Hoste v. Shanty Creek Management, Inc.

Decision Date04 May 1999
Docket NumberDocket No. 108599,No. 9,9
Citation459 Mich. 561,592 N.W.2d 360
PartiesLawrence J. HOSTE, Plaintiff-Appellee, v. SHANTY CREEK MANAGEMENT, INC., Hartford Insurance Group, and The Second Injury Fund (Dual Employment and Total and Permanent Provisions), Defendants-Appellants. Calendar
CourtMichigan Supreme Court

Moceri, Hoste & Bejin, P.C. (by Douglas W. Hoste ) Mount Clemens, MI, Daryl Royal, of counsel, Dearborn, MI, for the plaintiff-appellee.

Cox, Hodgman & Giarmarco (by Marsha M. Woods and Wendy Zimmer Linehan ), Troy, MI, for the defendants-appellants.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Mitchell J. Wood and Caleb B. Martin, Jr., Assistant Attorneys General, Lansing, MI, for Second Injury Fund.

Health Care Legal Group, P.C. (by Frank Shoemaker ), Lansing, MI, amicus curiae for Michigan Health and Hospital Association.



Plaintiff, a member of the National Ski Patrol System, Inc. (NSPS), 1 suffered an injury while "forerunning" a course at Shanty Creek Management Inc.'s Schuss Mountain ski resort in advance of a race. We granted leave to appeal to decide whether plaintiff was an "employee" as defined under the Worker's Disability Compensation Act of defendant Shanty Creek at the time of the injury. We hold that plaintiff was not an employee of Shanty Creek under the WDCA and therefore not entitled to worker's compensation benefits. We accordingly reverse the judgment of the Court of Appeals.


At the time of plaintiff's injury in January 1990, he was employed as a full-time journeyman electrician by Hoste Brothers, Inc. On weekends in the winter months, plaintiff, by virtue of his having been qualified for and thus securing membership in the NSPS, served as a ski patroller at the Schuss Mountain resort of Shanty Creek.

To join the local ski patrol at Shanty Creek, plaintiff was interviewed by the local ski patrol director. After he was selected, he was then scheduled by the local director for ski patrol duty at Shanty Creek.

On its application forms, the NSPS recognizes two categories of patrollers, "professional" and "volunteer." At the time of plaintiff's injury, Shanty Creek employed a "professional" NSPS patroller during the week at Schuss Mountain, while "volunteer" NSPS members provided patrolling services on weekends. Although none of the members of the weekend patrol received wages, each was accorded other benefits in exchange for services. The benefits included not having to pay for lift tickets, skiing privileges for family members, free hot beverages, and reduced prices on certain meals and merchandise.

In order to remain in good standing as a weekend patroller at Schuss Mountain, NSPS members were required to be at the resort at least half the days it was open for weekend skiing. Plaintiff testified that he usually reported for duty every weekend during the ski season.

The last weekend in January 1990 was no exception. In addition to the usual skiing activity, however, there was to be a race. According to plaintiff, he was asked by a resort employee to help check out the course in advance of the race. The purpose of such a "forerun" is to ensure the safety of the course and to set a track for the racers to follow. Plaintiff's injury occurred when he misjudged a gate at the bottom of a hill. It is undisputed that he is totally and permanently disabled.

Defendant Shanty Creek and its insurance carrier voluntarily paid worker's compensation benefits in connection with the injury until April 1990. At that time, they filed a notice of intent to stop payments on the basis that the plaintiff was not an employee of Shanty Creek.

Plaintiff subsequently filed an application for hearing or mediation. Hearings were held over the course of six days, and the magistrate considered deposition testimony as well. The magistrate found that plaintiff performed his patrolling duties under a "contract of hire" with Shanty Creek, and therefore he was an employee of Shanty Creek as defined under § 161(1)(b) of the WDCA. 2 The magistrate thus held that plaintiff was entitled to worker's compensation benefits and medical expenses from defendant Shanty Creek and its insurer, and that defendant Second Injury Fund was responsible for 91.6 percent of the weekly benefits of $427 under the "dual employment" provision of the WDCA. 3 The fund also was held liable for differential benefits. 4

Both Shanty Creek and the Second Injury Fund appealed to the WCAC. The WCAC reversed the finding of the magistrate that plaintiff was an employee of Shanty Creek, and accordingly held that he was not entitled to benefits under the WDCA.1995 Mich. ACO 612, 621. The WCAC reasoned that the magistrate erred in ending his analysis upon finding an implied contract of hire under § 161(1)(b), and instead, "a full application of § 161(1) to the particular facts" was required. Id. at 615. According to the WCAC, " § 161(1) requires that an individual's situation must be examined in respect to both the entity they are associated with and the particular characteristics of that association." Id. The WCAC reasoned therefore that the magistrate "erred as a matter of law by merely finding an association ('implied contract of hire') with a private employer under § 161(1)(b) without examining the character of plaintiff's association with [Shanty Creek] under § 161(1)(d)." Id. at 615-616. Section 161(1)(d) 5 defined an employee as "[e]very person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury," subject to the following exclusions:

[P]rovided the person in relation to this service does not maintain a separate business, does not hold himself or herself out to and render service to the public, and is not an employer subject to this act.

With regard to § 161(1)(d), the WCAC said that the eight-factor "economic reality" test described in McKissic v. Bodine, 42 Mich.App 203, 201 N.W.2d 333 (1972), 6 on which the subsection was based, should be used as a "tool for understanding and applying the statute...." Id. at 616. After looking at each of the factors, the WCAC held that plaintiff was not an employee, but rather "a volunteer engaged in an accommodation relationship with defendant ski resort. He was in essence a desirable patron providing desirable services in exchange for modest benefits. He was not 'hired' to perform these services, as required under [the WDCA]." Id. at 620.

Plaintiff appealed in the Court of Appeals, which granted his application for leave and reversed the WCAC. The Court of Appeals did not discuss § 161(1)(b), other than to note that it was the basis of the magistrate's decision. Instead, the panel focused on § 161(1)(d) and the economic reality test, concluding that the WCAC had erred as a matter of law in its application of the eight McKissic factors. The Court of Appeals therefore remanded the matter to the WCAC to reinstate the benefits awarded by the magistrate and to address the remaining issues that were not decided by the WCAC in its initial opinion. 221 Mich.App. 144, 561 N.W.2d 106 (1997).

This Court denied defendants' applications for leave to appeal. 456 Mich. 949, 576 N.W.2d 168 (1998). We subsequently granted reconsideration and vacated our earlier order, granting leave to appeal limited to the issue:

[W]hether plaintiff, a member of the National Ski Patrol, is an employee of defendant Shanty Creek Management, Inc., within the meaning of the Worker's Disability Compensation Act. [458 Mich. 864, 582 N.W.2d 836 (1998).]


This Court has the power to review questions of law involved in any final order of the WCAC. M.C.L. § 418.861; MSA 17.237(861); Goff v. Bil-Mar Foods, Inc. (After Remand), 454 Mich. 507, 512, 563 N.W.2d 214 (1997). The interpretation of statutes is a question of law. People v. Webb, 458 Mich. 265, 274, 580 N.W.2d 884 (1998). This Court reviews questions of law de novo, Hagerman v. Gencorp Automotive, 457 Mich. 720, 727, 579 N.W.2d 347 (1998), according great weight to the administrative interpretation of the statute unless such interpretation is clearly wrong. Murphy v. Michigan, 418 Mich. 341, 348-349, 343 N.W.2d 177 (1984); Schuhknecht v. State Plumbing Bd., 277 Mich. 183, 186-187, 269 N.W. 136 (1936). 7


Michigan's Worker's Disability Compensation Act requires that employers provide compensation to employees for injuries suffered in the course of the employee's employment, regardless of who is at fault. MCL 418.301; MSA 17.237(301). In return for this almost automatic liability, employees are limited in the amount of compensation they may collect, and, except in limited circumstances, may not bring a tort action against the employer. See M.C.L. § 418.131; MSA 17.237(131); Welch, Worker's Compensation in Michigan: Law & Practice (3d ed.), § 1.2, pp. 1-2 to 1-3. The statute also defines who is an "employee" in § 161, and by doing so determines which individuals have essentially traded the right to bring a tort action for the right to benefits.

This case requires us to determine if plaintiff is such an "employee" under any of the definitions of "employee" contained in § 161 of the WDCA. Here, the parties agree that two of these definitions, § 161(1)(a) and (c), which relate to public employees and individuals involved in certain government training programs, do not apply. Accordingly, our analysis focuses on § 161(1)(b) and on § 161(1)(d).

The first issue we must address in our analysis is how to read the statute. Either § 161(1)(b) and § 161(1)(d) are separate and necessary hurdles each individual must clear in order to be considered an employee, or they are independent and unconnected, so that qualification under either one is sufficient to establish employee status. The WCAC held, we believe correctly, that the subsections were separate and necessary...

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