H&L Quarterly – February 2024

01 Feb H&L Quarterly – February 2024

Governor Whitmer Gets Involved

Just two weeks ago, Governor Gretchen Whitmer issued Executive Order 2024-2, which addressed issues related to several different executive agencies. The order stated that “it is also important that. . . the Workers’ Disability Compensation Appeals Commission have the tools to exercise their functions as efficiently as possible. This reorganization. . . streamlines the process for ensuring that the Workers’ Disability Compensation Appeals Commission can proceed expeditiously to hear appeals even when conflicts arise.” Though her precise concern was not explicitly stated, it appears that Governor Whitmer is concerned that the WDCAC’s speed has been slowed due the three WDCAC members often having to recuse or disqualify themselves from hearing cases based on previous involvements with the litigating parties, or due to other conflicts of interest. 

In order to accomplish it’s stated goal, EO 2024-2 rescinded part of an executive order issued in 2019, and replaced it with new provisions. Important among those new provisions, EO 20240-2 indicates that the WDCAC can issue opinions based on the vote of only two of it’s three members. Further, if the WDCAC cannot secure the vote of two of it’s members, a worker’s compensation magistrate, who is not subject to disqualification or recusal, will be chosen at random to hear the case on appeal and issue a decision. 

You can read Governor Whitmer’s Executive Order 2024-2 in full at: 
https://www.michigan.gov/whitmer/news/state-orders-and-directives/2024/01/17/executive-order-2024-2-executive-reorganization

Case Law Updates

Receiving Worker’s Compensation Benefits Does Not Necessarily Make Someone An Employee

In the recent case of Wittenberg v. Bulldog Onsite Solutions, Plaintiff sought worker’s compensation benefits after an injury on June 6, 2017. Plaintiff’s injury occurred while he was on the job site of Defendant. During trial, it was discovered that Defendant believed they were Plaintiff’s employer, because they directed his work duties, paid his wages, provided his tools, and could discipline him. However, Plaintiff believed that he was an independent contractor, given that while with Defendant, he also worked on other job sites for other employers and was paid using a Form 1099 instead of being issued a Form W-2. 

After his injury, Plaintiff received worker’s compensation benefits from Defendant’s insurer of around $22,000 during an approximate three-month period. However, Plaintiff later sued Defendant for negligence and gross negligence. Defendant sought to dismiss Plaintiff’s claims by arguing that Plaintiff qualified as an employee under the economic-reality test and his receipt of worker’s compensation benefits brought him under the purview of the exclusive remedy provision of the Workers’ Disability Compensation Act. Plaintiff responded by arguing that under the economic-reality test he should be considered an independent contractor, which is what he held himself out as during his entire time working with Defendant. 

The circuit court that presided over this matter granted Defendant’s motion to dismiss Plaintiff’s claims, based mainly on the fact that Plaintiff accepted the worker’s compensation benefits paid by Defendant’s insurer, which the court believed would bar Plaintiff’s claims outside of the worker’s compensation court system. 

The Michigan Court of Appeals did not make a conclusive finding about whether Plaintiff was an employee or independent contractor under the WDCA. However, the Court of Appeals did state that “Payment or receipt of workers compensation benefits does not, in and of itself, bring a worker within the exclusive remedy provision of the WDCA.” (Emphasis added). This holding is based on the language of Section 831 of the WDCA, which states that “Neither the payment of compensation or the accepting of the same by the employee or his dependents shall be considered as a determination of the rights of the parties under this act.”  

You can read the Michigan Court of Appeals’ opinion in full at: https://www.courts.michigan.gov/49f29b/siteassets/case-documents/uploads/opinions/final/coa/20230216_c359424_29_359424.opn.pdf 


Fraud and the Overpayment of BenefitsSome cases bounce around for years between the workers’ compensation magistrate, the WDCAC, and the Michigan civil court system. Carson v. Bandit Industries, 2023 ACO #3 is just such a case. Litigation in this matter centered around an overpayment of benefits by Defendant’s insurer to Plaintiff. Defendant alleged that Plaintiff had employment with his brother but failed to report his earnings. If Plaintiff had disclosed these earnings to Defendant, his worker’s compensation benefit payments would have been reduced accordingly.

The magistrate who presided over trial in this matter held that the parties had conceded that “in the absence of fraud, Defendant is not entitled to recoup benefits previously paid.” Conversely, the WDCAC held that plaintiff engaged in a “willful failure” to report his employment with his brother for over four years, and thus Defendant was entitled to a determination as to what recoupment they may be owed. Further, the WDCAC disagreed with the magistrate about Defendant’s need to prove fraud in order to recoup overpaid benefits. The Michigan Court of Appeals agreed with the WDCAC, and allowed the WDCAC’s holding in this regard to stand. The Court of Appeals also applied the statute colloquially referred to as the “One Year Back Rule” codified in Section 833 of the WDCA, which limited Defendant’s recover of any overpaid benefits, even though Plaintiff did not raise this issue during the earlier proceedings. 

You can read the WDCAC’s opinion in full at: 
https://adms.apps.lara.state.mi.us/AppellateCommission/ViewWCACDecisionDocument/6643