Opinion ID: 1825934
Heading Depth: 2
Heading Rank: 1

Heading: Procedural Due Process: Stays

Text: A claim for review filed pursuant to sections 859 or 861 shall not operate as a stay of payment to the claimant of 70% of the weekly benefit required by the terms of the hearing referee's award. Payment shall commence as of the date of the hearing referee's award and shall continue until final determination of the appeal or for a shorter period if specified in the award. The threshold question for this Court is whether the foregoing language of the 70% statute violates procedural due process in that it does not provide for an automatic stay of a hearing referee's award to a claimant pending an appeal by the employer. The test by which courts decide whether a particular legislative enactment comports with due process has been stated and restated ad infinitum. We prefer the traditional statement found in Nebbia v New York, 291 US 502, 525; 54 S Ct 505; 78 L Ed 940 (1934): The Fifth Amendment, in the field of federal activity, and the Fourteenth, as respects state action, do not prohibit governmental regulation for the public welfare. They merely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with due process. And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. It results that a regulation valid for one sort of business, or in given circumstances, may be invalid for another sort, or for the same business under other circumstances, because the reasonableness of each regulation depends upon the relevant facts. See also Grubaugh v City of St Johns, 384 Mich 165; 180 NW2d 778 (1970). In determining, then, whether the 70% statute is unreasonable, arbitrary, or capricious, and whether the means selected bear a real and substantial relation to the object sought to be attained, we must look to (1) the overall objective of the Worker's Disability Compensation Act and (2) the specific objective of the 70% provision itself, and how that objective is implemented. Professor Larson, in his classic treatise on worker's compensation law, succinctly stated the social philosophy underlying any worker's compensation system: The ultimate social philosophy behind compensation liability is belief in the wisdom of providing, in the most efficient, most dignified, and most certain form, financial and medical benefits for the victims of work-connected injuries which an enlightened community would feel obliged to provide in any case in some less satisfactory form, and of allocating the burden of these payments to the most appropriate source of payment, the consumer of the product. 1 Larson, Workmen's Compensation Law, § 2.20. Any worker's compensation schema has, therefore, as its primary goal the delivery of sustaining benefits to a disabled employee as soon as possible after an injury occurs, regardless of any traditional tort concepts of liability. The objective of the social legislation is to provide the disabled worker with benefits during the period of his disability so that the worker and his dependents may survive (literally) the catastrophe which the temporary cessation of necessary income occasions. The inherent rationality of worker's compensation legislation has stood unchallenged for decades. Its real and substantial relation to a valid legislative objective has successfully withstood due process challenges and is firmly established as a bellwether of Twentieth Century social legislation. See, for example, New York C R Co v White, 243 US 188; 37 S Ct 247; 61 L Ed 667 (1917). Historically, however, a profound injustice has plagued this piece of social legislation in Michigan, as well as in other states. Due to both the increasing number and sophistication of appeals by employers and carriers of worker's compensation awards, workers who have been awarded benefits and are indeed ultimately found entitled to such benefits because of legitimate disabilities, must often wait years to begin receiving compensation while the appellate process slowly grinds to a final conclusion. In the interim, workers and their families are denied the benefits which were intended under the initial philosophy of worker's compensation to sustain them through this period of disability. The appellate process hamstrings the delivery of immediate benefits and contributes to the very social ill which worker's compensation acts sought to remedy. [2] It is from this perspective that we must examine the advent of the 70% statute. 1975 PA 34 represents an attempt by the Legislature to instill new vitality into the Worker's Disability Compensation Act. The Legislature evidently realized that the ultimate goal of the worker's compensation schema was being thwarted by an appellate process which was merely a traditional carry-over from existing tort concepts of liability. [3] Workers were not receiving the benefits awarded by the referees and were often subject to being whipsawed into settlements for lesser benefits in order to avoid the lengthy appellate process. The Rhode Island Supreme Court recognized these very same abuses in commenting upon the enactment by its Legislature of a similar no-stay provision: The injured worker was confronted with an even more acute problem when the employer appealed. He did not receive his compensation promptly. At a time when he was unable to work and usually in need of medical attention with no income to support himself and his family, he was faced with what appeared to be a seemingly endless and costly litigation. As a result, either claims were abandoned or the injured worker was harassed into accepting an inadequate lump-sum settlement. It was obvious that the Legislature, when it enacted § 28-35-33, intended to eliminate the evils connected with the then existing law by providing that an injured worker who has successfully prosecuted his petition would be promptly compensated   . Merchants Mutual Ins Co v Newport Hospital, 108 RI 86, 91; 272 A2d 329, 331 (1971). Accord Employers' Mutual Ins Co v Industrial Commission, 65 Colo 283; 176 P 314 (1918). The Michigan Legislature remedied this social ill by providing that [a] claim for review    shall not operate as a stay of payment to the claimant of 70% of the weekly benefit required by the terms of the hearing referee's award. It is not this Court's role to decide whether the Legislature acted wisely or unwisely in enacting this statute. We will not substitute our own social and economic beliefs for those of the Legislature, which is elected by the people to pass laws. Ferguson v Skrupa, 372 US 726; 83 S Ct 1028; 10 L Ed 2d 93 (1963). We are only concerned that the enacted law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. In the case at bar, the Legislature decided not to stay, pending appeal, 70% of the weekly benefits due a claimant, after a hearing referee's award We do not find that this legislative enactment violates procedural due process. The employers and carriers receive a fair, impartial and full initial determination before an administrative judge (hearing referee); this they do not deny. Their right to appeal that award remains intact. The worker/claimant does not receive the entire award; only that percentage of the award which statistically reflects the ratio of ultimate affirmances. [4] Given the general social philosophy underlying the Worker's Disability Compensation Act and the abuses which have arisen under the traditional 100%-stay-pending-appeal system, we cannot agree that the 70% statute impinges upon any of the appellants' traditional due process rights. Due process does not necessarily guarantee appellant employers and carriers a right to a complete stay of benefits while an award, which was entered with full due process accorded, is appealed to a higher tribunal. In fact, this Court recognizes that it is arguable that the staying of all benefits awarded, pending appeal, could conceivably constitute a denial of claimants' due process rights. In California Dep't of Human Resources Development v Java, 402 US 121, 134; 91 S Ct 1347; 28 L Ed 2d 666 (1971), the United States Supreme Court alludes to the same problem. [5] While Java admittedly arose out of different factual context and dealt with the complex interplay of Federal-state guidelines regarding the prompt payment of unemployment benefits, the underlying policy issue is the same one at issue here. The Court required the payment of substitute wage benefits to a claimant without a stay pending appeal when a claimant has been awarded those benefits after a full initial hearing. The Supreme Court reasoned thus: It would frustrate one of the Act's basic purposes  providing a `substitute' for wages  to permit an employer to ignore the initial interview or fail to assert and document a claimed defense, and then effectuate cessation of payments by asserting a defense to the claim by way of appeal. If the employer fails to present any evidence, he has in effect defaulted, and neither he nor the State can with justification complain if, on a prima facie showing, benefits are allowed. If the employer's defenses are not accepted and the claim is allowed, that also constitutes a determination that the benefits are `due.' (Emphasis added.) The no-stay provision of 1975 PA 34 not only comports with procedural due process guarantees as regards employers and carriers, but it also extends a quantum of due process to disabled employees who have been awarded benefits but are denied them by a strangulating appellate process. Appellants further contend that the no-stay provision of 1975 PA 34 (a) effectively denies their right to judicial review of administrative decisions as guaranteed by the Michigan Constitution of 1963, art 6, § 28, and (b) allows for the payment of 70% benefits even after an appellate tribunal has reversed the hearing referee. Both contentions lack merit. Appellants are correct in their assertion that Const 1963, art 6, § 28, guarantees judicial review of administrative decisions: All final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law; and, in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record. Findings of fact in workmen's compensation proceedings shall be conclusive in the absence of fraud unless otherwise provided by law. However, we find nothing in the 70% statute or the Worker's Disability Compensation Act as a whole which violates this constitutional mandate. The Worker's Disability Compensation Act does provide for a review of the decisions made by the Worker's Compensation Bureau: If a claim for review is filed, the board shall promptly review the order, together with the records of the hearing; it may hear the parties, together with such additional evidence as it in its discretion may allow them to submit and shall file its order with the records of the proceedings. The review and hearing may be held at its offices in Lansing, or elsewhere, as the board deems advisable. Where the employer or carrier files a claim for review to the board or appeals to the court of appeals or supreme court, a copy of the testimony, depositions and other documents necessary for the appeal shall be furnished by the employer or carrier to the employee or his attorney. MCLA 418.859; MSA 17.237(859). The findings of fact made by the board acting within its powers, in the absence of fraud, shall be conclusive. The court of appeals and the supreme court shall have power to review questions of law involved in any final order of the board, if application is made by the aggrieved party within 30 days after such order by any method permissible under the rules of the courts of the laws of this state. MCLA 418.861; MSA 17.237(861). The constitutional provision cited was concerned with (1) providing for judicial review of rulings by administrative agencies, and (2) establishing a standard of review for the findings of fact made by administrative agencies. Nowhere in this constitutional stricture is it stated or implied that this right to review includes an automatic stay of the initial award made by the hearing referee (administrative judge). It would be inaccurate to contend that art 6, § 28, guarantees an unencumbered, de novo right to appeal. The very wording of the provision states otherwise. Article 6, § 28, specially provides that such rulings shall be subject to direct review by the courts as provided by law. (Emphasis added.) The phrase as provided by law clearly vests the Legislature with the authority to exert substantial control over the mechanics of how administrative decisions are to be appealed. Viculin v Dept of Civil Service, 386 Mich 375; 192 NW2d 449 (1971). We believe that it is perfectly reasonable, given the aforementioned problems with delivering worker's compensation benefits to disabled employees, that the Legislature decide that the original award shall not be stayed pending the appeal. Certainly such a no-stay provision does not constitute a denial of the right to appeal. It is recognized that the 70% no-stay provision of 1975 PA 34 might limit or inhibit strategically or tactically the number of appeals taken by an employer or carrier. However, as we construe the legislation, this is precisely one of the ancillary goals of the act: to discourage marginal or frivolous appeals. Certainly no employer or carrier will be discouraged from pursuing a meritorious appeal. The 70% no-stay payment shall commence as of the date of hearing referee's award and shall continue until final determination of the appeal. If an employer or carrier is successful upon appeal and the weekly benefit is reduced or rescinded by a final determination, the employer or carrier will have only paid the 70% benefits for the interim period between the initial award and its subsequent reduction or rescission. It is patently illogical to assume that an employer or carrier will not press a meritorious appeal simply because he is required to pay 70% benefits before an appeal can be completed. Nor does such payment render the appellate process meaningless when one considers the potential liability present in many cases. Furthermore, we do not agree with the construction that the interim 70% payments continue even though the hearing referee's award is overturned at some juncture during the appellate process. The statute specifically provides that [p]ayment shall commence as of the date of the hearing referee's award and shall continue until final determination of the appeal   . (Emphasis added.) It would yield an absurd result to construe the phrase until final determination of the appeal as until completion of the entire appellate process. See In re Petition of State Highway Commission, 383 Mich 709; 178 NW2d 923 (1970). The entire appellate process could conceivably include appeals either by the claimant or by the employer or carrier to the Worker's Compensation Appeal Board, Court of Appeals and Supreme Court. The logical consequence of the statute's wording indicates that a claimant is entitled to 70% benefits awarded by a hearing referee until such time as the hearing referee's award is reduced or rescinded upon an appeal. If the hearing referee's award, the prerequisite for putting the entire legislative schema in motion, is vacated at any appellate stage, the 70% benefits are terminated. If at any point on appeal the benefits are reduced, the 70% no-stay provision applies only to the new award (provided, of course, another appeal is taken). Likewise, if a hearing referee's award which was vacated or modified at a lower appellate level is reinstated at a higher appellate level, the 70% benefits resume. [6] This interpretation is consistent with the Legislature's intent as we read the statute. The hearing referee's initial award is the catalyst which initiates the 70% benefits. During the various appellate steps, it is that initial hearing referee's award and its eventual disposition which governs when 70% benefits are to be paid or not paid, until the appellate process is completed. Thus, it can readily be seen that the 70% no-stay provision of 1975 PA 34 ultimately encourages all parties to expedite appeals. Employers and carriers certainly will seek prompt appellate relief in cases where they believe unjustified benefits are awarded. Claimants will also seek prompt appellate finalization in most cases [7] because they will wish to obtain the 30% benefits held pending final disposition. In the meantime, the 70% benefits initially awarded will sustain the claimants during this sometimes lengthy process and remove any unfair bargaining leverage employers or carriers exercise during the interim. We find nothing unreasonable, arbitrary or capricious about this legislative plan and believe the means selected, to wit, the 70% no-stay provision, bears a real and substantial relation to the object sought to be attained.