Michigan Health Maintenance Organization

Not overruled or negatively treated on appealinfoCoverage
Michigan Court of AppealsMar 27, 1986
151 Mich. App. 578 (Mich. Ct. App. 1986)
151 Mich. App. 578391 N.W.2d 757

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Docket No. 79201.

Decided March 27, 1986.

Sachs, Nunn, Kates, Kadushin, O'Hare, Helveston Waldman, P.C. (by Melvyn J. Kates and Granner S. Ries), for plaintiff.

Lacey Jones (by Gerald M. Marcinkoski), for defendants.

Before: R.M. MAHER, P.J., and BRONSON and D.F. WALSH, JJ.

On June 7, 1984, the Workers' Compensation Appeal Board affirmed the decision of the hearing referee awarding plaintiff, Louise Murdock, benefits for a psychiatric injury. Defendants Michigan Health Maintenance Organization (Michigan HMO) and Travelers Insurance Company appeal by leave granted.

Plaintiff began employment as a private marketing group representative with Michigan HMO on May 24, 1976. During the ninety-day probationary period, plaintiff and W. Melvin Smith, the company's senior executive vice-president, entered into a sexual relationship. According to plaintiff, the relationship began at Smith's insistence. She claimed that Smith told her she would lose her job if she did not cooperate with him.

On July 15, 1977, plaintiff was meeting with Sam Hawkins, her immediate supervisor, when Smith entered Hawkins' office and asked Hawkins to leave. Plaintiff and Smith began to argue. According to plaintiff, Smith slapped her, knocked her to the floor, and left the office. When Hawkins returned to his office ten to fifteen minutes later, plaintiff was crying and distraught.

When plaintiff returned to work on July 19, 1977, Hawkins told her he wanted her to resign. Plaintiff refused and her employment was terminated on July 20, 1977.

Following her termination, plaintiff filed a civil rights action against Michigan HMO, alleging sexual harassment. In March, 1979, she filed a claim for workers' compensation benefits. In support of her claim, she presented psychiatric evidence of severe depression. Defendants' requests that plaintiff's civil rights complaint be admitted into evidence were rejected by both the hearing referee and the WCAB.

Affirming the hearing referee's award of benefits to plaintiff, the WCAB found, in pertinent part, as follows:

The assault of July 15, 1977, has resulted in plaintiff's inability to return to work for defendant.

* * *

Plaintiff's disability, we find, is the inability to return to work for defendant in her skill because of a psychiatric injury and its resultant disability, i.e., anxiety neurosis with depression. Kaarto v Calument Hecla, Inc, 367 Mich. 128 [ 116 N.W.2d 225] (1962); Deziel v Difco Laboratories, Inc, (After Remand), 403 Mich. 1 [ 268 N.W.2d 1] (1978).

The WCAB rejected defendants' contention that plaintiff's claim was barred because she had failed to notify her employer of her injury:

Defendant argues that it had no notice. We find that Hawkins had notice of an event on July 15, 1977. He saw plaintiff distraught and crying. Since no reports were made to the bureau, plaintiff's claim, filed March 6, 1979, was timely. Norris v Chrysler Corp, 391 Mich. 469 [ 216 N.W.2d 783] (1974). It is not required that the employer know the injury is work-related. Combs v Michigan Mobile Homes, 406 Mich. 507 [ 280 N.W.2d 451] (1979).

On appeal, defendants challenge the WCAB decision in several respects. Absent fraud, findings of fact by the WCAB are conclusive if supported by any competent evidence. MCL 418.861; MSA 17.237(861). Kostamo v Marquette Iron Mining Co, 405 Mich. 105; 274 N.W.2d 411 (1979). If the WCAB applied an erroneous legal standard, the correct procedure is to reverse and remand for further fact-finding and conclusions of law. Williams v Lang (After Remand), 415 Mich. 179, 183; 327 N.W.2d 240 (1982).


The statute in effect at the time of plaintiff's injury required employees to notify their employers of their injuries within specified time periods; but once an employer had notice or knowledge of an employee's injury, the employer's failure to report the injury to the bureau precluded a defense of lack of timely notice. MCL 418.381(1); MSA 17.237(381)(1).

The notice to the employer that was required was that which would be sufficient to make the employer aware that an injury had occurred. Norris v Chrysler Corp, 391 Mich. 469, 477; 216 N.W.2d 783 (1974). Employers were not, however, required to report all injuries sustained by employees. Only if the circumstances surrounding an employee's injury indicated the possibility of a work-related cause did an employer have to report the injury. Nicholson v Lansing Bd of Ed, 423 Mich. 89, 102-103; 377 N.W.2d 272 (1985).

In this case, the WCAB found that plaintiff's supervisor Hawkins had had notice of her injury. We disagree.

The record conclusively establishes that Hawkins did not know, or have reason to know, that plaintiff was injured. There is no evidence that plaintiff told Hawkins or anyone else at Michigan HMO that she was suffering from any kind of illness.

We decline to hold that a supervisor who observes an employee crying and distraught, especially when the supervisor has reason to believe the reasons are purely personal, has been notified of an employee's possibly work-related injury.

Although there is no evidence to support the WCAB'S finding of notice to Hawkins, we are remanding this matter for further factfinding. See infra. Among the issues to be addressed by the WCAB on remand is whether any other person associated with Michigan HMO, most notably Smith, received the requisite notice.


In Kidd v General Motors Corp, 414 Mich. 578, 591-592; 327 N.W.2d 265 (1982), the Supreme Court discussed the standard to be used in determining disability:

It is well-established that the standard to be used in general disability cases is whether there is an impairment in wage-earning capacity. This is determined by comparing post-injury with pre-injury ability to compete with the able-bodied for jobs within the type of work in which the injury occurred. [Emphasis supplied.]

See also Dressler v Grand Rapids Die Casting Corp, 402 Mich. 243, 251; 262 N.W.2d 629 (1978), where the Supreme Court noted Larson's definition of compensable disability: "inability, as the result of a work-connected injury, to perform or obtain work suitable to the claimant's qualifications and training." 2 Larson, Workmen's Compensation Law, § 57.00.

Recently, the Legislature codified the judicial definition of disability:

As used in this chapter, "disability" means a limitation of an employee's wage earning capacity in the employee's general field of employment resulting from a personal injury or work related disease. [MCL 418.301(4); MSA 17.237(301)(4).]

In this case, the WCAB found only that plaintiff was unable to return to work for Michigan HMO. There was no finding relative to plaintiff's ability to obtain employment in another setting within her general field of employment. We remand to the WCAB for a determination of disability using the proper legal standard.


The WCAB may hear the parties and may consider such additional evidence as it, in its discretion, allows them to submit. MCL 418.859; MSA 17.237(859).

Defendants challenge the WCAB'S refusal to admit into evidence a copy of the civil rights complaint plaintiff had filed in circuit court. The hearing referee ruled that a copy of the complaint, as opposed to the original, was inadmissible. The WCAB also rejected the proffered evidence, relying on the mistaken perception that it had already issued an order rejecting defendants' request.

The admissibility of evidence in workers' compensation proceedings is not determined with reference to the standards applicable in trial courts. Hawley v General Motors Corp, 67 Mich. App. 114, 119; 240 N.W.2d 290 (1976), lv den 397 Mich. 818 (1976). In any event, the evidence offered by the defendants in this matter was admissible. MRE 801(d)(2) and 901.

On remand, the WCAB is directed to admit into evidence and to consider defendants' Exhibit # 1.


The decision of the WCAB is vacated, and this matter is remanded to the WCAB for further findings of fact and conclusions of law consistent with this opinion. We do not retain jurisdiction.