Pike v. City of Wyoming

433 N.W.2d 768, 431 Mich. 589

• Court: Michigan Supreme Court
• Decided: November 10, 1988
• Docket: 78746, (Calendar No. 2)
• Status: Published

Opinions

Griffin, J.

In this workers’ compensation case the plaintiff’s benefit award was increased due to a determination that his wife was a dependent at the time of his injury. The determination was not based on fact finding, but on § 353(lXsO(i)1 of the Workers’ Disability Compensation Act,² which provides that the wife of an injured employee who lives with him "shall be conclusively presumed to be dependent . . . Subsequently, in Day v W A Foote Memorial Hosp, 412 Mich 698; 316 NW2d 712 (1982), this Court struck down as unconstitutional a similar gender-based presumption of a widow’s dependency set forth in § 331(a).³

We hold that the gender-based presumption in § 353(l)(a)(i) is also unconstitutional, and that res judicata does not preclude a redetermination of the wife’s dependency. Further, in the interest of fairness, we conclude that our holding will not affect dependency payments already made.

i

Plaintiff filed a petition under the wdca seeking total and permanent disability benefits for the loss of the industrial use of his legs as the result of an injury which occurred January 12, 1979. Plaintiff claimed his wife as a dependent, and in a decision mailed May 21, 1981, a hearing referee found plaintiff to be permanently disabled and his wife to be a dependent at the time of the injury.⁴ It was not determined whether plaintiff’s wife was dependent in fact because she was conclusively presumed to be a dependent under § 353(l)(a)(i)⁵ of the act. There was no appeal._^

Subsequently, on March 2, 1982, a parallel provision⁶ of the same act, setting forth a conclusive presumption of dependency in the case of the widow of a deceased employee,⁷ was declared by this Court to be "an unconstitutional gender-based discrimination because there [was] no similar presumption for widowers.” Day, supra at 701. The ruling in Day, based on the Equal Protection Clause of the Fourteenth Amendment, followed Wengler v Druggists Mutual Ins Co, 446 US 142; 100 S Ct 1540; 64 L Ed 2d 107 (1980), which on the same ground had invalidated a similar provision of the Missouri workers’ compensation statute.

Thereafter, on July 11, 1983, defendants city and the Second Injury Fund (sif) filed a petition, alleging that plaintiff’s wife was not a dependent in fact and requesting that plaintiff’s benefits be reduced⁸ as of the date on which Day was issued. Plaintiff interposed the defense of res judicata. Dismissal of the petition by the hearing referee was affirmed by the Workers’ Compensation Appeal Board on the basis of res judicata. After the Court of Appeals denied leave to appeal, the sif sought review in this Court. We granted leave to appeal. 428 Mich 857 (1987).

ii

As already noted, this Court’s decision in Day, that the conclusive presumption of a widow’s dependency was unconstitutional, dealt with a different section of the act. However, at the time Day was decided, the United States Supreme Court had already struck down in seven different cases, on equal protéction grounds, statutes containing similar gender-based distinctions. See Wengler, supra; Califano v Goldfarb, 430 US 199; 97 S Ct 1021; 51 L Ed 2d 270 (1977); Craig v Boren, 429 US 190; 97 S Ct 451; 50 L Ed 2d 397 (1976); Stanton v Stanton, 421 US 7; 95 S Ct 1373; 43 L Ed 2d 688 (1975); Weinberger v Wiesenfeld, 420 US 636; 95 S Ct 1225; 43 L Ed 2d 514 (1975); Frontiero v Richardson, 411 US 677; 93 S Ct 1764; 36 L Ed 2d 583 (1973); Reed v Reed, 404 US 71; 92 S Ct 251; 30 L Ed 2d 225 (1971). We conclude that the Supremacy Clause compels a conclusion in this case that § 353(l)(a)(i) is likewise unconstitutional because it provides an injured male worker with an increase in benefits if he has a wife living with him at the time of his injury, while no similar provision is made for an injured female worker whose husband lives with her.

As the Court of Appeals observed in Costa v Chrysler Corp, 152 Mich App 530, 535; 394 NW2d 6 (1986), "[t]he wording of § 331(l)(a) which applies to the wife of a 'deceased employee,’ is virtually identical to the wording of § 353(l)(a)(i) which applies to the wife of an 'injured employee.’ ” See also Williams v Chrysler Corp, 159 Mich App 8, 13; 406 NW2d 222 (1987).

Thus, on the authority of Wengler and Day, we hold that the gender-based conclusive presumption of a wife’s dependency set forth in § 353(l)(a)(i) violates the Equal Protection Clause of the Fourteenth Amendment.

In light of that holding, we turn now to consider whether res judicata bars redetermination of the unappealed finding that plaintiffs wife was a dependent at the time of plaintiffs injury.

hi

That res judicata principles are applicable in the workers’ compensation context has been recognized by this Court. Hlady v Wolverine Bolt Co, 393 Mich 368, 375; 224 NW2d 856 (1975); Theodore v Packing Materials, Inc, 396 Mich 152, 158; 240 NW2d 255 (1976); Gose v Monroe Auto Equipment Co, 409 Mich 147, 161; 294 NW2d 165 (1980). However, workers’ compensation determinations, which generally involve claims for continuing benefits, are different by their very nature from judgments rendered in tort and most other civil actions. From time to time, this Court has quoted with approval the rule set forth in 58 Am Jur, Workmen’s Compensation, § 508:

"The general rule with respect to the effect upon the application of the principles of res judicata to decisions under workmen’s compensation acts, of a provision authorizing the modification of an award upon a showing of a change in the employee’s condition, is that a compensation award is an adjudication as to the condition of the injured workman at the time it is entered, and conclusive of all matters adjudicable at that time, but it is not an adjudication as to the claimant’s future condition and does not preclude subsequent awards or subsequent modifications of the original award upon a showing that the employee’s physical condition has changed.” [See Hlady, supra at 375-376; White v Michigan Consolidated Gas Co, 352 Mich 201, 211; 89 NW2d 439 (1958).]

Disagreement within our Court surfaced in Hlady concerning the applicability of res judicata where there has been a subsequent change in the law, rather than a change in the facts. Justice Levin’s explanation included the following:

The basis of our disagreement is that, in my opinion, a change of law, like a change of fact, eliminates the bar of res judicata where the claimant seeks continuing benefits under a statute providing "income maintenance.”

The law can be changed by legislative enactment or court decision. When the Legislature amends a statute, its applicability to a case previously adjudicated is not analyzed in terms of res judicata. The issue then is one of statutory construction: did the Legislature intend the amendment to have retroactive as well as prospective application? Where the change is effected by court decision the analysis should be the same, whether as a matter of policy the new rule of law should apply retroactively as well as prospectively. [Hlady, supra at 387 (Levin, J., concurring).]

A

In a non-workers’ compensation context this Court has held res judicata not to be a bar where a subsequent change in the law altered the legal principles upon which the case was to be resolved. The plaintiff in Socialist Workers Party v Secretary of State, 412 Mich 571; 371 NW2d 1 (1982), a political party, had argued in a 1976 federal district court action that a Michigan statute unconstitutionally restricted the party’s access to the ballot. The federal district court held the statute to be constitutional, and its ruling was summarily affirmed by the United States Supreme Court. Allen v Austin, 430 US 924; 97 S Ct 1541; 51 L Ed 2d 769 (1977).

Later, however, in 1980, the same political party filed suit against the same defendant in state circuit court, again challenging the statute on constitutional grounds. The circuit court granted the defendant accelerated judgment on the ground of res judicata; however, this Court granted leave to appeal, and we reversed. Focusing upon the fact that there had been an intervening change by the United States Supreme Court in the legal standard to be applied in determining the constitutionality of legislative restrictions on ballot access, Illinois State Bd of Elections v Socialist Workers Party, 440 US 173, 183; 99 S Ct 983; 59 L Ed 2d 230 (1979), this Court held that under such circumstances res judicata did not bar the subsequent action. Socialist Workers, supra at 586. See also Young v Detroit City Clerk, 389 Mich 333; 207 NW2d 126 (1973).

The construction given to provisions of the Internal Revenue Code is sometimes changed by judicial decision. The United States Supreme Court emphasized in Internal Revenue Comm’r v Sunnen, 333 US 591, 599; 68 S Ct 715; 92 L Ed 898 (1948), that res judicata must yield at times to a change in the tax law, at least for future purposes:

A taxpayer may secure a judicial determination of a particular tax matter, a matter which may recur without substantial variation for some years thereafter. But a subsequent modification of the significant facts or a change or development in the controlling legal principles may make that determination obsolete or erroneous, at least for future purposes. If such a determination is then perpetuated each succeeding year as to the taxpayer involved in the original litigation, he is accorded a tax treatment different from that given to other taxpayers of the same class. [Emphasis supplied.]

While the analogy is by no means perfect, in some respects the relationship between a taxpayer and the federal government is similar to that of a disabled worker and the provider of workers’ compensation. Both involve the payment of money over á period of years, and, moreover, in each case the obligation for, and the level of, payments may be affected from time to time by changes in the underlying law or facts. Thus, as in the tax-law setting, a change in the workers’ disability compensation law may render a prior determination obsolete or erroneous for future purposes. Generally speaking, in such a situation one employee should not be "accorded a [workers’ disability compensation] treatment different from that given to other [employees] of the same class.” Sunnen, supra at 599. As the Sunnen Court observed:

[The] principle [of res judicata or estoppel by judgment] is designed to prevent repetitious lawsuits over matters which have once been decided and which have remained substantially static, factually and legally. It is not meant to create vested rights in decisions that have become obsolete or erroneous with time, thereby causing inequities .... [Id.]

As the preceding cases illustrate, res judicata does not always preclude a redetermination where there has been a subsequent change in the law. Nevertheless, we are not required to rest our decision in this case on so broad a proposition; the issue presented here is narrower and more limited.

B

In this case the defendant sif is not challenging plaintiffs "eligibility” for workers’ compensation benefits; rather, it is only the "amount” of his benefits which is at issue.

In Leskinen v Employment Security Comm, 398 Mich 501, 508-509; 247 NW2d 808 (1976), this Court distinguished between determinations concerning an employee’s "eligibility” for benefits and the "amount” of benefits which an employee may eventually receive. Although Leskinen did not implicate the same provision⁹ of the wdca, the distinction drawn in that case between "eligibility” and "amount” is instructive and applicable:

Eligibility for benefits under the act is established when an employee proves that he has suffered a personal injury which arose "out of and in the course of employment.” MCL 418.301(1); MSA 17.237(301X1). Van Atta v Henry, 286 Mich 379; 282 NW 185 (1938). It is only after this threshold determination that the amount of benefits is then computed. [Emphasis in original. See also Medacco v Campbell, Wyant & Cannon Foundry Co, 48 Mich App 217, 226; 210 NW2d 360 (1973).]

In this case, the hearing referee found that plaintiff suffered from total and permanent disability and ordered defendant sif to pay benefits beginning on January 1, 1980. Only after such a determination did the referee conclude that plaintiffs wife was a dependent in accordance with § 353(l)(a)(i), thereby increasing plaintiffs award. Whether plaintiffs wife was a dependent did not bear on plaintiffs eligibility to receive workers’ compensation benefits; however, it was a factor in calculating the amount or level of benefits which he would receive. Accordingly, the addition or deletion of § 353 benefits affects only the "amount” of plaintiffs award, and not his original "eligibility” for workers’ compensation benefits.

The amount of benefits awarded to an injured employee is subject to change upon the occurrence of various events. For example, as this Court said in Goines v Kelsey Hayes Wheel Co, 294 Mich 156, 158; 292 NW 686 (1940):

It is an accepted principle of law in this State that an award of compensation may be modified by a showing of a change in the physical condition that affects the earning power of the party receiving such award.

We explained in Houg v Ford Motor Co, 288 Mich 478, 481; 285 NW 27 (1939), that

[t]he doctrine of res judicata is limited in its operation when sought to be applied to man’s physical condition which constantly changes and under a statute which provides that weekly payments may be reviewed and ended, diminished, or increased as the facts warrant .... [Emphasis supplied.]

If the employee’s condition worsens, his benefits may be increased. See Murray v Ford Motor Co, 296 Mich 348, 355; 296 NW 284 (1941); Webber v Steiger Lumber Co, 322 Mich 675, 680; 34 NW2d 516 (1948). Of course, if the employee’s condition improves, his employer may file a petition to reduce or terminate payments. See Dyer v McQuistion, 273 Mich 327; 263 NW 73 (1935). In Sauch v Studebaker Corp, 232 Mich 147; 205 NW 120 (1925), this Court held, under 1915 CL 5449, that an employee’s benefits were to be reduced where he failed to show up for a scheduled medical examination.

Further examples demonstrating that the amount of an employee’s benefits is subject to change may be found in the wdca. Under § 352, the award of certain workers injured between September 1, 1965, and December 31, 1979, was enhanced by a weekly cost-of-living supplement beginning January 1, 1982. See Maglothin v Tryco Steel Corp, 137 Mich App 640; 357 NW2d 914 (1984). Another provision, § 357, requires that an employee’s benefits be reduced five percent each year after he reaches age sixty-five. Under § 353(2), an employee whose benefits are increased because dependent children are living with him, suffers a benefit decrease as each of the children attains the age of eighteen. See Theodore v Packing Materials, Inc, 396 Mich 152, 158; 240 NW2d 255 (1976), wherein this Court stated:

While we recognize that the doctrine of res judicata is applicable to workmen’s compensation proceedings, compensation awards represent "an adjudication as to the condition of the injured workman at the time it is entered, and conclusive of all matters adjudicable at that time, but it is not an adjudication as to the claimant’s future condition and does not preclude subsequent awards or subsequent modifications of the original award upon a showing that the employee’s physical condition has changed.” Just as one’s physical condition may change with the passage of time, so too can one’s status vary from one day to the next. [Emphasis in original.]

Because the amount of an employee’s award is never final, res judicata principles do not apply to a change in the amount of benefits the claimant receives. This is consistent with the flexible nature of the workers’ compensation system which permits redetermination of the amount of a claimant’s benefits.¹⁰

Accordingly, we hold that res judicata is inapplicable in the instant case because relitigation of § 353 benefits merely permits a subsequent modification of the amount of plaintiffs award.

iv

Having decided that res judicata is not a bar, we turn next to the question how our ruling is to be applied, particularly if it should be determined that plaintiffs wife was not in fact a dependent.

Defendant sip argues that our ruling should be applied retroactively so as to require repayment by plaintiff of dependency benefits already received— at least those benefits received after March 2, 1982, the date Day was decided. While such notice as Day provided may be considered in determining the retroactivity issue, because Day focused on a different provision of the act, we do not regard the date of that decision to be controlling in this case.

In 1932, the United States Supreme Court ruled that the federal constitution does not inhibit state courts in determining whether their own law-changing decisions should be applied retroactively or prospectively. Great Northern R Co v Sunburst Oil & Refining Co, 287 US 358; 53 S Ct 145; 77 L Ed 360 (1932).

Although it is, of course, not binding on the states, the United States Supreme Court has provided guidance in resolving the retrospective/prospective dilemma by identifying certain factors or considerations to be evaluated. In Linkletter v Walker, 381 US 618; 85 S Ct 1731; 14 L Ed 2d 601 (1965), the Court ruled that its lawmaking decision in Mapp v Ohio, 367 US 643; 81 S Ct 1684; 6 L Ed 2d 1081 (1961) (requiring states to exclude evidence seized in violation of the Fourth Amendment) should not be applied retrospectively. In reaching that decision, the Court weighed: (1) the purpose to be served by the new rule, (2) the extent of reliance on the old rule, and (3) the effect of retroactivity on the administration of justice.¹¹

While this Court has not always articulated the criteria used in reaching decisions in this area, Justice Moody has commented that

as a rule [the Michigan Supreme Court] follows the reasoning developed in the United States Supreme Court with emphasis upon the factors present in the three-pronged Linkletter test. [Moody, Retroactive application of law-changing decisions in Michigan, 28 Wayne L R 439, 462 (1982).]

This Court looked to the Linkletter test in deciding People v Hampton, 384 Mich 669; 187 NW2d (1971), and People v Kamin, 405 Mich 482; 275 NW2d 777 (1979).

Applying the Linkletter test in the instant case, we note that the purpose of the rule we announce today is to accord equal protection to wives and husbands. This purpose would not be advanced by requiring plaintiff to repay dependency benefits already received. The factors of reliance on the old rule and the effect on the administration of justice are often considered together. See Hampton, supra at 677; Kamin, supra at 495. Without a doubt, reliance on the conclusive presumption of dependency was very great. In addition to providing an intended benefit for persons such as plaintiff, it is apparent that the conclusive statutory presumption was designed as an administrative convenience. The Legislature sought to dispense altogether with the necessity in particular circumstances of adjudicating a wife’s factual dependency on a case-by-case basis. Although that design has been frustrated by our holding that the conclusive presumption is invalid, the administration of justice would not be served by requiring the repayment of benefits. While the requirement of case-by-case determination necessarily imposes an additional burden on the administration of justice, we note that the burden would be heavier if our ruling were to be applied retroactively.¹²

After weighing all the circumstances, we would hold in the interest of fairness that plaintiff in this case should not be required to repay dependency benefits received prior to the date of this opinion in the event it should be determined that his wife was not in fact a dependent.¹³

v

We reverse and remand this case to the Workers’ Compensation Appeal Board for further proceedings consistent with this opinion.

Riley, C.J., and Levin, J., concurred with Griffin, J.

1 MCL 418.353(l)(a)(i); MSA 17.237(353)(l)(a)(i).

2 MCL 418.101 et seq.; MSA 17.237(101) et seq.

3 Currently MCL 418.331(a); MSA 17.237(331)(a).

4 One section of the act provides in part:

Questions' as to who constitutes dependents and the extent of their dependency shall be determined as of the date of the injury to the employee .... [MCL 418.341; MSA 17.237(341).]

5 MCL 418.353(l)(a)(i); MSA 17.237(353)(l)(a)(i) provides:

(1) For the purposes of sections 351 to 361, dependency shall be determined as follows:

(a) The following shall be conclusively presumed to be dependent for support upon an injured employee:

(i) The wife of an injured employee living with such employee as such wife at the time of the injury.

6 MCL 418.331; MSA 17.237(331) provides in pertinent part:

The following persons shall be conclusively presumed to be wholly dependent for support upon a deceased employee:

(a) A wife upon a husband with whom she lives at the time of his death ....

7 When this conclusive presumption was first enacted, it applied equally to both spouses, irrespective of the fact of dependency. Day, supra at 705. See also Finn v Detroit, M C & M C R Co, 190 Mich 112, 119; 155 NW 721 (1916), and Flynn v Western Board & Paper Co, 318 Mich 28, 32; 27 NW2d 332 (1947). By the time the Legislature amended the workers’ compensation statute to add the conclusive presumption of dependency in the case of an injured employee’s wife, see 1949 PA 238, §9, the Legislature had changed the conclusive presumption of dependency for the spouse of a deceased employee to apply only to widows. See 1948 CL 412.6; Day, supra at 705.

8 At oral argument the sif estimated that plaintiff’s total benefit then amounted to approximately $211 a week, of which approximately $5 a week represented the incremental difference attributable to the dependency of plaintiffs wife. This estimate was not disputed.

9 In Leskinen, the Court was concerned with the construction of MCL 418.371; MSA 17.237(371).

10 The dissent claims that we have ignored the legislative direction that issues of dependency are to be determined "as the fact may be at the time of the injury.” Post, p 619. However, a reading of the full text of § 353 makes clear that a dependency determination under §353(l)(b), which includes such a direction is made only if the conclusive presumption under § 353(l)(a)(i) does not apply. Therefore, the parties never addressed dependency under § 353(l)(b). In fact, plaintiff and defendant contest whether Mrs. Pike would be a factual dependent under § 353(l)(b). The parties did not litigate dependency under § 353(l)(b), nor could they have, because of the application of § 353(l)(a)(i). Accordingly, §351(l)(b) does not apply, and even if it does apply, it leads to the conclusion that dependency benefits may be relitigated.

11 Thereafter, in a civil case, Chevron Oil Co v Huson, 404 US 97, 106-107; 92 S Ct 349; 30 L Ed 2d 296 (1971), the Court applied essentially the same test with the addition of a threshold consideration: Does the decision clearly establish a new principle of law?

12 Of course, the burden necessarily imposed upon the administration of justice by our decision could be lifted if the Legislature were to see fit to extend the conclusive presumption to husbands and wives on an equal basis.

13 See Gusler v Fairview Tubular Products, 412 Mich 270; 315 NW2d 388 (1981).