House passes new workers comp law

November 15, 2011
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The state House recently passed a bill that changes the Workers’ Disability Compensation Act in a way that favors employers. But should the bill become law, it could raise a few issues that might have to be ironed out in the courts.

State Rep. Brad Jacobsen said his bill — House Bill 5002 — amends the compensation act in a manner that better reflects modern medical, legal and economic advancements.

“Michigan’s outdated workers’ compensation laws are creating confusion for both business owners and employees. Jobs have changed significantly since this law was originally written, and these updates will clear up confusion in the law, cutting down on the need for many court cases,” said Jacobsen, R-Oxford.

Jacobsen also said his bill puts Supreme Court rulings on workers’ compensation into law to eliminate the need for litigation in cases moving forward. The changes will not affect employees currently receiving benefits or workers who have claims pending.

State Reps. Dave Agema, R-Grandville, and Peter MacGregor, R-Rockford, are co-sponsors of the legislation, which now heads to the Senate.

The Michigan Chamber of Commerce called the bill a “great compromise bill,” saying it balances the needs of injured workers and employers who finance the system.

“Arguments from opponents that the bill will result in an arbitrary reduction of an injured worker’s weekly benefits for his or her ‘theoretical’ ability to work are, quite simply, false, misleading and not grounded in reality,” said Wendy Block, director of health policy and human resources for the chamber.

Geri Drozdowski, senior counsel at Warner Norcross and Judd LLP, said a key provision in the bill is the way it defines “wage-earning capacity.” She said the definition will be vital in determining disability and could potentially revive the amount of benefits a worker might receive.

The new bill looks at the wages a claimant earns, as the current law does, but the new measure adds into the equation the wages a claimant is capable of earning, even if those wages haven’t been earned.

A legislative analysis done by the House Fiscal Agency reported, “The bill defines ‘wage-earning capacity’ as the wages the employee earns or is capable of earning, whether or not actually earned. The term ‘wage loss’ means the amount of wages lost due to a disability. Wage loss could be established, among other methods, by demonstrating the employee’s reasonable, good-faith effort to procure work suitable to his or her wage-earning capacity.”

“It goes on to basically say wage loss is the amount of wages lost due to a disability. This is actually adding to an employee’s burden of proof because a worker has to establish a connection between a work injury and reduced wages in establishing wage loss,” said Drozdowski, who represents employers in these types of cases and has practiced employment litigation and health law for 21 years.

Attorneys who represent injured employees are concerned that the bill’s language will encourage the court to look at hypothetical wage-earning capacities or at a job that could exist but has not been identified. Drozdowski explained that if the bill becomes law and the court takes that approach, the plaintiffs’ lawyers believe their clients will be denied wage-loss benefits because those workers will have the skills for a hypothetical job, or their benefit rates will be reduced if a hypothetical job pays less than the jobs they held when they were injured.

Another thought struck her about the bill. Drozdowski wondered what happens if someone is injured, a workers’ compensation claim isn’t disputed, the claim is paid and the employee is off the job. But then the plant closes: “Is the reduction in wage-earning capacity due to the work injury, or is it due to the plant closing? If you make the argument that it’s due to the plant closing, does the employer discontinue wage-loss benefits? I don’t know and I’m not sure what the courts will do with that,” she said.

So the wage-earning capacity portion of the bill, as written, will likely create legal hurdles that lawyers who represent injured workers will have to clear. “It certainly is a provision that favors the employer,” said Drozdowski, who has served on the state bar’s Workers’ Compensation Section.

“Many of the provisions are more favorable to the employer. Now, there are some that are very neutral and are likely to be supported by both plaintiff and defense counsel. But overall, it is something that I think many employers are embracing, and my understanding is the pushback is coming more from the unions.”

Drozdowski pointed out that one of the bill’s provisions could favor injured workers. It would allow workers’ comp settlements, known as redemptions, to be completed by written agreement rather than having claimants appear before a magistrate of the Workers’ Compensation Bureau. What makes this provision important for plaintiffs, Drozdowski said, is that a number of those bureaus have closed.

“So an injured worker could be traveling a long distance to the bureau. Then there could be three, four, or even eight redemptions all scheduled to take place at 9 a.m. on the same day. Some people end up waiting several hours, and this (change) would be much more convenient, especially for injured workers who have difficulty traveling,” she said.

The new bill would allow much of the work to be done through affidavits, and the documents could be signed in an attorney’s office.

“It’s probably more cost-efficient for employers, too, but employers are not required to attend redemptions. So if it favors anyone, it would favor the claimant more than the employer,” she added.

The bill offers another change Drozdowski felt employers should know. Under the current statute, an employer controls the medical care an injured worker receives for the first 10 days after an injury. However, starting on the 11th day, an injured employee can seek care from anyone, often a primary-care doctor the employee knows. Primary-care physicians may not be as knowledgeable about certain injuries as specialists. But at the same time, a primary may be more familiar with the employee and more sympathetic to the patient’s injury than a specialist and thus be more likely to give the worker an off-work slip.

That medical timeline, though, changes under Jacobsen’s bill. “The new legislation proposes that the employer would control medical treatment for the first 45 days. That is certainly a long enough span of time that I can see that will really make a difference in the direction some claimants end up going in terms of treatment and returning to work,” she said.

“It’s in the employer’s best interest to find the best medical care available for their injured workers. The goal of everyone is to get this person well and get them back to work as quickly as possible.”

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