Hudson v. Jackson Plating Co.

Per Curiam. This appeal represents the second time this matter has been brought to this Court. Currently, defendant Jackson Plating Company and its insurer,, defendant Transportation Insurance Company, appeal by leave granted from an order of the Workers’ Compensation Appeal Board finding them liable to plaintiff Sam Hudson for benefits ordered by the referee with no right of apportionment from defendant S & S Polishing Company and its insurance carrier, Bituminous Casualty Insurance Company. In 1972, plaintiff, who had contracted emphysema due to his employment in the plating and buffing industry with ten different firms over a twenty-year period, redeemed his workers’ compensation claims from his various employers for $15,000. Plaintiff subsequently returned to work in 1975 for defendant Jackson, with which he had never been previously employed. Plaintiff performed the same work for Jackson as he had performed for his previous employers (polishing and buffing metals) and was forced to quit after six weeks after redeveloping emphysema. Plaintiff filed a claim for workers’ compensation benefits against Jackson in July of 1975. The claim was initially brought to this Court on appeal from the wcab’s finding of liability against Jackson. This — 165 — Court affirmed the finding of liability, but remanded the matter to the wcab for resolution of the issue whether Jackson was entitled to receive apportionment from plaintiff’s prior employers under the former provisions of § 435 of the Workers’ Disability Compensation Act, MCL 418.435; MSA 17.237(435). 105 Mich App 572; 307 NW2d 96 (1981), lv den 412 Mich 936 (1982). Following an evidentiary hearing on the remanded issue before the referee, the wcab reversed the decision of the referee in favor of Jackson and held that Jackson was not entitled to apportionment benefits from S & S.1 The sole issue now on appeal is whether the prior redemption agreement shielded defendant S & S from apportionment liability to Jackson. It is undisputed that, in the absence of the redemption agreement, Jackson would have had a right of apportionment against S & S pursuant to those dictates of § 435 which existed prior to the statute’s 1981 amendment.2 Unfortunately, there is no authority to be found which addresses the question whether a redemption agreement between a claimant and his then prior employers bars a subsequent employer, who was not a party to the agreement, from seeking apportionment from a prior employer. Johnson v Valley Grey Iron Foundry, 58 Mich — 166 — App 574; 228 NW2d 469, lv den 394 Mich 769 (1975), cited by the parties, bears important factual distinctions. The plaintiff in Johnson was last employed by defendant Saginaw and had been previously employed with defendant Valley. After developing an employment-related lung disease, as well as sustaining a groin injury while working for Saginaw, the plaintiff filed a claim for workers’ compensation benefits against both Saginaw and Valley. Thereafter, Saginaw and the plaintiff entered into a redemption agreement, absolving Saginaw from liability for all claims which the plaintiff possessed against it. The plaintiff then obtained an award against Valley arising from his lung disease, and Valley sought apportionment from Saginaw. This Court found that, since the plaintiff could not file a claim against Saginaw for his lung disease because Saginaw was not his last employer under § 435 as it then provided, the redemption agreement operated to absolve Saginaw only from liability arising out of the plaintiff’s groin injury claim. Moreover, we found that the redemption agreement did not affect Valley’s liability to the plaintiff for the lung disease claim nor Valley’s right to contribution from Saginaw, as Valley was not a party to the agreement. 58 Mich App 582. Here, plaintiff entered into a redemption agreement with his then last employer, S & S Industries, Inc., and certain prior employers who would be subject to apportionment liability to S & S Industries for plaintiff’s occupational disease claim. In contrast to the agreement in Johnson, the instant agreement shielded the defendant employers from all potential liability under the Workers’ Disability Compensation Act. The agreement specifically provided: Defendants agree to pay $15,000.00 in redemp — 167 — tion of all liability under the Michigan Workmen’s Compensation Act, including medical, surgical and hospital expenses, past, present or future. This language evidences an intent by the parties to effectively redeem both the employers’ direct liability to plaintiff and any derivative liability which could arise through apportionment to plaintiff’s then last employer, S & S Industries, which was a party to the agreement. However, subsequent to the execution of the agreement, plaintiff returned to the industry in 1975 and became employed for the first time by defendant Jackson before his emphysema redeveloped, thereby entitling plaintiff to collect additional benefits against Jackson. Unlike the facts in Johnson, Jackson faces a challenge against its claim for apportionment because of a redemption agreement which was intended to insulate the prior employers from all future liability arising from plaintiff’s emphysema. Nonetheless, relying on Johnson, we could conclude that the redemption agreement should have no effect on Jackson’s claim for apportionment because Jackson was not yet involved and was not a party to that agreement. Such á result, however, would lead to the inevitable result that plaintiff would obtain a windfall. Although plaintiff is entitled to receive the entire amount of his award from Jackson, he would nonetheless indirectly receive a substantial share of the award from his prior employers, via their pro rata payments of contribution to Jackson. Such a result would effectively nullify the provision of the redemption agreement absolving the prior employers from all future derivative liability under the act to the benefit of plaintiff. Nor do we suggest that Jackson should be liable for the entire award. Jackson should not be put in — 168 — this position merely because it was not possible for it to participate in the redemptipn agreement. Moreover, imposition of such liability on Jackson would undermine the purpose behind the former apportionment provisions of § 435, "to distribute equitably the liability for a disease caused by similar employment conditions among the employers who [are] responsible for those conditions.” Derwinski v Eureka Tire Co, 407 Mich 469, 488; 286 NW2d 672 (1979). We conclude that the only equitable solution is to reduce the amount of the award (owed by Jackson) by the amount Jackson would have been entitled to recover by way of apportionment but for the redemption agreement. The wcab wrongfully concluded that it had no authority to grant such a remedy. Jackson is entitled to a reduction of this type where neither the apportionment statute nor the redemption provisions of the act3 provide for or forbid crediting under these circumstances and where the remedy is necessary to prevent plaintiff from obtaining a double recovery not contemplated by the act. See Thick v Lapeer Metal Products, 419 Mich 342, 350-351; 353 NW2d 464 (1984). Plaintiff has already received $15,000 from his prior employers pursuant to the redemption agreement, which intended to redeem the employers’ total liability for the occupational disease from which plaintiff again suffers and from which he now seeks recovery against Jackson. Although plaintiff is entitled to recover additional benefits against Jackson, Jackson’s liability should be limited to its pro rata share in order to effectuate both the policy against double recovery, Thick, supra, and the purpose behind the former apportionment provisions of § 435, Derwinski, supra. — 169 — Applying the former provisions of § 435, Jackson would have been entitled to apportionment from only those parties with which plaintiff was employed for at least six months in the ten-year period prior to his last day of work with Jackson. At the evidentiary hearing before the referee, the parties stipulated that plaintiff was employed with Jackson for two months and that, during the relevant ten-year period, he was employed for Leslie Polishing for twenty-four months and for S & S for eight months. It was further stipulated that during the ten-year period no other employer in the industry employed plaintiff for at least six months at a time. Pursuant to the terms of the stipulation, the calculation of apportionment would have been as follows: Total Period of Employment — 34 months Leslie Polishing & Buffing — 24/34 = 70.59 percent S&S Polishing Company — 8/34 = 23.53 percent Jackson Plating Company — 2/34 = 5.88 percent We consequently remand this matter to the Workers’ Compensation Appeal Board for reentry of a judgment against Jackson in the amount of 5.88 percent of the amount of the full benefits which plaintiff had previously been awarded. Reversed and remanded. Footnotes [1] After a delay in the decision of the referee, this Court entered an order directing the wcab to decide the matter within twenty-eight days. The order also terminated the continuing jurisdiction of this Court, thereby ultimately requiring Jackson to apply for leave to appeal the wcab’s decision. [2] MCL 418.435; MSA 17.237(435) was amended as of January 1, 1981, to eliminate references to apportionment of liability among the claimant’s last and prior employers. This Court, however, in Forsythe v Valley Consolidated Industries, 139 Mich App 211; 361 NW2d 768 (1984), lv den 422 Mich 944 (1985), held that the Legislature intended the amendment to have only prospective application. It is undisputed that the preamendment apportionment provisions of § 435 are applicable to the instant case. [3] MCL 418.835; MSA 17.237(835).