ROMEIN v. GENERAL MOTORS CORPORATION; GONZALEZ v. FORD MOTOR COMPANY
Case Details
- Citation
- 436 Mich. 515
- Judge(s)
- Levin, Boyle, and Archer, JJ., concurred with Cavanagh, J.
- Procedural Posture — the stage the case had reached
- appeal
- State
- Michigan
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
Michigan Supreme Court upheld 1987 PA 28, which retroactively prohibited coordination of workers' compensation benefits for pre-1982 injuries and required employers to refund withheld benefits plus interest. Court rejected constitutional challenges under Due Process, Contract Clause, and Separation of Powers doctrines.
Excerpt
ROMEIN v GENERAL MOTORS CORPORATION GONZALEZ v FORD MOTOR COMPANY Docket Nos. 83830, 83831. Argued October 5, 1989 (Calendar No. 7). Decided September 28, 1990. Rehearing denied 437 Mich 1202. Evert Romein was injured in the course of his employment with General Motors Corporation before 1981. On September 28, 1983, General Motors began coordinating benefits pursuant to the provision of 1981 PA 203, § 354, effective March 31, 1982, that permitted deduction of employer-financed pension and social security benefits from workers’ compensation benefits received by a disabled employee. A hearing referee held that § 354 could not be applied retroactively. The Workers’ Compensation Appeal Board reversed, finding that Chambers v General Motors Corp, 422 Mich 636 (1985), requires retroactive application. The Court of Appeals, Shepherd, P.J., and Wahls and G. B. Ford, JJ., reversed (Docket No. 101298). The defendant appeals. Arthuro Gonzalez was disabled prior to March 31, 1982, in the course of his employment with the Ford Motor Company. Workers’ compensation benefits were awarded pursuant to a voluntary agreement. After March 31, 1982, Ford began to coordinate benefits. A hearing referee held that § 354 did not apply retrospectively because the injury occurred prior to the effective date of the act. The Workers’ Compensation Appeal Board affirmed on the basis of 1987 PA 28 which declared that Chambers was erroneously decided. The Court of Appeals, Shepherd, P.J., and Wahls and G. B. Ford, JJ., affirmed (Docket No. 101510). The defendant appeals. In an opinion by Justice Cavanagh, joined by Justices Levin, Boyle, and Archer, the Supreme Court held: The amendment of the workers’ compensation act by 1987 PA 28, § 354(17)-(20), which prohibits the coordination of work_ers’ compensation benefits for employees who were injured before the effective date of 1981 PA 203, § 354, does not violate the Due Process Clauses of the federal and state constitutions, the Contract Clause of the federal constitution, or the Separation of Powers Clause of the Michigan Constitution. The amendment was a constitutional exercise of legislative power retroactively modifying benefit levels for a legitimate purpose furthered by rational means. The statute does not abrogate any vested rights of the employers and validly may be applied to all compensation liabilities within its terms except those reduced to a final judgment before its effective date. References Am Jur 2d, Workmen’s Compensation §§ 7, 8. See the Index to Annotations under Due Process; Impairment of Contract; Separation of Powers; Vested Rights; Workers’ Compensation. 1. A rational basis standard of review governs the scrutiny of the legitimacy of social and economic legislation. A retroactive workers’ compensation statute will not be deemed unconstitutional simply because it imposes a new duty or liability on the basis of past acts. All workers’ compensation benefits and liabilities are statutory in origin and may be revoked or modified at the will of the Legislature. Thus, 1987 PA 28 is constitutional even though it applies to benefits due and payable for a period prior to the date of the statute. Only judgments entered under former law are immune from legislative modification. 2. 1987 PA 28 serves a legitimate state interest and employs reasonable means sufficient to survive a Contract Clause challenge. The level of benefits existing at the time of an injury does not constitute a legitimate contractual expectation protected by the Contract Clause. While the Contract Clause prohibits any state law from impairing the obligations of a contract, the prohibition must be accommodated to the state’s inherent police power. The test for this accommodation involves determining whether the state law substantially impaired a contractual relationship, whether there is a legitimate public purpose for the law, and whether the means chosen to implement it are reasonable. In this case, the impairment is not substantial. The workers’ compensation act substitutes a remedial scheme of compensation for injuries otherwise subject to recovery in tort for negligent acts of employers in the workplace. Employers benefit from the limit placed on their liability; the impairment at issue does not alter this benefit. The act regulates a field of commerce that has been subject to wide-ranging government regulation; the employers knew their rights were subject to alteration. There is a significant state interest in protecting the rights of disabled employees to receive compensation in return for relinquishment of their tort claims. The means chosen by the Legislature are reasonable. 3. The amendment does not violate the Separation of Powers Clause of the Michigan Constitution. The operative provisions of the statute do not encroach upon the sphere of the judiciary. Rather, they merely repeal the act construed in Chambers v General Motors Corp. The enactment is a valid exercise of the Legislature’s authority to retroactively amend legislation perceived to have been misconstrued by the judiciary. Such retroactive amendments based on prior judicial decisions are constitutional if the statute comports with the requirements of the Contract and Due Process Clauses of the federal and state constitutions, and as long as the retroactive provisions of the statute do not impair final judgments. Justice Brickley, concurring, expressed dissatisfaction with respect to the current state of constitutional law regarding retroactive civil legislation. Applicable precedent does not prohibit the Legislature from redefining rights and liabilities enjoyed and owing in the past, notwithstanding the delineation of those rights and liabilities by a prior Legislature. The appellants’ due process claims, therefore, are not viable under current law. Affirmed. Chief Justice Riley, dissenting, stated that in interpreting 1987 PA 28 the intent of the Legislature that enacted 1981 PA 203, the Legislature of 1987 invaded the constitutional authority granted to the judicial branch and usurped the judicial function of determining the proper construction of a statute. It is within the power of the Supreme Court, not the Legislature, to interpret the legislative intent of 1981 PA 203. Therefore, 1987 PA 28, § 354(17)-(20), violates Const 1963, art 3, § 2 and art 6, § 1 and should be applied prospectively from its effective date, May 14,1987. The declaration made by the 1987 Legislature in 1987 PA 28, § 354(17) that it was providing the legislative intent of the 1981 Legislature is contrary to prior Michigan case law. Additionally, it is not supported by the economic, political, and legislative history behind the enactment of each amendment at issue in these cases. The interpretation of § 354 imputed to the 1981 Legislature by the 1987 Legislature was erroneous. The 1981 Legislature was fully cognizant of the consequences of coordinating workers’ compensation benefits, yet it enacted 1981 PA 203 in an attempt to stimulate a poor state economy by lowering the cost of doing business in Michigan. Furthermore, the claim of the 1987 Legislature that it provided the original intent of the 1981 Legislature flies in the face of the fact that those members of the 1981 Legislature who opposed 1981 PA 203 failed in their attempt to limit its application. 1987 PA 28 is not a remedial or curative amendment. The function of curative legislation is to repair the consequences of legal accident or mistake. These cases involve just the opposite. 1981 PA 203 was enacted to eliminate receipt by injured workers of total benefits in excess of workers’ compensation and thus reduce the cost of workers’ compensation to businesses through coordination of benefits. In Chambers, the Supreme Court unanimously interpreted the statute to mean that employers have the right to coordinate benefit payments regardless of the date of injury. 1987 PA 28 was enacted to invalidate this decision, thus effecting a substantive change in the law. The word of the curing legislature should not be conclusive in determining what the prior representatives meant. The question of original intent is ultimately one for the reviewing court. Applying both Michigan law and the rules of statutory construction in these cases leads to the conclusion that the coordination of benefits provisions that were interpreted by the Supreme Court in Chambers were not repealed. Rather, because they were reenacted by adopting the identical language from the original act, the coordination of benefits provisions have continued in force from the time of original enactment, March 31,1982. Justice Griffin, dissenting, stated that 1987 PA 28 violates Michigan’s constitutional requirement of separation of powers and contravenes the United States Constitution’s Fourteenth Amendment guarantee of due process. It is fundamental that the Supreme Court, not the 1987 Legislature, is entrusted by the constitution with the power to determine the meaning of 1981 PA 203. The Legislature, by enacting 1987 PA 28, not only declared what the law shall be, a legislative function, but purported to declare what the law is, i.e., what the intent of a prior Legislature was, a judicial function. This declaration by the 1987 Legislature concerning the intent of the 1981 Legislature is a nullity. Retroactive legislation has always been looked upon with disfavor. Even its constitutionality has been conditioned upon a rationality requirement beyond that applied to other legislation. The Supreme Court has never before recognized or sanctioned a legislative attempt to retroactively overrule one of its decisions, nor has the United States Supreme Court given consideration to the effect of retroactive legislation upon conduct occurring after judicial interpretation, but before the overruling legislation was enacted. While the Legislature possesses the authority to enact workers’ compensation laws that increase the burden on an employer for disability or expenses occurring or continuing after the date of enactment of the amendatory statute, even though the accident which gave rise to the disability or expenses occurred prior to that time, past cases have limited the retroactive effect of such legislation by applying a change in benefit levels to those payments due after the effective date of an enactment. The appellants’ reliance on the preexisting state of the law should be considered in determining whether retroactive legislation is constitutional. Because the Supreme Court never before recognized legislation purporting to retroactively overrule one of its decisions interpreting the enactment of a prior Legislature, it could hardly be said that the appellants were on notice that the law might be changed in such a manner. Where a person can prove detrimental reliance on the interim state of the law, it seems clear that there is entitlement to relief. In order to protect this Court’s status as the final arbiter of what the law is, and to secure the guarantee of due process, the Legislature should not be permitted to undo retroactively past transactions completed in reliance upon a decision of this Court. 168 Mich App 444; 425 NW2d 174 (1988) affirmed. Workers’ Compensation — Coordination of Benefits — Retroactive Application. The amendment of the workers’ compensation act by 1987 PA 28, § 354(17X20), which prohibits the coordination of workers’ compensation benefits for employees who were injured before the effective date of 1981 PA 203, § 354, does not violate the Due Process Clauses of the federal and state constitutions, the Contract Clause of the federal constitution, or the Separation of Powers Clause of the Michigan Constitution; the amendment was a constitutional exercise of legislative power retroactively modifying benefit levels for a legitimate purpose furthered by rational means; the statute does not abrogate any vested rights of the employers and validly may be applied to all compensation liabilities within its terms except those reduced to a final judgment before its effective date (1987 PA 28, MCL 418.354[17]-[20]; MSA 17.237[354][17]-[20]; US Const, art I, § 10, Am XIV; Const 1963, art 1, §§ 10,17, art 3, § 2, art 6, § 1). Levine, Benjamin, Tushman, Bratt, Jerris & Stein, P.C. (by Barrie R. Bratt and Charles P. Burbach), for appellee Romein. James M. O’Reilly, P.C. (by James M. O’Reilly), for appellee Gonzalez. Sachs, Nunn, Kates, Kadushin, O’Hare, Helveston & Waldman, P.C. (by Theodore Sachs, of counsel), for appellees Romein and Gonzalez. Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, and Sterling W. Schrock and George H. Weller, Assistant Attorneys General, for the intervenor-appellee. Bodman, Longley & Dahling (by Theodore Souris, Kim Michael Lavalle, and Martha B. Goodloe) for the appellants (John P. Raleigh and John G. Rahie, of counsel), for General Motors Corporation; (Douglas E. Cutler, Anthony P. Márchese, Jr., and Alan S. Gorosh, of counsel), for Ford Motor Company. Amicus Curiae: Clark, Klein & Beaumont (by Dwight H. Vincent, J. Walker Henry, M. Diane Vogt, and Rachelle G. Silherberg) for Michigan Manufacturers Association. Cavanagh, J. We granted leave in these consolidated cases to decide the constitutionality of 1987 PA 28, §354(17X20), MCL 418.354(17X20); MSA 17.237(354)(17)-(20). This statute prohibits the coordination of workers’ compensation benefits for employees who were injured before the eifective date of 1981 PA 203. It also requires the repayment plus interest of all benefits withheld as a result of coordinating benefits between 1982 and 1987 from disabled employees whose injury dates were before 1982. We hold that the amendments of the Workers’ Disability Compensation Act contained in 1987 PA 28, § 354(17)-(20) are constitutional exercises of legislative power retroactively modifying benefit levels for a legitimate purpose furthered by rational means. We also hold that the statute does not abrogate any vested rights of the employers. The statute may validly be applied to all compensation liabilities within its terms except those which have been reduced to final judgment before its enactment. FACTS AND PROCEDURAL HISTORY The plaintiffs were injured before 1981. In 1981, the Legislature enacted 1981 PA 203 which included the coordination of benefits provision of § 354, MCL 418.354; MSA 17.237(354). This section allowed coordination of workers’ compensation benefits with employer-funded pension plan payments. This statute was part of a legislative reform package involving a series of related amendments of the workers’ compensation statute. The coordination provisions were an essential component of a compromise plan that restructured benefits payable to disabled workers. The resources saved as a result of this coordination were reallocated by the statute to increase benefit levels generally, from two-thirds of the average weekly wage to eighty percent of after-tax wages, effective for injuries occurring after January 1, 1982. The plaintiffs were subjected to these coordination provisions even though the statute was silent regarding its application to claims resulting from injuries occurring before its 1982 effective date. On September 28, 1983, General Motors Corporation informed plaintiff Romein that he had been overpaid $75.03 per week from January 1, 1982, because of the corporation’s failure to coordinate benefits under 1981 PA 203, § 354, as of its effective date. Thus, the corporation began to deduct the amount of this "overpayment” of $3,913.57 from compensation benefits as they became due and payable. The corporation also began coordinating future benefit payments by deducting pension and social security benefits from the workers’ compensation payments due, resulting in a thirty-five percent reduction of benefits actually paid. This resulted in a reduction of $132 a week. His total benefits were reduced from $19,377.80 to $12,513.80 per year. Plaintiff Gonzalez experienced an even more dramatic reduction in his workers’ compensation benefits. The Ford Motor Company informed Gonzalez that it would begin coordination of his benefits in accordance with § 354 resulting in the withholding of his entire $176 weekly payment beginning March 31, 1982. Between January 1, 1982, and October 7, 1985, the legality of coordination of benefits for injuries which occurred before the effective date of 1981 PA 203, § 354, was in doubt. The Legislature expressed its view that the initial, lower court decisions permitting application of § 354 coordination rights only to claims arising from injuries occurring after the effective date of § 354 were correct. The defendants’ efforts to coordinate plaintiffs’ benefits under § 354 received judicial acceptance in 1985 when this Court reversed the lower court in Chambers v General Motors Corp, 422 Mich 636; 375 NW2d 715 (1985). The Court applied principles of statutory interpretation to hold that § 354 permitted coordination of benefits regardless of the date of injury since the Legislature did not state an intent to apply the provision only to benefits paid to employees whose injuries occurred after its effective date. Thereafter, the Legislature enacted 1987 PA 28 which clearly indicated that the coordination of benefits provision of 1981 PA 203 was not intended to reduce benefits for injuries which occurred before the effective date of the 1981 statute. This statute retroactively amended § 354 and prevented any coordination of benefits for claims arising from injuries which occurred before March 31, 1982. The first provision of 1987 PA 28 states that it is the Legislature’s intent to prohibit the coordination of benefits for pre-March 31, 1982, injuries. Another provision of the act requires that any setoffs which have been made by employers between March 31, 1982, and May 14, 1987, be refunded to employees, with interest. Thus, any benefits that were reduced under the coordination provisions of § 354, are deemed by statute to have been "underpayments” of workers’ compensation benefits and must be refunded within sixty days with interest. In addition, if the employee had repaid money to the employer for benefits received that the employer alleged should have been coordinated, 1987 PA 28 requires the employer to reimburse the employee, with interest, within sixty days. The issue before the Court is whether the Legislature has violated the defendants’ constitutional rights under the Due Process or Contract Clauses of the state and federal constitutions by retroactively altering the level of benefits due and payable prior to the amendment. We must also decide whether this retroactive alteration of benefits violates the Separation of Powers and One Court of Justice Clauses of the Michigan Constitution. i The defendants contend that 1987 PA 28, § 354(17)-(20) violates the Due Process Clauses of the United States and Michigan Constitutions by retroactively imposing liability for additional workers’ compensation benefits for past compensable periods. They contend that they relied on the coordination provisions of § 354 during the period between its effective date of March 31, 1982, and the amendment date of May 14, 1987, and that this reliance gives them a vested right to have their liability for those periods determined by the law then in effect. The defendants argue that 1987 PA 28 is "purely retroactive” and unconstitutionally impairs rights under executed contracts of employment. The defendants urge that this statute is "purely retroactive” because it not only applies to injuries arising before the effective date of the act, but also modifies the employer’s liability for a preenactment compensable period. Thus, this statute is different from the one upheld in Chambers. We hold that the challenged statute satisfies the rational relationship test and does not abrogate any vested rights of the employers. The statute, therefore, does not violate the Due Process Clauses. A
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