Workers' Compensation


Issues: Whether liability for plaintiff-Nichols's wage-loss benefits should be allocated between defendants-Pacific Employers Insurance Company (Pacific) and American Manufacturers Mutual Insurance (American); Differential wage-loss benefits; MCL 418.361; Sweatt v. Department of Corrs.; The "reasonable employment" provision; Derr v. Murphy Motors Freight Lines; MCL 418.301(9); MCL 418.301(5)(e); Whether the court could allocate liability or whether specific statutory sections provided for the allocation of wage-loss benefits; Sebewaing Indus., Inc. v. Village of Sebeawaing; MCL 418.372(1)(b); Stewart v. Saginaw Osteopathic Hosp.; MCL 418.301(5); Arnold v. General Motors Corp.

Court: Michigan Court of Appeals (Published)

Case Name: Nichols v. Howmet Corp.

e-Journal Number: 57685

Judge(s): Per Curiam – Servitto, Whitbeck, and Owens


On remand from the Supreme Court as to whether liability for plaintiff-Nichols's wage-loss benefits should be allocated between defendants-Pacific and American, the court held that, "when a first injury partially disables an employee, that employee resumes working, but then suffers a second disabling injury, the first insurance carrier is not liable for wage-loss benefits attributable to the second disabling injury." Thus, Pacific was only liable for wage-loss related to Nichols's 1993 cervical-spine injury and partial disability, and American was liable for wage-loss related to his 1998 low-back injury. The court vacated the Workers' Compensation Appellate Commission's allocation of liability for wage-loss benefits solely to Pacific, and remanded to the Commission for allocation of liability in accordance with its opinion. Pacific contended that it should only be liable for the wage-loss benefits above those that American should pay for Nichols's 1998 low-back injury. The court agreed, concluding that the Commission erred when it declined to hold American liable for wage-loss benefits related to Nichols's 1998 low-back injury. The Commission correctly determined that Pacific (the first insurance carrier) was liable to pay benefits on the basis of Nichols's wages at the time of the original injury. But it "should not have declined to reimburse Pacific simply because the Michigan Supreme Court did not address the issue in Arnold." Accepting as the court must the Michigan Supreme Court's determination that Pacific raised this issue before the Commission, the court held that the Commission "should have considered general principles of workers' compensation law to determine whether allocation was appropriate. To hold the first insurer liable for the employee's entire amount of wage-loss benefits under MCL 418.301(5)(e) when a second disabling injury causes the employee to lose his or her job defies principles of causation in worker's compensation law for two reasons." First, an employee's "entitlement to wage-loss benefits from an employer (or insurance carrier) is based on his or her reduction in wage-earning capacity." Second, an employee's "post-injury earnings or ability to earn operates as a credit and mitigates the employer's liability to pay wage-loss benefits." The court held that, under the circumstances of this case, American, as the insurer at the time of Nichols's 1998 low-back injury, was responsible for his wage-loss attributable to his 1998 low-back injury and second disability but that Pacific, as the insurer at the time of the Commission's partial disability determination, should remain liable for wage-loss benefits from the partial disability caused by his 1993 cervical-spine injury. The court found that this conclusion was "consistent with general disability principles concerning causation and with reasonable employment principles."


Full Text Opinion
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