Prepared by Donald A. Van Suilichem
Van Suilichem & Associates, P.C.
40900 Woodward Ave, Suite 105
Bloomfield Hills, Michigan 48304
[June 15, 2016]
The Benefits to Employers of Workers’ Compensation Law in Michigan
Many employers look at Michigan Workers’ Compensation law as a substantial cost burden which is quite often abused by frivolous claims being litigated and most of the time settled with a Redemption Agreement. While it is true that workers’ compensation is very liberally interpreted in favor of employees, the law does provide substantial protection to employers for catastrophic injuries.
- A Brief History of Workers’ Compensation Laws:
Just a little bit of history of workers’ compensation. Before the workers’ compensation statutes were enacted, if an employee were injured on the job or contracted an industrial illness, the employee would have to file a negligence suit against the employer. Before the days of contingency fee agreements, the cost of obtaining an attorney to handle a case was beyond the reach of most injured employees. Even if a lawsuit was filed, employers had the economic reserves to afford litigation and most employees either abandoned their claims or lost at trial. As part of a social movement to protect workers’, every state in the nation adopted workers’ compensation laws and set up administrative agencies to handle employee injury claims. In most cases, who was at fault became irrelevant in workers’ compensation cases. Rather, the focus was on whether the employee suffered an injury, the extent and duration of the injury and the amount of statutory benefits to be paid. The workers’ compensation laws are somewhat of a tradeoff to employees and employers. For employees they may receive lesser benefits than if they filed a negligence suit, but have a greater chance of recovery most of the time without any litigation at all. For employers, workers’ compensation capped an employers’ liability especially from large jury verdicts. In addition, all workers’ compensation statutes have an “exclusive remedy” provision which precludes an employee from bringing a separate claim for damages outside of workers’ compensation. Well that was the intent of the statute, but negligence attorneys sought to allow a loophole to recover more money. This loophole is the intentional act claim, that the employer knew or should have known of the potential for injury and, therefore, can be held responsible outside of workers’ compensation.
This “intentional act” had been pushed very hard by the plaintiffs’ bar and with some success. Fortunately, the Michigan Courts continue to severely limit these negligence “high potential jury verdict cases”.
- The Limited “Certainty to Occur” Exception to Workers’ Compensation.
In order to get around the exclusive remedy provision of the Workers’ Compensation Statute, an employee must meet a very strict standard of demonstrating that the employer actually knew of an unsafe condition and actually intended to injure the employee. This exception had been continually tested by the plaintiffs’ bar and our courts have done a great job in keeping the exception very narrow. This refusal to expand the intentional tort is recognized just again last month by our Michigan Court of Appeals in the case of Luce v Kent Foundry Company, No. 327978 (Mich App 5-17-16) where the Court of Appeals refused to allow the injured employee to avoid the exclusive remedy provision of the Workers’ Compensation statute.
First, the facts in Luce. Andrew Luce worked in a foundry and was assigned to work on a large machine called a “wheelabrator” which cleans and surface-treats industrial parts. The evidence showed that the doorstops on the door would break off on a monthly basis. Until Andrew Luce was injured, despite the breakage of the door stops, no one had previously been injured even though the machine was allowed to continue to operate without the door stops. In August of 2012, the maintenance supervisor was advised that the door stops had broken off again but the machine was allowed to continue to operate for approximately two weeks with no repair. Luce was assigned to the machine and his hand was crushed between the door and the I-beam, resulting in extensive damage and ultimately a partial amputation of a finger. Luce filed suit claiming that his employer was negligent in failing to repair the machine. His employer moved to dismiss the case arguing the exclusive remedy provision of the workers’ compensation statute. The Montcalm Circuit Court agreed and dismissed the case. This dismissal was then affirmed by the Court of Appeals on May 17, 2016.
In upholding the dismissal, the Court of Appeals noted that prior to Luce’s injury, no other operator was injured when the door stops broke off. While the employer was aware of the need to repair the machine and had failed to take any efforts over a two-week period to repair the machine, the key issue was whether the employer knew that operating the machine without repair was “certain” to cause injury. The Court noted that the “existence of a dangerous condition does not mean that an injury is certain to occur. An employer’s awareness of a dangerous condition, or knowledge that an accident is likely, does not constitute actual
knowledge that an injury is certain to occur.” As stated by the Court of Appeals proof of intent to injure is a very high standard:
“This element establishes an “extremely high standard” of proof that cannot be met by reliance on the laws of probability, the mere prior occurrence of a similar event, or conclusory statements of experts.” Palazzola v Karmazin Products Corp, 223 Mich App 141, 149-150; 565 NW2d 868 (1997). We hold that there is no question of fact regarding whether defendant knew that plaintiff’s injury was certain to occur. The undisputed evidence is that the doorstops routinely broke and became ineffectual, and during these times when there were no functioning doorstops, the wheelabrator nonetheless operated, without any injury to any employee. Clearly, there was nothing to inform defendant that an injury was “certain” to occur. As this Court has explained, “The existence of a dangerous condition does not mean that an injury is certain to occur. An employer’s awareness of a dangerous condition, or knowledge that an accident is likely, does not constitute actual knowledge that an injury is certain to occur.” Bagby, 308 Mich App at 492-493 (citation omitted); see also Herman v City of Detroit, 261 Mich App 141, 148; 680 NW2d 71 (2004) (“An injury is certain to occur if there is no doubt that it will occur . . . .”); Palazzola, 223 Mich App at 150. Here, the evidence merely demonstrates that defendant was aware of a dangerous condition—it was not aware that injury was certain to occur.
The decision by the Court of Appeals in Luce keeps intact the broad exclusive remedy provisions of the workers’ compensations statute and keeps a very tight lid on separate negligence lawsuits.
III. So How Does the Luce Decision Impact Employers?
- The Luce decision provides a cap on employer liability when injuries occur at work. Almost all injury claims will be covered by workers’ compensation with a substantially lower liability.
- Despite the umbrella of protection to employers, employers need to move aggressively to repair equipment especially when there are safety concerns. Your foremost goal should be to avoid injuries and protect your workers.
- Even though the workers’ compensation act provided a cap on liability, OSHA and MIOSHA will investigate workplace injuries and can impose substantial fines, penalties and even criminal liability. So a machine should be repaired as soon as possible or shut down until the repairs can be completed.
Don’t rely on the Luce decision to lower the importance of repairs to avoid safety concerns. Remember, Kent Foundry was sued and only because of the particular facts of the case, was able to get the case dismissed. The circuit court could have allowed the case to go to the jury and then all bets were off. You do not want to be in court on an intentional injury lawsuit.
- Remember, supervisors and managers can also be individually sued. Even though the exclusive remedy provisions of the statue provide protection to co-employees, supervisors and managers, there is always a chance that the facts of your employee’s injuries that could impose liability against both the company and you individually.
Employers who have questions about the Luce decision are free to call Don Van Suilichem at 248-644-2419.