Assume a claimant achieves an award of wage loss benefits and then returns to employment that pays less that the average wage earned at the time of the injury. Are benefits payable at all? What is the method for calculating post injury wages if those wages, on average, exceed the average injury wage?
These questions were clarified by the Court of Appeals' opinion in KUZMA v. GREAT LAKES BEV. CO., 2004 Mich. App. LEXIS 1988 which was decided this week.
The importance of the opinion is that when a claimant returns to a lesser paying job, the method for calculating weekly benefits must be made each week. The post injury wages cannot be averaged.
The employer had argued that the claimant is not entitled to ongoing wage loss benefits because he returned to work and his average post injury earnings exceeded his average weekly wage at the time of his injury. The Court of Appeals disagreed and pointed out that the statute is clear: post injury wages must be calculated each week.
Insurance claims representatives and adjusters are therefore encouraged to examine a claimant's post injury wage each week in order to remain in compliance with the law. In the event the claimant has returned to work, the claimant's post injury wages cannot be merely averaged and compared to the injury average. Indeed there maybe certain weeks where the post injury wage exceeds the injury average wage, in which instance no wage loss benefits would be paid. A differential wage loss benefit should be paid however for those weeks where the post injury average does not meet or exceed the injury average weekly wage.
Here are some pertinent quotes from the decision:
"If the employee's average weekly wage is less than that received before the injury, the benefits payable to the employee are eighty percent of the difference before the employee's "after-tax weekly wage before the date of injury and the after-tax weekly wage" that the employee is able to earn after the injury. MCL 418.301(5)(b) (emphasis supplied). The WCAC utilized an average weekly wage in this formula. This is erroneous. Had the Legislature intended that the wages be averaged, it would have included such language in the statute. Thus, remand for recalculation of plaintiff's benefits consistent with this opinion is necessary."
MCL 418.301(5) provides, in part:
If disability is established pursuant to subsection (4), entitlement to weekly wage loss benefits shall be determined pursuant to this section and as follows:
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(b) If an employee is employed and the average weekly wage of the employee is less than that which the employee received before the date of injury, the employee shall receive weekly benefits under this act equal to 80% of the difference between the injured employee's after-tax weekly wage [*3] before the date of injury and the after-tax weekly wage which the injured employee is able to earn after the date of the injury, but not more than the maximum weekly rate of compensation ... [Emphasis supplied.]