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Fisher v. Kalamazoo Regional Psychiatric Hospital

Court of Appeals of Michigan

September 10, 2019

IESHA FISHER, Plaintiff-Appellee,
v.
KALAMAZOO REGIONAL PSYCHIATRIC HOSPITAL and STATE OF MICHIGAN, Defendants-Appellants.

          MCAC LC No. 15-000038

          Before: Swartzle, P.J., and Gleicher and M. J. Kelly, JJ.

          Swartzle, P.J.

         Sometimes an employee will be overpaid worker's disability compensation benefits. This can create several types of unfairness-unfairness to the employer or insurance carrier that paid more than it should have, and unfairness to the employee who may have come to rely on the higher payment and now must adjust to a lower payment and, indeed, possibly reimburse the employer or carrier.

         How best to minimize the resulting unfairness is a policy question. One way would be to require an employee to reimburse the full overpayment only if the employee engaged in fraud. Another way would be to limit the reimbursement to the amount overpaid within the year prior to the recoupment action. The Michigan Compensation Appellate Commission adopted the former policy, while our Legislature adopted the latter policy. Under separation-of-powers principles, we conclude that the Commission lacked any legal authority to adopt its policy and reverse.

         I. BACKGROUND

         Defendants, Kalamazoo Regional Psychiatric Hospital and the state of Michigan, appeal by leave granted the decision of the Michigan Compensation Appellate Commission affirming the magistrate's opinion and order denying defendants' petition for recoupment of benefits overpaid to plaintiff, Iesha Fisher. See Fisher v Kalamazoo Regional Psychiatric Hosp, unpublished per curiam order of the Court of Appeals, entered October 1, 2018 (Docket No. 343283).

         The facts are few and not in dispute. Plaintiff sustained a workplace injury, and her employer voluntarily paid her worker's disability compensation benefits. Defendants later filed a petition for recoupment of benefits, seeking reimbursement of an alleged overpayment. Defendants asserted that plaintiff received weekly compensation benefits for approximately three months, but that defendants paid those benefits at an incorrect rate, resulting in an overpayment to plaintiff. The magistrate held a hearing on the petition for recoupment, and plaintiff did not appear at the hearing, despite the fact that she was provided with notice of that hearing.

         The magistrate entered an order denying defendants' petition. The magistrate observed that the Commission had previously held in several administrative cases that when an employer or carrier voluntarily but mistakenly overpaid a claimant, it could not recoup the overpayment without proving that the overpayment resulted from the employee's fraudulent act. The magistrate found that defendants failed to establish that the overpayment occurred because of any fraud by plaintiff.

         Defendants appealed to the Commission, arguing that an employer or carrier has a right to recoup an overpayment of benefits under MCL 418.354(9) and Ross v Modern Mirror & Glass Co, 268 Mich.App. 558; 710 N.W.2d 59 (2005). Defendants argued that they were only limited by the one-year back rule of MCL 418.833(2), and the Worker's Disability Compensation Act, MCL 418.101 et seq. (WDCA), did not limit an employer's or carrier's right of recoupment to only those instances in which the employee fraudulently obtained the overpayment.

         The Commission disagreed, finding that the circumstances of this case were distinguishable from Ross, which involved an overpayment to an employee because of the lack of coordination of the claimant's disability pension benefits with the worker's disability compensation benefits as required under MCL 418.354. The Commission also noted that denial of defendants' petition would neither discourage voluntary payment of claims nor result in unnecessary disputes and delays of payments because defendants had a clear duty to make professional and prompt evaluation of worker's compensation claims and apply the correct rate.

         Defendants appealed.

         II. ANALYSIS

         On appeal, defendants do not argue that plaintiff engaged in fraud or that the Commission made erroneous factual findings. Rather, defendants ask us to consider a pure question of law- Is the right to recoup the overpayment of disability compensation benefits from an employee subject ...


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