Summary
In Logan v Edward C Levy Co, 99 Mich. App. 356; 297 N.W.2d 664 (1980), the Court held that where an employee was killed in the course of employment, reimbursement under § 827 could be made only from that part of the judgment reflecting economic loss, and not from that portion that was for noneconomic changes such as the spouse's recovery for "loss of love, companionship and affection."
Summary of this case from Eddington Estate v. Eppert OilOpinion
Docket No. 45979.
Decided August 12, 1980. Leave to appeal applied for.
Blum, Brady, Fischel Rosenberg (by Mark J. Spielman), for plaintiff.
LeVasseur, Werner, Mitseff Brown, for defendant.
Plaintiff appeals the decision of the Worker's Compensation Appeal Board, which reversed the administrative law judge's determination and held that defendants were entitled to credit the entire amount of a third-party wrongful death recovery. The effect of this decision is to effectively extinguish any future worker's compensation liability. Plaintiff appeals by leave granted.
Plaintiff's husband was killed in 1971, as a result of a tire explosion at the Edward C. Levy Company, his place of employment. Defendant Maryland Casualty Company, the Levy Company's insurer, voluntarily commenced paying death benefits to plaintiff, Mr. Logan's widow, and their nine children. In 1971, plaintiff and her children obtained a $142,500 judgment in the United States District Court for the Eastern District of Michigan against the tire vendor, Sears Roebuck and Company, and the tire manufacturer, the Wertenberger Tire Company. Pursuant to the wrongful death act, MCL 600.2922(2); MSA 27A.2922(2), certification was made to the probate court by the Federal District Court. Under this certification, the Federal District judge determined that each of the nine children suffered a $2,000 loss while Mrs. Logan suffered a $124,500 loss. Maryland Casualty Company, joined as a party-plaintiff in the Federal suit, waived recovery of any worker's compensation payments already made by them in exchange for payment of $2,500 in attorney fees.
Subsequently, plaintiff sought further worker's compensation benefits on behalf of the children. Plaintiff acknowledged that of the $2,000 paid each child pursuant to the wrongful death judgment, Maryland Casualty should be credited with $1,333 for worker's compensation benefits voluntarily paid. Plaintiff calculated that each child's pro rata share of the decedent's worker's compensation benefits would reach $1,333 on December 20, 1974. Plaintiff sought a resumption of the payment of benefits from that date onward for all children who had not attained the age of majority. Defendants refused to make any payments, arguing that they were entitled to credit the entire $142,500 judgment against past and future compensation regardless of the apportionment of benefits between the wife and the children by the Federal trial court.
On December 17, 1976, the administrative law judge decided that the defendants' credit for benefits paid pursuant to the third-party judgment was limited to the extent of the recovery by each individual dependent. Defendants were accorded credit for the amount of the recovery, decreased by prorated attorney fees and expenses. The administrative law judge ordered payment retroactive from March 1, 1973. Pursuant to MCL 418.862; MSA 17.237(862), payments of seventy percent of the compensation benefits were paid by the defendants, who appealed the decision.
On June 19, 1979, the Worker's Compensation Appeal Board reversed the referee's decision and payments of the defendants were discontinued. The board found that the defendants were entitled to credit the entire recovery awarded in the wrongful death action. After reviewing the applicable statutory provisions, the board decided that the amount recovered in the wrongful death action was to be applied to compensation paid or payable by the insurer. The board noted that the large size of the widow's share, $124,500, out of a total award of $142,500, was clearly disproportionate and should be credited toward any future liability by the defendants.
The Workmen's Compensation Bureau is a quasi-judicial agency vested with the authority to determine compensation issues. Jesionowski v Allied Products Corp, 329 Mich. 209; 45 N.W.2d 39 (1950). Among its power is the authority to allocate credit from a third-party tortfeasor judgment to an insurer who has paid worker's compensation benefits. See Hakkinen v Lake Superior District Power Co, 54 Mich. App. 451; 221 N.W.2d 202 (1974).
The pertinent statute provides:
"In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits." (Emphasis added.) MCL 418.827(5); MSA 17.237(827)(5).
Thus, where an insurer pays worker's compensation benefits to an injured party, he may recoup monies paid if the injured party successfully sues the third-party tortfeasor. The appeal board focused on the language "any amounts" and held that the entire $142,500 judgment should be credited to the insurer. It assumed that the settlement only included payments for injuries compensable under the Worker's Disability Compensation Act. This is not necessarily true. "Any amounts" reimbursed must be those "paid or payable" under the act and must be for "damages resulting from personal injuries or death only". MCL 418.827(5); MSA 17.237(827)(5).
In Lone v Esco Elevators, Inc, 78 Mich. App. 97; 259 N.W.2d 869 (1977), this Court interpreted that latter phrase to exclude any award for loss of consortium. In Great American Ins Co v Queen, 86 Mich. App. 362; 272 N.W.2d 659 (1978), this Court held that a worker's compensation carrier is not entitled to reimbursement from third-party tortfeasors for noneconomic losses under the no-fault automobile insurance statute.
We believe that a similar bar should apply here. It is clear that of the amounts awarded both the wife and children, a portion of the judgment was for noneconomic damages such as loss of love, companionship and affection. These injuries were never compensated by the worker's compensation insurer, so they cannot be recovered now. See Griggs v The Budd Co, 90 Mich. App. 649; 282 N.W.2d 431 (1979). The insurer can obtain reimbursement for economic loss only.
It is impossible to determine how much of the judgment award was for noneconomic and how much was for economic loss. The Federal court did not apportion the $142,500 nor did the appeal board which adopted the judgment sum as the proper amount for reimbursement.
In Hakkinen, supra, this Court stated that it is the sole province of the Workmen's Compensation Bureau to determine the insurer's credit for reimbursement. This position was implicitly repudiated by Franges v General Motors Corp, 404 Mich. 590; 274 N.W.2d 392 (1979), and Manninen v Warner Swasey Co, 80 Mich. App. 253; 263 N.W.2d 341 (1977), as both cases recognize that the trial court can perform this function.
In the instant case, neither the Federal District Court nor the Worker's Compensation Appeal Board made an adequate allocation. This apportionment is necessary so that the insurer will simply receive reimbursement for the economic compensation which it actually paid the plaintiff. Since our jurisdiction only extends to the appeal board, we will reverse and remand to allow that body to make the appropriate apportionment. Any adjustments made by the board on remand, with respect to sums awarded, should reflect this apportionment and a modification of the credit that the insurer should receive.
An adjustment might be advisable due to the lopsided amount allocated to the wife, $124,500 out of the total $142,500 awarded. The $142,500 figure may also require alteration if the board acted under the misapprehension that the children's benefits end at age 18. The statute in effect at the time of decedent's death, and as yet unamended, continues to specify 21 as the maximum age for nondisabled children to receive death benefits. See MCL 418.335; MSA 17.237(335).
We take this opportunity to refute defendant's position that the dependent children have no interest in the death benefits that is distinct from that of the spouse. The fact that benefits are paid through the mother rather than directly to the children does not undermine the severability of the award. See MCL 418.331; MSA 17.237(331), Cichecki v City of Hamtramck, 382 Mich. 428, 433; 170 N.W.2d 58 (1969).
Reversed and remanded for proceedings consistent with this opinion.
We retain no jurisdiction. Costs to await final outcome of proceedings.