Michigan Worker's Compensation Law

Summary of Changes to the Act

 

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.  

 

Changes to the Cross Appeal Policy from the Appellate Commission

Effective March 1, 2012 in accordance with MCL 418.861a (6) and (7) and Rules 4 and 6 the following policy will be strictly adhered to:

Parties must file a Claim for Review (clearly labeled "cross" at the top of the Form WC-262) not later than 30 days after the appellant's brief is received.  The cross-appellant's brief is due 30 days after the appellant's brief is received.  EXTENSIONS FOR FILING BRIEF IN SUPPORT OF CROSS-APPEAL WILL NO LONGER BE GRANTED.  A party filing a cross appeal shall attach an affidavit stating the date on which the appellant's brief was received.  A reply, while optional, to the cross appeal is due 30 days after the cross-appellant's brief is filed.  Cross appeals are derivative; if the appeal is withdrawn or dismissed, the cross appeal is extinguished. 

Delayed cross appeals will not be accepted.  An extension of time in which to file a reply brief does not extend the time in which to file a cross appeal.  

 

Changes to the Worker's Compensation Act

Below is a link to document that was prepared by the Senate staff for use by the Senate in its deliberations.  It summarizes changes to the Worker's Compensation Act.  The Act took immediate effect on December 19, 2011.

 

5002: SUMMARY AS ENROLLED (Date Completed: 12-19-11) - WORKER'S COMPENSATION CHANGES

 

And here is a link to the new Act.

Michigan's Governor Snyder issues press release regarding changes to WC Law

Snyder signs bills to update workers' comp, unemployment insurance systems

Monday, Dec. 19, 2011 LANSING, Mich. - Gov. Rick Snyder today signed legislation strengthening the state's Unemployment Insurance program and updating workers' compensation laws. "These bills are critical to our reinvention of Michigan," Snyder said. "Modernizing our unemployment insurance and workers' compensation systems will ensure their solvency and integrity."   House Bill 5002, sponsored by state Rep. Brad Jacobsen, continues the state's mission to protect workers who are injured on the job, while ensuring that the workers' compensation system remains viable. H.B. 5002 is now P.A. 266 of 2011. The bill promotes certainty to workers and employers by codifying years of Supreme Court and Court of Appeals decisions. Under the bill, a person receiving workers' compensation benefits must take a job that is within his or her skill set, and that they can physically perform, if it is available to them. If not, the person risks losing the compensation benefits. "The system's goal must be to help injured workers get back on the job as soon as possible while making sure the benefits they deserve during recovery are paid fully and promptly," Snyder said. "These changes to this 100-year-old act will help ensure that the promise of compensation for injured employees is around for the next century." The legislation supports the Workers' Compensation Agency's goal of gaining efficiencies through electronic filing and results in a savings of over $400,000 through reorganization of the mediation system for contested workers' compensation issues. Benefits held up by contested cases will move more quickly. Legal costs also will be reduced as the bill allows settlements to be entered without an additional hearing before a magistrate. Issues such as fraudulent claims by employees or the failure of employers to secure coverage increase the cost of workers' compensation. H.B. 5002 requires the agency to report to the Legislature on measures taken to address such issues.

 

So Why Have Worker’s Compensation Insurance at all?

 

Depending on the industry, worker’s compensation insurance can be a significant expense.  So, why is it mandatory?  What if there was no worker’s compensation insurance at all?  There was at time, just over 100 years ago when this was true.  As you will discover, employers and employees are far better off with it, than without it.

Worker’s Compensation insurance is a product of the Industrial Revolution.  Before its existence, there were gross disparities between the amount that an injured worker recovered and the amount that employer’s had to pay for those injuries.  An example is instructive.

During the late 1800’s copper was heavily mined out of Michigan’s Upper Peninsula.  Workers and their families migrated from Europe to work the mines.  It was a dangerous work environment.  Explosions and cave-ins were common.   From 1905 through 1911, the mines in the United States killed an average of sixty-one men per year, or more than one per week.  At the end of this unfortunate run, one out of every ten men killed in the United States mining industry died on the Keweenaw Peninsula.[1]  Prior to the advent of worker’s compensation insurance in Michigan in 1912, an injured miner could sue his employer for injuries incurred on the job, but the employer could defend the case with the defenses of assumption of the risk, contributory negligence and the fellow servant rule. 

Pursuant to the assumption of the risk doctrine, the employer did not force the miner into the mine, and the miner understood the dangers associated with the work; therefore the miner could not sue the mine owner.

On the other hand, explosions and cave-ins left widows and children without fathers.  Savvy attorneys then entered the scene.  Coupled with sympathetic judges and juries, the widows and children began to see significant recoveries.  Recoveries so large, and unpredictable, employers were negatively affected.  Some miners, or the families that were left behind, would experience significant recoveries.  Others would get nothing.  It became exceedingly difficult for mine owners to budget and turn a profit.  The same disparities were experienced throughout all industries, especially those involving heavy manual labor or extremely dangerous activities. 

The answer, of course, was the advent of mandatory workmen’s compensation insurance.  (It was not until 1969 that the legislature changed the title from “workmen’s” to “worker’s”.)   Next year marks Michigan’s 100^th year anniversary of mandatory worker’s compensation insurance.  The law is really a tradeoff between the rights and duties of the employer and employee.  No longer can the employer defend on the basis that the injury was caused be the employee’s own negligence, or by a co-worker, or by an assumption of the risk.  In exchange thereof, the employee receives weekly wage loss benefits that equate his weekly take home pay.  Further, the employee is not entitled to pain and suffering damages.  All he can recover for his injury are wage loss, medical and vocational rehabilitation (re-training) benefits.  For amputations, employers are to pay a specific number of weeks for the limb that is lost.  The most that a fully dependent widow(er) may recover is 500 weeks of wage loss benefits. 

In 2010, 24,097 Michigan workers were injured on the job and experienced loss time of 7 days or more.  In the year 2000, that number was 54,207.  Last year, the average litigated case settled for $65,868.14.  Michigan is presently served by 17 Worker’s Compensation Magistrates.[2]  Clearly the employment environment is more predictable and reasonable with it than without it.

 

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[1] KEWEENAW NATIONAL HISTORICAL PARK, Historic Resource Study by Larry Lankton, Department of Social Sciences, Michigan Technological University, For the National Park Service, United States Department of the Interior, 2005

[2] 2010 ANNUAL REPORT, Michigan Workers Compensation Agency.

 

Governor reduces the number of Magistrates to 17

Effective January 26, 2010, the number of Magistrates will be reduced to 17.  The Workers Disability Compensation Act calls for a total number of Magistrates of 30.  However, that number was reduced to 26 by executive order of the Governor back in 2003.

The purpose of the order is that, "productivity and caseload justify a further reduction in the number of members of the Workers Compensation Board of Magistrates, which will contribute to a smaller and more efficient state government."

The announcement came via Executive Order promulgated on October 29, 2009.

It is assumed at this point that the Governor will attain this goal through attrition.

There was a rumor that a number of hearing sites were to be closed, but that nothing further has developed along those lines.

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."