Hudson v. Jackson Plating Co.
Hudson v. Jackson Plating Co.
Opinion of the Court
This appeal represents the second time this matter has been brought to this Court. Currently, defendant Jackson Plating Company and its insurer,, defendant Transportation Insurance Company, appeal by leave granted from an order of the Workers’ Compensation Appeal Board finding them liable to plaintiff Sam Hudson for benefits ordered by the referee with no right of apportionment from defendant S & S Polishing Company and its insurance carrier, Bituminous Casualty Insurance Company.
In 1972, plaintiff, who had contracted emphysema due to his employment in the plating and buffing industry with ten different firms over a twenty-year period, redeemed his workers’ compensation claims from his various employers for $15,000. Plaintiff subsequently returned to work in 1975 for defendant Jackson, with which he had never been previously employed. Plaintiff performed the same work for Jackson as he had performed for his previous employers (polishing and buffing metals) and was forced to quit after six weeks after redeveloping emphysema. Plaintiff filed a claim for workers’ compensation benefits against Jackson in July of 1975. The claim was initially brought to this Court on appeal from the wcab’s finding of liability against Jackson. This
Following an evidentiary hearing on the remanded issue before the referee, the wcab reversed the decision of the referee in favor of Jackson and held that Jackson was not entitled to apportionment benefits from S & S.
The sole issue now on appeal is whether the prior redemption agreement shielded defendant S & S from apportionment liability to Jackson. It is undisputed that, in the absence of the redemption agreement, Jackson would have had a right of apportionment against S & S pursuant to those dictates of § 435 which existed prior to the statute’s 1981 amendment.
Johnson v Valley Grey Iron Foundry, 58 Mich
Here, plaintiff entered into a redemption agreement with his then last employer, S & S Industries, Inc., and certain prior employers who would be subject to apportionment liability to S & S Industries for plaintiff’s occupational disease claim. In contrast to the agreement in Johnson, the instant agreement shielded the defendant employers from all potential liability under the Workers’ Disability Compensation Act. The agreement specifically provided:
Defendants agree to pay $15,000.00 in redemp*167 tion of all liability under the Michigan Workmen’s Compensation Act, including medical, surgical and hospital expenses, past, present or future.
This language evidences an intent by the parties to effectively redeem both the employers’ direct liability to plaintiff and any derivative liability which could arise through apportionment to plaintiff’s then last employer, S & S Industries, which was a party to the agreement.
However, subsequent to the execution of the agreement, plaintiff returned to the industry in 1975 and became employed for the first time by defendant Jackson before his emphysema redeveloped, thereby entitling plaintiff to collect additional benefits against Jackson. Unlike the facts in Johnson, Jackson faces a challenge against its claim for apportionment because of a redemption agreement which was intended to insulate the prior employers from all future liability arising from plaintiff’s emphysema.
Nonetheless, relying on Johnson, we could conclude that the redemption agreement should have no effect on Jackson’s claim for apportionment because Jackson was not yet involved and was not a party to that agreement. Such á result, however, would lead to the inevitable result that plaintiff would obtain a windfall. Although plaintiff is entitled to receive the entire amount of his award from Jackson, he would nonetheless indirectly receive a substantial share of the award from his prior employers, via their pro rata payments of contribution to Jackson. Such a result would effectively nullify the provision of the redemption agreement absolving the prior employers from all future derivative liability under the act to the benefit of plaintiff.
Nor do we suggest that Jackson should be liable for the entire award. Jackson should not be put in
We conclude that the only equitable solution is to reduce the amount of the award (owed by Jackson) by the amount Jackson would have been entitled to recover by way of apportionment but for the redemption agreement. The wcab wrongfully concluded that it had no authority to grant such a remedy. Jackson is entitled to a reduction of this type where neither the apportionment statute nor the redemption provisions of the act
Plaintiff has already received $15,000 from his prior employers pursuant to the redemption agreement, which intended to redeem the employers’ total liability for the occupational disease from which plaintiff again suffers and from which he now seeks recovery against Jackson. Although plaintiff is entitled to recover additional benefits against Jackson, Jackson’s liability should be limited to its pro rata share in order to effectuate both the policy against double recovery, Thick, supra, and the purpose behind the former apportionment provisions of § 435, Derwinski, supra.
Pursuant to the terms of the stipulation, the calculation of apportionment would have been as follows:
Total Period of Employment — 34 months
Leslie Polishing & Buffing — 24/34 = 70.59 percent
S&S Polishing Company — 8/34 = 23.53 percent
Jackson Plating Company — 2/34 = 5.88 percent
We consequently remand this matter to the Workers’ Compensation Appeal Board for reentry of a judgment against Jackson in the amount of 5.88 percent of the amount of the full benefits which plaintiff had previously been awarded.
Reversed and remanded.
After a delay in the decision of the referee, this Court entered an order directing the wcab to decide the matter within twenty-eight days. The order also terminated the continuing jurisdiction of this Court, thereby ultimately requiring Jackson to apply for leave to appeal the wcab’s decision.
MCL 418.435; MSA 17.237(435) was amended as of January 1, 1981, to eliminate references to apportionment of liability among the claimant’s last and prior employers. This Court, however, in Forsythe v Valley Consolidated Industries, 139 Mich App 211; 361 NW2d 768 (1984), lv den 422 Mich 944 (1985), held that the Legislature intended the amendment to have only prospective application. It is undisputed that the preamendment apportionment provisions of § 435 are applicable to the instant case.
MCL 418.835; MSA 17.237(835).
Dissenting Opinion
(dissenting). I dissent for the reason that I do not believe that the solution arrived at by my colleagues satisfies the objective of the workers’ compensation scheme in Michigan, which is to compensate workers who have been injured during the course of their employment. I agree that Thick v Lapeer Metal Products, 419 Mich 342; 353 NW2d 464 (1984), requires that courts attempt
We must first recognize that the apportionment scheme that is involved in this case was designed to take into account the fact that the industry in question, rather than employment with a specific employer, causes the disease. Employees may shift from one employer to another in the same industry and it is the accumulation of exposure to the dangers of the industry that results in the employee’s disability. For that reason two methods of fairly spreading the risk among employers have been legislatively determined.
Under the former law cited in the majority opinion the last employer of an employee who became disabled in the industry could obtain contribution from former employers, and it is in this manner that the risk of harm was spread with regard to an injury that was created by the industry rather than by a specific employer. Under the former statutory scheme, no single employer would bear the risk of simply being the last employer by happenstance.
Under the new law it is the risk of being the last employer that is spread equally since, when all employers and employees are considered together, every employer has an equal risk of being the last employer. The fact that one employer
It is not for us to say which method of spreading the risk is best. That is not our concern since the Legislature decided to spread the risk in a new way when it adopted the new statute, thereby rejecting the former method of spreading the risk as a matter of legislative policy. That is a legislative function and the courts ought not to interfere.
Under either system of spreading the risk among employers, the employee always receives one hundred percent of the benefits and the only issue as between employers relates to how the risk is spread. It is my perception that the method of spreading the risk has nothing to do with whether the employee should or should not receive one hundred percent of the benefits.
Under the majority opinion the Court is saying that the employee ought not to receive one hundred percent of the benefits and in fact the risk is spread by placing approximately ninety-five percent of the burden on the employee. Under any interpretation of the statute, I believe that the employee always has the right to attempt to return to work in the same industry if his or her health permits and, if the illness strikes the employee again, the employee is again entitled to obtain full benefits.
The problem in this case arises for two reasons. First, the employee entered into a redemption agreement with the former employers for $15,000 which purported to cover all future claims. Secondly, the employee then successfully attempted to
As I view the statute I do not believe that the Legislature intended that when the employee and the former employers entered into a redemption agreement they could effectively and permanently bar the employee from attempting to return to work in an industry where he had spent a large proportion of his working life. When the employers attempted to redeem their liability as to all future liability it could only mean that they were redeeming any future liability that they had to the employee. They as well as the employee had to have been aware that the employee could seek employment again in the industry and that a future employer would have a right to apportionment.
If the analysis were to stop at this point the employee would be able to receive one hundred percent of the benefits and the last employer would be able to receive full rights of contribution from all of the former employers and that, to me, under the circumstances would also be inequitable. The employee worked for the last employer for only two months and as a result would have the
In attempting to fashion an equitable remedy I cannot ignore the fact that plaintiff entered into a redemption agreement that purported to settle all future claims. By returning to the same industry and obtaining the right to obtain full workers’ compensation benefits after working only two months, it is my view that it would be inequitable to permit the plaintiff to retain the benefit of the redemption agreement while at the same time receiving one hundred percent of all future benefits for himself or for his dependents subsequent to his death. I therefore conclude that the total amount of benefits that should be paid to the plaintiff by the last employer must be reduced by the $15,000 which the plaintiff has already received under the redemption agreement. Since the last employer will have to pay $15,000 less there will be a reduction in the amount of apportionment by that same amount and the former employers will have less to pay in apportionment. In this way the former employers will be partially compensated for having paid $15,000 under the redemption agreement. To the extent that they remain disappointed by having to pay apportionment at all, their disappointment is vitiated by the fact that when they entered into the redemption agreement they must have known that the employee had the right to go back into the industry
By adopting the formula that I propose in this dissent I believe that the following objectives are achieved:
a. The employee and his dependents receive one hundred percent of their benefits minus the $15,-000 they have already received;
b. The last employer receives apportionment as required by law;
c. The former employers will have to pay apportionment but such apportionment will be reduced by the amount they previously paid to the employee.
It appears to me that there are only two solutions permitted by law: either that provided by the former statute, which allows apportionment or that provided by the new statute, which does not. I regret that the formula chosen by the majority opinion adopts a method of sharing the burden which does not find support in any statute. Nothing in the law forces the employee to forfeit a substantial portion of his benefits as a result of making a successful attempt to reenter the work force.
I recognize that my formula also contains a measure of inaccuracy. By urging a deduction of the full $15,000 I have not taken into account the fact that part of the redemption included compensation for periods of unemployment up to the time plaintiff became reemployed. However, to attempt to determine which portion of the $15,000 was designed to apply to future benefits would put any formula into the upper reaches of pure speculation. Perhaps in another case such an exercise would be possible; here it is not.
I would remand to the wcab for recomputation of benefits in a manner consistent with this opinion.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.