THOMAS SCHMALTZ V TROY METAL CONCEPTS INC
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Michigan Supreme Court
Lansing, Michigan 48909
Chief Justice
Maura D. Corrigan
Opinion
Justices
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
FILED DECEMBER 23, 2003
THOMAS SCHMALTZ,
Plaintiff-Appellant,
v
No. 123865
TROY METAL CONCEPTS, INC., and
WESTFIELD INSURANCE COMPANY,
Defendants-Appellees.
_______________________________
PER CURIAM
In
this
worker’s
compensation
case,
this
Court
is
asked to determine whether a disabled employee’s average
weekly wage at the time of injury can be recalculated or
redetermined to include discontinued fringe benefits when
that employee’s subsequent employment produces a partial
benefit rate.
We conclude that the average weekly wage
that is used to establish benefit entitlement is determined
at
the
time
recalculated.
of
injury
and
may
not
be
subsequently
Postinjury employment does not affect the
time of injury average weekly wage calculation.
This was
the decision reached by the Worker’s Compensation Appellate
Commission (WCAC), a decision which we affirm.
I
This case comes to us on stipulated facts, which we
will review after setting forth the applicable provisions
of law.
From this case’s inception, the sole question
posed
the
by
parties
is
whether,
and
to
what
extent,
plaintiff’s discontinued fringe benefits can be included in
his “average weekly wage” when determining his entitlement
to wage-loss benefits.
To
answer
this
question,
we
must
examine
several
provisions in the Worker’s Disability Compensation Act, MCL
418.101 et seq.
due
to
The act compensates workers for wage loss
work-related
injuries,
limits for such compensation.
have
been
entitled
to
but
it
also
establishes
Since 1982, disabled workers
receive
after-tax average weekly wage.
eighty
percent
MCL 418.351(1).
of
their
However,
this compensation is subject to a statutory maximum, which
is
ninety
percent
of
the
state
applicable at the time of injury.
The
benefit
after-tax
entitlement
418.313(1),
which
wages
are
used
average
2
wage
MCL 418.355(2).
to
calculated
establishes
weekly
how
determine
wage-loss
pursuant
the
to
MCL
“after-tax”
determination is made, and MCL 418.371, which establishes
how the “average weekly wage” is calculated.
The critical
provision for purposes of this case is § 371(2), which
provides:
As used in this act, “average weekly wage”
means the weekly wage earned by the employee at
the time of the employee's injury in all
employment, inclusive of overtime, premium pay,
and cost of living adjustment, and exclusive of
any fringe or other benefits which continue
during the disability. Any fringe or other
benefit which does not continue during the
disability shall be included for purposes of
determining an employee's average weekly wage to
the extent that the inclusion of the fringe or
other benefit will not result in a weekly benefit
amount which is greater than 2/3 of the state
average weekly wage at the time of injury. The
average weekly wage shall be determined by
computing the total wages paid in the highest
paid 39 weeks of the 52 weeks immediately
preceding the date of injury, and dividing by 39.
The plaintiff in this case was injured in 1997.
At
the time of his injury, his weekly wage (or “cash” wage)
was $983.59.
were
valued
His fringe benefits, which were discontinued,
at
$273.96.
The
applicable
state
average
weekly wage in 1997 was $591.18, two-thirds of which is
$394.12.
exceeded
Plaintiff’s
the
amount
“cash”
under
weekly
which
pay
fringe
therefore
benefits
may
far
be
included in the calculation of plaintiff’s “average weekly
wage” under § 371(2).
In short, plaintiff’s average weekly
wage at the time of his injury was $983.59.
3
Plaintiff subsequently found new employment, at wages
less than he earned from defendant.
In accordance with MCL
418.361(1), he is entitled to weekly compensation equal to
“80%
of
the
difference
between
the
injured
employee’s
after-tax average weekly wage before the personal injury
and the after-tax average weekly wage which the injured
employee is able to earn after the personal injury, but not
more
than
determined
statement
provisions
the
maximum
under
of
weekly
rate
[MCL
418.355].”
entitlement
in
of
the
act,
of
compensation,
There
the
is
a
reasonable
specifically
MCL
as
companion
employment
418.301(5)(b),
which states that if a disabled employee “is employed and
the average weekly wage of the employee is less than that
which the employee received before the date of injury, the
employee shall receive weekly benefits under this act equal
to 80% of the difference between the injured employee’s
after-tax weekly wage before the date of injury and the
after-tax weekly wage which the injured employee is able to
earn
after
the
date
of
injury,
but
not
more
than
the
maximum weekly rate of compensation, as determined under
[MCL 418.355].”
Plaintiff proposes that, if the differential benefit
entitlement discussed in §§ 361(1) and 301(5)(b) is below
two-thirds
of
the
applicable
4
state
average
weekly
wage
($394.12), his discontinued fringe benefits should now be
included in his average weekly wage, to the extent that
such inclusion does not result in a weekly benefit amount
greater
than
magistrate,
$394.12.
relying
The
on
prior
worker’s
decisions
compensation
by
the
WCAC,
rejected plaintiff’s proposal, and the WCAC affirmed the
magistrate’s decision.
2002 Mich ACO 326.1
We agree with
these authorities.
II
Findings
conclusive
on
of
fact
appeal,
made
or
absent
adopted
fraud,
by
if
the
there
WCAC
are
is
any
competent supporting evidence in the record, but a decision
of the WCAC is subject to reversal if the WCAC operated
within the wrong legal framework or if its decision was
based on erroneous legal reasoning.
DiBenedetto v West
Shore Hosp, 461 Mich 394; 605 NW2d 300 (2000).
Questions
of law arising in any final order of the WCAC are reviewed
by this Court under a de novo standard of review.
Mudel v
Great Atlantic & Pacific Tea Co, 462 Mich 691; 614 NW2d 607
(2000).
Unless clearly erroneous, the Courts are to give
great weight to the interpretation of a statute placed upon
1
Leave to appeal was denied by the Court of Appeals in
an unpublished order, entered April 24, 2003 (Docket No.
245945).
5
it by the administrative body whose job it is to apply the
statute.
Hoste v Shanty Creek Mgmt, Inc, 459 Mich 561; 592
NW2d 360 (1999).
III
The
statutory
discontinued
fringe
restriction
on
the
benefits
the
calculation
in
inclusion
of
of
an
employee’s average weekly wage, MCL 418.371(2), reflects
the Legislature’s intent that fringe benefits should only
be included to increase the weekly benefit amount available
to
employees
whose
other
earnings,
exclusive
of
fringe
benefits, are too low to yield a weekly benefit amount that
is equal to or above two-thirds of the applicable state
average
weekly
wage.
In
the
leading
WCAC
decision,
Karczewski v Gen Motors Corp, 1994 Mich ACO 613 (1995), the
WCAC
adopted
the
following
analysis
provided
by
magistrate in that case:
Defendant asserts that discontinued fringe
benefits are includable in the calculation of
average weekly wage only to the extent necessary
to bring the full rate up to two-thirds of the
state average weekly wage. I agree.
Section 418.371(2) of the Act provides that
discontinued fringe benefits are includable in
the computation of the average weekly wage only
to the extent necessary to yield a rate up to
two-thirds of the state average weekly wage for
the year of injury.
If the cash wage yields a
rate that meets or exceeds two-thirds of the
state average weekly wage, discontinued fringes
are not includable. The prior section of the Act
6
the
provided for inclusion of discontinued fringe
benefits in the average weekly wage computation
under all circumstances. Obviously, a change was
intended.
The present version was part of the large
package of reforms that became effective in 1982.
The whole thrust of the reform package was to
tighten up eligibility requirements and, at the
same time, improve the level of benefits for
those who do qualify. Subject to maximum rates,
the prior rate provisions were based on twothirds of an employee’s gross earnings.
At the
higher income levels, claimants are better off at
the 80% after tax rate.
At certain income
levels, employees were better off with a rate
based on two-thirds of their gross income,
inclusive of fringe benefits.
In permitting
addition of discontinued fringes up to the point
necessary to reach a rate equal to two-thirds of
the state average weekly wage, I believe the
Legislature
intended
to
reduce
the
overall
economic loss for claimants at that income level.
It was not intended that eligible claimants be
“worse off” under the new schedule of benefits.
Traditionally,
average
weekly
wage
is
established, once and for all, as of the date of
injury. Circumstances arising subsequent to that
date
(with
the
exception
of
later
ending
includable fringes) may affect the rate of
compensation, but not the average weekly wage.
Post-injury earnings, during periods of partial
disability,
operate
as
a
credit,
and
in
mitigation of, an employer’s wage indemnity
liability.
The differential is created by the
difference between the pre-injury and reduced
post-injury earnings.
Traditionally, and in the
present statutory scheme, there is no indication
that the Legislature intended to increase the
differential
by
adding
discontinued
fringe
benefits to the cash average weekly wage merely
because the differential payment falls below twothirds of the state average weekly wage.
That
concept
runs
counter
to
the
entire
mitigation/favored work doctrine.
7
Since
plaintiff’s
pre-injury
cash
wage
yields a full rate in excess of two-thirds of the
state average weekly wage, he is not entitled to
add fringe benefits to the wage calculation.
Therefore, plaintiff’s claim for rate adjustment
has been denied.
We agree with this analysis and note that it has been
consistently followed by the WCAC each time this question
has come up.
The
weekly
calculation
wage
at
the
of
a
time
worker’s
of
injury
compensation
involves
a
average
two-step
process that occurs “at the time of the employee’s injury.”
First, the worker’s gross weekly wages in “cash” alone are
applied
to
the
annual
benefit
pursuant to MCL 418.313(2).
rate
tables
published
If the resulting benefit rate
indicated on the tables does not meet or exceed two-thirds
of the applicable state average weekly wage, the second
step is to add in the value of the worker’s fringe benefits
(without regard to whether they discontinue on the date of
injury or at some later date), up to the point at which the
resulting benefit rate indicated in the tables equals twothirds of that state average weekly wage.
this
two-step
process
is
completed
It is only after
that
the
resulting
average weekly wage figure is used to determine the weekly
benefit amount that worker is actually entitled to receive.
According to Karczewski, this is the “full” weekly benefit
8
amount that is indicated in the benefit rate tables and
that is based upon the worker’s earnings at the time of
injury, without any offsets for postinjury wages, continued
wage-earning
capacity,
or
any
other
type
of
benefit
reductions and limitations, that is the focus of the twothirds limitation on the inclusion of fringe benefits in
the
calculation
of
the
average
weekly
wage
under
MCL
418.371(2).2
Here, plaintiff’s earnings at Troy Metal Concepts were
well above the kind of low income level that the inclusion
of fringe benefits in § 371(2) was designed to address.
Because plaintiff’s gross weekly wages, exclusive of fringe
benefits, were more than sufficient to result in a full
weekly benefit amount under the applicable rate tables that
exceeded two-thirds of the applicable state average weekly
wage,
his
fringe
benefits
may
not
be
calculation of his average weekly wage.
plaintiff
may
presently
be
included
in
the
The mere fact that
entitled
to
receive
a
differential weekly benefit amount that is less than the
2
Plaintiff’s reliance on Taylor v Second Injury Fund,
234 Mich App 1; 592 NW2d 103 (1999), is misplaced.
The
issue there involved calculation of total and permanent (or
“T&P”) disability benefits.
Those benefits may be
increased
(with
the
Second
Injury
Fund
paying
the
difference) to the extent an employee would qualify for
higher benefit rates in later years after injury.
MCL
418.521(2).
9
full weekly amount set forth in the tables and that is less
than two-thirds of the state average weekly wage for the
applicable year of injury, does not provide an occasion for
now including the value of discontinued fringe benefits in
the determination of his average weekly wage.
That average
weekly wage was fixed at the time of injury and may not be
recalculated.
Plaintiff’s
underlying
entitlement,
or
“full” benefit, has never changed.
The decision of the WCAC is affirmed.
Maura D. Corrigan
Elizabeth A. Weaver
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
CAVANAGH
and
KELLY,
JJ.
We
would
grant
appeal.
Michael F. Cavanagh
Marilyn Kelly
10
leave
to
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