Opinion ID: 1976846
Heading Depth: 1
Heading Rank: 3

Heading: the franks case

Text: Plaintiff Larry Franks began his employment with defendant White Pine Copper Division in June of 1970. On March 7, 1971, while classified as a development miner, he sustained a work-related injury to his right hand, which resulted in the amputation of four fingers. Following his accident, plaintiff received 215 weeks of specific loss benefits pursuant to MCL 418.361(2)(h); MSA 17.237(361)(2)(h) for the loss of a hand. He returned to work ten weeks after his injury, on May 24, 1971. Although there is some dispute as to his job description thereafter, [22] after a period of readjustment plaintiff resumed many of his previous duties. With the exception of layoff periods from January 4, 1976, to April 26, 1976, and from November 13, 1976, to May 31, 1977, due to defendant's economic difficulties, plaintiff worked for defendant until August 1, 1977, when he was permanently laid off. He received unemployment benefits, which were charged against White Pine's rating account, [23] during both interim layoff periods and for the maximum time allowed after the permanent layoff. On July 26, 1978, Mr. Franks filed a petition for workers' compensation, claiming total disability as a result of the 1971 hand injury. A hearing was held in March of 1979 and in a decision dated May 24, 1979, the hearing referee found plaintiff to be partially disabled and awarded benefits commencing August 2, 1977, the first day of the permanent layoff. A timely appeal was filed by the defendant in June of 1979 with the Workers' Compensation Appeal Board. Defendant alleged error in the finding of disability and contended that it was entitled to a setoff for the unemployment benefits plaintiff had collected under a theory that the unemployment benefits were a substitute for wage earning capacity and therefore should be set off from compensation benefits in the same manner as wages. Plaintiff filed no appeal or cross-appeal of the decision of the hearing referee or of the August 2, 1977 benefit commencement date. On February 18, 1982, forty-eight days after the effective date of § 358, the Workers' Compensation Appeal Board issued its decision. The board affirmed the finding of disability and denied a setoff of unemployment benefits. In addition, the board, sua sponte, reversed that portion of the hearing referee's order directing that payment for plaintiff's partial disability should begin as of August 2, 1977, and ordered computation of payment due from the time claimant returned to work in 1971. Anticipating an objection from defendant based on the two-year-back rule, MCL 418.381(2); MSA 17.237(381)(2), the board held that defendant had waived any right to application of the rule by failing to affirmatively raise that issue as a defense. The Court of Appeals affirmed. 122 Mich App 177; 332 NW2d 447 (1982). This case raises three issues. First, as in Chambers and Gomez, we must determine whether the amendatory legislation, in this case § 358 of 1980 PA 357, was intended to apply to persons injured prior to the enactment or effective date of the setoff provision. However, even if we determine that, like § 354, § 358 was intended to apply to workers whose injuries predated its enactment, that does not resolve the Franks case for we must then determine whether, under § 358, an employer may apply the statutory setoff to reduce its outstanding liability for compensable periods prior to that provision's effective date. Specifically, in this case we must determine whether the employer White Pine may reduce its liability for workers' compensation found to be payable for periods of disability in 1977 and 1978, but not yet paid as of January 1, 1982, by deducting the amount of unemployment compensation Mr. Franks received for loss of wages during those same periods in 1977 and 1978. Finally, we must determine whether the Court of Appeals erred in finding the defendant had waived the defense of the two-year-back rule under the facts and circumstances of this case.

On December 30, 1980, while this appeal was pending before the Workers' Compensation Appeal Board, the Michigan Legislature enacted 1980 PA 357, which was the first step in the recent reform of the Michigan workers' compensation system. The Legislature directed that most of the provisions of this act, including § 358, were to become effective one year later, on January 1, 1982. Then, on March 10, 1982, in § 2 of 1982 PA 32, the Legislature repealed enacting § 3 of 1980 PA 357 and simultaneously reenacted § 358 along with certain other provisions providing for the same effective date of January 1, 1982, which at that time was retroactive. 1982 PA 32, § 3(2). Section 358 provides as follows: Net weekly benefits payable under section 351, 361, or lump sum benefits under section 835, shall be reduced by 100% of the amount of benefits paid or payable to the injured employee under the Michigan employment security act, Act No. 1 of the Public Acts of the Extra Session of 1936, as amended, being sections 421.1 to 421.67a of the Michigan Compiled Laws, for identical periods of time and chargeable to the same employer.
The Court of Appeals held that the setoff provisions of § 358 could not be applied to employees whose injuries predated that provision's effective date. It reached this conclusion, based upon the assumption that such application would, in all cases involve retroactive application of the statute, and, after concluding that the statute was ambiguous on this question, applied principles of statutory construction to find that the Legislature's failure to provide clearly and unequivocally for applicability to cases of injuries predating its effective date mandates prospective application. 122 Mich App 186. We believe the analysis of the Court of Appeals on this question is erroneous. As in Chambers and Gomez, we disagree with the Workers' Compensation Appeal Board and the Court of Appeals and find that the setoff provision of § 358 may be applied to reduce workers' compensation liability to workers injured prior to its effective date. As this Court indicated in Hughes, supra, p 86, A statute is not regarded as operating retrospectively because it relates to an antecedent event. Merely because some of the requisites for its application are drawn from a time antedating its passage[, a law is not] retrospective. See also Selk, supra . [24]
The Court of Appeals holding on the date of injury issue made it unnecessary for that court to distinguish cases in which the workers' compensation liability relates to periods of disability prior to January 1, 1982, from cases involving compensable periods commencing on or after January 1, 1982. However, our conclusion that § 358 may be applied to pre-effective date injuries is not dispositive of the claim involved in this case and requires us to address the latter question; that is, whether the setoff provisions of § 358 may be applied to reduce an employer's liability for workers' compensation for periods of disability prior to January 1, 1982, by the amount of unemployment compensation benefits the employee received for the same pre-1982 periods, simply because the workers' compensation benefits remained unpaid as of January 1, 1982. We hold that unemployment compensation paid for weekly periods prior to the January 1, 1982 effective date of § 358 may not be deducted from workers' compensation benefits payable for the identical pre-1982 periods. Unlike the factual situation in Chambers, Gomez, and Hughes, application of § 358 to alter liability for benefits due and payable prior to its effective date does constitute retrospectivity. In Hughes, supra, p 87, this Court made clear that by requesting benefits not from the date of retirement but from the effective date of the amendment in question, plaintiffs seek only prospective application of the amendment. Application of the provisions of § 358 for a period of time preceding that statute's effective date is purely retrospective.

Traditional general constructional rules to determine whether a statutory amendment or enactment should be held to operate retrospectively are well established. The primary and overriding rule is that legislative intent governs. All other rules of construction and operation are subservient to this principle. Therefore, the initial critical inquiry is whether the Legislature has stated its retrospective or prospective intention in clear and express language. See Karl v Bryant Air Conditioning Co, 416 Mich 558, 570; 331 NW2d 456 (1982). A statute is not open to construction as a matter of course, but only where the language used in the statute requires interpretation  where it is ambiguous or where two or more constructions can be placed upon it, where it is of such doubtful or obscure meaning that reasonable minds might be uncertain or disagree as to its meaning. City of Lansing v Lansing Twp, supra, p 649. See also Owendale-Gagetown School Dist, supra, p 8; Selk, supra, p 8. We find nothing in the language of § 358 clearly indicating that workers' compensation benefits which remain payable after the statute's effective date are subject to setoff where those benefits are payable for periods of disability prior to the effective date of the section and where the unemployment benefits were also paid for periods prior to the effective date. The statute merely provides that [n]et weekly [workers' compensation] benefits payable be reduced by the amount of [unemployment] benefits paid or payable to the injured employee ... for identical periods of time and chargeable to the same employer. This language does not constitute a clear legislative statement as to retroactivity or to the period of time intended to be covered by the statute. Although it supplies some limitations as to when unemployment benefits qualify for the setoff, it says nothing about the period of time to which the setoff attaches. Where the Legislature has not stated any retrospective intention in clear and express language and the statute is ambiguous interpretation is required. See Karl, supra .
As a matter of statutory construction, statutes are presumed to operate prospectively unless the contrary intent is clearly manifested. Selk, supra, p 9, and cases cited therein. A retrospective law is one which takes away or impairs vested rights acquired under existing laws, or creates a new obligation and imposes a new duty, or attaches a disability with respect to transactions or considerations already past. Hughes, supra, p 85. Although a statute is not regarded as operating retrospectively merely because it relates to an antecedent event, as we have already observed, application of the provisions of § 358 to impose a disability, in the form of a setoff, upon the amount of workers' compensation time periods prior to the effective date of the legislation in question, is purely retroactive. Cf. Hughes, supra, p 85. The unemployment benefits at issue were received prior to the effective date of § 358. Although payments of the disability benefits were not made prior to January 1, 1982, because of the pendency of this appeal, the payments for the identical period of time as the unemployment payments involved were due and thus payable prior to the effective date of the statute. See MCL 418.801(1); MSA 17.237(801)(1). See also Selk, supra, p 8, and p 17, n 3, and accompanying text (LEVIN J., dissenting ). Workers' compensation benefits are geared to weekly wage loss. The weekly workers' compensation benefits at issue in this case became due over four years before the January 1, 1982 effective date of § 358. We therefore conclude that application of the statute to payments due for these periods would be purely retrospective.
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). Thus, statutes which operate in furtherance of a remedy or mode of procedure and which neither create new rights nor destroy, enlarge, or diminish existing rights are generally held to operate retrospectively unless a contrary legislative intention is manifested. In Selk, we found the interest rate on overdue compensation payments related to a remedy or mode of procedure and was but an incident and not the essence of a right or liability. Selk, p 11. The issue in this case is distinguishable from that in Selk. In essence, interest is a payment for the use of someone else's money. As we noted in Selk, this is not a matter of substance going to the individual's right to compensation. Rather, it is a matter of procedure. Unlike the interest statute in Selk, the statute here in question may not be regarded as wholly procedural in character. Its effect, if applied, would result in taking from the plaintiff the substantive right to receipt of compensation payments which existed prior to enactment of § 358. Consequently, only a clear statement of legislative intent could justify retroactive application. [25] Nor are we persuaded that § 358 should be applied retroactively because it can be characterized as remedial. This Court has been reluctant to apply this exception without extensive exploration of legislative intent. See, e.g., Rookledge v Garwood, 340 Mich 444; 65 NW2d 785 (1954); Lahti v Fosterling, 357 Mich 578; 99 NW2d 490 (1959). We agree with the Court of Appeals that [w]hile § 358 is `remedial' in the sense that it was adopted to effect a reform which, in the eyes of many, will correct certain injustice in the system, [retroactive application would] also significantly and detrimentally affect the substantive right of certain injured employees to receipt of workers' compensation benefits. 122 Mich App 186. In addition, such a construction would appear to reward employers who are found to have incorrectly withheld payment of workers' compensation benefits and correspondingly penalize those who timely made such payments prior to January 1, 1982. We cannot attribute to the Legislature an intention to reward those in defendant's position. We find nothing to overcome the presumption that prospective operation only was intended, and therefore conclude that unemployment compensation paid for weekly periods before the January 1, 1982 effective date of § 358 is not deductible from workers' compensation benefits payable for the identical pre-1982 periods, but that weekly payments of workers' compensation that become due on or after January 1, 1982, are to be reduced by unemployment compensation benefits paid or payable for the same periods.
We also are unable to concur in the Court of Appeals holding that defendant had waived the two-year-back rule, MCL 418.381(2); MSA 17.237(381)(2), Kleinschrodt v General Motors Corp, 402 Mich 381; 263 NW2d 246 (1978).
This Court's holding in Kleinschrodt that defendant had waived the defense of the one-year-back rule, MCL 418.833; MSA 17.237(833), by failing to raise it before the appeal board was expressly limited to the circumstances of that case. In Kleinschrodt, the hearing referee had ordered disability payments for a scheduled loss that occurred ten years before the claim had been filed. Thus, the decision involved liability for a time period that exceeded the limitations of the one-year-back rule, and it would have been both appropriate and indeed necessary to raise the rule as a defense to liability at the time of appeal. However, on appeal to the WCAB, General Motors not only failed to raise what may have been the complete defense of the one-year-back rule, it specifically limited the issues to be considered by the board to the question of disability. Although the Court divided over whether the one-year-back rule is a jurisdictional limitation on the authority of the WCAB or a waivable defense, [26] the majority interpreted the provision as a nonjurisdictional defense, akin to the statute of limitations, which can be waived. Id. However, in its per curiam opinion, the Court noted and expressly relied upon the defendant's stipulation as to the single issue in finding the defense had been waived.
We find the rationale and principles of Kleinschrodt inapplicable to the facts before the WCAB and Court of Appeals in the Franks case. Mr. Franks filed the petition in this case on August 26, 1978. The hearing referee ordered payment of weekly benefits from August 2, 1977.... Plaintiff's employer, White Pine, filed an application for review of the referee's decision with the appeal board, alleging error in the finding of disability and the refusal to apply a setoff for unemployment compensation benefits. As no disability benefits had been ordered for time periods prior to August 2, 1977, there was no reason for the defendant to raise the defense of the two-year-back rule on appeal. The issue of benefits for any period earlier than two years before the petition was filed was not present to defend against. The claimant in this case filed no application for review or cross-application requesting review of the hearing referee's decision on the benefit commencement date. In his brief to the WCAB, he indicated that [t]his Brief is submitted in opposition to [the] appeal and in support of Judge Mikko's Decision. No oral argument was permitted or presented before the appeal board. Nevertheless, in its decision, the appeal board modified the hearing referee's order and changed the commencement date of the partial disability benefits from 1977 to 1971. Even though the question of benefits prior to 1977 had not been an issue before the hearing referee and had not been raised by cross-appeal, the board, concurrently with its award of benefits for additional time periods prior to 1977, held that the employer was barred from applicability of the two-year-back rule. It cited Kleinschrodt as the basis for finding that defendant had waived the defense. We disagree. Under the circumstances of this case, defendant could not have appealed a ruling on the two-year-back rule to the WCAB, because the decision of the hearing referee was favorable to its position on that rule. There was no reason to anticipate a need to argue that issue prior to the determination that Mr. Franks was entitled to additional benefits. Although the majority in Kleinschrodt viewed this defense as nonjurisdictional, there is no authority for requiring it to be raised in a void in the first responsive pleading or be waived. Compare MCR 2.116(D)(1) and 2.116(D)(2). See Piwowarski v Detroit Sulphite Pulp & Paper Co, 412 Mich 716, 727; 316 NW2d 719 (1982) (COLEMAN, C.J., dissenting ). We agree with the admonition of Justice COLEMAN that it would be a costly mistake to extend the holding in Kleinschrodt beyond the facts presented in that case. (The majority did not reach this issue in its resolution of the case.) [27] In addition, defendant White Pine never stipulated or specified that the only issue before the appeal board was one other than the two-year-back rule, as the defendant had in Kleinschrodt. For these reasons, we conclude that under the facts and circumstances of this case, the holding that this defense was waived was clearly erroneous.
We hold that under the provisions of § 358 of 1980 PA 357, MCL 418.358; MSA 17.237(358) unemployment compensation paid for weekly periods before the January 1, 1982 effective date of the 1980 amendment is not deductible from workers' compensation benefits payable for the identical pre-January, 1982 periods, but weekly payments of workers' compensation that become due on or after January 1, 1982, are to be reduced by unemployment compensation benefits paid or payable for the same periods, although the worker was injured before January 1, 1982. We also hold that under the circumstances of this case, where the decision on review before the Workers' Compensation Appeal Board did not involve benefits for any time period which would require invoking the two-year-back rule, and the claimant had not filed an application for review or cross-appeal seeking benefits for a longer period, the holding that the defense had been waived was clearly erroneous. The judgment of the Court of Appeals is reversed, and the case is remanded to the Workers' Compensation Appeal Board for further proceedings and entry of judgment consistent with this opinion. We find defendant's remaining challenge to the test applied by the appeal board in determining disability to be without merit and affirm the judgment of the Court of Appeals on that issue.