The Michigan Supreme Court has recently released three important orders regarding partial disability benefits in Michigan.  First, here is some background.

The partial disability provision of the Michigan’s workers’ compensation statute, as well as certain case law, require magistrates to calculate the appropriate partial weekly rate of compensation to those claimants who are deemed “partially disabled.”  Whenever a partially disabled claimant is working post-injury at a lesser paying job, there is little controversy in calculating the appropriate partial rate.  But when a partially disabled claimant is not working at all post-injury, the point becomes more controversial.  The statute states that partial disability payments are to be calculated on the basis of what the claimant is “able to earn” post- injury, not what the claimant is actually earning. And, certain case law has made clear that “able to earn” is not limited to actual wages earned but rather, requires consideration of the claimant’s capacity to earn whether that capacity is being exercised or not.

You might recall that three years ago in Lofton v AutoZone, Inc, 482 Mich 1005 (2008), the Supreme Court reiterated that the partial rate calculation is required to be based on the claimant’s capacity to earn, regardless of whether that capacity is being exercised or not.  Lofton tended to be ignored by many practitioners and magistrates as an aberration.

It is now clear that the Michigan Supreme Court does not consider Lofton to be an aberration. 

In Umphrey v General Motors Corp, 489 Mich 978 (2011), the Supreme Court – with only one dissent – said that a Lofton partial disability evaluation is “required” and if “the plaintiff is only partially disabled then a calculation of wage loss benefits must be made… and the WCAC should in that event modify the plaintiff’s award accordingly.” (emphasis added).

Similarly, in Harder v Castle Bluff Apartments 489 Mich 951 (2011), the Court stated that Lofton“applies at all times to partially disabled workers.” (emphasis added).   And, in Vrooman v Ford Motor Company 489 Mich 978 (2011), the Court – again over only one dissent – returned the case to the magistrate for a partial disability evaluation, citing Lofton and Harder.

From these orders it is now quite clear that the Supreme Court meant what it said in Lofton, namely: the partial disability calculation is required when a claimant is determined to be only partially disabled. 

The Medicare Secondary Payer Recovery Contractor (MSPRC) protects Medicare’s interest by recovering payments Medicare made that were the responsibility of another entity. The agency is authorized to do so under the Medicare Secondary Payer Act. The payments recovered are those that Medicare believes are the responsibility of liability insurance and/or workers’ compensation insurance. MSPRC recently announced that it has contracted with Group Health Incorporated to perform MSPRC duties which include issuing Conditional Payment Letters. These are the letters that outline Medicare’s lien. The phone number and mailing address for MSPRC remain the same.

Approximately two weeks after an injury is reported to the Coordination of Benefits Center (COBC), MSPRC will issue a “Rights and Responsibilities” (RAR) letter. MSPRC will then automatically generate a Conditional Payment Letter (CPL) within 65 days from the date on the RAR letter.

We recommend that MSPRC be contacted by telephone approximately one month after reporting the injury to be sure that the appropriate authorization forms have been added to the Medicare file. This follow up call to MSPRC is the best way to ensure that MSPRC will process the case correctly.

MSPRC has also announced the availability of a Self Service Information Feature. This automated service provides the most current demand and Conditional Payment amounts as well as the date the CPL was issued. However, if the CPL has not been received within the 65 day time frame, we recommend that an MSPRC customer service representative be contacted for follow-up.

Lacey & Jones is pleased to announce that two of the firm’s partners have been recently recognized.  Dennis Zacharski has again been named in “Michigan Super Lawyers” for 2011 and “DBusiness Top Lawyers” for 2011, and Gerald (Jerry) Marcinkoski has again been recognized in “Best Lawyers in America” for 2012. Mr. Zacharski specializes in the defense of personal injury litigation while Mr. Marcinkoski practices workers’ compensation appellate law.

In an article in the July 8, 2011 issue of Michigan Lawyers Weekly that discussed attorneys who have made the greatest impact on the practice of law in Michigan over the last 25 years, Lacey & Jones Partner Jerry Marcinkoski was recognized as being instrumental in the practice of workers’ compensation and appellate law. Mr. Marcinkoski is the executive secretary of the Michigan Self Insurers’ Association, a member of the Workers’ Compensation Advisory Committee, and a former member of the Workers’ Compensation Law Section of the State Bar of Michigan. Lacey & Jones applauds Jerry for his many accomplishments in the field of workers’ compensation.

By the Governor’s Executive Order dated May 17, 2011, the Michigan Workers’ Compensation Appellate Commission and the Michigan Employment Security Board of Review have been combined to create the Michigan Compensation Appellate Commission. Lacey & Jones of counsel, Jack F. Wheatly, has been named Chairperson of the new Compensation Appellate Commission. We extend our congratulations to Jack on his appointment.

In Johnson v Recca, C.A. No. 294363, rel’d April 5, 2011,the Michigan Court of Appeals addressed the issue of whether expenses for replacement services rendered more than three years after the date of the motor vehicle accident are recoverable in a third-party action. The appellate court decision involved the interpretation of MCL 500.3107(1) of the No-Fault Act.

The plaintiff allegedly sustained injuries when she was struck by the defendant’s vehicle. She filed suit, seeking payment of non-economic damages, and economic damages consisting of excess replacement services expenses. Section 3135(3)(c) of the No-Fault Act permits  a plaintiff to recover damages for allowable expenses, work loss, and survivor’s loss in excess of the limitations set forth in the applicable sections in a third-party action.

The defendant moved for summary disposition as to non-economic damages, claiming that the plaintiff had not sustained serious impairment of body function, and economic damages, on the ground that replacement services, provided for in §3107(1)(c), were not allowable expenses that can be recovered in a third- party action.  In regard to economic damages, the trial court found that §3107(1)(a), which defines allowable expenses, does not specifically mention replacement services.  The court determined that since replacement services are not an allowable expense, they are not recoverable in a tort action brought pursuant to §3135.

The Court of Appeals considered whether replacement services are separate and distinct from allowable expenses or whether they are a category of allowable expenses. In its analysis, the Court relied on the definition of care in Griffith v State Farm Mut Auto Ins Co, 472 Mich 521, 534-535 (2005). Since replacement services are services necessitated by the motor vehicle accident, they are for the person’s care, and as such, the Court held that they are a category of allowable expenses.  

Lacey & Jones is pleased to announce that two of the firm’s partners have been recently recognized.  Dennis Zacharski has again been named in “Michigan Super Lawyers” for 2010 and Gerald Marcinkoski has been recognized in “Best Lawyers in America” for 2011.  Mr. Zacharski specializes in the defense of personal injury litigation while Mr. Marcinkoski practices workers’ compensation appellate law.

On July 31, 2010, the Michigan Supreme Court issued its opinion in McCormick v Carrier, which by a 4-3 decision, overruled Kreiner v Fischer, which was the leading Supreme Court case interpreting the serious impairment threshold of the No-Fault Act.

In 2004, the Supreme Court decided Kreiner v Fischer, 471 Mich 109; 683 NW2d 611 (2004), which interpreted the 1995 amendment to MCLA 500.3135 regarding the serious impairment threshold. The result of Kreiner was a narrow interpretation of the requirement that the impairment must affect the injured party’s general ability to lead his/her life by requiring the impairment to have affected the course or trajectory of the injured party’s life. In McCormick, the Supreme Court overruled Kreiner, finding it to have been incorrectly decided because it interpreted the serious impairment statute inconsistently with the plain, unambiguous language of the statute.

In McCormick, the plaintiff sustained a severe fracture to his ankle. As a result of the injury, the plaintiff was unable to stand or walk for a period of time and underwent two surgeries. One year after the accident, the plaintiff returned to work, albeit to a less strenuous job, but at the same rate of pay. The plaintiff was also able to golf and fish, but with a considerable amount of pain. The Court of Appeals ruled in favor of the defendant, finding that the plaintiff’s injuries did not affect the trajectory of his life. The Supreme Court, in overruling Kreiner, found that the plaintiff sustained, as a matter of law, a serious impairment, and reversed the Court of Appeals and remanded the case to the trial court.

The test for determining serious impairment as stated by the McCormick Court remains essentially the same. First, a court must determine if there is any material factual dispute as to the nature or extent of the injuries. If no factual dispute exists, the court must determine, as a matter of law, whether the injured person has sustained a serious impairment. Three elements must be met to have a serious impairment: 1) an objectively manifested impairment 2) of an important body function 3) that affects a person’s general ability to lead his/her normal life. The McCormick Court overruled Kreiner’s interpretation of these requirements, finding that Kreiner created ambiguities in the statute where none existed.

With respect to the first prong, objectively manifested impairment, the focus is to be on how the injury has affected a particular body function. The Supreme Court defined objectively manifested impairment as observable or perceivable from actual symptoms or conditions. Under Kreiner, medical documentation would always be required to meet this criterion, which the McCormick Court noted was beyond the legislative intent, as well as the plain meaning of the statutory language.

The impairment must be of an important body function, under both the McCormick and Kreiner analyses. However, with respect to the final element of serious impairment, the effect upon the injured party’s general ability to lead his/her normal life, the McCormick Court found that the interpretation in Kreiner “dramatically deviated” from the plain language of the statute.

The McCormick Court interprets an effect upon a person’s general ability to lead his/her normal life as having some influence upon a person’s capacity to lead a normal life. This requires a subjective inquiry which must be made on a case-by-case basis. While it does require the comparison between an injured person’s pre- and post-accident life, it only requires that some of the person’s ability to lead his/her normal life be affected as opposed to that person’s manner of living having been affected. There is no quantitative percentage and no requirement as to duration of the impairment. The Supreme Court rejected the Kreiner Court’s holding that the trajectory of the injured party’s life must have been affected in order to meet the serious impairment threshold. The Court also rejected Kreiner’s use of a list of non-exhaustive factors in conducting a serious impairment analysis.

McCormick relaxes the standard to be met in determining whether a serious impairment exists. An injured party must have 1) an objectively manifested impairment, defined by the Supreme Court as an impairment that is observable or perceivable from actual conditions or symptoms, 2) of an important body function of value, significance or consequence to an injured party that 3) affects the injured party’s general ability to lead his/her normal life which the Supreme Court now defines as an impairment which has influenced some of an injured party’s capacity to live his/her normal life.

Here is a link to the decision.

http://courts.michigan.gov/supremecourt/Clerk/01-10/136738/136738%20Opinion.pdf

When an individual receives workers’ disability compensation, no-fault benefits, and/or tort damages in addition to Medicare benefits, the workers’ disability compensation benefits, no-fault benefits, and/or tort recovery are by law considered to be primary benefits. Medicare benefits are secondary. In order to protect Medicare’s secondary payer status, parties to a settlement may be required to set aside sufficient funds for all future medical services related to the injury that would otherwise be reimbursable by Medicare. This procedure is called a Medicare Set-aside Arrangement (MSA).

Centers for Medicare & Medicaid Services (CMS) has taken the position that when there is a failure to consider and protect its interests in a settlement, Medicare may seek recovery from those obligated to make the payment or protect Medicare’s interest. This includes the defendant employer, insurance carrier, and third-party administrator. Medicare may also impose penalties on offenders.

Michael R. Sugar, Of Counsel to Lacey & Jones LLP, is experienced in the preparation and submission of the Medicare Set-aside Arrangements. Mr. Sugar is available to provide counsel during the settlement process and beyond. His services include preparation and submission of a timely and realistic proposal for review and approval by Medicare. He will follow the submission until approval by Medicare is obtained, the settlement is finalized, and the Set-aside Arrangement is funded. His will also determine whether any past conditional payments made by Medicare will need to be repaid.

For further information, please contact Mr. Sugar at (248) 283-0770 or msugar@laceyjones.com or Marianne Melton at (248) 283-0768 or mmelton@laceyjones.com.

Three of the firm’s partners have been named “Top Lawyers” in metro Detroit for 2010 by DBusiness, Detroit’s premier business journal. William Day and Gerald Marcinkoski specialize in workers’ compensation law. Mr. Marcinkoski was also recognized for his expertise in appellate practice. Dennis Zacharski was designated as a litigator in the areas of insurance and personal injury law.

The Michigan Court of Appeals has overturned a trial court’s grant of summary disposition in favor of an insurance carrier with respect to a claim for uninsured motorist benefits. In Smith v MEEMIC Insurance, the defendant sought summary disposition of the plaintiff’s claim for uninsured benefits based upon an exclusionary provision of the policy. The exclusion precluded coverage when an insured obtained a settlement or judgment against an uninsured third party without the knowledge and consent of the carrier.

The plaintiff was involved in an accident with a vehicle that was believed to be uninsured. She filed a claim for uninsured motorist benefits. The defendant failed to respond to the plaintiff’s request to settle or arbitrate the uninsured motorist claim. The defendant received notice of the plaintiff’s intent to obtain a default judgment to which it also failed to respond. The plaintiff obtained a default judgment and filed suit against the defendant for uninsured motorist benefits. The defendant filed a motion for summary disposition based upon the exclusionary provision. Before the defendant’s motion was heard, the plaintiff had the default judgment against the third-party set aside. Despite the plaintiff’s corrective action, the trial court granted the motion and dismissed the case. The plaintiff then appealed.

The Court of Appeals unanimously reversed the trial court. The Court held that when the default judgment was set aside, it effectively became null and void so that the exclusion upon which the defendant relied did not apply. The Court recognized the public policy behind the exclusionary clause, which is to protect the subrogation rights of the insurance carrier, but noted that by the default judgment having been set aside, the defendant’s subrogation rights remained intact.

The Michigan Supreme Court has granted leave to appeal in McCormick v Carrier,which opens the door to the Supreme Court potentially overruling Kreiner v Fischer, 471 Mich 109 (2004), as it relates to the No-Fault Act’s serious impairment threshold for the recovering of non-economic damages.

The No-Fault Act defines serious impairment as an objectively manifested impairment of an important body function which affects a person’s general ability to lead his or her normal life. The Supreme Court in Kreiner narrowly interpreted the definition of serious impairment by finding that the impairment must affect the course or trajectory of the injured person’s normal life.

In McCormick,the plaintiff sustained a severe fracture to his ankle in a motor vehicle accident. As a result of the injury, the plaintiff was unable to stand or walk for a period of time and underwent two surgeries. One year after the accident, the plaintiff returned to work, although to a less strenuous job, but at the same rate of pay. He was able to golf and fish, but did so with considerable pain.

The Court of Appeals ruled in favor of the defendant, finding that the injuries sustained by the plaintiff did not affect the trajectory of his life. Initially, the Supreme Court denied the plaintiff’s Application for Leave to Appeal. However, on a Motion for Reconsideration, the Court granted leave. Justice Corrigan dissented on the basis that the law and facts of the case had not changed, and that the plaintiff was attempting to benefit from the recent replacement of a conservative justice with a more liberal justice.

Lacey & Jones is pleased to announce that two of the firm’s partners: Gerald Marcinkoski and Dennis Zacharski have been named “Michigan Super Lawyers” for 2009. This is the first time for this honor for Mr. Zacharski. Mr. Marcinkoski has been so recognized previously a number of times. Mr. Marcinkoski has also been appointed by the Governor, upon recommendation of the Michigan Supreme Court, to the State of Michigan Board of Law Examiners. Besides that role, Mr. Marcinkoski also serves as the Executive Secretary of the Michigan Self-Insurers’ Association and serves as a Special Assistant Attorney General. Mr. Marcinkoski has also received recognition as one of the “Best Lawyers in America,” “Best Lawyers in Michigan,” and “Best Lawyers in Metro Detroit.” Congrats to Gerald and Dennis!

In Johnson v Wausau Insurance Company, the plaintiff belatedly sought attendant care benefits under the No-Fault Act pursuant to a theory of fraud. The plaintiff claimed that delay was due to the insurer’s failure to advise the plaintiff of entitlement to the payment of attendant care benefits at an hourly rate. As the theory of recovery was based on fraud, as opposed to a claim under the No-Fault Act, the plaintiff alleged that the one-year back rule of the Act, MCLA 500.3145 was not applicable and did not prevent the recovery of attendant care benefits extending beyond one year from the date of service.

The Michigan Supreme Court’s decision in Cooper v ACIA has paved the way for a plaintiff to assert potential fraudulent denial of benefit claims as a means to circumvent the one-year back provision of the No-Fault Act. In Cooper, which involved a claim for attendant care benefits based upon the fraudulent misrepresentation of the insurance carrier, the Supreme Court held that the one-year back rule, as set forth in §3145, only applies to actions brought under the No-Fault Act and not to claims for fraud. A plaintiff suing under a theory of fraud could seek unlimited attendant care benefits. The Supreme Court, however, also cautioned that in assessing such a claim, special care must be used to determine whether a plaintiff’s reliance upon an alleged misrepresentation, an element necessary to a fraud claim, was reasonable.

In Johnson, the Court of Appeals followed the Supreme Court’s advisory and found that the plaintiff’s reliance was not reasonable. In so holding, the Court stated that plaintiff could have confirmed the insurer’s representations by consulting an attorney to establish what benefits were available under the No-Fault Act. By failing to do so, the plaintiff failed to meet the burden of proof as to reasonableness of the alleged reliance. The plaintiff has applied for leave to appeal to the Supreme Court.

The Michigan Supreme Court has recently ruled that any non-party must owe a duty to the plaintiff, for purposes of assessing the percentage of fault pursuant to MCLA 600.6304(8).

In Romain v Frankenmuth Mutual Ins. Co., et al, the plaintiffs sued several defendants, based upon a theory of negligence, for failing to remove toxic mold from their home. IAQ, the company that tested the air quality in the plaintiffs’ home, was named as a defendant, but was dismissed by the trial court, which found IAQ did not owe any duty to the plaintiffs. Thereafter, another defendant filed a notice of non-party fault as to IAQ. The trial court struck the non-party fault notice, again noting that IAQ owed no duty the plaintiffs. The Supreme Court affirmed the trial court’s ruling.

In reaching its decision, the Supreme Court narrowly construed the comparative fault statute, MCLA 600.6304(8). The comparative fault statute allows for the allocation of percentage of fault among parties, as well as non-parties. Fault under the statute includes a breach of legal duty that is the proximate cause of the damages. The Supreme Court then applied common law principles of negligence to interpret the term “proximate cause” as used in the statute. The Supreme Court then held that for a party to be found at fault, the party must have been negligent, which requires a duty owed to the plaintiff and a breach of that duty which proximately caused damages to person or property. Therefore, as comparative fault rests upon negligence, no fault may be allocated to any non-party which does not owe a duty to the plaintiff.

We are pleased to announce that Thomas H. O'Connor and Michael R. Sugar have become associated with the firm. You're invited to review their biographies in The Attorney section of our website.

Read the Decision

The Michigan Supreme Court has remanded a case to the Michigan Court of Appeals directing that court to determine if a health insurer provides services comparable to chiropractic treatment with respect to a no-fault insurance carriers’ liability under a policy providing for coordination of medical benefits.

In Michigan Rehabilitation Clinic v AAA, the plaintiff sought payment for services provided to numerous patients receiving treatment for injuries sustained in a motor vehicle accident. The patients all had no-fault insurance policies coordinated for medical expenses. The health insurance carriers, who were primarily liable for medical expenses, did not cover chiropractic treatment and the plaintiff submitted their expenses to AAA for payment. AAA denied the claims claiming that under the terms of the policy no obligation arises to pay for the services unless the health insurance carrier does not provide coverage for treatment comparable to the chiropractic treatment.

The trial court agreed with AAA and an the case was appealed. The Court of Appeals held that the issue was not whether comparative services were available through the health insurer, but rather whether the chiropractic treatment was reasonably necessary for the care, recovery, and rehabilitation of the injured person as provided in MCLA 500.3107. Both parties appealed to the Supreme Court.

The Michigan Supreme Court in lieu of granting leave, has remanded the case to the Court of Appeals. Pursuant to the remand order, the Court of Appeals is to determine whether the health insurer provides coverage for comparable services. However, the manner in which to determine whether comparable services exists has been left to the Court of Appeals. It is unclear at this time, how the Court of Appeals will determine the availability of comparable services. The Supreme Court has further directed in its remand order that the no-fault carrier will not be responsible for payment of the chiropractic expenses if other comparable services are available. If none are available, then the carrier will only be responsible if such treatment was reasonably necessary pursuant to §3107.

In the case of Rowland v Washtenaw County Road Commission, the Michigan Supreme Court  addressed the notice provision of the defective highway exception to the Governmental Tort Liability Act. 

With respect to a claim for damages under the defective highway exception, MCL 691.1404(1) provides that an injured party seeking to recover damages must provide notice of the injury and defect to the governmental agency within 120 days from the date of the injury.  However, two prior Michigan Supreme Court cases,  Hobbs v Department of State Highways and Brown v Manistee County Road Commission, held that a claim under the defective highway exception could proceed where the notice was not timely given, absent the showing of “actual prejudice.”

In Rowland, the plaintiff’s notice was provided 140 days after the injury.  The trial court and Court of Appeals both allowed Plaintiff’s claim to proceed despite the untimely notice, following the “actual prejudice” requirement set forth in Hobbs and Brown.  The Supreme Court, however, reversed, holding that a violation of the notice provision statute was a complete bar to plaintiff’s claim.  In reaching its decision the majority stated that the “plain language of the statue should be enforced as written ….”  The opinion, therefore, overruled the “actual prejudice” precedent.  The Supreme Court indicated that the “actual prejudice” requirement of Hobbs and Brown were wrongly decided and failed to uphold the Legislative intent of the notice statute. 

Justices Cavanaugh and Kelly issued dissenting opinions critical of the majority’s decision to overturn the holdings in Hobbs and Brown by failing to follow the doctrine of stare decisis regarding precedents of the Court.