Michigan Supreme Court Rules Second Injury Fund Required Only to Reimburse Dual-Employer “Coordinated” Amount of Workers’ Compensation Benefits Payable to Injured Employee

In a 4-2 decision (Viviano, J., not participating), the Supreme Court overruled the decision of the Court of Appeals in Rahman v. Detroit Bd. of Education, 245 Mich. App. 103 (2001), and held that the state Second Injury Fund is not required to reimburse employers for the total amount of workers’ compensation benefits payable to injured employees where the employer has chosen not to “coordinate”, i.e., reduce the workers’ compensation benefits by the amount of disability benefits being paid to the same employee.  In a variety of unique circumstances, the state second injury fund (a fund with pooled assets funded by employers for payment of workers’ compensation benefits) reimburses employers for amounts it pays to employees where reimbursement or indemnity is owed but not otherwise available.  In a dual employment context, where an employee has two jobs but is injured in a job where he is making less money, the amount of his weekly wage benefits are set by statute and based on his total income, i.e., the income he receives from working both jobs.  Rahman interpreted the statutory provisions to require the state second injury fund to reimburse the paying “injury employer” for the total difference in the amount of benefits paid out and the amount that employer was actually responsible for (being less because that employer paid the employee only a portion of his total weekly wage).  This, even though the employer could have, but chose not to, coordinate the employee’s workers’ compensation payments with the amount of disability payments he was receiving from the same employer.  MCL 418.354(1).

This particular case is a bit more complex, as noted by the separate dissents of Justices Cavanaugh and McCormack.

This case involves a governmental employer and a volunteer firefighter who was an employee of the township, but too, a full-time employee of GM.  He was making much more money with GM but he was injured while working in his capacity as a volunteer firefighter.  That meant that the township (and its insurer) was responsible for the statutorily set weekly wage benefits.  It sought to recoup the difference from the second injury fund, even though it was not coordinating the workers’ compensation benefits with the employee’s receipt of disability benefits from the township.  The Board of Magistrates and the Michigan Compensation Appellate Commission (MCAC)  ruled in favor of the township.  The Court of Appeals, after an earlier remand order from the Supreme Court, followed Rahman, and affirmed the decision of the MCAC.

As noted by Justice Cavanaugh in his dissent, the Workers Disability Compensation Act allows public employers of volunteers to “waive” coordination of benefits.  In this case, the stipulated facts did not demonstrate the public employer exercised the statutory prerequisite to note this by ordinance.  Nonetheless, Justice Cavanaugh goes through the analysis demonstrating that if the employer is entitled to “waive” coordination by statute, then the second injury fund should not be required to reimburse the employer for the amount it pays out to the employee at all because of the exclusionary language in mcl 418.372(3).  The Commission has not previously interpreted this provision in this way to apply to any person other than a true volunteer.

In a different vein, Justice McCormack correctly points out that the coordination provision, even though it is stated in “mandatory” terms, i.e., an employer “shall coordinate benefits…”, has not been deemed to be mandatory and employers are allowed to decide not to coordinate benefits.  She also notes the statutory provision requiring the second injury fund to reimburse the employer does not admit of a straightforward limitation on the fund’s obligation vis-a-vis the dual-employer under these circumstances.

In a related case that I am defending in the Court of Appeals, the Court issued an abeyance order awaiting the outcome of Smitter.  However, in my case, the governmental entity actually did pass an ordinance explicitly waiving the coordination.  This brings my case directly in  line with the situation referred to and analyzed by Justice Cavanaugh, although I disagree with his conclusion because of the Commission decisions to the contrary, Rahman and its explicit overruling by this case notwithstanding.  We will have to wait and see if the Michigan Court of Appeals appreciates this fine distinction, or if it thinks it is a distinction with a difference.

The opinion is attached here:  Smitter.op

About cjtucker06

Owner of law firm since July 2014; Handles all types of appellate matters and assists other lawyers with complex litigation and insurance coverage issues; Admitted to the Supreme Court of the United States, the Sixth Circuit Court of Appeals and the State Bar of Michigan; Expertise in prosecuting and defending appeals with several significant successes in the Sixth Circuit Court of Appeals, the Michigan Supreme Court and the Michigan Court of Appeals; Author of briefs amicus curiae in the Michigan Supreme Court for the Michigan Defense Trial Counsel and the Insurance Institute of Michigan; Represents Insurance Companies, Major International Business, Governmental Entities, Law Enforcement Officers and County Sheriffs. Board of Directors, Michigan Defense Trial Counsel Amicus Committee Co-Chair, Michigan Defense Trial Counsel Military - Retired Major in the Judge Advocate General (JAG) Corps of the United States Army, Brigade Judge Advocate and Staff JAG officer for the Maneuver Training Center, Camp Grayling, Michigan; Recipient of the Army's Meritorious Service Medal (the highest medal of honor available to Soldiers serving in non-combat roles); 2012 Graduate of the Judge Advocate Officer Advanced Course, at The Judge Advocate Legal Center and School, Charlottesville, Virginia. United States Navy Reserves, Combat Warfare Qualification, January 1989 to July 2003 Former law clerk to Justice Stephen J. Markman, Michigan Supreme Court, Research Attorney, Michigan Court of Appeals. Insurance Coverage Associate Plunkett Cooney; Environmental Law Attorney at Squire Sanders, now Squire Patton Boggs; Master's Degree in Environmental Law; Environmental Law Scholar, ALI/ABA Washington, D.C., Juris Doctorate, Vermont Law School, Environmental Editor, Vermont Law Review; Treasurer and Finalist, Moot Court Advisory Board.
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