Court of Appeals Ruling Regarding Recoupment

On September 30, 2021, the Michigan Court of Appeals issued a per curium unpublished opinion, Carson v. Bandit Industries, Inc. and Acuity Mutual Insurance Co, No. 350257, that provides for recoupment of workers’ compensation benefits paid when a claimant is unable to establish a work-related injury at trial. In this case, Keller Thoma had argued that the Workers’ Compensation Act provides that only work-related injuries are compensable. Keller Thoma further argued, where there was a pre-existing condition, Rakestraw v General Dynamics Land System, 469 Mich 220; 666 NW2d 199 (2003), and the Act, MCL 418.301(1), require a claimant to provide objective evidence of a medically-distinguishable injury.

The Court of Appeals first ruled the appellate commission properly reviewed the magistrate’s finding that the claimant had established a work-related injury for a basis in the competent, substantial, and material evidence in the whole record. Once the appellate commission determined there was no record evidence of a medically-distinguishable injury, the appellate commission acted within its limited statutory jurisdiction to make a factual finding that the claimant had failed to establish existence of a work-related injury. In so doing, the Court of Appeals held that the test set forth in Rakestraw is binding and was undisturbed by the 2011 amendments to the Act. Thus, claimants with pre-existing conditions continue to have the burden of proving their conditions post-work-related injury are medically-distinguishable with objective evidence; onset of symptoms or complaints is insufficient.

The Court of Appeals next ruled, where the claimant had not met his burden of demonstrating a work-related injury as required by MCL 4118.301(1), the claimant was not entitled to the payment of any workers’ compensation benefits. Consequently, it held all the benefits that the claimant received constituted an overpayment of benefits. Thus, under MCL 418.833(2), Acuity is entitled to recoup this “overpayment of benefits,” subject to the one-year back rule. The Court of Appeals further held “an employer or carrier may recoup overpaid or improperly paid benefits from an employee without regard to whether that employee obtained the benefits as a result of fraud….”

This holding is significant because it authorizes recoupment by an insurer or employer where an employee at trial is unable to prove a work-related injury, regardless of whether the employee fraudulently sought benefits.

Categories: Case Alerts, KT