Newsletter

We have recently received several inquiries regarding out of state injuries, and the case of Karaczewski v Farbman Stein & Co, 478 Mich 28 (2007).

In Karaczewski, plaintiff was hired as a maintenance engineer in 1984 by a Michigan based company. The contract of hire was made in Michigan. Plaintiff transferred to Fort Lauderdale, Florida to work for the same company as a building superintendent. He was injured in the course of his employment on January 12, 1995. He received benefits under Florida’s workers’ compensation law. However, he incurred expenses for further treatment and anticipated the need for future additional surgery. These claims are not covered under Florida law. He filed a claim for these additional benefits under Michigan law.

MCL § 418.845 states that the Michigan Workers’ Compensation Agency “has jurisdiction over all controversies arising out of injuries suffered outside this state where the injured employee is a resident of this state at the time of the injury and the contract of hire was made in this state.” The Michigan Supreme Court overruled the Court of Appeals judgment awarding benefits. It stated that the statute clearly, plainly, and unambiguously granted jurisdiction only where both of these requirements are met. Here, plaintiff was not a resident of Michigan at the time of the injury, so Michigan did not have jurisdiction. When examining a claim under Karaczewski, it is necessary that the contract of hire was made in Michigan, and that the injured employee was a resident of Michigan at the time of the injury.

Stokes v Chrysler LLC

Recent Opinion from Michigan Supreme Court

This recent decision from the Michigan Supreme Court addressed the Sington requirement that a plaintiff must show that he or she is disabled from all jobs paying the maximum wages within his or her qualifications and training. The Court’s opinion addressed specific factors that must be considered by the Magistrate, the proofs that must be presented by the plaintiff and the defendant, as well as some practical discovery applications.

The plaintiff bears the burden of proving a disability by a preponderance of the evidence pursuant to MCL § 418.301(4). To establish a disability, the plaintiff must prove a work-related injury and a reduction of his or her maximum wage earning capacity in work suitable to his or her qualifications and training. The Michigan Supreme Court noted in Stokes that the plaintiff must do the following:

1) disclose all of his or her qualifications and training;

2) consider other jobs that pay the maximum pre-injury wage within his or her qualifications and training;

3) show that the work-related injury prevents performing any of the jobs identified as within his or her qualifications and training; and,

4) show that he or she cannot obtain any of the jobs that he or she may be capable of performing.

It is important that plaintiff now must engage in a type of “transferable skills analysis,” where his or her qualifications and training extend beyond just jobs that he or she has had previously. After these factors are established, the plaintiff has met the initial burden of showing disability. The defense must then produce evidence to refute the plaintiff’s showing by proving that there are actual jobs within the plaintiff’s qualifications, training, and physical restrictions for which the plaintiff either did not apply or refused. Following that production, the plaintiff then may come forward with additional evidence to refute the defendant’s evidence. The defense is entitled to discovery necessary to present its case.

Note the importance of ensuring that the available jobs pay the maximum pre-injury wage. If this is not the case, then Sington may not be applicable. There is still some question whether a plaintiff who failed to find employment due to poor economic conditions would be entitled to benefits. Previous cases seem to suggest that benefits could be denied. The Court in Stokes did not address that issue directly.

As a practical matter, investigation should be taken during the early stages of a claim to determine exactly what the plaintiff’s qualifications and training may be (e.g., past educational experiences, special skills they may possess, etc.). The Court clearly states in the recent Stokes opinion that “[t]he employer is entitled to discovery before the hearing to enable the employer to meet [its] production burden.” A good initial investigation will help the attorney to identify what discovery is necessary when the case proceeds to litigation. Interrogatories are appropriate in light of the recent Stokes decision, in order to get a better and more thorough understanding of an individual’s qualifications and training. A wage earning capacity evaluation/labor market survey may be appropriate in certain cases. The Court stated that face-to-face interviews of the plaintiff by defendant’s vocational expert are allowed as part of the discovery process.

Kashou v Coca-Cola Enterprises, Inc, 2008 ACO #89

This is an interesting new case from the Workers’ Compensation Appellate Commission regarding wage earning capacity. The Magistrate granted an open award of benefits, but found a residual wage earning capacity of $280.00 per week as of January 17, 2007. The plaintiff testified that he tried to obtain employment pursued by the vocational counselor. The Magistrate’s decision to find a residual wage earning capacity was specifically influenced by the plaintiff’s presentation in her courtroom. She believed that the plaintiff greatly exaggerated his impairment, which would have clearly prevented a potential employer from wanting to hire him. As of January 17, 2007, the Magistrate believed that the plaintiff could perform positions listed by the vocational counselor.

We presume that this case will be appealed. Note, however, that the opinion goes out of its way to describe the specific effect that the plaintiff’s poor credibility had on its decision. This, as well as the decision’s language that this case is not to be used as precedent to “secure reduction of weekly indemnity in cases involving all but the most severely disabled” makes this a limited but interesting issue. Pursuant to this holding, however, the Magistrate can imply a false presentation to potential employers based on the false presentation of an individual during trial. This false presentation as to the extent of impairment to potential employers may result in the Magistrate calculating a residual wage earning capacity.

Recent Amendments to the MSPA

Recent amendments to the Medicare Secondary Payor Act, which were adopted by Congress in late 2007, change the reporting provisions for any claimant who is a Medicare recipient. As a practical matter, as soon as a claim is filed in any workers’ compensation case, the insurer or self-insurer should immediately discover whether or not the claimant is a Medicare beneficiary. If the injured employee is entitled to Medicare, CMS must be notified and provided with his or her identity and basic claim information. If the Act is not complied with, Medicare can enforce fines of up to $1,000.00 per day.

At this point, there are still a lot of questions. The Secretary of Health and Human Services has not yet specified what reporting deadline is required to comply with this amendment. Additionally, the law is not scheduled to take effect until June 2009. The Secretary will be issuing a directive as to how an insurer or self-insurer complies with these new requirements before that time. From past experience, we know that these directives are generally published on CMS’ website. We will continue to check their website periodically in order to stay informed of all requirements when the information is eventually published. We will keep you updated in that regard.

The Medicare amendment also addresses issues related to reporting dealing with other types of claims, such as liability and medical malpractice claims.

On December 7, 2007 the Michigan Supreme Court issued the latest order interpreting Simpson v Borbolla Construction & Concrete Supply, Inc, and the application of Rakestraw to pre-existing work-related conditions.

Simpson v Borbolla Construction & Concrete Supply, Inc, 133274 (S Ct December 7, 2007)

Plaintiff Dennis Simpson injured his left wrist while working as an iron worker in 1979. He continued to work as an iron worker for various employers through October 23, 2000. The left wrist fracture developed necrosis, which led to bone loss and traumatic arthritis. His last day worked was with Borbolla Construction & Concrete Supply, Inc. He worked for them only one day.

Magistrate Thomas Burden granted benefits against Borbolla Construction for plaintiff’s left wrist injury. The WCAC affirmed. The Michigan Court of Appeals affirmed on the basis that the “medically distinguishable condition” standard of Rakestraw only applied to pre-existing non-occupational injuries, and did not apply to pre-existing work-related injuries. The Michigan Supreme Court recently issued an Order vacating the decision of the Michigan Court of Appeals. It determined that the Court of Appeals erroneously held that Rakestraw does not apply to pre-existing work-related conditions. However, it affirmed the award of benefits based on the reasoning in the WCAC opinion.

As the Court of Appeals decision has now been vacated, Rakestraw will clearly apply to all pre-existing conditions, regardless of whether they are work-related or non-work related in origin.

The reasoning in the WCAC opinion supported the Magistrate’s decision that Borbolla Construction is fully liable for benefits even though plaintiff only worked for them for one day. The WCAC believed that Rakestraw’s “medically distinguishable condition” standard applied to all pre-existing conditions. Please note that a recent Michigan Supreme Court order in the case of Fahr v General Motors Corp, 133500 (S Ct June 22, 2007) described a “medically distinguishable condition” as requiring pathologic change as opposed to merely a worsening of symptoms. Thus, it was their duty to determine whether plaintiff now had a “medically distinguishable condition” from his injury in 1979. They answered affirmatively, stating that his ongoing work as an iron worker caused or accelerated an arthritic change in condition that disabled him upon his last day worked.

The WCAC also had to determine whether plaintiff established a “last day worked injury” by showing that he was performing similar work. The Commission reasoned, “[p]laintiff was not required to prove a discrete contribution from the single day plaintiff worked for the defendant…where it is the cumulative effect of work that constitutes the injury.” Simpson v Borbolla Construction & Concrete Supply, Inc, 2005 ACO #153. Though he only worked for one day with Borbolla Construction, he performed similar iron working jobs to those he had performed throughout his career. Thus, the last employer is liable for benefits pursuant to MCL § 418.301(1).

Overall, a plaintiff must still prove a “medically distinguishable condition” pursuant to Rakestraw as of his or her last day worked. However, once this medically distinguishable condition is established, the last employer who subjected plaintiff to the conditions that resulted in the disability will be liable for benefits, even if the employee only worked for one day.

On May 23, 2007 the Appellate Commission issued their latest decision interpreting the wage earning capacity issue or “Sington issue”. See below for the Court of Appeals interpretation in Stokes v DaimlerChrysler

Sington Analysis from the Appellate Commission as reported in

Welch v Means Industrial, Inc, 2007 ACO #121

The plaintiff, John Welch, was an employee of the defendant, Means Industrial, where he worked in a variety of different positions. He suffered a cervical injury while employed as a forklift operator and a lumbar injury while employed as a box maker. He also had experience as a shipping and receiving clerk, machine operator/welder, crane operator, furnace operator/bolt assembler, weld cell worker, cell leader, and vibe attendant. The Magistrate granted an open award of benefits, determining that the plaintiff established a disability because he was precluded from working without restrictions, and the defendant had failed to offer him a job within those restrictions. The defendants appealed, arguing that these findings were insufficient to establish disability under Sington v Chrysler Corp, 467 Mich 144 (2002).

The WCAC agreed and reversed the Magistrate’s open award. Under Sington, disability can only be established if there is a loss of wage earning capacity in work suitable to an employee’s qualifications and training. Therefore, the plaintiff needs to establish his or her qualifications and training in order to identify the pool of relevant jobs, and then show that those jobs are not reasonably available or do not pay the equivalent of his or her maximum wage earning capacity.

Pursuant to Stokes v DaimlerChrysler, 272 Mich App 571 (2006), plaintiff’s proofs will essentially consist of the employee’s resume. Namely, there should be a listing and description of employee’s pre-injury employment, the pay for those jobs, a description of the employee’s training and qualifications, and testimony that the employee is unable to perform those jobs within his or her training and qualifications.

Specifically, taking into account both Sington and Stokes, a Magistrate’s decision must include findings on the following:

1) Plaintiff’s pre-injury qualifications and training;

2) Exact extent of plaintiff’s work-related physical or emotional limitations;

3) Work suitable to plaintiff’s qualifications and training within those limitations;

4) Whether that work is reasonably available;

5) Whether current pay for that kind of work is equivalent to plaintiff’s maximum wage earning capacity.