RENDERED: DECEMBER 14, 2007; 10:00 A.M. 

Commonwealth of Kentucky 
Court of Appeals 
NO. 2006-CA-001010-MR 

ASHLAND HOSPITAL CORPORATION, 
D/B/A KING’S DAUGHTERS MEDICAL 
CENTER APPELLANT 

APPEAL FROM BOYD CIRCUIT COURT 

v. 
HONORABLE C. DAVID HAGERMAN, JUDGE 
ACTION NO. 03-CI-00964 
COMMONWEALTH OF KENTUCKY, 
KENTUCKY UNEMPLOYMENT 
INSURANCE COMMISSION; BOBBI B. 
SMYSER APPELLEES 


OPINION 
REVERSING AND REMANDING 


** ** ** ** ** 

BEFORE: HOWARD1 AND WINE, JUDGES; BUCKINGHAM,2 SENIOR JUDGE. 

WINE, JUDGE: Ashland Hospital Corporation, d/b/a King’s Daughters Medical Center 

(KDMC), appeals from a judgment of the Boyd Circuit Court affirming a decision of the 
Kentucky Unemployment Insurance Commission (KUIC) that awarded unemployment 
insurance benefits to Bobbi B. Smyser. Because KUIC’s findings of fact are not 
supported by substantial evidence and as it misapplied the law to those facts, we reverse 
and remand for further hearing. 

The facts are straightforward and uncomplicated. Smyser was an employee 
of KDMC from August 1994 until she was fired for misconduct in June 2002. At the 
time of her termination, Smyser was employed as an Intensive Care Unit nurse, working 
approximately 36 hours per week at $21.19 per hour. 

The first incident of misconduct occurred in December 2001. KDMC 
claims that Smyser made an inappropriate comment to a family member of a patient. 
Smyser admitted her misconduct in this regard. As a result of the incident, Smyser was 
given a disciplinary suspension and placed on “decision making leave.” Following the 
disciplinary action, Smyser was required to “maintain fully acceptable performance in 
every area of [her] job, whether related to the [inappropriate comment] issue or not, since 
any further issues [requiring] disciplinary action” would establish sufficient cause for 
terminating her employment. 

In June 2002, another incident occurred involving Smyser and a patient’s 
family members. Smyser requested that the family members leave the room of a 
terminally ill patient. The family members complained Smyser was rude to them and did 
not answer their questions. After the incident, the family complained to Smyser’s 
supervisor, Mary Adams. Adams stated that she requested Smyser apologize to the 
family, but Smyser refused to do so because she felt that they had overacted. Adams also 
claims Smyser refused her order after the incident to move to another station farther from 
the family members. Further, Adams testified the family members later complained that 
Smyser again engaged in misconduct toward them. 

Smyser filed a claim for unemployment benefits, which was denied. 
Following a hearing in August 2002, the referee determined that Smyser was disqualified 
from receiving benefits and affirmed the denial. Smyser appealed the referee’s decision 
to KUIC, which in turn reversed that decision and awarded benefits to Smyser. When 
KUIC reversed the referee, the commission found: “Although hearsay testimony is 
admissible in administrative hearings, the direct, sworn testimony of the claimant must be 
assigned greater weight than the hearsay testimony offered by the employer.” In 
September 2003, KDMC filed an appeal of the KUIC decision in the Boyd Circuit Court 
pursuant to Kentucky Revised Statute (KRS) 341.450. In October 2003, the court 
remanded the case to the KUIC for a new hearing before another referee because the 
audiotape recording from the first referee hearing had been damaged and was inaudible. 

In March 2004, a different referee conducted a new hearing. KDMC 
introduced testimony from Adams, who testified as to what she claimed the patient’s 
family told her and what actions Smyser took in her presence, and from Elizabeth Loan, 
an ICU nurse, who testified that she was aware that the patient’s family was upset with 
Smyser and that she could hear Smyser tapping her pen while in the hallway, although 
Loan was in the patient’s room. Smyser testified on her own behalf. During the hearing, 
the referee stated hearsay evidence “[is] not going to be any amount of weight at all.” 
The second referee likewise awarded benefits to Smyser. In April 2004, the 
KUIC entered its order affirming the referee’s decision. The commission adopted the 
referee’s report which included the following statement: 
The evidence regarding the claimant was hearsay 
evidence because it was based on the account of the patient’s 
family members. Hearsay is admissible but cannot be 
assigned greater weight than the claimant’s direct, sworn 
testimony to the contrary. 

Shortly thereafter, KDMC filed an amended verified complaint with the Boyd Circuit 
Court. In April 2006, the court affirmed KUIC’s order, finding there was substantial 
evidence to support KUIC and stating: 

[KDMC] offered hearsay testimony of its Director of 
Intensive Care in support of the disciplinary action taken 
against the claimant, Bobbi Smyser. While the employer also 
offered the testimony of a second witness, such witness did 
not witness nor was able to substantiate misbehavior by the 
claimant. In Bowling v. Natural Resources and 
Environmental Protection Cabinet, 891 S.W.2d 406 (Ky.App. 
1994) the Kentucky Court of Appeals stated: “In weighing 
the subtantiality of the evidence supporting an agency’s 
decision, a reviewing court must hold fast to the guiding 
principle that the trier of facts is afforded great latitude in its 
evaluation of the evidence heard and the credibility of 
witnesses appearing before it. . . .” In weighing the testimony 
provided by [KDMC’s] witnesses and the claimant, the 
[KUIC] was correct in finding that the employer failed to 
substantiate the allegations of misconduct. 

This appeal by KDMC followed. 

Upon review of an administrative agency’s adjudicatory decision, our 
authority is somewhat limited. See American Beauty Homes Corp. v. Louisville and 
Jefferson County Planning and Zoning Commission, 379 S.W.2d 450 (Ky. 1964) (stating 
judicial review involves whether an administrative agency’s decision is arbitrary). The 
judicial standard of review of an unemployment benefit decision is whether the KUIC’s 
findings of fact were supported by substantial evidence and whether the agency correctly 
applied the law to the facts. Burch v. Taylor Drug Store, Inc., 965 S.W.2d 830, 834-35 
(Ky.App. 1998), citing Southern Bell Telephone & Telegraph Co. v. Kentucky 
Unemployment Insurance Commission, 437 S.W.2d 775, 778 (Ky. 1969); Kentucky 
Unemployment Insurance Commission v. Stirrat, 688 S.W.2d 750, 751-52 (Ky.App. 
1984); Tackett v. Kentucky Unemployment Insurance Commission, 630 S.W.2d 76, 78 
(Ky.App. 1982). 

Substantial evidence is defined as evidence that, taken alone or in light of 
all the evidence, has sufficient probative value to induce conviction in the minds of 
reasonable people. See Owens-Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 
414 (Ky. 1998); Piper v. Singer Co., Inc., 663 S.W.2d 761, 763 (Ky.App. 1984); Barren 
River Mental Health-Mental Retardation Board, Inc. v. Bailey, 783 S.W.2d 886, 888 
(Ky.App. 1990), quoting Kentucky State Racing Commission v. Fuller, 481 S.W.2d 298, 
308 (Ky. 1972). If there is substantial evidence to support the agency’s findings, a court 
must defer to those findings even though there is evidence to the contrary. See generally 
Whittaker v. Rowland, 998 S.W.2d 479, 481 (Ky. 1999); Kentucky Commission on 
Human Rights v. Fraser, 625 S.W.2d 852, 855 (Ky. 1981). A court may not substitute its 
opinion as to the credibility of the witnesses, the weight given the evidence, or the 
inferences to be drawn from the evidence. See Burch, 965 S.W.2d at 834; Energy 
Regulatory Commission v. Kentucky Power Co., 605 S.W.2d 46, 50 (Ky.App. 1980); 
Railroad Commission v. Chesapeake & Ohio Railway Co., 490 S.W.2d 763, 766 (Ky. 
1973). 

A court’s function in administrative matters is one of review, not 
reinterpretation. See Kentucky Unemployment Insurance Commission v. King, 657 
S.W.2d 250, 251 (Ky.App. 1983); Piper, 663 S.W.2d at 763. “The fact that a reviewing 
court may not have come to the same conclusion regarding the same findings of fact does 
not warrant substitution of a court’s discretion for that of an administrative agency.” 
Kentucky Unemployment Insurance Commission v. Landmark Community Newspapers of 
Kentucky, Inc., 91 S.W.3d 575, 582 (Ky. 2002). 

KDMC argues that the court erred when it found that the KUIC had 
correctly applied the law to the facts of the case regarding hearsay evidence that KDMC 
had presented. We agree. 

The first KUIC order, as previously noted above, stated that “[a]lthough 
hearsay testimony is admissible in administrative hearings, the direct, sworn testimony of 
the claimant must be assigned greater weight than the hearsay testimony offered by the 
employer.” Although that ruling was rendered moot when the motion was remanded, the 
referee apparently still believed hearsay evidence is subservient to direct testimony. The 
second KUIC order stated that “the Commission adopts the referee’s findings and 
conclusions of law as its own, the same as if fully set forth herein.” 

While the second referee order, which was adopted by the second KUIC 
order, stated that “[h]earsay is admissible but cannot be assigned greater weight than the 
claimant’s direct, sworn testimony to the contrary,” the referee during the hearing clearly 
opined that hearsay testimony would not be given any weight at all. While the trier of 
fact may decide what evidence to believe, or how much weight to give it, the decision 
should be based on the witness’s testimony or exhibit, not general categories. Thus, the 
trier of fact can decide to give greater weight to hearsay testimony. 

The referee further stated that “[t]he employer has failed to meet the burden 
of proof to show misconduct.” The evidence in this regard consisted of Adams’ 
testimony concerning what the patient’s family told her and her testimony of what she 
alleged Smyser did in her presence. A referee could simply believe one witness and not 
another. Here, the referee found that Adams’ statements were not corroborated and thus 
not believable. Yet, the referee found Smyser’s direct testimony believable even though 
not corroborated. Again, the trier of fact is free to believe or disbelieve testimony so long 
as there is substantial evidence to support the decision. However, there must be 
uniformity in evaluating the testimony. 

The goal of the administrative process must be to insure uniformity of 
treatment by administrative agencies to all persons who are similarly situated. “Without 
the application of uniform standards, uniformity of treatment is difficult to achieve.” 
Pearl v. Marshall, 491 S.W.2d 837, 839 (Ky. 1973). 

Parties must be assured the referee and KUIC will weigh all testimony 
appropriately. Because 78 KAR 1:40 requires unemployment compensation hearings to 
be conducted informally, erroneous statements by both the second referee and the KUIC 
as to the weight to be given to hearsay statements are contrary to the provision in the 
administrative regulation that “all issues relevant to the appeal shall be considered and 
passed upon.” (Emphasis added). Further, to require the testimony of some witnesses to 
be corroborated but not others is both inconsistent and contrary to the requirement of 
uniformity. 

For these reasons, we reverse the judgment of the Boyd Circuit Court and 
remand this matter for an additional hearing. It shall be within the discretion of KUIC as 
to whether a new referee should be assigned to consider this case, although a different 
referee would alleviate any concerns that a final decision had been tainted by previous 
findings. 

HOWARD, JUDGE, CONCURS. 

BUCKINGHAM, SENIOR JUDGE, DISSENTS. 
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE, KENTUCKY 

UNEMPLOYMENT INSURANCE 
Leigh Gross Latherow COMMISSION: 
Natalie E. Hurt 
Ashland, Kentucky Tamela A. Biggs 

Education Cabinet 
Office of Legal Services 
Frankfort, Kentucky