Drouillard v. Stroh Brewery Co.

• Decision Date: 20 July 1995
• Docket Number: Nos. 96422,No. 5,96423,s. 96422,5
• Citation: 449 Mich. 293,536 N.W.2d 530
• Parties: Paul A. DROUILLARD, Plaintiff-Appellant, v. STROH BREWERY COMPANY and Aetna Casualty & Surety Company, Defendants-Appellees. Gerald RISS, Plaintiff-Appellant, v. STROH BREWERY COMPANY and Aetna Casualty & Surety Company, Defendants-Appellees. Calender
• Court: Michigan Supreme Court

Page 530

536 N.W.2d 530

449 Mich. 293

Paul A. DROUILLARD, Plaintiff-Appellant, v. STROH BREWERY COMPANY and Aetna Casualty & Surety Company,

Defendants-Appellees.

Gerald RISS, Plaintiff-Appellant, v. STROH BREWERY COMPANY and Aetna Casualty & Surety Company,

Defendants-Appellees.

Nos. 96422, 96423.

Calender No. 5.

Supreme Court of Michigan.

Argued Jan. 11, 1995.

Decided July 20, 1995.

Miller, Cohen, Martens, Ice & Geary, P.C. by Murray A. Gorchow, Southfield, for plaintiffs.

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

Opinion

BRICKLEY, Chief Justice.

At issue in this appeal is the coordination of worker's compensation and early pension benefits pursuant to M.C.L. § 418.354; M.S.A. § 17.237(354). In particular, plaintiffs contend that they were compelled to accept early payment of their retirement benefits and are therefore exempt from coordination of these benefits under M.C.L. § 418.354(1)(d); M.S.A. § 17.237(354)(1)(d). We hold that plaintiffs' interpretation of this statutory provision is erroneous and that M.C.L. § 418.354(1)(d); M.S.A. § 17.237(354)(1)(d) does not preclude coordination where an employee is required to accept early pension benefits. We therefore affirm the disposition of these cases by the Court of Appeals and remand them to the hearing referees for further proceedings consistent with this opinion.

I

On February 8, 1985, Stroh Brewery Company announced its plan to close its brewery and to permanently lay off all brewery employees effective December 31, 1985. As a result of the plant closing, Stroh liquidated its employee pension plan and paid its employees pension benefits. Plaintiff Riss, age fifty-three at the time, received $64,505.13 in a lump sum. Plaintiff Drouillard, then age fifty-four, received $52,748.03 in a lump sum.

At the time the liquidation plan was announced, the contract plan administrator for the pension fund conducted meetings to explain the effect of the liquidation. Different classes of employees were invited to the meetings (salaried, hourly, able and disabled employees), and defendant prepared pension distribution applications for all employees. Riss attended one of these meetings; Drouillard did not attend the meetings and instead received his pension distribution information by mail.

At these assemblies the contract plan administrator gave all employees several forms, including a benefit election form. This form provided the employees with two choices regarding their pension benefits. First, employees could have their pension monies held in a trust, which would then be transferred to an insurance annuity until the employee requested distribution. Second, employees could take receipt of their pension benefits either in the form of a single lump-sum payment or rolled over into an individual retirement account. It is significant to plaintiffs' argument that they were told that it would be in their best interests to reject the trust option.

Defendant's contract plan administrator testified that he instructed Stroh's employees that if they left their pension monies in the trust it would earn no interest and therefore it was not wise to leave the money in the trust. It is disputed whether the plan administrator told the employees that they had the option of leaving the money in the trust. However, he did advise that persons with questions about the effect of payouts on their worker's compensation benefits should seek legal counsel.

Paul Drouillard began working for Stroh's as a general laborer on June 4, 1956. At some point during the late 1960's or early 1970's, Drouillard injured his back while at work. He occasionally aggravated this injury, and he sometimes missed work as a result. On February 19, 1985, Drouillard slipped and fell on oil and allegedly sustained injuries to his neck, right shoulder, back, and musculoskeletal system. Drouillard never returned to work after this accident.

Drouillard received worker's compensation benefits from defendant from February 20, 1985 until June 26, 1985. He filed a petition for continuing worker's compensation on July 2, 1985. On November 20, 1985, Drouillard received the lump-sum pension payment of $52,748.03 from the trust fund. In March, 1986, the magistrate found that Drouillard had sustained an aggravation of his preexisting degenerative arthritic condition and granted an open award of worker's compensation benefits. The magistrate held that Stroh could coordinate Drouillard's medical and social security benefits, but held that Stroh provided insufficient proof to allow coordination of pension benefits. The Worker's Compensation Appeal Board submitted an order reversing the magistrate in this regard, stating that the worker's compensation payments were subject to coordination in accordance with §§ 354(1)(d) and 354(13).

Gerald Riss began work for the Stroh Brewery Company on April 2, 1956. During his employment he sustained injuries to his back, right shoulder, and wrist. Riss injured his back in 1957, 1965, and 1975. In 1965, his injuries required surgery, and he missed six months of work, returning to restricted light-duty work. In 1973, Riss injured his shoulder, which also required surgery; however, he did not miss work at that time. In 1973, and again in 1982, Riss sustained injuries to his wrist. From 1982 to 1985, this injury became progressively worse. However, he continued to work through May 28, 1985. He had surgery on his wrist two days later and was unable to return to work before Stroh closed the plant on May 31, 1985. Riss received benefits from May 31, 1985, through July 30, 1985. After recuperating from the wrist surgery, Riss was capable of returning to restricted work, but did not do so.

In May, 1988, Riss was granted an open award of worker's compensation by the hearing referee. The hearing referee allowed Stroh to "coordinate sickness and accident benefits, unemployment benefits, and pension benefits received by plaintiff, in accordance with the [worker's compensation] act." The WCAB opined that the funds were set aside for retirement and because Riss did not retire, but instead was terminated, and because Stroh had shut down the plant, the payments were not for retirement. Instead, the board classified the benefits as "severance benefit[s] involuntarily received," which are not within the purview of the coordination language of § 354. 1991 WCABO 761, 771.

The Court of Appeals consolidated these cases and affirmed the WCAB determination in Drouillard and reversed the WCAB determination in Riss. See Drouillard v. Stroh Brewery Co., 199 Mich.App. 67, 501 N.W.2d 229 (1993). Citing Barr v. Stroh Brewery, 189 Mich.App. 549; 473 N.W.2d 716 (1991), the Court determined that the lump-sum payouts were subject to the coordination language of the worker's compensation act. Drouillard, supra at 71, 501 N.W.2d 229.

II

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, 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 (1995 Supp, p 106).

Because most social legislation in Michigan was implemented in unrelated fragments, failure to coordinate resulted in an accumulation of benefits. For example, before coordination, it was not unusual for an employee to collect both unemployment and worker's compensation benefits at the same time. However, if an employee undergoes a period of wage loss, it does not follow that he should receive multiple wage loss benefits simultaneously. An employee can experience only one wage loss and, in any logical or coherent system, should receive only one wage-loss benefit at any one time. Id.

As part of the 1981 amendments of the worker's compensation act, the Legislature added § 354, which provides for the coordination of wage-loss benefits. The purpose of this legislation was to prevent duplicate wage-loss payments while maintaining suitable wage-loss benefits. ¹ The coordination of worker's compensation and early pension benefits pursuant to § 354 presents a complicated set of issues previously only considered by the Court of Appeals. ²

III

Plaintiffs concede that under M.C.L. § 418.354(1)(d); M.S.A. § 17.237(354)(1)(d), pension benefits ordinarily are subject to coordination. ³ However, the statute itself provides exceptions. For example, subsection 354(1)(e) allows the employer to reduce the proportional amount of the pension where the employee has also contributed to the pension. Additionally, subsection 354(14) prohibits an employer from coordinating a disability pension plan that was in existence on March 31, 1982.

Plaintiffs contend that they are exempted from coordination by M.C.L. § 418.354(12); M.S.A. § 17.237(354)(12). In reference to this provision, plaintiffs contend that subsection 354(12) precludes coordination in all cases in which an employer "compels" employees to accept early retirement or pension benefits. We first note that it is not clear that plaintiffs were compelled to accept early retirement benefits. It is apparent that plaintiffs were told that the more expedient course would be to accept their pension benefits. However, it is also true that this was general advice to a disparate audience and plaintiffs were specifically instructed to seek legal advice if they had questions. However, even accepting arguendo plaintiffs' contention that they were compelled to accept early pension benefits, we believe that...