Michigan Supreme Court takes on Workers' Comp.
WHAT'S AHEAD FOR EMPLOYERS?

By Thomas H. Cypher and James J. Helminski

The Michigan Supreme Court has shown a recent willingness to ad-dress numerous issues with respect to Workers' Compensation Law This article focuses on recent Supreme Court decisions and highlights upcoming cases currently pending before the Court, including their potential impact on employers.

Intentional and willful misconduct
In the recent case of Daniel v Department of Corrections (Docket No. 120460) (decided March 26, 2003), the Supreme Court addressed an employee's entitlement to benefits under circumstances where the employee was injured by reason of his intentional and willful misconduct. The Court specifically looked at MCL 418.305 which provides in part "if the employee is injured by reason of his intentional and willful misconduct, he shall not receive compensation under the provisions of this Act."
Tony Daniel commenced employment as a probation officer with the Department of Corrections in 1984. His duties as a probation officer required him to attend probation violation hearings, held in Circuit Court, several times a month to inter-act with defense attorneys representing probationers. In February of 1995, a female defense attorney filed a complaint with Daniel's immediate supervisor alleging that in August of 1994 he obscenely propositioned her. She, in fact, testified that when she rejected his advances, he told her that they would have to be "discreet" since he was married with children. Again, in February 1995, the claimant propositioned her and told her that she would need to lose 20 pounds.
Several other similar allegations were brought by other female defense attorneys and an investigation was conducted into the complaints. At the close of the investigation, the claimant's supervisor recommended that a disciplinary conference be held regarding five separate accounts of sexual harassment.
In 1995, a disciplinary conference was held and Daniel was disciplined for two counts of sexual harassment arising from the August 1994 and February 1995 incidents. He was suspended for 10 days with-out pay.
Following his return to work in August of 1995, Daniel testified that he felt harassed by his supervisor and the defense attorneys that had accused him of sexual harassment. He felt "out of control" and began treatment with a psychologist who diagnosed him as suffering from depression caused by the disciplinary investigation and proceedings as well as subsequent stresses at work. As a result, Daniel began a leave of absence in February of 1996.
In March of 1996, his treating psychologist recommended a return to work if he could work under a different supervisor. The request was denied and in June of 1996, Daniel filed a claim for Workers' Compensation benefits based upon a mental disability arising from the disciplinary proceedings.
Following the trial, the Magistrate is-sued an Opinion awarding Daniel's benefits, finding that both the disciplinary proceedings and the post-disciplinary work events contributed significantly to his development of a disabling condition "of depression, anxiety and uncontrolled anger." No finding was made regarding whether his conduct was intentional and willful or otherwise not compensable under the act. The Magistrate did comment that it was difficult to have much sympathy for the claimant because it was clear that he brought problems upon himself by his own misconduct, but held "compensation, like the rain, falls on the just and unjust alike."
On appeal to the Workers' Compensation Appellate Commission, in a 2–1 decision, the WCAC reversed the Magistrate and denied benefits. The Commission held that Section 305 of the Workers' Compensation Act "puts up an umbrella to prevent compensation from falling on this particular `unjust' claimant." The Court reasoned that any injury the claimant suffered was a result of his own intentional and willful misconduct and that pursuant to Section 305, he was not entitled to benefits.
Daniel appealed to the Court of Appeals and in another 2–1 decision, the Court reversed the Commission and rein-stated the Magistrate's award of benefits. The majority reasoned that plaintiff's con-duct, though "voluntary, crude, and unprofessional," did not rise to "intentional and willful misconduct" as it has been interpreted in this state.
The Michigan Supreme Court granted Leave to Appeal to address the application of Section 305 and injury by reason of intentional and willful misconduct.
The Court first focused on the question of causation; in other words, whether the claimant was injured "by reason of" his intentional and willful misconduct. The Court found that the causation element was met because claimant's misconduct was the starting point for the result in disciplinary proceedings that ultimately caused his injury. Next, the Court addressed whether the claimant's acts amounted to "intentional and willful misconduct." Again, the Supreme Court found that the claimant's misconduct was voluntary and amply sup-ported by the record.
Finally, the Supreme Court explained that Section 301(5) does not operate to preclude benefits where an employee was injured while violating a work rule that had not been enforced by the employer; however, that was simply not the case here. The Court found that the record clearly reflected that the claimant's immediate supervisor had conducted several investigations into other alleged violations of work rules by other employees during her supervisory tenure and the facts were not demonstrative of a lack of enforcement of workplace rules.
The Court's holding in Daniel stands for, among other things, the proposition that an employee's misconduct that results from disciplinary proceedings and ultimately a mental injury, shall not receive compensation be-cause his injury will have been deemed to have been caused by "reason of his intentional and willful misconduct."
The Court's ruling also reinforces an employer's right to enforce its own company rules without the prospect of being found liable for Workers' Compensation benefits when it justly disciplines an employee who has engaged in misconduct.

Symptoms versus pathology

On April 10, 2003, the Michigan Supreme Court heard oral argument in the case of Rakestraw v General Dynamics Land Systems. The essential issue in the case is whether an employee who had a pre-existing condition, who suffers an aggravation of symptoms at the employment, constitutes as an injury for which Workers' Compensation benefits should be paid in the event a disability is established.
On the employee's side of the issue, Rakestraw and other interested groups argue that Michigan law makes no distinction between symptomatic and pathological consequences of an injury, finding compensabiliry where such effects arise out of and in the course of employment and limit the injured employee's wage earning capacity.
The employer, General Dynamics, argued that the aggravation of pain from a pre-existing condition as opposed to aggravation of the pathology of the pre-existing condition does not constitute a "personal injury" under the Workers' Disability Compensation Act warranting compensability.
A holding from the Court that an aggravation of a pre-existing condition with symptoms alone is compensable, would increase the burden for a large number of employers.

Reasonable employment before disability?
The significance of whether an injured employee who returns to work is deemed to have returned to reasonable employment is legally significant. If an employee returns to reasonable employment, then the reasonable employment provisions of the Act, Section 301(5—9) apply. Under Section 301(5)(e), an employee who is performing reasonable employment for less than 100 weeks is entitled to benefits if he loses his job for whatever reason. Unlike the employee who returns to regular work, if the employee returns to reasonable employment and is terminated be-fore 100 weeks of work are completed, then the employee is entitled to benefits as long as he is partially disabled. The reason for his termination does not matter.
The employee can engage in any work-place behavior, get fired, and still be entitled to benefits as long as he is engaged in reasonable employment and it is less than 100 weeks.
The issue in dispute is whether the reasonable employment provision in the Act applies only when the disability is established under Section 301(4).
Because of the importance of this issue, the Michigan Supreme Court has granted
leave in the case of I anDrie v Steelcase
Corporation as of February 5, 2003. The Supreme Court granted leave in 6anDrie to address the interaction between reasonable employment provisions of the Act and Section 301(4) (disability). Specifically, the Court granted leave to address whether the reasonable employment provisions apply only after a disability is established pursuant to Section 301(4) or not.
The Act provides in Section 301(9) for a definition of reasonable employment as follows:
Reasonable employment means work that is within the employee's capacity to perform that poses no clear and proximate threat to that employee's health and safety, and that it is within a reasonable distance from that employee's residence. The employee's capacity to perform shall not be limited to jobs and work suitable to his/her qualifications and training.
However, Section 301(9) does not ad-dress the interaction between reasonable employment and the prerequisite of disability. One reason the Supreme Court has chosen to address this issue is because on its face the definition of reasonable employment could include all employment that an injured employee would return to, without regard to whether it was a "regular job" suitable to the employee's qualifications and training at or above the employee's maximum earning capacity.
Of practical importance to the employers is that if a disability must first be established, then not necessarily every job that the employee returns to after an injury will be considered reasonable employment. For example, an injured employee may be offered a "regular job" with all the earmarkings of permanence and availability in the marketplace, at or above the claimant's preinjury earning capacity. Although the job the injured employee is returned to is light duty and accommodates the injury, it may be "a regular job" and the employee may nor have suffered a loss of his maximum earning capacity. Hence, no disability is established. It follows, if no disability is established, the reasonable employment pro-visions do not apply.

The impact on employers is that in the scenario outlined above, the employee who returns to a "regular" although accommodating job, with no loss of earning capacity; i.e. no disability, may be terminated and no workers' compensation liability will be found.

Conclusion

The three cases discussed in this article will have a substantial impact on an injured employee's entitlement to Workers' Compensation benefits.
If you have any questions regarding the ramifications of these decisions or any other issue, please feel free to contact any of us.

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