Riley v. Northland Geriatric Center, Docket Nos. 81129

• Court: Supreme Court of Michigan
• Writing for the Court: GRIFFIN; RILEY, C.J., and LEVIN; BRICKLEY; BOYLE; CAVANAGH; ARCHER
• Citation: 433 N.W.2d 787,431 Mich. 632
• Parties: , 51 Ed. Law Rep. 254 Geneva RILEY, Deceased, by Personal Representative Melvin King, Plaintiff-Appellee, v. NORTHLAND GERIATRIC CENTER, and Michigan Mutual Insurance Co., Defendants- Appellants. (After Remand) Ljena JUNCAJ, Plaintiff-Appellant, v. C & H INDUSTRIES and Allstate Insurance Company, Defendant-Appellees, and Second Injury Fund, Defendant. (After Remand) Katherine MOORE, Plaintiff-Appellant, v. DETROIT BOARD OF EDUCATION, Defendant-Appellee. (After Remand)
• Docket Number: 81325 and 81689,Docket Nos. 81129
• Decision Date: 10 November 1988

Page 787

433 N.W.2d 787 431 Mich. 632, 51 Ed. Law Rep. 254 Geneva RILEY, Deceased, by Personal Representative Melvin
King, Plaintiff-Appellee,
v.
NORTHLAND GERIATRIC CENTER, and Michigan Mutual Insurance
Co., Defendants- Appellants. (After Remand)
Ljena JUNCAJ, Plaintiff-Appellant,
v.
C & H INDUSTRIES and Allstate Insurance Company, Defendant-Appellees,
and
Second Injury Fund, Defendant. (After Remand)
Katherine MOORE, Plaintiff-Appellant,
v.
DETROIT BOARD OF EDUCATION, Defendant-Appellee. (After Remand) Docket Nos. 81129, 81325 and 81689. Supreme Court of Michigan. Argued May 4, 1988.
Decided Nov. 10, 1988.

[431 Mich. 635]

Page 788

Bockoff & Zamler, P.C. by Anne K. Flaherty, Joel W. Jonas, Southfield, for plaintiff-appellee in no. 81129.

Lacey & Jones by Gerald M. Marcinkoski, Detroit, for defendants-appellants on appeal in no. 81129.

Sachs, Nunn, Kates, Kadushin, O'Hare, Helveston & Waldman, P.C. by Melvyn J. Kates, Granner S. Ries, Detroit, for plaintiff-appellant in no. 81325.

Sinn, Day, Felker, Chinitz & Lovernick, P.C. by Gilbert M. Chinitz, Bloomfield, for defendants-appellees, C & H Industries and Allstate Insurance Co.

Bockoff & Zamler, P.C. by Anne K. Flaherty, Joel W. Jonas, Southfield, for plaintiff-appellant in no. 81689.

Law Offices of Charfoos, Reiter, Peterson, Krut & Jones, P.C. by Kenneth E. Jones, Birmingham, for defendant-appellee in no. 81689.

Before the entire bench.

OPINION

GRIFFIN, Justice.

We granted leave in these workers' compensation cases to resolve a conflict among panels of the Court of Appeals concerning the application of Gusler v. Fairview Tubular Products, 412 Mich. 270, 315 N.W.2d 388 (1981), reh. gtd. 414 Mich. 1102, 323 N.W.2d 909 (1982), app. dis. 414 Mich. 1102, 323 N.W.2d 909 (1983). Overruling Jolliff v. American Advertising Distributors, Inc., 49 Mich.App. 1, 211 N.W.2d 260 (1973), [431 Mich. 636] we held in Gusler that the adjustment provisions of Sec. 355 ¹ of the Workers' Disability Compensation Act ² apply only to the maximum, and not to the minimum, weekly rates established in Sec. 351(1) ³ of the act.

Taking into account the reliance on Jolliff during an interim of more than eight years, this Court determined that its ruling in Gusler should be implemented as follows:

"In the interest of fairness we do not believe our holding should affect any disability compensation payments already made. Consequently, no recipient will be obligated to repay sums already received by reason of the erroneous computation formula we have nullified today. However, any benefits due and not yet paid or to be awarded after the date of this opinion shall be in accord with this ruling." Id. 412 Mich. at 298, 315 N.W.2d 388.

The principal issue raised is whether the directed correction of Jolliff's error with respect to "benefits due and not yet paid" after Gusler is precluded by the doctrine of res judicata. We conclude that res judicata is not a bar. We further hold that Gusler applies to all benefits due or paid after December 30, 1981, the date of our opinion in that case, including benefits paid pursuant to awards entered prior to that date.

I

Before turning to a discussion of the issues, we shall examine the facts and the interrelated procedural history of these cases.

A. Riley

On October 6, 1981, a referee awarded the plaintiff[431 Mich. 637] compensation of $119 per week on the basis of a rate determined in accordance with Jolliff. No appeal was taken. Two months later, this Court decided Gusler, and defendant petitioned for a reduction in plaintiff's compensation in accordance with Gusler, which the referee granted.

Thereafter, the Workers' Compensation Appeal Board reversed, and its decision was affirmed by the Court of Appeals, but on the ground that this Court's decision in

Page 789

Gusler is not binding precedent. The Riley panel noted that, after filing and entering its opinion in Gusler, this Court granted a motion for rehearing and thereafter dismissed the appeal upon stipulation. It was the conclusion of the Riley panel that our Gusler opinion had never been "issued" in accordance with then GCR 1963, 866. Riley v. Northland Geriatric Center, 140 Mich.App. 72, 362 N.W.2d 894 (1985).

On appeal, this Court reversed on that point and held that our opinion in Gusler became binding precedent when it was filed on December 30, 1981, notwithstanding the subsequent grant of rehearing and dismissal. In addition, we remanded the case to the Court of Appeals for consideration of res judicata and retroactivity issues which had not been addressed in the earlier appeal. Riley v. Northland Geriatric Center, 425 Mich. 668, 391 N.W.2d 331 (1986).

On remand, the Court of Appeals held that res judicata barred a reduction of plaintiff's benefits. Riley v. Northland Geriatric Center (On Remand), 160 Mich.App. 507, 408 N.W.2d 489 (1987). ⁴ We then granted leave to appeal. 429 Mich. 885 (1987).

B. Juncaj

In Juncaj, plaintiff was awarded benefits of $79 [431 Mich. 638] per week on the basis of Jolliff, and the award was not appealed. Thereafter this Court decided Gusler, and defendant's insurer reduced plaintiff's level of benefits. Plaintiff then requested a hearing and argued that res judicata barred such a reduction. The referee denied relief, finding the reduction proper under Gusler. On appeal, however, the WCAB reversed, relying on the Court of Appeals decision in Riley that Gusler is not binding precedent.

After the Court of Appeals denied leave to appeal, defendant applied to this Court, and we ordered the case held in abeyance pending our decision in Riley. Once we had decided Riley, we remanded the case to the Court of Appeals for consideration of res judicata and retroactivity issues raised by plaintiff. On remand, the Juncaj panel held, contrary to the Court of Appeals decision in Riley (On Remand ), that res judicata is not a bar and that Gusler applies to all payments after December 30, 1981, the date of our opinion in that case. Juncaj v. C & H Industries, 161 Mich.App. 724, 411 N.W.2d 839 (1987). We granted plaintiff's application for leave to appeal. 429 Mich. 885 (1987).

C. Moore

On March 26, 1981, a referee awarded plaintiff Moore $108 per week, the rate applicable under Jolliff. While defendant's appeal to the WCAB was pending, this Court decided Gusler, and the WCAB then granted defendant's motion to reduce plaintiff's benefits in accordance with Gusler. However, the Court of Appeals thereafter held in Riley, that Gusler is not binding precedent. The WCAB then affirmed a decision by the referee which reinstated the original award to plaintiff.

[431 Mich. 639] While a second appeal to the Court of Appeals was pending, this Court held in Riley that our December 30, 1981, decision in Gusler is binding precedent. The Court of Appeals then reversed the WCAB and ordered a reduction in plaintiff's benefit rate in accordance with Gusler. Moore v. Detroit Bd. of Ed., unpublished opinion of the Court of Appeals, decided December 3, 1986 (Docket No. 86579).

On appeal, we remanded the case to the Court of Appeals with instructions to consider whether Gusler should be given retroactive effect. Thereafter, the Moore panel opined that Gusler applies to all payments made after December 30, 1981 (the date of Gusler ), even though a case may have been decided prior to that date, relying on the implementing language set forth in our Gusler opinion. Moore v. Detroit Bd. of Ed. (On Remand), 163 Mich.App. 130, 414 N.W.2d 160 (1987). After the Moore panel certified a conflict with the decision of the Riley remand panel, we granted leave to appeal. 429 Mich. 885 (1987).

Page 790

II

In Riley and Juncaj, plaintiffs point out that their compensation rates were set prior to Gusler by decisions that were not appealed, and they argue that any post-Gusler reduction in benefits is barred by res judicata. ⁵

The applicability of res judicata principles in workers' compensation cases has been recognized. See Hlady v. Wolverine Bolt Co, 393 Mich. 368, 375, 224 N.W.2d 856 (1975); Theodore v. Packing Materials, 396 Mich. 152, 158, 240 N.W.2d 255 (1976); Gose [431 Mich. 640] v. Monroe Auto Equip. Co, 409 Mich. 147, 161, 294 N.W.2d 165 (1980).

Nevertheless, in considering how res judicata is to be applied in that context, we have not overlooked that there is a fundamental difference between the lump-sum judgment in a tort action and the award of continuing weekly benefits in a workers' compensation case. This difference was noted by Justice Levin who wrote, concurring, in Hlady, supra 393 Mich. at 391, 224 N.W.2d 856:

"Workmen's compensation disability benefits, like social security and unemployment compensation benefits, are a form of income maintenance for persons whose wage-earning capacity has been suspended or terminated. A claimant's entitlement to such benefits depends on the circumstances at the time of application and payment."

Res judicata is a judicially created doctrine which reflects appropriate concern for the use of judicial resources and the finality of litigation. However, it is not an inflexible doctrine, and its applicability depends in part upon the legal context in which a determination is made.

In a wide variety of circumstances, an employee's future rate of workers' compensation benefits is subject to change. Events in the future may operate to increase or decrease the amount of benefits to which he is entitled. For example, as a consequence of 1980 P.A. 357, certain employees injured between September 1, 1965, and December 31, 1979, became entitled after January 1, 1982, to receive a supplemental benefit under Sec. 352 to offset increases in the cost of living. Furthermore, if a disabled worker recovers, or later works at a less lucrative job, the amount of his compensation is subject to adjustment, and res judicata is not a bar.

[431 Mich. 641] Recently, in Pike v. City of Wyoming, 431 Mich. 589, 433 N.W.2d 768 (1988), this Court faced a...