Court Opinion

ID: 7958914
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:27:37.594611+00
Date Added: 2024-06-11T16:34:22.130207
License: Public Domain

H. R. Gage, J.
(dissenting). I respectfully dissent from that portion of the majority opinion upholding the constitutionality of MCL 418.611(2); MSA 17.237(611)(2). I believe that the provision results in an improper delegation of a legislative function because it does not give the director sufficient guidelines upon which to make a decision to revoke the self-insured status of an employer.
I have no disagreement with the guidelines set forth by the Supreme Court in Dep’t of Natural Resources v Seaman, 396 Mich 299; 240 NW2d 206 (1976), and relied upon by the majority. I believe, however, that an application of these guidelines to *364the challenged language requires a finding opposite to that of the majority.
The majority first notes that the challenged language of subsection (2) must not be read in isolation but must be construed with reference to the language immediately preceding it in subsection (l)(a). That language requires the employer to make a reasonable showing of his solvency and financial ability to pay benefits in order to receive authorization to be a self-insurer in the first instance. The majority feels that subsection (2) is to be construed with reference to that language.
Although subsection (l)(a) may arguably set forth sufficient guidelines for granting self-insured status in the first instance, in my view, it is precisely because that language appears in the very provision as the challenged language that subsection (2) cannot withstand the constitutional challenge. In light of the close proximity of the language, I cannot believe that the Legislature, after taking the time to set forth what the director must consider to grant self-insured status initially, intended that the language used in subsection (2), giving the director the power to alter his decision "for any reason”, would simply incorporate the factors stated in subsection (l)(a). I believe the use of the word "any” in subsection (2), immediately following the relatively precise factors as stated in subsection (l)(a), requires a contrary conclusion. Had the Legislature intended the director and this Court to incorporate those factors into subsection (2), it could have easily accomplished that result by simply referring the director to the language of subsection (l)(a).
The primary rule of statutory construction is that the Legislature is presumed to have intended the plain meaning of the words used by it. This *365Court must construe all words and phrases according to the common and approved usage of the language. Congregation B’Nai Jacob v City of Oak Park, 102 Mich App 724, 729; 302 NW2d 296 (1981). Both the Supreme Court and this Court have recognized that the word "any” has a well-defined meaning, not only in the law but in common daily usage, and includes "every”, "each one of all” or "more than one”. Harrington v Inter-State Business Men’s Accident Ass’n, 210 Mich 327, 330-331; 178 NW 19 (1920), Congregation B’Nai Jacob, supra, 729-730. Construing the challenged language of subsection (2) with reference to the language of subsection (l)(a), as required by Seaman, it is my belief that the Legislature, by providing specific factors to be considered in initially granting self-insured status but then, in the very same provision, allowing the director to alter that decision "for any reason”, expressed its intention in a manner which leaves this Court with no alternative other than to find subsection (2) to be an unconstitutional delegation of legislative authority.
The majority also notes that Seaman requires the challenged language to be viewed as guided by the purpose of that provision and the act in general. In reaching its conclusion that the director is given sufficient guidance in reviewing or altering a prior decision, the majority incorporates the factors of subsection (l)(a) into subsection (2). In light of my earlier conclusion that, because of the manner in which the provision was enacted and the language used, such an incorporation cannot be made, I must also disagree with the majority’s conclusion on this factor. I do not disagree with the appeal board’s statement that the purpose of director review is protection of the workers and *366other self-insured employers. I also believe, however, that there must be a reciprocal purpose of protecting the particular employer under director review who may well be financially capable of retaining self-insured status. Allowing the director to revoke that status "for any reason” does not sufficiently protect or further that purpose of the act.
Finally, in light of the fact that the Legislature provided relatively specific guidelines for the grant of self-insured status in the first instance, it is apparent that more precise standards could have been provided with regard to reviewing and altering such a decision. Thus, the final principle announced in Seaman requires that subsection (2) be struck down as an unconstitutional delegation of legislative authority.
I remain mindful of our duty to construe, if possible, subsection (2) as vesting discretionary, not arbitrary, and as conferring administrative, not legislative, power. Argo Oil Corp v Atwood, 274 Mich 47, 53; 264 NW 285 (1935). We must also, however, interpret the statute as the Legislature wrote it. Congregation B’Nai Jacob, supra, 730. I believe that subsection (2) confers upon the director virtually unbridled discretion to revoke self-insured status and is, therefore, unconstitutional.
I would also find that Administrative Rule 13, 1954 AC, R 408.43, which was in effect at the time plaintiffs self-insured status was revoked,1 failed *367to provide any further protection of plaintiffs right to due process. Rule 13 provided:
"Rule 13. (1) An employer seeking exemption from insuring its risk under the workers’ disability compensation act and the privilege of becoming a self-insurer shall apply to the bureau on form 402, application for self-insurance. The approval of an application for self-insurance shall be for no longer than 1 year after the effective date of the approval. An approval may, upon application and review, be renewed for no more than 1 year at a time. The employer shall submit a renewal application to the director 30 days before expiration of the self-insurance privilege. Upon receipt of a renewal application, the privilege may be extended until denied by the director.
"(2) The director may require a surety bond, proof of excess insurance, or such other type of security as he deems necessary.
"(3) Pursuant to section 611 of the act and this rule, the director, upon his own motion, may review his prior approval granting an employer the privilege of becoming self-insured. If, as a result of such review, the director determines that it is necessary to revoke the self-insurance privilege, he shall do so in accordance with the following:
"(a) Notify the employer of his review and intention to revoke the employer’s previously granted privilege to *368be self-insured. The reasons for revocation shall be included in the notice of review.
"(b) The self-insured employer may request a hearing before the director within 15 days of the mailing date of the director’s notice as to why it should be allowed to remain self-insured.
"(c) If the employer fails to request a hearing within 15 days after mailing of the director’s notice, the director may revoke the self-insurance privilege.
"(d) If, after a hearing, the director still finds it necessary to alter his decision granting an employer the privilege to be self-insured, he shall notify the employer to that effect.
"(e) A hearing, when requested, shall be scheduled within reasonable time subject to the availability of the director or his authorized representative.
"(f) If, after a hearing, the self-insurance privilege is revoked, it shall become effective 30 days after the director’s decision is mailed. Thereafter, the employer shall be required to have private insurance coverage.” (Emphasis supplied.)
Aside from setting forth some procedural requirements, Rule 13 simply reiterated the director’s statutory authority that is set forth in subsection (2) without establishing any additional guidelines to govern the director’s decision to revoke. The rule’s extensive procedural guarantees cannot make up for the fundamental flaw of its vagueness. It only serves to lodge "unbridled ad hoc, ad hominem discretion” in the director. See Civil Service Comm of Hamtramck v Pitlock, 44 Mich App 410, 414; 205 NW2d 293 (1973).
The dangers inherent in the failure to establish sufficient guidelines for the exercise of an administrative officer’s discretion are apparent in this case. There is evidence in the record which indicates that the director customarily relied on an unwritten rule or policy requiring a company to retain a ratio of net worth to self-insurance reten*369tion of 10 to 1. Reliance on such an unwritten rule denies the employer the opportunity knowledgeably to defend its self-insured status and constitutes a violation of the Administrative Procedures Act of 1969 which requires a state agency to promulgate, process and publish all its rules and regulations. MCL 24.203(1), 24.205(5), 24.231 et seq.; MSA 3.560(103)(1), 3.560(105)(5), 3.560(131) et seq., Mallchok v Liquor Control Comm, 72 Mich App 341; 249 NW2d 415 (1976).
My disposition of the above issues makes discussion of plaintiffs other issues unnecessary. I would reverse the director’s revocation of plaintiffs self-insured status.

 The rule was subsequently amended to provide as follows:
"Rule 13c. (1) The director may decline to approve an application for self-insurance or terminate the self-insurance privilege if the employer is unable to demonstrate that the employer will be able to meet all obligations under the act. The following factors shall be used in determining if a nonpublic employer can meet those obligations:
"(a) Ratio of tangible net worth to annual self-insurance retention. "(b) Ratio of current assets to current liabilities.
"(c) Ratio of debt to tangible net worth.
"(d) Profit and loss history.
*367"(e) Organizational structure and management background.
"(f) Compensation loss history and proposed excess insurance coverage.
"(g) Source of reliability of financial information.
"(h) Ratio of net worth to annual compensation premium.
"(i) Number of employees.
"(j) Excess insurance.
"(k) Guarantee by parent company.
"(1) Surety bond or other security.
"(m) Claims administration.
"(2) Notice of a denial or termination of self-insured status shall be mailed to the employer. The notice shall include the grounds for denial or termination. The employer may request a hearing in accordance with R 408.43n.” 1979 ACS 3, R 408.43c, effective 9/3/80.