Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
Opinion 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. MCL 418.901 et
seq. The act makes an employer initially liable to pay
disability benefits to a certified vocationally disabled
employee who is injured on the job. It imposes on the
employer only fifty-two weeks of liability for
compensation, medical care, and last illness and burial
expenses. MCL 418.921. Thereafter, the Second Injury Fund
becomes liable. In 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 the fund is solely liable for a vocationally
disabled person's disability benefits after fifty-two
weeks. MCL 418.925(1). 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 hold that the employer has no liability for
benefits after the fifty-second week, even if the fund
receives late notice. 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. If the employee
2
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. But the fund must reimburse
the carrier for the amount the carrier pays after the
fifty-second week following the injury. MCL 418.925(2).
1
248 Mich App 601; 639 NW2d 846 (2001).
2
242 Mich App 331; 619 NW2d 411 (2000).
3
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 Plaintiff was its vocationally
disabled employee. After plaintiff was injured at work,
defendant Oakwood failed to timely notify the defendant
3
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. In controversy is
which defendant, if either, 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 benefits to
plaintiff until March 20, 1998. At that time, Oakwood
asserted that plaintiff was able to return to work.
Plaintiff applied for a hearing before a 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 12, 1998, Oakwood filed a
5
petition with the worker’s compensation bureau seeking
reimbursement from the fund for its overpayment to
plaintiff pursuant to MCL 418.931(1). Oakwood included a
copy of plaintiff’s vocationally handicapped certificate
with its petition. 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). A magistrate granted the motion and
dismissed the petition. On appeal to the WCAC, the
commission granted Oakwood’s interlocutory 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 and continued the
liability of the carrier. 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 an open award of
benefits to be paid by Oakwood.
6
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 the first fifty-two
weeks after the injury. MCL 418.921. On the basis of the
Robinson decision and the mandatory language of the
statute, the WCAC terminated plaintiff’s benefits. Bailey
v Oakwood Hosp & Med Ctr, 2002 Mich ACO 185.
Plaintiff sought leave to appeal in the Court of
Appeals. 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 the WCAC
decision, citing both Robinson and Valencic.4 259 Mich App
298; 674 NW2d 160 (2003). 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. See MCL
418.861a(3). Oakwood sought, and we granted, leave to
appeal. 470 Mich 892 (2004).
THE STANDARD ON APPELLATE REVIEW
Because this case presents an issue of statutory
construction, we review it de novo. 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. Robinson, supra
at 335. The appropriate sanction, it reasoned, was
complete dismissal of the fund’s liability. This not only
effectuated the Legislature’s intent, Robinson observed, it
protected the fund from prejudice. Id.
In Valencic, the Court of Appeals followed the
reasoning of Robinson, as it was required to do. MCR
7.215(J)(1). 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. The
Legislature enacted the Worker’s Disability 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. They had to release the employer-carrier
and the fund from liability, leaving no one to pay
plaintiff’s benefits. This directly 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 of benefits to an employee who
qualifies for them. 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 during the fifty-two weeks
following the injury.7 Also, the fund must assume liability
6
MCL 418.415.
7
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. It also provides
that, after notification, the fund “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). The notice
provision and accompanying deadlines afford the fund an
opportunity to review claims to verify their 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. “Liability” means “the
state or quality of being liable,” and “liable” means
“legally responsible.” Random House Webster’s 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 . . . .” MCL 418.921
(emphasis added). 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 would to other disabled employees who are not
certified as vocationally disabled. These 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 directly is consistent with the above
provisions. The fund may pay an employee directly if a
carrier fails to meet its obligation to the employee for
any reason, such as insolvency. This furnishes additional
assurance that the employee will receive the benefits
envisioned in the act. 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 MCL 418.925(3).
Once the fund has notice, it may review any
information the carrier has about the claim. 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 fund argues that the Court should create an
additional consequence: it should relieve it 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 its assets derive from
10
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 fifty-
second 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, notification is merely a prediction of a
future event: that benefits may become payable. 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 in MCL 418.381.11 For example, a certified
11
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, the
symptoms attributable to the injury might worsen. 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 claims found in § 381. It is
possible that only when the claim is filed would the
employer and its carrier become aware of a potentially
compensable claim. 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 notice
provision of § 925(1).
Should this situation occur, the carrier 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 PENALTY CLAUSE SOUGHT BY
THE 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. This suggests that the Legislature did not intend
to 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 of Vocational Rehabilitation at the Michigan
Department of Education12 when it hires 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 impose on a
carrier a penalty that is not in the act. He proposes an
alternative version of the act, one 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 FOR A CARRIER’S
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. If this occurs, the employer
will be required to obtain liability insurance. MCL
418.631(2).13 Thus, the act penalizes a 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 benefits to a certified vocationally disabled
13
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. Id.
The fund must make prompt reimbursement to the
carrier. Id. The act does not include a provision
releasing the fund from this obligation if the carrier
delays in reporting to it a payment to an employee. It
would contravene the intent of the Legislature for the
Court to read into the act words extinguishing the
carrier’s right to reimbursement. 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. It claims that it is
precluded from disbursing the 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 reimburse carriers for benefits paid to
disabled employees after fifty-two weeks following an
injury. MCL 418.925(3). Notification by a carrier is not
a condition precedent to the fund’s obligation. The
trustee is not absolved of its responsibility by a
settlor’s failure to notify the trustee of a possible
obligation.
The record contains no showing that the fund’s payment
of claims for which it received delayed notice from
carriers has caused it an actuarial crisis. 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 receiving delayed notification of a claim. Any
monies that the fund pays out are recouped through
assessments on employers and carriers pursuant to MCL
418.551(1) and passed along to consumers. 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 medical care, and for payment of the last
illness expenses of a certified vocationally disabled
employee. 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 further
liability.
The Second Injury Fund is liable after the fifty-
second week and must reimburse a carrier for eligible
benefits it pays the employee on the fund’s behalf. MCL
418.921 and 418.925(3). The Worker's Disability
Compensation Act provides inherent consequences for a
carrier that fails to timely notify the fund of the fund’s
potential obligation. For instance, the carrier loses the
temporary use of the money that the fund would have
reimbursed to it. 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. We do not
retain jurisdiction.
Marilyn Kelly
Clifford W. Taylor
Elizabeth A. Weaver
Maura D. Corrigan
Robert P. Young, Jr.
24
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 majority concludes that the Second Injury Fund
(the fund) is automatically liable for a 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 of the carrier with its statutory
obligation. Instead, I conclude that the better reading of
the 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 plaintiff began working for defendant Oakwood
Hospital and Medical Center (Oakwood) in 1989, 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. 259 Mich App
298; 674 NW2d 160 (2003).
3
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 and no word should be treated as
surplusage or rendered nugatory if at all 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 context of the entire statute in the interest of
producing an harmonious whole. 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 statutory mandate at the
3
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 giving meaning to every word of the statute, the
majority effectively reads this mandatory notification
language out of the statute. I do not believe that the
Legislature intended to 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 fifty-
two 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. See §
7
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, because an injury to any other, non-
“vocationally disabled,” employee would result in
indefinite liability to the employer, the limited penalty
suffered by the employer who fails to comply with the
notice requirement does not seem unreasonable.5 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 oblivious to the argument that the
interpretation in this dissent 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. There is simply no perfect
interpretation of this confusing statute, merely a less
imperfect and a more imperfect interpretation. 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 after Oakwood provided the notice
required under § 925(1). Before that time, Oakwood
remained liable for these benefits.
Stephen J. Markman
Michael F. Cavanagh
11