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Recent Michigan Supreme Court Decision Affects Workers' Comp COVID-19 Rebuttable Presumption

Court RoomOn October 2, 2020, the Michigan Supreme Court issued an opinion regarding whether Governor Gretchen Whitmer had the authority to declare and extend a State of Emergency and issue Executive Orders related to the COVID-19 pandemic. In a lengthy opinion, the Court held that the Governor did not have proper authority because the law upon which she relied is unconstitutional. 

The Court's decision makes clear that the Governor's Executive Orders are not enforceable. This includes Executive Order 2020-128, which created a rebuttable presumption that a "COVID-19 Response Employee" sustained a compensable injury if he or she was diagnosed with COVID-19. Below, you will find a breakdown of the events that led to the Court's decision, our discussion about why EO-2020-128 remains in effect for the time being, and steps that workers' compensation insurers may now consider.

History

  • March 10, 2020. Governor Whitmer declared a State of Emergency relying on both the Emergency Powers of the Governor Act ("EPGA") and the Emergency Management Act ("EMA").
  • March 18, 2020. The Department of Labor & Economic Opportunity ("LEO") issued an Emergency Rule creating a non-rebuttable presumption that a "First Response Employee" sustained a compensable injury if he or she was diagnosed with COVID-19 or was quarantined due to COVID-19 exposure. This Emergency Rule indicated that carriers’ insurance licenses would be revoked if they failed to pay a claim in accordance with this Rule.
  • March 30, 2020. LEO issued a new Emergency Rule, which superseded the March 18, 2020 Rule. This new Rule created a rebuttable presumption that a "First Response Employee" sustained a compensable injury if he or she was diagnosed with COVID-19. The threat of penalty as described in the March 18, 2020 Rule remained.
  • April 2020. Pursuant to the EMA, the Governor requested that the Legislature extend the State of Emergency by 70 days. The Legislature agreed to extend the State of Emergency, but only through April 30, 2020.
  • April 30, 2020. The Governor issued Executive Orders that terminated the State of Emergency under the EMA and indicated that the State of Emergency remained in effect under the EPGA. The Governor has issued numerous Executive Orders since then, relying solely on the EPGA for authority.
  • June 17, 2020. The Governor signed Executive Order 2020-125. EO-2020-125 suspended the March 30, 2020 Emergency Rule. EO-2020-125 created a rebuttable presumption that a "First Response Employee" sustained a compensable injury if he or she was diagnosed with COVID-19. The EO does not mention any penalty for an insurer which fails to pay a claim in accordance with the EO.
  • June 18, 2020. The Governor signed Executive Order 2020-128. EO-2020-128 rescinds EO 2020-125.  This EO creates a rebuttable presumption that a "COVID-19 Response Employee" sustained a compensable injury if he or she was diagnosed with COVID-19. We discussed this Executive Order at length here

The Michigan Supreme Court Decision

On October 2, 2020, the Michigan Supreme Court issued a decision in which it answered certified questions from the Federal District Court for the Western District of Michigan. 

A slim majority of the Michigan Supreme Court justices held that the law upon which Governor Whitmer relied to extend the State of Emergency and issue related Executive Orders – the EPGA – is unconstitutional. The majority reasoned that the EPGA delegated to the executive branch powers of the legislature and allowed the executive branch to exercise those powers indefinitely. The Court went on to say that, when the Governor is given significant power under the law, the legislature must make the law conferring such power precise enough to constrain the Governor's actions. The Court found that the EPGA did not meet this threshold. Thus, it determined that the Governor did not have the authority to extend the State of Emergency beyond April 30, 2020 and issue subsequent Executive Orders.

Next Steps

The Court's decision throws into question the enforceability of Executive Order 2020-128 signed on June 18, 2020. However, it remains in effect for the time being. 

Because the Michigan Supreme Court answered certified questions from the Federal District Court, its decision cannot officially render null and void the Governor’s extended State of Emergency and subsequent Executive Orders until the Federal District Court enters an order effectuating the Michigan Supreme Court decision. 

No order has been entered as of the date of this article. Once entered, however, the order could take immediate effect (if ordered by the District Court Judge), or it could be stayed for a period of 30 days under the Federal Court Rules. The Governor's office has taken the position that the order will not take effect for 21 days based on the time that the Michigan Court Rules allow for motions for reconsideration. Also, on October 5, 2020, the Governor and Director of MDHHS have asked the Michigan Supreme Court to clarify that its October 2, 2020 ruling would not take effect until October 30, 2020. Thus, it is our opinion that EO-2020-128 remains in effect for the time being. 

Once the Federal District Court enters the order, EO-2020-128 will be rendered null and void. This has several consequences.

  • For claims that arose prior to April 30, 2020. The March 30, 2020 Emergency Rule probably applies in this situation.
  • For claims that arose after April 30, 2020. Once the Federal District Court enters an order effectuating the Michigan Supreme Court decision, EO-2020-128 will not govern this situation. However, it is not at all clear whether any other rule, particularly the March 30, 2020 Emergency Rule, governs and, if so, for how long.  

It is, at most, arguable that the March 30, 2020 Emergency Rule applies to claims with dates of injury after April 30, 2020. This Rule was promulgated by the Director of the Department of Labor and Economic Opportunity pursuant to Section 48 of the Administrative Procedures Act. The Act indicates that the Director may issue an Emergency Rule when it is necessary to protect the public health, safety, or welfare, and the Act requires the Governor to concur in the finding of an emergency. The Act also provides that the Emergency Rule, once passed, remains in effect for six months after the date of filing. Since the Governor’s June Executive Orders suspended the March 30, 2020 Emergency Rule, and those Executive Orders will soon become null and void, it is arguable that the March 30, 2020 Emergency Rule will be revived and found to be applicable through September 30, 2020. If this is the case, there is absolutely no indication as to what rule or law, if any, applies after September 30, 2020.

Conclusion

There are so many unanswered questions right now that it is nearly impossible to determine what the law actually is. This uncertainty has a huge impact on workers’ compensation carriers, third-party administrators (TPAs) and claimants involved in COVID-19 claims. Many carriers and TPAs have relied upon EO-2020-128, EO-2020-125, or the March 30, 2020 Emergency Rule to voluntarily pay a claim knowing that the steep burden of proof would make it hard for them to defend such a claim. 

At this point, carriers and TPAs should consult their attorneys regarding each COVID-19 claim. The discussion should revolve around whether there is a basis for disputing benefits. Of course, sound legal advice on these matters in a time with so much legal uncertainty will be very fact dependent. This uncertainty will continue to plague all parties until the State of Michigan decides on a formal solution.

We are particularly interested in the various ways that the law in this regard will once again be made certain. In fact, in a previous article, we discussed two bills introduced by legislators that would, in essence, codify EO-2020-128 and the March 30, 2020 Emergency Rule. The legislature has the option to pass these bills. Also, it is possible that the Director of the Department of Labor and Economic Opportunity may issue another Emergency Rule. It is also possible that the Governor and the legislature could come to some agreement extending the State of Emergency and reviving EO-2020-128.

We will continue to monitor and keep you apprised of the ever-changing developments in this area. If you have any questions, please contact us. We are here to assist you with making determinations on these complicated issues of first impression.

Alicia Birach...248.785.4172...abirach@fosterswift.com
Mike Cassar...517.371.8110...mcassar@fosterswift.com
Brian Goodenough (Practice Group Leader)...517.371.8147...bgoodenough@fosterswift.com
Tyler Olney...248.538.6352...tolney@fosterswift.com
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Mike Sanders...517.371.8210...msanders@fosterswift.com

Categories: COVID-19 and Workers' Compensation, Legislative Updates

Photo of Alicia W. Birach
Shareholder

Alicia Birach is a member of the Employer Services Practice Group and works out of the firm's Southfield office. She has extensive experience representing insurance carriers, third party administrators and employers against workers' compensation claims. Additionally, she is experienced in counseling employers on labor and employment issues.

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Mike is a member of the Firm’s Employer Services practice group. His practice focuses on representing employers, insurance carriers, and third-party administrators in workers’ compensation matters across Michigan. He has experience advising clients on various labor and employment law issues as well.

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Currently, Brian Goodenough chairs the firm's Employer Services Practice Group where he practices municipal law, zoning and land-use disputes and workers' compensation law. Previously, he served as a member of the firm's Executive Committee and as an officer of the firm.

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Photo of Tyler J. Olney
Associate

Tyler Olney focuses his practice in General Litigation and Workers’ Compensation Defense. He has experience in cases involving first and third party no fault defense, insurance defense, commercial and real estate litigation.

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Photo of Michael D. Sanders
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Mike devotes his practice to the representation of employers, insurance carriers, and third-party administrators in workers' compensation matters throughout the state. He is the author of several published law review articles on workers' compensation topics, and he is a frequent lecturer on this topic.

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