Case Name: SELK v. DETROIT PLASTIC PRODUCTS; KELLY v. MUSKEGON COUNTY ROAD COMMISSION; FURMAN v. DEPARTMENT OF CORRECTIONS
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1984-03-21
Citations: 419 Mich. 1
Docket Number: Docket Nos. 70397, 70412, 70417, 70421
Parties: SELK v DETROIT PLASTIC PRODUCTS KELLY v MUSKEGON COUNTY ROAD COMMISSION FURMAN v DEPARTMENT OF CORRECTIONS
Judges: Williams, C.J., and Ryan, Brickley, and Cav-anagh, JJ., concurred with Boyle, J.
Reporter: Michigan Reports
Volume: 419
Pages: 1–31

Head Matter:
SELK v DETROIT PLASTIC PRODUCTS KELLY v MUSKEGON COUNTY ROAD COMMISSION FURMAN v DEPARTMENT OF CORRECTIONS
Docket Nos. 70397, 70412, 70417, 70421.
Argued August 16, 1983
(Calendar Nos. 10-12).
Decided March 21, 1984.
Rehearings granted post, 1205.
Marguerite A. Selk was awarded workers’ compensation benefits for work-related injuries of her hips while employed by Detroit Plastic Products. Edward T. Kelly was awarded workers’ compensation benefits for the aggravation of a pre-existing back injury while employed by the Muskegon County Road Commission. Ralph C. Furman was awarded total and permanent disability benefits for the loss of the industrial use of both legs and for incurable insanity as a result of a work-related injury while employed by the Department of Corrections. While an appeal to the Workers’ Compensation Appeal Board was pending in each case, the Legislature increased the interest on unpaid compensation from 5% to 12% per annum from the date each payment was due until it is paid; the statutory amendment took effect January 1, 1982. In each case, the board entered an award after January 1, 1982, and ordered the employers and carriers to pay 12% interest on the entire award. The Court of Appeals, Danhof, C.J., and J. H. Gillis and Knoblock, JJ., affirmed (Docket Nos. 62449, 62542, 62553, 62653). The employers and carriers appeal, arguing that because the bulk of the awards became due before January 1, 1982, interest should be calculated at 5% per annum for payments due up to December 31, 1981, regardless of when the awards were made.
In an opinion by Justice Boyle, joined by Chief Justice Williams and Justices Ryan, Brickley, and Cavanagh, the Supreme Court held:
Interest on a workers’ compensation award paid by an employer pursuant to an award of a hearing referee, the WCAB, or a court which is entered after January 1, 1982, shall be paid at the rate of 12% per annum from the date each payment was due.
References for Points in Headnotes
[1-4] 82 Am Jur 2d, Workmen’s Compensation § 579.
[2-4] 81 Am Jur 2d, Workmen’s Compensation § 34.
[3] 81 Am Jur 2d, Workmen’s Compensation §§ 16, 18.
1. The amendment of the provision for interest on workers’ compensation awards plainly, certainly, and unambiguously requires that 12% interest per annum is to be computed on an award of weekly workers’ compensation benefits from the date on which each payment was due until it is paid. The language "was due” is clear and does not require construction. Even if it did, the result would be the same. Statutes are presumed to operate prospectively unless a contrary intent is clearly expressed. The fact that a statute relates to an antecedent event does not require retrospective application. Statutes which further an existing remedy and which neither create new rights nor destroy existing rights apply retrospectively absent contrary legislative intent. The interest rate on workers’ compensation awards and the period for computation of the interest is an incident of the right to compensation, not the right itself, and thus a change in the rate may be applied retroactively.
2. Computation of interest on workers’ compensation awards paid after January 1, 1982, at the rate of 12% per annum does not violate the Contract Clause of the federal or state constitutions. Workers’ compensation, although characterized as a liability arising out of a contract of employment, is provided by statute. Remedies for enforcement of a contract may be modified without impairing the contract, and the interest rate on a workers’ compensation award relates to a remedy. Retroactive application of an increase in the rate does not alter the substance of the employment contract.
3. The state may increase the obligations under a private contract where it is necessary to meet a broad and pressing social need and where the increase is reasonably related to the goal. Retroactive application of an increase in the rate of interest on workers’ compensation claims is reasonably related to the goal of compensating disabled workers. Such an increase does not violate either the Contract Clause or the Due Process Clause.
Affirmed.
Justice Levin, joined by Justice Kavanagh, dissenting, would hold that weekly workers’ compensation payments that were due and payable before January 1, 1982, bear interest at 5% per annum until December 31, 1981, and thereafter at 12% per annum until paid, whether or not the award was entered before, on, or after January 1, 1982; and weekly payments that became or become due and payable on or after January 1, 1982, bear interest at 12% per annum until paid even though the award was entered before January 1, 1982.
1. When the Legislature states a specific effective date for an act, it thereby indicates its intent to limit the retroactivity of the act. The amendment providing for an increase in the rate of interest paid on workers’ compensation awards from 5% to 12% per annum specified that the effective date of the amendment was January 1, 1982. That showed a legislative intent to limit retroactivity by allowing interest at the higher rate only where the interest accrues on or after January 1, 1982. Interest that accrues before January 1, 1982, accrues at the rate of 5% per annum, and interest that accrues on or after January 1, 1982, accrues at the rate of 12% per annum. Neither the date of an award nor the date of a payment has any relation to the date the change in the rate of interest became effective.
2. Because interest is always payable for the period between the date a substantive right to payment accrues and the date the interest is awarded or paid, it is in a sense inherently retroactive. The Legislature apparently expressed this inherent characteristic by providing that "interest on the compensation shall be paid at the rate of 12% per annum from the date each payment was due, until paid”.
3. There does not appear to be any appellate decision holding that a statutory increase in the rate of prejudgment interest or interest on a judgment should be given retroactive effect. All cases concerning an increase in a prejudgment interest rate and some cases concerning a postjudgment interest rate hold that interest accrues at the increased rate only from and after the effective date of the amendatory act. Other postjudgment increase in interest rate cases hold that interest accrues at the increased rate only on a judgment entered after the effective date of the act. The holding of the Court in this case that a statute increasing the interest rate is effective as to interest that accrued before the effective date of the amendatory act appears to be unique.
120 Mich App 135; 328 NW2d 15 (1982) affirmed.
Opinion of the Court
1. Workers’ Compensation — Interest on Awards.
Interest on workers’ compensation awards entered by a hearing referee, the WCAB, or a court after January 1, 1982, is to be paid at the rate of 12% per annum from the date each payment was due (1981 PA 194, MCL 418.801[5]; MSA 17.237[801][5]).
2. Workers’ Compensation — Interest on Awards.
The rate of interest to be paid on workers’ compensation awards is an incident of the right to compensation, relating to the remedy of collecting the award when challenged; an increase in the rate furthers the remedy and neither creates new rights nor destroys existing rights and, absent contrary legislative intent, may be applied retroactively (1981 PA 194, MCL 418.801[5]; MSA 17.237[801][5]).
3. Workers’ Compensation — Interest on Awards.
Retroactive application of an increase in the rate of interest on workers’ compensation claims is reasonably related to the goal of compensating disabled workers, and such an increase does not violate either the Contract Clause or the Due Process Clause (US Const, art I, § 10; Const 1963, art 1, § 10; 1981 PA 194, MCL 418.801[5]; MSA 17.237[801][5]).
Dissenting Opinion by Levin, J.
4. Workers’ Compensation — Interest on Awards.
Weekly workers’ compensation payments that were due and payable before January 1, 1982, should bear interest at 5% per annum until December 31, 1981, and thereafter at 12% per annum until paid, whether or not the award was entered before, on, or after January 1, 1982, and weekly payments that became or become due and payable on or after January 1,1982, bear interest at 12% per annum until paid even though the award was entered before January 1, 1982 (1981 PA 194, MCL 418.801; MSA 17.237[801]).
Kelman, Loria, Downing, Schneider & Simpson (by James P. Harvey) for plaintiff Selk.
Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, and Bay W. Cardew, Jr., Assistant Attorney General, for Self-Insurers’ Security Fund.
Fielstra, Flynn, Beider, Wierengo & Brown, P.C. (by Michael J. Flynn), for plaintiff Kelly.
Baxter & Hammond (by James B. Piggush) for Muskegon County Road Commission and Kansas City Fire & Marine.
Nelson, Payne, Parsons & Bouwkamp (by Stephen C. Bouwkamp) for Department of Corrections and Michigan State Accident Fund.
Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, and Caleb B. Martin, Jr., Assistant Attorney General, for the Second Injury Fund.
"An act to amend section 801 of Act No. 317 of the Public Acts of 1969, entitled as amended 'An act to revise and consolidate the laws relating to worker’s disability compensation; and to repeal certain acts and parts of acts,’ as amended by Act No. 302 of the Public Acts of 1977, being section 418.801 of the Compiled Laws of 1970.”
"The People of the State of Michigan enact:
"Section 1. Section 801 of Act No. 317 of the Public Acts of 1969, as amended, being section 418.801 of the Compiled Laws of 1970, is amended to read as follows:
"Sec. 801. (1) Compensation shall be paid promptly and directly to the person entitled thereto and shall become due and payable on the fourteenth day after the employer has notice or knowledge of the disability or death, on which date all compensation then accrued shall be paid. Thereafter compensation shall be paid in weekly installments. Every carrier shall keep a record of all payments made under this act and of the time and manner of making the payments and shall furnish reports, based upon these records, to the bureau as the director may reasonably require.
"(2) If weekly compensation benefits, accrued weekly benefits, medical bills, or travel allowance are not paid within 30 days after becoming due and payable in cases where there is not an ongoing dispute, $50.00 per day shall be added and paid to the worker for each day over 30 days in which the benefits, medical bills, or travel allowance are not paid. Not more than $1,500.00 in total may be added pursuant to this subsection.
"(3) For purposes of rate-making, daily charges paid under subsection (2) shall not constitute elements of loss.
"(4) An employer who has notice or knowledge of the disability or death and fails to give notice to the carrier shall pay the penalty provided for in subsection (2) for the period during which the employer failed to notify the carrier.
"(5) When weekly compensation is paid pursuant to an award of a hearing referee, the board, or a court, interest on the compensation shall be paid at the rate of 12% per annum from the date each payment was due, until paid.
"Section 2. This amendatory act shall take effect January 1, 1982.
"This act is ordered to take immediate effect.
"Approved December 30, 1981.” 1981 PA 194.

Opinion:
Boyle, J.
We granted leave in these consolidated workers' compensation cases in order to determine whether 1981 PA 194, which amended MCL 418.801; MSA 17.237(801), requires that interest on workers' compensation awards made after January 1, 1982, the effective date of the amendment, is to be computed at a rate of 12% per annum with respect to payments which became due prior to January 1, 1982.
In each of these cases, the WCAB entered a post-January 1, 1982, award favorable to the employee and ordered the employer or carrier to pay 12% interest on the entire award. The Court of Appeals affirmed. 120 Mich App 135; 328 NW2d 15 (1982). We granted leave to appeal. 417 Mich 934 (1983). We affirm the Court of Appeals.
I. Facts
There is no dispute as to the facts in the instant cases. Therefore, we adopt the Court of Appeals statement of facts:
"A. Furman
"Plaintiff, Ralph Furman, suffered a work-related injury in 1961. He was awarded benefits for partial incapacity at that time. In 1973, he petitioned for total and permanent disability benefits alleging industrial loss of use of both legs and incurable insanity. He presented the testimony of a psychiatrist which sup ported his claim. Defendants failed to present any contradictory evidence, whereupon in January, 1973, the hearing referee made a finding of total and permanent disability on the basis of plaintiff's incurable insanity. That decision was not appealed.
"In June, 1976, plaintiff's 800-week conclusive presumption period ended. MCL 418.351; MSA 17.237(351). At that time, defendants discontinued paying benefits, whereupon plaintiff petitioned for a factual determination of permanent and total disability. At the hearing, defendants presented expert testimony concerning plaintiff's mental condition. Plaintiff presented contradictory evidence. The hearing referee found that there had been no material change in plaintiff's condition since the original determination of incurable insanity was made and that plaintiff's benefits should be resumed. Defendants appealed that decision to the Workers' Compensation Appeal Board.
"Defendants did not deny that plaintiff's condition remained unchanged after the 1973 decision. Rather, they argued that the evidence conclusively established that plaintiff had never been incurably insane, under either the definition of insanity which existed at the time the 1973 award was entered or the definition which was established thereafter.
"In a split decision, the board affirmed the hearing referee's decision by an order entered on January 14, 1982.
"B. Selk
"Plaintiff Selk filed a petition for benefits on July 27, 1978, claiming that she injured her hips in a work-related incident in January, 1978, and that thereafter her condition was aggravated by a further work-related incident. Contradictory evidence was presented at the hearing with plaintiff and her expert testifying that her injury was work-related. Defendant's expert testified that plaintiff's condition was related to her normal 'non-work related' activities of life. The hearing referee found in favor of plaintiff and entered an open award and ordered the payment of back benefits. By order entered January 8, 1982, the board affirmed the decision of the hearing referee.
"C. Kelly
"Plaintiff Kelly suffered a work-related back injury in January, 1974. Thereafter, defendants voluntarily paid benefits until plaintiff returned to work in November, 1975. Plaintiff quit his job in April, 1976, and filed a petition for benefits on November 11, 1976. Following a hearing held on April 26, 1978, the hearing referee found that plaintiff suffered a work-related injury in 1974. However, he refused to award benefits because he found that plaintiff did not have a compensable injury on April 21, 1976, the last day that he worked.
"By an order entered on January 15, 1982, the board reversed the hearing referee's decision. It found that plaintiff aggravated his pre-existing back injury while performing work for defendants after returning to work in 1975. It further found that plaintiff suffered disabling neck pain and headaches which resulted from the back injury. Therefore, it entered a retroactive award of compensation benefits from April 21, 1976, and thereafter until further order of the board." 120 Mich App 140-142.
II. The Statutory Amendment
A
While these appeals were pending before the WCAB, the Legislature enacted 1981 PA 194, which amended MCL 418.801; MSA 17.237(801) to provide a new fifth paragraph:
"(5) When weekly compensation is paid pursuant to an award of a hearing referee, the board, or a court, interest on the compensation shall be paid at the rate of 12% per annum from the date each payment was due, until paid."
The Legislature directed that the amendment "shall take effect January 1, 1982". Until December 31, 1981, the effective interest rate was 5%. Wilson v Doehler-Jarvis Division of National Lead Co, 358 Mich 510; 100 NW2d 226 (1960).
The issue is whether 1981 PA 194 was intended by the Legislature to operate prospectively or retrospectively. We agree with the Court of Appeals conclusion that this case "does not even involve retrospective application". 120 Mich App 146. We find that the statute is plain, certain, and unambiguous, Grand Rapids v Crocker, 219 Mich 178, 182; 189 NW 221 (1922), and requires application, not interpretation.
The amendment provides that interest shall be paid from the date each payment was due. MCL 418.801(1); MSA 17.237(801)(1) provided prior to 1977 that compensation shall "become payable on the fourteenth day after the employer has notice or knowledge of the disability or death".
In 1977, the Legislature amended § 801 to further clarify when compensation is "dueAs of the time the amendment in issue was enacted the statute provided:
"Compensation shall become due and payable on the fourteenth day after the employer has notice or knowledge of the disability or death". (Emphasis added.)
Against this backdrop the conclusion is compelling that 1981 PA 194 was unambiguously intended to award interest from the date payment "was due".
We find further support for our conclusion from the fact that legislative recognition of inflationary interest rates was not confined to the area of compensation awards.
In 1980, the Legislature provided for a change in the interest rate on money judgments which clearly provided for 6% interest to the effective date of the act (June 1, 1980) and 12% thereafter. MCL 600.6013; MSA 27A.6013. In the instant case, the Legislature failed to limit the increase in interest to the effective date of the statute and instead employed language unequivocally stating that the triggering event "was" an occurrence antedating the effective date of the legislation.
Defendants correctly detail the history of the reform efforts which led to the adoption of 12 acts pertaining to workers' compensation approved on December 30, 1981, and note that the Legislature fixed an effective date of January 1, 1982, for 11 of the 12 acts. However, in our view neither the existence of a legislative concern for the financial burdens on employers or reference to the effective date of the act squarely meet the issue in this case. The Legislature used the language "was due". Unless this language is unclear, these observations are irrelevant to our task which is to give effect to the plain meaning of the language used. Owendale-Gagetown School Dist v State Bd of Ed, 413 Mich 1; 317 NW2d 529 (1982).
B
Moreover, even if we were to conclude that the language used required construction, we would nonetheless conclude that the board's application of the legislation was correct.
As a matter of statutory construction, statutes are presumed to operate prospectively unless the contrary intent is clearly manifested. In re Davis Estate, 330 Mich 647, 651-653; 48 NW2d 151 (1951). Moreover, the fact that the statute relates to antecedent events does not, in itself, require a finding that the statute operates retrospectively. Hughes v Judges' Retirement Bd, 407 Mich 75, 85; 282 NW2d 160 (1979).
An exception to the general rule is recognized where a statute is remedial or procedural in nature. Hansen-Snyder Co v General Motors Corp, 371 Mich 480; 124 NW2d 286 (1963). Statutes which operate in furtherance of a remedy already existing and which neither create new rights nor destroy existing rights are held to operate retrospectively, unless a contrary legislative intention is manifested. Defendant argues that because it is the general rule that an act amending a specific act will be applied retroactively, Rookledge v Garwood, 340 Mich 444; 65 NW2d 785 (1954), it follows that a new provision, which does not amend an existing one, cannot be so applied. However, the Rookledge principle is also simply one of statutory construction. Thus, the fact that § 801 is a new provision does not preclude retroactive application where this is the clearly expressed intent of the Legislature.
As the Second Injury Fund concedes, this Court has held that interest rates relate to a remedy or mode of procedure. See Ballog v Knight Newspapers, Inc, 381 Mich 527, 535; 164 NW2d 19 (1969). While Ballog is not dispositive of the question in the instant case because it related to interest on a money judgment, we there quoted with approval language which characterized interest on a judgment in an action of trespass or trespass on the case for damages to person or property as "not of the substance of the right of action but exclusively an incident attached thereto by legislative fiat after such right has been adjudicated. The period for computation of such interest is in the same category".
Thus, unless we accept the defendants' position that the rights in this case are contractual in nature and that a retroactive application of the statute would impair defendants' vested rights, the conclusion must follow that interest is but an incident and not the essence of a right or liability.
III. Contract Impairment
We recognize the general rule accepted by a majority of jurisdictions that legislative changes in the rate of interest will not be retroactively applied to vary an existing contractual obligation, express or implied, fixing the rate of recoverable interest. Anno: Retrospective application and effect of statutory provision for interest or changed rate of interest, 4 ALR2d 932.
We are persuaded nonetheless that in the instant case interest may be awarded from the date payment was due without running afoul of the constitutional provision against impairment of contract. US Const, art I, § 10; Const 1963, art 1, § 10.
While this Court has characterized workers' compensation as a liability arising out of the contract of employment, we have nonetheless consistently emphasized that workers' compensation is a matter of statutory grace. Rookledge v Garwood, supra, p 453; Wilson v Doehler-Jarvis, supra; So-lakis v Roberts, 395 Mich 13; 233 NW2d 1 (1975).
In Lahti v Fosterling, 357 Mich 578, 584; 99 NW2d 490 (1959), the Court held that an amendment to the workers' compensation act which eliminated a limitation on medical benefits had retroactive effect. The Court considered the theory, also advanced by defendants here, that "since the workmen's compensation act is statutory, and since the employment is based upon a contract, for the legislature to change the remedies would be a violation of the rights of the parties and the contract".
In rejecting this conclusion the Court quoted with approval the following language:
" 'It is true that this Court has held, we believe correctly, that the basis of liability of employers under the Workmen's Compensation Statutes, is contractual. But we cannot say that such contractual relationship or liability necessarily precludes a subsequent Legislature from effecting changes in the Workmen's Compensation laws. Those who enter into such contractual relationships do so with knowledge of the right and power of the Legislature to enact any new law relating to the subject matter, not in conflict with any constitutional provision, and must be presumed to have agreed to any such change.' " Lahti, supra, pp 594-595, quoting Peak v State Compensation Comm'r, 141 W Va 453, 459; 91 SE2d 625 (1956).
In McAvoy v H B Sherman Co, 401 Mich 419, 457; 258 NW2d 414 (1977), we held constitutional the application of MCL 418.862; MSA 17.237(862), which provided that no stay on appeal from an award entered by a referee was available with respect to 70% of the weekly benefit in cases involving injuries or appeals taken by employers before the effective date of the act. We recognized the contractual nature of the relationship while reiterating the principle "that remedies for the enforcement of a contract may be modified without violating the impairment of contract clauses".
We conclude that the interest rate on a compensation award relates to an additional remedy, and that retroactive application of the statute does not alter the substance of the relationship. See Guardian Depositors Corp v Brown, 290 Mich 433; 287 NW 798 (1939).
Defendant correctly contends that the characterization of a particular legislative action as remedial is not a talisman which forecloses further analysis of a constitutional claim. The Contract Clause retains viability as a restriction on legislative action. The state may, however, alter the terms of a private contract to either lighten or increase obligations, save where its activities constitute a substantial alteration of the terms of a contract. In the latter event, the alteration is permissible if the legislation is necessary to meet a broad and pressing social need and is reasonably related to that goal. Allied Structural Steel Co v Spannaus, 438 US 234; 98 S Ct 2716; 57 L Ed 2d 727 (1978).
Certainly the change involved here is not of the magnitude of the pension fund charge found defective in Allied Structural Steel, supra. Moreover, if it is conceded that the retroactive application of the 12% interest rate is a "substantial alteration" of the contract, we think it abundantly clear that compensation for worker disability is legislation for the public welfare. Energy Reserves Group, Inc v Kansas Power & Light Co, 459 US 400; 103 S Ct 697; 74 L Ed 2d 569 (1983). It is also clear that the act is an attempt to remedy a serious social problem, depreciation of the value of the award as a result of the escalation in the interest rate over the period preceding final determination.
Nor can we say that the legislative solution to the problem is not reasonably related to the goal sought to be obtained. We cannot say that the Legislature acted irrationally in considering that 12% interest was an appropriate compensation on an award ultimately deemed to have been rightfully due 14 days from notice of the injury. Defendants do not dispute plaintiffs' assertion that for two years prior to the date of enactment, governmental investment instruments provided interest generally in excess of 12%.
Defendants contend that § 801 is irrational because to the extent that the marketplace interest rate was less than 12% during the period before final judgment, plaintiffs will receive a windfall. We note that the converse is true for those periods in which the 12% interest rate was less than that obtainable in the marketplace. Moreover, if defendants' contentions were accepted and the statute was applied only to payments which are due on or after January 1, 1982, it is foreseeable that some number of workers would not, because of the length of the appeal process, receive 12% interest until 1984, 1985, or later. The wisdom of retroactive application of the 12% interest rate is, in any event, a matter confined to the exclusive judgment of the Legislature. That in any given case the statute may operate imperfectly does not authorize this Court to invalidate an act which is reasonably related to a permissible legislative objective. Shavers v Attorney General, 402 Mich 554, 612; 267 NW2d 72 (1978).
IV. Due Process
Having found that the statute is reasonably related to a legitimate state interest for purposes of the impairment of contract claim, we conclude that defendants' due process claim is likewise without merit. In Lahti v Fosterling, supra, 357 Mich 591-592, we quoted from Matter of Hogan v Lawlor & Cavanaugh Co, 286 App Div 600; 146 NYS2d 119 (1955), in'holding:
" 'The due process clause of the State and Federal Constitutions does not freeze the burden of compensation liability as of the date of the occurrence of an industrial accident, beyond the power of legislative change. In carrying out its social purpose, the Legisla ture has the power to increase the burden on the employer for disability or expenses occurring or continuing after the date of the enactment of the amendatory statute, even though the accident which gave rise to the disability or expenses had occurred prior to that time.' "
V. Conclusion
For the reasons stated, we conclude that where an employer pays compensation pursuant to an award of a hearing referee, the WCAB, or a court which is entered after January 1, 1982, interest shall be paid at 12% from the date each payment was due. As to the remaining issues, the judgment of the Court of Appeals is affirmed for the reasons stated in its opinion. No costs, a public question being involved.
Williams, C.J., and Ryan, Brickley, and Cav-anagh, JJ., concurred with Boyle, J.