Powell v. Keeler Brass Co.

• Decision Date: 02 August 1984
• Docket Number: Docket No. 69983
• Citation: Powell v. Keeler Brass Co., 351 N.W.2d 896, 135 Mich.App. 67 (Mich. App. 1984)
• Parties: Pamela POWELL, Plaintiff-Appellee, v. KEELER BRASS COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 896

351 N.W.2d 896

135 Mich.App. 67

Pamela POWELL, Plaintiff-Appellee, v.KEELER BRASS COMPANY, Defendant-Appellant.

Docket No. 69983.

Court of Appeals of Michigan.

Submitted Dec. 12, 1983.

Decided June 4, 1984.

Released for Publication Aug. 2, 1984.

McCroskey, Feldman, Cochrane & Brock by J. Walter Brock, Muskegon, for plaintiff-appellee.

Cholette, Perkins & Buchanan by Edward D. Wells, Grand Rapids, for defendant-appellant.

Before HOLBROOK, P.J., and BRONSON and TAHVONEN^*, JJ.

TAHVONEN, Judge.

Defendant appeals by leave granted from a February 4, 1983 decision and order of the Workers' Compensation Appeal Board finding that plaintiff was entitled to benefits for a work-related injury sustained in February and June, 1973, and denying defendant's request that benefits currently due be offset by a third-party recovery obtained by plaintiff in compensation for a prior personal injury.We affirm.

Plaintiff is employed by defendant, Keeler Brass Company.On August 3, 1967, her left forearm was severely crushed in a power press accident.The injury necessitated bone and tendon grafts and other reconstructive surgery.She was off work for approximately five years, and defendant, a self-insured employer, paid compensation benefits for the injury totaling $20,959.Plaintiff filed a federal action against the manufacturer of the press and received a judgment in the amount of $79,510.The benefits paid by defendant were fully reimbursed out of the third-party judgment pursuant to M.C.L. Sec. 418.827;M.S.A. Sec. 17.237 (827).

Plaintiff returned to employment with defendant on June 17, 1972, and was given favored work as a timekeeper.In January or February, 1973, plaintiff was placing some papers in a file drawer when a bump appeared on her left forearm in the area of the previous injury.Plaintiff did not experience any pain and she continued to work.On June 14, 1973, plaintiff was sharpening a pencil when she felt a snap and a sharp pain in her left arm.She was unable to continue working because of the pain.X-rays subsequently revealed that the surgically inserted metal nail securing the bone grafts had broken.Since the area around the nail had not fully healed, further deformity resulted.In July, 1975, plaintiff underwent additional reconstructive surgery.

Plaintiff filed a petition for workers' compensation benefits on October 11, 1973.A hearing referee found that plaintiff did not incur a new injury in January, February or June of 1973.He awarded benefits but provided for a setoff from the prior third-party judgment.The appeal board reversed, finding that plaintiff suffered new and additional injuries in 1973 and ordering defendant to pay continuing compensation for plaintiff's new disability.

Although no appeal was taken from the order, defendant refused to commence payment of weekly benefits.Plaintiff filed an action in the Kent County Circuit Court to enforce the WCAB's award.Defendant argued that the appeal board's decision was ambiguous as to defendant's right to a credit from plaintiff's third-party recovery.The circuit court denied plaintiff's request for a judgment on the setoff issue and held that the matter should be decided by the WCAB.

Plaintiff appealed from the dismissal of her circuit court action and this Court, in an unpublished per curiam opinion, Docket No. 43202, December 28, 1979, affirmed and remanded to the WCAB for clarification of defendant's right to a set-off.On remand, the WCAB held that defendant was not entitled to any further setoff against plaintiff's third-party recovery since the 1973 injury was a new injury which did not create liability in a third party.Defendant appeals.

The pertinent statute is M.C.L. Sec. 418.827;M.S.A. Sec. 17.237(827), which provides in part:

"(1) Where the injury for which compensation is payable under this act was caused under circumstances creating a legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof, the acceptance of compensation benefits or the taking of proceedings to enforce compensation payments shall not act as an election of remedies but the injured employee or his dependents or personal representative may also proceed to enforce the liability of the third party for damages in accordance with the provisions of this section.If the injured employee or his dependents or personal representative does not commence the action within 1 year after the occurrence of the personal injury, then the employer or carrier, within the period of time for the commencement of actions prescribed by statute, may enforce the liability of such other person in the name of that person. * * *

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"(5) In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort.Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits.

"(6) Expenses of recovery shall be the reasonable expenditures, including attorney fees, incurred in effecting recovery.Attorney fees, unless otherwise agreed upon, shall be divided among the attorneys for the plaintiff as directed by the court.Expenses of recovery shall be apportioned by the court between the parties as their interests appear at the time of the recovery."(Emphasis added.)

By its terms the statute applies only where the injury for which compensation is payable was caused under circumstances creating a legal liability in a third party.In other words, where a third-party recovery is obtained for an injury, reimbursement or credit out of that recovery is available to an employer only to the extent that compensation benefits are paid for that same injury.Reimbursement or credit is not available for compensation payable for a new injury from which no third-party liability arises.In Pitoniak v. Borman's, Inc, 104 Mich.App. 718, 305 N.W.2d 305(1981), lv. den.411 Mich. 1049(1981), the plaintiff, a cashier employed by defendant Borman's, injured her knee in a nonwork-related automobile accident.She instituted a lawsuit against the driver of the other car involved in the accident and received a settlement.When the plaintiff returned to work after recovering from the accident, she developed further problems with her knee and was unable to continue working.The WCAB found that the plaintiff had proven work-related...