Corbett v. Plymouth Tp., Docket Nos. 97085

• Decision Date: 27 December 1996
• Docket Number: 97599 and 102521,Nos. 2-4,Docket Nos. 97085,s. 2-4
• Citation: 453 Mich. 522,556 N.W.2d 478
• Parties: Shawn CORBETT, Plaintiff/Appellant, v. PLYMOUTH Township, Defendant/Appellee, Dennis J. DANE, Plaintiff/Appellant, v. STROH BREWERY COMPANY AND AETNA CASUALTY & SURETY, Defendants/Appellees. Willis B. WHITE, Plaintiff/Appellant, Cross/Appellee, v. McLOUTH STEEL PRODUCTS AND MICHIGAN MUTUAL INSURANCE COMPANY, Defendants/Appellees, Cross/Appellants. Calendar
• Court: Michigan Supreme Court

Page 478

556 N.W.2d 478

453 Mich. 522

Shawn CORBETT, Plaintiff/Appellant, v. PLYMOUTH Township, Defendant/Appellee, Dennis J. DANE, Plaintiff/Appellant, v. STROH BREWERY COMPANY AND AETNA CASUALTY & SURETY,

Defendants/Appellees.

Willis B. WHITE, Plaintiff/Appellant, Cross/Appellee, v. McLOUTH STEEL PRODUCTS AND MICHIGAN MUTUAL INSURANCE

COMPANY, Defendants/Appellees, Cross/Appellants.

Docket Nos. 97085, 97599 and 102521.

Calendar Nos. 2-4.

Supreme Court of Michigan.

Argued Oct. 8, 1996.

Decided Dec. 27, 1996.

Robert F. James, Southfield, for plaintiff/appellant Corbett.

Miller, Cohen, Martens, Ice & Geary, P.C. by Murray A. Gorchow and Valencia L. Jarvis, Southfield, for plaintiff/appellant Dane.

Levine, Benjamin, Tushman, Bratt, Jerris & Stein, P.C. by Charles P. Burbach, Southfield, for plaintiff/appellant, cross/appellee White.

Parsons & Bouwkamp, P.C. by Stephen C. Bouwkamp and William T. Buie, Livonia, for defendant/appellee in Corbett.

Cummings, McClorey, Davis & Acho, P.C., by Daniel J. O'Leary, Livonia, for defendants/appellees in Dane.

Lacey & Jones by Gerald M. Marcinkoski, Birmingham, for defendants/appellees, cross/appellants in White.

Daryl Royal, Dearborn, and Richard E. Shaw, Detroit, amici curiae for Michigan Trial Lawyers Association.

Conklin, Benham, Ducey, Listman & Chuhran, P.C. by Martin L. Critchell, Detroit, for Michigan Self-Insurers' Association.

LEVIN, Justice.

The question presented concerns statutory coordination of weekly worker's compensation benefits with a lump sum paid to the employee pursuant to his election for early withdrawal, in full liquidation of his interest, from a pension or retirement program established or maintained by his employer.

The statute ¹ provides that the employer's obligation to remit weekly worker's compensation payments shall be reduced by the proportion of payments, "with respect to the same time period" as the worker's compensation payment, from a pension or retirement program represented by the employer's contributions to the program.

We conclude, in Corbett and Dane, that, when a lump sum is withdrawn early from a pension or retirement program, the weekly worker's compensation payment shall be reduced by an amount that will amortize, in equal weekly payments, the proportion of the after-tax amount of the lump sum contributed by the employer over the employee's life expectancy.

We conclude in White that, when a lump sum is withdrawn early from a pension or retirement program and rolled over into an IRA, the employer is not entitled to an offset or reduction in the weekly worker's compensation payment therefor before the earlier of withdrawal from the IRA or the time when payments from the pension or retirement program would have been made had there not been early withdrawal.

We further conclude in White that defendant, McLouth Steel Products, is not entitled to a reduction in the weekly worker's compensation payment in respect to amounts paid by the Pension Benefit Guarantee Corporation on account of the pension obligation to the plaintiff employee of the predecessor corporation, McLouth Steel Corporation.

We conclude still further in White that the Worker's Compensation Appellate Commission did not err in affirming the magistrate's finding of mental disability.

I

Section 354 of the statute provides that where the weekly worker's compensation payment is "with respect to the same time period" for which payments from a pension or retirement program are made, the weekly compensation payments shall be reduced by a proportional amount, based on the ratio of the employer's contributions to the total contributions to the program, of the after-tax amount of the pension or retirement payments being received by the employee pursuant to the program. ² Section 354 was added in 1981 ³ to address the perceived problem of a retired worker receiving, "redundantly," both worker's compensation payments and other payments also funded by the employer. ⁴ Section 354, thus, provides that fifty percent of old-age ⁵ and disability insurance payments under the Social Security Act, ⁶ and the proportion of pension, retirement, ⁷ and profit sharing ⁸ and other payments funded by the employer, ⁹ shall be coordinated with and shall reduce the weekly worker's compensation payment due from the employer.

II

In Corbett, the Worker's Compensation Appeal Board affirmed the magistrate's decision to coordinate over a one-year period by reducing the weekly compensation payment by 1/52 of the amount of the lump sum attributable to the employer's contributions. ¹⁰

In Dane, the WCAC affirmed the magistrate's decision to coordinate by reducing the weekly compensation payment by the amount the employee would have received if he had used the lump sum to purchase an annuity. ¹¹

In White, the employee rolled over the lump sum into an investment retirement account in a tax-free exchange and contended that there should not be any reduction in the weekly worker's compensation payment because he did not retain the lump sum and further receipt of benefits will be deferred until he withdraws money from the IRA. The WCAC did not address the issue of coordination. The Court of Appeals agreed with the defendant employer, McLouth Steel Products, that the lump sum payment was subject to coordination, but did not address the manner in which this should be accomplished. ¹²

III

Coordination of weekly worker's compensation payments with weekly, monthly, or other periodic payments from a pension or retirement program does not appear to have presented difficult issues of coordination of the amount by which a weekly worker's compensation payment is to be reduced. The instant cases, however, concern coordination with a lump sum paid at the employee's election for early withdrawal from the program before "normal" retirement.

The plaintiff employee in Corbett contends that the weekly worker's compensation payment due in the week in which the lump sum was "received" should be reduced in its entirety, but not below zero, and that there should be no reduction whatsoever in succeeding weeks. ¹³ He argues that it is only in the week that the lump sum is actually received that any amount is "received or being received by the employee" pursuant to the pension or retirement program (emphasis added).

The defendant employer in Dane and White contends that coordination should be accomplished by eliminating all weekly worker's compensation payments entirely until the sum of all weekly compensation payments so eliminated aggregate the amount of the lump sum withdrawn, whereupon the employer would be obliged to resume making weekly compensation payments. ¹⁴

While the opening clauses of subsection 354(1) expressly refer to "weekly or lump sum payments" of worker's compensation benefits, there is no express reference to lump sum payments of pension or retirement benefits. The Legislature was, however, aware of the possibility of "early or reduced pension or retirement benefits." Subsection 12 provides that an employee is not obliged to apply for early or reduced retirement benefits. ¹⁵ But it does not appear from this language whether the Legislature recognized the possibility of lump-sum payment of early or reduced pension or retirement benefits. In all events, the Legislature did not expressly provide for the manner of coordinating lump-sum payments on early withdrawal from a pension or retirement program.

Because the Legislature provided no express guidance concerning statutory coordination of weekly worker's compensation benefits with a lump sum paid to the employee pursuant to his election of early withdrawal, we turn to a consideration of what would constitute the most appropriate construction of the statute. We approach this task in an effort to "do, responsibly, fittingly, intelligently, with and within the given frame." ¹⁶

Worker's compensation benefits are social welfare wage replacement benefits for workers whose injuries arise out of and in the course of their employment. Such benefits are normally paid weekly. The amount of the award is based on the injured worker's average weekly wage. ¹⁷ These payments function as current wage replacement, and an award generally extends for the duration of the disability. ¹⁸ The statutory scheme includes an implicit assumption that the disability may continue over the employee's lifetime. In Drouillard v. Stroh Brewery Co., 449 Mich. 293, 299, 536 N.W.2d 530 (1995), this Court observed:

Worker's compensation is one unit in a loosely connected system of wage-loss protection that also includes unemployment compensation, social security old-age, disability, and survivors benefits, aid to families with dependent children, and general assistance. Franks v. White Pine Copper Div., 422 Mich. 636, 654, 375 N.W.2d 715 (1985). Such wage-loss legislation is designed to restore to employees a portion of wages lost because of three major causes of wage loss: physical disability, unemployment, and old age. The crucial operative fact is that of wage loss; the cause of the wage loss merely dictates the category of legislation applicable. See, generally, 4 Larson, Workmen's Compensation, § 97, p 18-9 (1995 Supp, p 106).

Retirement benefits are also elements of the compensation package, and employees work for years and sometimes an entire work lifetime in partial consideration of anticipated retirement benefits. Retirement benefits are normally distributed monthly. Benefits are calculated and distributed in accordance with the retirement program and the retiree's life expectancy. Retirement plans generally provide for regular payments in a fixed amount to the retiree for life.

We conclude, essentially agreeing with the plaintiff employee in Dane and the alternative contention of the employee in Corbett ¹⁹, that, where a lump sum is received on early withdrawal, weekly compensation payments should be reduced by an amount that will amortize, ²⁰ in...