Opinion ID: 2227742
Heading Depth: 3
Heading Rank: 1

Heading: The Worker's Disability Compensation Act

Text: In the early 1980's, the Legislature, after a good deal of public discussion, came to the view that the costs of Michigan's worker's compensation system were excessive and therefore a deterrent to the state's nascent economic recovery from the recession of the late 1970's. See Senate Analysis Section, SB 573, January 7, 1982. To sense the tenor of the argument of the reformers, it is helpful to recall, as this Court did in Franks v. White Pine Copper, 422 Mich. 636, 655, 375 N.W.2d 715 (1985), the words of the then Governor William Milliken, who described the system as the `biggest single liability to Michigan's job climate today.' Having determined to reduce worker's compensation's costs, the Legislature passed a series of measures, including legislation limiting attorney fees in worker's compensation cases, [6] legislation regulating medical fees, [7] and legislation excluding certain fringe benefits from the calculation of worker's compensation. [8] See id. These bills also included a measure to end the duplicative payment of worker's compensation benefits to employees who receive other forms of wage-loss benefits, M.C.L. § 418.354; MSA 17.237(354). This reform, described as coordination, meant that the injured party's worker's compensation was to be reduced by the amount of the other wage-loss benefits received, such as payments from a disability pension. This approach, which served to reduce disincentives to return to work, was in harmony with the traditional goal of Michigan's worker's compensation, which has always been to rehabilitate workers so as to facilitate their return to work. Bower v. Whitehall Leather Co., 412 Mich. 172,191, 312 N.W.2d 640 (1981). To implement coordination, § 354(1) sweeps broadly. It states in pertinent part that worker's compensation benefits shall be reduced by ... [t]he after-tax amount of the pension ... payments received or being received pursuant to a plan or program established or maintained by the same employer from whom [worker's compensation] benefits ... are received.... (Emphasis added.) With this section having established across the board coordination, the Legislature then carved out, in § 354(14), some narrow exceptions to universal coordination. The scope of these exceptions is at issue here. The initial sentence of § 354(14) states that coordination does not apply to any payments received or to be received under a disability pension plan provided by the same employer which plan is in existence on March 31, 1982. The second sentence of § 354(14) states: Any disability pension plan entered into or renewed after March 31, 1982 may provide that the payments under that disability pension plan provided by the employer shall not be coordinated pursuant to this section. These are essentially opt out clauses. By their terms, they apply only to disability pension plans that are entered into or renewed after March 31, 1982. These provisions permit plans that are entered into or renewed after March 31, 1982, to be exempted from the general coordination requirement. Said another way, these clauses, if utilized, allow parties to a disability pension plan entered into or renewed after March 31, 1982, to except such plan from the general regime of coordination by specifically so providing in the plan. The scope of this opt out language is central to the resolution of this dispute. In particular, is the language of § 354(14) to be read to apply to statutory pensions as well as privately negotiated pensions, or only to the latter? We conclude it applies only to privately negotiated pensions. This section of the statute when read in context clearly applies only to private pension plans because of the words used and their meaning in the law. Contextual understanding of statutes is generally grounded in the doctrine of noscitur a sociis: [i]t is known from its associates, see Black's Law Dictionary (6th ed), p. 1060. This doctrine stands for the principle that a word or phrase is given meaning by its context or setting. State ex el. Wayne Co. Prosecutor v. Diversified Theatrical Corp., 396 Mich. 244, 249, 240 N.W.2d 460 (1976), quoting People v. Goldman, 7 Ill.App.3d 253, 255, 287 N.E.2d 177 (1972). [9] As the second sentence of § 354(14) enables employers and employees who enter[ ] into or renew[ ] pension plans to opt out of § 354(1)'s coordination requirement, we must look to the legal disciplines such words call forth. These words are contractual in nature, terms used by contracting parties when, for example, negotiating a pension plan in conjunction with collective bargaining. On the other hand, pension arrangements pursuant to statute invariably are created (or established) and amended rather than entered into or renewed. This distinction is significant because created and amended are not words of contract, but rather are the words of a legislature at work, implying, as they do, unilateral action. The Legislature's choice of the words entered into and renewed demonstrates that the meaning of the term plan in § 354(14) does not include pensions provided pursuant to statute, but rather only those privately negotiated. In response to this context argument, it was argued that § 354(14)'s use of the word plan must encompass both private and statutory pensions, because plan is frequently used in other subsections of this statute to mean both and thus § 354(14), by use of an in pari materia argument, must be held to cover both types of pensions. This argument fails, however, because the interpretive aid of the doctrine of in pari materia can only be utilized in a situation where the section of the statute under examination is itself ambiguous. Voorhies v. Faust, 220 Mich. 155, 157, 189 N.W. 1006 (1922); 2B Singer, Sutherland Statutory Construction (5th ed.), § 51.01, p. 117; Black's Law Dictionary (6th ed.), p. 791. That not being the case here, in pari materia techniques are inappropriate. [10] That the Legislature would feel comfortable treating coordination requirements for privately negotiated pension plans differently than for those pensions created by statute is not hard to understand, as legislatures dealing with labor matters frequently utilize different approaches for public and private employees. This can be seen in the legislative regulation of collective bargaining, labor negotiations, injunctions, arbitrations, and even work stoppages. It seems clear that there is just more legislative reluctance to intervene statutorily in private employment contracts than in public employment contracts. Accordingly, that this legislation would treat this aspect of a labor contract differently, by allowing only parties to privately negotiated pensions to opt out of coordination, is not disharmonious with this pattern, nor should it be viewed with a suspicion that the Legislature might have been unfamiliar with such distinctions. In fact, that the Michigan Legislature would apply different rules to the two types of pensions is even more explicable when one considers that the roughly parallel federal legislation that dominates this field, the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., treats pensions maintained by governments differently than those coming from private contractual plans that are subject to the act. 29 U.S.C. §§ 1002(32) and 1321(b)(2). This is compelling because federal treatment of matters in other legal fields, such as discrimination, is frequently held to be instructive in explicating our Legislature's treatment of similar matters. [11] In light of this pattern, we are reinforced in our conclusion that§354(14), when understood in context, can, and does, apply only to privately negotiated pension plans. Moreover, the argument we advance to interpret this statute is such as to give it coherence and rationality, whereas plaintiff's position, when fully examined, would create a statute that, essentially, has the Legislature acting futilely by marching up the coordination mountain only to about-face and immediately march back to the same spot. Under plaintiff's reading of the statute, the first clause of § 354(14) applies to his PSERA pension, and because the Legislature never, after 1982, renewed it or established a new plan, the pre-1982 rule of non-coordination remains to this day in effect for statutory pensions such as his. The problem with this analysis, however, is that if the exception contained in the first clause of § 354(14) applied not only to privately negotiated pensions, but also to those created by statute, such as the one at issue here, virtually all imaginable pensions (that is, statutory and private) in existence on § 354's effective date would be excepted from the broad rule of coordination that was the very purpose of the statute. It would be a circumstance, to use the familiar formulation, where the exception would swallow the rule. Such a construction should be avoided. [12] It is, after all, a wellknown principle that [s]tatutes should be construed so as to prevent absurd results.... McAuley v. General Motors Corp., 457 Mich. 513, 518, 578 N.W.2d 282 (1998). We should heed this venerable rule that is based on respect for our coequal branch of government, and accordingly on this basis also reject the reading of § 354(14) tendered by plaintiff. For all these reasons, we hold that disability pension benefits under the PSERA are not included in the exception set forth in § 354(14). Accordingly, PSERA disability pension benefits are to be coordinated with worker's compensation benefits as mandated in § 354(1).