Hiltz v. Phil's Quality Market

Decision Date22 August 1983
Docket Number67273,Docket Nos. 67272
Citation417 Mich. 335,337 N.W.2d 237
PartiesKurt HILTZ, Plaintiff-Appellant, v. PHIL'S QUALITY MARKET, Buckeye Union Insurance Company, and Second Injury Fund, Defendants-Appellees.
CourtMichigan Supreme Court

Kelman, Loria, Downing, Schneider & Simpson by Ann Curry Thompson, Detroit, for plaintiff-appellant.

John F. Vos, III, Richard D. Toth, Sommers, Schwartz, Silver & Schwartz, P.C., Southfield, Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., Joseph M. Binno, Asst. Atty. Gen., Detroit, for defendants-appellees, Phil's Quality Market and Buckeye Union Ins. Co.

Conklin, Benham, McLeod, Ducey & Ottaway, P.C. by Martin L. Critchell, Detroit, for amicus curiae Michigan Self-Insurers' Ass'n.

BOYLE, Justice.

This workers' compensation case focuses on the interpretation of M.C.L. Sec. 418.862; M.S.A. Sec. 17.237(862), 1 the so-called 70% provision. Specifically, we address the issue whether an employer (or its workers' disability compensation carrier) who has paid benefits to an employee during the appeal of a workers' compensation case may claim those payments as pre-payments or credit against the employer's ultimate liability or, stated conversely, whether the exclusive source of the employer/carrier's recovery, on the facts here presented, is the Second Injury Fund.

I

The plaintiff, Kurt Hiltz, was a 17-year-old minor employed by defendant Phil's Quality Market (defendant Buckeye Union's compensation insured). On May 10, 1974, plaintiff suffered a compensable injury to his right hand. Defendant carrier voluntarily paid compensation of $56 per week 2 from May 11, 1974, through October 4, 1974, when plaintiff returned to work until he was laid off on December 31, 1974.

Plaintiff filed a petition for hearing on December 16, 1974. The decision of the hearing referee was rendered on August 28, 1975. Plaintiff was awarded 136 weeks of specific loss benefits at the rate of $128 per week 3 for the loss of the industrial use of the thumb (65 weeks), index finger (38 weeks) and middle finger (33 weeks) of his right hand. See M.C.L. Sec. 418.361(2); M.S.A. Sec. 17.237(361)(2). The award also included reimbursement of $545 rehabilitation training expense. The hearing referee further found that at the conclusion of the specific loss period, plaintiff would be entitled to partial disability benefits in accordance with MCL 418.361; M.S.A. Sec. 17.237(361).

The employer appealed this decision to the Workers' Compensation Appeal Board. While this appeal was pending, M.C.L. Sec. 418.862; M.S.A. Sec. 17.237(862) became effective. Pursuant to its provisions, the employer paid 70% of the $128 award for specific loss benefits from August 28, 1975, through December 18, 1976. After this date, the employer continued 70% payments for partial disability benefits.

On December 6, 1977, the WCAB entered its order modifying the hearing referee's decision. The WCAB found that plaintiff had not proven the loss of the industrial use of his thumb; thus, the award of 65 weeks of specific loss benefits was reversed. Specific loss benefits for the loss of the industrial use of the right index and middle fingers, totaling 71 weeks from the date of injury, were affirmed. Thereafter, plaintiff would receive benefits for a continuing partial disability in accordance with M.C.L. Sec. 418.361; M.S.A. Sec. 17.237(361). The reimbursement The employer/carrier's application for leave to appeal to the Court of Appeals was denied on March 31, 1978.

for rehabilitation benefits was denied.

Thereafter, in its computation of benefits, the employer/carrier credited all payments made to the plaintiff against the total specific loss benefits due--$9,088.00 (71 weeks X $128). There is no dispute regarding the employer/carrier's entitlement to a credit for the benefits voluntarily paid between May 10, 1974, and October 4, 1974; to a credit for 70% benefits paid from August 28, 1975 (the date of hearing referee's decision), to September 12, 1975 (the termination of the WCAB award of 71 weeks of specific loss benefits); and to a credit for 70% of the wage loss differential benefits paid from September 13, 1975, to December 6, 1977. 4 However, credit was also claimed for the 70% benefits paid from September 19, 1975, to December 16, 1976, the 65-week period for the loss of the industrial use of the thumb to which the WCAB found plaintiff not to be entitled. Plaintiff took exception to this credit.

On May 18, 1978, the employer/carrier filed a petition for determination of rights with the Bureau of Workers' Disability Compensation, joining the Second Injury Fund as a party.

A hearing was held on July 17, 1978, and, on October 4, 1978, the hearing referee entered a decision finding that the 70% benefits paid during the 65-week period were benefits in excess of the WCAB award. The referee found that these benefits could not be credited against the remaining compensation due but, rather, that reimbursement to the carrier must come from the Second Injury Fund. This decision was affirmed by the WCAB on October 9, 1979.

In an unpublished memorandum opinion, the Court of Appeals reversed. Docket Nos. 48272, 48273 (April 30, 1981). Adopting the reasoning of Stewart v. Saginaw Osteopathic Hospital, 100 Mich.App. 502, 298 N.W.2d 911 (1980), lv. den. 410 Mich. 916 (1981), the Court concluded that the employer/carrier could set off payments made under the 70% statute. This Court granted leave to appeal. 414 Mich. 866 (1982).

II

The controversy in this case centers on the interpretation of M.C.L. Sec. 418.862; M.S.A. Sec. 17.237(862). In resolving disputed interpretations of statutory language, it is the function of a reviewing court to effectuate the legislative intent. Aikens v. Dep't of Conservation, 387 Mich. 495, 499, 198 N.W.2d 304 (1972). If the language used is clear, then the Legislature must have intended the meaning it has plainly expressed, and the statute must be enforced as written. In re Certified Questions, 416 Mich. 558, 567, 331 N.W.2d 456 (1982); Dussia v. Monroe County Employees Retirement System, 386 Mich. 244, 249, 191 N.W.2d 307 (1971).

There is no disagreement regarding the meaning of the first portion of Sec. 862 which reads as follows:

"A claim for review filed pursuant to sections 859 or 861 shall not operate as a stay of payment to the claimant of 70% of the weekly benefit required by the terms of the hearing referee's award. Payment shall commence as of the date of the hearing referee's award and shall continue until final determination of the appeal or for a shorter period if specified in the award. Benefits accruing prior to the referee's award shall be withheld until final determination of the appeal."

During the pendency of an appeal, 70% of the weekly benefits as determined by the hearing referee are to be paid to the employee from the date of the hearing referee's award until the appeal is finally resolved.

The dispute herein involves the next three sentences of Sec. 862 which we will address seriatim. Sentence four of Sec. 862 states:

"If the weekly benefit is reduced or rescinded by a final determination, the carrier shall be entitled to reimbursement in a sum equal to the compensation paid pending the appeal in excess of the amount finally determined."

This language addresses the situation in which the result of the final appeal determination is that the weekly benefit is either reduced or rescinded. In such a situation, if the amount of compensation paid by the employer pending appeal (70% benefits) is more than the amount ultimately found to be due the employee as of the final determination date, then the employer is entitled to be reimbursed for this difference.

The controversy here focuses on the meaning of "in excess of the amount finally determined". Plaintiff contends that the proper interpretation of this language is that, upon final determination of the appeal, the amount in "excess" is all 70% benefits which were paid for those weeks ultimately found to be weeks for which no benefits are due. The carrier must seek reimbursement for this "excess" from the Second Injury Fund. Utilizing this interpretation, the 70% benefits paid herein during the 65-week period rescinded by the WCAB award are in excess of the amount actually due for that time period and thus subject to reimbursement.

Defendants, on the other hand, contend that "in excess of the amount finally determined" refers to an excess of their total liability to the plaintiff as finally determined. Here, the total amount of specific loss benefits which the WCAB found to be due plaintiff is $9,088. Pursuant to the 70% provision, considerably less than this amount was actually paid. Since additional monies are still owed to the plaintiff under the WCAB award, defendants claim that no "excess" was realized which would be subject to reimbursement.

In our view, plaintiff's construction strains the clear language of the statute. Plaintiff claims that the "excess" applies to those weeks during the pendency of the appeal in which 70% benefits had been paid but, in view of the final award, need not have been paid. Such an analysis is based on a fallacy because the employer/carrier is bound by Sec. 862 to pay 70% benefits throughout the entire time in which the appeal is pending. When the final award is determined, it is immaterial whether or not 70% benefits were paid for "certain weeks" now found to be weeks for which no benefits were due, 5 because during the appeal period the employer/carrier must pay 70% benefits for each week under the hearing referee's award.

The key question is not for what period 70% benefits need not have been paid, but, rather, what amount of benefits were not paid while the employer/carrier's appeal was pending which were subsequently found to be owing for a given time period. If, for example, the final award is $10,000, and during the pendency of the...

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