Sanchez v. Eagle Alloy Inc.

• Decision Date: 26 March 2003
• Docket Number: Docket No. 239592.,Docket No. 238003
• Parties: David SANCHEZ, Plaintiff-Appellee, v. EAGLE ALLOY INC., Defendant-Appellant, and Second Injury Fund, Defendant-Appellee. Alejandro Vazquez, Plaintiff-Appellant, v. Eagle Alloy, Inc., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

658 N.W.2d 510

254 Mich. App. 651

David SANCHEZ, Plaintiff-Appellee, v. EAGLE ALLOY INC., Defendant-Appellant, and Second Injury Fund, Defendant-Appellee.

Alejandro Vazquez, Plaintiff-Appellant, v. Eagle Alloy, Inc., Defendant-Appellee.

Docket Nos. 238003, 239592.

Court of Appeals of Michigan.

Submitted September 5, 2002, at Lansing.

Decided January 7, 2003, at 9:00 a.m.

Released for Publication March 26, 2003.

McCroskey, Feldman, Cochrane & Brock, P.C. (by Gary T. Neal), Muskegon, for David Sanchez.

Libner, VanLeuven, Evans, Portenga & Slater, P.C. (by John A. Braden), Muskegon, for David Sanchez and Alejandro Vazquez.

Bleakley, Cypher, Parent, Warren & Quinn, P.C. (by Thomas H. Cypher and James J. Helminski), Grand Rapids, for Eagle Alloy, Inc.

Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, and Victoria A. Keating, Assistant Attorney General, for Second Injury Fund.

Elaine Sterrett Isely, Grand Rapids, for Michigan Migrant Legal Assistance Project, Inc.

Gary N. Gershon and Richard Kessler, Cedar Springs, for Farm Labor Organizing Committee, AFL-CIO.

Before: MARKEY, P.J., and MARK J. CAVANAGH and R.P. GRIFFIN,¹ JJ.

MARKEY, P.J.

In Docket No. 238003, defendant Eagle Alloy, Inc., appeals by leave granted from an order of the Worker's Compensation Appellate Commission (WCAC) affirming with modification the magistrate's order on remand awarding weekly wage-loss benefits to plaintiff David Sanchez, an undocumented alien in the United States.² We affirm in part and reverse in part.

In Docket No. 239592, plaintiff Alejandro Vazquez, also an undocumented alien in the United States, appeals by leave granted from an order of the WCAC, sitting en banc, denying Vazquez weekly wage-loss benefits on the basis of its construction of subsection 361(1) of the Worker's Disability Compensation Act (WDCA), M.C.L. § 418.361(1). We affirm in part and reverse in part.

I. Introduction

In deciding these consolidated appeals, we answer two questions of first impression:

First, are plaintiffs "employees" under the definition provided by WDCA subsection 161(1)(l), M.C.L. § 418.161(1)(l) ("[e]very person in the service of another, under any contract of hire, express or implied, including aliens")? Yes. We hold that including undocumented aliens such as plaintiffs as "aliens" within the WDCA definition of "employee" accords with the language and apparent legislative intent of subsection 161(1)(l). Plaintiffs are "employees" who are not only eligible but also required to invoke the exclusive remedy provided by the WDCA in lieu of any tort-based remedy.

Second, does WDCA subsection 361(1), which provides for suspension of weekly wage-loss benefits when the employee is unable to obtain or perform work because of commission of a crime, operate to temporarily suspend any award of weekly wage-loss benefits to plaintiffs? Yes. We hold that defendant has borne its burden of demonstrating that plaintiffs "committed" a crime under subsection 361(1) to the extent that any award of weekly wage-loss benefits to which plaintiffs are entitled should be suspended.

II. Facts

A. Docket No. 238003

Plaintiff Sanchez, a Mexican national, purchased a fake social security card in California and thereafter obtained a California driver's license. Upon his arrival in Michigan, Sanchez presented defendant with the false documentation and signed an employment application that contained the averment that he was legally present in the United States. In March 1997, he began full-time employment for defendant doing grinding work, among other tasks. He simultaneously worked full-time doing grinding work for another employer.

In September 1998, Sanchez suffered a right hand injury when one of defendant's machines closed on his hand, crushing and burning it between two heated metal plates. After many surgeries and physical therapy, he was released to restricted work in April 1999 and unrestricted work in September or October 1999. Sanchez did not attempt to also return to working for the other employer. In August 1999, defendant terminated Sanchez' employment because Sanchez was unable to refute a notice defendant received from the Social Security Administration in June 1999 that Sanchez's social security number was invalid. Defendant informed Sanchez that it would rehire him if he became a documented alien in the United States.

In December 1999, still with his status as an undocumented foreign citizen, Sanchez obtained employment through a temporary employment agency, working forty hours a week.

Sanchez applied for worker's compensation benefits, and defendant filed a petition seeking recoupment of benefits and reimbursement from the Second Injury Fund. The magistrate³ found that Sanchez was an "employee" under the WDCA and awarded him a closed award of weekly wage-loss benefits through the date on which his employment status was discovered. The magistrate reasoned that Sanchez' wage-loss benefits were forfeited on the date his employment status was discovered under subsection 361(1), which provides in pertinent part that "an employer shall not be liable for compensation ... for such periods of time that the employee is unable to obtain or perform work because of ... commission of a crime." MCL 418.361(1). The magistrate also ordered defendant to pay for all reasonable and necessary medical treatment of Sanchez' right hand pursuant to M.C.L. § 418.315.

On appeal, a majority of the WCAC agreed with the magistrate that the definition of "employee" in WDCA subsection 161(1) included Sanchez, but reversed the magistrate's decision to forfeit benefits pursuant to WDCA subsection 361(1). The WCAC remanded to the magistrate for further fact finding on the question of compensable disability. On remand, the magistrate granted Sanchez an open award of benefits, which a majority of the WCAC affirmed.

Defendant timely filed an application for leave to appeal to this Court, which this Court granted.

B. Docket No. 239592

Plaintiff Vazquez, also a Mexican national, used a fake social security card and fake resident alien card to obtain work with defendant as a grinder. In January 1999, Vazquez lifted a heavy metal part at work and experienced sudden pain in his left shoulder. He was diagnosed with a left acromioclavicular joint separation. Defendant gave Vazquez favored work but subsequently terminated his employment in April 1999 for failure to adhere to defendant's attendance policy.

Defendant received a notice from the Social Security Administration in June 1999 that Vazquez' social security number may be invalid, a fact that was subsequently confirmed by counsel for Vazquez in October 1999.

Vazquez applied for worker's compensation benefits from defendant, and the magistrate awarded Vazquez a closed award of weekly wage-loss benefits from the date his employment was terminated until the date on which his illegal status was confirmed. The magistrate also ordered defendant to pay for all reasonable and necessary medical treatment of Vazquez' left shoulder pursuant to M.C.L. § 418.315.

The WCAC heard the appeal en banc and split on the proper construction of WDCA subsection 361(1). The majority addressed only the "commission of a crime" language in subsection 361(1) and held that this subsection operated to temporarily suspend payment of all weekly wage-loss benefits to Vazquez. Accordingly, the majority affirmed the magistrate's opinion with modification. The majority opined that its statutory interpretation discouraged further violations of the law by undocumented workers while keeping employers liable for paying the medical expenses of workers injured on the job.

The concurring commissioner would have found that Vazquez did not meet the threshold requirement of entering into a valid "contract of hire" as required by WDCA subsection 161(1)(l).

The commissioners who joined the dissenting opinion would have relied on the prior decision of the WCAC in Sanchez to reverse the magistrate's closing of the award.

Vazquez filed an application for leave to appeal to this Court, which this Court granted. We consolidated these two appeals and accepted briefing from amicus curiae.

III. Analysis

The WDCA 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(1); Hoste v. Shanty Creek Mgt., Inc., 459 Mich. 561, 570, 592 N.W.2d 360 (1999); Layman v. Newkirk Electric Assoc., Inc., 458 Mich. 494, 502, 581 N.W.2d 244 (1998), overruled in part on other grounds in Mudel v. Great Atlantic & Pacific Tea Co., 462 Mich. 691, 614 N.W.2d 607 (2000). 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. MCL 418.131; Hoste, supra at 570, 592 N.W.2d 360; Welch, Worker's Compensation in Michigan: Law & Practice (3d ed), § 1.2, pp 1-2 to 1-3.

The WDCA defines who is an "employee" in subsection 161(1)(l) and, by doing so, demonstrates which individuals have essentially traded the right to bring a tort action for the right to benefits. Hoste, supra at 570, 592 N.W.2d 360. Because the WDCA was intended as remedial legislation, it is liberally construed to grant, rather than deny, benefits. Goff v. Bil-Mar Foods, Inc. (After Remand), 454 Mich. 507, 511, 563 N.W.2d 214 (1997), overruled in part on other grounds in Mudel, supra.

We review de novo questions of law involved in final orders from the WCAC. Mudel, supra at 697, n. 3, 614 N.W.2d 607, citing DiBenedetto v. West Shore Hosp., 461 Mich. 394, 401, 605 N.W.2d 300 (2000).

A. Construction of WDCA Subsection 161(1)(l)

Our Supreme Court has held that the threshold inquiry in worker's compensation cases is whether the worker is an "employee" under section 161(1)(l), Hoste, supra at 571-573, 592 N.W.2d 360,⁴ and we begin our analysis with...