Michigan Farm Bureau v. Bureau of Workmen's Compensation, Dept. of Labor

• Decision Date: 03 May 1977
• Docket Number: Docket No. 26771
• Citation: 254 N.W.2d 890,75 Mich.App. 362
• Parties: MICHIGAN FARM BUREAU, a Michigan non-profit Corporation, Farm Bureau Mutual Insurance Company of Michigan, a Michigan Corporation, and Underwriters Adjusting Company, a Michigan Corp., Plaintiffs-Appellants, v. The BUREAU OF WORKMEN'S COMPENSATION, DEPARTMENT OF LABOR of the State of Michigan, and Director of the Bureau of Workmen's Comp., Defendants-Appellees. 75 Mich.App. 362, 254 N.W.2d 890
• Court: Court of Appeal of Michigan — District of US

Page 890

254 N.W.2d 890

MICHIGAN FARM BUREAU, a Michigan non-profit Corporation Farm Bureau Mutual Insurance Company of Michigan, a Michigan Corporation, and Underwriters Adjusting Company, a Michigan Corp., Plaintiffs-Appellants, v. The BUREAU OF WORKMEN'S COMPENSATION, DEPARTMENT OF LABOR of the State of Michigan, and Director of the Bureau of Workmen's Comp. Defendants-Appellees.

Docket No. 26771.

75 Mich.App. 362, 254 N.W.2d 890

Court of Appeals of Michigan.

May 3, 1977.

Released for Publication June 28, 1977.

[75 MICHAPP 363] Miller, Canfield, Paddock & Stone by Gregory L. Curtner, Detroit, for plaintiffs-appellants.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Francis W. Edwards, Asst. Atty. Gen., Detroit, for defendants-appellees.

[75 MICHAPP 364] Before QUIN, P. J., and HOLBROOK, R. B. BURNS and CAVANAGH, JJ.

CAVANAGH, Judge.

Ingham County Circuit Court granted the defendants' motion for accelerated judgment for lack of subject matter jurisdiction, and plaintiffs appeal.

In August of 1973, this Court decided in Jolliff v. American Advertising Distributors, Inc., 49 Mich.App. 1, 211 N.W.2d 260 (1973), lv. den., 391 Mich. 780 (1974), that the minimum compensation rates for total disability established by § 351 of the Workmen's Compensation Act of 1969 (WCA), M.C.L.A. § 418.351; M.S.A. § 17.237(351), were adjustable according to the provisions of WCA § 355; M.C.L.A. § 418.355; M.S.A. § 17.237(355). On April 4, 1974, the Bureau of Workmen's Compensation (Bureau) distributed a letter signed by the Bureau Director to all self-insured employers and compensation insurance carriers in Michigan. The letter referred to Jolliff, supra, and stated new retroactive minimum compensation rates for total disability and death benefits. After the Supreme Court denied a rehearing in the Jolliff case on June 27, 1974, the Bureau sent to the same persons a second letter which basically repeated the message contained in the first, and repeated the new rate schedule. A third letter was sent on December 27, 1974.

In October, 1974, the plaintiffs asked the Bureau Director to make several declaratory rulings that would limit the application of the Jolliff case. The Director responded that a rulemaking procedure would be more appropriate and indicated that rule promulgation proceedings would soon begin. The Director subsequently refused to issue any declaratory rulings, and explained that compensation disputes had to be submitted to the Bureau under M.C.L.A. § 418.841, M.S.A. § 17.237(841).

[75 MICHAPP 365] In January, 1975, plaintiffs brought this action in Ingham County Circuit Court to challenge the validity of the Bureau's proposed interpretation of Jolliff. Plaintiffs asserted that the Bureau Director's letters constituted the announcement of agency rules within § 7 of the Administrative Procedures Act of 1969 (APA), 1969 P.A. 306; M.C.L.A. § 24.207; M.S.A. § 3.560(107), and that APA § 64; M.C.L.A. § 24.264; M.S.A. § 3.560(164) provided the circuit court subject-matter jurisdiction to determine the validity of the rules. The circuit court held that the Bureau's announced policies did not constitute rules under the APA and dismissed the action for lack of jurisdiction. Discussion of the plaintiffs' other asserted grounds for circuit court jurisdiction is unnecessary, for we disagree with the circuit court's construction of the WCA and the APA and reverse.

If the Bureau's letters constitute "rules" under the APA, the circuit court has authority to determine their validity under § 64 of the APA; M.C.L.A. § 24.264; M.S.A. § 3.560(164). This section provides:

"Unless an exclusive procedure or remedy is provided by a statute governing the agency, the validity or applicability of a rule may be determined in an action for declaratory judgment when the court finds that the rule or its threatened application interferes with or impairs, or imminently threatens to interfere with or impair, the legal rights or privileges of the plaintiff. The action shall be filed in the circuit court of the county where the plaintiff resides or has his principal place of business in this state or in the circuit court for Ingham county. The agency shall be made a party to the action. An action for declaratory judgment may not be commenced under this section unless the plaintiff has first requested the agency for a declaratory ruling and the agency has denied the request or failed to act upon it expeditiously. This section shall not be construed[75 MICHAPP 366] to prohibit the determination of the validity or applicability of the rule in any other action or proceeding in which its invalidity or inapplicability is asserted." ¹

We do not agree with defendants' claim that WCA § 841; M.C.L.A. § 418.841; M.S.A. § 17.237(841) vests exclusive jurisdiction in the Bureau to determine the validity of rules promulgated by the Bureau Director, thereby making a challenge under the APA unavailable. WCA § 841 provides:

"Any controversy concerning compensation shall be submitted to the bureau and all questions arising under this act shall be determined by the bureau. The director shall be deemed to be an interested party in all workmen's compensation cases in questions of law."

This section must be read in conjunction with WCA § 205; M.C.L.A. § 418.205; M.S.A. § 17.237(205), which vests the Bureau Director with the power to "make rules not inconsistent with this act (WCA) for carrying out the provisions of the act in accordance with (the Administrative Procedures Act)". ² The legislative scheme allows the Bureau to proceed by either of two avenues: (1) the Bureau may promulgate broad, across-the-board rules which construe the WCA, in which case it subjects itself to the safeguards of the APA; or, (2) it may choose to proceed through adjudication of individual disputes, in which case the APA does not apply, and the Bureau may forge its own procedures. Either [75 MICHAPP 367] method complies with the legislative purpose to confer upon the Bureau primary jurisdiction over questions arising under the APA.

This construction is consistent with § 315 of the APA; M.C.L.A. § 24.315; M.S.A. § 3.560(215), which expressly exempts the Bureau from the requirements of chapters 4 and 6 of the APA, those chapters which control procedure and judicial review in contested cases. Had the Legislature intended to exempt the Bureau from circuit court review under APA § 264, M.C.L.A. § 24.264; M.S.A. § 3.560(164), it would have expressly so stated.

Our decision is not adverse to those cases which have expansively construed the Bureau's exclusive jurisdiction in contested cases. Szydlowski v. General Motors Corp., 397 Mich. 356, 245 N.W.2d 26 (1976), St. Paul Fire & Marine Insurance Co. v. Littky, 60 Mich.App. 375, 230 N.W.2d 440 (1975). Those cases properly emphasize that a litigant may not evade the Legislative judgment that all questions arising under the WCA shall be determined by the Bureau. M.C.L.A. § 418.841; M.S.A. § 17.237(841). We agree that the...