Can State Legislature’s “Impair” the Obligations and Rights of Insurance Contracts to Force Insurers to Cover Losses to Commercial Enterprises Under Commercial Insurance Policies Due to COVID19?

Post on Contract Clause and State Legislation to Force Insurers to Cover Losses Under Commercial Insurance Policies due to COVID19 Pandemic

Law Offices of Carson J. Tucker Secures Victory for Employer and Insurer – No Liability for Workers’ Compensation Benefits

Scott v TKMS and Travelers

Lawyer’s Weekly Chronicles Appellate Court Victory by Law Offices of Carson J. Tucker

The lawyer’s weekly recently published an article on the Menard v Imig case in which I successfully represented the Macomb County governmental defendants in the Court of Appeals, briefing and arguing this case addressing governmental immunity and the highway defect exception under the Governmental Tort Liability Act.

Macomb County Road Department Not Liable


Former Employee’s Alleged Criminal Activities Relevant to Determine “Wage Earning Capacity” for Purposes of Assessing Entitlement to Workers Compensation Benefits

In a case I brought to the Michigan Supreme Court, which remanded in Omian v Chrysler, 495 Mich. 859 (2013), to the Court of Appeals for consideration of my appeal, the Michigan Court of Appeals has now reversed the decision I originally appealed.  In Omian v. Chrysler.COA.Published, the Court of Appeals agreed that evidence of a former employee’s ability to engage in a financially lucrative criminal enterprise generally allows consideration of that employee’s ability to “continue to earn wages” despite his or her claim that a work-related injury entitles him to wage-loss benefits.  I argued that an ability to earn wages, any wages, even those gained through nefarious criminal activities, should be admissible to demonstrate that the claimant is not entitled to be paid wage-loss benefits based on a claimed disabling injury – an injury he or she claims is preventing him from earning wages in other legal and gainful employment.

Although the Court did not agree with all of my arguments, it reversed the case on the main principal espoused and directs the administrative tribunal to consider the evidence.


Insurance Coverage Not Available to Employer Mistakenly Listed as Insured on State-Required Workers Compensation Forms

The Michigan Court of Appeals ruled on Tuesday, February 17, 2015, that insurance coverage was not available to an employer (Delphi) merely because the insurers had errantly listed the employer on forms required to be filed with the state to notify it of the existence of workers’ compensation insurance.

Delphi had multiple subsidiaries, some of which had been and were insured by policies issued by the insurers for workers compensation claims coverage.  However, Delphi itself was self-insured, and did not therefore require or purchase workers compensation insurance from an insurance carrier.  The insurance companies had mistakenly listed Delphi, generally, rather than the insured subsidiaries, on the forms required by the state of Michigan to list and certify the existence of workers compensation insurance coverage for employers.

When Delphi entered bankruptcy reorganization in 2005, because it was self insured, insurance coverage for underlying workers compensation claims filed by employees were assumed by the state’s “self insured security fund” under Michigan law. MCL 418.537(1).  However, the state objected in the bankruptcy proceedings, and claimed that the insurers’ listing of “Delphi”, rather than the insured subsidiaries on the state-required notice forms bound the insurers to cover the claims, rather than the state of Michigan’s self-insured security fund.

When Delphi’s obligations were eventually discharged in bankruptcy, the insurers filed an adversary proceeding in the bankruptcy court (essentially the equivalent of a declaratory judgment action) asking the court to rule on the underlying issues regarding errant listing of the employer, Delphi, on the Michigan state workers compensation insurance notice forms.  While this was pending the director of Michigan’s Workers Compensation Agency scheduled a “Rule 5” hearing to determine whether the insurers were liable for the Delphi claims under the policies that had been issued to the subsidiary companies.

The bankruptcy court stayed the Rule 5 proceeding.  It determined it had jurisdiction to consider the underlying issue.  However, the Second Circuit Court of Appeals ruled that while the bankruptcy court had jurisdiction to consider the scope of coverage in the underlying insurance policies, it did not have jurisdiction to consider whether the insurers were nonetheless liable for filing the inaccurate forms in Michigan.

The insurers then filed a declaratory judgment action in the Michigan Court of Claims seeking determination of its coverage obligations under the policies for the Delphi claims.  The insurers argued that the policies controlled the obligation of coverage and not the errant listing of the wrong employer on the state-required forms.  The Court of Claims agreed and the state appealed.

The Court of Appeals affirmed, holding that the inaccurate designation of Delphi on the state-required notice forms did not trump the contractual language in the insurance policies themselves, which underwrote and insured only the subsidiary company’s workers compensation obligations.  Liability for the workers’ compensation claims filed and/or to be filed by Delphi were not covered by the insurers’ policies, which had insured only the subsidiary companies.

This is an interesting and somewhat procedurally complex case, which addresses significant liabilities that, according to the holding, will be borne by the state of Michigan, rather than by the insurers.

However, the holding and the rationale is rather unremarkable.  The underlying insurance contracts control the coverage obligations vis-à-vis the listed insureds, not another party that was not underwritten for such coverage.

Read the case here:  Ace American, et al. v. Workers Compensation Agency Director, et al.



Court of Appeals Issues Ruling On Independent Contractor Case

The Michigan Court of Appeals issued its opinion in a case I briefed (92675_Moore_Appellant’s_Brief_313440.12.26.2013.1838)  and argued in the Court of Appeals last summer, ruling consistent with the Supreme Court’s recent disposition of workers compensation insurance coverage for subcontractors holding themselves out to be employers, while claiming to be employees.

The facts involved a workers compensation claimant who was hired to do a four-hour roofing job by the putative “employer”.  The claimant ran an independent roofing business, had other workers doing roofing work at another location, purchased workers compensation insurance, and otherwise held himself out to be a roofer doing roofing work.  He injured his foot while performing the four-hour job and sought workers compensation benefits from the company that had hired him to do that job.  Several iterations of a decision were rendered by the workers compensation board and the appellate commission.  The Court of Appeals granted my application for leave to appeal, and then, plaintiff’s cross-application on a wage-loss calculation issue (a very interesting issue in its own right but which is likely rendered moot by this finding that the claimant was not in fact an employee).

The coverage case involved several underlying insurance companies potentially covering the claim depending on the employment status of the claimant.  What is remarkable, among other interesting procedural twists and turns, is that two Judges on the panel I argued the case before were on opposite sides of the underlying issue in a Court of Appeals conflict panel opinion issued after the Court of Appeals convened a special conflict panel to address whether the language of MCL 418.161(1)(n) (pre-2011 amendments) was conjunctive or disjunctive, requiring satisfaction of all or only one of the “elements” listed to remove or, divest, a claimant of “employee” status under the Workers Disability Compensation Act.

That conflict panel decision by the Court of Appeals actually ruled against the arguments I forwarded in my brief, but as I predicted in the brief, and at oral argument, the Supreme Court was considering the conflict panel’s decision and was likely to overrule it, which they did, as I explained in this post:  Supreme Court Overrules Court of Appeals Decision Defining Employees for Purposes of Workers Compensation Entitlement

Thus, at oral argument, I made a full frontal assault on the conflict panel’s decision reading the statutory language as conjunctive (much to the satisfaction of Judge Borrello, who the Supreme Court ultimately sided with), and, as well, in my arguments section of the brief.

The Court also used my argument to counter the Appellate Commission’s unique (if not strained) reading of the meaning of the introductory phrase of the statute “in relation to this service” (my emphasis).  In its decision, the appellate commission reasoned that the phrase contained in MCL 418.161(1)(n) referred not to roofing in general, but roofing on behalf of the putative employer.  The Commission had stated that plaintiff did not maintain a separate business of roofing for this employer, nor was he hired by this employer in his capacity as a roofing contractor with a crew of workers. Rather, the Commission had stated plaintiff was hired by the putative employer as an individual worker.

As I argued in my brief, this reasoning was flawed because the statutory phrase “in relation to this service” refers to roofing in general. And, the Court of Appeals cites to the case I referred to, Reed v. Yackell, 473 Mich 520, 537 (2005), in which the Supreme Court had used the precise example factually relevant in this case, to wit, a roofer doing roofing work!  In other words, the Court of Appeals went on to reason, the phrase “in relation to this service” refers to the type of services performed, not the identity of the party receiving the services.

It was one of the more active panels that I have been before and they were extremely engaged in the issue and the outcome.  Read the decision here:  Moore Opinion

If you have any questions about this case and its impact on general liability and workers’ compensation insurance coverage determinations please call Carson J. Tucker, (734) 218-3605.

Employee Driving Company Truck to Job Site Not “In the Course and Scope of Employment” Under Workers Disability Compensation Act

The Court of Appeals (in a 2-1 majority opinion) issued a significant case yesterday, albeit unpublished, holding that an employee driving a company vehicle to a job site location in another part of the state was not “in the course and scope of his employment” when injured in a traffic accident while en route to the job site.

The Court of Appeals opinion is here:  Little, et al. v. Kappen Tree Service, et al. COA (1).

The Court of Appeals cites the general rule that ordinarily injuries received while employees are traveling to and from work are not compensable by the employer’s workers’ compensation insurance coverage because such injuries do not “arise out of and in the course of” employment within the meaning of the Michigan Workers Disability Compensation Act (WDCA), MCL 418.101, et seq.  MCL 418.301 requires for an injury to be compensable it must both “arise out of” and occur “in the course of employment”.

The Court of Appeals reasons that the employee faced no special risks other than those faced by the ordinary commuter to and from work.

Judge Hoekstra dissents.  He reasons that the employee was performing a “dual purpose” and therefore an exception to the “going to and coming from” exclusion applied.   The “dual purpose” was the employee bringing another employee to the job site so that employee could drive another vehicle home the day of the accident.  Judge Hoekstra would have found that the employee was “in the course and scope of his employment” and therefore covered by workers compensation, rather than no-fault automobile liability insurance.

This is an important case given the many disputes between no-fault automobile liability insurers and employers and their workers’ compensation insurers when an accident occurs in a vehicle while the employee is traveling to or from work, or driving his or her vehicle during the work day.

If anyone has questions regarding this decision, please contact Carson J. Tucker, JD, MSEL at (734) 218-3605.




Equitable Tolling of Medical Malpractice Claim Waiting Period on Supreme Court’s Mini-Oral Argument Calendar

The Michigan Supreme Court has ordered mini-oral argument to be held in two cases addressing a very significant issue dealing with whether trial courts can disregard the notice waiting period required before filing a complaint in a medical malpractice action, either by disregard of the defect or allowing amendment of the complaint under MCL 600.2301.

Here is the Court’s order, Furr v. McLeod Order, which the Court consolidated with another case addressing the same basic issue, Tyra v. Organ Procurement Agency of Michigan, et al., MOAA Order.

I previously wrote about these cases as they were making their way up through the Court of Appeals.  Those prior posts are below:

Equitable Amendment of Complaint Allowed in Med Mal Action

Court of Appeals Impanels Conflict Panel to Consider Whether Trial Courts Can Allow Defective Medical Malpractice Claims to Go Forward

Michigan Supreme Court Reverses Court of Appeals Decision Forcing Workers Compensation Agencies to Remain Open at Certain Locations

The Michigan Supreme Court has reversed the Court of Appeals decision that held the Director of the Michigan Administrative Hearing System and the Director of the Department of Licensing and Regulatory Affairs were required to maintain local offices for litigation of Workers’ Compensation Agency hearings.  Read the opinion here:

Younkin v. Zimmer

In September 2012, the Director of the MAHRS had announced new efforts to reorganize, including closing the Flint office that previously handled workers’ compensation claims and transferring those claims to an office in Dimondale, approximately 70 miles away.

The Plaintiff in the underlying case injured his back while at his job in Flint.  He filed a workers’ compensation claim.  Because of the reorganization, he was required to litigate his claim in Dimondale, rather than in the now-closed Flint office.

He filed a writ of mandamus in Circuit Court to compel the Directors to maintain the Genesee County (Flint) hearing site.  The circuit court issued the writ and the Directors appealed.  The Court of Appeals (M. J. KELLY, P.J., and FORT HOOD, J. (CAVANAGH, J., dissenting)), affirmed, holding that the trial court had not abused its discretion. 304 Mich App 719 (2014).

In a unanimous opinion released November 18, 2014, the Supreme Court reversed, holding the trial court abused its discretion by issuing a writ of mandamus compelling the Directors to hold workers compensation hearings in Flint.

MCL 418.851 provides that a workers’ compensation hearing must be held at the locality where the injury occurred. The Supreme Court reasoned Defendants, in their official capacities as administrators of the workers’ compensation hearing system, interpreted the term “locality” as meaning a district or a definite region. This interpretation was entitled to respectful consideration. Because it did not conflict with the Legislature’s intent, there were no cogent reasons to overrule it.

The Court continued, reasoning that in accordance with the Directors’ interpretation of the statute, they divided the state into 11 reasonably located hearing districts, and workers’ compensation claims were assigned from definite regions of the state to one of those hearing district offices depending on where the injury occurred.

Nothing in the Worker’s Disability Compensation Act, MCL 418.101 et seq., requires that there be a hearing site in every county. While the hearing should be held at a place convenient for parties and their witnesses, it was not unreasonable to conclude that the locality where the injury occurred in this case was Dimondale given the injury occurred in Genesee County and that county falls within the Dimondale district.

The Court concluded although having the hearing in the latter rather than in the former venue would doubtlessly be less convenient for plaintiff, this would not constitute an unreasonable inconvenience. Accordingly, plaintiff did not have a clear legal right to a hearing in Genesee county, and the Directors did not have a clear legal obligation to hold the hearing there.

I previously wrote about this case in an earlier blog here:

Court of Appeals Rules Workers Compensation Hearings Must Be Held in “Locality” Where Injury Occurred Forcing Directors of Administrative Hearing Systems to Reopen Closed Offices Throughout the State

Missing Pane of Glass from Public Bus Shelter Not a Defective or Dangerous Condition Sufficient to State Cause of Action Against Public Bus Authority Under “Public Building” Exception to Governmental Immunity

The Summary Disposition Standard Debate

This case highlights a current conflict among the Court of Appeals.  There is a current “debate” among Court of Appeals panels in recent opinions about the sufficiency of pleading a cause of action against the government when assessing the government’s motion for summary disposition under MCR 2.116(C)(7), which provides for “[e]ntry of judgment, dismissal of the action, or other relief because of…immunity granted by law”.  There is also debate about the extent to which sufficiently pled allegations, without more, can survive a summary disposition motion brought under this court rule pursuant to the Governmental Tort Liability Act (GTLA), and the respective exceptions to governmental immunity being pled by the plaintiff in a given case.

Is it sufficient for a plaintiff to merely plead allegations that, if true, but not proved, would be sufficient to survive a motion for summary disposition filed by the government under MCR 2.116(C)(7)?  Should the trial court decide the factual question before allowing the case to go forward against the government?  Or, should the question be left to a jury (which of course means the case goes to trial)?

Hubbert v. SMART

This is a rather unremarkable case in terms of the outcome, but the majority and dissenting opinions are worth noting for several points.  The plaintiff was injured when he fell through a missing pane of glass on a public bus stop.  Plaintiff filed suit against the public bus authority seeking damages and claiming negligence.

The plaintiff never pled allegations in avoidance of immunity, i.e., never pled that the facts established his case fit with one of the five statutory exceptions to governmental immunity.  In fact, the plaintiff never acknowledged that governmental immunity applied.

The governmental defendant (the public bus authority), included “immunity” in its affirmative defense, and simply conceded the “public building” exception to governmental immunity was the exception under which the plaintiff had to bring her cause of action.  Public bus stops are considered “public buildings” within the meaning of MCL 691.1406 of the Governmental Tort Liability Act (GTLA) (the “public building” exception).  Ali v. City of Detroit, 218 Mich. App. 581, 585 (1996).

The bus authority filed a motion for summary disposition under MCR 2.116(C)(7), (C)(8) and (C)(10), contending that the public building exception did not apply because the missing pane of glass did not constitute a “dangerous or defective condition” within the meaning of the public building exception.

Plaintiff argued there was a genuine issue of material fact concerning whether the missing pane of glass was a “dangerous or defective condition”, and that this was a sufficient question to allow the action to proceed to a jury for consideration.  The trial court agreed and denied the bus authority’s motion.  Pursuant to Michigan Court Rules (MCR) 7.203(A)(1) and MCR 7.202(6)(a)(v), denial of a governmental entity’s motion for summary disposition on immunity grounds under MCR 2.116(C)(7) is appealable by right.

The Court of Appeals, in a 2-1 opinion reversed ordering judgment for the bus authority.  The Court reasoned that, as a matter of law, the missing pane of glass was not a “dangerous or defective” condition within the meaning of the public building exception.

Applying the MCR 2.116(C)(7) Standard –  “Immunity Granted by Law”

Even though the bus authority sought summary disposition under the standards applicable to such motions under all three court rules MCR 2.116(C)(7) (“immunity granted by law”); (C)(8) (“failure to plead or state a claim”); and (C)(10) (“no genuine issue of material fact”), the Court of Appeals majority properly oriented the motion as one falling under (C)(7).

Thus, the Court reasoned, that summary disposition is appropriate under MCR 2.116(C)(7) when a claim is barred by “immunity granted by law”.  Slip Op. at 2-3.  (emphasis added), citing Seldon v. SMART, 297 Mich. App. 427, 432 (2012).  The Court pointed out that the trial court is to resolve the governmental immunity issue at the summary disposition stage as “an issue of law”, “[i]f there are no material facts in dispute or if reasonable minds could not differ regarding the legal effect of the facts.”  Id., citing Norris v. Lincoln Park Police Officers, 292 Mich. App. 574, 578 (2011).

This is not an insignificant detail.  The jurisdictional view of governmental immunity adhered to in Michigan requires that for a circuit court to even have subject-matter jurisdiction over a cause of action filed against the government, the case itself (the underlying facts of the case) must establish that the claim against the government can go forward under one of the legislative exceptions to immunity in the GTLA.  Greenfield Construction Co. v. State Highway Dep’t., 402 Mich. 172, 194 (1978) (stating that “it is well settled that the circuit court is without jurisdiction to entertain an action against the State of Michigan unless that jurisdiction shall have been acquired  by legislative consent).  See also Ross v. Consumers Power Co., 420 Mich. 567 (1984) and Manion v. State Highway Comm’r., 303 Mich. 1 (1942).  As the Supreme Court has recognized: “the state created the courts and so is not subject to them” or their jurisdiction absent explicit legislative consent.  County Road Ass’n of Michigan v. Governor, 287 Mich. App. 95, 118 (2010), citing Pohutski v. City of Allen Park, 465 Mich. 675, 681 (2002).

Such consent comes only in the form of the narrowly applied exceptions to that immunity in the GTLA.  In re Bradley’s Estate, 494 Mich. 367, 389 (2013) (to state a claim for “tort liability” against the government, the only avenue to impose such liability and access any available remedy is through and under the provisions of the GTLA).  Only when the claimant pleads that the facts fall within an exception and proves the facts exist is there evidence of a waiver of the inherent and preexisting immunity granted by law.  Mack v. City of Detroit, 467 Mich. 186, 200-202 (2002) (a plaintiff pleads in avoidance of immunity by stating a claim that fits within a statutory exception).  And, later, the Court in a case I successfully briefed and argued, made clear that, at least with respect to actions against governmental entities, the burden of proof to both plead and prove the case falls within an exception is on the claimant at the outset.  Odom v. Wayne County, 482 Mich. 459 (2008).

In this case, the Court of Appeals properly notes that the governmental immunity issue must be addressed at the summary disposition stage and as a “question of law”.  This properly orients the the preexisting and inherent characteristic of the government’s immunity.  As the Supreme Court has noted on more than one occasion, the government is immune from suit, not just liability, and if it has to expend its resources defending lawsuits all the way to the stage of the case reaching a jury, or a trial judge’s verdict, then immunity will be meaningless.  The government cannot be burdened with the expense of full-scale litigation in every case where a plaintiff merely recites allegations that, if true, would constitute a claim within an exception to immunity.

Conflict in Treatment of Governmental Immunity Motions Under MCR 2.116(C)(7)

Yet, the Court of Appeals is not consistent on this point.  In Kincaid v. Cardwell, 300 Mich. App. 513, 522 (2013), the Court of Appeals noted that where a fact question existed involving application of a bar to suit under MCR 2.116(C)(7), the question had to be submitted to a jury.

More recently, in Yono.v.MDOT.After.Remand.opn (Yono v. Michigan Dep’t of Transportation, Court of Appeals No. 308968 (released September 23, 2014)), the Court of Appeals, while recognizing the conflict of opinions in this area, conflated the (C)(7) standard with the “genuine issue of material fact” standard of (C)(10), as if there was no difference in application of these two court rules when assessing a motion for summary disposition.  This led to the result that a pled (but not necessarily proved) genuine issue of material fact (or a fact dispute) was sufficient to survive the summary disposition stage, even in a case against the government, which then leads to the case being submitted to the finder of fact.

This is error.  If this is the standard, then any well-pled allegation in a complaint setting for the parameters of an exception to immunity, and the factual allegations sufficient to fall within the exception will survive a motion for summary disposition on grounds of “immunity granted by law” under MCR 2.116(C)(7).

The Court of Appeals in this case got it right.  The trial court should decide the question “as a matter of law”.  In such cases, either party has an appeal by right to challenge the merits of the decision in the Court of Appeals, and the Court of Appeals has de novo reviewing authority over the case to check the trial court’s decision.

Otherwise, trial courts have the discretion to allow a case to proceed against the government, which is inconsistent with the jurisdictional view of governmental immunity and contrary to established case law, which preserves the government’s preexisting and inherent immunity from suit and liability in all but a small subset of narrowly applied circumstances.

Here is the Court of Appeals opinion:  hubbert v smart maj.OPN

And, the dissent:  hubbert v. smart .krause.dissent.OPN