Michigan Workers' Compensation Law

What Happens to Workers Compensation Claims when an Insurance Company goes Bankrupt?

When a workers' compensation insurance company goes bankrupt the claims of the insolvent company go to the Michigan Property & Casualty Guarantee Association (MPCGA). The MPCGA then becomes the carrier for those claims.

The issue was recently discussed by the Court of Appeals in Smith v. Parkland Inn, 22 MIWCLR (LRP) 122:

"MPCGA is an association of all insurers authorized to engage in the business of insurance in Michigan. The statutory purpose of MPCGA is to fulfill the obligations of an insolvent insurer in regard to covered claims. To effectuate this purpose, MPCGA assumes the rights of an insolvent."

All insurance companies licensed to operate as workers compensation insurnace companies pay premiums into, or "fund" the MPCGA.

"Each insurer is a member of the association as a condition of its authority to transact insurance business in this state. MCL 500.7911(1). To fund the cost of MPCGA's operations, all member insurers are levied assessments by MPCGA. MCL 500.7941(1).

Any claims assumed by the MPCGA are processed like any other claim. The MPCGA becomes just like any other workers compensation insurance carrier and is subject to the the laws of this state:

MPCGA is subject to the laws "of this state to the extent that it would be subject to those laws if it were an insurer organized and operating under [MCL 500.5000 et seq.], to the extent that those other laws are consistent with this chapter." MCL 500.7911(3)."

Court of Appeals addresses attorney fees.

On August 21, 2008 the Court of Appeals issued an opinion regarding workers compensation and attorney fees.  It ruled that the Workers' Compensation Appellate Commission correctly awarded attorney fees to a claimant whose medical bills were not paid until he hired an attorney and sought relief from the Workers' Compensation Agency.

The Court ruled that attorney fees were appropriate.  In Harvlie vs. Jack Post, Docket No. 276044, the magistrate found that plaintiff’s counsel was entitled to an attorney fee (30%) under MCL 418.315(1) with regard to the unpaid medical bills. The magistrate agreed with plaintiff’s counsel that “the bills would not have been paid but for the fact that he filed a petition.”  Moreover, because the bills were not paid within 30 days of their receipt, the magistrate ordered defendants to pay a $1,500 penalty.  Further, the bills were to be paid by the insurance company, and not the health care provider who benefited by the attorney's efforts. 

Upon review of the case it would appear that attorney fees on unpaid medical bills are not appropriate in every case.  In this case the employer/insurance carrier had refused to pay medical bills after first being ordered to do so.  It appears that the recalcitrance of the insurance carrier led to the award of attorney fees.  The Court stated, 

". . . it is not the compensability of the medical bills, but the ongoing failure, neglect or refusal to pay, which allows the magistrate the discretion to order the attorney fees."

Seasonal Employees - No wage loss benefits beyond the season

A football player for the Grand Rapids Rampage may not be entitled to wage loss benefits beyond his regular football season. This article discusses the nuance between wage-loss that is due to a work related injury and wage-loss that is due to some other circumstance, such as the end of a football season. We will see that there are instances where an employee may suffer an injury at work, but not be entitled to wage loss benefits. It is important to remember that Michigan is a "wage-loss" state, meaning that an injured worker must not only demonstrate a work injury, but also must demonstrate that the work injury has damaged, or has led to, his or her loss of earning capacity. We will see that if the wage loss is occasioned by some other cause, then wage-loss benefits will not necessarily follow.

FACTS

The football player sustained injuries to his foot, right knee and right ankle. After trial the magistrate awarded weekly wage loss benefits that extended beyond the regular season. The defendant-employer argued the the football player - plaintiff sustained no loss of wage-earning capacity or wages in the off season and so cannot receive wage-loss benefits for the time he was not employed during the off season.

ANALYSIS

The controlling statute for this issue is Section 301(4) of the Michigan's Workers Disability Compensation Act. The act states, "The establishment of a disability does not create a presumption of wage loss."

The Court's have pointed out that even if the employee establishes a disability, he must further prove a wage loss because wage loss will not be presumed. The employee must link his or her reduced wages to a work-related injury. There must be proof of wage loss and a causal connection between the injury and the wage loss.

In this case the employer successfully argued that the wage loss was not attributable to the work injury, but the end of the arena football season. The Court of Appeals remanded the case to the magistrate to determine what portion of the football player's lost wages were caused by the end of the football season rather than his disability. In making that conclusion, the Court pointed to other decisions that had commented that there may be circumstances in which an employee, despite suffering a work-related injury that reduced earning capacity, does not suffer a wage loss. For example, "an employee might suffer a serious work-related injury on the last day before the employee was scheduled to retire with a firm intention never to return to work again. In such a circumstance, the employee would have suffered a disability, i.e. a reduction in wage earning capacity, but no wage loss because, even if the injury had not occurred, the employee would not have earned any further wages."

In this case the Court of Appeals agreed with the employer, the Grand Rapids Rampage. The football player's loss of wages must be attributable to his work-related injuries rather than to the end of the football season and the player cannot receive wage loss benefits for the time in the off season when he would not otherwise be earning wages.

UPSHOT
In conclusion, employers and carriers must be vigilant and not assume that just because there is an injury, wage loss benefits are owed. It may be that the wage loss is due to some other circumstance than the work injury. Particular situations were this scenario may be applicable in addition to seasonal sports teams, are with employees who are students, retirees, or incarcerated criminals.

10 Steps to Take Control of Workers' Compensation Costs

#10. Promptly Investigate All Claims.

For employers time is your worst enemy. Once a case has been filed it can take up to 12 months before it is heard by a Magistrate. If an employee waits for two years and then files a claim, then the time period expands to 36 or more months. That is a long time to remember all of the facts surrounding an alleged injury at work. It is even harder to disprove its occurance after so much time. Further, witnesses may relocate and no longer be available.

A good report of injury is recommended. This is a form that is used by the injured employee to record the injury. It should be signed and dated by the employee and his or her supervisor. Like a police report it should record all of the relevant facts surrounding the incident. The report should be saved for future use. It should also be reviewed along with all other reports of injury from time to time in order to reveal any patterns of injuries. After review and analysis, proper steps can then be taken to address problem areas and consequently to acheive the goal of lowering workers' compensation costs.

The 100 Week Rule

The “100 week rule” comes from Section 301(5)(e) of the Workers Disability Compensation Act:

"If an employee, after having been employed pursuant to this subsection for less than 100 weeks loses he or her job for whatever reason, the employee shall receive compensation based upon his or her wage at the original date of injury."

What it means is that if employee who has sustained a work related injury and who has returned to “reasonable employment” stops working “for whatever reason”, then that employee is entitled to continued wage loss benefits.

So if someone is hurt at work and then comes back to restricted-reasonable work, and works in a restricted capacity less than 100 weeks (2 years), that person is entitled to wage loss benefits when they stop working. The employee needs to be under restrictions when they stop working. The employee is paid wage loss benefits based on the original date of injury. Further, the employee is entitiled to the accelerated, "60 day" status on his or her petition. "60 day" status only means that the petition gets higher priority than other petitions.

It has been successfully argued that in the event that an employee tests positive for drugs during that 100 weeks, that the employee will not obtain wage loss benefits because he or she had refused the offer of "reasonable employment". Testing positive for drugs has the same effect as a voluntary removal from employment.

Workers' Compensation Fraud

Q:

I want to know how to report workmans comp
FRAUD.....THANK YOU

A:

Thank you for your comment regarding fraud.

I suggest that you contact the insurance company that is handling the claim. If you do not know the insurance company, but you do know where the individual worked, click this link to look up the name of the insurance company:

http://www.cis.state.mi.us/bwuc/wkrcomp/asp/sr_bwdc.asp

Once you have the name of the insurance company you then need to click this link for the insurance company’s address:

http://www.michigan.gov/documents/wca_ins_co_list_79584_7.pdf

I would also suggest that you contact the attorney general’s office at

G. Mennen Williams Building, 7th Floor
525 W. Ottawa St.
P.O. Box 30212
Lansing, MI 48909
Main Number (517) 373-1110
Toll Free (877) 765-8388
Facsimile (517) 373-3042
http://www.michigan.gov/ag

Lastly you should contact your local sheriff.

A Great Article...

How States Differ - Entrepreneur.com - MSNBC.com:
"http://msnbc.msn.com/id/9339501/"

Above is a link to a great article from Edward J. Priz of Entrepreneur.com regarding the need for workers compensation insurance.

What is a fringe benefit?

A fringe benefit is something other than an hourly wage that benefits the employee or enhances the employment relationship.  A fringe benefit refers, obviously, to compensation or benefit other than wages.

Sometimes its easier to describe something by what it is not.  The courts have determined that clearly it is not overtime, premium pay, or cost of living adjustment.  Also it is not employer contributions to union funds, the employer's social security and unemployment compensation contributions, and the employer's workers' compensation insurance premiums.  Although these items may benefit the employee and enhance the employment relationship, they are statutorily mandated and every employer must provide these items and therefore they are not a fringe benefits.

The Michigan courts have determined that fringes include all items of compensation or advantage agreed upon in a contract of hiring which are measurable in money, whether in the form of cash or as an economic gain to the employee.  Hite v. Evart Prod.s Co. 34 Mich. App. 247 (1971).  Furthermore, a fringe benefit "represents a loss to the employee that the employee has to either replace independently or not receive at all." Ember v. Wayne Village, 197 Mich App 307, 311 (1992).

Traditionally, an employer's contribution to health insurance, group insurance benefits, dental benefits, and an employer's contribution to a pension plain are all common fringe benefits. Also, use of a company truck and an employee's receipt of a monthly housing allowance are items that have been determined to be fringe benefits.  Lastly, rent on the company house plaintiff lived in, his phone bill and free beef, could be bargained for as fringe benefits within the meaning of MCL 418.371(2).