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Kuhlgert v. Michigan State University

Court of Appeals of Michigan

May 21, 2019

SEBASTIAN KUHLGERT, Conservator of ELISABETH OSTENDORF, Plaintiff-Appellee,
v.
MICHIGAN STATE UNIVERSITY, and BOARD OF TRUSTEES OF MICHIGAN STATE UNIVERSITY, Defendants, and UNITED EDUCATORS, Intervening Defendant-Appellant. ELISABETH OSTENDORF, Plaintiff-Appellee, and UNITED EDUCATORS, Intervening Plaintiff-Appellant, and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Intervening Plaintiff,
v.
MICHIGAN STATE UNIVERSITY, Defendant-Appellee.

          Court of Claims LC No. 15-000047-MZ

         MCAC LC No. 17-000013

          Before: Swartzle, P.J., and Cavanagh and Cameron, JJ.

          CAMERON, J.

         These consolidated appeals all concern whether the injuries that plaintiff Elisabeth Ostendorf (hereinafter Ostendorf), a German national, suffered when a truck owned by Michigan State University (MSU) struck her as she was walking on the campus triggers the exclusive-remedy provision of the Worker's Disability Compensation Act (WDCA), MCL 418.101 et seq. See MCL 418.131(1) (except where an intentional tort is involved, benefits as provided by the WDCA constitute an employee's "exclusive remedy against the employer for a personal injury"). If not, then MSU's no-fault insurer, State Farm Mutual Automobile Insurance Company, and its excess liability insurer, United Educators (hereinafter UE), are responsible for providing insurance coverage for her injuries. We affirm.

         I. FACTS

         Ostendorf was a post-doctoral research associate at MSU and lead scientist involving a project funded through a grant from the Advanced Research Projects Agency for the Department of Energy. She was in the United States on a J-1 Visa as a participant in an exchange visitor program as authorized under the Mutual Educational and Cultural Exchange Act (MECEA), 22 USC 2451 et seq. The goal of Ostendorf's project was to screen plants for increased photosynthetic capacity. She began her work in 2012 for a one-year term, with the anticipation that the project could be renewed annually and last for three or more years. She was injured during her third term.

         In October 2014, Ostendorf left the Food and Safety Toxicology Building where she worked and walked towards her vehicle parked in a lot located elsewhere on the MSU campus. She had walked approximately 900 feet when, while completing a text message, she emerged from the sidewalk abutting a driveway and was struck by a truck. At that time, Cole Gibson was backing up his truck-an MSU vehicle-toward a loading dock. Ostendorf suffered severe injuries.

         II. PROCEDURAL BACKGROUND

         This case involves a lengthy, complicated procedural history. In March 2015, Ostendorf's conservator, plaintiff Sebastian Kuhlgert (hereinafter "plaintiff"), commenced a negligence action in the Court of Claims against MSU and its Board of Trustees. Plaintiff did not file a claim for workers' compensation benefits, and MSU did not report an injury to the workers' compensation bureau. MSU has an excess liability insurance policy through UE, and the policy does not provide coverage for any obligation for which the insured may be held liable under any workers' compensation law. Over a year after the complaint was filed, UE filed a motion to intervene in the action because it believed that MSU failed to pursue the argument that plaintiff's claims were barred by the exclusive-remedy provision in the WDCA. The Court of Claims held that the motion to intervene was untimely and that MSU had adequately represented UE's interests by raising the exclusive-remedy provision in its affirmative defenses. The court further noted that the exclusive-remedy provision would not apply if, at the time of the accident, Ostendorf was not on the premises of where her work was performed. We denied UE's application for leave to appeal, and UE filed an application for leave to appeal with the Michigan Supreme Court.

         While the application for leave was pending in our Supreme Court, UE and State Farm filed applications for mediation or petitions to intervene in a separate proceeding with the Workers' Compensation Board of Magistrates. At issue in that proceeding was not the extent to which Ostendorf was engaged in her employment with MSU at the moment of her accident, but rather whether she was exempted from workers' compensation coverage through an exemption of the definition of "employee" set forth in MCL 418.161(1)(b) for "[n]ationals of foreign countries employed pursuant to section 102(a)(1)[1] of the mutual educational and cultural exchange act of 1961 . . . ."

         In November 2016, our Supreme Court remanded the first case to this Court for consideration as on leave granted with instructions to address the exclusive-remedy provision of the WDCA and whether UE could intervene. Kuhlgert v Michigan State Univ, 500 Mich. 890 (2016). The Court ordered:

The Court of Appeals shall consider: (1) whether the plaintiff's claims are barred by the exclusive remedy provision of the [WDCA], see MCL 418.131(1); Sewell v Clearing Machine Corp, 419 Mich. 56, 62; 347 N.W.2d 447 (1984); and if not, (2) whether the Court of Claims erred by denying [UE's] motion to intervene. [Kuhlgert, 500 Mich. at 890.]

         In February 2017, UE moved this Court to stay the appeal pending the outcome of the workers' compensation proceedings. We granted UE's request and agreed to hold the appeal in abeyance until the workers' compensation magistrate issued a decision.

         In the Workers' Compensation Board of Magistrates proceeding, the magistrate examined the text and history of the pertinent legislation, along with Ostendorf's documents relating to her status as a foreign national in the United States. However, before the magistrate issued its opinion, plaintiff sought relief from the Court of Claims in a third proceeding, asking the Court of Claims to consider the issue that was currently before the magistrate-whether Ostendorf's employment status itself exempted her from the definition of "employee" for purposes of the WDCA. UE requested that the Court of Claims decline to address the issue in deference to the workers' compensation proceedings, and again sought to intervene so that it could challenge Ostendorf's status as exempting her from coverage under the WDCA should the court elect to decide that issue.

         Before the Court of Claims could render a decision, the WDCA magistrate issued an opinion and concluded that Ostendorf "was a research scholar employed by MSU pursuant to . . . the MECEA and therefore considered not to be an employee." In March 2017, UE filed a claim for review with the Michigan Compensation Appellate Commission (MCAC). In April 2017, the Court of Claims again denied UE's motion to intervene in the third case. UE then filed an application for leave to appeal that decision in May 2017. After the appeal was filed, the Court of Claims issued another opinion and order holding that "the errand that took Dr. Ostendorf to the accident site was purely personal and in no way related to her employment at MSU" and, alternatively, that Ostendorf "was employed by MSU under the United States J-1 Visa program and as such was not eligible for workers [sic] compensation." We granted leave to appeal, consolidated the appeal from the third case with that in the first case, and ultimately stayed the proceedings pending the outcome of the proceedings before the MCAC.[2]

         The MCAC issued its opinion and order on June 6, 2018, noting the lack of factual disputes in the case and adopting in full the magistrate's legal conclusion that Ostendorf "is not considered an employee of Michigan State University covered under the Worker's Disability Compensation Act" because of her employment status. UE filed its application for leave to appeal in this Court on July 5, 2018. This Court granted leave and also consolidated the appeal with those in the other two cases. Ostendorf v Mich. State Univ, unpublished order of the Court of Appeals, entered September 6, 2018 (Docket No. 344533).

         Our Supreme Court has directed this Court to determine whether plaintiffs' claims are barred by the exclusive-remedy provision of the WDCA; and if not, whether the Court of Claims erred by denying UE's motion to intervene.

         III. EXCLUSIVE REMEDY UNDER MCL 418.131(1)

         UE argues that the Court of Claims erred for two reasons when it concluded that compensation under the WDCA was not Ostendorf's exclusive remedy for her injuries as provided under MCL 418.131(1). First, UE argues that Ostendorf is not exempted as a foreign national under MCL 418.161(1)(b) of the WDCA. Second, UE argues that Ostendorf's injuries occurred while in the course of her employment, and therefore, workers' compensation is her exclusive remedy.

         A. FOREIGN NATIONALS EXEMPTION UNDER MCL 418.161(1)(B)

         UE first argues that the Court of Claims and the MCAC erred when they concluded that Ostendorf's employment status removed her from coverage under the WDCA by way of MCL 418.161(1)(b)-which exempts "foreign nationals" from the definition of "employee." We disagree.

         This Court reviews a trial court's findings of fact for clear error. MCR 2.613(C). Questions of law, including statutory interpretation, are reviewed de novo. See Thompson v Thompson, 261 Mich.App. 353, 358; 683 N.W.2d 250 (2004).

         The MCAC reviews a decision of the Workers' Compensation Board of Magistrates for whether the decision is supported by competent, material, and substantial evidence on the whole record; absent fraud, the MCAC's factual conclusions are conclusive on appeal if supported by competent record evidence. Omian v Chrysler Group LLC, 309 Mich.App. 297, 306; 869 N.W.2d 625 (2015). A decision of the MCAC is subject to reversal if it is based on erroneous legal reasoning or the wrong legal framework. Id. "Although judicial review of a decision by the MCAC is limited, questions of law in a workers' compensation case, including the proper interpretation of a statute, are reviewed de novo." Arbuckle v Gen Motors LLC, 499 Mich. 521, 531; 885 N.W.2d 232 (2016).

         It is undisputed that MSU, as an employer, generally comes under the protections and requirements of the WDCA. The exclusive-remedy provision under the WDCA requires that "[a]n employee" receive compensation as provided under the Act. See MCL 418.301(1) (emphasis added). The WDCA defines "employee" broadly, see MCL 418.161, but in doing so sets forth the following exemption: "Nationals of foreign countries employed pursuant to section 102(a)(1) of the [MECEA], shall not be considered employees under this act." MCL 418.161(1)(b).

         It is also undisputed that, as the WDCA magistrate had found, "the Exchange Visitor Program (EVP) is an international exchange program administered by the Department of State to implement the MECEA by means of educational and cultural programs," that "[t]he EVP program is commonly known as the 'J visa program' as participants in the program are issued a 'J' non-immigrant visa for entry into the United States," or that Ostendorf was "in the United States under a 'J-1 visa.'" Instead, UE maintains that Ostendorf was not an exempt employee because MSU, not the State Department, paid her salary.

         The WDCA magistrate acknowledged that the MECEA was "subsequently codified in 22 USC Section 2451, et seq." That section was incorporated by reference in MCL 418.161(1)(b), which sets forth the activities authorized under the MECEA, and it is now designated as 22 USC 2452. The latter's Subsection (a) authorizes the Director of the United States Information Agency, in the interests of "strengthen[ing] ...


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