At issue in this appeal is the coordination of worker's compensation and early pension benefits pursuant to MCL 418.354; MSA 17.237(354). In particular, plaintiffs contend that they were compelled to accept early payment of their retirement benefits and are therefore exempt from coordination of these benefits under MCL 418.354(1)(d); MSA 17.237(354)(1)(d). We hold that plaintiffs' interpretation of this statutory provision is erroneous and that MCL 418.354(1)(d); MSA 17.237(354)(1)(d) does not preclude coordination where an employee is required to accept early pension benefits. We therefore affirm the disposition of these cases by the Court of Appeals and remand them to the hearing referees for further proceedings consistent with this opinion.
On February 8, 1985, Stroh Brewery Company announced its plan to close its brewery and to permanently lay off all brewery employees effective December 31, 1985. As a result of the plant
At the time the liquidation plan was announced, the contract plan administrator for the pension fund conducted meetings to explain the effect of the liquidation. Different classes of employees were invited to the meetings (salaried, hourly, able and disabled employees), and defendant prepared pension distribution applications for all employees. Riss attended one of these meetings; Drouillard did not attend the meetings and instead received his pension distribution information by mail.
At these assemblies the contract plan administrator gave all employees several forms, including a benefit election form. This form provided the employees with two choices regarding their pension benefits. First, employees could have their pension monies held in a trust, which would then be transferred to an insurance annuity until the employee requested distribution. Second, employees could take receipt of their pension benefits either in the form of a single lump-sum payment or rolled over into an individual retirement account. It is significant to plaintiffs' argument that they were told that it would be in their best interests to reject the trust option.
Defendant's contract plan administrator testified that he instructed Stroh's employees that if they left their pension monies in the trust it would earn no interest and therefore it was not wise to leave the money in the trust. It is disputed whether the plan administrator told the employees that they had the option of leaving the money in the trust. However, he did advise that persons
Paul Drouillard began working for Stroh's as a general laborer on June 4, 1956. At some point during the late 1960's or early 1970's, Drouillard injured his back while at work. He occasionally aggravated this injury, and he sometimes missed work as a result. On February 19, 1985, Drouillard slipped and fell on oil and allegedly sustained injuries to his neck, right shoulder, back, and musculoskeletal system. Drouillard never returned to work after this accident.
Drouillard received worker's compensation benefits from defendant from February 20, 1985 until June 26, 1985. He filed a petition for continuing worker's compensation on July 2, 1985. On November 20, 1985, Drouillard received the lump-sum pension payment of $52,748.03 from the trust fund. In March, 1986, the magistrate found that Drouillard had sustained an aggravation of his preexisting degenerative arthritic condition and granted an open award of worker's compensation benefits. The magistrate held that Stroh could coordinate Drouillard's medical and social security benefits, but held that Stroh provided insufficient proof to allow coordination of pension benefits. The Worker's Compensation Appeal Board submitted an order reversing the magistrate in this regard, stating that the worker's compensation payments were subject to coordination in accordance with §§ 354(1)(d) and 354(13).
Gerald Riss began work for the Stroh Brewery Company on April 2, 1956. During his employment he sustained injuries to his back, right shoulder, and wrist. Riss injured his back in 1957, 1965, and 1975. In 1965, his injuries required surgery, and he missed six months of work, returning to
In May, 1988, Riss was granted an open award of worker's compensation by the hearing referee. The hearing referee allowed Stroh to "coordinate sickness and accident benefits, unemployment benefits, and pension benefits received by plaintiff, in accordance with the [worker's compensation] act." The WCAB opined that the funds were set aside for retirement and because Riss did not retire, but instead was terminated, and because Stroh had shut down the plant, the payments were not for retirement. Instead, the board classified the benefits as "severance benefit[s] involuntarily received," which are not within the purview of the coordination language of § 354. 1991 WCABO 761, 771.
The Court of Appeals consolidated these cases and affirmed the WCAB determination in Drouillard and reversed the WCAB determination in Riss. See Drouillard v Stroh Brewery Co, 199 Mich.App. 67; 501 N.W.2d 229 (1993). Citing Barr v Stroh Brewery Co, 189 Mich.App. 549; 473 N.W.2d 716 (1991), the Court determined that the lump-sum payouts were subject to the coordination language of the worker's compensation act. Drouillard, supra at 71.
Worker's compensation is one unit in a loosely connected system of wage-loss protection that also includes unemployment compensation, social security old-age, disability, and survivors benefits, aid to families with dependent children, and general assistance. Franks v White Pine Copper Div, 422 Mich. 636, 654; 375 N.W.2d 715 (1985). Such wage-loss legislation is designed to restore to employees a portion of wages lost because of three major causes of wage loss: physical disability, unemployment, and old age. The crucial operative fact is that of wage loss; the cause of the wage loss merely dictates the category of legislation applicable. See, generally, 4 Larson, Workmen's Compensation, § 97, p 18-9 (1995 Supp, p 106).
Because most social legislation in Michigan was implemented in unrelated fragments, failure to coordinate resulted in an accumulation of benefits. For example, before coordination, it was not unusual for an employee to collect both unemployment and worker's compensation benefits at the same time. However, if an employee undergoes a period of wage loss, it does not follow that he should receive multiple wage-loss benefits simultaneously. An employee can experience only one wage loss and, in any logical or coherent system, should receive only one wage-loss benefit at any one time. Id.
As part of the 1981 amendments of the worker's compensation act, the Legislature added § 354, which provides for the coordination of wage-loss benefits. The purpose of this legislation was to prevent duplicate wage-loss payments while maintaining
Plaintiffs concede that under MCL 418.354(1)(d); MSA 17.237(354)(1)(d), pension benefits ordinarily are subject to coordination.
Plaintiffs contend that they are exempted from coordination by MCL 418.354(12); MSA 17.237(354)(12). In reference to this provision, plaintiffs contend that subsection 354(12) precludes coordination in all cases in which an employer "compels" employees to accept early retirement or pension benefits. We first note that it is not clear that plaintiffs were compelled to accept early retirement benefits. It is apparent that plaintiffs were told that the more expedient course would be to accept their pension benefits. However, it is also true that this was general advice to a disparate audience and plaintiffs were specifically instructed to seek legal advice if they had questions. However, even accepting arguendo plaintiffs' contention that they were compelled to accept early pension benefits, we believe that the conclusion that subsection 354(12) thereby precludes coordination only follows from a forced reading of the statute.
The cardinal rule of statutory construction is to discern and give effect to the intent of the Legislature. Murphy v Michigan Bell Telephone Co, 447 Mich. 93, 98; 523 N.W.2d 310 (1994). It has long been an accepted principle of statutory construction, in discerning the legislative will through its enactments, to construe a statute so as to give full effect to all its provisions. See, e.g., Malonny v Mahar, 1 Mich. 26 (1847). Subsection 354(12) provides:
As indicated by the emphasized language, we believe
This interpretation is supported by reading subsection 354(12) in conjunction with the rest of the coordination statute. In fact, this Court is so required; in the interpretation of statutes, effect must be given, if possible, to every word, sentence and section and, to that end, the entire act must be read to be an harmonious and consistent enactment as a whole. Dussia v Monroe Co Employees Retirement System, 386 Mich. 244, 248; 191 N.W.2d 307 (1971). Subsection 354(3) provides that employers shall be notified of an employee's eligibility for social security benefits and that employees shall apply for social security benefits when eligible.
The Legislature could have, but did not, easily written the statute to read clearly and unambiguously as the plaintiffs would like: "Coordination of benefits will not apply if the employer compels the employee to receive early or reduced pension, retirement or other benefits that can be coordinated." We believe that subsection 354(12) was intended only to void any inference that § 354
Contrary to the argument of the plaintiffs, MCL 418.354(1)(d); MSA 17.237(354)(1)(d) was intended only to void any inference that Michigan's worker's compensation coordination statute might permit or encourage employers to coerce early application for social security or pension benefits by withholding worker's compensation. We therefore affirm the disposition of these cases by the Court of Appeals and remand them to the hearing referees for further proceedings consistent with this opinion.
LEVIN, BOYLE, RILEY, and WEAVER, JJ., concurred with BRICKLEY, C.J.
MALLETT, J. (dissenting).
In these consolidated cases
We disagree with this holding, not because we believe that an employer may not reduce the full amount of the pension received under the coordination statute, but rather, because § 354(12) explicitly bars compelling an employee to take an early pension payout. Accordingly, we would reverse the decision of the Court of Appeals.
Worker's compensation, like other wage replacement programs, is a social welfare program.
Under MCL 418.354(1)(d); MSA 17.237(354)(1)(d), pension benefits ordinarily are subject to coordination. However, the statute itself provides exceptions. For example, § 354(1)(e) allows the employer to reduce the proportional amount of the pension where the employee has also contributed to the pension. Additionally, § 354(14) prohibits an employer from coordinating a disability pension plan that was in existence on March 31, 1982.
In the present case, we are concerned with the exception found in MCL 418.354(12); MSA 17.237(354)(12), which provides:
In reference to this provision, plaintiffs contend that they were compelled by the circumstances to accept an early pension benefits payout.
Conversely, defendant claims that plaintiffs had the option not to apply for their benefits. Defendant maintains that any participants not paid because of a failure to apply would have had their
To resolve this dispute, we must determine how § 354(12) fits into the overall statutory scheme and if the Legislature intended this section to apply in this type of case.
It is well settled in Michigan that when construing statutes, the cardinal rule is to discern and give effect to the Legislature's intent. Murphy v Michigan Bell Telephone Co, 447 Mich. 93, 98; 523 N.W.2d 310 (1994); Pioneer State Mut Ins Co v Allstate Ins Co, 417 Mich. 590, 595; 339 N.W.2d 470 (1983). This is accomplished by interpreting statutory language according to its commonly accepted meaning. Production Credit Ass'n of Lansing v Treasury Dep't, 404 Mich. 301; 273 N.W.2d 10 (1978), rev'g 68 Mich.App. 409; 242 N.W.2d 794 (1976), and aff'g Michigan Consolidated Gas Co v Treasury Dep't, 72 Mich.App. 426; 250 N.W.2d 85 (1976). Where a statute is plain and unambiguous in its terms, the courts have nothing to do but to obey it. Mull v Equitable Life Ins Co, 444 Mich. 508, 514, n 7; 510 N.W.2d 184 (1994); Gardner-White Co v State Bd of Tax Administration, 296 Mich. 225, 230; 295 NW 624 (1941). When different statutes address the same subject, courts must endeavor to read them harmoniously and give them reasonable effect. House Speaker v State Administrative Bd, 441 Mich. 547, 568; 495 N.W.2d 539 (1993). Further, it has long been recognized that the Worker's Disability Compensation Act is remedial in nature and should be construed in a liberal and humanitarian manner in favor of the employee. Bower v Whitehall Leather Co, 412 Mich. 172, 191; 312 N.W.2d 640 (1981).
The coordination-of-benefits provisions were designed in part to prevent an employee from receiving duplicate benefits. Defendant contends that if it is not allowed to coordinate benefits, plaintiffs would, in essence, receive more than they are entitled to under the worker's compensation scheme. The history of § 354 demonstrates a desire on the part of the Legislature to protect worker's compensation benefits while remedying a recurring dual-benefits payment quandary that had existed since the enactment of the worker's compensation statute.
Therefore, there was a dual purpose to the enactment of the coordination statute. First, the legislation was crafted to provide employers major savings in worker's compensation costs. Second, the emphasized excerpts show the specific intent to protect adequate wage-loss benefits to injured employees. Thus, coordination of benefits must not be allowed at the expense of the worker's compensation act as a whole.
Defendant argues that § 354(12) is an intrinsic statutory construction aid rather than a limitation on an employer's right to coordinate benefits. We disagree. The language of the statute itself gives no indication that § 354(12) was designed to be a proviso that only clarifies the remainder of the statute. Instead, the contrary is true. A proviso is generally added as a clause that limits the operation of the rule and removes special cases from the general enactment. Such clauses generally are set apart from the general enactment and are to be strictly construed. 1A Singer, Sutherland Statutory Construction (5th ed), § 20.22, p 110. Thus, for § 354(12) to be considered a proviso, it would have had to been drafted to address special cases only.
Moreover, it is clear from the history of SB 595 that the Legislature intended to protect the interest employees have in their pension benefits. On submission, the House of Representatives amended
Federal social security old-age insurance and pension plans are aimed at meeting the income needs of individuals post retirement. Conversely, worker's compensation benefits are designed to provide replacement wages during an employee's disability status. Clearly, the Legislature recognized the different wage replacement purposes of these social welfare programs and intended to separate current wage-loss benefits from future wage-loss benefits. This fundamental difference in purpose lends further support to the notion that the benefits, in these circumstances, should not be coordinated. Thus, it is clear that the Legislature was specifically concerned with protecting pension benefits.
A reading of the statute as a whole indicates that § 354(12) was meant to apply to all cases in which an employer compels employees to accept early retirement or pension benefits. Section 354(12) was specifically designed to protect an employee's interest in future wage-loss benefits and to prohibit an employer from coordinating worker's compensation benefits where an employee is compelled to accept an early pension payout. We believe this was the intent of the legislation and accordingly would apply § 354(12) to this case.
There have been several cases concerning § 354 and the coordination of worker's compensation benefits, but relatively few have considered coordinating worker's compensation benefits with pension
In Barr, the plaintiff was injured and was receiving worker's compensation benefits. During the plaintiff's disability, Stroh Brewery divested itself of the plaintiff's employment unit and terminated its pension plan with those employees. As a result, the plaintiff was given the option to receive an immediate monthly pension or to have an amount of money equal to his share in the pension plan rolled over into an individual retirement account. The plaintiff received a draft for $56,642, rolled over $30,000 into an IRA, and retained the balance. The Court of Appeals allowed Stroh to coordinate worker's compensation benefits with the retained balance without addressing the application of § 354(12).
The present case is different from Barr in two respects. First, the event giving rise to the liquidation was different in each case. Because of this, the plaintiff in Barr was not a party to the liquidation that is central to the dispute in this case. Second, and perhaps more importantly, the present facts indicate that plaintiffs were compelled to accept the payout, leaving them without a rational choice. There is no indication in Barr that the
Moreover, in Barr, the plaintiff was given the opportunity to begin receiving a monthly pension. Riss' and Drouillard's choices consisted of receiving the pension benefits in a lump sum or electing not to take such a distribution. Stroh's pension fund administrator testified about two dispositive facts that effectually left plaintiffs without a meaningful choice: first, that if they did not accept the payout, their money would not accrue interest. Second, if an employee chose not to receive such a payout, the money would be transferred to an insurance company.
Maine is the only other state that has statutory language similar to that at issue in the present case. The Me Rev Stat Ann, tit 39-A, § 221(8), provides:
In Jordan v Sears Roebuck & Co, 651 A.2d 358 (Me, 1994), the Supreme Court of Maine was asked to interpret the legislative intent of its coordination of benefits statute. The plaintiff suffered a compensable back injury and, because of his inability to work, was forced into early retirement. Sears gave the plaintiff approximately $22,000 in funds that Sears had paid into the plaintiff's pension account, and that the plaintiff immediately rolled it over into an IRA. Subsequently, Sears filed a petition to coordinate benefits. The court held that an employer is not entitled to a coordination of compensation benefits when an
We do note, however, that the Jordan court held that the statutory language found at § 221(8) provides protection against the mandatory coordination of benefits where the employee is forced into early retirement. Id. at 361, n 3. We also recognize that the Michigan provision, § 354(12), was designed to protect a worker's earned pension benefits that are designed for retirement and are not intended to replace current wages.
The presentation of the employees' options in the liquidation meetings not only distinguishes this case from Barr, but it also should be determinative of the outcome. At the meetings, each employee was presented with the following forms that were prepared in advance by the contract plan administrator: (1) an application for benefits, (2) a benefit election form, (3) an election for payees of lump-sum distributions, and (4) a waiver form. The benefit election form provided the employees with two options. First, the employee could elect a joint and survivor annuity. Second, an employee could revoke any joint and survivor annuity and take the distribution in a single payment or it could be rolled into an individual retirement account.
The administrator explained that the law required that a married employee elect a joint and survivor annuity, unless spousal consent for another option was obtained. Significantly, none of the forms indicated that the employees could leave their money in the trust.
It was suggested to the employees that it would be in their best interests to accept lump sums
With respect to the consequences of leaving the money in the fund, Mr. Holefca testified:
In fact, no provisions were made by the plan to establish and maintain a trust in which employees could leave their benefits. Moreover, it is unknown whether the insurance company was to establish some sort of trust under which the employees' money would remain in trust and accumulate interest.
There also appears to be some dispute concerning whether the plan administrator even told the employees that they had the option of leaving the money in trust. For example, Holefca testified:
A. That's correct.
A. That's correct.
A. That's correct.
A. You read that correctly. [Emphasis added.]
From this dialogue, we conclude that plaintiffs either were not informed that leaving the money in trust was an option or operated under the assumption that monies left in trust would not accumulate interest. Indeed, it is these facts that necessitate the determination that Stroh Brewery is not entitled to coordinate plaintiffs' benefits under § 354.
In this regard, we agree with the WCAB. Section 354(12) "is telling us in plain words" that the act "could not be applied when an employee was forced into early `retirement.'" Id. (emphasis added). However, while Stroh itself may not have been directly responsible for compelling plaintiffs to accept the lump-sum payment,
Simply stated, the focus of the inquiry is whether plaintiffs were compelled to accept an early pension payout, not whether defendant was
Thus, the relationship of Dean Holefca to the defendant is irrelevant,
The question before us then is whether the employer is allowed to coordinate benefits pursuant to § 354(1)(d) or whether the closing of the brewery and the subsequent liquidation of the pension plan compelled the employees to accept an early pension payout that would provide the exception outlined in § 354(12).
The Random House Webster's College Dictionary at 276, defines "compel" as follows: "to force or
An employer may liquidate a pension plan, and lump-sum payments are subject to the provisions of the coordination statute if the liquidation is properly administered. However, in our opinion, the plaintiffs in this case had no meaningful choice other than to accept these lump-sum payouts. The option of leaving their money in trust was represented as a poor choice. Moreover, the employees were led to believe that the value of their pensions would not be left intact. In essence, the employees
CAVANAGH, J., concurred with MALLETT, J.
The application of the coordination statute in the context of pension benefits is confused by prior, conflicting Court of Appeals actions. In Knox v Stroh Brewery Co, unpublished order of the Court of Appeals, issued August 18, 1992 (Docket No. 129690), the plaintiff received a lump-sum check from the liquidated pension fund that he then rolled over into an IRA. The magistrate in that case disallowed coordination, ruling that a lump-sum payout that was rolled over into an IRA is not subject to coordination until the plaintiff receives the payout as taxable income. The WCAC affirmed and the Court of Appeals denied the defendants' delayed application for leave to appeal. Conversely, in Lemke v Stroh Brewery Co, unpublished order of the Court of Appeals, issued July 23, 1992 (Docket No. 130194), the Court of Appeals peremptorily reversed a WCAC decision refusing to coordinate a lump-sum payment that was immediately rolled over into an IRA, and then remanded Lemke to the WCAC for further proceedings consistent with Barr.
In Lemke v Stroh Brewery, 1993 WCACO 1106, the commission held that the purpose of coordination is so that employers should not be required to pay twice for employees' nonworking status, so lump-sum distribution must be coordinated over a sufficient period of time. See also Blevins v Shinville Associates, 1993 WCACO 1443.