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Worker's compensation magistrates engaging in settlement discussions regarding cases assigned to other magistrates

The Worker's Disability Compensation Act of 1969 does not prohibit a worker's compensation magistrate from engaging in informal settlement discussions regarding worker's compensation cases assigned to other magistrates.

Opinion No. 7021

May 28, 1999

Honorable Kwame M. Kilpatrick
State Representative
The Capitol
Lansing, Michigan 48909

You have asked if the Worker's Disability Compensation Act of 1969 prohibits a worker's compensation magistrate from engaging in informal settlement discussions regarding worker's compensation cases assigned to other magistrates.

Information supplied with your request indicates that worker's compensation magistrates, in addition to presiding over worker's compensation contested hearings, sometimes engage in informal settlement discussions with the parties and their attorneys regarding cases assigned to other magistrates. For example, a magistrate assigned to hear a case may believe that this procedure will enhance the likelihood of a settlement. If the parties wish to engage in further negotiations, the magistrate in such a case may ask the litigants and/or their attorneys to permit another magistrate, who has no involvement with the case, to facilitate informal settlement discussions. If they agree, the unassigned magistrate may informally meet with the litigants and/or their attorneys to discuss a possible settlement. If the unassigned magistrate's efforts are successful, the case continues before the assigned magistrate who presides over a redemption (settlement) hearing; if the unassigned magistrate's efforts do not achieve a settlement, the case proceeds to trial and adjudication before the assigned magistrate.

The Worker's Disability Compensation Act of 1969 (WDCA), MCL 418.101 et seq; MSA 17.237(101) et seq, establishes procedures for compensating employees for disabling injuries sustained in the course of their employment. Section 847(1) of the WDCA, which requires that worker's compensation claims be resolved by mediation or by hearing, provides:

Except as otherwise provided for under this act, upon the filing with the bureau by any party in interest of an application in writing stating the general nature of any claim as to which any dispute or controversy may have arisen, the case shall be set for mediation or hearing, as applicable. A worker's compensation magistrate shall hear a case that is set for hearing.

(Emphasis added.)

Section 223, which specifies the types of claims subject to mediation, provides:

1) A claim, except a claim concerning a petition to stop or reduce the payment of compensation or involving a carrier terminating the payment of benefits which had been voluntarily paid, shall be mediated by the parties pursuant to this section under any of the following circumstances:


(d) If the bureau determines that the claim may be settled by mediation.

(2) All other claims shall be mediated pursuant to this section by the parties unless a party refuses in writing to mediate that claim.

(3) The bureau, upon proper notice to all parties, shall schedule a mediation conference for a claim that is to be mediated.

OAG, 1989-1990, No 6573, p 62, 63 (February 28, 1989), explained that mediation conferences and contested hearings are mutually exclusive procedures:

A summary review of 222, 223, and 847 reveals the following. First, the Legislature has specifically designated two mutually exclusive procedures in which to resolve disputed workers' compensation claims, mediation conferences and contested hearings. Second, the mediation procedures are intended to make the disputed resolution process less adversarial by requiring a prompt and complete exchange of factual information between the employee and employer (or insurance carrier) before the claim is formally advanced. Third, there is no requirement that the mediator be an attorney as is required of magistrates who conduct contested hearings. Fourth, the Act mandates mediation when the claimant is not represented by an attorney. Fifth, certain post mediation procedures statutorily exclude attorneys from participating. Sixth, there is no requirement that the mediation conference be recorded. Seventh, mediation is non-binding, and the mediator is without authority to resolve claims short of a stipulation of the parties. Eighth, mediation is non-appealable.

Section 223(5) provides that where mediation is unsuccessful, the claim shall be heard and decided in one of two ways:

(5) If a mediation conference has been held and the claim has not been resolved, the mediator shall recommend 1 of the following:

(a) If the amount of the claim is for $2,000.00 or less, that the claim be heard in the small claims division.

(b) If the amount of the claim is for more than $2,000.00, that the claim be heard at a hearing held pursuant to section 847.

Thus, where a mediation conference proves unsuccessful in resolving a case, the claim shall be submitted to the Worker's Compensation Board of Magistrates for a contested hearing under section 847, or, if the claim is less than $2,000.00, to the Worker's Compensation Bureau's Small Claims Division under section 841(4). In either event, the claim is then formally heard and adjudicated by a worker's compensation magistrate.

The Worker's Compensation Board of Magistrates was created by the Legislature as an autonomous entity in the Department of Labor consisting of 30 member-magistrates appointed by the Governor with the advice and consent of the Senate. Section 213(1). The magistrate is primarily responsible for hearing and deciding contested claims and for preparing concise written opinions containing findings of fact and conclusions of law. Section 847. The independence of a magistrate was discussed in Civil Service Comm v Dep't of Labor, 424 Mich 571, 617-618; 384 NW2d 728 (1986), where the court noted that:

The members of the Board of Magistrates are appointed by, and are accountable only to, the Governor. They are not part of a bureaucratic hierarchy. In the exercise of the decisional function, they do not have a supervisor who can tell them how and what to decide. They are therefore "independent." The Board of Magistrates is created separate and apart from the appellate commission and the Bureau of Workers' Compensation, and accordingly is a separate autonomous entity within the Department of Labor.

The court in Civil Service Comm, supra, pp 621-622, likened a worker's compensation magistrate's function to that of a judge of a court of record:

A magistrate, in hearing a workers' compensation claim, will have the same role as a judge when the judge acts as trier of fact in an action brought to enforce a right created by statute. A magistrate, like a judge, will find the facts with a large measure of finality and apply the law to the facts, and in so doing will often find it necessary to construe the workers' compensation act. In so construing the act, the magistrate may not have the guidance of reported appellate decisions. The function of a magistrate and of a judge and their authority and power in hearing a statutory claim are essentially indistinguishable. The findings of fact of a circuit judge are subject to reversal if clearly erroneous (when the Court of Appeals or this Court is left with the definite and firm conviction that a mistake was made), while a magistrate's findings of fact can be reversed on appeal only if there is not substantial evidence on the whole record to support the decision.

(Citation omitted.)

While several sections of the WDCA make it clear that a magistrate's statutory obligation is to hear and decide contested worker's compensation cases and to decide cases heard in the Small Claims Division, (see, respectively, sections 847(1) and 841(4)), the vast majority of worker's compensation cases are settled rather than adjudicated. For example, in calendar year 1998, only 1,079 worker's compensation cases went to a contested hearing and were adjudicated while 13,696 cases were settled without a contested hearing.1

Nothing in the WDCA prohibits a magistrate from informally encouraging litigants to resolve their differences, or from engaging in settlement discussions regarding cases assigned to other magistrates. Indeed, public policy encourages the settlement of disputes and the reduction of litigation. Compromise settlements of worker's compensation claims are "favored in the law." Johnston's Administrator v United Airlines, 23 Mich App 279, 287; 178 NW2d 536 (1970). The settlement of worker's compensation claims achieves the "social interest in reducing . . . costly litigation." American Mutual Liability Ins Co v Michigan Mutual Liability Co, 64 Mich App 315, 327-328; 235 NW2d 769 (1975). Magistrates engage in settlement discussions on cases assigned to other magistrates in an effort to achieve a settlement and to avoid further litigation. In the process, the public policy favoring the settlement of disputes and the reduction of litigation is served.

The Legislature's purpose in amending the WDCA to create the position of magistrate was to reduce the time required to resolve worker's compensation cases. Civil Service Comm, supra, p 577. A procedure which promotes settlements and reduces the need for contested hearings and adjudications is consistent with the Legislature's intent to expedite the resolution of worker's compensation cases.

It is my opinion, therefore, that the Worker's Disability Compensation Act of 1969 does not prohibit a worker's compensation magistrate from engaging in informal settlement discussions regarding worker's compensation cases assigned to other magistrates.

Attorney General

1 Bureau of Workers' Disability Compensation Program Performance Measure Report for 1998, p 1.