Before we look more closely at the area of stress claims, a brief overview of the worker's compensation system might be in order.3 Worker's compensation is the method by which individuals are compensated for injuries sustained in the workplace. Michigan's system was established in 1912, with passage of a worker's compensation act. The current Worker's Disability Compensation Act was enacted in 1969.

Employers are required by state law to make payments to workers injured on the job, and to either purchase insurance or be certified as self-insured.

Prior to passage of the first act, the only remedy employees had available to them for losses due to injury in the workplace was under the general common law (judge-created) rules of liability, known as "tort law." If an employee was hurt at work, he or she had to sue the employer in a court of law and prove that his or her injury was the result of the employer's negligence (failure to use reasonable care). Such suits were extremely difficult to sustain at the turn of the century because of the many defenses given to employers at the time. An employee had to overcome the test of "assumption of risk," which protected employers from liability for injuries incurred in the exercise of jobs containing readily identifiable risks inherent in those jobs. An employee could not collect any damages if his or her own negligent actions contributed in any way to the occurrence of the injury (the defense of "contributory negligence"). The employer was not liable for any injuries caused by another employee as long as the employer exercised reasonable care in the hiring of that other employee (the "fellow servant rule").

Consequently, prior to the enactment of the worker's compensation act, employees seldom had success in suing their employers. As one legal commentator has put it, "the employer's 'shield' was a concrete coat of armor and the employee's 'sword' was a broken toothpick."4 This was a system of law which became increasingly viewed as an unacceptable method for dealing with workplace injuries. Out of a combined sense of social justice and economic efficiency, the concept of worker's compensation was crafted as an alternative to the tort liability system, developed with the assistance and support of the business community.

Under worker's compensation, an employee injured at work is entitled to benefits as compensation for his or her injuries regardless of who may be at fault. The employer is liable for benefits whether or not he or she acted wrongfully or unsafely. The employee can collect benefits even if the injury is entirely his or her own fault. Benefits include all reasonable and necessary medical treatment, rehabilitation costs, and wage loss benefits for time lost from work. Michigan law also provides for the payment of death benefits when a worker's death has been caused or hastened by his or her employment. In exchange for such guaranteed benefits for all injuries (except for those intentionally inflicted or self-inflicted), the employer is given certain protections, such as maximum wage loss benefits, some control over medical treatment, and the avoidance of court-imposed liability for punitive or pain and suffering damages. Worker's compensation is the "exclusive remedy" for compensating workplace injuries.

All 50 states now have worker's compensation systems. The purposes of these laws include the efficient and dignified treatment of injured workers, rehabilitation of those workers so that they may return to their jobs as quickly and effectively as possible, and stability in the work force. Provision of benefits by the employer is viewed as offering a fair distribution of cost, with benefits paid by those best in a position to make the payments and pass on the costs, and with insurance offering the opportunity to have those costs shared by the entire business community (and thus, ultimately, the individual consumer). The calculation of benefits is based first and foremost on the individualized experiences and needs of each worker, with an underlying social goal of permitting the injured worker to overcome his or her temporary problem without risk of destitution.

Employers are required by state law to make payments to workers injured on the job, and to either purchase insurance or be certified as self-insured. However, this system of compensation is primarily run without state administrative intervention; employers or their insurers usually make direct payments to claimants without state oversight. A state administrative system does exist for basic enforcement purposes, including assurance that employers are adequately insured and that they meet their statutory obligations to pay benefits. This system also provides a means for resolving disputes between employers and their employees regarding entitlement to benefits, but state involvement is decidedly less intrusive than in many other areas of regulatory law. Michigan's law is administered by the Bureau of Workers' Disability Compensation.

As stated earlier, the injured employee is entitled to medical treatment (which includes everything from consultations with doctors to physical therapy, surgery, hospitalization, drug treatment, nursing care and more), as well as physical and vocational rehabilitation services. The injured employee is also entitled to partial replacement of his or her lost wages--80 percent of the after-tax value of his or her average weekly wage, up to a maximum which in Michigan is fairly generous (90 percent of the state average weekly wage, which for 1995 is $554.22, producing a maximum rate of $499.00 per week).5

The test for entitlement to wage loss benefits is "disability," defined by the Michigan act as "a limitation of an employee's wage earning capacity in work suitable to his or her qualifications and training resulting from a personal injury or work related disease."6 Although the exact interpretation of this definition remains the source of extensive legal debate, the basic concept for entitlement to wage loss benefits is that an employee will receive weekly benefits when he or she is unable, due to a work-related injury, to perform the work within his or her experience. When an employee cannot work because of a work-related injury (an injury "arising out of and in the course of employment"7), he or she is entitled to benefits for the duration of the time that the inability to work persists.

An injured worker is entitled to benefits either when the work has caused the injury or when work contributes to (aggravates) a preexisting condition. In either case, the employment last contributing to the employee's disability is used to establish full liability for the disability. There is no longer a requirement that an "accident" have occurred. The consequences of constant physical activity and occupational disease are also compensable. In the typical workplace situation, an employee who suffers an injury reports that injury to the employer, the employer makes sure that the employee gets all the medical treatment he or she needs, and if the employee cannot work, makes direct payments to the employee, with a report of such payment made to the Bureau.

What happens when there is a dispute between the employee and the employer? Such dispute commonly occurs when the two parties disagree either about the existence of a disability, or the cause of that disability (that is, whether it is work-related). When a dispute arises between the parties, either may file an action with the Bureau, thereby commencing an often lengthy and legally-detailed process culminating in a hearing in front of a trial judge known as a Magistrate. There may be mediation, but in general, if the parties cannot reach agreement, their dispute goes to the Board of Magistrates, where one of thirty state-appointed statutory judges will hold an evidentiary hearing in order to determine the facts in the case. At such hearing, relevant witnesses (and almost always the claimant) will testify, and such hearing will usually be supplemented with the introduction of depositions (formal attorney examinations which are put into transcript form) taken of expert witnesses, such as doctors, vocational specialists, psychologists, chiropractors and therapists.

At hearing, the burden of proof rests with the claimant. He or she must show by a preponderance of the evidence (the prevailing weight of the evidence) that a work-related injury occurred and that such injury resulted in disability. In most cases, both the claimant and the defending party (which can consist of one or more employers and their respective insurance carriers) are represented by attorneys. After completion of the hearing, the magistrate is obligated to issue an opinion stating his or her findings of fact and applying the relevant law.

The decision of the magistrate may be appealed within thirty days as of right by any party to the hearing. Appeals go to the Appellate Commission, a seven-member body of state-appointed statutory appeals judges who decide cases as three-member panels. Review at the Appellate Commission is somewhat limited. The Commission reviews the record established at the trial level and must affirm the findings of fact made by the magistrate if they are supported by "competent, material and substantial evidence on the whole record." Substantial evidence is deemed to be "such evidence, considering the whole record, as a reasonable mind will accept as adequate to justify the conclusion."8 If a party remains unhappy after the Appellate Commission reaches its decision, it may seek review by the Michigan Court of Appeals and ultimately the Michigan Supreme Court, but such review is only granted on rare occasions when important issues of law appear to be at stake.

It is important to keep in mind that worker's compensation litigation is the exception, not the rule. Most estimates place the percentage of worker's compensation payments made voluntarily at well over 75 percent. Of those matters which do involve a dispute, roughly 90 percent of the cases are resolved or they settle before a hearing is necessary.9 Some of these settlements, known as "redemptions," involve a lump sum payment by the employer, after which all claims by the employee against that employer for workplace incidents occurring prior to the redemption are released. Consequently, the ratio of full-blown worker's compensation cases to overall incidents of worker's compensation payments is quite small. Naturally, it is this small number of cases which attracts the most attention. It is these cases, which often involve "close call" facts, which determine the detailed shape of the law, thereby establishing the worker's compensation "business climate" so often criticized by the employer community.

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3The most highly respected legal text dealing with worker's compensation law is authored by Duke University Law Professor Arthur Larson, Workmen's Compensation Law, published by Matthew Bender. This massive multi-volume treatise provides a comprehensive overview of worker's compensation law throughout the nation and provides an excellent history and analysis of this field of law. Professor Larson's treatise provides an important reference for this report. An outstanding text covering the Michigan act is Michigan State University School of Labor and Industrial Relations lecturer Edward M. Welch's Workers' Compensation in Michigan: Law & Practice, published by the Institute of Continuing Legal Education. This detailed single-volume work is a major source book for Michigan practitioners, administrators and adjudicators.

4"Can I Collect Worker's Compensation Benefits If My Job Drives Me Crazy?," by Derik R. Girdwood, Detroit College of Law Review, Summer 1992, p. 591 (1992).

5Benefit rates are published by the Michigan Bureau, which issues annual weekly benefit tables.

6Section 301(4) of the Worker's Disability Compensation Act of 1969, MCL 418.101 et seq.

7Section 301(1) of the Act.

8Section 861a(3) of the Act.

9Although basic annual statistics can be misleading--for example, they failing to take into account various nuances such as disputes involving injuries incurred in prior years and disputes not involving the basic question of entitlement to benefits--they are nevertheless helpful in indicating general patterns of behavior in the worker's compensation system. For example, according to the Michigan Bureau, in 1994 there were 88,804 reports of injury (a fairly typical number) and during the same year, the Bureau received 22,175 contested cases (again, a fairly typical number). These contested cases do not solely represent initial claims of entitlement, but are a fair indication of dispute activity in general. In the meantime, 24,533 cases were disposed of in 1994, including 16% by withdrawal or dismissal, 9% through voluntary pay agreements, 12% through mediation, and 54% through redemptions. Only 8% of the contested cases resolved in 1994 actually required a final decision after hearing by the magistrate, and of those cases, only three quarters (6%) involved the granting or denial of benefits. Roughly half of these final decisions are appealed to the Appellate Commission.