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January 15, 2018

MSC questions applicability of statutory employee provision of the workers disability compensation act

Where an injured employee is covered by a worker's compensation policy, is the statutory employee provision of MCL 418.171 applicable when the employer uses deceit to tell the injured employee he was not covered by worker’s compensation?  The Grand Traverse City Court answered "no" after David McQueer sued his employer, Perfect Fency Company, for negligence for failing to obtain worker’s compensation insurance.  The court noted that MCL 418.171 was not triggered because Perfect Fence Company did not hire a contractor whose employees were not covered by a worker’s compensation policy, and that even if it was triggered, the purpose of Perfect Fence Company's deception was to avoid paying a premium, not to avoid providing worker’s compensation insurance.  The Court of Appeals disagreed, holding that there was a genuine issue of material fact as to whether Perfect Fency Company used “coercion, intimidation, deceit, or other means to encourage persons who would otherwise be considered employees within the meaning of this act to pose as contractors for the purpose of evading” liability under sections 171 or 611 of the worker’s disability compensation act. 

The Michigan Supreme Court has scheduled a mini-oral argument on the question in McQueer v Perfect Fence Co, No. 153829, specifically directing the parties to address three questions: 

(1) whether the statutory employer provision of MCL 418.171 is applicable to McQueer's claims; and
(2) if so, whether McQueer has established a genuine issue of material fact sufficient to avoid summary disposition; and
(3) whether the Court of Appeals erred by reversing the trial court's order denying, on the basis of futility, McQueer's motion to amend his complaint to add an intentional tort claim. 

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