WILDER, J.
Following remand by the Michigan Supreme Court, defendant, Chrysler Group LLC, appeals as on leave granted the order of the Michigan Compensation Appellate Commission (MCAC),
Plaintiff qualified for workers' compensation benefits because of a back injury incurred while working for defendant on November 9, 2000. Defendant subsequently filed a petition to stop plaintiff's benefits, contending that he had been incarcerated for activities that demonstrated his physical and mental abilities to earn money, contrary to his claim of an ongoing disability. Plaintiff countered that his involvement in a criminal enterprise did not prove he was capable of performing physical labor commensurate with his previous ability or employment.
The parties presented conflicting evidence regarding plaintiff's ability to work. Dr. Philip J. Mayer examined plaintiff once and found symptom embellishment. Mayer opined that it was "improbable that [plaintiff] would have not shown any improvement over the past 6-8 years." Mayer asserted he "would not recommend restrictions of activity" and that "[r]est is not an appropriate treatment for back pain." On the other hand, plaintiff's treating physician, Dr. D. Bradford Barker, opined that, as a result of his back injury, plaintiff
The magistrate admitted into evidence Exhibit C, an order of judgment reflecting plaintiff's conviction by guilty plea to Counts 1 and 4 of a federal indictment. Count 1 of the indictment alleged that plaintiff was involved in a conspiracy to commit federal crimes, whereas Count 4 alleged that plaintiff had aided and abetted the structuring of financial transactions to evade reporting requirements. Pursuant to a plea agreement, all remaining counts in the indictment were dismissed, and plaintiff was sentenced to 30 months' imprisonment. The magistrate also admitted into evidence Exhibit E, a copy of the May 11, 2006 transcript of plaintiff's arraignment and guilty-plea hearing. In pleading guilty to the felony charges, plaintiff admitted having established bank accounts in his name from which he was sending money to Yemen and Switzerland. Plaintiff also admitted that he had allowed approximately 50 deposits of less than $10,000 into his accounts by other individuals and that the dollar amount of these transactions was chosen with the intent to avoid Internal Revenue Service (IRS) reporting requirements. Plaintiff testified that, despite the sizeable deposits, he only received $10 for each transfer made, and he also claimed that the earnings occurred before he was receiving workers' compensation benefits.
The magistrate excluded defendant's proposed Exhibits B and D (the grand jury indictment and a 48-page superseding indictment
In addition to excluding aspects of the indictment, the magistrate also rebuffed defendant's effort to introduce evidence of the circumstances underlying the indictment insofar as they did not directly relate to plaintiff's guilty plea, particularly during defendant's examination of plaintiff. For example, defendant was precluded from asking plaintiff whether he had five accounts at Comerica Bank, whether plaintiff and his son were the only approved signatories to the account containing $24,000, and when that account was opened.
In an opinion denying defendant's petition to stop benefits, the magistrate rejected the testimony of Mayer and found Barker, as the treating physician since 2002, credible. The magistrate further stated:
Adopting the magistrate's summary of the evidence under MCL 418.861a(10) and affirming the magistrate's ruling, the MCAC determined, in relevant part:
In its opinion, the MCAC did not address the magistrate's exclusion of evidence of the facts underlying the counts of the indictment to which plaintiff did not plead guilty and the expert testimony based on those facts.
Defendant contends the MCAC erred by affirming the magistrate's decision to exclude not only proposed Exhibit D, but also the evidence, including expert testimony, that related to the facts underlying the indictment. We disagree in part, but we also agree in part.
As discussed by this Court in Moore v. Prestige Painting, 277 Mich.App. 437, 447, 745 N.W.2d 816 (2007):
In addition, "[t]his Court reviews a ... decision to admit evidence for an abuse of discretion; however, when the ... decision involves a preliminary question of law, such as whether a statute precludes the admission of evidence, a de novo standard of review is employed." Detroit v. Detroit Plaza Ltd. Partnership, 273 Mich.App. 260, 275-276, 730 N.W.2d 523 (2006).
MCL 418.841(6) provides, in relevant part: "The rules of evidence as applied in a nonjury civil case in circuit court shall be followed as far as practicable, but a magistrate may admit and give probative effect to evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs." But see Yakowich v. Dep't of Consumer & Indus. Servs., 239 Mich.App. 506, 511, 608 N.W.2d 110 (2000) ("[H]earsay evidence is generally inadmissible, as provided in the rules of evidence.").
The MCAC did not err by affirming the magistrate's decision to exclude
Given plaintiff's voluntary entry of a guilty plea to Counts 1 and 4 of the indictment, those portions of the indictment were not inadmissible hearsay.
Nevertheless, the magistrate did not err by finding portions of the indictment "not relevant" and "speculative" because the excluded evidence referred to individuals other than plaintiff, failed to indicate whether it was applicable to all or only some of the individuals, and did not specifically identify what monies plaintiff had actually received from his participation in the conspiracy as alleged. MRE 402 provides, "Evidence which is not relevant is not admissible." Relevant evidence must be material or "related to a fact of consequence to the action, and ... have a tendency to make the existence of a fact of consequence to the action more probable or less probable than it would be without the evidence." Lanigan v. Huron Valley Hosp., Inc., 282 Mich.App. 558, 564 n. 6, 766 N.W.2d 896 (2009). The indictment's allegations against others and the unproved allegations against plaintiff were not material to plaintiff's credibility or his ability to earn wages. The MCAC reasoned that even without the evidence of the indictment, the magistrate had an adequate opportunity to consider the attack on plaintiff's credibility given the evidence of his actual convictions. We cannot conclude that the MCAC's decision to affirm the magistrate's exclusion of proposed Exhibit D was "based on erroneous legal reasoning or the wrong legal framework." DiBenedetto, 461 Mich. at 401-402, 605 N.W.2d 300.
However, unlike the aspects of the indictment just described, which were properly considered irrelevant, some of the remaining allegations in the indictment, as well as testimony tending to prove those allegations, might have been relevant to plaintiff's credibility. MRE 402. Thus, the magistrate erred by excluding this evidence. For example, plaintiff conceded during oral argument on appeal that evidence of plaintiff's bank records would have been relevant and admissible given that defendant had offered evidence that plaintiff opened a Comerica account with a $24,000 deposit sometime after he suffered his injury, despite plaintiff's testimony to
The magistrate did not address the relevance of the facts underlying the indictment, but excluded that evidence merely because it was information contained in the exhibits she had also excluded. On appeal, the MCAC affirmed the magistrate's findings of fact and the denial of the petition to stop benefits without addressing defendant's argument that the magistrate erred by excluding from evidence the facts underlying the indictment. Under MCL 418.861a(3), the MCAC was required to consider the whole record before determining that the magistrate's findings of fact were conclusive. Because the MCAC did not first decide whether the facts underlying plaintiff's indictment should have been part of the whole record, we conclude that the MCAC operated under the wrong legal framework. DiBenedetto, 461 Mich. at 401-402, 605 N.W.2d 300. We therefore remand this case to the MCAC for proper consideration of defendant's argument.
Defendant also asserts the applicability of the wrongful-conduct rule, contending that plaintiff, in light of his federal criminal convictions, was engaged in wrongdoing and should not be permitted to benefit from those crimes through the ongoing collection of workers' compensation benefits.
Workers' compensation issues raised for the first time in a pleading in this Court are not preserved for review. Defendant did not raise the issue of the applicability of the wrongful-conduct rule before the magistrate or MCAC. Because the issue is raised for the first time on appeal to this Court, it is not properly preserved, Auto-Owners Ins. Co. v. Amoco Prod. Co., 468 Mich. 53, 65, 658 N.W.2d 460 (2003),
Even if this Court had authority to address this issue, it would be unavailing to defendant. As discussed by our Supreme Court, for a plaintiff's action to be precluded or barred by the wrongful-conduct rule, "`[the plaintiff's] injury must have been suffered while and as a proximate result of committing an illegal act.'" Manning v. Bishop of Marquette, 345 Mich. 130, 136, 76 N.W.2d 75 (1956), quoting Meador v. Hotel Grover, 193 Miss. 392, 9 So.2d 782 (1942). Defendant has not argued that plaintiff's injury bears any relationship to the crimes alleged against plaintiff or the crimes of which he pleaded guilty.
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction. No costs under
STEPHENS, J.
I agree with the lead opinion that the Michigan Compensation Appellate Commission (MCAC) operated under the wrong legal framework by failing to address the magistrate's decision to exclude not only the indictment but the testimony of any witness who could testify about the facts that gave rise to that indictment. DiBenedetto v. West Shore Hosp., 461 Mich. 394, 401-402, 605 N.W.2d 300 (2000). I agree with Judge RONAYNE KRAUSE that the ability to engage in illegal activity does not equate with the ability to earn wages within the meaning of the statute. However, I cannot say that the physical and mental efforts required in every illegal activity have no bearing on an individual's ability to earn legal wages or perform work. For example, while passively laundering funds would likely not translate into evidence of the ability to engage in legal work, managing those laundered funds by arranging for transfers, keeping records of the transactions, and delivering the funds to third parties could be relevant to the ability to earn legal income. I agree that the argument here is laced with hyperbole, but the record does provide proof that defendant requested and was refused the opportunity to present witnesses to testify to the facts underlying the indictment. Whether upon review the MCAC will conclude that the magistrate's decision to decline to admit that evidence was in error remains to be seen. However, because I cannot conclude as a matter of law that the evidence has no legal relevance, I concur that the MCAC should review the issue.
RONAYNE KRAUSE, P.J.
I respectfully disagree with certain portions of the lead opinion. I agree entirely with its reasoning and conclusions that defendant's "Proposed Exhibit D," a copy of a federal indictment against plaintiff and several other individuals, was technically admissible, but that the magistrate's decision to exclude it and the decision of the Michigan Compensation Appellate Commission (MCAC) to affirm that exclusion were not clearly erroneous. I also agree with the lead opinion that the wrongful-conduct rule is not properly before this Court and would not be of any use to defendant if it were. I respectfully disagree with the lead opinion's conclusion that the magistrate's exclusion of certain additional evidence ostensibly supporting some of the allegations in Exhibit D constituted an error warranting reversal.
As an initial matter, I am highly skeptical that a demonstrated ability to generate income from illegal activities, standing alone, necessarily proves anything relevant to workers' compensation benefits. In relevant part, "wage earning capacity" is defined as the wages that can be earned at "a job reasonably available." See MCL 418.301(4)(b), MCL 418.302, and MCL 418.401(2)(c).
Credibility of a witness is generally relevant. See People v. Layher, 464 Mich. 756, 761-764, 631 N.W.2d 281 (2001); In re Dearmon, 303 Mich.App. 684, 696, 847 N.W.2d 514 (2014). As noted, the specific acts in which a benefits claimant has engaged can certainly constitute evidence of ability to engage in those acts. Here, however, the additional evidence would not show that plaintiff was able to perform physical or mental feats that he contended he could not. The medical testimony that the magistrate deemed credible showed that plaintiff was essentially limited to sedentary activities. In other words, there was no actual dispute that plaintiff could theoretically earn income through some hypothetical sedentary work. According to Exhibit D, plaintiff was merely a signatory on accounts used to funnel money out of the country illegally; evidence supporting that allegation would prove nothing of value beyond, possibly, the profitability of the operation. The fact that an illegal activity was more or less profitable does not, in my opinion, cast any light on plaintiff's credibility regarding what he could actually perform as legitimate employment.
I do agree with the lead opinion that the magistrate erred to the extent that her decision can be interpreted as a conclusion that plaintiff did not commit a crime purely because he did not plead guilty of that crime. The magistrate's exclusion of evidence pertaining to crimes to which plaintiff did not plead guilty could have had the effect of excluding potential evidence of crimes plaintiff actually perpetrated. Furthermore, I agree that excluding an exhibit, for whatever reason, does not per se necessitate exclusion of other evidence relating to the subject matter of that exhibit. I certainly agree that, in principle, actual work a benefits claimant performs under-the-table can be evidence that the claimant is capable of engaging in gainful employment, or evidence of "a job reasonably available." What I cannot accept is the contention that acquiring money through illegal conduct is inherently proof of the same. Consequently, I cannot agree that the magistrate's error warrants reversal in this matter.
Had defendant even submitted so much as a minimal offer of proof, or if the crimes had been at all related to plaintiff's work with defendant, I would accept that the decision to remand might make sense, depending on the nature of the proofs offered. Again, I agree that evidence of the actual conduct in which a claimant has engaged is relevant and should be considered to the extent that conduct consists of acts that would be performed in the course of gainful employment. Nevertheless, that would be true whether the conduct was legal or illegal. Defendant's argument amounts to a bare assertion, with which the lead opinion seemingly agrees, that profiting from a crime somehow equals proof of wage-earning capability. Defendant simply seeks to extrapolate too much, asking me to believe that plaintiff was a "criminal mastermind" without the basic decency to offer the slightest basis for why the existence of supporting evidence for that assertion is anything but hypothetical and speculative. Without that support, I cannot perceive any basis for undermining the MCAC's result.
I understand the lead opinion's position that, in theory, the magistrate should not ignore evidence of actual conduct by a benefits claimant that tends to demonstrate an ability to engage in gainful employment. However, beyond a perverse and disturbing implication that crime in fact does pay, I do not believe the omitted evidence that the lead opinion deems significant here would possibly have done so. Consequently, I would affirm.