Cesnulis v. Monarch Products Co.

274 N.W.2d 42, 87 Mich. App. 290, 1978 Mich. App. LEXIS 2671

• Court: Michigan Court of Appeals
• Decided: November 28, 1978
• Docket: Docket 77-4001
• Status: Published

Opinion

R. B. Burns, J.

Plaintiff petitioned for worker’s compensation benefits for an injury suffered during a period of time in which his employer permitted its worker’s compensation insurance coverage to lapse. The employer subsequently filed a petition in bankruptcy; a receiver was appointed, the employer was adjudicated bankrupt, the company reorganized, and control was eventually restored to the employer. Plaintiff amended his petition for worker’s compensation benefits to include the Self-Insurers’ Security Fund as a party defendant, claiming he was entitled to benefits from the fund during the period in which his employer was under the jurisdiction of the bankruptcy court. The hearing referee awarded benefits from the fund upon finding the employer was an insolvent, private, self-insured employer. MCL 418.502; MSA 17.237(502). The Workmen’s Compensation Appeal Board reversed, however, finding the employer was not self-insured. MCL 418.601(b); MSA 17.237(601)(b). We affirm.

A disabled employee may receive benefits from the fund where he is entitled to receive benefits from "a private self-insured employer who becomes involvent * * * and is unable to continue the payments.” MCL 418.537(1); MSA 17.237(537)(1). A literal interpretation of MCL 418.502; MSA 17.237(502) would support plaintiff’s argument that he is entitled to benefits, for that statute defines "an insolvent private self-insured employer” as one "who files for relief under the bankruptcy act or * * * against whom bankruptcy proceedings are filed or * * * for whom a receivor is appointed in a court of this state”. However, this statute must be read in conjunction with MCL 418.601; MSA 17.237(601), which provides in part that "[wjhenever used in this act: * * * (b) 'self-insurer’ means an employer authorized to carry its own risk”. Since plaintiff’s employer was not "authorized to carry its own risk”, it was not "a private self-insured employer who [became] insol vent”. Consequently, plaintiff is not entitled to benefits from the fund.

Plaintiff argues that this interpretation of the act deprives him of equal protection of the law, US Const, Am XIV, for employees of insolvent self-insurers are provided with greater protection than employees of insolvent, noncomplying employers. However, the Legislature could reasonably conclude that, while a fund was needed to back up self-insurers who might become insolvent, no such fund would be needed for employers who elect to insure, and are therefore backed by insurance companies or the accident fund. See MCL 418.611; MSA 17.237(611). The scheme contains penalties for noncompliance, designed to insure adequate financial backing. MCL 418.641, 418.645, 418.647; MSA 17.237(641), 17.237(645), 17.237(647). The classification bears a reasonable relation to the object of the legislation. Manistee Bank & Trust Co v McGowan, 394 Mich 655, 671; 232 NW2d 636, 642 (1975). Moreover, it would be unfair to self-insurers to impose upon them the burden of compensating employees of employers who did not contribute to the fund. MCL 418.551(3); MSA 17.237(551X3).

Affirmed.