Wehmeier v. W. E. Wood Co.

139 N.W.2d 733, 377 Mich. 176, 1966 Mich. LEXIS 98

• Court: Michigan Supreme Court
• Decided: February 8, 1966
• Docket: April Calendar No. 22. Docket No. 50,798
• Status: Published

Opinions

Kelly, J.

After 71 weeks of payment of compensation, hearing referee Broderick entered an order (September 6,1957) “that said agreement to redeem the employer’s entire liability for weekly payments herein by the payment of $15,000 be approved.”

More than two years later appellant filed an application for hearing and adjustment of claim for additional weekly payments and medical benefits.

After plaintiff withdrew his claim for weekly payments, hearing referee Broderick held “that the redemption ordered entered herein on September 6, 1957 had no effect on defendants’ liability to provide medical care under section 4 of part 2 of the workmen’s compensation act.”

After the appeal board reversed the hearing referee and granted defendants’ motion to dismiss, this Court granted appellant’s request for leave to appeal. On July 15, 1965, the eighth brief was filed, including three amicus curiae briefs, one of which was by “invitation.”¹

The main question in this appeal is: Did' the appeal hoard lack jurisdiction to make a lump sum settlement of medical benefits?

The redemption provision, being part 2, § 22, of the workmen’s compensation act, provides:

“Whenever any weekly payment has been continued for not less than 6 months, the liability therefor may be redeemed by the payment of a lump sum by agreement of the parties, subject to- the approval of the compensation commission, and said compensation commission may at any time direct in any case, if special circumstances be found which in its judgment require the same, that the deferred payments due under this act be commuted on the present worth thereof at 5 per cent per annum to 1 or more lump sum payments, and that such payments shall be made by the employer or the insurance company carrying such risk, or commissioner of insurance, as the case may be.” CL 1948, § 412.22 (Stat Ann 1960 Eev § 17.172).

Appellant states:

“This question is one of first impression before this Court and regardless of what may have been done in the past, the commission lacks jurisdiction to make a lump sum settlement of medical benefits. * *

“The redemption section of the statute * * * consists of one long sentence and contains a single thought; namely, the lump sum settlement of liability. The first part of the sentence states in effect that weekly payments may be redeemed by agreement. The second, part of the sentence states that ‘said * * * commission * * * may ¿Hrect * * '* if special circumstances be found * * * deferred payments * * # be commuted * * * on present Avorth.’ * * * This is the only section of the Avoikmen’s compensation statute Avhich provides for a lump sum settlement and from a reading of the section, it is obvious it deals with only one. thing—weekly payments and the ‘deferred payments’ referred to are, of course, weekly payments.”

The UAW expresses its approval of appellant’s interpretation as follows:

“The UAW is in accord with plaintiff and appellant that this redemption section of the statute does not and should not deal with medical benefits. * * * The public policy is against lump sum payments and in favor of payments over a period of time. This presents a compelling justification for the legislative requirement that medical benefits be furnished when they are needed and that they cannot be redeemed in one lump sum.”

The Michigan Chapter of the American Trial Lawyers Association calls attention in its brief that “the settlement herein exceeded the defendants’ exposure for weekly payments by almost $2,850,” and that “there is no question that the parties intended to include medical benefits”; that the words “weekly payment” in section 22 “can mean nothing but the benefits based on two-thirds of earnings not to exceed a certain maximum,” and, therefore, “Michigan A.T.L. submits that this Honorable Court should hold that medical benefits are not redeemable,” and states:

“However, because of long acceptance of redemption of medical and because it would be unfair, unjust, and even unethical to now restore retroactively the right to medical in past cases A.T.L. requests this Honorable Court to enforce its decision prospectively. There are a number of precedents for this. See Parker v. Port Huron Hospital, 361 Mich 1; Wilson v. Doehler-Jarvis Division of National Lead Company, 358 Mich 510.”

Appellees, in their brief, call attention to the rules of the workmen’s compensation department distinguishing between redemption and lump sum advanee payments which rules have been referred to legislative committees under the referral statute provision, and emphasize legislative assent to the final settlement of medical payments by saying:

“The law has always favored settlements of disputes. The legislature certainly provided for final settlement of disputes prior to 1943. Such a valuable right to workmen’s compensation litigants would not be taken away by inference. If it was done, it would be done directly. It was not done directly, so the right to finally settle these matters is found where it has always been—in the first provision of section 22 of part 2.”

In the brief amicus curiae submitted by American Mutual Insurance Alliance, et al, there is stated, “the workmen’s compensation department has from 1943 to the present day consistently held that a redemption operates to terminate the employer’s liability for medical benefits”; that during the period of over 20 years “the compensation act has been amended at least 23 times, but not once has any action been taken toward making the liability for medical benefits not redeemable”; that if this Court should reverse the appeal board without clearly providing that our decision would only be enforced prospectively, “the economic impact on Michigan employers and their compensation insurance carriers of the wholesale reopening of such long closed cases would be tremendous”; and, emphasizing that future settlements would be discouraged by a reversal, they state:

“During the past seven years, more than 20,000 comnensation cases have been settled by redemption; without redemptions, hearings would presumably have been required in most of the 20,000. This is roughly three times the number of cases which actually went to hearing during the same period. # * *

“To do it [to interpret the statute as not permitting redemption of liability for medical benefits] either retroactively or prospectively would tend to discourage the making of settlements in the future. As Chairman McAuliffe said in the Bovill case [Bovill v. Shell Oil Co., and made a part of the appeal board’s opinion herein] : ‘No one would ever think of entering into an agreement to redeem a case in part and leave open the possibility of future litigation over medical care.’ ”

The workmen’s compensation appeal board in its opinion on review calls attention that since our decision in Lahti v. Fosterling (1959), 357 Mich 578, “the department has received a number of petitions for further medical care from employees who, like the plaintiff, have heretofore redeemed their cases” ; that “the language of section 22, part 2 authorizing redemptions of liability is the same today as in 1912”; that “if the legislature had ever intended to limit the scope of settlement authorized under section 22 so as to exclude medical benefits we believe that it would have done so when a general revision of the statute was undertaken by PA 1943, No 245 when section 4, part 2 was amended to provide for an aggregate of 12 months’ medical care. Neither has it elected to do so since then even though the same section was further amended by PA 1949, No 238 and PA 1955, No 250”³ and:

“It seems to us that the reasoning upon which the Bombos decision⁴ was grounded is applicable in the instant case. To hold otherwise is to say that the legislature only intended to permit a settlement of part of a compensation case virile leaving the question of medical care unresolved. Such a monstrous result would rob the section of all meaning and usefulness. No one would ever think of entering into an agreement to redeem a case in part and leave open the possibility of future litigation over medical care, particularly so in cases where the prime issue might be as to whether any liability at all existed in the first place.”

The briefs submitted have been most helpful in establishing the size and importance of the question presented, and we express special thanks for the three amicus curiae briefs.

The Lahti decision, supra, holding that the 1955 amendment in re medical and hospital benefits operates retroactively, which, the appeal board states, precipitated this and similar cases, did not in any way refer to or apply to the redemption provision we are now considering.

Appellees disagree with appellant’s contention that both the first and second provisions of part 2, § 22, provide for partial settlement: One on a voluntary basis and the other on an involuntary basis.

The first provision of part 2, § 22, which has come to be known as “redemptions” provides as follows:

“Whenever any weekly payment has been continued for not less than 6 months, the liability therefor may be redeemed by the payment of a lump sum by agreement of the parties, subject to the approval of the compensation commission.”

The second provision, generally known as “lump sum advances,” provides:

“Said compensation commission may at any time direct in any case, if special circumstances be found which in its judgment require the same, that the deferred payments due under this act be commuted on the present worth thereof at 5 per cent per annum to 1 or more lump sum payments.”

In Catina v. Hudson Motor Car Co., 272 Mich 377, 382, we held:

“A direction by the board that deferred payments be commuted to one or more lump sum payments, under the second provision of CL 1915, § 5452 (CL 1929, § 8438 [CL 1948, § 412.22, Stat Ann 1960 Rev § 17.172]), presents no obstacle to a further review of weekly payments upon a showing of change in condition. The order for the lump sum settlement in the instant case was also made under this second provision. Had there been a contract for a lump sum settlement entered into by the parties and approved by the department, in accordance with the first provision of this section, and payment made accordingly, all payments would have been redeemed and defendants discharged from further liability.”

The fact that appellant’s construction is not correct is further proven by the following from Marks v. Otis Elevator Co., 276 Mich 75, 78:

“When a lump sum settlement is made in accordance with the first portion of section 22 the employee has the advantage of a large immediate payment and in this particular case, the furnishing of capital to conduct a business; on the other hand, the employer or his insurer is taking a certain risk. The employee may entirely recover from all disability, or he may die, or he may earn a much larger sum than his average weekly wage at the time of the injury, long before the lump sum would have been exhausted, had it been paid out in weekly payments. We do not find that the payment of such lump sum in final settlement of all liability is against public policy or the spirit of the act. The first portion of section 22 provides for such settlement. It is necessary that such settlement be approved by the department. As it was so approved in the instant case, it constituted a redemption from liability for all further payments.”

The legislature in changing the administrative structure and creating the workmen’s compensation department⁴ and workmen’s compensation appeal board⁵ granted various powers to these agencies and recognized the difference in the purposes between the first and second provisions of part 2, § 22, of the workmen’s compensation act, when it stated:

“Sec. 5. The director shall direct the processing for approval or rejection by the hearing referees of all agreements filed under the provisions of section 22 of part 2 of Act No 10 of the Public Acts of the First Extra Session of 1912, as amended, being section 412.22 of the Compiled Laws of 1948, and also direct the processing for granting or rejecting by the hearing referees of all petitions for the commutation of deferred payments in a lump sum filed pursuant to said section 22.” CLS 1961, § 408.5 (Stat Ann 1960 Eev § 17.6[11]).

Pursuant to the rule-making powers given to the department (CL 1948, § 413.3 [Stat Ann 1960 Eev § 17.176]), Eule 8 was created, stating:

“An application for advance payment of compensation must be submitted in duplicate on form 108. If the insurance company or self-insured employer refuses to approve the application, the matter will be set for hearing to determine whether or not the application should be granted. An advance payment of compensation to a minor dependent will not be approved or ordered until a legal guardian has been appointed.” (1959 AACS, §17 408.38.)

Rule 9, the redemption rule, provides:

“Any agreement to redeem the liability of the insurer or self-insured employer must be submitted on form R.E.D. The agreement must be accompanied by a report from a licensed physician approved by the employee giving in detail the findings of a recent examination.” (1959 AACS, § R 408.39.)

In accord with PA 1943, No 88, as amended, these rules, and previous rules, were submitted to the legislature and forwarded to the appropriate legislative committee, and appellees call to our attention that “there has been no legislative action on these rules indicating that the legislature thought that the workmen’s compensation department or workmen’s compensation appeal board was acting beyond its authority in recognizing the distinct purposes of the two provisions of section 22 of part 2.”

In 1912 when our legislature determined it would provide for regular weekly payments to the injured employee, it also recognized the fact that in certain cases a lump sum settlement would be more helpful to the injured employee.

This purpose we recognized in Harrington v. Department of Labor & Industry, 252 Mich 87, 89, when we said:

“Compensation is not a private matter between employer and employee. The public is interested. The act declares a State policy that the burden of industrial accidental personal injuries shall be borne by the industries, not by the general public. To effectuate this policy, the act provides for frequent regular payments, weekly, not monthly, or quarterly, or annually. It opposes payments in gross or in lump sum, except in certain ‘special circumstances.’ ”

To prevent hasty decision, the legislature provided that no final and binding agreement absolving the employer from all future liability could be entered into until six months had elapsed after the injury, and, to safeguard the employee against an unwise agreement, it provided that any such agreement must receive the approval of the referee and the appeal board.

For over 30 years between 1912 and 1943 there were many redemptions under section 22 and no one has claimed, nor no one can claim, that any of those redemptions were not a final settlement involving all liability, and no one could or did question the authority of the referee and appeal board to approve such settlements.

The portions of section 22 quoted above which control the right and scope of redemption have remained substantially intact, without amendment, from the date of enactment down to the present date. By PA 1935, No 148, the section was amended by adding requirements for the redemption procedure. This amendment was subsequently deleted in toto by PA 1943, No 245. Neither of these amendments in any way affected the above quoted portions of the statute now before this Court on this appeal.

We agree with the workmen’s compensation appeal board’s conclusion that to hold that the legislature only intended to permit a settlement of part of a compensation case while leaving the question of medical care unsolved, “would rob the section of all meaning and usefulness.”

We cannot agree that by the mere enlargement, in 1943, of the employee’s rights to medical care beyond six months, the legislature intended to take from the referee and the appeal board the right to approve a final settlement including medical benefits and that the legislature continued to so intend as amendments re medical and hospital benefits were made subsequent to 1943. If that had been the thought and desire of the legislature, the same would have been clearly and definitely expressed.

The expression from Marks v. Otis Elevator Co., supra, that the payment of a lump sum in final settlement of all liability is not against public policy is evidently shared by the Michigan Chapter of the American Trial Lawyers Association, as evidenced by the following from its amicus curiae brief:

“In the instant case, there is no question that the parties intended to include medical benefits. The settlement herein exceeded the defendants’ exposure for weekly payments by almost $2,850. The clear intention of the parties was to close out all of defendants’ liability.

“As is well recognized, redemptions serve their most important function in allowing compromises of borderline or difficult cases. Every business man, every citizen, on occasion has a dispute or .quarrel with someone else. Compromise is the lubricant that permits people to overcome interhuman frictions. No one knows better than lawyers about the cost of doing battle and the uncertainties incidental thereto. Almost all redemptions are compromises. The defendants’ exposure is estimated in dollars and cents and the chances of the plaintiffs collecting all or part thereof by litigation are carefully weighed. The cost of past and future medical is included by the parties in computing the exposure. The compromise that extricates the plaintiff from a dangerous gamble, from the highly risky philosophy of ‘winner take all,’ is the redemption. It would be unethical, unfair, indecent and wrong to now allow plaintiffs to obtain medical benefits which they previously bargained away at a redemption. Public policy should favor elimination of risk and gamble in litigation. In Marks v. Otis Elevator Co. 276 Mich 75, it was held that in workmen’s compensation cases such compromises are not against public policy.”

The International Union, UAW, does not share this view in re public policy, as shown by the following from its brief:

“The public policy is against lump sum payments and in favor of payments over a period of time. This presents a compelling justification for the legislative requirement that medical benefits be furnished when they are needed and that they cannot be redeemed in one lump sum. * * *

“Aside from the particular amount of speculation involved in medical benefits, there is a general policy in favor of any regular payments as opposed to a lump sum payment because an employee is more likely to dissipate his money when there is a lump sum payment.”

The question as to what is best for the injured employee is a question to be answered by the legislature and not by this Court.

In several decisions we have considered the construction of an act by those designated to enforce it as an important fact to be considered by us in our determination of legislative intent and construction of the statute.⁷

The fact that repeatedly and consistently through the years, referees and appeal boards have construed the provision now under consideration in the ■same way as the present appeal board has so construed it in this appeal, coupled with the additional ■fact that through these years the legislature has not objected to that construction, but, to the contrary, has given assent by its silence, causes us to conclude the appeal board did not err in entering the following order:

“It is ordered, that the decision of the hearing referee in this, cause shall be and the same is hereby reversed and; defendants’ motion to dismiss is granted.”

Affirmed. No costs.

Dethmers, Smith and O’Hara, JJ., concurred with Kelly, J. Black, J., concurred in result.

1 “On order of the Chief Justice (January 29, 19C5), the request of Auto Owners Insurance Company, Citizens Mutual Insurance Company and Michigan Mutual Liability Company to file an amicus curiae brief is granted, and the American Trial Lawyers_ Association, Michigan chapter, through Howard Silver, its president, is invited to file an amicus curiae brief if the association desires; both briefs to be filed within 30 days from the date of this order.” The request of the International Union, UAW, was also granted and its amicus curiae brief was filed March 11, 1965.

3 The section was further amended by PA 1945, No 325 and PA 1963, No 199.

4 Dornbos v. Bloch & Guggenheimer, Inc., 326 Mich 626: “The 'compensation’ provided in the workmen’s compensation act, in its broader sense, is not only the award in lieu of prospective earnings which the employee loses in consequence of his injury but includes what may be termed ‘sick benefits,’ such as medical, surgical and hospital services, for a limited period after the injury and the term is so used in section prescribing time within which a claim for compensation must be filed by an injured employee (PA 1912 [1st Ex Sess], No 12, pt 2, §§4, 15, as amended by PA 1943, No 245).” (Syllabus 2.) . . .

4 CLS 1961, § 408.1 (Stat Aim 1960 Eev § 17.6[7]).

5 CLS 1961, § 408.9 (Stat Ann 1960 Eev § 17.6 [15]).

7 Wyandotte Savings Bank v. State Banking Commissioner, 347 Mich 33; Lorraine Cab v. City of Detroit, 357 Mich 379; and People v. Holbrook, 373 Mich 94, 99.