Supreme Court Reverses the Retroactive Effect of Karaczewski

In the case Bezeau v Palace Sports & Entertainment, Inc., SCt No.: 137500,

decided July 31, 2010, a majority of the Court overruled in part one of its prior decisions that had

addressed whether Michigan can exercise workers’ compensation jurisdiction over injuries

occurring outside the state of Michigan. The case overruled in part is Karaczewski v Farbman

Stein & Co. 478 Mich 28; 732 NW2d 56 (2007). The only part of Karaczewski overruled by the

Supreme Court is the part that gave retroactive effect to the Karaczewski holding.

By way of background, Michigan’s workers’ compensation statute contains a

provision defining when Michigan can exercise jurisdiction over work related injuries that occur

outside the state of Michigan. The statutory provision is MCL 418.845. It says that Michigan

can only exercise jurisdiction over outstate injuries if the employee is a resident of Michigan at

the time of injury and the contract of hire was made in Michigan. Through the decades the

residency requirement of this provision was for a good portion of time read out of the statute via

court decisions. But, three years ago in Karaczewski, the Supreme Court held: the statute means

what it says (both residency and contract of hire requirements must be met); and (2) this

insistence on both requirements is to be given retroactive effect and, thus, apply in all cases not

finally decided by the date of the release of the Karaczewski decision: May 23, 2007.

The Bezeau case was in litigation at the time Karaczewski was released. Mr.

Bezeau was a professional hockey player for the Detroit Vipers. He was originally a resident of

Michigan and the contract he signed had been signed in Michigan. Later, however, the Detroit

Vipers loaned plaintiff to the Providence Bruins, a professional hockey team located in Rhode

Island. By that time, plaintiff was no longer a resident of Michigan. In his first game with the

Providence Bruins, plaintiff was injured. He filed his workers’ compensation claim in Michigan.
At the time his Michigan case began, Karaczewski had not been released; therefore, there was

initially no issue raised as to whether Michigan had jurisdiction. Mr. Bezeau’s case wandered

through the Michigan appellate system for six years on other issues. Then, when Karaczewski

was released, the defendant in Bezeau argued that Michigan no longer had jurisdiction over Mr.

Bezeau’s claim because the residency requirement had been given retroactive effect. The

employer in Bezeau prevailed with this argument until plaintiff appealed the matter again to the

Supreme Court.

The lead opinion in Bezeau from the Supreme Court was authored by Justice

Weaver. She held that the retroactive effect of Karaczewski was overruled and, therefore,

injuries that occurred on or before the date of the Karaczewski opinion are not subject to that

case’s requirement as long as the claim has not already reached final resolution in the court

system. Justice Hathaway concurred with Justice Weaver. Justice Cavanagh agreed as well on

slightly different reasoning. And, Chief Justice Kelly agreed as well (but would have also

overruled all of Karaczewski). A dissent was authored by Justice Young, and concurred in by

Justices Corrigan and Markman. They characterized the majority’s action as “another instance in

which the Court’s new philosophical majority seems to retreat from its previously stated fidelity

to” follow precedent created by other cases.

This residency issue in Michigan has been a nearly unending source of

controversy for years. And, there is still more to the story. On January 13, 2009, the Legislature

amended the outstate jurisdiction provision to say that a claimant now need meet only one of the

two requirements, i.e., either be a resident of Michigan at the time of injury or be employed

under a contract of hire made in Michigan. In Brewer v AD Transport Express, Inc. 486 Mich

50; 482 NW2d 475 (2010), the Supreme Court held that this statutory change only applies to
injuries occurring on January 13, 2009 and going forward. Therefore, despite the above

controversy in Bezeau, as of right now a claimant need only meet one of the two requirements,

either the residency requirement or the contract of hire requirement. New problems are

inevitable under this new amendment, however. Injuries will occur outside of Michigan while

people work for non Michigan employers. If they are residents of Michigan, they will file their

claims in Michigan and say Michigan has jurisdiction simply because they are residents of

Michigan. This will raise constitutional questions as to whether or not Michigan can exert

jurisdiction over non-Michigan companies for injuries occurring outside of the State of Michigan

simply because the person bringing the claim is a Michigan resident.