“Intentional Tort Exception” to Exclusive Remedy Provision of Workers Compensation Act Did Not Apply to Employee’s Claim of Injury by Allegedly Defective Machinery

Yesterday, the Michigan Supreme Court issued an order summarily reversing the published decision of the Court of Appeals in Thomai.v.MIBA Hydramechanica Corp., et al, 303 Mich. App. 196 (2013), a case in which the Court of Appeals allowed a circuit court suit to proceed against a manufacturer on the basis that the employee had sufficient basis to proceed under the intentional tort exception to the exclusive remedy provisions of the Michigan Workers’ Disability Compensation Act (WDCA), MCL 418.101 et seq.

The plaintiff was injured while operating a machine at work.  The machine leaked oil onto the floor and workers were constantly required to wipe up the oil with rags to keep the floor and work area dry.  While cleaning up the oil, the plaintiff’s arm became trapped in the machine.  He filed suit in circuit court, which dismissed the action, citing MCL 418.131(1) (the “intentional tort” exception to the exclusive remedy provisions of the WDCA).  The exclusive remedy in Michigan for workplace injuries is under the provisions of the WDCA.

In its published opinion, the Court of Appeals reversed, holding the statute, as well as prior Supreme Court precedent, allows this exception to apply to “deliberate acts” by the employer that are shown to have occurred over a period of time. Here, the allegation is that the machine that injured the plaintiff was in disrepair and needed constant maintenance.  Since the employer knew about this, but did nothing about it, the act of the employer being deliberate could constitute the “intentional” act needed to bring the case out of the exclusive remedy provision of the WDCA.

In its order, thomai.v.MIBA.order.reverse.coa, the Supreme Court notes the trial court gave the plaintiff sufficient time to prove the necessary elements of the intentional tort exception, and, after properly applying those elements to the facts that were in the record, properly dismissed the claim.  The Court therefore reverses the Court of Appeals’ decision noting:  “There is simply no evidence in the record to establish that the defendants wilfully disregarded knowledge that an injury was certain to occur to the plaintiff from his operation of the grooving machine.”

It is also worth noting, although the trial court did not dismiss on these grounds, that the Michigan Workers’ Compensation Agency has primary and exclusive jurisdiction over claims that should be filed under the WDCA, at least at the commencement of an action. On the basis of Michigan Constitutional authority of administrative agencies, as well as on the statutory jurisdiction of circuit courts, the question of compensation for injuries sustained by employees while at work resides exclusively within the purview of the workers’ compensation agency and the automatic benefits and remedies available under the WDCA.  If, during the course of discovery, it is determined that the “intentional tort” exception may apply, then, and only then, should a circuit court exercise jurisdiction over the claim.

For more than a century, Lacey & Jones has distinguished itself from other law firms by maintaining a robust Appeals and Legal Research Group.  Effective appellate representation demands different skills than those required by litigation attorneys.  Our appellate attorneys are adept at analyzing the intricacies of each case from an objective and critical perspective.  From reviewing and preparing the lower court record, identifying appealable errors, and developing a strategy to raise issues that will be addressed by appellate courts, our seasoned appellate team is capable of handling the most complex appeals from the application stage to oral advocacy before the highest courts.  Our research abilities and knowledge of current issues in nearly all major subject-matter areas of the law provide our clients with efficient and immediate assistance with complex and high-exposure cases.

We are experienced at navigating through all appellate courts to shepherd the appeal in the most expeditious fashion possible so that it can be reviewed and quickly ruled upon.

During the last three decades alone, the Appeals and Legal Research Group at Lacey & Jones has been responsible for over 150 published decisions, including seminal decisions in workers’ compensation, governmental immunity, employment and labor law, civil rights law and insurance coverage.  Because of its specialized knowledge and focus on appellate law and its recognized expertise, the Appeals and Legal Research Group at Lacey & Jones has been asked to participate as amicus curiae writing briefs for the Supreme Court or as special counsel to the Michigan Attorney General and other governmental entities in some of the most significant cases in the Court of Appeals and Supreme Court.   Below are some of the recent significant cases in which Lacey & Jones, LLP’s Appeals and Legal Research Group has participated.

• Arbuckle v. GM, Michigan Court of Appeals Docket No. 310611, oral argument in Court of Appeals presented May 2014 by Carson J. Tucker
• Yono v. MDOT, ___ Mich. App. ___ (201_), amicus curiae brief filed for Michigan Municipal League and Michigan Townships Association on June 16, 2014, after remand by Carson J. Tucker
• Estate of Truett v. Wayne County, Unpublished Opinion of the Michigan Court of Appeals, dated May 6, 2014 (Docket No. 313638), briefed and argued by Carson J. Tucker
• Omian v. Chrysler Group, LLC, 495 Mich. 859 (2013), application filed by Carson J. Tucker, Supreme Court remand to Court of Appeals on leave granted, oral argument to be held in July 2014
• Ghanam v. John Does, 303 Mich. App. 522 (2013), application to appeal filed in Supreme Court by Carson J. Tucker
• State Farm v. MMRMA, ___ Mich App ___ (2013), amicus curiae for Oakland County in support of MMRMA application, by Carson J. Tucker
• Hannay v MDOT, ___ Mich ___ 201_), application granted, amicus curiae filed for Michigan Townships Association, Macomb County, Oakland County and Wayne County, et al., by Carson J. Tucker
• Yono v. MDOT, ___ Mich ___ (201_), oral argument on application granted, amicus curiae for Oakland, Macomb and Wayne County filed by Carson J. Tucker in support of the state’s application
• Huddleston v. Trinity Health, et al., 495 Mich. 976 (2014), oral argument on application granted, amicus curiae with Lawrence Garcia, Esq., for MDTC
• Ashley, LLC v Pittsfield Twp., 494 Mich 875 (2013), application granted, for Pittsfield Township by Carson J. Tucker (resolved by settlement)
• Bailey v. Schaaf, ___ Mich ___ (2013), amicus curiae for MDTC by Carson J. Tucker
• Atkins v. SMART, 492 Mich 707 (2012), oral argument on application, Court of Appeals case reversed by opinion, Carson J. Tucker
• Hagerty v Manistee, 493 Mich 933 (2013), amicus curiae for Michigan Municipal League, et al., by Carson J. Tucker
• McMurtrie v Eaton Corp, 490 Mich 976 (2011)
• Findley v DaimlerChrysler Corp., 490 Mich 928 (2011)
• Brewer v. AD.Transport Express, Inc, 486 Mich 50 (2010)
• Stokes v Chrysler, 481 Mich 266 (2008)
• Brackett v Focus Hope, Inc, 482 Mich 269 (2008)
• Rakestraw v Gen Dynamics, 469 Mich 220 (2003)

Court of Appeals Holds All Three Criteria in MCL 418.161(1)(n) Must Be Met Before a Person Can Be Considered an “Independent Contractor” as “Opposed to an Employee” Under Workers’ Compensation Insurance Policy

In  a published decision released yesterday, Auto Owners Ins Co v. All Star Lawn, et al Auto Owners Ins Co v. All Star Lawn, et al, the Court of Appeals concludes that all three criteria in MCL 418.161(1)(n) of the Workers Disability Compensation Act (WDCA) must be met before a person can be considered an “independent contractor” as opposed to an “employee” subject to the provisions and protections of the WDCA.

MCL 418.161(1) defines, in relevant part, “employee” as:  (l) Every person in the service of another, under any contract of hire, express or implied . . . .  Subsection (1)(n) further provides “Every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury, if the person in relation to this service [1] does not maintain a separate business, [2] does not hold himself or herself out to and render service to the public, and [3] is not an employer subject to [the WDCA]. (brackets added).

The Court holds that since the claimant did not meet all three criteria, he was an employee, rather than an independent contractor and therefore the workers’ compensation insurance carrier was on the risk and the claimant was entitled only to those benefits, as opposed to benefits asserted on claims of liability outside of a workers’ compensation claim, e.g., personal injury claims that could be pursued in circuit court as opposed to in the workers’ compensation agency.   The Court noted that although the claimant met two of the criteria, he could not meet the third, as he could not be considered an “employer” under the act.

The court points out later in its opinion that the criteria are separated by the conjunction “and” rather than the disjunctive “or” and therefore all three criteria are required by the plain language of the statute to be satisfied.

Thus, the general liability insurer did not owe coverage under its policies, as they contained an exclusion if the claimant was covered by workers’ compensation.

This opinion overrules Amerisure Ins Cos v Time Auto Transp, Inc, 196 Mich App 569; 493 N.W.2d 482 (1992), which held that if any of the three criteria were shown the employee could be considered an independent contractor.

This is a conflict resolution case.  In the prior opinion the panel ruled as it did only because prior Court of Appeals precedent (the Amerisure case) required it to do so under Michigan Court Rule (MCR) 7.215(J).  However, the panel requested impaneling a conflict resolution panel by the Court of Appeals to address whether its own holding remains good law in light of Michigan Supreme Court precedent suggesting that a contrary result should now issue. MCR 7.215(J) obligates a Court of Appeals panel to follow precedent in opinions issued by it after November 1, 1990.  MCR 7.205(J)(3) allows the Chief Judge to poll the judges of the Court of Appeals to determine whether the particular question at issue is outcome determinative and warrants convening a special panel to rehear the case for the purposes of resolving the conflict that would have been created but for the provision of subrule (1) (the provision requiring the Court in the issuing opinion to follow prior decisional case law).

This is a favorable decision in instances in which insurers are seeking to absolve their liability policies from the risk, and have the claim sound only under the applicable workers’ compensation insurance policy.  It is not a favorable opinion in instances in which the employer and or workers’ compensation insurance carrier is seeking to prove they do not owe workers’ compensation benefits because the person performing work was allegedly an independent contractor.

Judge Borello, joined by Judge Fort-Hood and Michael J. Kelly, dissents from the majority opinion.  He argues Amerisure should remain good law and that each one of the criteria do not have to be satisfied to consider a person an independent contractor.  Since the Court found the claimant in this case was working for the employer under a contract of hire, did maintain a separate business, and did hold himself out to the public to perform such services, he was an independent contractor.

Judge Borello does not discuss the third criteria, that the claimant must also be considered an “employer” under the act.  That latter term carries with it significant definitional complexity in and of itself under the WDCA and therefore must be analyzed under its own meaning and interpretation.

Practice Note:  The jurisprudential significance of this decision does have a finite shelf life.  The rule enunciated by the Court only applies to cases in which the employment and injury of the individual occurred before January 1, 2013.  Injuries occurring during employment on or after January 1, 2013 are to be considered under a new “test”.  MCL 418.161(1)(n) was amended by 2011 Public Act 266 and now employs the “20-factor test” used by the Internal Revenue Service to determine whether an employer-employee relationship exists in the given case.

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, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP, a Birmingham law firm serving clients since 1912.  Mr. Tucker can be reached at (248) 283-0763.

Throughout its storied history, Lacey & Jones has distinguished itself from other law firms by maintaining a robust Appeals and Legal Research Group.  Effective appellate representation demands different skills than those required by litigation attorneys.  Our appellate attorneys are adept at analyzing the intricacies of each case from an objective and critical perspective.  From reviewing and preparing the lower court record, identifying appealable errors, and developing a strategy to raise issues that will be addressed by appellate courts, our seasoned appellate team is capable of handling the most complex appeals from the application stage to oral advocacy before the highest courts.  Our research abilities and knowledge of current issues in nearly all major subject-matter areas of the law provide our clients with efficient and immediate assistance with complex and high-exposure cases.   We are experienced at navigating through the Michigan Court of Appeals and Supreme Court to shepherd the appeal in the most expeditious fashion possible so that it can be reviewed and quickly ruled upon.  During the last three decades alone, the Appeals and Legal Research Group at Lacey & Jones has been responsible for over 150 published decisions in the Michigan Court of Appeals and Supreme Court, including seminal decisions in workers’ compensation, governmental immunity, employment and labor law, civil rights law and insurance coverage.  Because of its specialized knowledge and focus on appellate law and its recognized expertise, the Appeals and Legal Research Group at Lacey & Jones has been asked to participate as amicus curiae writing briefs for the Supreme Court or as special counsel to the Michigan Attorney General and other governmental entities in some of the most significant cases in the Court of Appeals and Supreme Court.   Below are some of the recent significant cases in which Lacey & Jones, LLP’s Appeals and Legal Research Group has participated.

• State Farm v. MMRMA, ___ Mich App ___ (2013), amicus curiae for Oakland County in support of MMRMA application, by Carson J. Tucker
• Hannay v MDOT, ___ Mich ___ 201_), application granted, amicus curiae to be filed for MTA, et al., by Carson J. Tucker
• Yono v. MDOT, ___ Mich ___ (201_), oral argument on application granted, amicus curiae for Oakland, Macomb and Wayne County filed by Carson J. Tucker in support of the state’s application
• Huddleston v. Trinity Health, et al., ___ Mich ___ (201_), oral argument on application granted, amicus curiae with Lawrence Garcia, Esq., for MDTC
• Ashley, LLC v Pittsfield Twp., 494 Mich 875 (2013), application granted, for Pittsfield Township by Carson J. Tucker (resolved by settlement)
• Bailey v. Schaaf, ___ Mich ___ (2013), amicus curiae for MDTC by Carson J. Tucker
• Atkins v. SMART, 492 Mich 707 (2012), oral argument on application, Court of Appeals case reversed by opinion, Carson J. Tucker
• Hagerty v Manistee, 493 Mich 933 (2013), amicus curiae for Michigan Municipal League, et al., by Carson J. Tucker
• McMurtrie v Eaton Corp, 490 Mich 976 (2011)
• Findley v DaimlerChrysler Corp., 490 Mich 928 (2011)
• Brewer v. AD.Transport Express, Inc, 486 Mich 50 (2010)
• Stokes v Chrysler, 481 Mich 266 (2008)
• Brackett v Focus Hope, Inc, 482 Mich 269 (2008)
• Rakestraw v Gen Dynamics, 469 Mich 220 (2003)

Continuing its tradition of providing highly specialized and unique legal services to an exclusive clientele, Lacey & Jones, LLP, also works with insurance companies and businesses to develop comprehensive insurance coverage strategies for all lines of coverage.  From the simplest review (second look) of an in-house counsel’s coverage determination to complete coverage analysis involving high-exposure, multi-party, multi-jurisdiction, multi-claim events, the firm is capable of assisting its clients in making valuable choices and advising them on the proper course of action.  The firm’s coverage counsel and litigation team is also capable of pursuing coverage determinations and indemnity or subrogation in courts by filing declaratory judgment actions or indemnity and subrogation actions, respectively.

Our attorneys have successfully navigated coverage cases in state and federal courts, involving multiple insurers, multiple claimants and multiple forums to arrive at favorable resolutions for our clients in eight figure exposure cases, including, but not limited to, environmental liability claims, construction claims, professional liability claims, catastrophic personal injury claims, and product liability claims.  Our coverage lawyers speak the language of insurers and understand the intricacies of policy coverage involving multiple insurers, multiple policy forms, and multiple layers and years of coverage.

• • Declaratory Judgment Actions
  • Coverage Analysis and Strategy
  • Property and Casualty Claims
  • General Liability Claims
  • Professional Liability Claims
  • Business Risk
  • Indemnity and Subrogation
  • Product Liability Claims
  • Construction Defect Claims
  • Government and Municipal Liability Claims
  • Workers’ Compensation Claims

Police Vehicle in Pursuit of Fleeing Motorcycle “Involved” in Motorcyclist’s Accident with Another Vehicle and County Liable to Participate with Auto Insurer in Reimbursement for Medical Care

In, State Farm v. MMRMA, the Michigan Court of Appeals addressed whether a police vehicle in pursuit of an uninsured motorcyclist who was fleeing was sufficiently “involved” in an accident between the motorcyclist and another vehicle such that the insurer of the latter vehicle (State Farm) could seek pro rata contribution from the county’s insurer, the Michigan Municipal Risk Management Authority (MMRMA) for reimbursement of medical and other expenses for the motorcyclist’s injuries.

The county sheriff observed the motorcyclist exceeding the speed limit and engaged to pursue and stop him.  After a chase at speeds of nearly 100 miles per hour, the sheriff lost sight of the motorcyclist, who had turned onto a winding dirt road.  The sheriff continued down the dirt road and soon noticed a plume of smoke in the distance.  He came upon a vehicle, which had collided with the motorcycle.  The motorcyclist was severely injured.  State Farm, the insurer of the motor vehicle that collided with the motorcycle paid personal insurance protection to the motorcyclist for his injuries in the amount of $675,114.16.  State Farm then sought contribution from MMRMA, which refused, asserting the sheriff’s vehicle was not involved in the accident.

State Farm filed a declaratory judgment action seeking contribution under Michigan Compiled Law (MCL) 500.3114(5), which provides:

A person suffering accidental bodily injury arising from a motor vehicle accident which shows evidence of the involvement of a motor vehicle while an operator or passenger of a motorcycle shall claim personal protection insurance benefits from insurers in the following order of priority:

(a) The insurer of the owner or registrant of the motor vehicle involved in the accident.

(b) The insurer of the operator of the motor vehicle involved in the accident.

(c) The motor vehicle insurer of the operator of the motorcycle involved in the accident.

(d) The motor vehicle insurer of the owner or registrant of the motorcycle involved in the accident.

There were other issues raised in this appeal, but the primary, and therefore dispositive, issue concerned the question whether the motorcyclist’s accident arose out of a motor vehicle accident which involved the county sheriff’s patrol car.  If yes, then the county’s insurer was required by the terms of MCL 500.3114(5) to participate pro rata in the reimbursement by State Farm of the motorcyclist’s PIP benefits.

The Court of Appeals concludes the county sheriff’s patrol car was “involved” in the accident.  The Court states the motorcyclist’s injuries “shows evidence of the involvement” of the county sheriff’s patrol vehicle.  The Court relies on a 1995 Supreme Court case in which the court held a police vehicle pursuing a fleeing motorist was sufficiently “involved” in a multi-vehicle crash involving the motorist even though the police vehicle had backed off the chase moments before the accident.

In my judgment, reliance on the 1995 case is out of line with more recent pronouncements on causation by the Supreme Court.  See, for example, my discussion of another recent case in which, relying on more modern Supreme Court precedent, the Court of Appeals held that where a motorcyclist who avoided a collision with another vehicle, an auto insurer would not be responsible to reimburse medical expenses incurred by the motorcyclist.  That post discussing the case is here:  DMC v. Progressive – Hospital Not Entitled to Reimbursement from Auto Insurer Where Motorcyclist’s Injuries Caused by Attempt to Avoid Collision with Motor Vehicle

Granted, the statutory provision in that case is the more general causation statement in MCL 500.3105, but the Court of Appeals here attempts nonetheless to distinguish “single vehicle” involvement with multi-vehicle involvement in the accident by relying on the vitality of the 1995 Turner decision by the Supreme Court.   Such a causation analysis seems contrary to the causation analysis employed in the more recent decision McPherson, discussed in my previous noted blog post, and further discussed in my post about that case here:  McPherson v. McPherson – Recent Pronouncement by Supreme Court on Level of Causation Required Under No-Fault Act

Considering the Supreme Court’s more recent pronouncement in McPherson, the dubious nature of the causation analysis employed in the 1995 Turner decision, the facts presented here, and other contrary Court of Appeals opinions, I believe this case is destined for further appellate treatment by the Supreme Court.

There are different statutory provisions at stake, but the attenuated nature of the causation analysis employed by the Court of Appeals in the instant case does seem to warrant further treatment by Michigan’s One Court of Justice.

We shall see.

For more information about this and other similar cases contact Carson J. Tucker, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP, a Birmingham law firm serving clients since 1912.  Mr. Tucker can be reached at (248) 283-0763.  For more information about Lacey & Jones, click on the following practice area company pages on Linked In.

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