Eddington Estate v. Eppert Oil Co.
Eddington Estate v. Eppert Oil Co.
Opinion of the Court
In this case we are called upon to determine the extent to which an employer, or workers’ compensation carrier, is entitled to seek reimbursement from a third-party tort recovery obtained as a result of the death of an employee. See MCL 418.827(5); MSA 17.237(827)(5). We would hold that an employer or workers’ compensation carrier is entitled to seek reimbursement from the entire amount of the third-party tort recovery obtained as a result of the death of an employee regardless of the classification of the damages, i.e., economic or noneconomic, or whether the recipient of the proceeds was entitled to receive compensation benefits.
i
Bobby Eddington was employed by Milford Fabricating Company, a subsidiary of intervening plaintiff-appellee The Budd Company, as a machine repairman. On February 16, 1982, he was cleaning a press pit with a chemical solvent manufactured by defendant Eppert Oil Company that contained methylene chloride.
Plaintiff, as personal representative of her deceased husband’s estate, brought a wrongful death action against the manufacturers and sellers of the chemical solvent that caused the death of Bobby Eddington.
The trial court entered an order for the distribution of the wrongful death proceeds on this same date. See MCL 600.2922(6); MSA 27A.2922(6). Pursuant to that order, $132,869.25 was allocated to plaintiff individually for her loss of society and companionship, and $49,482.18 was allocated to decedent’s parents for their loss of society and companionship. Approximately $206,643 was allocated for attorney fees, costs, and reimbursement, and $75,000 was placed in escrow with plaintiff’s counsel pending a determination of the amount of the workers’ compensation lien that would attach to the wrongful death proceeds. The decedent’s minor children each received an award of $333 per month until their nineteenth birthdays. There
On December 19, 1986, The Budd Company was permitted by stipulation to intervene to assert its workers’ compensation lien. The Budd Company filed a motion to determine the amount of the workers’ compensation lien on May 19, 1987, in which it was asserted that its lien should attach to the entire settlement proceeds regardless of the damages that the proceeds were intended to compensate. The trial court held that The Budd Company was not entitled to enforce its lien on the settlement proceeds designated for loss of society and companionship damages, relying upon several Court of Appeals cases.
Plaintiff appealed the trial court’s holding, contending that The Budd Company was not entitled to assert a lien on the portion of the proceeds awarded to the children after they attained the age of eighteen because no compensation benefits were recoverable by the children after age eighteen. The Budd Company appealed the trial court’s decision that loss of society and companionship damages are not subject to the employer’s statutory lien. The Court of Appeals held that The
This Court granted leave to appeal on July 19, 1991. 437 Mich 1046.
n
We must determine the extent to which the reimbursement provision of the Workers’ Disability Compensation Act, MCL 418.827(5); MSA 17.237(827X5), applies to the wrongful death recovery obtained by the plaintiff, as personal representative of Mr. Eddington’s estate, and subsequently distributed to the several individuals involved in this case. To properly evaluate this issue, it is necessary to understand the manner in which the tort recovery was obtained and the interplay between the wrongful death act and the wdca.
First, plaintiff, as personal representative of the
Secondly, an employer or compensation carrier is entitled to seek reimbursement from "[a]ny recovery against the third party for damages resulting from personal injuries or death” of an employee. MCL 418.827(5); MSA 17.237(827X5). A reimbursement provision of this nature has been a part of the wdca from the early stages of its enactment, even when the receipt of benefits had operated as an election of remedies by the injured employee. See 1915 CL 5468. The basic reimbursement provision has carried over into the current statutory framework and is the focus of the matter to be resolved in this case. The question then is whether the language of §827(5) permits reimbursement by the employer from the entire wrongful death recovery, and, if not, what portions of the recovery are to be subject to that reimbursement provision.
hi
Section 827(5) provides:
In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall*209 first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits. [Id. Emphasis added.]
We have previously indicated that the reimbursement section of the wdca
"provides clearly and unambiguously that the employer or carrier is to be reimbursed from 'any recovery’ against a third party for 'any amounts’ paid or payable to the employee under the wdca as of the date of the recovery. The statute speaks for itself; there is no room for judicial interpretation or construction.” [Downie v Kent Products, Inc, 420 Mich 197, 216; 362 NW2d 605 (1984), quoting Land v The George Schmidt Co, 122 Mich App 167, 170; 333 NW2d 30 (1982).]
Today we would reaffirm our finding that the language of § 827(5) is clear and unambiguous, thereby removing any need to look beyond its ordinary meaning in giving it effect. See Livonia v Dep’t of Social Services, 423 Mich 466; 378 NW2d 402 (1985); Kalamazoo Ed Ass’n v Kalamazoo Public Schools, 406 Mich 579; 281 NW2d 454 (1979).
iv
Plaintiff asserts that § 827(5) should be interpreted to provide reimbursement to the employer only to the extent that the third-party tort recovery duplicates damages compensable under the wdca. On the basis of this argument, plaintiff contends that the loss of society and companionship damages and the loss of financial support
A
The Court of Appeals rejected the argument that only those damages which are compensable under the wdca are entitled to be sought as reimbursement under § 827(5). Reliance was placed upon Pelkey v Elsea Realty & Investment Co, 394 Mich 485; 232 NW2d 154 (1975), for the proposition that reimbursement may be sought from a third-party tort recovery despite the damages not being the type of loss compensable under the wdca. In Pelkey, we held that the entire third-party tort recovery was subject to the reimbursement provision, even though pain and suffering damages were part of the recovery and not compensable under the wdca. In fact we made the following blanket statement regarding the application of § 827(5):
The 1952 amendment permits the employee to seek both workmen’s compensation and damages from a third party, but provides that any third-party recovery for damages resulting from personal injuries may be reached by the insurer. [Id. at 493. Emphasis added.]
We further expanded our holding in Pelkey that the entire recovery is subject to reimbursement despite a portion of the recovery being for damages not compensable pursuant to the wdca:
If he [the employee] is awarded damages, the employer or workers’ compensation carrier is enti*211 tied to reimbursement for benefits paid and to a credit against future payments, without regard to whether the recovery is for the same elements of loss compensated by the beneñts paid under the statute. [Great American Ins Co v Queen, 410 Mich 73, 89; 300 NW2d 895 (1980). See also Workman v DAIIE, 404 Mich 477, 511; 274 NW2d 373 (1979). Emphasis added.]
Accordingly, the Court of Appeals correctly determined that the reimbursement provision of the wdca applies to any third-party tort recovery obtained as a result of the compensable death of the employee without regard to whether such damages are compensable under the wdca. That analysis is consistent with our decision in Pelkey and the line of cases following it. Today we would reaffirm that an employer or compensation carrier may seek reimbursement from the entirety of a third-party tort recovery resulting from the death of the employee even when a portion of that recovery includes damages not compensable under the wdca.
b
The panel in this case found that a loss of consortium claim
The clear and unambiguous language of § 827(5) indicates that "any recovery” obtained from the third party shall first be subject to a claim of reimbursement by the employer or carrier before there is a distribution of the remaining balance to those listed, i.e., the employee, the dependents, or personal representative. There is no indication in § 827(5) that it is necessary to evaluate the eligibility of the tort-recovery recipient for compensation benefits before allowing the employer or compensation carrier to be reimbursed out of any recovery obtained. To place such a requirement upon the application of § 827(5) would essentially require this Court to rewrite the language of the provision, which we are not empowered to do.
It is asserted that the phrase "for any amounts paid or payable under this act” should restrict application of § 827(5) to instances in which compensation benefits were received. However, we would find that this phrase does not limit the application of § 827(5) to instances in which compensation benefits were directly provided to a particular individual; rather, it limits the amount of reimbursement that may be recouped by an employer from any third-party tort recovery obtained as a result of the death of the employee. As we stated in Franges v General Motors Corp, 404 Mich 590, 614-615; 274 NW2d 392 (1979):
The employer or its insurance carrier may receive two interests in any given third-party action. First, there is the reimbursement interest: the*213 refunding of monies previously paid or payable as workers’ compensation benefits as of the date of judgment. Additionally, a second interest appears when the dollar amount of recovery exceeds the insurer’s reimbursement. [Emphasis added.]
In essence, the employer or carrier is limited to recoupment of the amount paid as compensation benefits and is merely entitled to any remaining excess as a credit toward future compensation benefits that may be owed. This is a logical limitation to be placed upon the employer or compensation carrier because there should only be reimbursement for the amount expended up to the date of recovery. Such an approach is consistent with the early versions of the reimbursement provision. We have consistently held that an employer or compensation carrier is entitled to receive recoupment only for the amount expended for benefits. See Grand Rapids v Crocker, 219 Mich 178; 189 NW 221 (1922); Albert A Albrecht Co v Whitehead & Kales Iron Works, 200 Mich 109; 166 NW 855 (1918). Thus, the Legislature incorporated that limitation into § 827(5) along with the provision that any excess recovery is to constitute a credit toward future compensation obligations.
Section 827(5) provides that an employer or compensation carrier is entitled to reimbursement from any recovery obtained from a third party and that that ability is only constrained by the limitation that the reimbursement not exceed the total amount of compensation benefits paid or payable by the employer or compensation carrier to the date of recovery for the death of the employee. To interpret the statutory provision differently would essentially render the analysis of Pelkey, and our decisions following that opinion, meaningless. Those cases predicated their rationales on the
c
The Court of Appeals in this case did not address whether § 827(5) should be held applicable to the loss of society and companionship damages obtained by Mr. Eddington’s parents pursuant to the action for wrongful death. Nonetheless, plaintiff has sought to have this issue resolved and asserts that the Court of Appeals appears to subject such recoveries to reimbursement by the employer even though the decedent’s parents are alleged to have received no compensation benefits either directly or indirectly from the employer. Although the Court of Appeals did not address this particular matter, for purposes of judicial economy and in the interest of clarifying this aspect of the wdca, we address the question whether, in fact, the employer or compensation carrier may seek reimbursement from a loss of society and companionship recovery obtained by the parents of a deceased employee under the wrongful death act.
As discussed in subsection b, the Court of Appeals determined that, in determining whether a spouse’s loss of society and companionship recovery, which the panel characterized as a loss of consortium claim, is exempt from §827(5), a distinction was made between compensation benefits directly received from the employer or compensation carrier and those received indirectly. That approach would appear to apply with equal force to the parents’ claim because they were neither direct nor indirect recipients of compensation benefits. However, as we stated in subsection b, that interpretation is contrary to the express language of § 827(5) and is not the proper evaluation to be adopted.
The purpose of allowing third-party tort recoveries and immediate reimbursement of the employer was adequately summarized in Franges:
Accordingly, we believe that one of the major purposes for the Legislature permitting actions by both the injured employee and the insurer is to*216 provide the opportunity for full recovery by each and thereby place the liability for the injury and the resulting cost upon the negligent party. [Id. at 613. Emphasis added.]
Thus, the Legislature quite probably determined that it was necessary to permit the employer or compensation carrier to be allowed recoupment from any recovery in order to ensure complete satisfaction to them. Accordingly, we would find that any third-party tort recovery for damages obtained as a result of the death of the employee is available to the employer or compensation carrier for reimbursement to the extent compensation benefits have been paid or are payable to the date of recovery and are a credit for future compensation obligations.
v
Our reading of the language of § 827(5) leads to the following analysis regarding application of that provision. First, the Legislature has clearly permitted a "plaintiff” to bring a third-party tort action to recover any amount that the employee or the employee’s dependents or personal representative would be entitled to receive.
VI
Applying this analysis to the facts of the instant case, we would find that the employer, The Budd Company, is entitled to seek reimbursement from the entire tort recovery obtained by the personal representative because of the wrongful death of Mr. Eddington, to the extent that benefits had been paid or are payable by the employer to the date of recovery. Any balance of the wrongful death recovery remaining after application of this provision should be allocated to the personal representative for disposition of the proceeds to those entitled pursuant to the wrongful death act in accordance with the distribution ordered by the trial court. In addition, the balance that is allocated to the personal representative after the reimbursement should be treated as a credit toward future compensation obligations owed by The Budd Company under the wdca.
We would remand the case to the trial court for further proceedings consistent with this opinion.
The methylene chloride was produced by defendants Ashland Chemical, Inc., and Ashland Oil, Inc.
MCL 418.335; MSA 17.237(335).
MCL 600.2922; MSA 27A.2922.
See Treadeau v Wausau Area Contractors, Inc, 112 Mich App 130; 316 NW2d 231 (1982); Logan v Edward C Levy Co, 99 Mich App 356; 297 NW2d 664 (1980); Lone v Esco Elevators, Inc, 78 Mich App 97; 259 NW2d 869 (1977).
It must be noted that the Court of Appeals characterized the claims as loss of consortium; however, the claims were brought under the wrongful death act, which describes loss of society and companionship of the deceased as damages to be compensated by that act. Although the damages received are for similar losses, a common-law loss of consortium claim is not necessarily treated the same as loss of society and companionship damages allocated in a wrongful death action. Because we are not presented with a common-law loss of consortium claim in this case, we do not opine regarding the effect of the employer’s, or carrier’s, compensation lien on such a recovery. We do not mean to imply that the analysis by Justice Boyle regarding a loss of consortium cause of action is correct; rather, we do not address the question because loss of society and companionship are damages recoverable pursuant to the wrongful death act, which are predicated upon the death of the employee rather than personal injury, and are obtained through the actions of the decedent’s personal representative.
The loss of society and companionship damages allocated to Mr. Eddington’s parents were not addressed by the Court of Appeals.
As noted earlier, the Court of Appeals incorrectly characterized the loss of society and companionship damages allocated pursuant to the wrongful death act provision, MCL 600.2922(6); MSA 27A.2922(6), as a separate common-law loss of consortium claim. See n 5.
The Legislature did not specify those who may he classified as "plaintiffs” for the purpose of bringing a third-party tort action because it is possible that the employer or compensation carrier or other individuals may be the party bringing the action. See MCL 418.827(1), (3); MSA 17.237(827)(1), (3).
Employee is given an expansive definition for purposes of § 827, including subsection 5; thus, it must be considered in the allocation of the balance of damages of the recovery remaining after reimbursement to the employer or compensation carrier. See MCL 418.131(2); MSA 17.237(131)(2).
Dissenting Opinion
(dissenting). I write separately because I disagree that, in every third-party tort action arising out of the injury or death of an employee, either reimbursement is dependent upon the party’s status as a workers’ compensation beneficiary or the entire tort recovery is subject to the employer’s lien without regard to whom and for what the damages are allocated. Because I believe the reimbursement provision of the Workers’ Disability Compensation Act, MCL 418.827(5); MSA 17.237(827X5), is not "clear and unambiguous” and that the nature of the recovery dictates whether the lien attaches, I would hold that damages allocated for loss of consortium may not be reached by the employer’s lien for repayment of compensation benefits paid or payable under the act.
i
The Workers’ Disability Compensation Act has not altered an employee’s common-law right to proceed in tort against persons other than the employer or co-workers. An employee may pursue
MCL 418.827(5); MSA 17.237(827)(5) provides:
In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payment of compensation benefits. [Emphasis added.]
While I agree that the employer is entitled to reimbursement from the employee’s third-party tort recovery, I cannot concede that the language used in the statute is "clear and unambiguous” in subjecting the entire tort recovery to the employer’s lien. First, the Legislature’s amendment of the wdca, 1972 PA 285, deleted introductory language from § 131, the definition and exclusive remedy section, but chose to leave intact similar introductory language in §827(1).
*221 The right to the recovery of benefits as provided in this act shall be the employee’s exclusive remedy against the employer. As used in this section and section 827 "employee” includes the person injured, his personal representatives and any other person to whom a claim accrues by reason of the injury to or death of the employee, and "employer” includes his insurer, a service agent to a self-insured employer, and the accident fund insofar as they furnish, or fail to furnish, safety inspections or safety advisory services incident to providing workmen’s compensation insurance or incident to a self-insured employer’s liability servicing contract.[2 ]
The amendment deleted, "Where the conditions of liability under this act exist,” preceding "the right” and "compensation” preceding benefits, and inserted "employee’s” in the first sentence. Conversely, the Legislature left intact the introductory language in § 827, which provides:
Where the injury for which compensation is payable under this act was caused under circumstances creating legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof, the acceptance of compensation benefits or the taking of proceedings to enforce compensation pay*222 ments shall not act as an election of remedies but the injured employee or his dependents or personal representative may also proceed to enforce the liability of the third party for damages in accordance with the provisions of this section.
This language supports the argument that it is the injury for which recovery is had that defines the scope of the lien. Further evidence of a possible attempt to limit the scope of the lien can be found in the language of §827(5), which says, "Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier . . . .” The limitation "personal injuries or death only” has been part of the statute since it was passed, 1952 PA 155. The only certainty that can be gleaned from the "plain and unambiguous” language of the statute is that "only” damages recovered for "personal injuries or death” are subject to the employer’s lien and, after reimbursement for benefits already paid, that the balance of the recovery for these specific damages must be paid to the employee or the employee’s dependents or personal representative and, later, serve as a credit for any future compensation benefits the employer may be required to pay. By using the modifying word "only” and leaving intact introductory language that limits liability to conditions under the act, the Legislature arguably intended to identify a class of cases outside the statute’s operation and to limit the type of damages subject to the employer’s lien as something less than the entire tort recovery. Certainly, if the Legislature had intended the scope of the employer’s lien to be unlimited, it could have done so easily and explicitly. For example, the Federal Employees’ Compensation Act (feca) provides that the employee "shall refund to
[T]he employer or carrier shall recover from the judgment or settlement, after costs and attorney’s fees incurred by the employee or dependent in that suit have been deducted, 100 percent of what it has paid and future benefits to be paid, except, if the employee or dependent can demonstrate to the court that he did not recover the full value of damages sustained .... The burden of proof will be upon the employee.
Statutes of other states specify the exact percentage of an employee’s recovery that is exempt from a compensation lien. New York gives the employee the entire excess over the employer’s compensation outlay if the employee is the plaintiff, but only two-thirds if the employer or its carrier is the plaintiff. See, generally, 2A Larson, Workmen’s Compensation Law, § 74.31, p 14-445. By utilizing language such as the "entire recovery” without regard to apportionment or by specifying a percentage of the recovery to which the lien may or may not attach, the Legislature clearly could have indicated the scope of the workers’ compensation lien.
Because the language of the statute is ambiguous and the actual intent of the Legislature unclear, I would hold that loss of consortium, which is a separate cause of action, is not subject to the employer’s lien.
ii
The prevailing rule in the United States is that the employee’s third-party recovery is not beyond
If an injury or death for which compensation is payable under this subchapter is caused under circumstances creating a legal liability in a person other than the United States to pay damages, and a beneficiary entitled to compensation from the United States for that injury or death receives money or other property in satisfaction of that liability as the result of suit or settlement by bim or in his behalf, the beneficiary, after deducting therefrom the costs of suit and a reasonable attorney’s fee, shall refund to the United States the amount of compensation paid by the United States and credit any surplus on future payments of compensation payable to him for the same injury.[4 ]
We followed this general rule of reimbursement in Pelkey v Elsea Realty & Investment Co, 394 Mich 485; 232 NW2d 154 (1975), finding that a tort recovery by an injured employee allocated for pain and suffering was subject to the reimbursement provision of the workers’ compensation act. The employee received benefits in the amount of $3,364.60 for her injuries. In a $10,000 joint settle
Damages for lost income, medical expenses, disfigurement, and pain and suffering have traditionally been thought of as damages resulting from personal injury. In 22 Am Jur 2d, Damages, § 86 at 124 we read:
"In the case of a personal injury by reason of the tortious conduct of the defendant, the damages of the person injured fall into two general categories. Because of the injury, plaintiff has lost income which he otherwise would have received (for example, wages, profits, commissions, etc.), and certain damage has been thrust upon him which he otherwise would not have had (for example, medical expenses, pain and suffering, etc.). It is for these elements that the law grants recovery under the heading of damages in personal injury cases.”[5 ]
*227 From the foregoing we conclude that, when the Legislature stated that damages recovered by an employee from a third-party tortfeasor for "personal injuries or death only” could be reached by an insurer, the Legislature meant to include damages resulting from pain and suffering. [Id. at 491-492.]
Five years later, in Great American Ins Co v Queen, supra, we held that the workers’ compensation carrier was not entitled to reimbursement from no-fault benefits for noneconomic and excess economic loss. Thus, although neither Pelkey nor Queen dealt with the subject of loss of consortium, Queen stands as a recognition by this Court that a lien should not be imposed where there is no duplicate recovery.
We have not been previously presented with the question whether damages allocated for loss of consortium are subject to a workers’ compensation reimbursement lien pursuant to MCL 418.827(5); MSA 17.237(827)(5). We have specifically recognized, however, that a claim for loss of consortium is not an item of damages, but a separate cause of action, derivative only in the sense that it does not arise at all unless another party has sustained some legally cognizable harm. Eide v Kelsey-Hayes Co, 431 Mich 26; 427 NW2d 488 (1988). As Justice Talbot Smith, writing for the majority in Montgomery v Stephan, 359 Mich 33, 43-44; 101 NW2d 227 (1960), persuasively described the nature of the claim:
The fact of the matter is that the effort to break down consortium into its component parts is no more than a theoretician’s boast, the modern counterpart to the medieval resolution of the number of angels able to dance on the head of a pin. It requires a wisdom, and an effrontery, far greater*228 than ours to make differentiations so subtle, if, indeed, they are within the realm of human competence.
It is law well-established, not even worth a counter struggle, that the gist of such actions is not the loss of services but the loss of conjugal rights. . . . The fact of the matter is that there is no predominant element in the concept of consortium, that consortium is not capable of subdivision, and that it is not necessary that there be an allegation of the loss of any particular "element” thereof.[6 ]
Several Court of Appeal panels have addressed the question and expressly held that loss of consortium damages are not subject to the employer’s right to reimbursement. For example, in Manninen v Warner & Swasey Co, 80 Mich App 253; 263 NW2d 341 (1977), the Court held that the interest and proportionate share of a tort recovery by the spouse of an injured employee is not subject to the reimbursement lien of the employer. Similarly, in
In Logan v Edward C Levy Co, 99 Mich App 356; 297 NW2d 664 (1980), the Court held that where an employee was killed in the course of employment, reimbursement under § 827 could be made only from that part of the judgment reflecting economic loss, and not from that portion that was for noneconomic changes such as the spouse’s recovery for ."loss of love, companionship and affection.” Id. at 361 (opinion of Riley, J.). Finally, in Treadeau v Wausau Area Contractors, Inc, 112 Mich App 130; 316 NW2d 231 (1982), relying on Lone and Manninen, the Court held that portion of recovery allocated to the injured worker’s wife for loss of consortium was exempt from the employer’s compensation reimbursement lien.
In Kottka v PPG Industries, Inc, 130 Wis 2d 499; 388 NW2d 160 (1986), an employee injury and
The claim for a loss of consortium is derivative, in the sense that it does not arise unless the other spouse has sustained a personal injury. . . . However, the claim is not for the other spouse’s personal injury but for the separate and independent loss which the noninjured spouse sustains .... [The wife’s] claim for loss of consortium is, therefore, a claim for personal injury to her, not a claim "for the injury or death of an employee” within the meaning of [the act], [Id. at 521-522.][9 ]
hi
Finally, I am sensitive to the defendant’s argument that subjecting less than the total tort recovery to the employer’s compensation lien predisposes the employer to possible collusion between the employee and the third-party tortfeasor to evade the lien by apportioning the recovery in an arbitrary manner. However, although the issue
For these reasons, I would hold that the nature of the recovery in a third-party tort action dictates whether the employer’s lien will attach for reimbursement of compensation benefits paid or payable under the act. Irrespective of whether the claiming party is, or is not, a workers’ compensation beneficiary, recovery for loss of consortium is not subject to an employer’s reimbursement lien.
The interpretation of the reimbursement statute in the lead opinion, when played out to its logical conclusion, actually serves as a penalty for a workers’ compensation beneficiary who recovers in a third-party tort action.
(,separate opinion). The question presented is whether $75,000 allocated to Charlotte
When the language now set forth in § 827(5) was first enacted by 1952 PA 155, damages in a wrongful death action did not include recovery for loss of society and companionship. Until the enactment of 1971 PA 65, providing that the damages in a wrongful death action "may also include recovery for the loss of the society and companionship of the deceased,” recovery was limited to "such damages, as, the court or jury, shall deem fair and just, with reference to the pecuniary injury resulting from such death,” 1948 CL 691.582, which did not include losses that result from the deprivation of society and companionship. Breckon v Franklin Fuel Co, 383 Mich 251; 174 NW2d 836 (1970).
There is no reason to suppose that the Legislature, in enacting 1952 PA 155, contemplated that
I therefore conclude that the Legislature, when it enacted 1952 PA 155 and 1969 PA 317, in speaking of "[a]ny recovery against the third party for damages resulting from personal injuries or death,” meant, in the context of an action for wrongful death, damages awarded for "pecuniary injury” — the only damages that could then be awarded — and not damages awarded for loss of society and companionship, which then could not be awarded, and, therefore, the employer’s lien does not cover so much of a wrongful death recovery as is in respect to the loss of the society and companionship of the deceased.
Although the $75,000 being held in escrow is specifically designated for loss of society and companionship, it is clear that this designation was designed to avoid the employer’s lien.
The value of the recovery exceeded $600,000. The employer paid approximately $75,000 to Charlotte Eddington for her support and the support of her children between the date of death, February 16, 1982, and the approval of the settlement in the fall of 1988. Clearly, a substantial portion of the settlement, possibly as much as $75,000, should have been allocated to the pecuni
I would remand to the Court of Appeals to consider the employer’s alternative request that this action be remanded to the trial court for an evidentiary hearing on the apportionment of damages in regard to the total settlement.
1972 PA 285 was passed as a direct response to Ray v Transamer
Section 131 was again amended by 1987 PA 28, which revised the section providing that an employer’s intentional tort was exempt from tort immunity granted under the act.
5 USC 8101 et seq.
Section 8132 further provides:
No court, insurer, attorney, or other person shall pay or distribute to the beneficiary or his designee the proceeds of such suit or settlement without first satisfying or assuring satisfaction of the interest of the United States- The amount refunded to the United States shall be credited to the Employees’ Compensation Fund. If compensation has not been paid to the beneficiary he shall credit the money or property on compensation payable to him by the United States for the same injury. However, the beneficiary is entitled to retain, as a minimum, at least one-fifth of the net amount of the money or other property remaining after the expenses of a suit or settlement have been deducted; and in addition to this minimum and*225 at the time of distribution, an amount equivalent to a reasonable attorney’s fee proportionate to the refund to the United States.
The current edition is similar and reads:
The most common factors to be considered in determining the amount of damages for a personal injury are loss of earnings or earning capacity, medical expenses, pain and suffering, and any permanent effects of the injuries sustained. Loss of enjoyment of life and the shortening of the plaintiff’s life expectancy are also important factors in any case where they aPPly- [22 Am Jur 2d, Damages, § 139, p 133.]
The wrongful death act, MCL 600.2922(6); MSA 27A.2922(6), was amended by 1971 PA 65 to expressly provide for loss of consortium damages in direct response to this Court’s decision to the contrary in Breckon v Franklin Fuel Co, 383 Mich 251; 174 NW2d 836 (1970). However, as we noted in Smith v Detroit, 388 Mich 637; 202 NW2d 300 (1972), loss of consortium damages as an element of recovery in a wrongful death action can be traced back to this Court’s decision in Wycko v Gnodtke, 361 Mich 331; 105 NW2d 118 (1960). In Wycko, Justice Talbot Smith, writing for the majority, recognized that damages for loss of consortium could be obtained under the wrongful death act. He found:
[A]n individual member of a family has a value to others as part of a functioning social and economic unit. This value is the value of mutual society and protection, in a word, companionship. The human companionship thus alforded has a definite, substantial, and ascertainable pecuniary value and its loss forms a part of the "value” of the life we seek to ascertain. We are, it will be noted, restricting the losses to pecuniary losses, the actual money value of the life of the child, not the sorrow and anguish caused by its death. [Id. at 339-340.]
See also Fritsch v Magnaflux Corp, 150 Mich App 573; 389 NW2d 94 (1986), and Sylvester, Workers’ disability compensation, 1978 annual survey of Michigan law, 25 Wayne L R 770, 791 (1979).
See Brocker Mfg & Supply Co v Mashburn, 17 Md App 327; 301 A2d 501 (1973) (the employer was not entitled to any portion of the wife’s recovery for loss of consortium when her employee-husband was injured in the course of employment); Rascop v Nationwide Carriers, 281 NW2d 170, 173 (Minn, 1979) (loss of consortium damages recovered by an injured employee’s spouse are exempt from workers’ compensation liens because such damages are not cognizable under the state’s compensation act).
See also Dearing v Perry, 499 NE2d 268 (Ind App, 1986) (holding that although loss of consortium is a derivative action, it is separate
The Court of Appeals has wavered on its previous decision only recently. In Hearns v Ujkaj, 180 Mich App 363; 446 NW2d 657 (1989), the Court held that only when the employee was injured rather than killed were the spouse’s loss of consortium damages excluded from the employer’s reimbursement lien. It reasoned that, unlike an injury situation, a spouse who received death benefits was now a direct recipient of workers’ compensation benefits and no longer a stranger to the claim and, therefore, subject to the lien. Id. at 371.
The formulation clearly advantages the employer and penalizes the workers’ compensation beneficiary for having recovered damages in a tort action. Because, after reimbursement, the entire balance also must serve as a credit against future compensation benefits, the employer may receive a windfall credit. For example, if a balance of $200,000 is distributed as $150,000 to the decedent’s dependents and $50,000 to the decedent’s parents, the employer still receives credit for the entire $200,000. Thereafter, if the dependents are eligible for $200,000 in future benefits, the employer pays nothing because the employer has received a credit for the full $200,000. The decedent’s dependents would be in a better position, then, if they claim only workers’ compensation and do not bring a third-party tort action.
The Legislature responded to Breckon by enacting 1971 PA 65 to permit recovery for loss of society and companionship. In Smith v Detroit, 388 Mich 637; 202 NW2d 300 (1972), a new voting majority, Justices Williams and Swainson, joined Justices T. M. Kavanagh and Adams in adopting Justice Adams’ dissenting opinion in Breckon, and stated:
[W]e hold that loss of companionship is an element of pecuniary damages under the wrongful death act and that Breckon is overruled. [Id. at 651.]
The Court said "our decision and its application is limited to cases commenced before March 30, 1972,” id. at 649, the effective date of 1971 PA 65. Thus ended the long and bitter dispute between Justices Black and Adams, after the Legislature had amended the wrongful death act. I would read Smith as simply making 1971 PA 65 retroactive, which the Court could readily have done as a matter of construction, without gratuitously overruling Breckon under the circumstance that 1971 PA 65 did not specify an effective date.
Wycko v Gnodtke, 361 Mich 331; 105 NW2d 118 (1960), primarily relied on by Justice Adams, was decided in 1960 after the enactment of 1952 PA 155.
1972 PA 285 added subsection 8 to § 827; there was no change in the other provisions of § 827.
The allocation was pursuant to a settlement in which the employer did not participate.
Concurring in Part
(concurring in part and dissenting in part). I concur in the result reached by the lead opinion that the third-party tort recoveries obtained by the spouse and children of a deceased employee in a wrongful death action are subject to the employer’s reimbursement lien. However, I disagree that the reimbursement provision of § 827(5) also applies to the loss of society and companionship damages allocated to the non-dependent parents of a deceased employee. Because I believe that application of the reimbursement provision of § 827(5) to a third-party tort recovery is dependent upon whether the recipient of the recovery is eligible for compensation benefits, I respectfully dissent from part iv(c) of the lead opinion that subjects those portions of third-party tort recoveries awarded to persons ineligible to receive compensation benefits to the employer’s reimbursement lien.
The lead opinion asserts that the damages awarded to the decedent’s parents for loss of society and companionship are subject to the employer’s reimbursement lien because "[tjhere is no indication in § 827(5) that it is necessary to evaluate the eligibility of the tort-recovery recipient for compensation benefits before allowing the employer or compensation carrier to be reimbursed out of any recovery obtained.” Ante, p 212. I disagree.
Pursuant to § 827(5), the employer is entitled to reimbursement from any tort recovery, and any remaining excess is considered a credit toward future compensation benefits that may be owed. Thus, if The Budd Company is liable for continuing payments, no payments will have to be made
For these reasons, I would hold that status of the claiming party dictates whether the employer’s lien attaches for reimbursement of compensation benefits paid or payable under the act.
See the example set forth in Justice Boyle’s dissenting opinion, p 232, n 11.
Reference
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- Eddington Estate v. Eppert Oil Company
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