RILEY v. N'LAND GERIATRIC (AFT REM)

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Docket Number

Docket Nos. 81129, 81325, 81689.

Attorney(S)

Bockoff Zamler, P.C. (by Anne K. Flaherty and Joel W. Jonas), for plaintiffs Riley and Moore. Sachs, Nunn, Kates, Kadushin, O'Hare, Helveston Waldman, P.C. (by Melvyn J. Kates and Granner S. Ries), for plaintiff Juncaj. Lacey Jones (by Gerald M. Marcinkoski) for defendants Northland Geriatric Center and Michigan Mutual Insurance Company. Sinn, Day, Felker, Chinitz Lovernick, P.C. (by Gilbert M. Chinitz), for defendants C H Industries and Allstate Insurance Company. Law Offices of Charfoos, Reiter, Peterson, Krut Jones, P.C. (by Kenneth E. Jones), for defendant Detroit Board of Education.

Judges

BRICKLEY, J. (concurring).
BOYLE, J. (concurring in part and dissenting in part).

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Smart Summary

Factual and Procedural Background

This opinion addresses the application and retroactive effect of the Michigan Supreme Court's prior decision in Gusler v Fairview Tubular Products, 412 Mich. 270 (1981), which overruled Jolliff v American Advertising Distributors, Inc, 49 Mich. App. 1 (1973), concerning the adjustment provisions of the Workers' Disability Compensation Act.

Three related workers' compensation cases—Riley, Juncaj, and Moore—presented conflicts in the Court of Appeals regarding whether the Gusler decision applies retroactively to benefits awarded before its release on December 30, 1981, and whether res judicata bars adjustment of compensation rates based on that decision.

In Riley, a referee awarded minimum weekly compensation based on the Jolliff formula in 1981; after Gusler, the defendant sought reduction under the new rule. The Court of Appeals initially held Gusler was not binding precedent. The Supreme Court reversed, holding Gusler binding from its filing date and remanded for res judicata and retroactivity analysis.

In Juncaj, a similar award based on Jolliff was reduced post-Gusler without prior appeal; the WCAB and Court of Appeals diverged on whether res judicata barred the reduction. The Supreme Court held the case pending the Riley decision and then remanded for further consideration.

In Moore, a benefit award under Jolliff was reduced following Gusler while an appeal was pending. The Court of Appeals initially held Gusler not binding; the Supreme Court reversed, directed retroactivity analysis, and granted leave to appeal after a certified conflict with Riley.

Legal Issues Presented

Whether the adjustment of workers' compensation minimum benefit rates under Gusler is barred by the doctrine of res judicata.
Whether the Gusler decision applies retroactively to benefits awarded before its release date of December 30, 1981.
How the new legal rule announced in Gusler should be implemented with respect to prior awards and payments.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Gusler v Fairview Tubular Products, 412 Mich. 270 (1981)	Adjustment provisions of § 355 apply only to maximum, not minimum, weekly rates under § 351(1) of the Workers' Disability Compensation Act.	Overruled prior precedent (Jolliff); held binding from December 30, 1981; applied retroactively to benefits due or paid after that date.
Jolliff v American Advertising Distributors, Inc, 49 Mich. App. 1 (1973)	Previously held that § 355 adjustments applied to minimum and maximum rates.	Overruled by Gusler.
Hlady v Wolverine Bolt Co, 393 Mich. 368 (1975)	Res judicata principles in workers' compensation; continuing benefits subject to change based on circumstances.	Distinguished by majority; minority viewed it as barring relitigation absent changed facts.
Pike v City of Wyoming, 431 Mich. 589 (1988)	Res judicata does not bar adjustment of workers' compensation benefits when amount changes due to new legal rulings.	Applied to support that res judicata does not bar redetermination of benefit amounts after Gusler.
Whetro v Awkerman, 383 Mich. 235 (1970); Parker v Port Huron Hospital, 361 Mich. 1 (1960); Bricker v Green, 313 Mich. 218 (1946)	General principles regarding application of new legal rules and retroactivity.	Cited to illustrate approaches to retroactive or prospective application of new rulings.
Great Northern R Co v Sunburst Oil Refining Co, 287 U.S. 358 (1932)	State courts' authority to determine retroactivity of their own decisions.	Quoted to affirm Michigan Supreme Court's authority to decide retroactivity and fairness considerations.
People v Hampton, 384 Mich. 669 (1971); Linkletter v Walker, 381 U.S. 618 (1965)	Test for retroactivity of new legal rules balancing purpose, reliance, and effect on justice administration.	Applied to conclude Gusler should apply only to payments made after its release date to protect reliance interests.
People v Auer, 393 Mich. 667 (1975)	Considerations of administrative justice in retroactivity of new legal rules.	Used to support minimal retroactive effect of Gusler to avoid disruption.
Theodore v Packing Materials, Inc, 396 Mich. 152 (1976); Gose v Monroe Auto Equip Co, 409 Mich. 147 (1980)	Res judicata principles in workers' compensation and requirement to present all claims in single proceeding.	Discussed in dissent to support application of res judicata barring reopening of awards.
Socialist Workers Party v Secretary of State, 412 Mich. 571 (1982)	Doctrine of res judicata bars relitigation of facts and law previously litigated or adjudicable.	Quoted in dissent to emphasize finality of litigation and bar on relitigation.

Court's Reasoning and Analysis

The Court began by reaffirming that the Gusler decision overruled the prior holding in Jolliff regarding the adjustment of minimum weekly rates under the Workers' Disability Compensation Act. Recognizing the reliance on Jolliff for over eight years, the Court emphasized fairness by preserving payments already made and applying the new rule only to benefits due or payable after December 30, 1981.

The central legal issue was whether res judicata barred application of Gusler to reduce benefits previously awarded under Jolliff. The Court analyzed the nature of workers' compensation benefits as continuing income maintenance dependent on circumstances at the time of payment, distinguishing them from lump-sum tort judgments. Citing its recent decision in Pike v City of Wyoming, the Court held that res judicata does not bar redetermination of the amount of benefits when the governing law changes.

The Court rejected plaintiffs' arguments that the new rule should apply only prospectively to cases commenced or pending at the time of Gusler. Instead, it interpreted the explicit implementing language in Gusler as directing application to all benefits due and unpaid after the decision date, regardless of when the award was made.

Applying the three-part Linkletter test for retroactivity, the Court found that the purpose of Gusler was to correct a statutory misinterpretation, that reliance on Jolliff was substantial but safeguarded by non-repayment of prior benefits, and that limiting retroactivity to post-decision payments minimized disruption to the administration of justice.

Consequently, the Court concluded that Gusler applies retroactively to all payments made after December 30, 1981, and that res judicata does not bar such adjustments. The Court declined to overturn Gusler itself.

Holding and Implications

In the case of Riley, the Supreme Court reversed the Court of Appeals judgment. In the cases of Juncaj and Moore, the Supreme Court affirmed the Court of Appeals judgments.

The direct effect of this decision is that workers' compensation benefits awarded under the prior Jolliff standard may be adjusted downward in accordance with the Gusler ruling for all payments due or made after December 30, 1981, even if the original awards were final and unappealed. Recipients are protected from repayment of sums already received before that date.

The Court's ruling clarifies the application of res judicata in the context of workers' compensation benefits, emphasizing the continuing nature of such benefits and the importance of legislative intent. No new precedent beyond the retroactive application of Gusler and the non-application of res judicata to adjustments after its effective date was established.

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RILEY v NORTHLAND GERIATRIC CENTER (AFTER REMAND) JUNCAJ v C H INDUSTRIES (AFTER REMAND) MOORE v DETROIT BOARD OF EDUCATION (AFTER REMAND)

AFTER REMAND

GRIFFIN, J.

We granted leave in these workers' compensation cases to resolve a conflict among panels of the Court of Appeals concerning the application of Gusler v Fairview Tubular Products, 412 Mich. 270; 315 N.W.2d 388 (1981), reh gtd 414 Mich. 1102 (1982), app dis 414 Mich. 1102 (1983). Overruling Jolliff v American Advertising Distributors, Inc, 49 Mich. App. 1; 211 N.W.2d 260 (1973), we held in Gusler that the adjustment provisions of § 355 of the Workers' Disability Compensation Act apply only to the maximum, and not to the minimum, weekly rates established in § 351(1) of the act.

MCL 418.355; MSA 17.237(355).

MCL 418.101 et seq.; MSA 17.237(101) et seq.

MCL 418.351(1); MSA 17.237(351)(1).

Taking into account the reliance on Jolliff during an interim of more than eight years, this Court determined that its ruling in Gusler should be implemented as follows:

In the interest of fairness we do not believe our holding should affect any disability compensation payments already made. Consequently, no recipient will be obligated to repay sums already received by reason of the erroneous computation formula we have nullified today. However, any benefits due and not yet paid or to be awarded after the date of this opinion shall be in accord with this ruling. [ Id. at 298.]

The principal issue raised is whether the directed correction of Jolliff's error with respect to "benefits due and not yet paid" after Gusler is precluded by the doctrine of res judicata. We conclude that res judicata is not a bar. We further hold that Gusler applies to all benefits due or paid after December 30, 1981, the date of our opinion in that case, including benefits paid pursuant to awards entered prior to that date.

Before turning to a discussion of the issues, we shall examine the facts and the interrelated procedural history of these cases.

A. RILEY

On October 6, 1981, a referee awarded the plaintiff compensation of $119 per week on the basis of a rate determined in accordance with Jolliff. No appeal was taken. Two months later, this Court decided Gusler, and defendant petitioned for a reduction in plaintiff's compensation in accordance with Gusler, which the referee granted.

Thereafter, the Workers' Compensation Appeal Board reversed, and its decision was affirmed by the Court of Appeals, but on the ground that this Court's decision in Gusler is not binding precedent. The Riley panel noted that, after filing and entering its opinion in Gusler, this Court granted a motion for rehearing and thereafter dismissed the appeal upon stipulation. It was the conclusion of the Riley panel that our Gusler opinion had never been "issued" in accordance with then GCR 1963, 866. Riley v Northland Geriatric Center, 140 Mich. App. 72; 362 N.W.2d 894 (1985).

On appeal, this Court reversed on that point and held that our opinion in Gusler became binding precedent when it was filed on December 30, 1981, notwithstanding the subsequent grant of rehearing and dismissal. In addition, we remanded the case to the Court of Appeals for consideration of res judicata and retroactivity issues which had not been addressed in the earlier appeal. Riley v Northland Geriatric Center, 425 Mich. 668; 391 N.W.2d 331 (1986).

On remand, the Court of Appeals held that res judicata barred a reduction of plaintiff's benefits. Riley v Northland Geriatric Center (On Remand), 160 Mich. App. 507; 408 N.W.2d 489 (1987). We then granted leave to appeal. 429 Mich. 885 (1987).

Riley died after commencement of this action and her son, Melvin King, personal representative of her estate, has been substituted as plaintiff.

B. JUNCAJ

In Juncaj, plaintiff was awarded benefits of $79 per week on the basis of Jolliff, and the award was not appealed. Thereafter this Court decided Gusler, and defendant's insurer reduced plaintiff's level of benefits. Plaintiff then requested a hearing and argued that res judicata barred such a reduction. The referee denied relief, finding the reduction proper under Gusler. On appeal, however, the WCAB reversed, relying on the Court of Appeals decision in Riley that Gusler is not binding precedent.

After the Court of Appeals denied leave to appeal, defendant applied to this Court, and we ordered the case held in abeyance pending our decision in Riley. Once we had decided Riley, we remanded the case to the Court of Appeals for consideration of res judicata and retroactivity issues raised by plaintiff. On remand, the Juncaj panel held, contrary to the Court of Appeals decision in Riley (On Remand), that res judicata is not a bar and that Gusler applies to all payments after December 30, 1981, the date of our opinion in that case. Juncaj v C H Industries, 161 Mich. App. 724; 411 N.W.2d 839 (1987). We granted plaintiff's application for leave to appeal. 429 Mich. 885 (1987).

C. MOORE

On March 26, 1981, a referee awarded plaintiff Moore $108 per week, the rate applicable under Jolliff. While defendant's appeal to the WCAB was pending, this Court decided Gusler, and the WCAB then granted defendant's motion to reduce plaintiff's benefits in accordance with Gusler. However, the Court of Appeals thereafter held in Riley, that Gusler is not binding precedent. The WCAB then affirmed a decision by the referee which reinstated the original award to plaintiff.

While a second appeal to the Court of Appeals was pending, this Court held in Riley that our December 30, 1981, decision in Gusler is binding precedent. The Court of Appeals then reversed the WCAB and ordered a reduction in plaintiff's benefit rate in accordance with Gusler. Moore v Detroit Bd of Ed, unpublished opinion of the Court of Appeals, decided December 3, 1986 (Docket No. 86579).

On appeal, we remanded the case to the Court of Appeals with instructions to consider whether Gusler should be given retroactive effect. Thereafter, the Moore panel opined that Gusler applies to all payments made after December 30, 1981 (the date of Gusler), even though a case may have been decided prior to that date, relying on the implementing language set forth in our Gusler opinion. Moore v Detroit Bd of Ed (On Remand), 163 Mich. App. 130; 414 N.W.2d 160 (1987). After the Moore panel certified a conflict with the decision of the Riley remand panel, we granted leave to appeal. 429 Mich. 885 (1987).

In Riley and Juncaj, plaintiffs point out that their compensation rates were set prior to Gusler by decisions that were not appealed, and they argue that any post- Gusler reduction in benefits is barred by res judicata.

In Moore there is no res judicata issue, as there has been no final award. Gusler was decided by this Court while defendant's appeal to the WCAB was pending.

The applicability of res judicata principles in workers' compensation cases has been recognized. See Hlady v Wolverine Bolt Co, 393 Mich. 368, 375; 224 N.W.2d 856 (1975); Theodore v Packing Materials, Inc, 396 Mich. 152, 158; 240 N.W.2d 255 (1976); Gose v Monroe Auto Equip Co, 409 Mich. 147, 161; 294 N.W.2d 165 (1980).

Nevertheless, in considering how res judicata is to be applied in that context, we have not overlooked that there is a fundamental difference between the lump-sum judgment in a tort action and the award of continuing weekly benefits in a workers' compensation case. This difference was noted by Justice LEVIN who wrote, concurring, in Hlady, supra at 391:

Workmen's compensation disability benefits, like social security and unemployment compensation benefits, are a form of income maintenance for persons whose wage-earning capacity has been suspended or terminated. A claimant's entitlement to such benefits depends on the circumstances at the time of application and payment.

Res judicata is a judicially created doctrine which reflects appropriate concern for the use of judicial resources and the finality of litigation. However, it is not an inflexible doctrine, and its applicability depends in part upon the legal context in which a determination is made.

In a wide variety of circumstances, an employee's future rate of workers' compensation benefits is subject to change. Events in the future may operate to increase or decrease the amount of benefits to which he is entitled. For example, as a consequence of 1980 PA 357, certain employees injured between September 1, 1965, and December 31, 1979, became entitled after January 1, 1982, to receive a supplemental benefit under § 352 to offset increases in the cost of living. Furthermore, if a disabled worker recovers, or later works at a less lucrative job, the amount of his compensation is subject to adjustment, and res judicata is not a bar.

Recently, in Pike v City of Wyoming, 431 Mich. 589; 433 N.W.2d 768 (1988), this Court faced a question similar in important respects to the issue presented in the cases now before us. In Pike, the amount of plaintiff's award was increased because his wife was conclusively presumed to be a dependent under one provision of the Workers' Disability Compensation Act, and there was no appeal from that determination. Thereafter, this Court declared unconstitutional a similar gender-based presumption for widows under a different provision of the act. The defendant in Pike then sought a reduction in the level of plaintiff's benefits, alleging that plaintiff's wife was not in fact dependent. The plaintiff argued that res judicata barred any redetermination of his award. We held that res judicata did not preclude an adjustment in the amount of the employee's benefit:

MCL 418.353(1)(a)(i); MSA 17.237(353)(1)(a)(i).

MCL 418.331(1)(a); MSA 17.237(331)(1)(a).

Because the amount of an employee's award is never final, res judicata principles do not apply to a change in the amount of benefits the claimant receives. This is consistent with the flexible nature of the workers' compensation system which permits redetermination of the amount of a claimant's benefits. [ Pike, p 602.]

As in Pike, a new determination in these cases made on the basis of Gusler would affect only the amount of plaintiffs' benefits and not their eligibility for workers' compensation. As in Pike, we conclude that res judicata does not bar a redetermination of the amount of benefits to which plaintiffs are entitled.

Furthermore, we doubt that the Legislature could have intended the unfairness that would result if the position urged by plaintiffs in the instant cases were to be adopted. Under plaintiffs' theory, many employees whose Jolliff-based rates were paid voluntarily by their employers before Gusler would be subject to post- Gusler reductions, while other employees whose employers happened to contest the rate before Gusler would not be affected.

We are satisfied that this Court was conscious of such considerations when it wrote, "In the interest of fairness we do not believe our holding should affect any disability compensation payments already made. . . . However, any benefits due and not yet paid or to be awarded after the date of this opinion shall be in accord with this ruling." Gusler, supra at 298 (emphasis added). Likewise, if the effect of Gusler had been to increase benefits from and after the date of the opinion, res judicata would not have precluded plaintiffs from obtaining the increase.

We conclude that, by directing that its "new rule" was to apply to any benefits due and not yet paid, the Gusler Court implicitly stated that res judicata would not preclude adjustment of benefits after the date of its opinion. In so concluding, we are in agreement with Justice LEVIN's separate statement in Riley, 425 Mich. 690:

Were this Court to give preclusive effect to a prior adjudication that was based on Jolliff as to payments of workers' compensation benefits after Gusler it would perpetuate, in the name of a judicial doctrine, a judicial error in construing a statute that thwarts legislative intent.

Accordingly, we conclude that post- Gusler adjustment of compensation rates as directed in Gusler is not barred by res judicata.

III

We next consider how the change of law announced in Gusler is to be applied in the instant cases.

Sometimes a court which announces a change of law will refrain from going the next step to indicate how its new rule is to be applied. See Ross v Consumers Power Co (On Rehearing), 420 Mich. 567; 363 N.W.2d 641 (1984), Day v W A Foote Memorial Hosp, 412 Mich. 698; 316 N.W.2d 712 (1982), and Parker v Highland Park, 404 Mich. 183; 273 N.W.2d 413 (1978). In such a situation, the prospective-retroactive issue is left for decision in a later case.

In Gusler, however, we did not delay that decision. This Court proceeded to provide specific and precise directions concerning the applicability of the "new rule," stating:

Although our holding is based on what we perceive to have been the intent of the Legislature at the time of enactment of the provisions discussed, in practical effect, given the contrary interpretations of the law by the Director of the Bureau of Workers' Compensation and the bureau's subdivisions, the Workers' Compensation Appeal Board and its hearing referees, and the Court of Appeals, today's holding is not unlike the announcement of a new rule of law. Its application therefore should be treated accordingly. See Whetro v Awkerman, 383 Mich. 235; 174 N.W.2d 783 (1970); Parker v Port Huron Hospital, 361 Mich. 1; 105 N.W.2d 1 (1960); Bricker v Green, 313 Mich. 218; 21 N.W.2d 105 (1946).

In the interest of fairness we do not believe our holding should affect any disability compensation payments already made. Consequently, no recipient will be obligated to repay sums already received by reason of the erroneous computation formula we have nullified today. However, any benefits due and not yet paid or to be awarded after the date of this opinion shall be in accord with this ruling. [ Id. at 298.]

In Great Northern R Co v Sunburst Oil Refining Co, 287 U.S. 358; 53 S Ct 145; 77 L Ed 360 (1932), the United States Supreme Court made clear that state courts are not precluded by the federal constitution from determining whether their own law-changing decisions should be applied retroactively or prospectively. The Court stated:

We think the federal constitution has no voice upon the subject. A state in defining the limits of adherence to precedent may make a choice for itself between the principle of forward operation and that of relation backward. It may say that decisions of its highest court, though later overruled, are law none the less for intermediate transactions. . . . On the other hand, it may hold to the ancient dogma that the law declared by its courts had a Platonic or ideal existence before the act of declaration, in which event the discredited declaration will be viewed as if it had never been, and the reconsidered declaration as law from the beginning. . . . The alternative is the same whether the subject of the new decision is common law . . . or statute. . . . The choice for any state may be determined by the juristic philosophy of the judges of her courts, their conceptions of law, its origin and nature. We review not the wisdom of their philosophies, but the legality of their acts. [ Id. at 364-365.]

Courts have acknowledged that resolution of the retrospective-prospective issue ultimately turns on considerations of fairness and public policy. Peterson v Superior Court, 31 Cal.3d 147, 152; 181 Cal.Rptr. 784; 624 P.2d 1305 (1982). In Placek v Sterling Heights, 405 Mich. 638, 665; 275 N.W.2d 511 (1979), reh den 406 Mich. 1119 (1979), this Court said:

This Court has overruled prior precedent many times in the past. In each such instance the Court must take into account the total situation confronting it and seek a just and realistic solution of the problems occasioned by the change.

We believe fairness requires that Gusler be applied to workers' compensation awards made after December 30, 1981, the date Gusler was decided, and to all benefits due and not yet paid after that date where the award preceded the date of the opinion. Such a holding is fair because it allows employers to reduce their payments in accordance with the Legislature's intent while protecting employees with respect to payments received before Gusler.

While fairness is a goal, certain rules or principles have evolved which provide guidance in resolving the retroactive-prospective dilemma. In People v Hampton, 384 Mich. 669, 674; 187 N.W.2d 404 (1971), this Court adopted the three-part test set forth in Linkletter v Walker, 381 U.S. 618; 85 S Ct 1731; 14 L Ed 2d 601 (1965). In Linkletter the United States Supreme Court ruled that its decision in Mapp v Ohio, 367 U.S. 643; 81 S Ct 1684; 6 L Ed 2d 1081 (1961) (requiring states to exclude evidence seized in violation of the Fourth Amendment) should not be applied retroactively. In reaching that result, the Court weighed (1) the purpose to be served by the new rule, (2) the extent of reliance on the old rule, and (3) the effect of retroactivity on the administration of justice.

In a civil case, Chevron Oil Co v Huson, 404 U.S. 97, 106-107; 92 S Ct 399; 30 L Ed 2d 296 (1971), the Court applied essentially the same test with the addition of a threshold question: Does the decision clearly establish a new principle of law?

Application of the Linkletter test, also leads to the conclusion that Gusler be applied to awards made after December 30, 1981, and benefits due and not yet paid after December 30, 1981. Under Linkletter, we look first to the purpose of the "new rule" laid down in Gusler. It was to correct a serious error in the interpretation of a statute under which employees were being paid benefits in excess of the rate intended by the Legislature. We believe this purpose would best be furthered by applying Gusler only to payments made after the opinion's date.

Second, we take account of the fact that employees and employers relied for more than eight years on the Jolliff holding that minimum as well as maximum rates were adjustable under § 355. Gusler's implementing language appropriately recognizes that reliance, and it safeguards employees by not requiring repayment of any portion of benefits received prior to Gusler.

Finally, by applying the new rule only to payments after December 30, 1981, Gusler was designed to have a minimum effect upon the administration of justice. Cf. People v Auer, 393 Mich. 667, 677; 227 N.W.2d 528 (1975), reh den 394 Mich. 944 (1975).

In Auer, this Court addressed the retroactivity of the then recently adopted objective test of entrapment. In holding that the new rule was to be prospective, this Court expressed concern about the effect retroactive application would have on the administration of justice, noting that "retrospective application would require in many cases new trials with the tremendous obstacle of reassembling now stale evidence." Id. at 677.

In Riley and Moore plaintiffs claim that by citing Whetro, Parker, and Bricker, supra, the Gusler Court indicated an intent that Gusler should apply only to cases commenced after December 30, 1981, and to cases pending on that date in the Bureau of Workers' Disability Compensation, the WCAB, or the Court of Appeals in which the minimum rate adjustment issue was raised. Plaintiff in Juncaj argues that Gusler should apply only to cases in which the injury occurred after December 30, 1981. We are not persuaded that the citations were for that purpose.

In Whetro, wherein this Court adopted the "positional risk" rule in workers' compensation cases, we determined that the new rule would apply to claims arising after the date of that decision but would not apply to pending cases other than the case then at bar. Likewise, in Parker, this Court held that a new rule abolishing charitable immunity would apply only to that case and to cases arising after the opinion's date. However, in Bricker, this Court stated that its law change abrogating imputed negligence was to apply to "pending" as well as to "future" cases.

We believe the Whetro, Parker, and Bricker decisions were cited to demonstrate that this Court has not always applied the general rule that law changing judicial decisions are to be given complete retroactive effect. Obviously, the three cases did not follow the same pattern. Accordingly, we conclude that the Court's reference to the three cases was for a general purpose and not the specific purpose for which plaintiffs contend.

See Martin v White Pine Copper Co, 378 Mich. 37, 44; 142 N.W.2d 681 (1966). While this is the general rule for judicial decisions which make a substantive change in preexisting law, legislative changes in preexisting law are generally held to be prospective, unless a contrary legislative intent is clearly manifested, or unless the statute is procedural or remedial. Selk v Detroit Plastic Products, 419 Mich. 1, 9-10; 345 N.W.2d 184 (1984).

Furthermore, our interpretation is justified and required by the clear and unambiguous implementing language which this Court provided in the concluding paragraph of our Gusler opinion. As Justice LEVIN wrote in Riley, supra, 425 Mich. 688-689:

There is nothing unfair in applying the rule stated in Gusler, which appears to have been reaffirmed today on varying analyses, from and after the date of the announcement of the opinions of the justices in Gusler.

The statement in the . . . concluding paragraph of the majority opinion in Gusler was surely adequate notice to the workers' compensation department, the WCAB, bench and bar, that Jolliff should no longer be followed. . . . It would not be "unfair" to hold in the instant case that, as declared in Gusler, "any benefits due and not yet paid or to be awarded after the date of [the Gusler opinion] shall be in accord with th[e] ruling" stated in Gusler that the minimum rates are not subject to adjustment.

If we were to accept the interpretation urged by plaintiffs, we would effectively nullify that part of the implementing language which states that any benefits due and not yet paid after the date of Gusler shall be paid in accord with Gusler. Contrary to the argument advanced by plaintiffs, this Court did not limit its holding to cases commenced after December 30, 1981, and to cases pending on that date in the Bureau of Workers' Disability, the WCAB, or an appellate court in which the minimum rate adjustment issue was raised. Rather, Gusler clearly stated that its holding "not unlike . . . a new rule of law," was to apply to " any benefits due and not yet paid or to be awarded after the date [that Gusler was decided]. . . ." Id. at 298 (emphasis added).

In view of our holding concerning the applicability of Gusler, we find no merit in the argument advanced that defendant in Moore waived its right to relief because it did not raise the rate adjustment issue prior to December 30, 1981. As noted in n 5, defendant's appeal from the referee's decision in Moore was pending before the WCAB when this Court decided Gusler. Furthermore, defendant moved promptly after Gusler for relief in accordance with its holding. We also note that both the WCAB and the Court of Appeals addressed the rate adjustment issue in Moore.

We conclude that the implementing language means what it says, and that payments after December 30, 1981, are to be adjusted in accord with Gusler, whether the award was made before or after Gusler.

Although plaintiffs encourage us to reconsider and overturn our decision in Gusler, we decline the invitation to do so. We remain convinced that Gusler was correctly decided.

In Riley, we reverse the judgment of the Court of Appeals. In Juncaj and Moore, we affirm the judgment of the Court of Appeals.

RILEY, C.J., and LEVIN, J., concurred with GRIFFIN, J.

BRICKLEY, J. (concurring).

A. INTRODUCTION

Concurring in Pike v City of Wyoming, 431 Mich. 589; 433 N.W.2d 768 (1988), I expressed the view that the traditional concept of res judicata must be tailored to meet the special needs of income-maintenance systems such as workers' compensation. Specifically, I proposed a "hybrid" res judicata concept that should be applied when the law governing such systems is changed by judicial decision: The doctrine of res judicata bars relitigation as to "all payments and benefits awarded or denied pursuant to an earlier determination, but only until such time as a subsequent petition based on changed circumstances that would not have been present at the previous litigation is filed and the issues presented are resolved." Id., p 607.

B. RILEY AND JUNCAJ

The application of this principle in Riley and Juncaj is straightforward. In both cases, claimants were awarded and paid minimum benefits in accordance with Jolliff v American Advertising Distributors, Inc, 49 Mich. App. 1; 211 N.W.2d 260 (1973). Subsequently, Jolliff was overruled by Gusler v Fairview Tubular Products, 412 Mich. 270; 315 N.W.2d 388 (1981), and new proceedings were instituted in order to determine whether future benefits should be reduced accordingly. Referees in both cases approved the reduction. Because I believe that the doctrine of res judicata is not a bar under such circumstances, I agree with the lead opinion's conclusion that the referees ruled correctly.

Gusler itself supports this result. In the first of two paragraphs addressing the application of Gusler to other cases, we noted that Gusler was to be treated as a new rule of law. Id., 298. We cited three cases as general authority for the treatment of new rules in other contexts. Whetro v Awkerman, 383 Mich. 235; 174 N.W.2d 783 (1970), Parker v Port Huron Hosp, 361 Mich. 1; 105 N.W.2d 1 (1960), and Bricker v Green, 313 Mich. 218; 21 N.W.2d 105 (1946). Of these decisions, Parker and Bricker illustrate the application of new rules in general civil litigation, while Whetro, the only workers' compensation case of the three, is illustrative of the prospective effect to be accorded changes which address eligibility or qualification for benefits.

The penultimate paragraph of Gusler explains precisely the effect to be given that decision, which affected only the amount of benefits to which a claimant is entitled. We held that Gusler could not be applied so as to require repayment of payments already made under the Jolliff rule, but that payments due but not yet paid should be computed under the Gusler standard. Id., 298. Significantly, we did not limit the award of Gusler minimum benefits to cases in which awards were made after the date Gusler was issued.

A further question raised in Juncaj, but not answered below, is whether the employer acted properly in unilaterally reducing the claimant's benefits without prior administrative approval. Given that Gusler was correctly decided, Juncaj should be remanded to the WCAB in order for it to consider the propriety of the employer's implementation of Gusler. Specifically, the WCAB should determine (1) whether the unilateral reduction of benefits by the employer was improper, and, it so, (2) the extent to which the claimant should recover benefits improperly withheld.

C. MOORE

Because Moore was still pending before the WCAB when Gusler was decided, there was no final determination which would trigger a res judicata analysis. Justice ARCHER would hold that the employer, by waiting until after Gusler had been decided to raise the issue before the WCAB, waived its right to contest the future payment of Jolliff minimum benefits. I agree, however, with the conclusion reached in Justice GRIFFIN's opinion. Additional evidence submitted by the parties may be considered by the WCAB. While the WCAB is not required to consider the new material, where, as here, it exercises its discretion to do so, the issue has been adequately preserved.

MCL 418.851; MSA 17.237(851).

MCL 418.859; MSA 17.237(859).

Even if an intervening judicial decision may not technically be "evidence" under § 859, there is no reason to draw a distinction between such a decision and other types of evidence, particularly in light of the informal nature of workers' compensation proceedings. Moreover, even courts, bound by the Michigan Rules of Evidence, may take judicial notice of the common law. MRE 202(a). In workers' compensation proceedings, strict adherence to the Michigan Rules of Evidence is not required. MCL 418.841(6); MSA 17.237(841)(6).

Furthermore, from the perspective of administrative economy, I believe it would be unwise either to require parties to burden administrative decisionmakers with a claim or defense that has not yet been recognized, or to prevent the WCAB from immediately considering a recent judicial decision which by its terms is to be accorded immediate effect.

D. CONCLUSION

For the foregoing reasons, I concur in the result reached in Justice GRIFFIN's opinion. In addition, I conclude that Juncaj should be remanded to the WCAB in order for it to determine (1) whether the unilateral reduction of benefits by the employer was improper, and, if so, (2) the extent to which the claimant should recover benefits improperly withheld.

BOYLE, J. (concurring in part and dissenting in part).

I concur in the majority's holding in Moore, but do so for different reasons. In my view, Justice ARCHER has correctly observed that there was no final judgment in Moore and therefore the doctrine of res judicata is inapplicable. See 1 Restatement Judgments, 2d, § 24(1), p 196; Cohen v Home Life Ins Co, 273 Mich. 469, 473; 263 N.W. 857 (1935). However, unlike Justice ARCHER, I am not persuaded that the defendant waived the challenge regarding minimum benefits by failing to raise it before the hearing referee. It appears that the defendant raised and preserved the benefit rate issue in these proceedings or the proceedings below and that Gusler v Fairview Tubular Products, 412 Mich. 270; 315 N.W.2d 388 (1981), in terms applies to payments made after December 30, 1981. However, it appears that the plaintiff herself failed to raise and preserve the issue of defendant's waiver. I would therefore affirm the decision of the Court of Appeals in Moore.

Thompson v Continental Motors Corp, 320 Mich. 219, 226; 30 N.W.2d 844 (1948).

On the other hand, I agree with both Justice ARCHER'S reasoning and holding in Riley and Juncaj. I write separately only to add a few of my own observations as to the course of the majority opinion in these cases.

The majority asserts that the basis of its holding regarding the effect of res judicata in these cases is the continuing nature of an award of workers' compensation disability, or wage loss, benefits. The majority contrasts workers' compensation benefits in this regard with tort or contract damages. In my view, however, as proper analysis of the dependency provision in Pike v City of Wyoming, 431 Mich. 589; 433 N.W.2d 768 (1988), illustrates, the continuing nature of these payments is relevant in only a few instances, such as a change of physical condition or specific exceptions in the act. These are well-established exceptions to the general rule of res judicata in workers' compensation proceedings repeatedly recognized in the decisions of this Court. See, e.g., Theodore v Packing Materials, Inc, 396 Mich. 152; 240 N.W.2d 255 (1976); Hlady v Wolverine Bolt Co, 393 Mich. 368; 224 N.W.2d 856 (1975). Beyond these carefully crafted exceptions, there is no principled distinction between a final tort or contract judgment and a final decision of the bureau — regardless of how many times this dubious principle may be repeated in dissenting or concurring opinions. The nominal distinction upon which the majority has seized is simply the vehicle for this majority's voiding of the accrued and adjudged rights of these workers. Certainly nothing on these facts justifies a departure from the doctrine of res judicata by an ad hoc ruling of this Court.

See, e.g., Hebert v Ford Motor Co, 285 Mich. 607; 281 N.W. 374 (1938).

See MCL 418.353; MSA 17.237(353).

Indeed, a final order of the bureau is enforceable as a judgment in circuit court. See MCL 418.863; MSA 17.237(863).

The majority relies for its result on the concurrence in Hlady, supra. In addition to the fact that the majority fails to acknowledge that its reliance on Justice LEVIN's view of res judicata, sub silentio, overrules holdings in Hlady and Gose v Monroe Auto Equipment Co, 409 Mich. 147; 294 N.W.2d 165 (1980), the majority focuses on Justice LEVIN'S view that an intervening change of law eliminates the bar of res judicata as to "a claim for continuing disability benefits," Hlady, supra, p 385 (emphasis in the original). Because the Legislature has said that changes in facts may in certain circumstances permit a change in benefits, the majority concludes that this Court as a matter of its own policy determination can permit relitigation where the facts have been finally adjudicated and the new litigation is based on a subsequent change in the law. From this incorrect premise the majority reaches the final result that Gusler "implicitly stated" that res judicata would not preclude the reduction of benefits in finally adjudicated unappealed litigation, cases, it must again be emphasized, that do not involve any change in facts. As this Court held in Hlady, supra, p 380, "res judicata bars this from happening."

I cannot agree that the language in Gusler regarding the prospective application of the decision was intended to implicitly overrule the holding in Hlady that res judicata precludes a collateral attack on a claim for continuing benefits with a later change in law. Hlady is not even cited in Gusler, and two members of the Hlady majority joined the Gusler result. Indeed, were I to conclude that the broad dictum of the "penultimate" paragraph of Gusler could be so construed, Gusler would be precedent of the most questionable sort.

I, of course, take no position in the context of this case, on the substantive ruling of Gusler regarding adjusted minimum benefits.

For the reasons stated in my dissent in Pike, supra, I cannot accept the majority's conclusion that collateral attacks upon the amount of compensation, as opposed to eligibility, are always permissible. There is neither a theoretical basis for this distinction nor a practical limit to its application. In truth, the majority's conclusion in this case, as well as in the concurring opinion of Justice BRICKLEY and the concurring opinion of Justice LEVIN in Hlady, turns the matter of collateral attack on an award of continuing benefits into a question of policy to be decided on an ad hoc basis by four members of this Court. The bench and bar are therefore without guidance as to how this exception will be applied. This case and Pike suggest that the refinements of this rule will emerge in the process of finding either that any change in governing law permits reopening of a final award or that some collateral attacks are more fair than others. In either event, the ultimate result is an unwarranted alteration of the doctrine of res judicata in workers' compensation proceedings.

While Justice BRICKLEY nominally endorses a "hybrid" rule of res judicata in workers' compensation proceedings, finality exists only until "`a subsequent petition based on changed circumstances that would not have been present at the previous litigation is filed. . . .'"

In Hlady, supra, p 387, Justice LEVIN stated:

The law can be changed by legislative enactment or court decision. When the Legislature amends a statute, its applicability to a case previously adjudicated is not analyzed in terms of res judicata. The issue then is one of statutory construction: did the Legislature intend the amendment to have retroactive as well as prospective application? Where the change is effected by court decision the analysis should be the same, whether as a matter of policy the new rule of law should apply retroactively as well as prospectively.

This is nowhere more apparent than in the majority's quotation from Justice LEVIN in Riley:

Were this Court to give preclusive effect to a prior adjudication that was based on Jolliff [ v American Advertising Distributors, Inc, 49 Mich. App. 1; 211 N.W.2d 260 (1973)] as to payments of workers' compensation benefits after Gusler it would perpetuate, in the name of a judicial doctrine, a judicial error in construing a statute that thwarts legislative intent. [ Riley v Northland Geriatric Center, 425 Mich. 668, 690; 391 N.W.2d 331 (1986).]

The same could be said about any application of the doctrine of res judicata involving a prior construction of the Workers' Disability Compensation Act. I would respond that ignoring the doctrine of res judicata results in the summary alteration of benefits for many litigants who have never been given an opportunity to address the issue in any court or administrative proceedings. It is not erroneous to apply the doctrine of res judicata in this instance. To the contrary, an application of this doctrine to preclude a reopening of this litigation is both technically correct and manifestly just.

I therefore dissent in Riley and Juncaj.

CAVANAGH, J., concurred with BOYLE, J.

ARCHER, J. (dissenting).

The majority resolves the conflict present in the Court of Appeals application of this Court's decision in Gusler v Fairview Tubular Products, 412 Mich. 270; 315 N.W.2d 388 (1981), by holding that (1) the doctrine of res judicata does not bar relitigation of the plaintiff's minimum weekly benefit rate under § 351(1), and (2) our decision in Gusler is retroactively applicable to those parties receiving minimum rate benefits at the time of the decision's release irrespective of their date of injury.

I respectfully dissent and would hold that res judicata bars relitigation of the plaintiffs' minimum benefit levels. I would affirm the decision of the Court of Appeals in Riley, while I would reverse its decision in Juncaj. Accordingly, I find it unnecessary to address the retroactive application of the Gusler decision in these two cases. However, with regard to Moore, I would hold that Gusler is not retroactively applicable because the defendant waived the § 355 issue by its failure to assert it before the WCAB prior to December 30, 1981, Gusler's release date.

The doctrine of res judicata bars relitigation of all matters factual and legal, which were either adjudicated or adjudicable at the time of trial:

The doctrine of res judicata operates to prevent the relitigation of facts and law between the same parties or their privies. The plea of res judicata applies to points previously litigated and decided as well as to points "`which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.'" [ Socialist Workers Party v Secretary of State, 412 Mich. 571, 583-584; 317 N.W.2d 1 (1982). Citations omitted.]

The lead opinion argues, and I agree, that the doctrine of res judicata is not to be mechanistically applied. However, this Court should be hesitant in deviating from the doctrine where it would serve to reward dilatory parties.

I find the instant case indistinguishable from our decision in Hlady v Wolverine Bolt Co, 393 Mich. 368; 224 N.W.2d 856 (1975). In 1947, Hlady was awarded specific loss benefits for the amputation of four fingers under the predecessor of § 361 of the WDCA, MCL 418.361; MSA 17.237(361). Once the specific loss benefits expired, existing precedent disallowed continuing general disability benefits premised upon a condition deemed "normally resultant" from an amputation. This Court and the WCAB denied plaintiff continuing benefits, finding her postamputation condition did not exceed the "normally resultant" standard. Hlady v Wolverine Bolt Co, 325 Mich. 23; 37 N.W.2d 576 (1949). However, in Van Dorpel v Haven-Busch Co, 350 Mich. 135; 85 N.W.2d 97 (1957), an evenly divided court found plaintiff's class of recipients were entitled to continuing benefits. Nearly three decades after her original award, Hlady again appealed, seeking continuing general disability benefits, apparently in light of Van Dorpel's challenge to the "normally resultant" standard. Although the Court adopted the Van Dorpel position, we nonetheless denied plaintiff's claim upon res judicata grounds:

Mary Hlady's physical condition has not changed since her 1945 injury. The only change has been in the law applied to cases of this nature. However, it has long been the law of this state, starting with the leading case of Jacobson v Miller, 41 Mich. 90; 1 N.W. 1013 (1879), that the doctrine of res judicata applies not only to facts previously litigated, but also to points of law which were necessarily adjudicated in determining and deciding the subject matter of the litigation.

* * *

Plaintiff may not concede an issue, necessarily determinative of and included in the judgment of this Court, and then, after another has successfully raised the issue she did not wish to contest, ask the Court again for relief. The doctrine of res judicata bars this from happening. Mary Hlady could have as easily raised this issue as Peter Van Dorpel. It was, in fact, incumbent upon her to do so if she wished to avail herself of that interpretation. [ 393 Mich. 376, 380.]

As in Hlady, two of the three instant defendants seek to evade res judicata so as to revisit the same case and merely apply new law upon an adjudicated issue that was never reserved for appeal. On November 20, 1979, this Court specifically granted leave to appeal upon the issue whether § 355 applied to the minimum as well as maximum weekly rates for total disability as available under § 351 of the WDCA:

The parties are directed to include among the issues to be briefed whether the cost-of-living increases in workers' disability compensation benefits, provided for in MCL 418.355; MSA 17.237(355), apply to the minimum as well as the maximum weekly rates for total disability, as set forth in MCL 418.351; MSA 17.237(351)? [ Gusler v Fairview Tubular Products, 407 Mich. 926 (1979).]

Clearly, our published and issue-specific grant of leave to appeal placed the parties on notice as to the viability of challenging § 355's application to minimum-rate benefits. In Riley, the Court's order in Gusler was issued prior to the plaintiff's original hearing before the hearing referee in 1981, although the defendant neither raised the issue before the hearing referee nor appealed. In Juncaj, although the Court's order was not available at the time of the original hearing, the defendant also failed to appeal.

The opinion of the hearing referee was released on October 6, 1981.

The decision of the hearing referee was released on July 19, 1978.

This Court should be hesitant to extend the defendants an additional opportunity to raise this defense. It is not incumbent upon this Court to reward any other party's inaction. Accord Pike v City of Wyoming, 431 Mich. 589; 433 N.W.2d 768 (1988) (BOYLE, J., dissenting); Hackley v Hackley, 426 Mich. 582; 395 N.W.2d 906 (1986).

A compensation award represents "`an adjudication as to the condition of the injured workman at the time it is entered.'" Theodore v Packing Materials, Inc, 396 Mich. 152, 158; 240 N.W.2d 255 (1976), citing 58 Am Jur [Workmen's Compensation, § 508]. Disability benefits "are a form of income maintenance for persons whose wage-earning capacity has been suspended or terminated. A claimant's entitlement to such benefits depends on the circumstances at the time of application and payment." Hlady, supra, 391 (LEVIN, J., concurring).

The requirement that he present all of his available claims in a single proceeding is consistent with this purpose of adjudicating the worker's needs. The remedial character of the legislation, if affected at all by this rubric, would scarcely be enhanced by a construction which would authorize piecemeal compensation for an injury. [ Gose v Monroe Auto Equipment Co, 409 Mich. 147, 161-162; 294 N.W.2d 165 (1980). Emphasis added.]

I find our rationale in Gose equally calls for employers to timely submit all available defenses. Therefore, I would hold that the plaintiffs should not be subjected to the relitigation of their minimum benefit rates and should enjoy the finality res judicata affords.

However, in Moore, I agree with the defendants that the doctrine of res judicata is inapplicable. In Moore, the defendant had an appeal pending before the WCAB at the time that our decision in Gusler was released. Because this appeal was timely filed, there is no question that there was not a final decision upon plaintiff's benefit award. Nonetheless, I find that the defendant's failure to state the § 355 issue with specificity, effectively waived its entitlement to the Gusler defense.

In this regard, I would adopt the position advocated by the Court of Appeals in Riley v Northland Geriatric Center (On Remand), 160 Mich. App. 507, 513; 408 N.W.2d 489 (1987), which states, in pertinent part:

We believe that when our opinion today is read with the above-quoted language of Gusler, the net effect is that Gusler will apply to all cases commenced after December 30, 1981, the date that opinion was issued, and to those cases pending in the Bureau of Workers' Disability Compensation, the WCAB, or an appellate court on December 30, 1981, in which the issue of § 355 reductions was raised.

Defendant argues that it was sufficient that its case was pending before the WCAB at the time the Court's decision was released in Gusler. I disagree. I believe the more important question is whether the defendant raised the issue at the time the appeal was filed or at any time prior to the release of the Court's decision on December 30, 1981. The answer to this question is "no." On January 27, 1982, the defendant addressed a letter to the WCAB asking whether its appeal would be dismissed if the defendant reduced its payments in reliance upon Gusler. This same letter contained an "amendment to answer," claiming Gusler as a defense. Thus, it is obvious that at the time the defendant had raised its appeal, it did not raise the minimum benefit levels addressed in Gusler. Therefore, I would hold that the defendant's failure to specifically raise the § 355 issue does not entitle it to raise the defense at this date.

III

Accordingly, I would affirm the decision of the Court of Appeals in Riley. However, I would reverse its decisions in Juncaj and Moore, and affirm the decisions of the Workers' Compensation Appeal Board.