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Workers Compensation
Wayne State University Law School
Evans, William

WORKERS’ COMPENSATION OUTLINE – EVANS – WINTER 2017

EXAM: Worker’s disability compensation law is remedial legislation to be liberally construed to aid the injured worker with the cost being passed on to the consumer of the goods or services.
Great start to EXAM question: The Michigan Worker’s Compensation Act §418.301 defines a compensable, accidental injury under the act as one “arising out of and in the course of employment…” the phrase “arising out of” relates to the origin of the accident and generally requires a causal connection between the nature of the employment and the injury. “In the course of employment” refers to the time, place and circumstances giving rise to the injury. Although these elements are interrelated, the claimant has the burden of establishing both to receive compensation.
A. Arising Out of Employment
B. In the Course of Employment

Basic Features of Workers’ Compensation

The typical workers’ compensation act has these features:

The basic operating principle is that an employee is automatically entitled to certain benefits whenever he or she suffers a “personal injury by accident arising out of and in the course of employment” or occupational disease.
Negligence and fault are largely immaterial, both in the sense that the employee’s contributory negligence does not lessen his rights and in the sense that the employer’s complete freedom from fault does not lessen its liability.
Coverage is limited to persons having the status of employee, as distinguished from independent contractor.
Benefits to the employee include wage-loss benefits, usually around ½ to 2/3 of his average weekly wage, and hospital, medical, and rehabilitation expenses; in death cases benefits for dependents are provided; arbitrary maximum and minimum limits are ordinarily imposed, usually related to the state’s average weekly wage.
The employee and his dependents, in exchange for these modest but assured benefits, give up their common-law right to sue the employer for damages for any injury covered by the act.
The right to sue third persons whose negligence caused the injury remains, however, with the proceeds usually being applied first to reimbursement of the employer for the compensation outlay, the balance (or most of it) going to the employee.
Administration is typically in the hands of administrative commissions and as far as possible, rules of procedure, evidence and conflict of laws are relaxed to facilitate the achievement of the beneficent purposes of the legislation and
The employer is required to secure its liability through private insurance, state-fund insurance in some states, or “self-insurance”; thus the burden of compensation liability does not remain upon the employer but passes to the consumer, since compensation premiums, as part of the cost of production, will be reflected in the price of the product.

3 primary benefits:

1) Weekly indemnity
2) Reasonably and necessary medical care
3) Vocational rehabilitation

3 Sisters defenses GIVEN UP by employers & insurance carriers in exchange for limited liability set forth in Michigan WCDA

1) Fellow servant (co-employee)
2) Assumption of risk

HARDEST for claimant to overcome
After being on the job for a few months or a few years (vs. your first day), it is virtually impossible to succeed on a workers compensation claim in an industrial setting à assumption of risk

3) Contributory negligence

During the industrial revolution, no workers comp because you wouldn’t sue your parents for injury on their farm

Now with employers, we have someplace else to look

Workers comp legislation is REMEDIAL in nature: What to do with employee injured on the job & loses capacity to work?

Who do we look to?

1) Government (or general public) – Could pass to taxpayer in terms of appropriations

Perceived to be inappropriate though because: 1) We don’t like tax increases, & 2) general public didn’t have anything to do with what happened between employee & employer

2) Employer – Consumer falls under this umbrella too because the cost is passed on to them
3) Insurance Company

General Principles and Doctrines

§ 2.03 Origins of Workers’ Compensation in the United States

New York Central Railroad Company v. White

This was a Supreme Court case – weird because workers compensation is a STATE remedy
Issue: Constitutional challenges to the validity of workers compensation
Holding: Constitutional. In the public’s best interest to come up with a process that protects the injured employee

Societal issue – we determine how much to provide to injured people (in Michigan, we decided we will provide up to $870/week)

It is not arbitrary or unreasonable for a state to mandate employee compensation for death or injury, without regard to fault and in accordance with a compensation schedule that is not overly miserly or extravagant. Although a workman’s compensation scheme may deprive employers and employees of legal judgments to which they would otherwise be entitled, the system also benefits both parties by establishing a limited, defined recovery that eliminates numerous costs arising from litigation.
RULE: A state workmen’s compensation scheme that provides an exclusive source of compensation for employee injury or death arising out of the course of employment, without regard to fault, does not violate the 14th amendment where the scheme is an adequate substitute for fault-based litigation and where the compensation schedule is reasonable.

Coverage Formula:

A coverage formula contains the elements of a compensable case

In Michigan à Must have:

A contract of hire (an employer and employee),
A personal injury,
That arises out of and in the course of employment, and

THIS IS A 2 PRONGS TEST – arising out of and in the course of (Michigan) – some states only have to prove one or have to prove something else such as “sustained while in the performance of duty,” etc.
Presumption that something happened in the course of employment when it happened on the premises within a short period of time before or after the shift of the employee

A court may make this a 1-prong test if it wants! But Michigan is a 2 prong standard

Must be disabled

MCL 418.301(1): An employee (1st element), who receives a personal injury (2nd element) arising out of (3rd element) and in the course of (4th element) employment (5th element) by an employer (6th element) who is subject to this act at the time of the injury, shall be paid compensation as provided in this act. 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. In the case of death resulting from the personal injury to the employee, compensation shall be paid to the employee’s dependents as provided in this act. Time of injury or date of injury as used in this act in the case of a disease or in the case of an injury not attributable to a single event is the last day of work in the employment in which the employee was last subjected to the conditions that resulted in the employee’s disability or death.

Coverage formula in Michigan is highlighted
“Law of symptomatic exacerbation” (Brown v. Board of Education – if employment rendered an asymptomatic condition symptomatic à compensable)

This is no longer the law – Now, there has to be a change in the underlying condition, or a worsening of the pathology (Rakestraw – Michigan Supreme Court held it has to be a distinguishable medical condition)

“Arising out of” = causation element (practitioners refer to this as “work related”)
Must be a contract hire, but there’s a legal fiction called the “emergency doctrine”

If you put out a fire in a bar, you could be considered an employee – the theory is that there’s no time to negotiate a contract, so you’re presumed to be an employee

NOT INCLUDED = “disability”

But the court writes them in anyway. This is important for the 3 benefits:

1) Weekly indemnity; 2) Reasonable & necessary medical care; 3) Vocational rehabilitation

“In the course of” = the time, place, and circumstance
“Arise out of” and “in the course of employment” often lumped into “work related”

2-prong test, BOTH must be independently applied and satisfied

“Arising out of” is construed to refer to causal origin and the “course of employment” portion to the time, place and circumstances of the accident in relation to the employment. Each test must be independently applied and met.
If a 1-prong standard, it would be “arising out of OR in the course of” employment

§ 3.02 The 5 Lines of Interpretation of “Arising” – Risk doctrine is a burden-satisfying mechanism

The “arising out of” test is primarily concerned with causal connection. Most courts have interpreted “arising out of employment” to require a showing that the injury was caused by an increased risk to which claimant, as distinct from the general public, was subjected by the employment. A substantial number have modified this to accept a showing merely that the risk, even if common to the public, was actually a risk of the employment. Other jurisdictions have adopted the positional-risk test while the peculiar risk test is largely obsolete.
1) Peculiar-Risk Doctrine: claimant had to show the source of the harm was, in its nature, peculiar to his occupation

Thus, even if work subjected claimant to a tremendously increased quantitative risk of injury by heat, or cold, or lightning, that claimant might be turned away because “everyone is subject to the same weather”
Robinson’s Case – nothing showed the employee was exposed to a greater risk of freezing his foot as compared to the ordinary person engaged in outdoor work in cold weather

Criticism to the above: The ordinary person is NOT engaged in outdoor work in cold weather

Example: Asbestos, Baker’s Asthma, Black Lung in mining job, etc.

Risk doctrine will be substituted for your proofs.

Largely obsolete today

2) Increased-Risk Doctrine: differs from the peculiar-risk test in that the distinctiveness of the employment risk can be contributed by the increased quantity of a risk that is qualitatively not peculiar to that employment

Exposes the employee to an increased risk

Example: Who is more likely to be electrocuted? An electrician or a carpenter?

à Electrician: so there’s an increased risk associated with his job

Replaced the peculiar risk test
Prevalent test in the United States today – even in states that have accepted the positional-risk doctrine, a prudent lawyer will, in a lightening case for example, begin by trying to prove that the employment increased the risk of exposure to lightning by placing the claimant on a height, or near metal, etc.

3) Actual-Risk Doctrine: doesn’t matter whether the risk was also common to the public, if in fact it was a risk of thi

om this day forward ONLY)
Dissent: “Lightning, flood, tornadoes and estranged wives will always be with us, in this vale of tears.”

Fault is not the same as proximate cause – the compensation law does not use the word “cause”
“Arising out of” and “in the course of” are not redundant – they mean 2 different things:

HYPO: An adulterous cobbler shot at his last by his jealous wife may be “in the course of” his employment. But the injury does NOT “arise out of” his job

Basically: No matter how sorry I am for this individual, it doesn’t mean they win just because of a vale of tears

“The Michigan/Massachusetts Rule”

Meaning, if the states of Michigan and Massachusetts ruled in a certain fashion, that was the standard to be adopted nationally (the rest of jurisdictions would follow suit)

“This decision is in accord with the Michigan/Massachusetts Rule”

Why? Massachusetts is a very liberal-controlled legislature, and Michigan is a pro-union legislature à 2 most liberal jurisdictions in the United States (pro-plaintiff)

Exposure to Heat and Cold

Hughes v. Trustees of St. Patrick’s Cathedral

Facts: Section boss suffered heat prostration while working in cemetery, argues nature of work positioned him at risk
Holding: Compensable to employee

Heat prostration is an accidental injury arising out of and during the course of employment, if the nature of the employment exposes the workman to the risk of such injury
Although the risk may be common to all who are exposed to the sun’s rays on a hot day, the question is whether the employment exposes the employee to the risk

Average person would seek shade in extreme heat when working, but an employee is not permitted to do so if he or she wants to be paid à thus, actual risk

Hanson v. Reichelt (Iowa)

Facts: A farm employee died from heatstroke while working
Issue: Whether the employee suffered an injury that arose out of and in the course of his employment.
Holding: Compensable

An injury occurs in the course of employment when it happens within the period of employment at a place the employee may reasonably be, and while the employee is doing work or something incidental to it. Both sides agree that heatstroke arose during the course of his employment so sole issue is whether injury arose out of employment.
Adopted NEW RULE: Actual Risk Rule in cases involving injuries from exposure to the elements à

NEW RULE: If the nature of the employment exposes the employee to the risk of such an injury à then the employee suffers an accidental injury arising out of and during the course of employment. It makes NO DIFFERENCE that the risk was “common” to the general public on the day of the injury

The average man would avoid the risk of the sun exposure

§ 3.05 The Street-Risk Doctrine

ALL courts now agree that street or highway injuries to employees such as traveling salespeople, delivery persons, and solicitors, whose duties increase their exposure to the hazards of the street, arise out of the employment, although the nature of the risk, as distinguished from the degree, is NOT peculiar to the employment
Take place of proofs = don’t have to go through all details to show place of employment

Just show guy was a delivery person making a delivery, and while removing a case of beer from the truck, he was hit by a bike (now you don’t have to establish proofs)

The concept of street risks has been broadened far beyond the original idea of traffic perils, and has been applied to almost any mishap whose locale is the street, including simple falls, stray bullets, falling trees and foul balls.
Rules for street injuries:

1) The earliest and strictest application of the increased AND peculiar risk test

Resulted in denials in ALL cases – the nature of the hazard was common to all; OBSOLETE now

2) The increased (but not peculiar) risk test

Those classes of employees whose duties carried them into the street more often than ordinary people were allowed compensation for street injuries–while the kind of exposure was common to the public, the degree of exposure was increased; ALL courts are prepared to go this far

3) The actual risk test

It is immaterial even whether the degree of exposure is increased–question: if in fact employment subjected employee to hazards of the street, whether continuously or infrequently; Majority rule