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Workers’ Compensation: Critical Legislation and Case Law Update – Michigan

Residual Wage Earning Capacity of Injured Worker Could Cease Indemnification Benefits

Residual Wage Earning Capacity of Injured Worker Could Reduce or Cease Indemnification Benefits

As the law stands in Michigan today, if one is injured at work, the injured worker must prove total disability and incapable of performing any type of employment, even on a part-time basis, in order to receive full Workers’ Compensation benefits.

Under the codification of residual wage earning capacity, the defendant has the right to reduce an injured worker’s weekly indemnity rate by an amount that they deem to be the injured worker’s present ability to earn wages, despite the alleged injury.

The defendant may assert that the injured worker could be a part time cashier, which isn’t particularly physically demanding. It could also be argued that an injured worker could earn wages as a telephone solicitor or greeter at a retail outlet, which are vocations that require almost no physicality. In either case, the defendant would have the right to reduce the injured worker’s Workers’ Compensation rate by the amount of wages the injured worker could potentially earn, taking into consideration the injured worker’s transferable skill set, education and injury related restrictions. The burden of proof is on the injured worker. Therefore, injured workers are now required to make a reasonable effort to look for work within their skills and physical limitations, including jobs for which they may be overqualified to perform.

Michigan Workers’ Compensation Pre-Existing/Aggravation Standard Codified (2011)

When the legislature amended the Worker’s Disability Compensation Act effective December 19, 2011, they codified the case of Rakestraw v General Dynamics Land Systems, Inc., 469 Mich220 (2003) in §§ 301(1) and 401 (2)(b). Both of the cited sections state, “A personal injury under this Act is compensable if work causes, contributes to, or aggravates pathology in a manner so as to create a pathology that is medically distinguishable from any pathology that existed prior to the injury.” §40 1 (2)(b) goes on to state, “Conditions of the aging process, including but not limited to heart and cardiovascular conditions, and degenerative arthritis shall be compensable if contributed to or aggravated or accelerated by the employment in a significant manner.” This statement is also made in §301(2).

In Rakestraw, the Court established several principles when looking at injuries that are consistent with a preexisting condition. The Court stated that when an injury is consistent with a preexisting condition,the injured worker must show the existence of a work-related injury that goes beyond the manifestation of any symptoms that may be related to an underlying, preexisting condition. The Court indicated that a symptom such as pain could be considered evidence of an injury; however, standing alone, pain would not establish a connection to a workplace injury. In order to establish this connection, the injured worker must show the differentiation (change in pathology) between the preexisting condition and the alleged work-related injury. When the symptoms can be equally contributed to, the injured worker will have failed to meet his burden of proof. Essentially, there must be a distinction from the preexisting condition. In fact, “inflammation” of a preexisting condition was recently denied as qualifying as pathological change.

Michigan Workers’ Compensation Litigation Docket Slowdown Continues

The Appellate Commission recognized that the Board of Magistrates had the authority to dismiss an application “for lack of progress,” but ruled that authority could be exercised only after an evidentiary hearing to describe the particular circumstances to warrant a conclusion that there had been a lack of progress and the reason for that inaction.

Unfortunately, the commission ruling will continue to foster the plaintiff attorney practice of “sitting on cases” while alleged accrued wage loss compounds while the plaintiff desperately searches for physicians that will render treatment on a lien basis and/or issue medical opinions with often overstated employment restrictions.

CMS/ Medicare Set Aside Issues to Consider Upon Settlement

  1. While a claimant must always consider and protect Medicare’s interests, the applicable regulations and statute make clear that CMS approval of an amount is never required. Therefore, if a Plaintiff is a Medicaid card holder at the time of the redemption/settlement, a formal set aside is not required.

  2. It is generally understood that CMS will accept a MSA amount designated in redemption and approved by a Magistrate if it is reasonable. Costs paid as a litigation expense by the employer/carrier do not count in this scenario.

  3. A zero allocation may also be considered on a strictly medical basis where the claimant’s medical care for the alleged work-related injury has been completed, and where the claimant’s treating physician will certify the claimant will no longer need Medicare-covered treatments related to the work injury.

  4. In spite of this the form letter by which CMS gives notice of approval of a zero allocation specifically notes that this determination “is independent of any determination regarding…recovery rights for conditional payments.”

  5. If there was strong evidence on the issue of causation, CMS would then properly demand reimbursement of all related Conditional Payments.

For more information or questions on how this pertains to cases you are handling please e-mail the author here.