Iesha Fisher v. Kalamazoo Regional Psychiatric Hospital

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

IESHA FISHER, FOR PUBLICATION

September 10, 2019

Plaintiff-Appellee, 9:00 a.m.

v No. 343283

MCAC

KALAMAZOO REGIONAL PSYCHIATRIC LC No. 15-000038

HOSPITAL and STATE OF MICHIGAN,

Defendants-Appellants.

Before: SWARTZLE, P.J., and GLEICHER and M. J. KELLY, JJ.

SWARTZLE, P.J.

Sometimes an employee will be overpaid worker’s disability compensation benefits.

This can create several types of unfairness—unfairness to the employer or insurance carrier that

paid more than it should have, and unfairness to the employee who may have come to rely on the

higher payment and now must adjust to a lower payment and, indeed, possibly reimburse the

employer or carrier.

How best to minimize the resulting unfairness is a policy question. One way would be to

require an employee to reimburse the full overpayment only if the employee engaged in fraud.

Another way would be to limit the reimbursement to the amount overpaid within the year prior to

the recoupment action. The Michigan Compensation Appellate Commission adopted the former

policy, while our Legislature adopted the latter policy. Under separation-of-powers principles,

we conclude that the Commission lacked any legal authority to adopt its policy and reverse.

I. BACKGROUND

Defendants, Kalamazoo Regional Psychiatric Hospital and the state of Michigan, appeal

by leave granted the decision of the Michigan Compensation Appellate Commission affirming

the magistrate’s opinion and order denying defendants’ petition for recoupment of benefits

overpaid to plaintiff, Iesha Fisher. See Fisher v Kalamazoo Regional Psychiatric Hosp,

unpublished per curiam order of the Court of Appeals, entered October 1, 2018 (Docket No.

343283).

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The facts are few and not in dispute. Plaintiff sustained a workplace injury, and her

employer voluntarily paid her worker’s disability compensation benefits. Defendants later filed

a petition for recoupment of benefits, seeking reimbursement of an alleged overpayment.

Defendants asserted that plaintiff received weekly compensation benefits for approximately three

months, but that defendants paid those benefits at an incorrect rate, resulting in an overpayment

to plaintiff. The magistrate held a hearing on the petition for recoupment, and plaintiff did not

appear at the hearing, despite the fact that she was provided with notice of that hearing.

The magistrate entered an order denying defendants’ petition. The magistrate observed

that the Commission had previously held in several administrative cases that when an employer

or carrier voluntarily but mistakenly overpaid a claimant, it could not recoup the overpayment

without proving that the overpayment resulted from the employee’s fraudulent act. The

magistrate found that defendants failed to establish that the overpayment occurred because of

any fraud by plaintiff.

Defendants appealed to the Commission, arguing that an employer or carrier has a right

to recoup an overpayment of benefits under MCL 418.354(9) and Ross v Modern Mirror &

Glass Co, 268 Mich App 558; 710 NW2d 59 (2005). Defendants argued that they were only

limited by the one-year back rule of MCL 418.833(2), and the Worker’s Disability

Compensation Act, MCL 418.101 et seq. (WDCA), did not limit an employer’s or carrier’s right

of recoupment to only those instances in which the employee fraudulently obtained the

overpayment.

The Commission disagreed, finding that the circumstances of this case were

distinguishable from Ross, which involved an overpayment to an employee because of the lack

of coordination of the claimant’s disability pension benefits with the worker’s disability

compensation benefits as required under MCL 418.354. The Commission also noted that denial

of defendants’ petition would neither discourage voluntary payment of claims nor result in

unnecessary disputes and delays of payments because defendants had a clear duty to make

professional and prompt evaluation of worker’s compensation claims and apply the correct rate.

Defendants appealed.

II. ANALYSIS

On appeal, defendants do not argue that plaintiff engaged in fraud or that the Commission

made erroneous factual findings. Rather, defendants ask us to consider a pure question of law—

Is the right to recoup the overpayment of disability compensation benefits from an employee

subject to the condition that the employee engaged in fraud to obtain the overpayment?

This Court reviews de novo questions of law with respect to a final order of the

Commission. DiBenedetto v West Shore Hosp, 461 Mich 394, 401; 605 NW2d 300 (2000). The

relevant legal framework is set forth in the WDCA. When construing a statute, this Court

presumes that the Legislature “intend[ed] the meaning clearly expressed, and this Court must

give effect to the plain, ordinary, or generally accepted meaning of the Legislature’s terms.”

D’Agostini Land Co LLC v Dep’t of Treasury, 322 Mich App 545, 554; 912 NW2d 593 (2018)

(citation omitted).

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Under our Constitution, state departments, agencies, and commissions do not have

general lawmaking authority. This authority is found, rather, in the Legislature. Const 1963, art

4, § 1. (One possible exception to this separation-of-powers principle is the recently adopted

“independent citizens redistricting commission” found in Article 5, § 2, but that commission is

not relevant here.) With respect to worker’s disability compensation, the Legislature enacted the

WDCA, within which it granted and defined the Commission’s limited authority to “handle,

process, and decide appeals from orders of the director and hearing referees and the orders and

opinions of the worker’s compensation magistrates.” MCL 418.274(1).

Under the WDCA, the right of an employer or carrier to seek reimbursement from an

employee for an overpayment of benefits has long been recognized by courts. See, e.g., McAvoy

v HB Sherman Co, 401 Mich 419, 449-450 n 11; 258 NW2d 414 (1977) (explaining that MCL

418.833(2) “originally was designed and passed . . . to provide for the recoupment of benefits

overpaid”); Ackerman v General Motors Corp, 201 Mich App 658, 660-661; 506 NW2d 622

(1993) (same). This is consistent with the oft-repeated principle that the WDCA does not

authorize double compensation to an injured employee, Reidenbach v Kalamazoo, __ Mich App

__, __; __ NW2d __ (2019) (Docket No. 340863), slip op at 4, because double recovery by an

employee “is repugnant to the very principles of workers’ compensation,” Hiltz v Phil’s Quality

Market, 417 Mich 335, 350; 337 NW2d 237 (1983).

And yet, as previously recognized, seeking reimbursement for overpayment could result

in some hardship to the employee. One way that the Legislature has alleviated this hardship is

with a one-year statute of limitations. Under MCL 418.833(2), “When an employer or carrier

takes action to recover overpayment of benefits, no recoupment of money shall be allowed for a

period which is more than 1 year prior to the date of taking such action.” Thus, while an

employee who, through no fault of her own, may have to reimburse her employer for an

overpayment of benefits, the financial impact to the employee is limited to a one-year period.

See Ross, 268 Mich App at 562 (recognizing that the one-year limit was a statute of limitations

that applied to overpayment of benefits).

To provide additional relief to employees, the Commission has further qualified the right

of reimbursement by strictly limiting it to cases where the employee engaged in fraud to obtain

the overpayment. Yet, nowhere in the act is there a requirement that an employer or carrier show

that the employee engaged in fraud before seeking reimbursement for an overpayment. Nor was

the rule adopted by formal rulemaking under delegated authority pursuant to the Administrative

Procedures Act, MCL 24.201 et seq.

Instead of relying on statutory authority, the Commission created the fraud requirement

out of whole cloth in Whirley v JC Penney Co, Inc, 1997 ACO #247. In this decision, the

Commission opined, “[I]t seems to us that voluntarily made payments, in the absence of any

fraudulent behavior, should remain undisturbed.” The Commission made this pronouncement

without further explanation or citation to authority, and subsequent decisions of the Commission

have simply relied on Whirley as support.

In crafting and applying this employee-fraud requirement, the Commission exceeded its

statutory authority. As explained by our Supreme Court on several occasions, “ ‘The power and

authority to be exercised by boards or commissions must be conferred by clear and unmistakable

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language, since a doubtful power does not exist.’ ” Consumers Power Co v Pub Serv Comm, 460

Mich 148, 155-156; 596 NW2d 126 (1999) (quoting Mason Co Civic Research Council v Mason

Co, 343 Mich 313, 326-327; 72 NW2d 292 (1955)). Neither the act nor any promulgated rule

entrusted the Commission with crafting an employee-fraud requirement to a recoupment action.

Whether the requirement might be sound public policy is neither for the Commission nor this

Court to decide, but instead is left solely to the Legislature. Const 1963, art 4, § 1; see also

People v Babcock, 343 Mich 671, 679-680; 73 NW2d 521 (1955); D’Agostini, 322 Mich App at

560.

Accordingly, we reverse the Commission’s decision in this case and remand for further

proceedings consistent with this opinion. We do not retain jurisdiction.

/s/ Brock A. Swartzle

/s/ Elizabeth L. Gleicher

/s/ Michael J. Kelly

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