S T A T E O F M I C H I G A N WORKERS' COMPENSATION APPELLATE COMMISSION V DOCKET #

Transcription

1 JOHN POTEREK, PLAINTIFF, 1997 OPINION # 24 S T A T E O F M I C H I G A N WORKERS' COMPENSATION APPELLATE COMMISSION LABORERS METROPOLITAN DETROIT HEALTH CARE FUND, INTERVENING PLAINTIFF, V DOCKET # PULTE CONSTRUCTION COMPANY, AND MICHIGAN MUTUAL INSURANCE COMPANY, DEFENDANT. APPEAL FROM MAGISTRATE BLAIR. JOHN P. CHARTERS FOR PLAINTIFF, KEVIN P. KALES FOR INTERVENING PLAINTIFF, GERALD M. MARCINKOSKI FOR DEFENDANT MICHIGAN MUTUAL INSURANCE COMPANY. WYSZYNSKI, COMMISSIONER OPINION Plaintiff appeals from the decision of Magistrate B. Lloyd Blair, mailed December 14, 1993, denying plaintiff s request for attorney fees. In reaching his conclusion, the magistrate found that MCL (2) was, in this instance, preempted by ERISA. 1 The magistrate found that the Laborers Metropolitan Detroit Health Care Fund (Fund) was a welfare benefit plan pursuant to 3(1) of ERISA. 2 The magistrate wrote: Defendant contends that the Fund is governed by ERISA and as such falls under the umbrella of federal law which, therefore, exempts it from the application of MCL (2), supra. Defendant argues that the federal protection granted the Fund preempts the state law whenever the Fund s directives are in conflict with state law. (See Alessi v Raybestos-Manhattan, Inc, 451 US 504, 68 L Ed 2d 402, 101 S Ct 1896 (1981)). Alessi involved the federally protected pension 1 Employee Retirement Income Security Act of 1974 (ERISA). 29 U.S.C et seq U.S.C. 1002(1).

2 plan which called for offsets or reduction of retirement benefits by an amount equal to state workers compensation benefits. In that case, the pension provisions prevailed over state law which prohibited the use of workers compensation benefits in such manner. In the instant case, the trustees of the Fund has issued a directive against attorney fees in assignment recoveries. The policy is cited in defendant s Memorandum of Law in the Fund s Summary Plan Description. The provision reads as follows: The obligation to repay the Fund is not limited to amounts recovered and the obligation to repay all such benefits to the Fund shall not be limited or reduced by reason of any attorney fees or expenses the participant, participant s spouse or dependent pay or agree to pay in connection with the prosecution of their claims. The participant, participant s spouse and dependent will be required to sign a subrogation agreement prior to the payment of any benefits from the Fund. Defendant argues that the above policy falls within the discretionary powers given the trustees and is governed by Alessi. Defendant further argues that when the trustees exercise their discretion, courts review said exercises with difference [sic]. And they are rarely overturned (Firestone Tire and Rubber v Bruch, 489 US 101, 109 S Ct 948 (1989) and Pokratz v Jones Dairy Farm, 771 F2d 206 (7th Cir )). Plaintiff first argues that 821(2) is not preempted by federal law. In pertinent part, 821(2) provides: When a[n]... insurance company... enforces an assignment given to it..., it shall pay, pursuant to the rules established by the director, a portion of the attorney fees of the attorney who secured the workers compensation recovery. This Commission must decide whether 821(2) relates to an authorized ERISA plan, as the term relates to is used in ERISA. After reviewing the pertinent federal and state case law on this issue, we conclude that 821(2) does not relate to the Fund in such a way so as to preempt its application to the matter before us. ERISA provides that it shall preempt any and all state laws in so far as they may now or hereafter relate to any employee benefits plan described in... this 2

3 title. 29 U.S.C. 1144(a). [Emphasis added.] In Teper v Park West Galleries, Inc, 431 Mich 202 (1988), the Court discussed at great length the federal case law on the issue of ERISA preemption. Within the framework of this discussion, the Court then concluded at 214: From the foregoing authority we conclude that a preemptive relationship to an ERISA plan is established when state law interferes with a plan by: 1) altering the level of benefits which would be paid out under a given plan from state to state, 2) altering the terms of a plan, such as the requirements for eligibility, or 3) subjecting the fiduciaries of a plan to claims other than those provided for in the ERISA itself. In arriving at his conclusion that ERISA preempted 821(2), the magistrate relied on Alessi v Raybestos-Manhattan, Inc, 451 US 504, 68 L Ed 2d 402, 101 S Ct 1896 (1981). As explained by our Supreme Court in Teper, supra, the New Jersey statute in Alessi which provided a set-off for workers compensation benefits was preempted by ERISA because it altered the level of benefits which would be paid to a beneficiary under a plan in New Jersey. We conclude there is nothing in 821(2) which would fall within this reduction of benefits concept and the magistrate s reliance on Alessi, supra, is therefore misplaced. More to the point, is the recent decision in Levine, Benjamin, Tushman, Bratt, Jerris and Stein, P.C. v The Paul Reverse Life Insurance Co, 875 F Supp 404 (E.D. Mich 1995). In that case, the Court held specifically that 821 is not preempted by ERISA pursuant to the so-called savings clause, 29 U.S.C. 1144(b)(2)(A). The rationale for this holding is that the thrust of 821 is intended to force insurance companies to reimburse attorneys that procure worker s compensation. 875 F Supp at 405. The court concluded that such a law is aimed at the insurance industry and is therefore within the savings clause. Id. We therefore reverse the decision of the magistrate. We next turn to the issue of what portion of the attorney s fees the Fund is liable for. We reject the Fund s assertion that plaintiff s attorney will enjoy double recovery should this Commission order it to pay a portion of the attorney fees. We find plaintiff s argument on this issue to be most persuasive and, in our opinion, in complete accord with the statute and the rules promulgated thereunder. As plaintiff states, the lien held by the Fund totals $13, which equals % of the overall recovery. The Fund s fee is therefore % of 30% of $207, or $3,951. Inasmuch as plaintiff has already paid the attorney fees in full, plaintiff s counsel shall release $3,951 from the escrow held in this matter directly to plaintiff. sanctions under MCL b. We reject the Fund s argument that is entitled to 3

4 Commissioner Garn and Chairperson Miller concur. James Edward Wyszynski, Jr. Marten N. Garn Donald G. Miller, Chairperson Commissioners 4

5 JOHN POTEREK, PLAINTIFF, S T A T E O F M I C H I G A N WORKERS' COMPENSATION APPELLATE COMMISSION LABORERS METROPOLITAN DETROIT HEALTH CARE FUND, INTERVENING PLAINTIFF, V DOCKET # PULTE CONSTRUCTION COMPANY, AND MICHIGAN MUTUAL INSURANCE COMPANY, DEFENDANT. This cause came before the Appellate Commission on appeal by plaintiff from the decision of Magistrate B. Lloyd Blair, mailed December 14, 1993, denying plaintiff s request for attorney fees. The Commission has considered the record and the briefs of counsel, and believes that the decision should be reversed. Therefore, IT IS ORDERED that the decision of the magistrate is reversed. Laborers Metropolitan Detroit Health Care Fund is ordered to pay its proportional share of the attorney fees in the amount of $3,951. James Edward Wyszynski, Jr. Marten N. Garn Donald G. Miller, Chairperson Commissioners