The Michigan legislature changed Michigan's Workers Disability Compensation Act on December 19, 2011. The purpose for the changes to the law arose out of an effort to reduce the number of worker’s compensation claims made in the State and limit Worker’s Compensation liability in certain ways for employers in Michigan. Fundamental changes to the definitions of personal injury, disability, and weekly wage loss benefits were incorporated into the Act.
The Definition of Personal Injury
Michigan is a “wage loss” State. This means that benefits are payable in the event that a work injury causes a limitation of wage earning potential. Originally the Act provided for the payment of compensation to employees who receive personal injuries arising out of and in the course of employment, or who experience an occupational disease or disability that limits the employee’s wage earning capacity.
The change to the definition of personal injury now incorporates and addresses pre-existing conditions. Until about 2004, an injured employee could recover workers compensation benefits for a personal injury as long as he or she could demonstrate a change of symptoms. In 2004 the Supreme Court determined that, in the event of pre-existing conditions, the employee had to demonstrate a change of the underlying pathology; not just a change of the symptoms. The new changes codify the Supreme Court’s interpretation. Now, pursuant to the changes, a personal injury, in order to be covered by the act, is compensable if the work caused, contributed to, or aggravated pathology so as to create a pathology that was medically distinguishable from any pathology that existed before the injury.
The Definition of Disability
Originally, the Act defined "disability" as a limitation of employee’s “wage earning capacity” in work suitable to his or her qualifications and training resulting from a personal injury or work-related disease.
Under modifications adopted by the Legislature, limitations of wage earning capacity occur only if a personal injury covered under the Act result in the employee’s being unable to perform all jobs paying the maximum wages in work suitable to his or her qualifications and training, including work that could be performed using the employees to transferable skills.
Changes to the Act now include the elements of total disability and partial disability. The disability is total if employee is unable to earn wages, in any jobs paying maximum wages in work suitable to his or her qualifications and training. Disability is partial if the employee retains a wage earning capacity at a pay level less than his or her maximum wages and work suitable to his or her qualifications and training.
The Definition of Wage Earning Capacity
The biggest, and perhaps the most controversial change to the Act, is found in the definition of “Wage Earning Capacity”. It is now defined as the wages the employee earns or is capable of earning a job reasonably available to the employee, whether or not wages are actually earned. No longer can an employee prove that she cannot return to her job and be entitled to benefits. For the purposes of establishing limitation of wage earning capacity, an employee has an affirmative duty to seek work reasonably available to him or her, taking into consideration the limitations from the work related personal injury or disease. The Worker’s Compensation Magistrate will consider good faith job search efforts to determine whether job reasonably available. Benefits can be reduced if there are jobs available that the employee is capable of earning, whether or not those wages are actually earned.
Only a few of the changes to the Worker’s Compensation Act are set forth above. Without question the changes to the Act are significant to both employers and employees. Interestingly the 2010Annual Report from the Worker’s Compensation Agency, reveals that there has already been a reduction of the number of lost time claims over 7 days from 54,201 claims filed in the year 2000 to 24,097 claims filed in 2010. Litigated claims commenced during the year also were reduced from 20,066 to 9,566 over the same period of time.