Michigan Worker's Compensation Law

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."

Statutory Employment

"Statutory Employment" is found in Section 171 of the Workers Disability Compensation Act.

"Statutory Employment" unfortunately occurs all too frequently with employers who do not carry workers compensation insurance. It is a criminal misdemeanor to operate without the insurance.

An example is illustrative: Assume contractor A is without workers compensation insurance for its employees. Assume also that Contractor A enters into a contract with Principal B to perform some service. Assume also that Employee C is hired by Contractor A and performs some work for Principal B, and is hurt on Principal B's job-site. Because Contractor A is uninsured for workers compensation purposes, Principal B becomes the "statutory employer" of Employee C, and Employee C can make a workers compensation claim against Principal B.

In Peck/Auto Club Ins. Asso, vs. Elliott's Amusements, LLC, 2005 ACO #140the Workers Compensation Appellate Commission addressed the differences between a statutory employer and a direct employer.

Peck was hired by Elliott's to build and operate an amusement park game. When the carnival season ended in Michigan, Elliott's permitted its manager to use the carnival equipment for a three week carnival in Florida. The manager asked Peck to come to Florida and erect and operate the equipment. Peck was involved in a serious accident en-route to Florida, sustaining injuries. Was Peck an employee of Elliot's at the time of the accident? Or was Peck an employee of the manager for the independent venture in the State of Florida? Elliott's had workers compensation insurance while the manager did not, so it was to Peck's benefit to assert that he was an employee of Elliott's.

Peck won. The Workers Compensation Appellate Commission determined that Peck was a direct employee of Elliott's at the time of the automobile accident. It also commented that even if Peck was not a direct employee, then Elliott's was a statutory employer because its manager had hired Peck and the manager was uninsured. The Commission determined that Elliott's and its manager were in a joint venture together. Whenever there is a joint venture, each entity involved in the joint venture has liability and therefore must be insured.

Supreme Court Addresses Specific Loss

When someone suffers an amputation of a limb or loss of a body part, such as an eye, Michigan's Worker's Compensation Act provides for "specific loss" benefits.

There is a schedule of benefits found in Section 361 of the Act. For example, loss of a thumb provides the injured party with 36 weeks of wage loss benefits (payable at the weekly benefit rate, based on the claimant's average weekly wage). Loss of an eye provides 162 weeks of benefits.

The Act also provides for Total and Permanent Disability (T&P) benefits if someone has loss the use of a combination of limbs and body parts. For example if someone has lost the sight in both eyes then they are entitled to an increase in wage loss benefits up to 2/3 of the state average weekly wage. ($496.33 for 2004).

The Supreme Court in Cain vs. Waste Management clarified that the claimant may suffer something less than a full amputation as long as the claimant demonstrates, "no practical usefulness" of the limb or body part. Furthermore, when it comes to the loss of legs, arms, or any combination of eyes, arms or legs (one eye and one leg, for example) the determination of "usefulness" is made without reference to corrective devices such as prosthetics, braces or glasses.

Mr. Cain was awarded T&P benefits because he sustained an amputation of one leg and the damage to the other leg met the "no practical usefulness" standard.

New Job and Still Getting Wage Loss Benefits

Question: Can someone return to work and still receive wage loss benefits?

The answer is yes if they did not earn as much as they did when they were injured. The Michigan statute provides in Section 301(5) the if the employee's average weekly wage is less than that received before the injury, the benefits payable to the employee are 80% of the difference before the employee's "after-tax weekly wage before the date of injury and the after-tax weekly wage" the the employee is able to earn after the injury.

However if the employee stays at that new job paying the lower wage longer than 250 weeks (5 years) then the law presumes that the earning capacity has been restored and wage loss benefits arguably should end. Michigan is a "wage loss" state which means that wage loss benefits are paid based upon an employee's ability or capcity to earn. An employer can establish a new wage earning capacity after the court considers four factors:

Employee's No-Fault Claim Denied as Untimely

In Watson v. Waste Management Of Michigan, Inc., et al., an unpublished opinion from the Court of Appeals, the Court denied an employee's claim for no-fault benefits. The employee was injured at work in an automobile accident with the company vehicle. The employer's no-fault insurance carrier defended the claim on the basis that the claim was not made within one year pursuant to the terms of the policy. The employee argued that timely notice of the injury was provided to the employer as part of the workers' compensation claim. The Court of Appeals ruled that the notice given to the workers' compensation claims service was insufficient notice to the employer's no-fault insurer and therefore dismissed the employee's no-fault claim.

Generally the employee would not be able to receive both workers' compensation wage loss benefits and no-fault wage loss benefits. The workers' compensation benefit is primary and the no-fault benefit will coordinate against the workers' compensation benefit. Also the no-fault wage loss benefit is slightly more the the workers compensation benefit.

Job Site Electrocution - No Intentional Tort

The estate of a worker who was electrocuted when the crane he was directing touched overhead wires cannot sue under the intentional tort exception to the exclusive remedy of the Workers' Disability Compensation Act despite the fact that the employer received a MIOSHA citation after the incident. The MIOSHA citation is not evidence that the employer had actual knowledge that an injury was certain to occur.

The estate of the worker was unable to prove that the employer possessed (1) actual knowledge, (2) that injury was certain to occur and, (3) that the employer willfully disregarded that knowledge.

- Flores v. E.C. Korneffel Co.

Fringes and Michigan Workers Compensation

Are fringes taken into consideration when calculating an average weekly wage? If so, how are fringes calculated?

What are fringe benefits? Fringe benefits include things that are provided by the employer such as the cost of any insurance, whether it be health, vision, dental, life and disability; employer contributions to a pension plan and vacation and holiday pay. Fringe benefits are only calculated when they are discontinued.

Occasionally an employer will continue to provide these benefits during disability, however there is no obligation to do so.

In the event that fringes are discontinued during disability, then the average weekly wage is increased to compensate for the value of the discontinued fringe benefit. It is important to remember that the date of injury controls when it comes to calculating both the average weekly wage and the value of the discontinued fringe. Therefore if a fringe benefit is discontinued during a period of disability we use the value of that fringe benefit as it existed on the date of injury. This is important to remember as the cost of health insurance increases between 15 and 25 percent per year.

The other important item to remember regarding the calculation of fringe benefits is that the value of the discontinued benefit is added to the average weekly wage only to the extent that it raises the average weekly wage to two thirds of the state average weekly wage.

Workers Compensation, the Sole Proprietor and Health Insurance.

Question: What if you have a sole proprietorship which has formed a separate business and has no coverage for workers compensation insurance. The sole proprietorship only has health insurance, which is not primary. The sole proprietorship does medical transcription for a company & gets carpal tunnel syndrome. The health insurance carrier declines coverage stating it was work related. Would this person be able to file a claim back on the business which  hired them to do the transcription work for them?

Answer...

Positive for Drugs and Alcohol? Benefits can be denied

Question: If a person tests positive for drugs or alcohol post accident,
does anything happen to their benefits? Can the claim be denied?

Answer: Our statute says that "the establishment of a
disability does not create a presumption of wage
loss." In other words, just because a claimant is
injured at work does not mean that he will
automatically get wage loss benefits. It is the
injury that must cause the subsequent loss of wages. If a
claimant was otherwise injured at work, but was subsequently terminated for theft (or drugs for example), then he or she is not entitled to wage loss benefits.

Establishing a New Wage Earning Capacity.

Michigan is called a "wage loss state." Workers Compensation wage loss benefits are not payable unless the claimant demonstrates that he has suffered a loss earning capacity due to an injury at work.

There are times, however, when a claimant can establish a new wage earning capacity. In that event, then he or she is not entitled to wage loss benefits.

How can an employer demonstrate that the claimant has established a new wage earning capacity? There are four factors: