Opinion
Docket No. 110651.
Decided November 7, 1989. Leave to appeal applied for.
James A. Tanielian, and Daryl Royal, of Counsel, and MacDonald, Fitzgerald, MacDonald Simon, P.C. (by Duncan MacDonald), of Counsel, for plaintiff.
Bodman, Longley Dahling (by Theodore Souris, James A. Smith, and Kim Michael Lavalle), and Conklin, Benham, Ducey, Ottaway, Listman Chuhran, P.C. (by Martin L. Critchell), of Counsel, and David M. Davis and John G. Rahie, of Counsel, for defendant.
Before: WAHLS, P.J., and GILLIS and McDONALD, JJ.
ON REMAND
This case comes before us on remand from the Supreme Court. 431 Mich. 855; 426 N.W.2d 183 (1988). In our earlier opinion, we affirmed an order of the Workers' Compensation Appeal Board requiring the employer in this case, defendant, General Motors Corporation, to pay a portion of the attorney fees incurred by an employee, plaintiff, Luella Gilroy, in obtaining workers' compensation benefits from defendant after having received sickness and accident benefits under an insurance plan provided by defendant. 166 Mich. App. 609; 420 N.W.2d 829 (1987). In that opinion we stated that § 821 of the Workers' Disability Compensation Act, MCL 418.821; MSA 17.237(821), does not necessarily preclude payment by an employer of a portion of the attorney fees incurred by an employee in a case where the disability insurer failed to obtain or enforce an assignment of the employee's right to receive workers' compensation benefits for reimbursement of sickness and accident benefits already paid to the employee. Section 821 provides that a disability insurer which paid sickness and accident benefits to an employee and subsequently enforces an assignment of the employee's right to receive workers' compensation benefits must pay a portion of the fees of the attorney who secured payment of the workers' compensation benefits for the employee. Upon reconsideration, we affirm the order of the WCAB requiring defendant to pay a portion of the attorney fees plaintiff incurred in securing her workers' compensation recovery.
In this case, no arrangements were made for reimbursement to the disability insurer for any sickness and accident benefits payable to plaintiff. In our earlier opinion we observed, after quoting with agreement certain language in the opinion of the WCAB, that no truly independent insurance company would intentionally fail to obtain an assignment from a worker for reimbursement of sickness and accident payments in the event of the worker's entitlement to workers' compensation benefits, and we concluded that, "under the facts in this case, defendant stands in the place of the disability insurance carrier." 166 Mich. 614. In our earlier opinion we stated:
Under the circumstances in this case, we do not believe that the disability insurance carrier can be characterized as an insurer independent of defendant since no truly independent insurance company would intentionally fail to take an assignment from a worker for reimbursement of sickness and accident payments in the event of the worker's entitlement to workers' compensation benefits. Under such a scenario, a disability insurer which agrees with an employer not to take an assignment from a worker helps to circumvent the proper payment by the employer of a worker's attorney fees incurred in obtaining workers' compensation benefits, even while the employer reaps the substantial benefit of a coordination credit for any disability payments made by the insurer. In this case, because defendant stands in the place of the disability insurance carrier, defendant, under § 821, is required to pay a portion of plaintiff's attorney fees incurred in securing workers' compensation benefits. [ Id., pp 615-616.]
The Supreme Court, which originally denied defendant's application for leave to appeal, 430 Mich. 872 (1988), upon reconsidering defendant's request, remanded this case for reconsideration as on rehearing granted, directing this Court to retain jurisdiction over the case while, in turn, remanding it to the Bureau of Workers' Disability Compensation "so that the parties can make a supplemental record as to the contractual relationship between the defendant and the insurance carrier, which relation resulted in the carrier's foregoing its right of reimbursement. . . ." 431 Mich. 855; 426 N.W.2d 183 (1988). Such a supplemental record was generated at hearings conducted on January 27, 1989, and February 3, 1989, by a magistrate of the Bureau of Workers' Disability Compensation.
The hearings conducted by the magistrate on remand serve only to reinforce our earlier conclusion that defendant stood in the place of the disability insurance carrier in this case. They reveal that the disability insurer provided merely an "excess risk policy" to defendant. Under that policy, the insurer was required to pay sickness and accident benefits only if the trust funded by defendant, called the General Motors Disability Benefit Trust, was required to pay more than a specified amount of sickness and accident benefits to disabled employees. In this case, defendant's trust fund paid plaintiff's sickness and accident, as well as extended disability, benefits, and the latter were subsequently coordinated with plaintiff's workers' compensation benefits. Moreover, at the hearings on this issue, defendant's witness, David M. Davis of the General Motors legal staff, acknowledged that by the insurer's not obtaining an assignment of an employee's right to receive workers' compensation benefits, and thus permitting the employee to keep the full amount of the sickness and accident benefits previously paid, the employee's loss of work time could be characterized by defendant in such a way as to possibly deprive the employee of certain employment rights which, had the lost work time been characterized as a period during which workers' compensation benefits were received, would have accrued in the employee's favor. Throughout the hearings, no credible, straightforward, unadorned, or intelligible reason was proffered by the witnesses presented by defendant to explain why the allegedly independent insurer in this case failed to act as any truly independent insurer would have acted under the circumstances by obtaining an assignment from plaintiff for any sickness and accident benefits which the insurer would have been obligated to pay to plaintiff if obligated to do so under the terms of its contract with defendant and if plaintiff were entitled to receive workers' compensation benefits.
Thus, upon reconsideration, we remain convinced that, under the facts in this case, the WCAB correctly determined that defendant is obligated under § 821 to pay a portion of the attorney fees plaintiff incurred in securing her workers' compensation recovery. To disallow the payment of a portion of such fees, particularly in a case such as this in which the employer reaped the substantial benefit of a coordination credit for the disability benefits paid to plaintiff, would be unjust.
Affirmed.