Opinion
Docket No. 44297.
Decided November 19, 1980.
Kelman, Loria, Downing, Schneider Simpson (by Robert W. Howes and James P. Harvey), for plaintiff.
Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Eileen D. Zielesch, Assistant Attorney General, for the Second Injury Fund.
Defendant Second Injury Fund appeals from a decision of the Workers' Compensation Appeal Board upholding plaintiff's claim for total and permanent disability benefits.
On June 25, 1976, plaintiff was awarded compensation benefits for the loss of industrial use of his left leg in a work-related accident which occurred on August 13, 1973. Neither his employer, Cadillac Gage, nor its insurer, Fireman's Fund Insurance Company, appealed from that award. On July 28, 1976, plaintiff filed a supplemental petition seeking benefits for total and permanent disability from the Second Injury Fund based on the loss of industrial use of his left leg and the alleged prior loss of his left eye. The administrative law judge rendered his decision on December 13, 1977, in favor of plaintiff, ordering the Second Injury Fund to pay compensation benefits beginning on the date defendants Cadillac Gage and Fireman's Fund concluded payments on the June 25, 1976, award. Defendant Second Injury Fund appealed this decision to the Workers' Compensation Appeal Board, and oral argument took place on January 4, 1979. At that time, defendant Cadillac Gage, plaintiff's employer, admitted that plaintiff had suffered the alleged prior eye loss. On April 30, 1979, the appeal board ruled that the Fund was bound by the employer's admission regarding plaintiff's eye injury and affirmed the award.
The Fund claims in this appeal that the Workers' Compensation Appeal Board was required to review the evidence and make findings of fact on the eye loss question and erred by ruling that the Fund was bound by the employer's admission. We agree and hold, based on the specific facts of the instant case, that the employer's admission did not bind the Second Injury Fund.
Plaintiff relies on White v Weinberger Builders, Inc, 397 Mich. 23; 242 N.W.2d 427 (1976), in claiming that the employer's admission in the present case was binding on the Fund because the Fund's liability is derivative of the employer's liability. White involved four separate employees whose claims for compensation benefits were disputed by their respective employers. In each case, the employers' liability was terminated when it entered into a redemption agreement with the claimant whereby the employer agreed to pay a lump sum in settlement of the claim, without admitting liability. See, MCL 418.835; MSA 17.237(835). Each claimant subsequently petitioned the Second Injury Fund seeking differential benefits under § 521(2) of the Worker's Disability Compensation Act, MCL 418.521(2); MSA 17.237(521)(2). The Fund denied liability on the ground that the liability of the employers, a prerequisite to recovery of differential benefits, had not been admitted or determined in a hearing. The hearing referee and the Workers' Compensation Appeal Board agreed, and an appeal to this Court followed. In White v Weinberger Builders, Inc, 49 Mich. App. 430; 212 N.W.2d 307 (1973), this Court held that the establishment of employer liability, either by admission or adjudication prior to redemption, is an absolute prerequisite to Second Injury Fund liability. The Supreme Court affirmed. Both opinions contain language indicating that the Fund's liability is derivative of that of the employer.
We do not believe White is controlling in the present case, which does not involve the differential benefits provision of the act. Derivative liability and a passive role for the Second Injury Fund make sense where the employer and its insurer have a sufficient stake in the outcome of the case to resist a dubious claim. The instant case does not present such a situation since only the Second Injury Fund would have been required to pay benefits for total and permanent disability if plaintiff prevailed. By admitting that plaintiff had a preexisting disabling eye injury, the employer did not render itself "liable" for any additional benefits. We hold that the employer's admission, which may have been motivated by such factors as a desire to promote employee relations or avoidance of the cost of further litigation, does not deprive the Second Injury Fund of the right to appeal the administrative law judge's decision. The Workers' Compensation Appeal Board erred by failing to address the merits of the appeal.
Reversed and remanded.