Workers Comp and Disability Ruling in Michigan Fire Case

The Michigan Supreme Court handed down a horrendously boring fire service case yesterday … so boring that I seriously debated (a) whether to blog about it and (b) how to blog about it without putting non-attorney readers to sleep…

However, the case seems to have garnered some national interest – and precisely because it is so boring – there is a risk that some commentators may misinterpret it – causing it appear to stand for more than it actually does.

With that introduction, let me try – as painlessly as possible – to walk you through the case of Smitter v. Thornapple Township using a few BURNING QUESTIONS!!!!

Burning Question 1: I am a part-time firefighter in Michigan. I am a full time employee of General Motors Corp. in Michigan. I make 90% of my income working for GM. If I get hurt firefighting, will I be entitled to workers compensation benefits based only on my fire department wages?

Answer: No, you will receive 80% of your regular weekly compensation from both jobs combined. You will receive this compensation from the fire department’s workers comp carrier even though only 10% of your income comes from the fire department. You probably don’t care what happens after you get your check – but the fire department comp carrier can seek reimbursement for having paid you 80% of your GM wages through a special comp fund known as the Second Injury Fund. There is a whole body of case law and statutes that govern how the Second Injury Fund operates and what each carrier has to pay.

Burning Question 2: Well that is a relief. I was afraid I would only get a percentage of my fire department income and i would be in serious financial trouble. My fire department also provides us with disability insurance coverage in addition to workers compensation… you know, like the kind of insurance in the commercials with the stupid duck… I really like this benefit because it protects me for the other 20% that comp does not cover, plus it will provide enough extra cash to cover the overtime I would lose. I have become kind of accustomed to working a lot of overtime and would definitely need the extra cash to pay my bills in the event I was injured. Any issues with disability insurance?

Answer: That is where things start to go sideways. Michigan law requires that workers comp and disability insurance that are paid for by an employer – be “coordinated” in such a way that you are only entitled to receive 80% of your normal weekly wages. If you receive disability payments your employer is supposed to reduce your comp payments so the total does not exceed 80%. It is called “coordination of benefits”.

Burning Question 3: Are you f%$#ing kidding me?

Answer: No.

Burning Question 4: Does my employer have to follow the coordination of benefits rule? They never have done that in the past. They always have given guys who get hurt both comp and disability pay.

Answer: Apparently not. There was a case that the Michigan Supreme Court just handed down, Smitter v. Thornapple Township. The facts are amazingly similar to your case. The court seemed to imply that employers can choose to voluntarily give injured employees workers comp plus the disability payments. In addition some departments can formally opt out of the coordination of benefits requirement all together. Unfortunately in the Smitter case the fire department did not opt out of the coordination of benefits so it was supposed to coordinate benefits.

Burning Question 5:  Well… what ever. That’s confusing. So everything is cool then, right. I mean so long as my fire department continues to pay me both comp and disability, what do I care that the department didn’t coordinate benefits?

Answer: Yeah… well, it seems in the Smitter case the Michigan Supreme Court ruled that if the fire department does not coordinate benefits, the fire department’s insurer cannot recoup the payments made to an injured firefighter from the Second Injury Fund to the extent the payments violated the coordination of benefit requirement. The insurer is only entitled to get reimbursed for the amount it would be entitled to if the fire department had actually coordinated benefits. That being the case I tend to think your department may no longer be willing/able to provide disability insurance coverage for you going forward. The comp insurers will probably be getting a lot stricter about this. So most likely fire departments will not be able to offer both comp and disability as they have in the past.

Burning Question 6: Are you f%$#ing kidding me?

Answer: No.

Burning Question 7: Well that’s just great. So what are my options? I mean, I really need the disability coverage and that was an important factor in my decision to work part-time for the fire department?

Answer: I’d start talking to the duck and buy my own coverage directly from him. Maybe your fire department might be willing to offer you a stipend or pay increase to offset that cost, seeing as how they will no longer be paying the disability insurance premiums.

Burning Question 8: I am a fire chief in Michigan. A bunch of my guys just walked into my office and said you told them we ought to give them a stipend or pay increase so they could buy their own disability coverage. Are you f%$#ing kidding me?

Here is a copy of the ruling. Smitter v Thornapple