JEANNETTE GORDON V HENRY FORD HEALTH SYSTEM
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
JEANNETTE GORDON,
UNPUBLISHED
November 18, 2003
Plaintiff-Appellant,
v
No. 244596
WCAC
LC No. 00-121533
HENRY FORD HEALTH SYSTEM,
Defendant-Appellee.
Before: Gage, P.J., and White and Cooper, JJ.
PER CURIAM.
This case is remanded to us from the Supreme Court on leave granted, Gordon v Henry
Ford Health Sys, 467 Mich 889; 654 NW2d 326 (2002). Plaintiff Jeannette Gordon appeals a
decision of the Worker’s Compensation Appellate Commission (WCAC) to the extent it reversed
the magistrate’s decision denying defendant Henry Ford Health System’s petition to recoup wage
loss benefits. We affirm.
The issue before this Court is whether the profits plaintiff received as the owner/operator
of two group homes can be set off from her wage loss benefits for a previous work-related injury
with defendant. Because plaintiff actively participates in the operation of her business, we agree
with the WCAC that MCL 418.371(1) entitles defendant to credit for the portion of plaintiff’s
profits stemming from her efforts.
I. Facts and Procedural History
Plaintiff began receiving wage loss benefits from defendant in June 1992. In September
1998, defendant petitioned to stop these benefits and recoup benefits overpaid, given plaintiff’s
earnings as the owner/operator of two group homes. Plaintiff established these homes after her
work-related injury with defendant. She explained that her operating license requires her to
actively participate in the operation of the homes. To this end, plaintiff visits the homes
frequently to ensure that the staff is treating residents properly and to address any complaints.
Plaintiff also hires and fires the group home employees, sets staff wages, and exercises control
over the employees. On occasion, plaintiff will transport patients and deliver supplies and food
to the homes. Plaintiff receives profits each year from these homes.
-1-
Defendant argued that plaintiff’s income from the group home enterprise constitutes
earned income and that it should be permitted to prorate plaintiff’s yearly income to a weekly
basis and set it off against weekly wage benefits, pursuant to subsection 371(1). This provision
of the Worker’s Disability Compensation Act (WDCA) provides:
The weekly loss in wages referred to in this act shall consist of the
percentage of the average weekly earnings of the injured employee computed
according to this section as fairly represents the proportionate extent of the
impairment of the employee’s earning capacity in the employments covered by
this act in which the employee was working at the time of the personal injury.
The weekly loss in wages shall be fixed as of the time of the personal injury, and
determined considering the nature and extent of the personal injury. The
compensation payable, when added to the employee’s wage earning capacity after
the personal injury in the same or other employments, shall not exceed the
employee’s average weekly earnings at the time of the injury.
Noting that subsection 371(1) refers to post-injury wage-earning capacity and that
defendant failed to claim that plaintiff’s “post-injury income established a post-injury wageearning capacity or that the income affected the existence of plaintiff’s disability,” the magistrate
concluded that the provision does not apply in this case. He further found that plaintiff’s income
from her group homes does not represent wages, but rather investment or ownership income.
Thus, he concluded that defendant may not setoff plaintiff’s group home income against her
weekly wage loss benefits and denied defendant’s petition to recoup.
Defendant appealed to the WCAC, which reversed this decision. While the WCAC
found the magistrate’s factual findings supported by competent, material, and substantial
evidence on the record, it found that he erred in analyzing whether plaintiff’s earnings can be set
off against benefits owed to plaintiff. The WCAC concluded:
We believe the correct rule is that an employer may receive credit for the
net earnings of an individual who is able to operate an independent business after
injury without regard to whether those earnings are denominated wages or profits.
To refuse to permit credit in such a situation would enrich the employee at the
employer’s expense simply because the employee chose to operate her own
business rather than return to service with another employer. We recognize that
an employee who receives only income from passive investment in a business
enterprise, without engaging in any substantial work in furtherance of the business
enterprise, may not be charged with creditable earnings to offset compensation.
***
In the case before us, the facts found by the magistrate demonstrate that
plaintiff is not merely a passive investor in her business. Although she is not able
to perform the physical labor she did prior to her injury, the record shows an
individual very active in the day-to-day operation of her business. . . .
***
-2-
As a result, it cannot be said that plaintiff’s income from the group homes
business reflects mere passive ownership. As a result, the employer is entitled to
offset the net profit from plaintiff’s business.
II. Legal Analysis
Plaintiff initially alleges that the WCAC improperly utilized a de novo standard of review
in this case and substituted its findings of fact for those of the magistrate. We disagree.
This Court reviews the WCAC’s decision under the any evidence standard.1 If any
evidence supports the WCAC’s factual findings and the WCAC did not misapprehend its
administrative appellate role in reviewing the magistrate’s decisions, this Court must treat the
WCAC’s factual findings as conclusive.2 Providing “the WCAC carefully examined the record,
was duly cognizant of the deference to be given to the decision of the magistrate, did not
‘misapprehend or grossly misapply’ the substantial evidence standard, and gave an adequate
reason grounded in the record for reversing the magistrate,” leave to appeal should be denied or
the WCAC’s decision should be affirmed.3 But this Court may review questions of law involved
with any final order of the WCAC.4 The WCAC’s decision may be reversed if it operated within
the wrong legal framework or based its decision on erroneous legal reasoning.5
In reviewing the magistrate’s decision, the WCAC must consider the whole record and
conduct a qualitative and quantitative analysis.6 The WCAC has some fact-finding powers and,
if it gives different weight to quality or quantity of the evidence presented, may substitute its
own findings of fact for those of the magistrate.7
To the extent plaintiff claims that the WCAC erroneously overturned the magistrate’s
factual findings after stating that it found them to be supported by competent, material, and
substantial evidence, we disagree. The record shows that the WCAC clearly considered the facts
as found by the magistrate and made a legal conclusion based on those facts. But contrary to the
magistrate’s holding, the WCAC determined that these facts indicated that plaintiff was more
than a passive investor in her business and that her activities with respect to the group homes
elevated her income from a simple return on an investment to compensation for work performed
or services provided. The WCAC did not apply a de novo standard of review to the magistrate’s
1
Mudel v Great Atlantic & Pacific Tea Co, 462 Mich 691, 709; 614 NW2d 607 (2000).
2
Id. at 709-710.
3
Holden v Ford Motor Co, 439 Mich 257, 269; 484 NW2d 227 (1992).
4
MCL 418.861a(14); DiBenedetto v West Shore Hosp, 461 Mich 394, 401; 605 NW2d 300
(2000).
5
DiBenedetto, supra at 401-402.
6
MCL 418.861a(4), (13); Mudel, supra at 699.
7
Mudel, supra at 699-700.
-3-
factual findings, but properly reviewed them to determine if they were supported by the requisite
evidentiary standard and made a legal conclusion based on those facts.8
Regardless, plaintiff argues that the WCAC should have made a determination regarding
the amount of income attributable to her efforts with respect to the business rather than using her
entire income from the group homes to offset her worker’s compensation benefits. After
reviewing the record, we find that plaintiff has failed to demonstrate that the WCAC’s
determination regarding the amount of the setoff is erroneous.
Any limitation on an employer’s entitlement to set off income received by an employee
against worker’s compensation benefits payable to that employee is a question of statutory
construction, which is reviewed de novo.9 The primary purpose in interpreting a statute is to
determine and give effect to the Legislature’s intent.10 The first step is to consider the language
of the statute.11 “The Legislature is presumed to have intended the meaning it has plainly
expressed, and if the expressed language is clear, judicial construction is not permitted and the
statute must be enforced as written.”12 Only where the language of a statute is ambiguous may
this Court look beyond the statute to determine the Legislature’s intent.13
When interpreting the worker’s disability compensation act (WDCA), courts must take
into consideration the fact that “the WDCA is a remedial statute that should be ‘liberally
construed to grant rather than deny benefits.’”14 As a general rule, deference is given to the
agency’s construction of statutory provisions, providing that interpretation is not clearly
incorrect.15
The WDCA exists to “compensate a claimant for lost earning capacity caused by a workrelated injury, under a comprehensive scheme that balances the employer’s and the employee’s
interests.”16 Subsection 371(1) instructs, with regard to an employer’s responsibility to pay
worker’s compensation benefits: “[t]he compensation payable, when added to the employee’s
wage earning capacity after the personal injury in the same or other employments, shall not
exceed the employee’s average weekly earnings at the time of the injury.” In Powell v Casco
Nelmor Corp, our Supreme Court held that under subsection 371(1), an employer may set off a
8
See Hoste v Shanty Creek Management, Inc, 459 Mich 561, 570 n 7; 592 NW2d 360 (1999)
(noting that error may be committed by failing to properly apply the law to the factual findings).
9
Robertson v DaimlerChrysler Corp, 465 Mich 732, 739; 641 NW2d 567 (2002).
10
Id. at 748.
11
Id.
12
Id.
13
DiBenedetto, supra at 402.
14
Id. at 402; quoting Goff v Bil-Mar Foods, Inc (After Remand), 454 Mich 507, 511; 563 NW2d
214 (1997).
15
Jones-Jennings v Hutzel Hosp (On Remand), 223 Mich App 94, 105; 565 NW2d 680 (1997).
16
Sweatt v Dep’t of Corrections, 247 Mich App 555, 566; 637 NW2d 811 (2001); rev on other
grounds 468 Mich 172 (2003).
-4-
disabled employee’s wages or wage-earning capacity after the injury.17 Thus, defendant may
deduct from the amount of compensation it must pay to plaintiff any wages earned by plaintiff
after her disabling injury.
The WCAC considered the definition of “wage” and the characterization of “wages” set
forth by our Supreme Court in Hoste, and distinguished an employee’s passive investment in a
business enterprise from an employee’s active participation in developing, running and
maintaining a business for profit.18 It then concluded that because plaintiff’s income reflects
more than simple passive ownership of the group homes, defendant could offset the net profit
from plaintiff’s business from the compensation it owed to her. Plaintiff has not demonstrated
that the WCAC’s interpretation of subsection 371(1) is clearly incorrect. Thus, we defer to the
WCAC’s decision.
Affirmed.
/s/ Hilda R. Gage
/s/ Jessica R. Cooper
17
406 Mich 332, 348; 279 NW2d 769 (1979); see also Bower v Whitehall Leather Co, 412 Mich
172, 192; 312 NW2d 640 (1981).
18
Hoste, supra at 576 (describing wages as “real, palpable and substantial consideration . . . .”).
-5-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
