Lulgjuraj v. Chrysler Corp.
| Decision Date | 06 November 1990 |
| Docket Number | Docket Nos. 117738,117747 |
| Parties | Marash LULGJURAJ, Plaintiff-Appellee, v. CHRYSLER CORPORATION, Defendant-Appellant, and Aetna Casualty & Surety Company, Defendant. Marash LULGJURAJ, Plaintiff-Appellee, v. CHRYSLER CORPORATION, Defendant, and Aetna Casualty & Surety Company, Defendant-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
Kelman, Loria, Downing, Schneider & Simpson by Rosemary E. Jabbour, Detroit, for plaintiff-appellee.
Lacey & Jones by Stephen Jay Schwartz, Birmingham, for defendants.
Before WAHLS, P.J., and MARILYN J. KELLY and ALLEN, * JJ.
Defendants appeal by leave granted from an April 24, 1989, opinion and order of the Workers' Compensation Appeal Board. We affirm in part and reverse in part.
Plaintiff was injured in 1975 and began receiving sickness and accident and extended disability benefits through defendant Chrysler Corporation's group insurer, defendant Aetna Casualty & Surety Company. In 1981, the WCAB awarded plaintiff workers' compensation benefits. Chrysler paid plaintiff past due benefits, weekly compensation and supplemental benefits under M.C.L. § 418.352; M.S.A. § 17.237(352), plus five percent interest on the weekly compensation. Plaintiff refused, however, to reimburse Aetna in accordance with alleged assignment agreements.
In 1982, plaintiff petitioned for a determination of rights. He contended that he was entitled to twelve percent interest, not five percent, plus interest on the § 352 supplemental benefits. He also claimed that Aetna was not entitled to reimbursement and that, should Aetna receive reimbursement, plaintiff's attorney must be paid an attorney fee out of it. Aetna intervened seeking reimbursement, opposing payment of an attorney fee.
At a hearing before the referee, plaintiff denied signing an application for sickness and accident benefits on a form containing an assignment in favor of Aetna. He admitted signing the application and assignment covering extended disability benefits. He also admitted receiving sickness and accident as well as disability benefits.
The WCAB held that the assignment relating to disability benefits was enforceable. However, as plaintiff denied signing the sickness and accident application and as defendants provided no contrary evidence, the alleged assignment was not enforced. The board declined to apply equitable principles. It agreed to award plaintiff interest on § 352 supplemental benefits. Lastly, it awarded plaintiff attorney fees out of the reimbursement he must make to Aetna under the disability assignment. M.C.L. § 418.821(2); M.S.A. § 17.237(821)(2).
On appeal, defendants argue the WCAB erred in refusing to enforce the sickness and accident assignment and in awarding plaintiff's attorney a fee out of the extended disability reimbursement. Chrysler also claims the board erred in awarding interest on the accrued supplemental benefits.
Section 352 of the Workers' Disability Compensation Act (WDCA) provides a supplemental benefit designed to keep disability benefits in pace with inflation. Weekly compensation benefits are increased by a maximum of five percent of the adjusted average weekly wage increase differential, compounded for each calendar year in the adjustment period. M.C.L. § 418.352(1); M.S.A. § 17.237(352)(1), M.C.L. § 418.355; M.S.A. § 17.237(355). The supplemental payment is not an obligation of the employer or the insurance carrier, nor of the Second Injury Fund or the Self-Insurers' Security Fund. These groups are the disbursement agents. They are reimbursed either through a single business tax credit or by a refund from the Compensation Supplement Fund created by M.C.L. § 418.391; M.S.A. § 17.237(391). Each of these forms of reimbursement represents monies from the state treasury. M.C.L. § 418.352, subds. (8), (10) and (11); M.S.A. § 17.237(352), subds. (8), (10) and (11).
Claims for reimbursement from the Compensation Supplement Fund must be made within three months after the right to reimbursement first accrues. Payments from the fund are made every quarter without interest. M.C.L. § 418.391(7); M.S.A. § 17.237(391)(7). Thus, because the supplement represents funds from the state treasury, directly or indirectly, the Legislature has elected not to provide for the payment of interest when the fund makes reimbursement.
The interest which is imposed upon past due workers' compensation benefits is not a penalty; it is designed to pay the employee for lost use of the funds to which he was entitled and from which the employer benefitted while the claim was pending. McCaslin v. General Motors Corp., 133 Mich.App. 782, 787-788, 349 N.W.2d 544 (1984), lv. den. 419 Mich. 945 (1984).
Chrysler argues that awarding interest on supplemental benefits would amount to imposing a penalty on the employer. The state treasury, not the employer, benefits from use of the money while the claim is pending. However, if the employer is obligated to pay interest on the supplemental benefits, it cannot by law recover that interest from the treasury.
Plaintiff claims that if the employer is not liable for interest on the supplemental benefits, it could arbitrarily refuse to pay the benefit without the fear of having to pay interest. However, there is no incentive for the employer to refuse to pay supplemental benefits, since they are reimbursed by the state.
Under the statute, the employer must pay interest on unpaid "weekly compensation." M.C.L. § 418.801(6); M.S.A. § 17.237(801)(6). The employee is not entitled to interest on medical benefits, which is something other than weekly compensation. Brown v. Eller Outdoor Advertising Co., 139 Mich.App. 7, 14, 360 N.W.2d 322 (1984), lv. den. 424 Mich. 902 (1986). The Supreme Court has held that the phrase "weekly compensation" as used in § 352(1) of the WDCA refers only to the amount of the employer's obligation. Kincaid v. Detroit Mutual Ins. Co., 431 Mich. 426, 441-442, 429 N.W.2d 595 (1988). It does not include the differential benefit payable weekly by the Second Injury Fund for total and permanent disability. Kincaid, supra, M.C.L. § 418.521(2); M.S.A. § 17.237(521)(2). Differential benefits have a reimbursement procedure quite similar to the procedure for § 352 supplemental benefits.
Thus, extending the Supreme Court's definition of weekly compensation to § 801, weekly compensation benefits do not include supplemental benefits, as they are an obligation of the state, not the employer. See also Maglothin v. Tryco Steel Corp., 137 Mich.App. 640, 646, 357 N.W.2d 914 (1984). Further, the theory that an interest award in a workers' compensation case is based on a contract of employment does not justify the imposition of interest on supplemental benefits. The supplement is an obligation of the state. No contract of employment exists between the employee and the state. Brown, 139 Mich.App. at 14-15, 360 N.W.2d 322. Plaintiff is not entitled to interest on his § 352 supplemental benefits.
Next, defendants claim the board erred in refusing to enforce the assignment in exchange for payment of sickness and accident benefits. The board decided that defendants had not proven the existence of a valid assignment. This finding of fact is supported by the record and, thus, is conclusive. Coleman v. General Motors Corp., 166 Mich.App. 784, 789, 421 N.W.2d 295 (1988). However the board erred in refusing to apply equitable principles.
While the WCAB has no equitable jurisdiction, it is well established that it may apply equitable principles in appropriate instances to further the purposes of the act. Solo v. Chrysler Corp. (On Rehearing), 408 Mich. 345, 292 N.W.2d 438 (1980); Fuchs v. General Motors Corp., 118 Mich.App. 547, 325 N.W.2d 489 (1982).
A circuit court may have concurrent jurisdiction over certain issues, particularly those involving determination of rights arising out of an entirely different relationship than that of employer-employee. Modeen v. Consumers Power Co., 384 Mich. 354, 360-361, 184 N.W.2d 197 (1971); Bonney v. Citizens' Mutual Automobile Ins. Co., 333 Mich. 435, 440, 53 N.W.2d 321 (1952). However where the employer-employee relationship is substantially involved, the jurisdiction of the bureau is exclusive. Michigan Property & Casualty Guaranty Ass'n v. Checker Cab Co., 138 Mich.App. 180, 183, 360 N.W.2d 168 (1984).
In this case, the relationship of employer-employee is at the heart of Aetna's right of reimbursement. Aetna...
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