Franks v. White Pine Copper Div., Copper Range Co.

• Decision Date: 07 October 1985
• Docket Number: 71921,Docket Nos. 70901,71717
• Citation: 375 N.W.2d 715,422 Mich. 636
• Parties: Larry J. FRANKS, Plaintiff-Appellee, v. WHITE PINE COPPER DIVISION, COPPER RANGE CO., Defendant-Appellant. John H. CHAMBERS, Plaintiff-Appellee, v. GENERAL MOTORS CORPORATION, Defendant-Appellant. Anacleto J. GOMEZ, Plaintiff-Appellee, v. GENERAL MOTORS CORPORATION, CHEVROLET MOTOR DIVISION, Saginaw Metal Casting Plants, Defendant-Appellant. 422 Mich. 636, 375 N.W.2d 715
• Court: Michigan Supreme Court

Page 715

375 N.W.2d 715

Larry J. FRANKS, Plaintiff-Appellee, v. WHITE PINE COPPER DIVISION, COPPER RANGE CO.,

Defendant-Appellant.

John H. CHAMBERS, Plaintiff-Appellee, v. GENERAL MOTORS CORPORATION, Defendant-Appellant.

Anacleto J. GOMEZ, Plaintiff-Appellee, v. GENERAL MOTORS CORPORATION, CHEVROLET MOTOR DIVISION,

Saginaw Metal Casting Plants,

Defendant-Appellant.

Docket Nos. 70901, 71717, 71921.

422 Mich. 636, 375 N.W.2d 715

Supreme Court of Michigan.

Argued Jan. 8, 1985.

Decided Oct. 7, 1985.

Wisti, Jaaskelainen, Makinen & Goodman, P.C. by Gordon J. Jaaskelainen, Hancock, for plaintiff-appellee L. Franks.

Vairo, Mechlin, Tomasi, Johnson & Manchester by Paul J. Tomasi, Houghton, for defendant-appellant White Pine Copper Div., Copper Range Co.

Bockoff & Zamler, P.C. by Daryl Royal, Southfield, for plaintiff-appellee J. Chambers.

Sachs, Nunn, Kates, Kadushin, O'Hare, Helveston, & Waldman, P.C. by Granner S. Ries, Detroit, for Anacleto Gomez.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., Richard F. Zapala, Asst. Atty. Gen., Lansing, for Rudy C. Redmond, Director, Bureau of Workers' Disability Compensation.

Bodman, Longley & Dahling, Theodore Souris (P20803), Lloyd C. Fell (P13359), Detroit, for defendant-appellant Gen. Motors Corp.; M.J. Basford, W.W. Wallace, D.M. Davis, Gen. Motors Corp., Detroit, of counsel.

Conklin, Benham, McLeod, Ducy & Ottaway, P.C. by Martin L. Critchell, Detroit, for amicus curiae Mich. Self-Insurer's Ass'n.

Lacey & Jones by Gerald M. Marcinkoski, Detroit, for amicus curiae Chrysler Corp.

Braun, Kendrick, Finkbeiner, Schafer & Murphy by E. Louis Ognisanti and Bruce L. Dalrymple, Saginaw, for defendant-appellant Gen. Motors Corp., Chevrolet Motor Div., Saginaw Metal Casting Plants; M.J. Basford, W.W. Wallace, D.M. Davis, Gen. Motors Corp., Detroit, of counsel.

BOYLE, Justice.

I INTRODUCTION

We granted leave in these consolidated cases arising under the Michigan Worker's Disability Compensation Act of 1969, M.C.L. Sec. 418.101 et seq.; M.S.A. Sec. 17.237(101) et seq., to consider the interpretation of two recently enacted "set off" or "coordination of benefits" provisions that became effective in 1982. In each of these cases, we must decide whether an employer may apply the appropriate setoff to reduce its workers' compensation obligation with respect to payments made after the effective date of the provision, to workers whose injuries occurred prior to that date.

In the Chambers and Gomez cases, we consider whether Sec. 354, M.C.L. Sec. 418.354; M.S.A. Sec. 17.237(354), of the act permits an employer to set off against its obligation to pay workers' compensation benefits, employer-financed pension and social security benefits received by the disabled employee after March 31, 1982, Sec. 354's effective date, where both the workers' compensation benefits and the other employer-financed benefits relate to time periods after such a date.

In the Franks case, we will consider whether an employer may apply Sec. 358, M.C.L. Sec. 418.358; M.S.A. Sec. 17.237(358), of the act to reduce the amount of its liability for workers' compensation where that liability is based upon periods of disability prior to Sec. 358's effective date of January 1, 1982, but "payable" after that date, by setting off against that liability unemployment compensation benefits chargeable to that employer and received by the disabled employee to compensate for the wage loss during those same pre-1982 periods. We will also determine whether the Court of Appeals erred in concluding that defendant waived application of the two-year-back rule under the facts and circumstances of this case.

Both Secs. 354 and 358 were enacted as parts of a series of legislative reforms of the workers' compensation laws of Michigan. Although Sec. 358 was enacted on December 30, 1980, by 1980 P.A. 357, it did not become effective until January 1, 1982. ¹ Section 354 became effective March 31, 1982, as part of a final series of enactments on December 30, 1981. 1981 P.A. 203.

The cases under consideration today involve employees who were injured prior to the effective dates of the pertinent sections. In Chambers and Gomez, the plaintiffs' employer, General Motors, applied Sec. 354 to reduce its workers' compensation obligation, on the basis of liability for disability during periods after that section's March 31, 1982 effective date, to workers injured prior to that date. In Franks, the employer, White Pine Copper, sought to reduce its liability for workers' compensation benefits payable by the amount of unemployment compensation payment the employee had already received to compensate him for his wage loss during earlier periods also covered by the workers' compensation award.

In both instances the Workers' Compensation Appeal Board and the Court of Appeals

held that Sec. 354 and Sec. 358 could not be applied to reduce workers' compensation obligations to workers injured prior to their respective effective dates. ²

II THE CHAMBERS AND GOMEZ CASES

A. Facts and Procedural History

Plaintiff John Chambers worked for defendant General Motors Corporation from April 1, 1943, until September 30, 1974, when he retired. Prior to retirement, plaintiff earned average weekly wages before tax of $238.80. Since October 1, 1974, plaintiff has received retirement benefits funded by defendant under its pension plan which have an after tax value of $103.75 per week. ³ He also received old age social security benefits in the amount of $94.34 per week.

Shortly after his retirement, on October 16, 1974, plaintiff filed a petition for workers' compensation benefits, alleging that he had developed disabling pulmonary and heart diseases as a result of his employment with defendant. A hearing was held on November 5, 1975, and an open award was entered in plaintiff's favor on February 16, 1976, by the hearing referee. Defendant was ordered to pay plaintiff $106 per week from October 1, 1975, on the basis of a finding of an injury incurred on September 30, 1974, the plaintiff's last day of employment. The award was affirmed by the Worker's Compensation Appeal Board on January 30, 1978. In addition, since January 1, 1982, Mr. Chambers has received $43 per week in supplemental workers' compensation benefits pursuant to M.C.L. Sec. 418.352; M.S.A. Sec. 17.237(352). ⁴

Plaintiff Anacleto Gomez was injured on May 31, 1979, when he slipped and fractured his left ankle in the course of his employment with defendant General Motors Corporation. Defendant filed a report of injury and voluntarily paid compensation to Mr. Gomez at the rate of $161 per week from the date he was injured until February 25, 1980. Shortly thereafter, plaintiff filed a petition for workers' compensation benefits, alleging disability as a result of the 1979 injury to his left leg and ankle. In a decision mailed December 17, 1981, which was not appealed and is accordingly final, the hearing referee found plaintiff to be partially disabled and entered an open award ordering compensation payments of $161 per week. Since January 1, 1982, Mr. Gomez has also received supplemental compensation benefits in the amount of $17 per week, pursuant to Sec. 352. In addition, plaintiff receives pension benefits of $179.36 per week, net after tax value, which are funded entirely by General Motors.

On December 30, 1981, the Legislature enacted 1981 P.A. 203, which included the coordination of benefits provisions of Sec. 354, M.C.L. Sec. 418.354; M.S.A. Sec. 17.237(354). This section provides that an employer may coordinate employee benefits, by applying against it workers' compensation obligations payable for compensable periods after its effective date, that portion of certain other benefits, such as pensions and social security payments, also received by the employee and financed by the employer.

On March 31, 1982, the effective date of Sec. 354, General Motors began coordinating benefits and notified plaintiffs Chambers and Gomez that it was reducing their weekly workers' compensation benefits in accordance Thus, prior to the effective date of Sec. 354, Mr. Chambers was receiving the following weekly payments: $106 basic workers' compensation, $43 supplemental workers' compensation, $94.34 social security, and net after tax pension benefits of $103.75. Section 354 authorized as an offset against workers' compensation fifty percent of social security payments, in this case $94.34 divided by 2 equals $47.17, and that proportion of retirement pension, after taxes, that have been funded by employer contributions, in this case $103.75. Because the sum of those portions of the employer funded benefits subject to coordination, $47.17 plus $103.75 equals $150.92, exceeded the workers' compensation payment of $106, coordination resulted in termination of basic workers' compensation benefits with the exception of the supplemental benefit payment of $43.

with the provisions of that section. Because the sum of those portions of their employer-funded benefits subject to coordination exceeded their basic workers' compensation payments, elimination of plaintiffs' weekly compensation payments resulted, except for the supplemental benefits received pursuant to Sec. 352 which were not subject to coordination.

In the Gomez case, prior to the effective date of Sec. 354, plaintiff was receiving pension benefits entirely funded by defendant with an after tax value of $179.35. Since the weekly after tax value of Mr. Gomez's pension exceeded his basic workers' compensation rate of $161, coordination resulted in termination of all workers' compensation benefits except for $17 per week in supplemental benefits. He is, of course, still receiving his pension benefits.

Both plaintiffs requested and were granted hearings under Rule 5 ⁵ as to the propriety of General Motor's action in coordination of benefits. In both cases, the hearing referee ruled that the offset provisions of Sec. 354 could not be applied...