Joseph S Bell v. City of Saginaw ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
JOSEPH S. BELL, UNPUBLISHED
May 21, 2019
Plaintiff-Appellant,
v No. 341858
MCAC
CITY OF SAGINAW, LC No. 14-000081
Defendant-Appellee.
Before: SWARTZLE, P.J., and M. J. KELLY and TUKEL, JJ.
PER CURIAM.
Plaintiff Joseph S. Bell appeals by leave granted1 the opinion and order of the Michigan
Compensation Appellate Commission (MCAC) affirming an opinion and order entered by the
workers’ compensation magistrate. The magistrate awarded plaintiff wage-loss benefits for
2013, denied wage-loss benefits for 2012 and 2014, and ruled that plaintiff would not be eligible
for future wage-loss benefits until he reinitiated a good-faith search for alternate employment.
Finally, the magistrate held that any wage-loss benefits for which plaintiff might become eligible
in the future would be subject to coordination with his pension benefits under Section 354 of the
Workers’ Disability Compensation Act (WDCA), MCL 418.354. We affirm.
I. BACKGROUND
Plaintiff became employed by defendant as a firefighter in 1984 and held various
positions within the fire department throughout approximately 28 years of employment. In
October 2011, plaintiff suffered a shoulder injury while fighting a structure fire. Plaintiff
underwent various medical evaluations and was off work until March 2012. Plaintiff filed a
1
Bell v Saginaw, unpublished order of the Court of Appeals, entered August 20, 2018 (Docket
No. 341858).
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claim for worker’s compensation benefits, alleging that he suffered a work-related injury.
Defendant paid plaintiff wage-loss benefits during the time he was off work.
Although his shoulder injury had not improved, the city sent plaintiff back to work while
he continued with physical therapy. After his return to work, plaintiff was promoted from the
rank of captain to the rank of battalion chief. According to plaintiff, after his return to work, he
responded to some fires in a supervisory capacity, but purposely avoided wearing an oxygen
tank, entering or fighting fires, or repetitively using his arms to pull a fire hose or swing an ax.
In April 2012, however, during plaintiff’s annual physical examination, the city’s doctor
concluded that plaintiff was unfit for full duty because he was unable to perform several essential
job functions required of fire department personnel and because he would pose a direct threat to
himself and others if he attempted to perform his job. The city therefore removed plaintiff from
duty. The city’s police and fire retirement system granted plaintiff a non-duty-disability pension.
When plaintiff submitted the required medical documentation, the pension system granted him a
duty-disability pension. The monetary benefit that plaintiff received under the duty-disability
pension was equal to the benefit he received under the non-duty-disability pension.
Plaintiff continued to seek workers’ compensation benefits after he began receiving his
duty-disability-pension benefits. The workers’ compensation magistrate found that plaintiff’s
shoulder injury was work-related but that his neck injury, which presented a few days after the
shoulder injury, was not work-related. The magistrate also found that plaintiff was subject to
various physical restrictions because of his work-related injury. These physical restrictions
prevented plaintiff from lifting more than 10 pounds with the right arm and from repetitive
reaching and above-shoulder work with the right arm.
The magistrate noted that two employment experts testified about plaintiff’s potential
employment opportunities and identified a list of jobs that plaintiff could perform despite his
physical restrictions. The record indicates that Michele D. Robb, a vocational rehabilitation
consultant, and Marcy Slabey-Klar, a certified rehabilitation counselor, both worked with
plaintiff to identify transferable skills and available employment. Plaintiff reported to Robb and
Slabey-Klar that his maximum wages as a firefighter were approximately $25 per hour.
First, Robb opined that plaintiff had no transferable skills because his skills from a career
as a firefighter were industry specific. Although she opined that plaintiff could perform the
administrative functions of the battalion chief position, she acknowledged that the position of
battalion chief required an individual to perform the full duties of a firefighter in an unrestricted
capacity, which plaintiff was unable to perform with his physical restrictions. Therefore, Robb
testified that plaintiff suffered a diminution in his ability to earn his prior maximum wage
because of his physical restrictions. Although she was able to identify unskilled-labor positions
within plaintiff’s physical restrictions, all of those jobs paid less than plaintiff’s maximum wage-
earning capacity in his former employment as a firefighter. Robb therefore concluded that
plaintiff did not retain a residual-wage-earning capacity. Second, Slabey-Klar concluded that
plaintiff had a variety of transferable skills and that she found a variety of employers that were
hiring for positions matching plaintiff’s qualifications and physical restrictions. After
completing four labor-market searches, she concluded that plaintiff could earn between $13.30
and $30.13 per hour, even with his physical restrictions.
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After reviewing this testimony, the magistrate concluded that plaintiff was “unable to
perform work at his maximum wages in an unrestricted capacity.” The magistrate, however,
found that plaintiff was qualified to perform a number of different jobs within the applicable
salary range and within plaintiff’s work-restrictions. Contrary to plaintiff’s claim on appeal, the
magistrate did not find that the only job plaintiff was capable of performing at his maximum
wages was that of a captain in the fire department.
Additionally, the magistrate concluded that plaintiff made a good-faith effort to find
employment in 2013 but that plaintiff could not substantiate a good-faith effort to find
employment in either 2012 or 2014. The magistrate therefore concluded that plaintiff was not
entitled to wage-loss benefits after January 2014 and that “the residual wage earning capacity
determination is moot” because plaintiff was not eligible to receive ongoing worker’s
compensation benefits until he reinitiated a good-faith employment search.
Regarding plaintiff’s pension benefits, Kenneth Alberts, an actuarial consultant who
performed an actuarial valuation of the city’s police-fire pension system, testified that when an
individual receives both workers’ compensation benefits and a duty-disability pension from the
city, the workers’ compensation benefits are paid first and the pension payment was reduced by
the amount of wage-loss benefits payable under workers’ compensation. Beth Church, the city’s
director of human resources, testified that plaintiff received $80,547.22 per year from his duty-
disability pension. Church also testified that, under the city’s pension ordinance, a firefighter’s
duty-disability pension is offset by the amount of any payments he receives through workers’
compensation benefits. Defendant also submitted as a trial exhibit a letter from Church to
plaintiff noting that the city recomputed his duty-disability-pension benefits upon his attainment
of age 50, in accordance with § 16.18 of the city’s pension ordinance. Although this
recomputation of benefits produced an annual pension payment of $75,056.41, less than the
$80,547.22 that plaintiff had been receiving under his duty-disability pension, § 16.18(B) of the
pension ordinance entitled plaintiff to continue receiving the higher benefit amount. Therefore,
plaintiff continued to receive the higher pension payment as calculated under the duty-disability
pension provisions.
The magistrate determined that plaintiff’s original application for a non-duty-disability
pension did not qualify as an election of “like benefits” for the purposes of MCL 418.161(c)
because § 16.22 of the city’s pension ordinance provided for the offset of benefits and, therefore,
specifically contemplated that employees could be eligible for both a non-duty-disability pension
and worker’s compensation benefits. The magistrate concluded, however, that plaintiff was
eligible for a regular age-and-service pension when he reached age 50. Relying on this Court’s
decision in Hatton v Saginaw, 159 Mich. App. 522; 406 NW2d 871 (1987), the magistrate held
that plaintiff’s duty-disability pension converted to a regular age-and-service pension when he
reached age 50, and ruled that coordination of pension benefits and worker’s compensation
benefits was allowed under MCL 418.354(1)(e). Therefore, the magistrate concluded that any
workers’ compensation benefits for which plaintiff might become eligible in the future would be
subject to coordination with his pension benefits under MCL 418.354.
Plaintiff appealed the magistrate’s decision to the MCAC, which affirmed. Plaintiff now
appeals the decision of the MCAC to this Court as on leave granted. On appeal to the MCAC
and to this Court, plaintiff has not challenged any of the magistrate’s factual findings. Rather,
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plaintiff argues that the MCAC erred as a matter of law in ruling that (1) his failure to search for
employment within his qualifications and work restrictions disqualified him from receiving an
open award of workers’ compensation benefits, and (2) any workers’ compensation benefits
awarded to plaintiff in the future would be subject to coordination with his pension benefits
under MCL 418.354.
II. ANALYSIS
A. STANDARD OF REVIEW
The Court’s review of the MCAC’s decision is very limited. Judicial review of a
decision of the MCAC includes the determination whether “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.” Const 1963, art
6, § 28. In the absence of fraud, this Court must affirm the MCAC’s factual findings if they are
supported by any competent evidence. Id.; Schmaltz v Troy Metal Concepts, Inc, 469 Mich. 467,
471; 673 NW2d 95 (2003); see also MCL 418.861a(14). The reviewing court’s primary function
is to ensure that the MCAC “did not misapprehend its administrative appellate role (e.g., engage
in de novo review; apply the wrong rule of law).” Mudel v Great Atlantic & Pacific Tea Co, 462
Mich. 691, 703-704; 614 NW2d 607 (2000). This Court may not independently review the
findings of fact made by the magistrate. Id. at 701. In contrast, the MCAC reviews the
magistrate’s factual findings for “competent, material, and substantial evidence on the whole
record.” MCL 418.861a(3). The MCAC is required to perform “both a qualitative and
quantitative analysis of that evidence in order to ensure a full, thorough, and fair review.” MCL
418.861a(13). If the MCAC finds that the magistrate’s decision was not supported by substantial
evidence, it may make independent factual findings. Mudel, 462 Mich. at 699-700.
Although judicial review of a decision of the MCAC is limited, this Court reviews de
novo questions of law that arise in a workers’ compensation case. Arbuckle v General Motors
LLC, 499 Mich. 521, 531; 885 NW2d 232 (2016). A decision of the MCAC is therefore “subject
to reversal if it is based on erroneous legal reasoning or the wrong legal framework.”
DiBenedetto v West Shore Hosp, 461 Mich. 394, 401-402; 605 NW2d 300 (2000).
B. FAILURE TO SEEK ALTERNATE EMPLOYMENT
On appeal to this Court, plaintiff does not contest the magistrate’s factual finding that he
failed to substantiate a good-faith effort to find employment in either 2012 or 2014. Yet,
plaintiff argues that the magistrate erroneously failed to determine what, if any, residual-wage-
earning capacity plaintiff had during periods when he did not actively seek employment and that
the magistrate erroneously failed to award him wage-loss benefits for those periods. Plaintiff
points to the magistrate’s ruling that he suffered a work-related disability that caused a reduction
in his wage-earning capacity. Plaintiff argues that, in the face of such a ruling, the magistrate
was required to determine his residual-wage-earning capacity. Plaintiff argues that the
magistrate erroneously failed to calculate and award him partial benefits for 2012, 2014, and all
years thereafter, so long as plaintiff’s disability and wage loss continued, regardless of whether
plaintiff made a good-faith effort to seek other employment. We conclude that plaintiff’s
argument is without merit.
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The WDCA provides in part that “[a]n employee, who receives a personal injury arising
out of and in the course of employment by an employer who is subject to this act at the time of
the injury, shall be paid compensation as provided in this act.” MCL 418.301(1). “A workers’
compensation claimant bears the burden of proving that he has a disability under MCL
418.301(4), and that burden does not shift to the employer.” Stokes v Chrysler LLC, 481 Mich.
266, 270; 750 NW2d 129 (2008). To establish a prima-facie case of disability, a claimant must
prove the occurrence of a work-related injury that resulted in a “reduction of the claimant’s
wage-earning capacity in work suitable to his qualifications and training.” Id. at 281.
To satisfy his burden of proof under the WDCA, a claimant must “do more than
demonstrate that his work-related injury prevents him from performing a previous job.” Id. A
workers’ compensation claimant must: (1) disclose his qualifications and training; (2) “prove
what jobs, if any, he is qualified and trained to perform within the same salary range as his
maximum earning capacity at the time of the injury”; (3) “show that his work-related injury
prevents him from performing some or all of the jobs identified as within his qualifications and
training that pay his maximum wages”; and (4) “if the claimant is capable of performing any of
the jobs identified, the claimant must show that he cannot obtain any of these jobs.” Id. at 281-
283. Regarding the fourth prong of this test, the Stokes Court specified that the claimant “must
make a good-faith attempt to procure post-injury employment if there are jobs at the same salary
or higher that he is qualified and trained to perform and the claimant’s work-related injury does
not preclude performance.” Id. at 283. “Upon the completion of these four steps, the claimant
establishes a prima facie case of disability.” Id. Only after the claimant has made that prima-
facie showing does the burden shift to the employer “to come forward with evidence to refute the
claimant’s showing.” Id. In this case, the magistrate held that plaintiff satisfied the first three
prongs of the Stokes test but that plaintiff failed to satisfy the fourth prong of that test because
plaintiff did not make a good-faith attempt to procure post-injury employment in 2012 and 2014.
The MCAC affirmed the magistrate’s conclusion that plaintiff was not eligible to receive
workers’ compensation benefits until he “once again establishes with probative evidence that he
has made a good faith effort to seek employment to mitigate his wage loss.”
On appeal to this Court, plaintiff argues that the magistrate and the MCAC improperly
applied the fourth prong of the Stokes test. We conclude that the fourth prong of the Stokes test
applies to plaintiff’s claim for workers’ compensation benefits and that the magistrate and
MCAC correctly concluded that plaintiff was ineligible for benefits until he can demonstrate
compliance with that fourth prong.
The magistrate identified a number of jobs plaintiff was qualified to perform within the
same salary range as his maximum-earning capacity in his prior employment as a firefighter.
Because the magistrate found that plaintiff was capable of performing some of the jobs
identified, plaintiff was therefore required to satisfy the fourth prong of Stokes by showing “that
he cannot obtain any of these jobs.” Id. To do so, plaintiff was required to “make a good-faith
attempt to procure post-injury employment” because there were “jobs at the same salary or
higher that he is qualified and trained to perform and [his] work-related injury does not preclude
performance.” Id.
Plaintiff relies on Harder v Castle Bluff Apartments, 489 Mich. 951; 798 NW2d 26
(2011), and Vrooman v Ford Motor Co, 489 Mich. 978; 799 NW2d 17 (2011), to support his
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argument that he is entitled to receive an open award of workers’ compensation benefits even
during time periods when he failed to make a good-faith effort to look for employment within his
qualifications and training. In the Harder case, this Court denied the claimant’s application for
leave to appeal. Harder v Castle Bluff Apartments, unpublished order of the Court of Appeals,
entered January 27, 2011 (Docket No. 298975). The Michigan Supreme Court then issued an
order denying the plaintiff’s application for leave to appeal from the decision of this Court.
Harder, 489 Mich. at 951. In that order denying leave to appeal, the Michigan Supreme Court
stated that “the magistrate in this case found, and the record supports, that the plaintiff did not
have the ability to earn wages within his qualifications and training, and the [MCAC] therefore
properly affirmed the magistrate’s decision.” Id.
The Supreme Court’s order denying leave in Harder cited Lofton v Autozone, Inc, 482
Mich. 1005; 756 NW2d 85 (2008). In the Lofton case, this Court denied the claimant’s
application for leave to appeal. Lofton v Autozone, Inc, unpublished order of the Court of
Appeals entered February 4, 2008 (Docket No. 277845). The Michigan Supreme Court then
issued an order remanding the case to the workers’ compensation magistrate for reconsideration
of its decision in light of Stokes. Lofton, 482 Mich. at 1005. The Lofton Court held that, if “it is
found that the plaintiff is disabled under MCL 418.301(4), but that the limitation of wage-
earning capacity it only partial, the magistrate shall compute wage loss benefits under MCL
418.361(1), based upon what the plaintiff remains capable of earning.” Id.
Finally, in the Vrooman case, this Court denied the claimant’s application for leave to
appeal. Vrooman v Ford Motor Co, unpublished order of the Court of Appeals, entered February
17, 2011 (Docket No. 299340). The Michigan Supreme Court then issued an order remanding
the case to the workers’ compensation magistrate for additional findings of fact and conclusions
of law. Vrooman, 489 Mich. at 978. In doing so, the Vrooman Court cited Harder, 489 Mich. at
951, and Lofton, 482 Mich. at 1005. Vrooman, 489 Mich. at 978.
Harder, Lofton, and Vrooman are distinguishable from the present case and therefore
inapplicable. Harder involved a plaintiff who did not have the ability to earn wages within his
qualifications and training. Harder, 489 Mich. at 951. In contrast, the magistrate in this case
identified several jobs that plaintiff was qualified to perform, in the same salary range as his
maximum-earning capacity. Lofton discussed only a limitation of wage-earning capacity but did
not discuss whether the claimant engaged in a good-faith attempt to find employment within his
qualifications and training. Lofton, 482 Mich. at 1005. In contrast, the magistrate in this case
found that plaintiff did not substantiate a good-faith attempt to find alternate employment for the
years in question. Vrooman did not specify the grounds on which the Court remanded the case to
the magistrate for additional findings of fact and conclusions of law. Vrooman, 489 Mich. at 978.
The authorities cited by plaintiff do not support an argument that a plaintiff who fails to make a
good-faith effort to look for employment is entitled to recover wage-loss benefits during the
period when he fails to look for work.
In this case, plaintiff has not challenged the magistrate’s factual finding that he failed to
engage in a good-faith effort to look for qualifying employment in 2012 and 2014. Therefore,
the MCAC did not err in concluding that plaintiff failed to satisfy the fourth prong of Stokes, and
the MCAC appropriately affirmed the magistrate’s conclusion that plaintiff remains ineligible to
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receive workers’ compensation benefits “until he once again establishes with probative evidence
that he has made a good faith effort to seek employment to mitigate his wage loss.”
C. COORDINATION OF BENEFITS
Plaintiff next argues that the magistrate erroneously held that plaintiff’s disability pension
converted to a regular age-and-service pension once he reached age 50. Plaintiff concedes that
he became eligible to apply for a regular age-and-service pension at the age of 50. He argues,
however, that the magistrate only heard testimony that he was receiving a duty-disability pension
and that there was no testimony in the record that the city would convert his duty-disability
pension to an age-and-service pension at the age of 50 or any other age. As noted earlier,
however, the record includes a letter from Church to plaintiff noting that his duty-disability-
pension benefits were recomputed upon his attainment of age 50, in accordance with § 16.18 of
the city’s pension ordinance. Therefore, plaintiff’s argument that there was no evidence in the
record to support the magistrate’s decision is without merit.
Plaintiff argues, nonetheless, that (1) the magistrate erred as a matter of law in ruling that
plaintiff’s disability pension converted to a regular age-and-service pension when he turned 50
years old and that as a result, it was subject to coordination of benefits under MCL 418.354; (2)
Section 16.22 of the pension ordinance “states that any worker’s compensation payable to a
member retiree shall be offset against any pension”; and (3) statutory coordination under MCL
418.354(14) does not apply to plaintiff’s pension.
In contrast, defendant argues that the magistrate and the MCAC correctly relied on this
Court’s decision in Hatton in ruling that any workers’ compensation benefits to which plaintiff
may become entitled are subject to coordination with his pension benefits. Defendant argued to
the magistrate that, if plaintiff’s pension benefits were not considered “like benefits” for
purposes of MCL 418.161(c), then plaintiff’s pension should be coordinated under MCL
418.354. The magistrate concluded that § 161(c) did not apply. As for coordination, the
magistrate concluded that, before his fiftieth birthday, plaintiff’s pension was offset by the
amount of worker’s compensation benefits received, but that coordination did not apply during
that time period. Yet, the magistrate concluded that after his fiftieth birthday, plaintiff’s “duty
disability pension converts to a regular pension or are in the nature of retirement benefits” as
defined by this Court in Hatton, which meant that MCL 418.354(1)(e) applied, and plaintiff’s
pension and workers’ compensation benefits were subject to coordination.
The MCAC affirmed the magistrate’s opinion on this point, stating:
After plaintiff turned 50 years of age on March 3, 2014, pursuant to
Hatton, supra and § 354, the defendant is able to coordinate the benefits paid to
plaintiff against any workers’ compensation benefits paid to him if that occurs in
the future.
* * *
The record, in this case, demonstrates that plaintiff contributed approximately 25
percent toward the funding of his pension and the employer contributed
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approximately 75 percent of the funding. Therefore, under § 354 and Hatton,
supra the defendant is entitled to coordinate the pension benefits with any
workers’ compensation benefits received or liable for. The plaintiff’s workers’
compensation benefits paid or due shall be reduced by 75 percent of the pension
received.
MCL 418.354 provides for coordination of benefits when an individual is receiving
workers’ compensation benefits at the same time that he or she is receiving “pension or
retirement payments under a plan or program established or maintained by the employer.” MCL
418.354(1). “Coordination of benefits serves to reduce the amount of weekly benefits an
employer is legally obligated to pay an employee under the WDCA.” Smitter v Thornapple Twp,
494 Mich. 121, 126; 833 NW2d 875 (2013). If MCL 418.354(1) applies, “[t]he coordination of
benefits is mandatory,” subject to certain limitations not relevant here. Id. Benefits under
disability-pension plans begun or renewed after March 31, 1982 are subject to coordination by
virtue of MCL 418.354(14), but an employer may elect against exercising its right to coordinate
benefits, in certain circumstances, such as when the employer enters into an employment
agreement exempting benefits from coordination. See Arbuckle, 499 Mich. at 536. Therefore,
the question in this case is whether the city’s pension plan exempted plaintiff’s pension benefits
from coordination with workers’ compensation benefits. This is a question of law that this Court
review de novo. See id. at 531.
The relevant portion of the city’s pension ordinance addressing plaintiff’s duty-disability
pension states, “To his or her attainment of age . . . fifty (50) years for a firefighter member who
retires on or after July 1, 1993, his or her disability pension shall be subject to §§ 16.21 and
16.22.” Section 16.21, which requires ongoing physical evaluations regarding whether an
individual’s disability improves before retirement, does not apply to plaintiff. Section 16.22,
however, deals specifically with worker’s compensation. That section states in relevant part:
(A) Any worker’s compensation which may be paid or payable to a
member retiree or beneficiary on account of the member’s employment shall be
offset against any pension payable to such member. . . .
(B) Effective January 15, 1992, this section shall no longer be in effect for
police patrol officers, however, for injuries after March 31, 1982, the coordination
of pension and workers’ compensation benefits will be subject to the provisions of
the Workers Disability Compensation Act of 1969 (MCL 418.101 through
418.941). Further, pursuant to Section 161 of the Workers Disability
Compensation Act (MCL 418.161), the initial election between duty disability
pension and workers’ compensation will find such workers’ compensation benefit
not falling below the July 1990 level.
In other words, when the various sections of the pension ordinance are considered together, the
ordinance indicates that plaintiff’s duty-disability pension was subject to an offset, until plaintiff
reached the age of 50. Because § 16.22 of the pension ordinance identifies no further exclusions
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past the age of 50, however, we conclude that the ordinance intended the coordination of benefits
after plaintiff reached the age of 50.2
In this case, both the magistrate and the MCAC relied on this Court’s opinion in Hatton.
In that case, the plaintiff was a firefighter for the city of Saginaw who suffered a work-related
injury. Hatton, 159 Mich. App. at 524. The city granted the plaintiff a duty-disability pension.
Subsequently, the plaintiff applied for and was awarded workers’ compensation benefits. Id. at
525. The magistrate held that the duty-disability pension did not constitute “like benefits” and
that the plaintiff was not barred from receiving workers’ compensation benefits under the
election provision of MCL 418.161. Id. On appeal, this Court determined that the plaintiff’s
benefits under the city’s pension ordinance were in the nature of retirement benefits, and thus did
not qualify as “like benefits” under MCL 418.161. Id. at 534. As the Hatton Court stated:
As such, § 354(1)(e) allows coordination of the pension benefits and workers’
compensation benefits. Because of this retirement nature of plaintiff’s pension
benefits, § 354(14) does not remove plaintiff’s pension from coordination even
though it is termed a disability pension. Plaintiff cannot have it both ways. Our
holding that after age fifty-five plaintiff’s pension was primarily a retirement
pension was to plaintiff’s advantage. Since we do not view such benefits as “like
benefits,” § 161 does not apply to plaintiff’s pension. Plaintiff cannot now argue
that § 354 also does not apply because his pension is for disability. Section 354
represents a legislative enactment to remedy compensation abuses. We will not
thwart the Legislature’s purpose by a disingenuous application of the exception to
coordination found in § 354(14). [Id. (citation omitted).]
Moreover, in Sterner v McLouth Steel Prod, 211 Mich. App. 354; 536 NW2d 225 (1995),
this Court addressed whether a provision in the plaintiff’s pension agreement barred the
coordination of benefits. In that case, the plaintiff suffered a work-related injury and the
defendant voluntarily paid him workers’ compensation benefits. Id. at 355. The plaintiff later
received both a permanent-incapacity-retirement pension and social-security-disability benefits,
and the parties agreed that those benefits were not subject to coordination under MCL 418.354.
Id. at 355-356. When the defendant began coordinating the plaintiff’s workers’ compensation
benefits with his disability-pension benefits, the plaintiff objected to that coordination. Id. at
355. The applicable pension ordinance provided that workers’ compensation benefits “shall not
be deducted from any such amount for permanent incapacity retirement payable prior to age 65.”
Id. at 356.
The magistrate in Sterner held that this ordinance language barred coordination of the
plaintiff’s pension benefits before age 65. Id. at 356. The MCAC reversed that decision,
holding:
2
Although § 16.22(B) applies only to police officers, it further illustrates the city’s intention to
coordinate benefits for those individuals who are not otherwise granted an exception to
coordination.
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We must abide by the plain meaning of the language in section 3.10 of the
Agreement. . . . The Agreement states that any worker’s compensation benefits
‘shall not be deducted from any such amount for permanent incapacity retirement
payable prior to age 65.’ In short, the pension plan prohibits a reduction in the
pension payments due to the payment of worker’s compensation benefits. It
requires that the employee receive the full amount of his or her disability
retirement income until he or she is age 65.
However, MCL 418.354 provides, not for a reduction in pension benefits,
but for a reduction in worker’s compensation benefits. The full amount of
disability retirement income payable under the pension plan is not affected. . . .
Therefore, coordination of plaintiff’s worker’s compensation benefits is not
barred by application of MCL 418.354(14). [Id. at 356-357 (cleaned up).]
This Court reversed the MCAC, explaining that the MCAC “ignored the primary rule of
construction of an ambiguous provision in a contract, which is to ascertain the intent of the
parties.” Id. at 357. Finding the ordinance language ambiguous, this Court concluded that “the
parties must have intended to prohibit coordination before a recipient’s sixty-fifth birthday
because, otherwise, the provision would have been unnecessary.” Id. at 358.
Applying this Court’s decision in Sterner, we conclude that by limiting the setoff
provision until age 50 and providing no further exclusions to the coordination of benefits, the
goal of the city’s pension ordinance was to prevent double recovery for wage loss. This goal is
consistent with the objective of MCL 418.354. See Rangel v Ralston Purina Co, 248 Mich. App.
128, 136-137; 638 NW2d 187 (2001). Nothing in MCL 418.354 provides that plaintiff’s pension
is automatically exempt from coordination absent express exemption from coordination under
the plan. Rather, the statute lists both pensions and retirement plans as subject to coordination.
MCL 418.354(1). Absent an applicable exemption, regardless of whether plaintiff’s pension is
categorized as a disability pension or a retirement pension, plaintiff’s pension remains subject to
coordination in accordance with the legislative intent of preventing double recovery. “If the plan
is silent on the subject, disability compensation benefits are subject to coordination.” Sterner,
211 Mich. App. at 356.
In this case, the city’s pension ordinance does not include a specific provision exempting
plan members from coordination after they attain age 50. Subsequently, no exception to
coordination existed. Absent such an exception, and given that plaintiff’s disability pension
plans began after March 31, 1982, it is subject to coordination by virtue of MCL 418.354(14).
See Arbuckle, 499 Mich. at 536. Therefore, the MCAC did not err in affirming the magistrate’s
conclusion that defendant will be able to coordinate worker’s compensation benefits with
plaintiff’s pension should plaintiff qualify for worker’s compensation benefits in the future.
Affirmed.
/s/ Brock A. Swartzle
/s/ Michael J. Kelly
/s/ Jonathan Tukel
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