MARY BAILEY V OAKWOOD HOSPITAL & MEDICAL CENTER
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Michigan Supreme Court
Lansing, Michigan
Chief Justice:
Opinion
Justices:
Clifford W. Taylor
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
FILED JUNE 29, 2005
MARY BAILEY,
Plaintiff-Appellee,
v
No. 125110
OAKWOOD HOSPITAL AND MEDICAL
CENTER,
Defendant-Appellant,
and
SECOND INJURY FUND,
Defendant-Appellee,
and
DIRECTOR OF THE BUREAU OF
WORKERS' AND UNEMPLOYMENT
COMPENSATION,
Intervenor-Appellee.
_______________________________
BEFORE THE ENTIRE BENCH
KELLY, J.
This
case
involves
the
allocation
of
liability
for
benefits under the vocationally disabled persons chapter of
the Worker’s Disability Compensation Act.
seq.
MCL 418.901 et
The act makes an employer initially liable to pay
disability benefits to a certified vocationally disabled
employee who is injured on the job.
employer
only
compensation,
expenses.
becomes
fifty-two
medical
care,
MCL 418.921.
liable.
In
weeks
and
It imposes on the
of
last
liability
illness
and
for
burial
Thereafter, the Second Injury Fund
the
event
of
an
employment-related
injury to a certified vocationally disabled employee, the
employer’s
worker’s
disability
insurance
carrier
has
an
obligation to give notice to the fund.
The issue here is whether a carrier that fails to
notify
disabled
weeks.
the
fund
is
person's
solely
liable
disability
MCL 418.925(1).
for
benefits
a
vocationally
after
fifty-two
Related issues are whether the
fund is liable after the fifty-second week if it receives
late notice, and whether the employer can be liable after
fifty-two weeks under any circumstances.
We
benefits
hold
after
that
the
the
employer
fifty-second
receives late notice.
has
week,
no
liability
even
if
the
for
fund
Also, the carrier must continue to
pay benefits after fifty-two weeks.
Finally, the fund is
not released from liability to reimburse the carrier for
its payments made after fifty-two weeks even if it receives
late notice.
An exception exists if the employee loses
eligibility before late notice is given.
2
If the employee
is found ineligible for payments made before late notice
was given, the fund need not reimburse the carrier for the
benefits paid.
We overrule the Court of Appeals decisions
in Valencic v TPM, Inc1 and Robinson v Gen Motors Corp2 to
the extent that they are inconsistent with today’s opinion.
We reverse in part the Court of Appeals decision in this
case
and
remand
the
case
to
the
Worker’s
Compensation
Appellate Commission (WCAC).
THE PROVISIONS
FOR
VOCATIONALLY DISABLED EMPLOYEES
A vocationally disabled employee is an employee who
suffers from one of several statutorily enumerated medical
conditions and whose impairment is a substantial obstacle
to
employment.
MCL
418.901(a).
The
liability
to
pay
benefits for such an employee, when injured on the job, is
allocated among the employer, the employer's carrier, and
the Second Injury Fund.
The disability act restricts the
employer’s liability to the first fifty-two weeks.
MCL
418.921.
After that, the employer’s carrier must continue to
pay benefits to the employee.
the
carrier
for
the
amount
But the fund must reimburse
the
carrier
fifty-second week following the injury.
pays
the
MCL 418.925(2).
1
248 Mich App 601; 639 NW2d 846 (2001).
2
242 Mich App 331; 619 NW2d 411 (2000).
3
after
By allocating liability in this fashion, the act reduces an
employer’s
normal
worker’s
compensation
liability,
encouraging employment of the vocationally disabled.
The act provides that a vocationally disabled employee
will receive benefits in the same manner and to the same
extent as other employees.
MCL 418.921.
To qualify under
this chapter, the employee must apply to the Division of
Vocational Rehabilitation of the Department of Education
for
certification
as
vocationally
disabled.
MCL
418.901(b), 418.905.
The employer and the disability insurance carrier must
also fulfill certain obligations.
When hiring a disabled
employee, the employer must submit required information to
the Division of Vocational Rehabilitation.
MCL 418.911.
If a certified vocationally disabled employee is injured on
the job, the carrier must notify the fund within a certain
time after the injury.
MCL 418.925(1).
In this case, defendant Oakwood Hospital was both the
employer and the carrier.3
disabled employee.
defendant
Oakwood
Plaintiff was its vocationally
After plaintiff was injured at work,
failed
to
timely
3
notify
the
defendant
See MCL 418.601(c).
Oakwood is self-insured.
We
distinguish between “carrier” and “employer” here, just as
the act does, although in this case, they are the same
party.
4
fund under the act’s notice provision.
which
defendant,
if
either,
is
In controversy is
liable
for
benefits
to
plaintiff after the fifty-second week.
FACTUAL BACKGROUND
The basic facts are not in dispute.
Plaintiff, an
employee of Oakwood, was certified as vocationally disabled
from
a
previous
injury.
She
became
afflicted
with
debilitating bilateral cumulative trauma disorder in her
hands, known as carpal tunnel syndrome, as a consequence of
her
work
as
a
medical
transcriptionist.
Her
condition
rendered her unable to work after September 21, 1994.
Over
the next several months, she received noninvasive treatment
then underwent carpal tunnel release surgery.
Oakwood
voluntarily
paid
disability
plaintiff until March 20, 1998.
asserted
that
Plaintiff
plaintiff
applied
for
was
a
benefits
to
At that time, Oakwood
able
to
hearing
return
before
a
to
work.
worker’s
compensation magistrate pursuant to MCL 418.931, seeking
the reinstatement of her benefits.
PROCEEDINGS
IN THE
WCAC
AND THE
COURT
OF
APPEALS
Oakwood failed to notify the Second Injury Fund within
the
period
established
in
MCL
418.925(1)
that
the
fund
might be liable to pay plaintiff’s compensation and medical
care
benefits.
On
November
5
12,
1998,
Oakwood
filed
a
petition
with
reimbursement
the
worker’s
from
the
compensation
fund
for
its
plaintiff pursuant to MCL 418.931(1).
copy
of
plaintiff’s
with its petition.
vocationally
bureau
seeking
overpayment
to
Oakwood included a
handicapped
certificate
It argued that it should be liable for
payment of no more than fifty-two weeks of benefits under
MCL 418.921 and that the fund owed the rest.
The fund sought to dismiss Oakwood’s petition on the
basis that Oakwood had failed to give it timely notice
under MCL 418.925(1).
dismissed
the
commission
A magistrate granted the motion and
petition.
granted
On
appeal
Oakwood’s
to
the
WCAC,
interlocutory
the
appeal,
reversed, and remanded the case to the magistrate.
Bailey
v Oakwood Hosp & Med Ctr, 2000 Mich ACO 292.
Soon after that action, the Court of Appeals decided
Robinson, supra.
It held that the failure of a carrier to
timely notify the fund under MCL 418.925(1) resulted in
dismissal
of
the
fund’s
liability of the carrier.
liability
and
continued
the
Robinson, supra at 334–335.
On remand, the magistrate again dismissed Oakwood’s
claim
against
the
fund.
He
relied
on
Robinson.
In
addition, he found that plaintiff was not avoiding work as
Oakwood
claimed
and
granted
plaintiff
benefits to be paid by Oakwood.
6
an
open
award
of
Again on appeal to the WCAC, the commission concluded
that neither Oakwood nor the fund was liable for additional
benefits.
It found that the Robinson decision shielded the
fund from liability, and that the act protected Oakwood
from payments beyond fifty-two weeks.
MCL 418.921.
It
ruled that, under the act, a carrier’s liability must be
limited
to
benefits
accruing
during
weeks after the injury.
MCL 418.921.
Robinson
the
the
decision
and
first
fifty-two
On the basis of the
mandatory
language
of
statute, the WCAC terminated plaintiff’s benefits.
the
Bailey
v Oakwood Hosp & Med Ctr, 2002 Mich ACO 185.
Plaintiff
Appeals.
sought
leave
to
appeal
in
the
Court
of
The director of the worker's compensation bureau
intervened on plaintiff’s behalf as provided for in MCL
418.841(1).
The
Court
of
Appeals
reversed
decision, citing both Robinson and Valencic.4
298; 674 NW2d 160 (2003).
the
WCAC
259 Mich App
The Court held that Oakwood’s
failure to provide the fund with timely notice precluded it
from taking advantage of the fifty-two-week limitation of
liability contained in MCL 418.921.
Absent timely notice,
Oakwood would remain liable for the duration of plaintiff’s
4
In Valencic, the Court of Appeals held that
compliance with the notice provision of MCL 418.925(1) is
mandatory. It ruled that a worker’s compensation insurance
carrier that fails to timely notify the fund may not shift
liability to the fund. Valencic, supra at 608.
7
work-related disability.
259 Mich App at 305–306.
The Court remanded the case to the WCAC to review
Oakwood’s claim that plaintiff was avoiding work.
418.861a(3).
appeal.
Oakwood
sought,
and
we
granted,
See MCL
leave
to
470 Mich 892 (2004).
THE STANDARD
Because
this
case
ON
APPELLATE REVIEW
presents
an
construction, we review it de novo.
issue
of
statutory
Cardinal Mooney High
School v Michigan High School Athletic Ass’n, 437 Mich 75,
80; 467 NW2d 21 (1991).
If possible, we give effect to the
Legislature’s purpose and intent according to the common
and
ordinary
meaning
of
the
language
it
used.
When
ascertaining intent, we read differing statutory provisions
to produce an harmonious whole.
MCL 8.3a; Farrington v
Total Petroleum, Inc, 442 Mich 201, 208-209, 212; 501 NW2d
76 (1993).
THE STATUTORY LANGUAGE
The following are the relevant statutory provisions:
A person certified as vocationally disabled
who receives a personal injury arising out of and
in the course of his employment and resulting in
death or disability, shall be paid compensation
in the manner and to the extent provided in this
act, or in case of his death resulting from such
injury, the compensation shall be paid to his
dependents. The liability of the employer for
payment of compensation, for furnishing medical
care or for payment of expenses of the employee's
last illness and burial as provided in this act
shall be limited to those benefits accruing
8
during the period of 52 weeks after the date of
injury. Thereafter, all compensation and the cost
of
all
medical
care
and
expenses
of
the
employee's last sickness and burial shall be the
liability of the fund. The fund shall be liable,
from the date of injury, for those vocational
rehabilitation benefits provided in section 319.
[MCL 418.921 (emphasis added).]
The notification provision, § 925(1), reads:
When a vocationally disabled person receives
a personal injury, the procedure and practice
provided in this act applies to all proceedings
under this chapter, except where specifically
otherwise provided herein. Not less than 90 nor
more than 150 days before the expiration of 52
weeks after the date of injury, the carrier shall
notify the fund whether it is likely that
compensation may be payable beyond a period of 52
weeks after the date of injury. The fund,
thereafter, may review, at reasonable times, such
information as the carrier has regarding the
accident, and the nature and extent of the injury
and
disability.
[MCL
418.925(1)
(emphasis
added).]
PREVIOUS INTERPRETATIONS
OF THE
STATUTORY LANGUAGE
AT
ISSUE
Robinson was the first reported case to consider the
consequences of a carrier’s failure to notify the fund.5
There, the Court of Appeals noted that the word “shall” in
§ 925(1) created a mandatory duty to notify.
It reasoned
that the Legislature must have intended that there be an
5
The
careful
reader
will
note
that
Robinson
“concern[ed] . . . an employer’s failure to give notice
. . . .” Robinson, supra at 334 (emphasis added).
The
employer in Robinson was self-insured and thus was a
carrier under the act.
Hence, Robinson concerned the
failure of the employer as carrier to give notice, just as
this case does.
9
adverse consequence for failing to give notice, or carriers
could violate the provision with impunity.
at
335.
The
appropriate
sanction,
Robinson, supra
it
reasoned,
complete dismissal of the fund’s liability.
was
This not only
effectuated the Legislature’s intent, Robinson observed, it
protected the fund from prejudice.
In
Valencic,
reasoning
of
7.215(J)(1).
the
Robinson,
Court
as
Id.
of
followed
the
was
it
Appeals
required
to
MCR
do.
It concluded that
compliance with the notice provisions of [MCL]
418.925(1) is “mandatory,” and in the case at
bar, it is undisputed that notice was not given
within the period set forth in that subsection.
In light of Robinson . . ., we conclude that the
WCAC’s decision [not to dismiss the fund]
amounted to an error of law. [Valencic, supra at
608.]
As in Robinson, the Court dismissed the fund from the
lawsuit
and
imposed
full
liability
on
the
carrier
for
payments beyond the first fifty-two weeks.
THE INVALIDITY
OF
ROBINSON
AND
VALENCIC
The flaws in Robinson and Valencic become painfully
apparent when their holdings are applied to this case.
Legislature
enacted
the
Worker’s
Disability
The
Compensation
Act to provide a reliable source of benefits to employees
injured on the job regardless of tort liability.
McAvoy v
H B Sherman Co, 401 Mich 419, 437; 258 NW2d 414 (1977).
In applying Robinson, Valencic, and MCL 418.925(1) to
10
this case, the Court of Appeals and the WCAC were trapped
in a Catch-22.
and
the
They had to release the employer-carrier
fund
plaintiff’s
from
liability,
benefits.
This
leaving
directly
no
one
to
pay
contradicted
the
express language of MCL 418.921 that “an employee . . .
shall be entitled to compensation” for a disability caused
by employment6 and that a certified vocationally disabled
employee “shall be . . . compensat[ed] in the manner and to
the extent provided in this act . . . .”
We interpret the Legislature’s use of the word “shall”
to
mandate
the
payment
qualifies for them.
of
benefits
to
an
employee
who
Scarsella v Pollak, 461 Mich 547, 549;
607 NW2d 711 (2000); Oakland Co v Michigan, 456 Mich 144,
154; 566 NW2d 616 (1997).
The question becomes who is
liable for the benefits.
It is apparent from the language of § 921 that an
employer’s liability must end after the employee receives
the
benefits
that
accrued
following the injury.7
6
7
during
the
fifty-two
weeks
Also, the fund must assume liability
MCL 418.415.
The dissent’s conclusion to the contrary has a
superficial appeal. At first blush, it seems equitable to
relieve the fund of all liability if the carrier fails to
provide the notice required by § 925.
But the equity of
the
dissent’s
solution
is
questionable
upon
closer
examination.
(continued…)
11
for benefits, if any are due and paid by the carrier beyond
that date.
Section 925 describes the procedure for transferring
liability from the carrier to the fund.
that,
after
reasonable
notification,
times,
such
the
fund
information
It also provides
“may
as
the
review,
carrier
at
has
regarding the accident, and the nature and extent of the
injury
and
provision
disability.”
and
opportunity
MCL
accompanying
to
review
418.925(1).
deadlines
claims
to
The
afford
verify
the
their
notice
fund
an
validity.
This avoids unwarranted costs to the fund.
Although
the
statute
shifts
liability,
it
does
not
alleviate the disability insurance carrier’s responsibility
to pay benefits to the employee.
state
or
“legally
quality
of
responsible.”
being
“Liability” means “the
liable,”
Random
House
and
“liable”
Webster’s
means
College
(…continued)
In this case, the carrier (who must provide notice
under § 925) and the employer (who is liable for benefits
for the first fifty-two weeks under § 921) are the same
entity: Oakwood Hospital and Medical Center.
Extending
Oakwood’s liability beyond the statutory fifty-two-week
period, as the dissent suggests, imposes a penalty on the
same party that failed to comply with § 925.
However, if
the carrier and the employer are separate entities, the
dissent would extend the employer’s liability because of
the carrier’s failure to comply with its statutory duty.
In this light, the dissent’s solution is neither a
reasonable construction of the statutes at issue nor an
equitable one.
12
Dictionary (2001 ed), p 765.
It is different than the
responsibility to pay, although the two often overlap.
The act requires that the employee be compensated “in
the manner . . . provided in this act . . . .”
(emphasis added).
MCL 418.921
It requires carriers to pay benefits
directly to injured employees. MCL 418.801.
Thus § 921
requires carriers to continue to make payments to certified
vocationally disabled employees after fifty-two weeks just
as
they
certified
would
as
to
other
disabled
vocationally
employees
disabled.
who
These
are
not
provisions
ensure that the injured employee is not left uncompensated
during a dispute between a carrier and the fund over who is
liable for payments after week fifty-two.
The
act
also
requires
that
the
fund
reimburse
the
carrier for all compensation rightfully paid on its behalf.
MCL 418.925(2).
In effect, the act requires the carrier to
advance benefits on behalf of the fund.
By shifting the
liability but not the obligation to pay, and by providing
for parallel responsibility for payment, the Legislature
ensured that an injured employee would not be left without
benefits. The provision in § 925(3)8 allowing the fund to
8
MCL 418.925(3) reads:
The obligation imposed by this section on a
carrier to make payments on behalf of the fund
(continued…)
13
pay
the
employee
provisions.
directly
is
consistent
with
the
above
The fund may pay an employee directly if a
carrier fails to meet its obligation to the employee for
any reason, such as insolvency.
assurance
that
the
envisioned in the act.
employee
This furnishes additional
will
receive
the
benefits
MCL 418.921.
THE CONSEQUENCES CONTEMPLATED
BY
THE ACT
FOR
FAILURE
OF
NOTICE
When the act is read in context to give effect to all
its provisions, it becomes apparent that the Legislature
intended several consequences for failure to give notice
under § 925(1).
Carriers have a built-in incentive to give
timely notice.
If a carrier fails to notify the fund, one
consequence is that it loses the temporary use of the money
that the fund would have reimbursed to it.9
Once
information
the
the
fund
has
carrier
notice,
has
about
it
MCL 418.925(3).
may
the
review
claim.
any
MCL
418.925(1). It may dispute an employee's eligibility for
(…continued)
does not impose an independent liability on the
carrier. After a carrier has established the
right to reimbursement, payment shall be made
promptly on a proper showing every 6 months. If a
carrier does not make the payments on behalf of
the fund, the fund may make the payments directly
to the persons entitled to such payments.
9
This consequence is inherent in the statute as
written; the Legislature did not have to write it in to
make it so, as Justice Markman implies.
Also, the record
does not support Justice Markman’s assertion that this
consequence is ineffectual. Post at 10 n 7.
14
payment under MCL 418.925(2):
[A]t any time subsequent to 52 weeks after
the date of injury, the fund may notify the
carrier of a dispute as to the payment of
compensation.
The liability of the fund to
reimburse the carrier shall be suspended 30 days
thereafter until such controversy is determined.
These provisions allow the fund, once it has notice, to
ensure that it is required to reimburse only legitimate
claims.
Another consequence would occur if the employee became
ineligible
for
benefits
after
fifty-two
weeks.
If
the
employee is not eligible, there is no liability to pay
benefits under MCL 418.921.10
The
additional
fund
argues
consequence:
that
the
it
Court
should
should
relieve
create
it
an
from
all
obligations to reimburse the carrier after fifty-two weeks
if notice is not timely even if the employee is eligible
for
benefits.
It
argues
that
10
its
assets
derive
from
We agree with Justice Markman that the statute
bestows on the fund the right to dispute an employee’s
eligibility at any time. Post at 10 n 7. But the fund can
scarcely be expected to dispute payments of which it has no
knowledge.
Hence, the relevant inquiry is this:
what
consequence does the act contemplate for the time that the
carrier fails to give notice to the fund?
For any period
during which the fund has no notice and the employee was
ineligible for benefits, the fund has no liability.
The
consequence to the carrier that fails to give notice and
pays benefits to an ineligible employee after the fiftysecond week is that it will not receive reimbursement from
the fund.
15
contributions or assessments of self-insured employers and
worker’s compensation insurance carriers.
Therefore, it
says, it must be able to rely on the notification process
to determine its budget.
However,
future event:
notification
is
merely
a
prediction
that benefits may become payable.
of
a
In order
for the fund to use notifications that are only predictions
to forecast its budget, it must build in a component to
allow for changes in the condition of injured employees.
Hence, the fund cannot budget for the future on the basis
of predictions alone.
Moreover, compliance with the notice requirement may
be
impossible
under
some
circumstances.
Section
925(1)
could directly conflict with the act’s general statute of
limitations
11
in
MCL
418.381.11
For
example,
a
certified
MCL 418.381 provides in pertinent part:
A proceeding for compensation for an injury
under this act shall not be maintained unless a
claim for compensation for the injury, which
claim may be either oral or in writing, has been
made to the employer or a written claim has been
made to the bureau on forms prescribed by the
director, within 2 years after the occurrence of
the injury.
In case of the death of the
employee, the claim shall be made within 2 years
after death. The employee shall provide a notice
of injury to the employer within 90 days after
the happening of the injury, or within 90 days
after the employee knew, or should have known, of
(continued…)
16
vocationally disabled employee could suffer what appears to
be a minor injury at work.
Because the injury does not
initially appear serious, the employee might continue to
work.
Although
the
employee
might
work
every
day,
symptoms attributable to the injury might worsen.
the
At the
conclusion of fifty-two weeks, the symptoms could be so
severe
that
the
employee
must
stop
working.
If
the
employee filed a claim for worker’s compensation at the
beginning of week fifty-three, it would be well within the
two-year
limitation
on
possible
that
when
employer
and
only
its
compensable claim.
claims
the
carrier
found
claim
become
in
is
aware
§
381.
filed
of
a
It
would
is
the
potentially
However, because fifty-two weeks would
have already elapsed since the date of injury, the carrier
would
have
lost
its
ability
to
comply
with
the
occur,
the
carrier
notice
provision of § 925(1).
Should
this
situation
would
be
unable to satisfy the notice provision because of no fault
of its own.
Under Robinson, despite the language of § 921
that limits carrier liability “to those benefits accruing
(…continued)
the injury.
Failure to give such notice to the
employer shall be excused unless the employer can
prove that he or she was prejudiced by the
failure to provide such notice.
17
during the period of 52 weeks after the date of injury,”
the carrier would remain liable.
This would occur because
the carrier had been unaware of the possible compensable
claim until after the fifty-two-week period.
THE LEGISLATURE COULD HAVE INSERTED
THE
THE
PENALTY CLAUSE SOUGHT
BY
FUND
The Legislature knows how to create a penalty when it
intends one.
As we have pointed out, consequences for
noncompliance with notification provisions are inherent in
the act.
to
This suggests that the Legislature did not intend
impose
the
penalty
for
noncompliance
with
the
notification provision of § 925(1) that the fund seeks.
The act requires the employer to timely notify the
Division
Department
of
Vocational
of
Rehabilitation
Education12
when
it
at
hires
the
Michigan
a
certified
vocationally disabled employee:
Upon
commencement
of
employment
of
a
certified
vocationally
disabled
person
the
employer shall submit to the certifying agency,
on forms furnished by the agency, all pertinent
information
requested
by
the
agency.
The
certifying agency shall acknowledge receipt of
the information.
Failure to file the required
information with the certifying agency within 60
days after the first day of the vocationally
disabled
person's
employment
precludes
the
employer from the protection and benefits of this
chapter unless such information is filed before
an injury for which benefits are payable under
12
MCL 418.901(b).
18
this act. [MCL 418.911 (emphasis added).]
Under this section, failure to notify the agency within the
specified time or before an injury for which benefits are
payable bars the employer from shifting liability to the
fund.
The Legislature enacted this provision simultaneously
with §§ 921 and 925.
It furnishes a model for penalties in
the event of noncompliance.
However, the Legislature did
not follow it when creating the notification requirement of
§ 925(1).
It seems unlikely that the Legislature intended
a penalty that it did not build into the act, especially
given that it did specify penalties elsewhere in the act.
Farrington, supra at 210.
Justice
Markman’s
construction
would
carrier a penalty that is not in the act.
alternative
version
of
the
act,
one
impose
on
a
He proposes an
that
limits
the
employer’s liability
provided that the carrier complies with the
notice requirement of § 925(1).
Where the
carrier
fails
to
notify
the
fund
of
the
possibility that benefits will remain payable
under this chapter, the employer’s liability
continues until such time as ninety days have
passed from when the fund receives notification.
[Post at 7.]
The Legislature did not write this limitation into the
act.
The limitation conflicts with the text of the statute
that requires notice be provided 90 to 150 days before a
19
date
fifty-two
weeks
“after
the
date
of
injury.”
MCL
418.925(1).
THE
ACT
DOES NOT PENALIZE
THE
INJURED EMPLOYEE
CARRIER’S
FOR A
MISFEASANCE
The act allows an employee to enforce his or her award
in circuit court.
MCL 418.863.
The employee’s claim may
be brought directly against the directors and officers of a
self-insured employer or carrier as well as against the
corporate
entity.
MCL
418.647(2).
These
provisions
establish recourse for an employee if a carrier does not
meet
its
obligations
and
ceases
making
payments
in
violation of an award.
Also,
the
self-insured
status
of
an
employer,
like
Oakwood, that repeatedly or unreasonably fails to meet its
obligations may be revoked.
will
be
required
418.631(2).13
to
Thus,
If this occurs, the employer
obtain
the
act
liability
penalizes
insurance.
a
MCL
self-insured
employer or carrier that fails to pay its obligations to
disabled employees.
Valencic and Robinson failed to give effect to the
Legislature’s intent.
They precluded the magistrate from
awarding
a
benefits
to
certified
13
vocationally
disabled
Similarly, a carrier that repeatedly or unreasonably
fails to meet its obligations may have its state license to
provide insurance revoked. MCL 418.631(1)
20
employee to the same extent and in the same manner as other
employees.
They
created
a
penalty
for
the
carrier’s
failure to notify the fund of its liability where none was
written into the act.
Accordingly, Valencic and Robinson
are overruled to the extent that they are inconsistent with
this opinion.
THE CARRIER
IS
ENTITLED
TO
REIMBURSEMENT FROM
THE
FUND
The act explicitly states that the obligation of the
carrier to continue to pay benefits after fifty-two weeks
“does not impose an independent liability on the carrier.”
MCL 418.925(3).
The act provides for reimbursement to the
carrier once the carrier has established having made an
overpayment of accrued benefits.
The
fund
carrier.
Id.
releasing
the
must
make
The
fund
prompt
act
from
Id.
does
this
reimbursement
not
include
obligation
if
a
to
provision
the
carrier
delays in reporting to it a payment to an employee.
would
contravene
Court
to
read
the
into
intent
the
of
act
carrier’s right to reimbursement.
the
Legislature
words
the
It
for
the
extinguishing
the
Hence, in this case, the
fund must reimburse Oakwood for any eligible benefits it
paid on the fund’s behalf after the fifty-two-week period
following the date of injury.
The fund argues that its assets are in the nature of a
21
trust and that it is the trustee.
precluded
from
disbursing
the
It claims that it is
trust’s
assets
unless
the
terms of the trust are followed.
We
find
unconvincing
the
argument
that
it
is
a
violation of the terms of the fund’s trust to disburse
benefits when the mandatory notice provision has not been
satisfied.
To the contrary, the trust by its terms is
required
to
disabled
employees
injury.
a
reimburse
carriers
after
fifty-two
MCL 418.925(3).
condition
trustee
is
precedent
settlor’s
not
to
benefits
to
following
weeks
paid
an
Notification by a carrier is not
to
absolved
failure
for
the
of
notify
fund’s
its
the
obligation.
The
responsibility
trustee
of
a
by
a
possible
obligation.
The record contains no showing that the fund’s payment
of
claims
for
which
it
received
delayed
carriers has caused it an actuarial crisis.
notice
from
We believe
that the fund is not prejudiced by untimely delays and, in
fact, that it enjoys the time value of the money it holds
until
monies
receiving
that
assessments
delayed
the
on
fund
employers
notification
pays
and
out
of
a
claim.
Any
are
recouped
through
carriers
pursuant
to
418.551(1) and passed along to consumers.
MCL
McAvoy, supra at
436, quoting 1 Larson, Workmen’s Compensation Law, § 2.20.
22
CONCLUSION
An employer is liable for payment of compensation, for
furnishing
illness
medical
expenses
employee.
care,
of
a
and
for
certified
payment
of
the
vocationally
last
disabled
This liability exists for fifty-two weeks after
the employee suffers a second disabling injury or is killed
at
work.
After
that,
the
employer
has
no
liable
after
further
liability.
The
second
Second
week
Injury
and
must
Fund
is
reimburse
a
carrier
the
for
fifty-
eligible
benefits it pays the employee on the fund’s behalf.
418.921
and
Compensation
418.925(3).
Act
provides
The
inherent
Worker's
MCL
Disability
consequences
for
a
carrier that fails to timely notify the fund of the fund’s
potential obligation.
temporary
use
of
reimbursed to it.
For instance, the carrier loses the
the
money
that
the
fund
would
have
It risks that the fund will dispute the
employee’s eligibility, precluding the carrier from being
reimbursed if the employee is found ineligible.
In this case, Oakwood’s liability as an employer ended
at the conclusion of fifty-two weeks after the date of
plaintiff’s injury.
However, as the carrier, it remained
obligated to pay her benefits thereafter and could rely on
reimbursement from the fund unless plaintiff was shown to
23
be avoiding work.
The Court of Appeals holding to the
contrary is overruled.
The
fund
will
be
liable
for
plaintiff’s
continuing
benefits retroactive to fifty-two weeks after her injury
provided that it is determined on remand that plaintiff was
not avoiding work.
We remand the case to the Worker’s
Compensation Appellate Commission for consideration of this
issue.
Valencic and Robinson are overruled to the extent
that they are inconsistent with this opinion.
retain jurisdiction.
Marilyn Kelly
Clifford W. Taylor
Elizabeth A. Weaver
Maura D. Corrigan
Robert P. Young, Jr.
24
We do not
S T A T E
O F
M I C H I G A N
SUPREME COURT
MARY BAILEY,
Plaintiff-Appellee,
v
No. 125110
OAKWOOD HOSPITAL AND MEDICAL
CENTER,
Defendant-Appellant,
and
SECOND INJURY FUND,
Defendant-Appellee,
and
DIRECTOR OF THE BUREAU OF
WORKERS’ AND UNEMPLOYMENT
COMPENSATION,
Intervenor-Appellee.
_______________________________
MARKMAN, J. (dissenting).
The
(the
majority
fund)
is
concludes
that
automatically
the
Second
liable
for
Injury
a
Fund
certified
vocationally disabled employee’s disability benefits after
fifty-two
weeks,
notwithstanding
the
fact
that
the
employer’s carrier has failed to comply with the notice
provisions
of
MCL
418.925(1).
I
respectfully
disagree.
Because § 925(1) provides that a carrier “shall notify" the
fund at least ninety days before the normal expiration of
the carrier’s liability, I do not agree with the majority
that the fund’s liability is automatic at the expiration of
fifty-two weeks from the date of the injury, without regard
to
the
compliance
obligation.
the
of
the
carrier
with
its
statutory
Instead, I conclude that the better reading of
vocational
disability
chapter
of
the
Worker’s
Disability Compensation Act requires that the carrier must
notify the fund at least ninety days before the liability
limitation set forth in MCL 418.921 can become effective.
Accordingly, I would reverse the decision of the Court of
Appeals
and
hold
that
the
fund’s
liability
was
not
triggered in this case until ninety days after it received
statutory notice from the carrier.
When
Hospital
plaintiff
and
Medical
began
working
Center
for
(Oakwood)
defendant
in
1989,
Oakwood
she
was
certified as vocationally disabled because of a prior back
injury.1
She developed bilateral carpal tunnel syndrome in
1993; after surgery failed to provide relief from the pain,
1
“‘Vocationally disabled’ means a person who has a
medically certifiable impairment of the back or heart, or
who is subject to epilepsy, or who has diabetes, and whose
impairment is a substantial obstacle to employment,
considering such factors as the person’s age, education,
training, experience, and employment rejection.”
MCL
418.901(a).
2
she left her employment on September 21, 1994.
Oakwood
paid worker’s compensation benefits until March 1998, when
it stopped payment on the basis of plaintiff’s alleged work
avoidance.
Plaintiff applied for a hearing in May 1998.
Shortly thereafter, Oakwood found plaintiff’s vocationally
handicapped worker’s certificate and filed a claim against
defendant fund for reimbursement of the benefits it paid
plaintiff beyond the fifty-two-week period set by § 921.
The magistrate granted the fund’s motion to dismiss on the
basis of Oakwood’s failure to provide timely notice under §
925.
The Worker's Compensation Appellate Commission (WCAC)
reversed, remanding with an instruction to make the fund a
party.
On remand, the magistrate again dismissed the fund,
citing Robinson v Gen Motors Corp, 242 Mich App 331; 619
NW2d 411 (2000), which had been released in the interim.
The
magistrate
then
rejected
Oakwood’s
work
avoidance
claim, granting plaintiff an open award of benefits.
The
WCAC reversed, concluding that neither Oakwood nor the fund
was liable for additional benefits.
The Court of Appeals
then reversed the WCAC, holding that Oakwood’s failure to
timely provide notice meant that it remained liable as long
as plaintiff had a work-related disability.
298; 674 NW2d 160 (2003).
3
259 Mich App
We review issues of statutory construction de novo.
Burton v Reed City Hosp Corp, 471 Mich 745, 757; 691 NW2d
424 (2005).
We recently noted “the fundamental rule” of
statutory construction that “every word of a statute should
be
given
meaning
surplusage
or
and
rendered
no
word
nugatory
should
be
if
all
at
treated
as
possible.”
Pittsfield Charter Twp v Washtenaw Co, 468 Mich 702, 714;
664 NW2d 193 (2003).
The word “shall” is “unambiguous and
denote[s] a mandatory, rather than discretionary action.”
Roberts v Mecosta Co Gen Hosp, 466 Mich 57, 65; 642 NW2d
663 (2002).
The provisions of a statute must be read in
the
of
context
the
entire
statute
producing an harmonious whole.
in
the
interest
of
Burton, supra at 757.
As a result of her certification as a vocationally
disabled person, plaintiff's subsequent work-related injury
triggered § 921 of the Worker’s Disability Compensation Act
(WDCA).
That section (MCL 418.921) provides:
A person certified as vocationally disabled
who receives a personal injury arising out of and
in the course of his employment and resulting in
death or disability, shall be paid compensation
in the manner and to the extent provided in this
act, or in case of his death resulting from such
injury, the compensation shall be paid to his
dependents. The liability of the employer for
payment of compensation, for furnishing medical
care or for payment of expenses of the employee’s
last illness and burial as provided in this act
shall be limited to those benefits accruing
during the period of 52 weeks after the date of
4
injury. Thereafter, all compensation and the cost
of
all
medical
care
and
expenses
of
the
employee’s last sickness and burial shall be the
liability of the fund. The fund shall be liable,
from the date of injury, for those vocational
rehabilitation benefits provided in section 319.
However, § 921 does not exist in a vacuum.
Section
925(1) of the WDCA (MCL 418.925[1]) further provides:
When a vocationally disabled person receives
a personal injury, the procedure and practice
provided in this act applies to all proceedings
under this chapter, except where specifically
otherwise provided herein. Not less than 90 nor
more than 150 days before the expiration of 52
weeks after the date of injury, the carrier shall
notify the fund whether it is likely that
compensation may be payable beyond a period of 52
weeks after the date of injury. The fund,
thereafter, may review, at reasonable times, such
information as the carrier has regarding the
accident, and the nature and extent of the injury
and disability.
While these statutes normally coexist harmoniously, a
conflict arises where, as here, the carrier2 has failed to
timely notify the fund of a situation where “it is likely
that compensation may be payable beyond a period of 52
weeks after the date of injury.”
In such a case, the
carrier has violated the mandate of § 925(1) that it “shall
notify” the fund, yet the consequences of such violation
2
Under MCL 418.601, the definition of “carrier”
includes both an insurer and a self-insured employer, such
as Oakwood in the present case.
Thus, as noted by the
majority, the distinction between “employer” and “carrier”
has no bearing on this case. Ante at 4 n 3.
5
are not readily apparent because § 921 mandates that the
employer’s liability “shall be limited to . . . 52 weeks.”
The
majority
correctly
concludes
that
the
interpretation of the Court of Appeals, based upon Robinson
and Valencic v TPM, Inc, 248 Mich App 601; 639 NW2d 846
(2001), cannot stand.
In concluding that the carrier’s
failure to timely notify the fund served as a permanent and
complete
bar
to
the
fund’s
liability,
Robinson
and
its
progeny ignored the instruction in § 921 that “liability of
the
employer
.
.
.
shall
be
limited
to
those
benefits
accruing during the period of 52 weeks after the date of
injury.”
Robinson’s sanction of complete dismissal of the
fund creates a clear conflict with the text of § 921.3
However, despite recognizing that the Robinson line of
cases
completely
ignores
one
3
statutory
mandate
at
the
As an example of the impact of Robinson’s sanction of
dismissal upon an employer or a carrier, one need only look
at Valencic. In that case, because of confusion regarding
which insurer was the “carrier” at the time of the
plaintiff’s injury, the carrier ultimately found liable was
not alerted to the existence of the injury until four years
after it occurred.
Valencic, supra
at 604, 608.
Notwithstanding that the carrier had no knowledge of the
injury until long after the notice provision of § 925(1)
had expired, the fund was dismissed from the suit because
the carrier had not provided timely notice. This left the
full liability to fall on the shoulders of the employer or
carrier.
6
expense of another, the rule the majority adopts today has
exactly the same effect.
Section 925(1) provides:
Not less than 90 nor more than 150 days
before the expiration of 52 weeks after the date
of injury, the carrier shall notify the fund
whether it is likely that compensation may be
payable beyond a period of 52 weeks after the
date
of
injury.
[MCL
418.925(1)
(emphasis
added).]
Applying basic principles of statutory construction, the
Legislature’s use of the words “shall notify” makes clear
that notification to the fund is mandatory.
However, far
from
statute,
giving
majority
meaning
effectively
to
every
reads
this
language out of the statute.
Legislature
intended
to
word
of
the
mandatory
the
notification
I do not believe that the
make
such
notice
requirement
“mandatory,” yet intended no remedy or means of enforcement
for such requirement.
In
my
judgment,
the
most
harmonious
and
natural
reading of the vocational disability chapter as a whole
would limit the employer’s liability to a period of fiftytwo weeks under § 921, provided that the carrier complies
with the notice requirement of § 925(1).
Where the carrier
fails to notify the fund of the possibility that benefits
will
remain
payable
under
this
chapter,
the
employer’s
liability continues until such time as ninety days have
passed from when the fund receives notification.
7
See §
925(1).
This approach is sounder, I believe, than that of
the majority by giving meaning to both the limitation on
the employer’s liability in § 921 and the requirement that
notice be given to the fund in § 925(1), thereby giving
effect to all the relevant language of the law.
At the
same time, as long as the carrier supplied notice to the
fund at some point, this approach would avoid permanently
placing responsibility for the payment of benefits upon the
employer, as would be effected by Robinson and Valencic.4
Moreover,
“vocationally
because
an
disabled,”
injury
employee
to
any
would
other,
result
nonin
indefinite liability to the employer, the limited penalty
suffered
by
the
employer
who
fails
to
comply
notice requirement does not seem unreasonable.5
with
the
Because the
4
Contrary to the majority's assertion, this dissent
does not “relieve the fund of all liability if the carrier
fails to provide the notice required by § 925.” Ante at 11
n 7 (emphasis added). Rather, as has been made clear, the
employer’s liability would continue beyond fifty-two weeks
only until such time as the carrier has complied with the
notice requirements of § 925.
The fund would then become
liable ninety days after the carrier has provided the
notice required by the statute.
5
The majority asserts that this interpretation would
be neither “reasonable” nor “equitable” in situations in
which the carrier and the employer were not the same party,
because in such situations the failure of the carrier to
provide timely notice would result in liability to the
employer.
Ante at 12 n 7.
By this observation, the
(continued…)
8
employer essentially derives a benefit under the WDCA by
hiring
the
vocationally
disabled
employee,
in
that
its
liability ordinarily ceases after fifty-two weeks in the
face of a second injury, it does not seem unreasonable to
require the employer to comply with the act in order to
receive such benefit.6
I
am
not
interpretation
oblivious
in
this
to
the
dissent
argument
that
the
accords
inadequate
consideration to the “shall be limited to those benefits
(…continued)
majority treats the employers of this state as essentially
passive participants in the marketplace, incapable of
protecting their own economic interests without the
strained interpretations of this Court.
Employers are
perfectly capable of contracting with their own carriers,
as well as utilizing the legal process where necessary, to
ensure that the risks of liability in cases such as this
one fall upon the party whose failure to comply with its
statutory duty caused liability.
Further, unlike what
occurred in this case, there is nothing to prevent an
employer from simply monitoring its carrier with regard to
the typically few injured, vocationally disabled employees
employed by an employer to ensure that the carrier carries
out the required notification.
6
The majority implies that the fund will not be
prejudiced by a delay in notification, because under MCL
418.925(2), the fund “may dispute an employee’s eligibility
for payment” at any time.
Ante at 14.
However, the
majority fails to consider that one of the purposes of the
notice requirement is to allow the fund to timely
investigate the validity of such claims. While it may be
true that the fund may dispute an employee’s eligibility
for payments at any time, evidentiary concerns too obvious
to state suggest that the fund is in a better position to
dispute such eligibility if the investigation comes sooner
rather than later.
9
accruing during the period of 52 weeks after the date of
injury” language in § 921.
interpretation
of
this
There is simply no perfect
confusing
statute,
merely
imperfect and a more imperfect interpretation.
a
less
I believe
that the interpretation here accords at least some meaning
to the “shall” language in both § 921 and § 925(1), while
the majority interpretation effectively ignores the “shall”
language in § 925(1).7
7
The majority struggles to accord some modicum of
meaning to § 925(1). It suggests that the “Legislature
intended several
consequences for failure to give notice
under § 925(1).” Ante at 14. First, it suggests that the
loss of the temporary use of the carrier’s money serves as
an adequate sanction.
Ante at 14.
If the majority is
correct that the Legislature intended as a
sanction the
loss of interest on certain benefits paid out, then the
majority has discerned a sanction that is most noticeable
by its absence from the language of the statute, and which
sanction is a notably ineffectual one to boot.
Second, the majority suggests that another sanction
exists in cases in which an employee becomes ineligible for
benefits after fifty-two weeks, because “[i]f the employee
is not eligible, there is no liability to pay benefits
under
MCL
418.921.”
Ante
at
15.
However,
in
characterizing the Legislature’s unremarkable decision that
fraudulent
claims
should
not
be
reimbursed
as
a
"consequence”
of
untimely
notification,
the
majority
misapprehends the statutory scheme. The fund’s ability to
contest an employee’s eligibility is not a “consequence” of
the carrier’s failure to comply with the notice requirement
of § 925(1), but rather a “consequence” of the plain
language of § 925(2), which provides that the fund may
dispute the employee’s eligibility “at any time.” Because
the fund has this power at any time regardless of when it
received notice, it can hardly be said that such power is a
“consequence” of untimely notice.
10
Accordingly, I would reverse the decision of the Court
of Appeals affirming the dismissal of the fund from the
suit, and hold that the fund became liable for plaintiff’s
benefits
ninety
days
required
under
§
after
Oakwood
925(1).
Before
provided
that
time,
remained liable for these benefits.
Stephen J. Markman
Michael F. Cavanagh
11
the
notice
Oakwood
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