CROWE v. CITY OF DETROIT

CORRIGAN, C.J.

In this case we are called upon to construe section 161(1)(c)1 of the Worker's Disability Compensation Act, M.C.L. § 418.161. Section 161(1)(c) authorizes municipalities and villages to offer injured police officers and fire fighters a form of compensation that, while like that provided through Michigan's statutory worker's compensation system, M.C.L. § 418.101 et seq., can be tailored to the needs of public safety officers. The statute allows officers to bargain collectively for beneficial alternatives to the otherwise mandatory state system.

Accepting the invitation of the Legislature, the city of Detroit provides an alternative benefits plan2 in tit. IX, ch. VII, art. VI, part B, § 2 of the Detroit City Charter. The charter grants payments during an officer's working life (twenty-five years from the time service as an officer commenced) that exceed what the officer would receive under the WDCA. But after the twenty-five-year period, described as the "creditable service" period, the officer receives the same amount as an uninjured, retired officer. During this second benefit period, i.e., the "retirement" period,3 the officer usually receives less than he would have obtained under the WDCA.

I. UNDERLYING FACTS AND PROCEDURAL HISTORY

Detroit Officers Crowe, Conant, and Singleton, following work-related disabling injuries, accepted municipal disability benefits under the city charter. After twenty-five-years of creditable service, they each received the reduced benefit provided by the plan that they had selected. At that point, they sought to revoke their previous elections to avoid the retirement reductions discussed above.

Although they acknowledged having received the enhanced benefits under the city's plan during the preretirement period, they sought to compel the city of Detroit to supplement the "retirement" benefit to match the comparable WDCA benefit. In two of the proceedings, involving plaintiffs Conant and Crowe, the magistrate and the Worker's Compensation Appellate Commission ruled in favor of defendants, reasoning that plaintiffs' election of the entire municipal plan remained in effect and that § 161(1)(c) does not provide for a "re-election."

In the third proceeding, involving plaintiff Singleton, the magistrate and the WCAC ruled against defendant, relying on Hatton v. Saginaw, 159 Mich.App. 522, 406 N.W.2d 871 (1987). Hatton held that disability benefits provided by the Saginaw City Charter that are reduced when a worker reaches a certain age were not "like" WDCA benefits. The WCAC nonetheless agreed with the magistrate's criticism of Hatton: § 161(1)(c) "is not intended to allow plaintiff the opportunity to jump between benefit programs as it suits his fancy or as benefits change."

The Court of Appeals consolidated the plaintiffs' cases and held that they could not alter their election in order to avoid the reduction in compensation after twenty-five years. Because defendant's charter required the reductions, the Court of Appeals concluded that plaintiffs could not properly claim that they had been surprised:

The Court of Appeals reasoned that the altered calculation of benefits did not change their nature.

We granted leave to consider whether plaintiffs may withdraw their waivers of WDCA benefits.

We affirm the Court of Appeals decision rejecting plaintiffs' arguments. By accepting "like benefits," plaintiffs chose the entire disability plan provided in the charter, including reduction of benefits after twenty-five years. The plain language of § 161(1)(c) does not allow plaintiffs to change their election.

II. STANDARD OF REVIEW

This case requires us to examine the text of § 161(1)(c). Statutory interpretation is a question of law that we review de novo. The Herald Co. v. Bay City, 463 Mich. 111, 117, 614 N.W.2d 873 (2000). See also M.C.L. § 418.861a(14); Mudel v. Great Atlantic & Pacific Tea Co., 462 Mich. 691, 700, 614 N.W.2d 607 (2000).

III. ANALYSIS

The primary goal of statutory interpretation is to discern and give effect to the intent of the Legislature:

"Contextual understanding of statutes is generally grounded in the doctrine of noscitur a sociis: `[i]t is known from its associates,' see Black's Law Dictionary (6th ed), p 1060. This doctrine stands for the principle that a word or phrase is given meaning by its context or setting." Tyler v. Livonia Pub. Schs., 459 Mich. 382, 390-391, 590 N.W.2d 560 (1999).

Section 161(1)(c) plainly requires disabled officers to choose either WDCA benefits or "like benefits" provided under a municipal plan. Employees must elect an entire plan and may not "re-elect" WDCA benefits after they have waived its provisions.

A contextual reading of § 161(1)(c) supports this interpretation. The statute allows officers in "municipalities or villages... providing like benefits" to "waive the provisions of this act and accept like benefits that are provided by the municipality or village but [officers] shall not be entitled to like benefits from both the municipality or village and this act...." This text contemplates an election of a plan. The Legislature plainly distinguished municipalities that provide "like benefits" from those that do not. This distinction is based on whether a municipality provides a plan. It does not refer to individual payments or discrete provisions of a plan.

Similarly, the statute provides that an officer who elects "like benefits" "waives the provisions of this act." The statute does not call for waiver of some WDCA benefits; it requires a waiver of the provisions of the WDCA itself. Had the Legislature intended to allow employees to change an election or to waive some, but not all, benefits, it would not have referred to a waiver of the provisions of the WDCA generally. Indeed, with regard to medical expenses, the Legislature limited the effect of the waiver providing, "this waiver shall not prohibit such employees or their dependents from being reimbursed under section 315 for the medical expenses or portion of medical expenses that are not otherwise provided for by the municipality or village." MCL 418.161(1)(c).

Moreover, the statute expressly states that a claimant "shall not be entitled to like benefits from both the municipality or village and this act...." A claimant who participates in the municipal plan thus cannot claim WDCA benefits.

In these cases, plaintiffs do not dispute that they opted for and accepted benefits under the municipal plan.4 By accepting those benefits, plaintiffs elected the municipal plan in its entirety and waived the provisions of the WDCA. They weighed the benefits and detriments of the WDCA and the municipal scheme, and chose the more advantageous plan.5 Having made that choice, they now seek to withdraw from the bargain because their retirement benefits are less than they would have been under the WDCA.

Plaintiffs and the dissent ignore the plain language of § 161(1)(c). They compare the WDCA alternative plan with the city's other municipal plan. The statute, however, directs us to compare the alternative WDCA plan with WDCA benefits, not to compare one municipal plan with another municipal plan.

The question remains, nevertheless, whether disability benefits provided by defendant's charter are "like" WDCA benefits. We believe that they are. Our decision in MacKay v. Port Huron, 288 Mich. 129, 284 N.W. 671 (1939), offers guidance that helps lead us to this conclusion. In MacKay, a firefighter's widow accepted a monthly pension under a city charter. While still receiving this pension, she sought WDCA benefits. The pension was based on "the amount of retirement salary that her deceased husband would have received had he lived and been placed upon the retirement list at the date of his death." Id. at 132, 284 N.W. 671. This Court found the pension sufficiently similar to worker's compensation benefits:

Further, in Johnson v. Muskegon, 61 Mich.App. 121, 232 N.W.2d 325 (1975), the Court of Appeals held that the city's disability retirement pension provision was "like" the WDCA provisions even though the pension provision did not include medical insurance:

We reaffirm the principles articulated in MacKay and Johnson. The statute does not require that municipal benefits be identical or coextensive in every detail with WDCA benefits. Rather, municipal benefits must be "like" WDCA benefits. Under MacKay, "like benefits" are those that are similar in their salient features.

The municipal benefits accepted by plaintiffs here meet this test. Like the WDCA, defendant's charter provides a total package including periodic payments for disability and payments for the period after creditable service, i.e., retirement. While the municipal benefits are not precisely identical in amount or method of calculation to WDCA benefits—because they are sometimes higher and sometimes lower—they are "like benefits" as this Court and the Court of Appeals have interpreted that phrase.7 Thus, under the plain language of § 161(1)(c), they need not be identical. MacKay, supra.

One cannot rely on one component of the plan, such as the recalculation under the charter after twenty-five years of creditable service. Rather, the relevant inquiry is the nature of the entire plan, not its discrete components.

IV. RESPONSE TO THE DISSENT

The dissent contends that our approach would allow a municipality to change its plan after the option was chosen "regardless of whether the benefits are like in kind or purpose to the benefits offered by the WDCA." Op. at 304. We reject this characterization. We do not hold that a city may offer "virtually anything" "regardless of whether the benefits are like in kind or purpose to" WDCA benefits. Instead, we have followed the plain language of § 161(1)(c) and our decision in MacKay, which is, to repeat, that a municipal plan must offer "like" WDCA benefits, i.e., similar in its salient features.

The statute does not refer to discrete components of a plan or to individual payments of benefits. It refers generically to "like benefits" that are provided by "municipalities or villages of this state." The statute directs that a disabled officer who elects "like" municipal benefits waives "the provisions of the WDCA" itself. This statutory directive means that we must compare an entire municipal plan to the WDCA. The municipal plan here is similar in its salient features to the WDCA because it provides periodic payments for disability. MacKay, Johnson, supra.

The dissent disregards the statutory directive by failing to consider the municipal plan in its entirety. Instead, the dissent disaggregates the plan and compares individual components to the WDCA, concluding that benefits received after the twenty-five-year reduction are not "like" WDCA benefits. Under the dissent's approach, plaintiffs would receive the best of preretirement and postretirement periods, i.e., higher benefits during their "creditable service" years and higher benefits in their "retirement" years.8 This approach is not consistent with the statute or our precedent.

Next, the majority and the dissent apparently agree that the phrase "like benefits" does not require precisely identical benefits. Had the Legislature intended to permit identical benefits, it would have used words such as "identical," "equivalent," or "exactly the same" instead of "like." But the Legislature did not employ those phrases. We thus conclude that the plans need not provide exactly the same benefits. The dissent fails to explain why it does not share our view.

Next, the dissent states that we have "ignore[d] our duty to recognize that the WDCA is a remedial statute that should be liberally construed in favor of the employee, and must be construed to grant rather than deny benefits." Op. at 304. We do not think that the statute at issue is ambiguous.

In any event, if the statutory language were ambiguous, our first duty is to attempt to discern the legislative intent underlying the ambiguous words. Only if that inquiry is fruitless, or produces no clear demonstration of intent, does a court resort to the remedial preferential rule relied on in the dissent.

The dissent would hold that the Legislature intended disabled employees to receive benefits greater than the nondisabled after twenty-five years of creditable service. This scheme would encourage employees to become disabled as retirement approached to obtain greater benefits.9 The act has never been construed as providing a disincentive for recovery and return to work.10 We decline to "construe" this section of the WDCA to create incentives that other areas of the act spurn.

The dissent's construction would create classes of disabled employees—i.e., officers disabled before reaching twenty-five years of service and officers disabled after reaching twenty-five years of service—who are treated differently without apparent reason. Under the dissent's approach, those injured early would receive greater benefits than those injured later. A reasonable inference is not available that the Legislature intended to create unequal outcomes.

Moreover, the dissent's analysis would likely cause municipalities to repeal ordinances providing "like benefits" and thus ultimately deprive police and fire personnel of a valuable benefit.11 If we were to judicially engraft onto the statute a right to make two elections of benefits one at the time of the disability and the second when the years-of-service limitation is triggered municipalities would not establish an independent disability scheme because it would lead to increased costs. As a result, disabled police and fire personnel in the future would be forced to rely entirely on the disability benefits conferred by the WDCA. Thus, the dissent's interpretation would effectively nullify the statutory option of "like benefits" for which public safety officers and their advocates successfully petitioned the Legislature.12

Further, would the Legislature have created a pending financial trap for unwary cities that chose, at the Legislature's invitation, to create a beneficial program for injured public safety officers? The majority believes the Legislature would not do such a thing, but this outcome would ensue if the dissent's approach prevailed. Detroit, either as a self-insurer offering "like benefits," or as an insured paying premiums to an insurance company on the basis of the risks, would be forced to finance benefit payments for which no insurance reserves exist; that is, for unanticipated, and thus unfunded, risks. The Legislature plainly expressed no intent to require cities to raise local taxes or cut other programs to finance such additional responsibilities. In light of these considerations, any ambiguity in the statute would support our conclusion that the Legislature did not intend to allow a second election of benefits.

Finally, the remedial rule of preference cited by the dissent requires courts to determine how an interpretation of the statute would affect all similarly situated claimants, not merely the particular claimants in a particular case. The dissent stands the doctrine on its head; it construes the statute in favor of the particular plaintiffs, but against the entire class of disabled officers. Under the dissent's approach, these municipal plans would cease to exist. Thus, the remedial legislation doctrine, if it applied, would support our conclusion.

V. CONCLUSION

The plain language of M.C.L. § 418.161(1)(c), requires a disabled police officer to choose either WDCA benefits or "like benefits" provided by a municipality or village. By accepting "like benefits," an officer elects the entire municipal plan. Section 161(1)(c) does not permit an officer to change an election after it has been made. Plaintiffs accepted periodic payments for disability under defendant's charter and thereby waived the provisions of the WDCA. Accordingly, we affirm the Court of Appeals decision.

TAYLOR, YOUNG, and MARKMAN, JJ., concurred with CORRIGAN, C.J.

MICHAEL F. CAVANAGH, J. (dissenting).

I am unpersuaded that the plaintiffs continued to receive "like benefits" as defined by M.C.L. § 418.161(1)(c) after reaching the twenty-five-year reduction. Therefore, I must respectfully dissent from the majority's holding. Moreover, I cannot agree with the majority's implication that, once an employee has chosen to receive benefits under a municipal plan, he is thereafter precluded from challenging the benefits he receives as not being "like benefits" under the Worker's Disability Compensation Act. I would hold that the benefits the plaintiffs received before the twenty-five-year reduction were "like benefits" for the purposes of § 161, but that the reduced benefits received thereafter were not "like benefits." Therefore, I would reverse.

I

The Detroit City Charter provides the following with respect to disability pensions:

A member, as defined under article IV, section 1(a), (b), or (c) retired under section 1 above shall receive the following benefits:

The present plaintiffs were retired because of disability at times when each had not attained twenty-five years of creditable service. Each employee received two thirds of his final compensation at the time of retirement in accordance with art. VI, part B, § 2(a) of the city charter.

However, the plaintiffs' benefits were reduced pursuant to § 2(b) of the city charter when each plaintiff reached what would have been twenty-five years of creditable service. The amount of "reduced disability allowance," by the terms of subsection (b)'s reduction provision, was "computed in the same manner as the allowance provided in Part A of this Article with optional benefits as provided in Part H of this Article." Part A is entitled "Service Retirement Allowance," and discusses the standard retirement allowance.1

The plaintiffs initially received the twothirds disability allowance provided by § 2(a) in lieu of receiving worker's compensation benefits. Those payments are not at issue on appeal. The issue on appeal, instead, is the contention that the plaintiffs were impermissibly reduced pursuant to § 2(b). According to the plaintiffs, they were entitled to receive both worker's compensation benefits and municipal benefits because the benefits received by the plaintiffs under the municipal plan were changed from injury-based benefits to retirement benefits when each plaintiff had twenty-five years of creditable service. The defendants contend that § 2(b) is part of an overall disability retirement plan under which the plaintiffs elected to receive benefits after they were injured. Thus, the defendants argue, the benefits provided in the plan are akin to worker's compensation benefits, and the plaintiffs are precluded from receiving "dual" benefits by § 161 of the WDCA.

Thus, in order to fully analyze the parties' arguments, it is necessary to examine the language of the municipal plan under which the plaintiffs are currently entitled to receive benefits, to consider the language of limitation used in § 161, and to determine whether that language of limitation allows the plaintiffs to recover benefits under both the municipal plan and under the WDCA. The language of the charter is provided above. The disputed statutory "election provision" of § 161(1)(c) reads as follows:

Further, the act discusses municipal charters by providing that:

With charter and statute in hand, we can turn to the question whether M.C.L. § 418.161(1)(c) allows the city of Detroit to deny the payment of worker's compensation benefits to the plaintiffs solely because they elected to receive duty disability pension benefits pursuant to § 2(a) of the city charter in lieu of WDCA benefits. Stated alternatively, the question is whether the conversion of the officers' pensions to reduced disability allowances after twenty-five years of service changed the benefits so that they were no longer "like benefits" for the purposes of § 161. The crux of plaintiff's argument is that the benefits were not "like benefits" under § 161 because they were converted from disability benefits to retirement benefits. According to the defendants, the municipal plan benefits were "like benefits" at the time of election, and retained their character as "like benefits" after the reduction because the benefits were created as part of an overall plan designed to be "like" the WDCA formulation.

II

In the majority's words, "The plain language of M.C.L. § 418.161(1)(c) requires a disabled police officer to choose either WDCA benefits or `like benefits' provided by a municipality or village. By accepting `like benefits' an officer elects the entire municipal plan." Op. at 300. However, nothing in the statutory language provides that an employee may elect a benefits plan and that if he does so, he is forever precluded from asserting that the payments being made to him by the city are not "like benefits." The majority's assertion that "[e]mployees must elect an entire plan and may not re-elect WDCA benefits after they have received its provisions," is unsupported by either authority or analysis. Op. at 297. Although the opinion asserts that a "contextual" reading of the statute supports the approach, nothing in the text or context of the statute says anything about all-encompassing plans. Rather, the statutory language provides only that designated employees shall not be entitled to receive "like benefits" from the municipality and under the WDCA at the same time.

Under the majority's approach, an employee is able to elect an overall plan by accepting payment from the city under the city's municipal plan. Thereafter, the employee could be bound to accept virtually anything the city offers as part of the plan, regardless of whether the nature of the benefits changes and regardless of whether the benefits are like in kind or purpose to the benefits offered by the WDCA. I am unconvinced that the majority's approach is supported by the language of the WDCA. Further, the majority ignores our duty to recognize that the WDCA is a remedial statute that should be liberally construed in favor of the employee, and must be construed to grant rather than deny benefits. Hagerman v. GenCorp Automotive, 457 Mich. 720, 579 N.W.2d 347 (1998); Sobotka v. Chrysler Corp. (After Remand), 447 Mich. 1, 20, n. 18, 523 N.W.2d 454 (1994).2

Subsection (1)(c) of § 161 allows injured police officers and firefighters, such as the plaintiffs, to choose whether they wish to receive "like" benefits under a municipal plan rather than under the WDCA. If a plaintiff chooses to receive benefits from the municipality, and those benefits are "like benefits," then § 161(1)(c) operates to bar the employee from receiving payment under the WDCA. While the statutory language makes it clear that the plaintiffs cannot simultaneously receive "like benefits" under the WDCA and the municipal charter, it also implicitly provides that an employee is entitled to receive both worker's compensation benefits and municipal benefits when the two benefits are not like in kind.

Because § 161 does not define the phrase "like benefits," we are left to examine the statutory language and take guidance from precedent. As the majority acknowledges, this Court long ago stated that the determination whether benefits are "like" hinges on whether the benefits are similar in "salient features" considering the full scope of the benefits. MacKay v. Port Huron, 288 Mich. 129, 284 N.W. 671 (1939). Though MacKay was decided under a prior version of the WDCA, I agree with the majority's use of the salient features test under the current version of the WDCA. However, in my view, our duty to consider the full scope of the benefits requires that we analyze the salient features of the particular benefits currently being received and challenged, and not only at the benefits received because of an initial election made by a particular plaintiff.

While the fact that the benefits may be associated with an overall benefit plan may be relevant to our determination of whether particular benefits share salient features, I do not believe that a plaintiff's decision to elect benefits under a municipal plan forecloses a determination that a particular benefit rendered under the plan inadequately addresses the interests intended to be protected by the WDCA. In other words, simply because one aspect of a municipal plan provides benefits that are "like benefits" because they have salient features similar to benefits available under the WDCA, it does not follow that every benefit allocation made in a municipal plan should automatically be considered a like benefit. I believe that duty binds us to carefully examine the reduced disability benefits the plaintiffs are currently receiving and to determine whether those benefits have salient features similar to the benefits that would be available to the plaintiffs under the WDCA.

Further, I strongly disagree with the majority and the defendant that the "waiver" language of § 161 refers to waiver in the sense that the plaintiffs are barred from asserting a claim of inadequate compensation if they "elect" the city plan. The waiver provision is associated with the election provision. It is true that an injured employee may choose between benefits. It is also true that an employee who chooses between "like benefits" waives entitlement to benefits under the alternative plan. However, the employee does not waive WDCA protection for other benefits. Thus, the city has no right to reduce a plaintiff's overall entitlement to a degree that the benefits are no longer "like benefits."

III

In the instant case, the plaintiffs base their claim on the theory that once their benefits were reduced, they were put on a par with nondisabled retired employees. Thus, in plaintiffs' view, their reduced disability allowances were actually in the nature of retirement benefits rather than in the nature of disability compensation benefits. As such, the benefits were not "like benefits" for the purposes of § 161. I agree with the plaintiffs.

In my view, the "reduced disability allowance" provided to the plaintiffs after twenty-five years of service does not share salient features with the disability-based benefits recoverable under the WDCA. Though the benefits are called a "disability" allowance, it is clear that the purpose of § 2(b) is to place disabled retirees on a par with other retirees. In their brief, the defendants argue that the plaintiffs should not be entitled to a windfall that would allow them to receive more money after twenty-five years of creditable service than would be received by their nondisabled retired counterparts. The fundamental flaw in the defendant's logic is that the defendant argues that the plaintiffs' retirement has been fairly structured, but nonetheless claims that the benefits received after twenty-five years of service are akin to WDCA benefits. If the defendant's argument is accepted, then the conclusion that follows is that employees receive no compensation for their disabilities after they reach the point when they would have put in twenty-five years of service.3 If the WDCA would continue to provide benefits after that point, the charter fails to provide a "like" benefit.

Under the city of Detroit Charter, several aspects of disability payment change once an employee would have had twenty-five years of creditable service. Most obviously, the amount of payment received by the plaintiff is reduced. Although MacKay noted that the quantitative amount of benefits need not be exactly the same under a city plan and under the WDCA in order to constitute a "like benefit," MacKay also recognized that the full scope of benefits must be considered. In this case, the purpose of the quantitative reduction was to put disabled officers who would have had twenty-five years of service into the same retirement payment category as nondisabled officers. This is clearly evidenced by the fact that the charter states that an officer's "reduced disability allowance" is to be "computed in the same manner as the allowance provided in Part A of this Article...." Part A of the article provides the standard retirement plan. Moreover, at the point when an officer's disability allowance is reduced, he is no longer required to undergo a medical examination to certify his continued disability.4 This further provides evidence that the plaintiffs' status as disabled officers has little bearing on the payments they receive after twenty-five years of creditable service.

This Court has not taken up the exact question presented by this case, but in Bannan v. Saginaw, 420 Mich. 376, 362 N.W.2d 668 (1984), we considered a city ordinance that adjusted plaintiffs' pension benefits when they reached fifty-five years of age. With regard to the benefit reduction, this Court stated, "We agree with the plaintiffs' contention that to deprive duty disabled retirees of their earned retirement income, after they have become 55 years of age, is contrary to the underlying purpose of the pension ordinance." Bannan at 385, 362 N.W.2d 668; see also Hatton v. Saginaw, 159 Mich.App. 522, 532, 406 N.W.2d 871 (1987). Though Bannan is not directly on point because it held § 161 to be inapplicable on the grounds that the pension reduction at issue occurred pursuant to a city ordinance rather than a city charter, the overall logic of Bannan is persuasive and its message rings loudly. In the present case, depriving the plaintiffs of their disability benefits after they logged twenty-five years of service would be contrary to the purposes behind plans that compensate officers injured while carrying out their duties. Thus, I would apply Bannan by analogy and consider the city of Detroit Charter in light of the purposes behind compensating injured officers.

The defendant is clearly attempting to avoid making double payments to the plaintiffs. However, I am unconvinced that the they are simply attempting to avoid paying double disability payments as might potentially be precluded by § 161. Rather, I am persuaded that the defendants are attempting to avoid making simultaneous retirement payments and disability payments to injured employees. Perhaps the employer would have recourse under a different section of the WDCA, but I do not believe that the remedy lies in § 161 because the benefits being sought are not "like benefits." I would therefore carry out our duty to liberally interpret the WDCA in favor granting benefits, Hagerman; Sobotka, supra, and grant the relief requested by the plaintiffs in this case.

WEAVER and MARILYN J. KELLY, JJ., concurred with MICHAEL F. CAVANAGH, J.