WORKERS’ COMPENSATION ALERT

TO: Our Clients and Friends

FROM: Bleakley, Cypher, Parent, Warren & Quinn, P.C.

RE: Court of Appeals’ Decision Regarding Stokes

The fundamental issue of disability and its definition have been the focus of much debate since the Supreme Court decided the case of Sington v Daimler Chrysler Corporation, 467 Mich 144 (2002).

Recently, you will recall that the Workers’ Compensation Appellate Commission, in the liberal en banc 101 page decision Stokes v Daimler Chrysler Corporation, 2006 ACO #24, attempted to rewrite the definition of disability set forth by the Supreme Court in the case of Sington. The controlling commission opinion would have limited an employee’s qualifications and training to actual jobs that were performed in the past. Further, it would have disavowed the requirement that plaintiff’s loss of earning capacity and wage loss be causally related to a work-related injury.

In addition, the commission in Stokes previously held that the plaintiff had no obligation to look for work. Perhaps one of the most startling aspects of the commission’s Stokes’ decision was the determination that pretrial discovery is not available in the workers’ compensation arena.

COURT OF APPEALS DECISION

On October 26, 2006, the Court of Appeals issued its decision in Stokes v Daimler Chrysler Corporation, wherein it addressed the definition of disability and the application of the standard of disability set forth by the Supreme Court in the case of Sington v Daimler Chrysler Corporation.

DEFINITION OF DISABILITY

The Court of Appeals reaffirmed the definition of disability, set forth by the Supreme Court in Sington, that an employee must establish a loss of maximum earning capacity in all jobs within one’s qualifications, training and experience.

Moreover, the court explained that the language used in Sington takes a broad view of the injured employee’s “qualifications and training.” In other words, the Court of Appeals reversed the commission’s decision and held that qualifications and training is not limited to only the jobs performed in the past or on employee’s resume, but rather includes any job the injured employee could actually perform upon hiring. Also, the court explained that “transferable skills” is a relevant analysis when determining an employee’s qualifications and training. Specifically, the court acknowledged that a transferable skills analysis may yield credible testimony that there is actual employment the employee is capable of performing upon hiring, regardless of whether the employee ever performed the job before.

BURDEN OF PROOF

The Court of Appeals in Stokes reiterated that the employee has the burden of proof to establish a compensable disability. An employee may establish a prima facie case of disability by producing evidence of a work-related injury, that the injury has caused the inability to perform all jobs which the employee has held up until the time of injury, and that there are no real jobs in the marketplace consistent with plaintiff’s qualifications and training, i.e. past jobs, that the plaintiff is able to perform.

While transferable skills are a part of the analysis, the majority of the court held that the plaintiff need not establish the inability to perform work within one’s transferable skills. Transferable skills are relevant to a disability inquiry after a prima facie case of disability has been established by the plaintiff. The defendant is entitled to utilize transferable skills to rebut the plaintiff’s establishment of disability with evidence that there are real jobs in the ordinary marketplace, within one’s qualifications, training, experience and “transferable skills.”

In other words, an employee need not engage in a transferable skills analysis to establish a compensable disability; however, an employer may utilize a transferable skills analysis to disprove or rebut a compensable disability.

DISCOVERY

The Court of Appeals summarily reversed the appellate commission’s decision regarding discovery and held that discovery does exist in the workers’ compensation arena. The court explained that the magistrate has the authority to grant relevant discovery necessary for a “proper inquiry into the facts.” Specifically, the magistrate has the authority to grant relevant discovery requests to an employer to develop a defense under Sington.

That being said, the court reasoned that the methods of discovery would differ from case to case, based upon the factual circumstances presented. The form of discovery necessary in each particular case is a matter of discretion, for the magistrate, according to the Court of Appeals.

A meeting with a vocational expert is certainly a method of discovery that may be available if the circumstances of a particular case merit that discovery technique. Most likely, an employer will have to establish a lack of information or significant hardship in obtaining information, in order to have the magistrate grant a face-to-face meeting with a vocational expert.

Other forms of discovery including interrogatories and depositions are also available should the facts of the case merit their usage. Again, all forms of discovery are a “matter for the magistrate’s discretion,” per the Court of Appeals decision.

In the particular case of Stokes, the Court of Appeals’ majority found that the magistrate did not abuse his discretion when he denied the defendants the request to conduct a face-to-face vocational interview with the claimant. The dissenting opinion disagreed and would have remanded the matter to the magistrate for further proofs, and the ability for the employer to prepare a defense under Sington.

It is noteworthy to point out that the factual circumstances in Stokes were not employer friendly. Specifically, there was evidence presented at the time of the trial hearing that the defendant did not utilize information at its disposal including a resume, medical testimony, etc., prior to trial, and thus was an underpinning for the court’s decision that the defendants failed to establish a need for further discovery information at the trial level. In essence, because the defendant did not utilize the information it had available, it was difficult to argue for the need for further information.

WAGE LOSS

The Court of Appeals vacated the appellate commission’s decision that held an employee need not show that the loss of wages was caused by a work-related injury. Further, the Court of Appeals majority vacated all provisions in the appellate commission’s decision regarding partial disability.

The Workers’ Compensation Act and prior case law appears to indicate that a plaintiff must prove wage loss is causally related to a work-related injury and based upon the fact that the court vacated the appellate commission’s decision to the contrary, presumably pre-Stokes case law is applicable and the plaintiff must establish a causal connection between wage loss and a work-related injury.

PRACTICAL IMPLICATIONS

Employers will now be able to affirmatively utilize pretrial discovery methods in appropriate cases. That will include interrogatories, depositions, and the use of a vocational expert when necessary. As a practical matter, not every case may require the use of a vocational expert and a transferable skills analysis. For example, an individual who has performed the same job since graduating from high school, for 20 years, with no further education or transferable skills would not likely require the use of a vocational expert and/or testimony. Conversely, an individual with a post-high school education and/or additional certification, that has performed numerous jobs, may indeed require a vocational assessment given the significant possibility that additional jobs may exist in the ordinary marketplace based upon a transferable skills analysis.

It will be extremely important to analyze every case at the outset to ensure that all appropriate discovery methods are pursued based upon the facts and circumstances presented in each case. Some cases will require the use of numerous forms of discovery, while other cases may not.

Perhaps the most uncertain aspect of the definition of disability that still remains is residual earning capacity. The Court of Appeals appears to have indicated that any and all lost earning capacity and/or wages must be causally related to an injury. It follows that an employee’s residual earning capacity or ability to earn wages is still a relevant and viable inquiry. The Court of Appeals simply did not state one way or the other as to whether a residual earning capacity argument is appropriate under the definition of disability and Section 301(4).

The ultimate question in that regard is whether employers are entitled to a credit or set-off for an employee’s residual earning capacity. For example, if an employee was capable of returning to a job that paid less than the employee earned at the time of injury, are the defendants entitled to a credit. While the Court of Appeals decision in Stokes is not clear in that regard, putting the Stokes’ decision together with the Supreme Court’s recent order in the case of Bessinger v Our Lady of Good Counsel, the issue of residual earning capacity within one’s qualifications and training is a relevant inquiry. Thus, it will be important for employers to continue to inquire into the issue of residual earning capacity as part of any disability analysis and/or defense of a case.

Ultimately, in the Stokes case, the Court of Appeals majority found that the claimant did establish a compensable disability despite the numerous errors of law committed by the Workers’ Compensation Appellate Commission in its decision. That being said, it is anticipated that both parties will appeal this matter to the Michigan Supreme Court and there is a greater likelihood that the Supreme Court will accept Leave to Appeal, given its recent order that the Court of Appeals accept the Stokes case and issue a decision.

We will continue to keep you apprised of all developments with respect to the Stokes decision, the ever-illusive definition of disability, and all other case law developments.

If you have any questions regarding this decision or any other issue, please do not hesitate to contact any of the attorneys at Bleakley, Cypher, Parent, Warren, & Quinn.