Gilroy v. General Motors Corp.

• Decision Date: 25 April 1988
• Docket Number: Docket No. 88424
• Citation: 166 Mich.App. 609,420 N.W.2d 829
• Parties: Luella GILROY, Plaintiff-Appellee, v. GENERAL MOTORS CORPORATION, Assembly Division, Defendant-Appellant. 166 Mich.App. 609, 420 N.W.2d 829
• Court: Court of Appeal of Michigan — District of US

Page 829

420 N.W.2d 829

Luella GILROY, Plaintiff-Appellee, v. GENERAL MOTORS CORPORATION, Assembly Division Defendant-Appellant.

Docket No. 88424.

166 Mich.App. 609, 420 N.W.2d 829

Court of Appeals of Michigan.

Submitted June 3, 1987.

Decided Sept. 17, 1987.

Released for Publication April 7, 1988.

Leave to Appeal Denied April 25, 1988.

[166 MICHAPP 611] James A. Tanielian, and Daryl Royal, of counsel, Dearborn, for plaintiff-appellee.

Conklin, Benham, McLeod, Ducey & Ottaway, P.C., by Martin L. Critchell, Detroit, for defendant-appellant.

Before WAHLS, P.J., and J.H. GILLIS and SIMON, ^* JJ.

PER CURIAM.

Defendant, General Motors Corporation, Assembly Division (GM), appeals by leave granted from an opinion of the Workers' Compensation Appeal Board affirming a hearing referee's order requiring defendant to pay a portion of plaintiff's attorney fees. We affirm.

The merits of plaintiff's claim are not before us for review. Plaintiff was involved in an argument with another GM employee on May 27, 1982. The other employee knocked plaintiff down, causing injury to plaintiff's ankle. For approximately one year thereafter, plaintiff received sickness and accident insurance benefits from Metropolitan Life Insurance Company. In July, 1982, plaintiff filed a petition to recover workers' compensation benefits from defendant, which initially filed a notice of defenses but later entered into a voluntary payment agreement. Under that agreement, payment of benefits for the first year were set at $238.49 per month, with $230 of sickness and accident benefits to be coordinated. Thereafter, payments of $830 per month in extended disability benefits were to be coordinated. Defendant would not agree, however, to pay as part of plaintiff's attorney fees an amount equal to thirty percent of the sickness and accident benefits paid to plaintiff by [166 MICHAPP 612] Metropolitan Life Insurance Company and coordinated with the first year of workers' compensation benefits.

Ultimately, the voluntary payment agreement was submitted to a hearing referee. As a result, the hearing referee dismissed plaintiff's petition. He also ordered defendant to "pay plaintiff's attorney a fee of 30% of the [sickness and accident] benefits that were adjusted to [or coordinated with] compensation benefits." The WCAB affirmed, and this appeal ensued.

Our review of a decision of the WCAB is limited to questions of law and, in the absence of fraud, restricted to whether there is any competent evidence to support findings of fact. Williams v. Chrysler Corp., 159 Mich.App. 8, 406 N.W.2d 222 (1987); Aquilina v. General Motors Corp., 403 Mich. 206, 213, 267 N.W.2d 923 (1978); M.C.L. Sec. 418.861; M.S.A. Sec. 17.237(861); Const. 1963, art. 6, Sec. 28.

Defendant argues that it should not have been ordered to pay any of plaintiff's attorney fees because such fees were not taxable against it under any statute. Generally, a party in a workers' compensation case must bear his or her own attorney fees absent a statute providing otherwise. Gross v. Great Atlantic & Pacific Tea Co., 87 Mich.App. 448, 450, 274 N.W.2d 817 (1978), lv. den. 406 Mich. 944 (1979); Boyce v. Grand Rapids Asphalt Paving Co., 117 Mich.App. 546, 552, 324 N.W.2d 28 (1982), lv. den. 417 Mich. 1023 (1983). The WCAB found that the attorney fees in this case were taxable against defendant under M.C.L. Sec. 418.354; M.S.A. Sec. 17.237(354), which provides, in pertinent part:

Except as otherwise provided in this section, the employer's obligation to pay or cause to be paid weekly benefits other than specific loss benefits [166 MICHAPP 613] under section 361(2) and (3) shall be reduced by these amounts:

* * *

(b) The after-tax amount of the payments received or being received under a self-insurance plan, a wage continuation plan, or under a disability insurance policy provided by the same employer from whom benefits under section 351, 361, or 835 are received if the employee did not contribute directly to the plan or to the payment of premiums regarding the disability insurance policy. If such self-insurance plans, wage continuation plans, or disability insurance policies are entitled to repayment in the event of a worker's compensation benefit recovery, the carrier shall satisfy such repayment out of funds the carrier has received through the coordination of benefits provided for under this section. Notwithstanding the provisions of this subsection, attorney fees shall be paid pursuant to section 821 to the attorney who secured the worker's compensation recover." (Emphasis added.)

Thus, in the event sickness and accident benefits are received under a disability insurance policy provided by the employer, a claim for workers' compensation benefits is subsequently brought and found to have merit, and the disability insurer is entitled to repayment, the workers' compensation benefits carrier must repay the insurer from the funds that it saved through the coordination of the sickness and accident benefits with the workers' compensation benefits. In addition, in such a situation, the worker's attorney fees "shall be paid pursuant to section 821" of the Workers' Disability Compensation Act.

Section 821 of the act provides, in pertinent part:

"When a group disability or hospitalization insurance[166 MICHAPP 614] company ... enforces an assignment given to it as provided in this section, it shall pay, pursuant to rules established by the director, a portion of the attorney fees of the attorney who secured the worker's compensation recovery." M.C.L. Sec. 418.821(2); M.S.A. Sec. 17.237(821)(2).

Defendant stresses that under Sec. 821 the obligation to pay a portion of a worker's attorney fees hinges on whether the disability insurance obtained an assignment of the worker's right to workers' compensation benefits and enforces that assignment. In the instant case, there has been no evidence proffered suggesting that such an assignment was made. Indeed, the WCAB noted that "the parties' arguments assume that no arrangements were made for reimbursement to the [disability insurance] carrier, and our opinion is so premised." In addition, defendant in this case apparently is not required to reimburse the disability insurance carrier for the sickness and accident benefits paid. No reimbursement has occurred pursuant to M.C.L. Sec. 418.354; M.S.A. Sec. 17.237(354), but, rather, only "an accounting" has been made.

Even though defendant is apparently not technically required to reimburse the disability insurance carrier, and even though that carrier apparently obtained no assignment of plaintiff's right to workers' compensation benefits, we find that Sec. 354, and hence Sec. 821, apply because, under the facts in this case, defendant stands in the place of the disability insurance carrier. As stated by the WCAB:

"Without coordination, the S & A [sickness and accident] carrier would normally enforce an assignment of benefits to prevent double recovery by the employee for benefits advanced, as the latter would receive the full rate of compensation benefits. [166 MICHAPP 615] The difference would be reimbursed by the workers' compensation carrier to the S & A carrier, which would then pay its share of attorney fees under Section 821. The problem herein lies in the lack of any reimbursement by defendant or its workers' compensation carrier. If defendant herein is absolved from any reimbursement, is Section 354(1)(b) thereby nullified 'notwithstanding the provisions of this subsection'? Does payment of the attorney's fee become solely the employee's responsibility, presumably by retaining the difference in S & A benefits that would otherwise be assigned?

"Plaintiff herein has had his compensation benefits reduced in the same manner as though he had signed a reimbursement agreement, but defendant (or its compensation carrier) has received coordination credit for that portion of the S & A payments not reimbursed to the S & A carrier. With the credit thus obtained through its obligation to pay only reduced (or no) compensation, it can be reasonably inferred that the employer (and/or its compensation carrier) stands in the place of the S & A carrier under Section 821, thus becoming responsible for the attorney fee based on the S & A benefits representing the balance of workers' compensation." (Emphasis in original.)

Under the circumstances in this case, we do not believe that the disability insurance carrier can be characterized as an insurer independent of defendant since no truly independent insurance company would intentionally fail to take an assignment from a worker for reimbursement of sickness and accident payments in the event of the worker's entitlement to workers' compensation benefits. Under such a scenario, a disability insurer which agrees with an employer not to take an assignment from a worker helps to circumvent the proper payment by the employer of a worker's attorney fees incurred in obtaining workers' compensation[166 MICHAPP 616] benefits, even while the employer reaps the substantial benefit of a coordination credit for any disability payments made by the insurer. In this case, because defendant stands in the place of the disability insurance carrier, defendant, under Sec. 821, is required to pay a portion of plaintiff's attorney fees incurred in securing workers' compensation benefits.

We find without merit defendant's argument that the WCAB decision is at odds with the policy enunciated in Boyce, supra, where this Court found that a hospital, which neither...