Michigan Court of Appeals Holds Workers’ Compensation Court Applied Incorrect Legal Standard

Plaintiff Robert Florian suffered a severe leg injury while working as a logger. A magistrate determined that he was entitled to workers’ compensation benefits because he suffered a disability in the course of his employment. Rather than considering whether the magistrate’s decision was supported by the evidence, the Michigan Compensation Appellate Commission (MCAC) employed de novo review and reversed the magistrate’s award of benefits beyond March 2010. The Michigan Appeals Court held that despite the court’s use of an incorrect standard, the MCAC correctly determined that Florian was an employee rather than an independent contractor and affirmed on that issue.The appeals court, however, reversed the portion of the MCAC’s opinion concluding that Florian failed to establish a prima facie case of disability under relevant case law. The appeals court also reversed the MCAC’s ruling that limited Florian’s benefits. However, the MCAC aptly determined that remand to the magistrate for the recalculation of Florian’s applicable wage was required. As a result, the appeals court affirmed in part, reversed in part, and remanded to the magistrate for further proceedings.

In September 2009, Robert Florian was struck by a tree he was cutting while working as a logger for G & G Logging. The impact fractured Florian’s tibia and broke his fibula. Dr. Edward Southern operated and affixed a plate to the tibial fracture. After a March 2010 follow-up visit, Dr. Southern reported that although “obviously [Florian] is not going to be going back to cutting trees any time in the near future,” he had reached a point at which he could “return to whatever type of work he feels he is capable of.”

In April 2010, Florian filed an application for mediation or a hearing with the Workers’ Compensation Agency. G & G Logging and its insurer, Travelers Indemnity Company, denied liability and demanded Florian’s medical records. At Travelers’ request, the Silicosis, Dust Disease, and Logging Industry Compensation Fund (hereafter “the Logging Fund”) was added as a necessary party.

A magistrate hearing was held in June 2012 to determine whether Florian was entitled to workers’ compensation benefits. Florian presented into evidence a questionnaire disclosing his work history, qualifications, and training. To establish that he was disabled from logging work, Florian presented an independent medical examination (IME) performed by orthopedic surgeon Kent E. Anderson. Dr. Anderson reported that Florian had “sustained a serious injury that typically results in some permanent impairment of function” and that the plate that had been surgically affixed to his tibia would have to be removed before Florian could regularly wear boots or shoes that extended above his ankle.

The defendants responded with a report by Dr. Grant Hyatt, who examined Florian on August 4, 2011. Florian told Dr. Hyatt that he still had some occasional aching, soreness, and stiffness as a result of his injuries and that his lower left leg seemed weaker than his right. However, Florian characterized his response to the surgery as “excellent” and related that his “symptoms had effectively resolved.”

With regard to his future job prospects, Florian proffered a vocational assessment performed on June 16, 2012 by David Ostwald, a certified vocational evaluation specialist. The assessment took into account Florian’s age, education, work experience, and medical history, including Florian’s own description of his limitations and Dr. Anderson’s IME. Ostwald explained that although he had reviewed the opinions of Drs. Southern and Hyatt, he did not rely on them to reach his conclusion because they were not as specific as Dr. Anderson’s in determining Florian’s physical limitations.

After considering the evidence, the magistrate determined that Florian was an employee of G & G Logging under The Worker’s Disability Compensation Act (MCL 418.161(1)(n)). In doing so, the magistrate employed the test set forth in Michigan precedent, under which Florian was required to prove both that he entered into a contract of hire and that he was not an independent contractor. Noting that Florian’s weekly paychecks, as reported on IRS Form 1099-MSC, were substantial remuneration when considering the hours that Florian worked, the magistrate concluded that Florian was an employee rather than an independent contractor under MCL 468.161(1)(n).

With regard to Florian’s disability, the magistrate concluded that the testimony of Dr. Anderson and Ostwald established that Florian was not able to perform his former job or any other job involving heavy labor. Accordingly, the magistrate concluded that Florian had established a prima facie case of disability under MCL 468.161 and precedent. Florian therefore was entitled to continuing weekly wage loss benefits commencing on September 20, 2009, the date of his injury. The magistrate ordered that the Logging Fund would be responsible for any benefits due pursuant to statute.

The Logging Fund filed a claim for a review of the magistrate’s decision in the Michigan Compensation Appellate Commission (MCAC). Counsel for G & G Logging and Travelers also filed a claim for review; however, the MCAC dismissed the claim as untimely filed, leaving the Logging Fund as the only remaining defendant. Thereafter, the MCAC affirmed the magistrate’s conclusion that Florian was an employee rather than an independent contractor. The MCAC also affirmed the magistrate’s decision to grant Florian weekly wage benefits until March 10, 2010, since he had “established total disability” until that date.

The MCAC, however, reversed the continuation of weekly benefits after March 10, 2010 on the grounds that Florian had been “cleared” by Dr. Southern “for whatever work he felt capable of performing,” and Florian had not complied with the job-seeking requirements imposed by case law. The MCAC also concluded that the magistrate had erred in computing Florian’s weekly wage, which the magistrate claimed to have calculated under MCL 418.161(6) but actually calculated under MCL 418.161(3). While the MCAC agreed that MCL 418.161(3) provided the proper calculation, the magistrate used figures unsupported by the evidence. Accordingly, the MCAC remanded the matter to the Board of Magistrates to recalculate Florian’s weekly wage benefits from September 20, 2009 until March 10, 2010.

The appeals court first stressed that the MCAC operated within the wrong legal framework by reviewing the magistrate’s decision de novo rather than determining whether it was supported by competent, material, and substantial evidence. The MCAC also based its analysis of Florian’s duty to seek employment on erroneous legal reasoning. Since the magistrate’s ruling that Florian had established a disability was supported by competent, material, and substantial evidence, the MCAC erred by overruling it.

Overall, the appeals court affirmed the portion of the MCAC’s opinion concluding that Florian was an employee rather than an independent contractor, reversed the portion of the MCAC’s opinion concluding that Florian failed to establish a prima facie case of disability under relevant case law, and remanded for the reinstatement of the magistrate’s open award of workers’ compensation benefits. On remand, the appeals court dictated, the magistrate must determine the correct amount of benefits due by recalculating Florian’s average weekly wage in a manner that addresses the discrepancies regarding the number of weeks that he worked, Florian’s yearly earnings total, and the statutory basis for the computation.

The workers’ compensation attorneys at the Neumann Law Group represent injured people throughout Michigan from offices in Traverse City and Grand Rapids. Call us at (231) 463-0122 or at (616) 717-5666 for a free consultation.

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