News & Events

News Headlines

We aim to keep our members informed about current relevant news and issues, along with legislative and regulatory initiatives that affect workers' compensation and self-insured groups. Check back regularly to read the latest updates.

Legislative updates may be provided by Dusty Fancher and Chris Fisher, Midwest Strategy Group

Michigan Workers' Compensation Act: Clash Brewing Over Proposed Overhaul

MCSIGA is preparing for a potential battle over Michigan's workers' compensation law, with proposed changes drafted by labor groups and plaintiff’s attorneys clashing with concerns from the business community and insurers. The proposed legislation, aimed at reversing reforms from 2011, has sparked heated debate about fairness, cost, and the future of the system.

Labor groups and trial attorneys argue the current system, shaped by the 2011 reforms, makes it difficult for injured workers to obtain benefits. They claim the reforms shifted the balance too far in favor of employers, creating an unfair burden for injured workers. Their proposed legislation seeks to redefine who qualifies for benefits, eliminate the requirement for injured workers to seek future employment, and significantly broaden the ability to file civil lawsuits against employers.

However, the insurers and the business community is sounding the alarm, calling the proposed changes "extremely anti-business" and warning of significant cost increases. They argue the 2011 reforms created a stable and cost-effective system, benefiting both employers and employees by reducing legal and premium costs. Businesses fear the proposed changes would disrupt this stability, leading to higher costs that could potentially exceed the savings from the 2011 reforms. National trends and data show Michigan as a national leader in cost containment and stability.

Key points of contention include:

  • Scope of coverage: The proposed changes could redefine who qualifies for workers' compensation benefits, potentially expanding the pool of eligible workers.
  • Future employment: The current requirement for injured workers to seek future employment could be eliminated, potentially impacting benefit calculations and duration.
  • Civil lawsuits: Workers' ability to sue employers for workplace injuries could be significantly broadened, potentially increasing litigation costs for businesses.

The current system, established in 1912, has undergone several changes over the years. Currently, injured workers receive 80% of their average weekly wage, capped at 90% of the state average. Benefits can be reduced based on post-injury earning capacity, a provision that critics argue unfairly disadvantages injured workers.

With the draft legislation still under development, the debate is expected to intensify. Both sides are expected to actively lobby lawmakers as the potential overhaul progresses.

In a recent interview in Lansing-based Gongwer News, Workers' Disability Compensation Agency Director Jack Nolish said, "With Michigan leading the pack and being among the lowest comp cost states, that's very important to businesses. At the same time, that same piece of information is a problem to injured workers. We've had this decline over the last several years, and I think there's room for improvement."

Governor Whitmer Delivers 2024 State of the State Address

Gov. Whitmer delivered her 6th State of the State on January 24 to a packed House chambers. The Governor’s speech focused on several areas, starting with a summary of accomplishments of the Democratic majorities over the last year. The newer policy topics broke down into three categories:

Lowering Costs for MI Residents

  • Creating a new vehicle purchase tax credit (union assembled vehicles get an extra $500), it would be point of sale based so it’s an instant savings for buyers
  • $1.4B to promote the creation of new housing options
  • Create the Caring for MI family tax credit – lowering taxes and increasing write-offs for certain family-related care services like long-term care, counseling, etc.

Improving Education for Students

  • Governor’s budget will propose free Pre-k for every 4-year-old in MI
  • Proposed tuition-free Community College for all residents

Making it in Michigan – Economic Development and Infrastructure Focus

  • Economic Development
    • Creation of a Research and Development tax credit
    • A new “Hire Michigan” program to lower payroll taxes for small MI business
    • Recommending policies to create Renaissance Zones
    • A State of Michigan-backed start-up and innovation fund
  • Infrastructure
    • MDOT to authorize final $700M in bonds for infrastructure this year

The speech was longer than past speeches and touched on many key Democratic priorities. Republicans sat largely mute during the speech and panned the contents in comments to the press often citing large price tags for some of the proposed new programs.

Governor Orders Changes to Workers’ Disability Compensation Appeals Commission

In December, Gov. Whitmer issued an executive order to allow a broader range of individuals to serve in the place of a member of the commission in the event of a conflict of interest.

In a press release Governor Whitmer said… “ these changes will improve efficiency and allow the State of Michigan to better serve the people of Michigan.”

The order reads as follows:

“If the Workers’ Disability Compensation Appeals Commission does not have the vote of two or more members to decide a case because a member cannot participate due to a conflict under section 4(g) or for any other reason, the director of the Workers’ Disability Compensation Agency or the director’s designated representative shall randomly assign a member of the Workers’ Compensation Board of Magistrates who is not subject to disqualification in that case to participate in the case and cast a vote upon a review of the record. In the event that two members of the Workers’ Disability Compensation Appeals Commission cannot participate in a case because of a conflict under section 4(g) or for any other reason, the director of the Workers’ Disability Compensation Agency or the director’s designated representative shall randomly assign two members of the Workers’ Compensation Board of Magistrates who are not subject to disqualification in that case to participate in the case and cast votes upon a review of the record.”

The Workers’ Disability Compensation Appeals Commission includes three members appointed by the governor with the advice and consent of the Michigan Senate.

Employee or Independent Contractor Classification Under the Fair Labor Standards Act

The U.S. Department of Labor recently announced the issuance of a final rule to help employers and workers analyze whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA).

The final rule, Employee or Independent Contractor Classification Under the Fair Labor Standards Act, provides guidance on whether a worker is an employee or independent contractor under the FLSA. Misclassification is a serious issue that denies employees’ rights and protections under federal labor laws and hurts the economy at large. The Department believes this final rule will protect workers from misclassification, while at the same time providing a consistent approach for those businesses that engage (or wish to engage) with independent contractors.

The final rule restores the multifactor, totality-of-the-circumstances analysis to assess whether a worker is an employee or an independent contractor under the FLSA, and establishes other worker classification criteria.

For more information, visit: Employee or Independent Contractor Classification Under the Fair Labor Standards Act.

MCSIGA Raises Concerns Over Expensive Workers’ Compensation Legislation

MCSIGA is gearing up to challenge a pending package of bills in the Senate that could significantly impact Michigan's century-old workers' compensation law.

The bills, still in draft form, are poised to redefine the scope of employees, eliminate the requirement for injured workers to seek future employment, and significantly broaden the ability to file civil suits against employers.

These proposed changes are primarily driven by trial lawyers and labor organizations. In 2011, statutory reforms to the system curtailed lawsuits and reduced costs for businesses, resulting in an estimated savings of over $500 million for Michigan businesses in the first five years after enactment in legal and premium costs.

In early 2023, the Senate Labor Committee heard testimonies from labor unions and trial attorneys advocating for a "complete overhaul" of the workers' comp system and urging lawmakers to "reverse the system 180 degrees."

For over a century, Michigan's worker disability system has maintained stability and has been regarded as one of the best in the United States. The system's cornerstone is the principle that public and private employers are shielded from civil lawsuits for job-related injuries in exchange for providing guaranteed compensation to employees injured while at work.

These proposed bill drafts threaten to undermine the foundational principles of Michigan's system, causing deep concern among self-insurer groups, the insurance industry, employers, and local governments.

Self-insurer groups interested in joining a coalition opposing these bills should contact MCSIGA.

Opposition Mounts Against "Bad Faith" Bills

A diverse coalition of businesses, nonprofits, and trade associations has united to voice their opposition to the so-called "Bad Faith" bills introduced in both the House and Senate.

The coalition is actively working to oppose this legislation, asserting that it will have negative consequences on the state's economy and disproportionately affect working families and small businesses. Beyond creating new and unprecedented challenges for insurance companies, the bill would open up 35 new avenues for legal action, according to an analysis by the Insurance Alliance of Michigan. The potential cost to Michigan consumers is estimated to range between $2.4 billion and $4.7 billion.

The legislation, which allows for both first- and third-party claims, would prohibit insurers from delaying, denying, or failing to pay a claim unless a reasonable basis is found in the policy. If there are grounds for denial or delay, those reasons must be clearly stated. Additionally, the bill would mandate that insurers provide specific information to policyholders regarding pending claims and introduce expanded grounds for claims.

If this legislation is passed, it could open the floodgates to litigation, resulting in unnecessarily high settlements that benefit plaintiffs' attorneys while transferring the costs of litigation to consumers. Other states with similar laws have witnessed a surge in fraudulent claims and frivolous lawsuits, leading to increased costs for consumers and businesses.

Governor Appoints New Members to Workers’ Disability Compensation Boards

Governor Whitmer has made the following appointments to the Workers' Disability Compensation Appeals Commission and Workers Compensation Board of Magistrates:

  • Governor Gretchen Whitmer has reappointed Daryl Royal to the Workers' Disability Compensation Appeals Commission. Mr. Royal, based in Wayne, is an attorney and has been the chairperson of the commission since his initial appointment in 2019. He previously owned a private law practice in Dearborn for over 30 years, primarily focusing on social security disability insurance and workers' compensation. Mr. Royal is reappointed for a term commencing on August 1, 2023, and will continue to serve as chair.
  • Kevin Kales, of Allen Park, has been appointed as the chair of the Workers Compensation Board of Magistrates. Mr. Kales has served as a magistrate on the Workers' Compensation Commission Board of Magistrates since 2021. Prior to this, he worked as an attorney with Legghio & Israel, P.C., where he was the head of the worker's compensation and social security law department. He holds a Bachelor of Arts in Philosophy and a Juris Doctorate from Wayne State University. He succeeds Luke McMurray.

New House and Senate Insurance Committees Formed

The 2023-24 Michigan Legislature was gaveled into order on January 12 marking the first time in 40 years that the House, Senate and Governorship were all under democrat control. The newly minted leadership in the House of Representatives and Senate were quick to announce committee assignments the next day that included a list of all lawmakers serving on the Insurance Committees.

The House Insurance and Financial Services Committee will be chaired by Rep. Brenda Carter (D-Pontiac). The Minority Vice Chair will be Rep. Mike Harris (R‑Clarkston.) The overall committee composition will consist of 9 democrats and 5 republicans.

“My legislative priorities for this term are to lower the cost of insurance, increase financial literacy and make financial institutions more transparent,” committee chair Carter said. “I am honored to receive this appointment, which will help me further these goals. I look forward to the opportunity to advocate for financial policy that works for working families.”

The Senate Finance, Insurance and Consumer Protection Committee will be chaired by Senator Mary Cavanagh (D‑Redford). The Minority Vice Chair will be Sen. Mark Huizenga (R‑Walker). The overall committee composition will consist of 5 democrats and 3 republicans.

“I am honored by the opportunity to shape the policy and budget priorities of the people of Michigan in my committee roles,” said Sen. Cavanagh. “A deliberate and solution-oriented committee process is essential to good governance, and I'm committed to working with my legislative colleagues to continue to move Michigan forward.”

McDonough Appointed to Data Collection Agency Governing Board

Emily McDonough, administrator for the Funds Administration and Self-Insured Program Division at the Workers' Disability Compensation Agency has been appointed by Governor Whitmer to serve on the Michigan Data Collection Agency Governing Board.

McDonough holds a Bachelor of Science in Environmental Biology and Zoology from Michigan State University and received a Juris Doctor degree from Thomas M. Cooley Law School. Ms. McDonough is reappointed for a term commencing January 1, 2023 and expiring December 31, 2023.

The Data Collection Agency Governing Board is responsible for the determination of workers' compensation data requirements for establishing workers' disability compensation insurance rates.

The appointment is subject to the advice and consent of the Senate.

MCSIGA Monitoring Legislation Affecting Workers’ Compensation in Michigan

The new legislative session will result in MCSIGA keeping a close eye on possible legislation affecting the Workers' Disability Compensation Act.

As committees start meeting on a regular basis and different bills get introduced, MCSIGA lobbyists will be meeting with lawmakers and coalition partners to advance and defend key industry priorities.

In the previous legislative session MCSIGA successfully fended off bills creating new workplace injury resumptions, attempts to loosen affirmative job search requirements, additional assessments, and administrative rules changes. Many of these issues are expected to be discussed again this year.

MCSIGA will also be focused on preserving key reforms that were enacted in 2011 such as suitable work provisions, presumptions, good faith work search, preexisting conditions and other aspects of law important to insurers. These and other statutory changes, supported by MCSIGA members, modernized and provided greater efficiency in the workers' compensation system in Michigan.

Legislation Creating COVID-19 Injury Presumption Stalls in Senate
Winter 2022

Legislation opposed by MCSIGA creating a presumption that any COVID-19 diagnosis is a work-related injury for all first responders has stalled in the Senate as alternative ways to help first responders affected by COVID-10 have gained traction instead.

As introduced, House Bill 4822 is retroactive to March 20, 2021, and it defines a “first response employee” as any firefighter, law enforcement officer, emergency medical personnel, or corrections officer.

According to Michigan's workers' compensation statute "an ordinary disease of life to which the public is generally exposed outside of the employment is not compensable." Deviating from this standard has drawn opposition from MICSIGA, insurance professionals, and business groups both in Michigan and across the nation.

Legislation Expanding First Responder Presumed Injury Fund Passes
Winter 2022

Governor Whitmer signed House Bill 4172 into law to amend the Worker's Disability Compensation Act to include current and former part-time, paid on-call, or volunteer firefighters under the First Responder Presumed Coverage Fund. This enables firefighters who develop certain cancers to claim worker's compensation benefits from the First Responder Presumed Coverage Fund.

"Michigan's firefighters – whether they are full-time, part-time or volunteer – courageously sacrifice their time and health to serve our communities and keep us safe," said Governor Whitmer. "First responders and their families should know that the state of Michigan will support them during their time of need. House Bill 4172 will expand the options for firefighters to receive benefits for cancer treatment. We owe our state's firefighters endless thanks for their selfless acts of service."

House Bill 4172 was sponsored by Rep. Jeff Yaroch, R-Richmond.

MCSIGA Fighting COVID-19 Injury Presumption Language
Fall 2021

MCSIGA has been sounding the alarm in the State Legislature on House Bill 4822 which creates a presumption that any COVID-19 diagnosis is a work-related injury for all first responders.

The legislation is retroactive to March 20, 2021, and it defines a “first response employer” as any firefighter, law enforcement officer, emergency medical personnel, or corrections officer.

According to Michigan’s workers' compensation statute "an ordinary disease of life to which the public is generally exposed outside of the employment is not compensable." Deviating from this standard has drawn opposition from MICSIGA, insurance professionals, and business groups both in Michigan and across the nation.

The exact language of concern in the legislation states that “an injury or illness resulting from a first response employee's contracting of COVID-19 is rebuttably presumed to be a personal injury arising out of and in the course of employment, in the absence of evidence to the contrary, if the first response employee receives a laboratory-confirmed COVID-19 diagnosis.”

House Bill 4288 passed the House of Representatives on June 30. It has not yet received a committee hearing in the State Senate.

State Budget Requires Attorney General to Report on Worker Misclassification
Fall 2021

Boilerplate language in the state budget will require the Michigan Attorney General to report on all findings of the Payroll Fraud Enforcement Unit (PFEU), which investigates alleged instances of worker misclassification.

The budget includes language requiring the Attorney General to make available to the public on its website a report on the activities and findings of the PFEU, since April 1, 2019. Information in the report must include a listing of each complaint received by the unit, what enforcement action, if any, was taken, and what complaints were not subject to any action being taken by the department.

Michigan Attorney General Dana Nessel created the Payroll Fraud Enforcement Unit in April 2019 to focus primarily on the misclassification of employees as self-employed independent contractors. The attorney general asserts that Michigan employers have improperly used this approach to avoid paying overtime, health benefits, unemployment, and worker’s compensation, along with payroll taxes.

The Attorney General has until September 20, 2022 to complete the report.

Governor Whitmer Reappoints Workers' Disability Compensation Appeals Commission Member
Fall 2021

Governor Gretchen Whitmer announced the reappointment of Duncan A. McMillan, of East Grand Rapids, to the Workers’ Disability Compensation Commission. Mr. McMillian has served on the commission since 2019.

Prior to his appointment in 2019, Mr. McMillan served as a commissioner with the former Michigan Compensation Appellate Commission. He holds a Bachelor of Arts in Political Science from the University of Michigan and a Juris Doctor degree from the University of Michigan Law School. His second term became effective on August 1, 2021 and expires on July 31, 2025.

The Workers' Disability Compensation Appeals Commission was created by Executive Order No. 2019-13 and replaces the abolished Michigan Compensation Appellate Commission. The Commission services Michigan's employees and employers by addressing and resolving their workers' compensation appeals expeditiously, impartially, and in a judicious manner.

This appointment is subject to the advice and consent of the Senate.

Governor Whitmer Makes Appointments to Workers’ Compensation Board of Magistrates
Spring 2021

Governor Whitmer recently made several appointments to the Michigan Workers’ Compensation Board of Magistrates.

The Workers’ Compensation Board of Magistrates was established as an autonomous entity within the Workers' Disability Compensation Agency. The Board of Magistrates currently consists of 14 members appointed by the Governor, with the advice and the consent of the Senate. All members of the board are required to be members in good standing of the State Bar of Michigan and have been an attorney licensed to practice in the courts of this state for five years or more. Those appointed and reappointed in 2021 include the following:

  • Keith A. Castora, of Canton, is a current magistrate with the Workers’ Compensation Board of Magistrates and has been serving since 2013. He previously worked as an attorney with Foster, Swift, Collins & Smith. Mr. Castora earned his Juris Doctor degree from the Detroit College of Law, now known as the Michigan State University College of Law. He is reappointed for a term commencing January 27, 2021 and expiring January 26, 2025.
  • Lisa L. Dykstra, of Grand Rapids, is a current magistrate with the Workers’ Compensation Board of Magistrates and has been serving since 2013. She previously served as an attorney with Kluczynski, Girtz, and Vogelzang. Ms. Dykstra earned her Juris Doctor degree from Valparaiso University School of Law. She is reappointed for a term commencing January 27, 2021 and expiring January 26, 2025.
  • Richard J. Ehrlich, of Commerce Township, is an attorney with Zamler, Shiffman & Karfis, PC. He earned his Juris Doctor degree from Wayne State University Law School. Mr. Ehrlich is appointed for a term commencing February 1, 2021 and expiring January 26, 2025. He succeeds Robert Timmons whose term expired January 26, 2021.
  • John Housefield, of DeWitt, is a current magistrate with the Workers’ Compensation Board of Magistrates and has been serving since 2017. He previously served as an attorney and partner with McGinty, Jakubiak, Hitch, & Housefield, PC. Mr. Housefield earned his Juris Doctor degree from the Thomas M. Cooley Law School. He is reappointed for a term commencing January 27, 2021 and expiring January 26, 2025.
  • Kevin P. Kales, of Allen Park, is an attorney with Legghio & Israel, PC. He earned his Juris Doctor degrees from Wayne State University Law School. Mr. Kales is appointed for a term commencing February 1, 2021 and expiring January 26, 2025. He succeeds Jane Colombo whose term expired January 26, 2021.
  • Lenny Segel, of Farmington Hills, is an attorney with Bernstein and Bernstein. He earned his Juris Doctor degree from Wayne State University Law School. Mr. Segel is appointed for a term commencing February 1, 2021 and expiring January 26, 2025. He succeeds John Sims whose term expired January 26, 2021.
  • David H. Williams, of Grosse Pointe Woods, is a current magistrate with the Workers’ Compensation Board of Magistrates and has been serving since 2013. He previously worked as an attorney with Kluczynski, Girtz, Zamler & McCubbrey, PC. Mr. Williams earned his Juris Doctor degree from Wayne State University Law School. Mr. Williams is reappointed for a term commencing January 27, 2021 and expiring January 26, 2025.

Only workers’ compensation magistrates can hear cases for which an application for hearing has been filed with the Workers’ Disability Compensation Agency.

First Responder COVID-19 Cases Considered a Presumed Workers’ Compensation Injury Under New Bill
Spring 2021

Legislation has been introduced by Democrats in the state Senate to expand workers’ compensation benefits to essential workers who test positive for COVID‑19.

Senate Bill 161, sponsored by Senator Sean McCann (D-Kalamazoo), establishes a new presumption that frontline workers who contract COVID-19 did so in the workplace, thereby making them automatically eligible for workers’ compensation benefits.

“Essential workers have risked exposure to COVID-19 to keep our economy running throughout this pandemic,” Sen. McCann said. “By ensuring essential workers are protected with workers’ compensation if they get sick with COVID-19, we can give them the safety and confidence they need so they won’t lose their job, their car, or their house.”

The legislation was referred to the Senate Committee on Economic and Small Business Development. Committee chair Ken Horn (R-Frankenmuth) is not expected to hold any hearings on the legislation and the bill is not expected to advance in the legislature.

First Responder Presumed Coverage Fund Expansion Passes House
Spring 2021

Bipartisan legislation recently passed the Michigan House of Representatives to amend the Worker’s Disability Compensation Act to expand coverage under the First Responder Presumed Coverage Fund. Senate Bill 4172, sponsored by Representative Jeff Yaroch (R-Richmond), would do the following:

  • Allow part-time, paid on-call, and volunteer firefighters and former full-time, part-time, paid on-call, and volunteer firefighters to seek benefits from the First Responder Presumed Coverage Fund.
  • Add breast cancer, ovarian cancer, and cervical cancer to the cancers presumed to arise in the course of employment as a firefighter with respect to a claim against the fund.

Currently, for any respiratory tract, bladder, skin, brain, kidney, blood, thyroid, testicular, prostate, or lymphatic cancer, a member in active service of a fully paid fire department or public fire authority who meets certain criteria must suspend a worker’s compensation claim he or she has under the act and instead can claim benefits from the First Responder Presumed Coverage Fund. Part-time and volunteer firefighters are among those who would now be covered under the fund.

Under the bill, breast cancer, ovarian cancer, and non-HPV cervical cancer would be added to the list of cancers for which an eligible person may claim benefits from the fund.

The bill is now before the Senate Committee on Insurance and Banking. No hearing is currently scheduled on the legislation.

Governor Whitmer Announces Steps to Fight Worker Misclassification
Spring 2021

On April 15, Governor Gretchen Whitmer announced changes to protocols for state contract bids to implement the Michigan Jobs First Executive Directive 2019-15. Among other things, the new rules seek to curb the use of misclassified independent contractors.

Under the new protocols, the Department of Technology, Management and Budget will have bidders for state contracts complete a vendor questions worksheet, which includes disclosure of a bidder's labor and environmental compliance record, disclosure of information related to economic impact in Michigan, and a certification that the bidder has properly classified its employees.

The Whitmer Administration hopes these disclosures and certifications protect workers against payroll fraud, which can happen when a business misclassifies its employees as "independent contractors," which can deprive employees of access to overtime pay, workers' compensation, health care, and other benefits.

Smith v. Chrysler Group Court of Appeals Decision and Potential Impact on Workers’ Compensation Claims
December 2020

The published decision by the Court of Appeals in Smith v Chrysler Group, LLC, #339705 affected the general rule in workers’ compensation that injuries sustained while going to or coming from work are not compensable.

Previously, based on the case of Forgach v George Koch & Sons Company, 167 Mich App 50 (1988), the Courts utilized a balancing test of 4 factors to determine if any injury that occurred going to or coming from work was compensable. Those 4 factors were as follows:

  1. Whether the employer paid for or furnished employee transportation.
  2. Whether the injury occurred during or between working hours.
  3. Whether the employer derived a special benefit from the employee’s activity at the time of the injury.
  4. Whether the employment subjected the employee to excessive exposure to traffic risks.

No one factor was dispositive. The factors had to be balanced against each other to arrive at the appropriate result. The Forgach case had been applied for over 30 years when deciding the issue of compensability of injuries sustained while going to or coming from work when there was a motor vehicle accident.

The Smith decision changed that. Under Smith, no longer is there a balancing of the factors but, rather, those factors are considered exceptions to the general rule. If one of the exceptions is met, the injury is compensable. The Court of Appeals in Smith noted that there are 6 “exceptions” based on the Michigan Supreme Court decision in Bush v Parmenter, Forsythe, Rude & Dethmers, 413 Mich App 444 (1982).  Those 6 exceptions are as follows:

  1. The employee is on a special mission from the employer.
  2. The employer derives a special benefit from the employee’s activities at the time of the injury.
  3. The employer paid for or furnished employee transportation as part of the employment contract.
  4. The travel comprised a dual purpose, combining employment related business needs with the personal activity of the employee.
  5. The employment subjected the employee to excessive exposure to traffic risks.
  6. The travel took place as a result of a split shift working schedule or employment requiring similar irregular non-fixed working schedule.

The facts in the Smith case were that the Plaintiff had left his house in Clarkston to head to the Jefferson Avenue North Assembly Plant (JANAP) for purposes of doing an audit. The main office he worked at was the Chrysler Tech Center (CTC) in Auburn Hills.  Once Plaintiff passed the Tech Center, he would be reimbursed for mileage down to the JANAP.

His accident occurred after he had passed the Tech Center and before he arrived at the JANAP. The Court of Appeals held that Exception 1, the special mission, and Exception 3, the employer paid for or furnished transportation, applied. Therefore, he was found entitled to benefits.

The Smith decision will impact any number of employers, as it relates to potential workers’ compensation claims.  Under Exception 3, the employer paid for or furnished employee transportation as part of the employment contract, employers who provide company vehicles and allow the employee to drive the company vehicle home and then back to work each day will find themselves liable for workers’ compensation benefits if the worker gets in a motor vehicle accident on the way to work or on the way home, just because they happen to be driving a vehicle provided by the employer.

Employees who use their own vehicles and are reimbursed mileage to drive to and from work sites are other potential claimants, should they be in a motor vehicle accident going to or from the work site.

The Court of Appeals in Smith also appeared to have expanded Exception 1, the special mission doctrine.  Despite the fact that Plaintiff would regularly travel to multiple places to do audits at different plants, the Court found Smith to have been on a special mission at the time of his motor vehicle accident.

Under the Court’s holding, every off-site employment would be “a special mission” no matter how many times that person may do that off-site employment activity. An example would be attorneys who travel to court or depositions would be on a special mission, no matter how times they may have done that in the past. Construction workers who drive to various work sites may be considered on special missions when they leave their driveways. The more time these employees are on the road, the greater chance of a motor vehicle accident that might be found compensable.

The Smith decision has created the potential for increased workers’ compensation claims involving motor vehicle accidents while going to or coming from work. Plaintiff’s burden of proof will be easier because they only need to show one of the six exceptions apply in order to find the injury compensable. This could mean higher workers’ compensation costs to insurance companies and self-insured employers.

(The Smith case was appealed to the Michigan Supreme Court. While awaiting a decision on granting the Application for Leave to Appeal, the parties appeared to have reached a resolution. A Motion was filed with the Michigan Supreme Court to hold the matter in abeyance for at least 60 days. The Michigan Supreme Court granted that Order on August 28, 2020. When the settlement is finalized, the Application for Leave to Appeal will be dismissed by the Court.)

MCSIGA wants to thank Mike Smith from Hanba & Lazar for filing an amicus brief with the Michigan Supreme Court on our behalf. Mike and his firm are a great supporter of MCSIGA and we appreciate their expertise.

Independent Contractor Misclassification Bills Introduced
September 2019

In September, legislation cracking down on employee misclassification was introduced in the state legislature. The bills are largely viewed as a continuation of increased focus by state officials to crackdown on instances of misclassification. Key provisions of the bills include:

  • Strengthening whistleblower protections to shield employees who report wrongdoing
  • Providing rewards when they do
  • Toughening penalties against payroll fraud
  • Seeking to make Michigan a leader in protecting workers
  • Reimbursing back-wages and benefits to affected workers

For purposes of defining who can still be an independent contractor, the legislation states that an “independent contractor means an individual who performs work for a payer for remuneration and to whom all of the following apply:

  1. The individual is free from control and direction of the payer in connection with the performance of work, both under a contract and in fact.
  2. The individual performs work that is outside the usual course of the payer’s business.
  3. The individual is customarily engaged in an independently establish trade, occupation, or business of the same work performed by the individual for the payer

“Payer” would be defined as “a person who pays remuneration to an independent contractor for work the independent contractor provides for the payer.”

Early comments on the legislation from stakeholder groups has been varied. Some employer groups have already objected to one particular provision in the legislation stipulating that anytime an alleged misclassification occurs, the business owner “has the burden of proving, by a preponderance of the evidence,” that they did not misclassify. Labor groups have praised the bill introductions as a way to put an end to “payroll fraud” and protect workers. 

The bills have been referred to the House Commerce and Tourism Committee. No hearings have been scheduled on the legislation.

Emily McDonough Appointed to Workers’ Compensation Data Collection Agency Governing Board
August 2019

Gov. Gretchen Whitmer announced the appointment of Emily McDonough to the Data Collection Agency Governing Board. The board determines data requirements for establishing workers' disability compensation insurance rates. McDonough is currently the administrator for the Funds Administration and Self-Insured Program Division in the Michigan Department of Licensing and Regulatory Affairs. She was appointed to succeed John Schrock, who resigned May 31, to represent the executive branch of state government for a term expiring Dec. 31. Read more.

Good Faith Job Search Proposal Unveiled
June 2019

Senate Minority Leader Jim Ananich and Senate Democrats are hoping to revise changes made to Michigan’s Workers’ Compensation law in 2011. Senate Bill 368 specifies that an employee must be deemed to have established proof of a good-faith job search if any of the following are met:

  • The employee is still working where the injury occurred, and the employee has tried unsuccessfully to obtain other jobs with that employer;
  • The employee applies for at least two jobs per week; or,
  • The employee is working full-time in reasonable employment.

An “affirmative duty” to seek employment would not apply under the following circumstances:

  • A physician states that seeking employment poses a threat to health or if the employee is disabled;
  • The employee is employed and seeking other work could cause loss of “employment-related benefits”; or,
  • Employee demonstrates “good and reasonable cause”

Many Democrats are praising the bill as pro-workers. Meanwhile, most Republicans do not want to make changes to the 2011 law. The bill was referred to the Senate Government Operations Committee, which is s chaired by Republican Senate Majority Leader Mike Shirkey. Sources have said the bill is unlikely to be acted upon.

Rule Changes on the Horizon
May 2019

The Health Care Services Advisory Committee has been discussing carrier responsibilities in subcommittee over the last several months. At the center of the issue is the role and responsibility of third-party providers in relation to the explanation of benefits (EOB). The EOB notifies the parties of reimbursement decisions, educates the injured workers on balance billing and outlines the right to appeal payment adjustments.

Noticing an increase in the use of third-party providers, the department deemed it was necessary to adjust the rules to provide for some clarification around the issues. This includes adding definitions of both “network” and “designated agent” to the rule set and outlining the process for notification to interested parties.

Draft rules were released by the department on May 15. The proposed changes would not regulate the networks, but would require that providers disclose any network they are using to the department. Further, carriers would need to supply the agency with a copy of the EOB that is utilized by the network and the carrier, or its designated agent must send an agency-approved EOB form to the provider and the injured worker. In addition, only a provider can alter or change the provider’s original bill.

These changes should assure providers and the injured worker are receiving identical information in a timely fashion, creating clarity with the EOB. The department is expecting the process to be finalized by the end of the year.

– Dusty Fancher, Midwest Strategy Group

Attorney General Creates Worker Misclassification and Payroll Fraud Enforcement Unit
May 2019

Attorney General Dana Nessel and Michigan legislators unveiled measures on April 22 to crack down on companies that misclassify workers to avoid paying full wages, workers’ compensation overtime and taxes.

Nessel is establishing the Payroll Fraud Enforcement Unit within the Department of Attorney General, dedicating resources to receive credible complaints of payroll fraud and misclassification. The unit will investigate claims with the assistance of other departments and agencies, and take appropriate actions available under existing laws.

It is expected that accompanying legislation will soon be introduced to include:

  • Increasing civil and criminal penalties for payroll theft;
  • Strengthening whistleblower protections and creating incentives to turn in violators;
  • Auditing companies that commit violations; and
  • Requiring companies that cheat workers to pay back-wages.

Read article on www.michigan.gov

Governor Whitmer Makes Industry Appointment
May 2019

Gov. Gretchen Whitmer appointed Jerome Hooper, Jr., of Roseville to the Self-Insurers’ Security, Second Injury Fund, Silicosis, Dust Disease, and Logging Industry Compensation Fund Board of Directors. The Board oversees the Funds Administration, which is funded by insurers who write workers' compensation policies in Michigan and employers who self-insure their workers' compensation liability. The board's assessments cover all benefits paid by the Funds Administration and all administrative and litigation costs.

Hooper is the supervisor of health, welfare and occupational health for DTE Energy and a member of the Michigan Self-Insurers’ Association Board of Managers. He is appointed to succeed Barb Pelak, representing employers that have been authorized to act as self-insurers for a term expiring April 30, 2020. His appointment is subject to approval of the Senate.

New House and Senate Insurance Committee Chairs Announced
February 2019

With the start of the 100th Legislature comes the naming of committee members to the House Insurance Committee and Senate Committee on Insurance and Banking.

Formerly the Chair of the House Insurance Committee, freshman State Sen. Lana Theis (R-Brighton) will now chair the recombined Senate Insurance and Banking Committee. Sen. Dan Lauwers (R-Brockway Township) will serve as Majority Vice Chair of the powerful committee, and Sen. Erika Geiss (D-Taylor) will serve as the Minority Vice Chair.

The committee's regularly scheduled meeting time is Wednesdays at 8:30 a.m. in the Binsfeld Building in Lansing.

In the House, State Rep. Daire Rendon (R-Lake City) will take over as chair of the House Insurance Committee. Rep. Gregory Markkanen (R-Hancock) will serve as the Majority Vice Chair and Rep. Robert Whittenberg (D-Royal Oak) will serve as the Minority Vice Chair.

The House Insurance Committee will meet on Thursdays at 9 a.m. in the Anderson House Office Building.

Governor Appoints, Reappoints to Workers' Comp Board
February 2019

Gov. Gretchen Whitmer announced appointments and reappointments to the Workers’ Compensation Board of Magistrates. All terms expire Jan. 26, 2023 and the appointments and reappointments are subject to Senate approval.

  • David DeGraw, Republican, of Grand Rapids, is a Michigan Compensation Appellate Commissioner. He succeeds Beatrice Logan.
  • Michael Heck, Democrat, of Troy, is the associate counsel at SEVA Law Firm. He succeeds Lisa Klaeren.
  • Philip Della Santina, Democrat, of Howell, is the Workers’ Compensation claims representative for Chrysler Corporation. He succeeds Bryan Boyle.
  • Emil Louis Ognisanti (reappointed), Republican, of Saginaw, was previously a partner at Braun Kendrick.
  • Chris Slater (reappointed), Republican, of Grand Rapids, was previously employed with the Slater Law Office.
  • Luke McMurray (reappointed), Democrat, of Grand Blanc, was previously president of McMurray & Associates. He is also appointed to serve as chairperson and will serve at the pleasure of the Governor.
  • David Grunewald (reappointed), a Democrat, of Grosse Pointe Woods, was previously a trial specialist with CAN Insurance Companies.
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