This case involves an employee with two jobs who was injured, and temporarily disabled from working, while on the job for one of his employers. At issue is the interaction between two provisions of the Worker’s Disability Compensation Act, 418.101 et seq. First, the WDCA has special rules for “dual employment” situations so that an injured employee can be compensated for all lost wages. The employee’s wage loss benefit is based on a combination of the wages from both jobs. However, MCL 418.372(1)(b) provides that, if the job where the employee was injured provided 80 percent or less of the employee’s average weekly wage at the time, that employer is ultimately only liable for its portion of the employee’s weekly benefits. The Second Injury Fund – which is funded by self-insured employers and worker’s compensation insurers – is liable to pay for the remainder of “the benefits due the employee.”
Second, MCL 418.354 provides for coordinating worker’s compensation with other wage-loss benefits the employer pays the injured employee. Worker’s compensation payments must be reduced by “(b) The after-tax amount of the payments received or being received under a self-insurance plan, a wage continuation plan, or under a disability insurance policy provided by the same employer …”
Robert Smitter, a General Motors employee, also worked as a firefighter for Thornapple Township in Barry County. On May 3, 2005, while working for Thornapple, Smitter was injured; as a result, he was not able to perform either job for about six months. At that time, Smitter was earning 10.87 percent of his wages from Thornapple and 89.13 percent from General Motors. Based on his combined income, Smitter was entitled to a maximum weekly worker’s compensation payment of $689. From May 4, 2005 until November 1, 2005, the township paid Smitter weekly wage loss benefits at the maximum rate – but the township also paid him $800 per week from a “sickness and accident” policy the township had purchased. The township deliberately chose not to coordinate those benefits and so did not reduce Smitter’s worker’s compensation benefits.
The township sought reimbursement for the 89.13 percent portion of Smitter’s worker’s compensation – a total of $17,897.87 – from the Second Injury Fund. But the fund refused, offering $2,077.99 instead. Under MCL 418.354, the township should have coordinated the “sickness and accident” payments, the fund argued. The fund claimed that it was not obligated to reimburse benefits that the township chose to pay over and above what the WDCA requires. Under MCL 418.372(1)(b), the fund contended, it was only obliged to pay based on “the benefits due the employee” – not on the higher amount the employer was voluntarily paying.
A worker’s compensation magistrate and the Workers’ Compensation Appellate Commission both ruled in favor of the township, holding that the Second Injury Fund could not take a set-off for the amount the township chose not to coordinate. Both tribunals cited the Court of Appeals decision in Rahman v Detroit Board of Education, 245 Mich App 103 (2001). In Rahman, another dual employment case, the plaintiff received a pension from one of his two employers. The Second Injury Fund argued that the reimbursement amount it owed the employer should have been calculated after the plaintiff’s pension benefits were deducted from his total average weekly wage. But the Rahman court disagreed, holding that the choice of whether to coordinate pension benefits belonged only to the employer, not the fund, under MCL 418.354. The panel stated, “It is apparent from the language of the statute that the Legislature intended that the employer whose employment caused an injury alone may take advantage of the coordination provisions. There is no suggestion that the SIF, in a dual employment situation, may take advantage of the injury-employer’s entitlement to coordination.”
The fund appealed the WCAC’s ruling, but in an unpublished per curiam opinion, the Court of Appeals concluded that the lower tribunals were correct: The fund had to reimburse the township based on the worker’s compensation benefits the township actually paid, rather than on the coordinated amount allowed by the WDCA. The Court of Appeals rejected the fund’s argument as not just inconsistent with Rahman, but as also inconsistent with a plain reading of MCL 418.354. The reduction provided under that statute is premised on the fact that the employer is providing another benefit; the legislature intended that only the employer could take advantage of that provision. The appellate panel also rejected the fund’s argument that Rahman should not apply to this case because Rahman concerned pension payments, not disability payments as in Smitter’s case. “[B]oth types of benefits are governed by § 354(1), and the statute does not provide any reason to treat these benefits differently,” the Court of Appeals reasoned.
Moreover, even if the fund was correct that an employer is required to coordinate benefits under the statute, “the SIF has not shown that the pertinent statutes provide a basis for the SIF to reduce its reimbursement or to force an employer to coordinate benefits,” the appellate panel stated. The phrase “benefits due” in MCL 418.372(1)(b) refers to the amount the fund owes as calculated under that section – not to the amount that an employer is legally required to pay, the Court of Appeals said.
The fund appealed. In an order dated May 11, 2012, the Supreme Court granted leave to appeal.