Case Name: LINCOLN v. GENERAL MOTORS CORPORATION
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1998-08-21
Citations: 231 Mich. App. 262
Docket Number: Docket No. 204560
Parties: LINCOLN v GENERAL MOTORS CORPORATION
Judges: Before: Whitbeck, P.J., and Mackenzie and Murphy, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 231
Pages: 262–315

Head Matter:
LINCOLN v GENERAL MOTORS CORPORATION
Docket No. 204560.
Submitted April 9, 1998, at Detroit.
Decided August 21, 1998, at 9:00 A.M.
Leave to appeal sought.
Arthur L. Lincoln sustained a work-related injury in 1966 while employed by General Motors Corporation and was awarded total and permanent worker’s compensation benefits. He continued to receive benefits from General Motors and the Second Injury Fund after the expiration of the eight hundred-week statutory period of presumed disability. He reached the age of sixty-five in 1981. In 1985, the fund reduced Lincoln’s differential benefits to twenty-five percent of the state’s average weekly wage pursuant to Lopez v Flower Basket Nursery, 122 Mich App 680 (1982). The fund further reduced the benefits to recoup the overpayment of benefits in the previous twelve months. Lincoln did not timely challenge these reductions. He thereafter filed an application seeking reinstatement of the reduced benefits pursuant to Wozniak v General Motors Corp, 198 Mich App 172 (1993) (Wozniak I). A magistrate concluded that the employer and the fund were entitled to continue to take the age sixty-five reduction pursuant to Rotondi v Chrysler Corp, 200 Mich App 368 (1993), but did not reach the other issues presented. The Worker’s Compensation Appellate Commission (wcac) affirmed the magistrate’s reliance on Rotondi and noted that the plaintiff’s benefits could not be reduced below the minimum level established by MCL 418.351(2); MSA 17.237(351)(2). The WCAC observed that pursuant to Wozniak v General Motors Corp (After Remand), 212 Mich App 40 (1995) (Wozniak II), the one-year-back rule, MCL 418.833(1); MSA 17.237(833)(1), does not apply to limit recovery of any underpayments in violation of subsection 351(2). The Court of Appeals denied the fund’s application for leave to appeal in an unpublished order entered September 11, 1996 (Docket No. 194191). The Supreme Court, in lieu of granting leave to appeal, remanded the matter to the Court of Appeals for consideration as on leave granted of the issue whether Wozniak I is retroactive in favor of those who did not object to the reduction in benefits made pursuant to Lopez. 455 Mich 852 (1997).
On remand, the Court of Appeals held:
1. The Lopez panel sanctioned the application of the age sixty-five reduction in benefits set forth in MCL 418.357(1); MSA 17.237(357)(1) to employees who reached the age of sixty-five after July 1, 1968. Wozniak I concluded that Lopez was wrongly decided and that the minimum-benefit provision in subsection 351(2) was not affected by the age sixty-five reduction. Wozniak I held that for totally and permanently disabled workers whose date of injury precedes July 1, 1968, the age sixty-five reduction in subsection 357(1) cannot reduce the worker’s benefit below the minimum established by subsection 351(2).
2. The Supreme Court has made exceptions to the general rule that judicial decisions are given complete retroactive effect, while legislative changes are usually prospective, where the Court has issued decisions that have an effect similar to the announcement of a new rule of law.
3. A court, to resolve the retroactive-prospective dilemma, must weigh the purpose to be served by the new rule, the extent of reliance on the old rule, and the effect of retroactivity on the administration of justice.
4. Retroactive application of Wozniak I is mandated in this case. The purpose of the holding in Wozniak I was to correct a misapplication of the age sixty-five reduction to a class of workers who were injured before 1968. The Legislature did not intend to reduce benefits for this class of injured workers below the minimum level of subsection 351(2). The fund’s reliance on Lopez was misplaced and, because the age sixty-five reduction has been extensively litigated in the Bureau of Worker’s Disability Compensation since Lopez, the fund should have been well aware that Lopez did not definitively decide the question. Applying Wozniak I retroactively would further the administration of justice. The burden of compensating for an erroneous legal decision should not be placed on an elderly group of disabled workers, and they should be paid the full amount of the benefits to which they are entitled.
5. The fact that the plaintiff failed to timely object to the application of the Lopez reduction does not disqualify him from receiving the retroactive application of Wozniak I. Where a decision is given full retroactivity, its application is not limited to those who raised the issue in a timely manner.
6. The plaintiff’s attempt to recover payments improperly withheld does not constitute an application for further compensation to which the one-year-back rule, MCL 418.833(1); MSA 17.237(833)(1), applies. The two-year-back rule, MCL 418.381(2); MSA 17.237(381)(2), is inapplicable where, as here, the plaintiff has been receiving total and permanent disability benefits for an injury received before July 1, 1968. Wozniak I should be given full retroactive effect in favor of those who did not initially object to the reduction of benefits pursuant to Lopez where the one-year-back rule and the two-year-back rule are inapplicable.
Affirmed.
Whitbeck, P.J., concurring in the result reached by the majority, wrote separately to state that the decision to give Wozniak I full retroactive effect should be based not on a consideration of the economic fairness of the result as it relates to Lincoln and others similarly situated but on the fact that Wozniak I did not establish a new principle of law.
1. Worker’s Compensation — Reduction of Benefits at Age Sixty-Five — Minimum Benefits.
The age sixty-five reduction in worker’s compensation benefits set forth in MCL 418.357(1); MSA 17.237(357)(1) cannot reduce a totally and permanently disabled worker’s benefits below the minimum established in MCL 418.351(2); MSA 17.237(351)(2) where the worker was injured before July 1, 1968.
2. Worker’s Compensation — New Rules of Law — Retroactive Effect — Prospective Effect.
Judicial decisions generally are given complete retroactive effect and legislative changes are usually prospective; the Supreme Court has made exceptions to the general rule when it has issued worker’s compensation decisions that have had an effect similar to the announcement of a new rule of law; in resolving the retroactive-prospective dilemma, a court must weigh the purpose to be served by the new rule, the extent of reliance on the old rule, and the effect of retroactivity on the administration of justice.
3. Worker’s Compensation — Reduction of Benefits at Age Sixty-Five.
Full retroactive application of the holding in Wozniak v General Motors Corp, 198 Mich App 172 (1993), which corrected a misapplication of the age sixty-five reduction in worker’s compensation benefits to a class of workers who were injured before 1968, is not limited to those who timely raised the issue of the misapplication (MCL 418.357[1]; MSA 17.237[357][1]).
4. Worker’s Compensation — One-Year-Back Rule — Two-Year-Back Rule — Words and Phrases — Further Compensation.
An injured worker’s attempt to recover worker’s compensation benefits improperly withheld does not constitute an application for further compensation for purposes of the one-year-back rule; the two-year-back rule does not apply where the plaintiff has been receiving total and permanent disability benefits for an injury suffered before July 1, 1968 (MCL 418.381[2], 418.833[1]; MSA 17.237[381][2], 17.237[833][1]).
Randall K. Caryl (Kelman, Loria, Simpson, Will, Harvey & Thompson, by Ann Curry Thompson, of Counsel), for the plaintiff.
Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Morrison Zack, Assistant Attorney General, for the Second Injury Fund.
Before: Whitbeck, P.J., and Mackenzie and Murphy, JJ.

Opinion:
Murphy, J.
On remand from the Supreme Court for consideration as on leave granted, 455 Mich 852 (1997), defendant Second Injury Fund appeals a decision of the Worker's Compensation Appellate Commission affirming a magistrate's modification of plaintiff's benefit award. We affirm.
Plaintiff sustained a work-related injury in 1966 while employed by defendant General Motors Corporation and was awarded total and permanent disability benefits on the basis of the loss of the industrial use of both legs. Plaintiff remained disabled after the expiration of the eight hundred-week statutory period of presumed disability and continued to receive benefits from both defendants. Plaintiff reached the age of sixty-five in 1981, and in 1985 the Second Injury Fund reduced plaintiff's differential weekly benefits to twenty-five percent of the state's average weekly wage pursuant to Lopez v Flower Basket Nursery, 122 Mich App 680; 332 NW2d 630 (1982). The fund further reduced plaintiff's benefits to recoup the overpayment of benefits in the previous twelve months. Plaintiff did not timely challenge these reductions.
Plaintiff filed an application seeking reinstatement of the reduced benefits pursuant to Wozniak v Gen eral Motors Corp, 198 Mich App 172; 497 NW2d 562 (1993) (Wozniak I). The magistrate concluded that defendants were entitled to continue to take the age sixty-five reduction pursuant to Rotondi v Chrysler Corp, 200 Mich App 368; 504 NW2d 901 (1993), but did not reach the other issues. On appeal, the Worker's Compensation Appellate Commission affirmed the magistrate's reliance on Rotondi and noted that plaintiff's benefits could not be reduced below the minimum level established by MCL 418.351(2); MSA 17.237(351)(2). Pursuant to Wozniak v General Motors Corp (After Remand), 212 Mich App 40; 536 NW2d 841 (1995) (Wozniak II), the commission observed that the one-year-back rule, MCL 418.833(1); MSA 17.237(833)(1), does not apply to limit recovery of any underpayments in violation of subsection 351(2).
This Court denied the fund's application for leave to appeal in an unpublished order entered September 11, 1996 (Docket No. 194191). The Supreme Court, in lieu of granting leave to appeal, remanded the matter to the Court of Appeals for consideration as on leave granted, directing this Court to address whether Wozniak I should be applied retroactively to plaintiffs who failed to timely object when their benefits were reduced pursuant to Lopez.
In Lopez, a panel of this Court sanctioned the application of the age sixty-five reduction in benefits set forth in MCL 418.357(1); MSA 17.237(357)(1) to employees who reached the age of sixty-five after July 1, 1968. In Wozniak I this Court conducted a detailed analysis of the revisions in the statutes governing the age sixty-five reduction and the case law interpreting those statutes and concluded that Lopez was wrongly decided. The Wozniak I Court concluded that the minimum-benefit provision of MCL 418.351(2); MSA 17.237(351)(2) was not affected by the age sixty-five reduction. For totally and permanently disabled workers whose date of injury precedes July 1, 1968, the age sixty-five reduction in subsection 357(1) cannot reduce the worker's benefit below the minimum established by subsection 351(2). Wozniak I, supra at 182.
As a general rule, judicial decisions are given complete retroactive effect, while legislative changes are usually prospective. Riley v Northland Geriatric Center (After Remand), 431 Mich 632, 647; 433 NW2d 787 (1988). In the context of worker's compensation law, the Supreme Court has made exceptions to the general rule when it has issued decisions that have had an effect similar to the announcement of a new rule of law. In Gusler v Fairview Tubular Products, 412 Mich 270; 315 NW2d 388 (1981), the Court corrected a misinterpretation of the act with regard to the adjustment of minimum benefits under MCL 418.351; MSA 17.237(351). The Court gave its holding prospective application, stating:
Although our holding is based on what we perceive to have been the intent of the Legislature at the time of enactment of the provisions discussed, in practical effect, given the contrary interpretations of the law by the Director of the Bureau of Workers' Compensation and the bureau's subdivisions, the Workers' Compensation Appeal Board and its hearing referees, and the Court of Appeals, today's holding is not unlike the announcement of a new rule of law. Its application therefore should be treated accordingly. See Whetro v Awkerman, 383 Mich 235; 174 NW2d 783 (1970); Parker v Port Huron Hospital, 361 Mich 1; 105 NW2d 1 (1960); Bricker v Green, 313 Mich 218; 21 NW2d 105 (1946). [Gusler, supra at 298.]
The Court revisited the prospective application of Gusler in Riley, supra. The Court noted that certain rules or principles have evolved that provide guidance in resolving the retroactive-prospective dilemma. A court must weigh (1) the purpose to be served by the new rule, (2) the extent of reliance on the old rule, and (3) the effect of retroactivity on the administration of justice. Riley, supra at 645-646.
As applied to this case, these principles mandate the retroactive application of Wozniak I. The purpose . of the Wozniak I holding was to correct a misapplication of the age sixty-five reduction to a class of workers who were injured before 1968. The Legislative intent was never to reduce benefits for this class of injured workers below the minimum level of subsection 351(2). While the Second Injury Fund may have relied on this Court's ruling in Lopez, its reliance was misplaced. The application of the age sixty-five reduction has been extensively litigated in the bureau since Lopez, and the fund should have been well aware that Lopez did not definitively decide the question. Wozniak I, supra. Applying Wozniak I retroactively would further the administration of justice. While the Second Injury Fund may incur additional liabilities, the injured workers should be paid the full amount of the benefits to which they are entitled. The burden of compensating for an erroneous legal decision should not be placed on an elderly group of disabled workers. The fact that plaintiff failed to timely object to the application of the Lopez reduction does not disqualify plaintiff from receiving the retroactive application of Wozniak I. Where a decision is given full ret reactivity, its application is not limited to those who raised the issue in a timely manner. Riley, supra at 649, n 11.
Defendant fund argues that any retroactivity should be limited by the one-year-back rule, MCL 418.833(1); MSA 17.237(833)(1). However, this question has been conclusively decided in the successor case of Wozniak II, supra. A plaintiffs attempt to recover payments improperly withheld does not constitute an application for further compensation as defined by the statute. The two-year-back rule, MCL 418.381(2); MSA 17.237(381)(2), is inapplicable where the plaintiff has been receiving total and permanent disability benefits for an injury received before July 1, 1968. Brecht v Save-Way Food Center, 407 Mich 743; 288 NW2d 576 (1980). The one-year-back and two-year-back rules provide the limiting structure for back benefits in the Worker's Disability Compensation Act contemplated by the Legislature. Where these rules are inapplicable, Wozniak I should be given full retroactive effect in favor of those who did not initially object to the reduction of benefits pursuant to Lopez.
Affirmed.
Mackenzie, J., concurred.