sarah Hunley. Because we believe the trial court erred, we reverse.

Hunley worked for well over twenty years as a nurse on the OB/GYN ward of the Harlan Appalachian Regional Hospital ("the hospital"), an agency of Appalachian Regional Healthcare, Inc. Hunley was discharged from her employment on March 27, 1997, and her application for unemployment compensation benefits was initially denied by the Division for Unemployment Insurance. Two separate incidents led to Hunley's discharge and to the denial of benefits to her. First, in 1994, Hunley gave an injection of the

The gynecologist who orally directed Hunley to give the1 employee the injection likewise did not make a record of his action. anti-inflammatory drug Torodol to a fellow employee pursuant to an oral directive from the employee's gynecologist without making a record of the administration of the medication. Second, in1 December 1996, Hunley used a fetal monitor on an ultrasound machine on an expectant mother who was not a patient of the hospital and failed to document the event.

Concerning the first incident, Hunley was on the OB/GYN floor when she received a call from a fellow employee, Pat Foley, complaining of pelvic cramps and requesting that Hunley ask Foley's gynecologist, Dr. Doral Abramavici, for medication to relieve her cramps. Dr. Abramavici was contacted by Hunley, and he authorized her to administer fifteen milligrams of Torodol to Foley. Dr. Abramavici also instructed Foley to see him in the next twenty-four hours. Neither Dr. Abramavici nor Hunley documented the incident.

The second event, occurring over two years after the first event, occurred when another hospital employee, Gloria Myers, called Hunley at the hospital on Christmas Day 1996 and asked for her help. Myers's son and pregnant daughter-in-law had come to the hospital because the daughter-in-law was upset after having dreamt that her twin fetuses had died. The daughter-inlaw lived in another state, was visiting Myers for the holidays, and was not a patient at the hospital. At the request of Myers's son, Hunley connected an ultrasound machine to the daughter-inlaw but explained that she was not qualified to interpret it or give an opinion. The daughter-in-law believed that she saw the hearts of the fetuses beating, and her anxiety and fear that the unborn twins were dead subsided. Hunley made no written record of this incident, as the woman had not been admitted as a patient to the hospital.

Personnel action at the hospital concerning another employee led to the disclosure that Hunley had not documented the actions she had taken on the two previous occasions. Hunley was given the opportunity to sign a "last chance agreement" with the hospital in order to retain her employment. The agreement provided that any future violation of hospital rules or policy would result in immediate loss of employment. Hunley refused to sign the agreement, and she was discharged for the stated reasons of drug diversion and practicing medicine outside the scope of nursing practice.

After the Division for Unemployment Insurance made an initial determination that Hunley was disqualified from receiving benefits, she appealed to a referee as is allowed by Kentucky Revised Statute (KRS) 341.420(2). The referee likewise determined that Hunley was disqualified from receiving benefits and found that "[t]he fact that no record was made of the drug injection or the use of the ultra sound, and the absence of documentation was wantonly contrary to the employer's interest, and constitute misconduct within the meaning of the law." 

KRS 341.430(1) provides:2

The commission may on its own motion affirm, modify, or set aside any decision of a referee on the basis of the evidence previously submitted in such case, or direct the taking of additional evidence, or may permit any of the parties to such decision to initiate further appeals before it. The commission may remove to itself or transfer to another referee the proceedings on any claims pending before a referee.

Hunley's claim was then reviewed by the KUIC pursuant to KRS 341.430(1). The KUIC found that 2

[b]ased on the evidence in this record, we do not find that claimant was guilty of misconduct in the 1994 administration of medication to a co-worker at the direction of a doctor. There is no evidence that there was a specific rule against following such an order or that a procedure was in place to document administration of medication in that situation. . . .

We likewise find no willful disservice to the employer's interests in claimant's use of the Ultra-Sound machine. . . .

. . . We do find that claimant used poor judgment in using the machine at that time. However, we do not find that her use was misconduct.

. . . . While the employer may wish to terminate the services of a long term employee who has acted in a manner unsatisfactory to it, we find that the evidence in this record does not support that claimant acted in willful or wanton disservice to the employer's interests. Her discharge was for reasons other than misconduct as that term is used for unemployment insurance purposes. While the employer may choose [to] terminate claimant's employment, claimant is not disqualified from receiving benefits during this period of unemployment. 

Following the ruling of the KUIC in Hunley's favor, the hospital sought judicial review of the KUIC order in the Harlan Circuit Court. KRS 341.450. Concluding that "the Board lacks substantial evidence to support its decision even when the proof in this action is placed under a light most favorable to Nurse Hunley[,]" the court found that Hunley's actions constituted misconduct and disqualified her from receiving benefits. Following entry of the court's judgment, this appeal by Hunley followed. KRS 341.450(4).

We deem it appropriate at this point to consider the roles of the Commission and the trial court as well as to review the applicable law in these types of cases. Although the referee makes an initial determination, the Commission conducts a de novo review of applications, has the authority to enter independent findings of fact, and may disagree with the conclusion reached by the referee. Burch v. Taylor Drug Store, Inc., Ky. App., 965 S.W.2d 830, 834 (1998). The Commission's findings of fact must be accepted as binding by the reviewing court if they are supported by substantial evidence of probative value. Id.; Kosmos Cement Co. v. Haney, Ky., 698 S.W.2d 819, 820 (1985). "Substantial evidence means evidence of substance and relative consequence having the fitness to induce conviction in the minds of reasonable men." Pierce v. Kentucky Galvanizing Co., Ky. App., 606 S.W.2d 165, 166 (1980). "Upon determining that the Commission's findings were supported by substantial evidence, the court's review is then limited to determining whether the Commission applied the correct rule of law." Burch, 965 S.W.2d

KRS 341.370(6) states as follows:3

"Discharge for misconduct" as used in this section shall include, but not be limited to, separation initiated by an employer for falsification of an employment application to obtain employment through subterfuge; knowing violation of a reasonable and uniformly enforced rule of an employer; unsatisfactory attendance if the worker cannot show good cause for absences or tardiness; damaging the employer's property through gross negligence; refusing to obey reasonable instructions;

(continued...) at 834. "An erroneous application of the law by an administrative board or by the circuit court is clearly reviewable by this Court. Also, where an administrative body has misapplied the legal effect of the facts, courts are not bound to accept the legal conclusions of the administrative body." Epsilon Trading Co. v. Revenue Cabinet, Ky. App., 775 S.W.2d 937, 940 (1989).

Turning now to the law applicable to these facts, KRS 341.370(1)(b) states that a worker who has been discharged for misconduct shall be disqualified from receiving benefits. Although the claimant seeking benefits bears the burden of proof in order to recover on a benefits claim, the employer seeking to show misconduct under the statute bears the burden to defeat recovery of the claim. Brown Hotel Co. v. Edwards, Ky., 365 S.W.2d 299, 301 (1962). "The test for determining misconduct is whether the employee's actions evidence a `wilful and wanton disregard of the employer's interests.'" Burch, 965 S.W.2d at 835.

KRS 341.370(6) gives several examples of conduct which may lead to a person being discharged for misconduct and disqualified from receiving benefits. The facts of this case,3

(...continued)

reporting to work under the influence of alcohol or drugs or consuming alcohol or drugs on employer's premises during working hours; conduct endangering safety of self or co-workers; and incarceration in jail following conviction of a misdemeanor or felony by a court of competent jurisdiction, which results in missing at least five (5) days work.

The definition of misconduct in Boynton has been followed4 by the courts of this state. See Douthitt v. Kentucky Unemployment Insurance Comm'n, Ky. App., 676 S.W.2d 472, 474 (1984). however, do not fit neatly into any of the examples stated in that statute. In Boynton Cab Co. v. Neubeck, 237 Wis. 249, 296 N.W. 636 (1941), the court defined misconduct in this manner:4

[T]he term "misconduct" . . . is limited to conduct evincing such willful or wanton disregard of an employer's interests as is found in deliberate violations or disregard of standards of behavior which the employer has a right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to his employer. On the other hand mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not to be deemed "misconduct" . . . .

Id. at 640. Also, conduct which may allow a discharge from employment may not always be sufficient to constitute misconduct so as to support a denial of unemployment compensation benefits. See Alliant Health System v. Kentucky Unemployment Insurance Comm'n, Ky. App., 912 S.W.2d 452 (1995).

The trial court in the case sub judice held that to determine Hunley's actions were "of a class not likely to

As we noted previously, Hunley was discharged in5 connection with this incident for the stated reason of drug diversion. Dr. Abramavici later signed a statement that he had directed Hunley to administer the medication. adversely impact her employer's commercial and business interests is to ignore the obvious, the logical, the commonsensical, and the only reasonable conclusion regarding said conduct." On the other hand, Hunley contends that the findings of the KUIC were supported by substantial evidence, that the KUIC applied the correct rule of law, and that the trial court erred in its determination that the KUIC "lacks substantial evidence to support its decision[.]" We agree with Hunley.

There was substantial evidence that Hunley was not guilty of misconduct in the 1994 incident when she failed to document her administration of medication to a coworker at the direction of a doctor. As the KUIC stated, there was no5 hospital rule or policy against following such an order from a doctor and there was no hospital procedure for documenting the administration of medication in a situation where no patient or outpatient was involved. Further, the KUIC's finding that Hunley's action in no way benefitted her was supported by substantial evidence. In short, the evidence supports the KUIC's finding that there was no willful or wanton disservice to the hospital's interests.

We likewise conclude that there was substantial evidence to support the KUIC's finding of no willful disservice to the hospital's interests in Hunley's use of the ultrasound machine. As stated by the KUIC, there was no evidence of evil intent on Hunley's part or any suggestion that she was acting for personal reasons. Although we agree with the KUIC that Hunley used "poor judgment," there was substantial evidence to support the KUIC's finding that her use of the ultrasound machine did not constitute misconduct.

In the trial court's diligent review of the KUIC's order granting Hunley eligibility for benefits, the trial court stated that "Nurse Hunley's actions and omissions are the type that creates a field day for lawyers representing patients believed to have suffered from unauthorized or negligent care, prescription, or treatment at a health care facility." We do not necessarily disagree with the trial court's assessment of the seriousness of Hunley's actions. We also understand why the hospital would discharge Hunley for her actions in connection with the two incidents. While we neither undermine the seriousness of Hunley's actions nor question her discharge by the hospital, we must conclude that the evidence supported the KUIC's holding that Hunley's actions did not constitute misconduct as that term is defined for purposes of the unemployment compensation statutes.

The judgment of the Harlan Circuit Court is reversed, and the order of the KUIC holding Hunley eligible for benefits is affirmed.

HUDDLESTON, JUDGE, CONCURS. SCHRODER, JUDGE, DISSENTS WITHOUT SEPARATE OPINION.

BRIEFS FOR APPELLANT: Eugene Goss Harlan, KY

BRIEF FOR APPELLEE, APPALACHIAN REGIONAL HEALTHCARE, INC.:

Charles D. Cole Lexington, KY

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