## Facts

- Tony J. Daniel worked as a probation officer for the Michigan Department of Corrections (DOC) and regularly interacted with defense attorneys at probation violation hearings.
- A female defense attorney complained that Daniel sexually harassed her during two encounters; three other female attorneys later made similar allegations.
- The DOC investigated and convened a disciplinary conference on multiple counts of sexual harassment; Daniel denied the allegations and presented no defense at the conference.
- The presiding official found a strong basis to conclude Daniel violated DOC work rules; the DOC ultimately imposed discipline for two counts, including a ten-day unpaid suspension.
- After the disciplinary process, Daniel reported psychological symptoms and was diagnosed with depression attributed to work stress and the investigation/disciplinary proceedings.
- Daniel filed a workers’ compensation claim for a work-related mental disability; a magistrate awarded benefits, finding disabling depression, anxiety, and uncontrolled anger arising out of employment.
- The Workers’ Compensation Appellate Commission (WCAC) reversed, denying benefits under MCL 418.305 on the ground that Daniel’s injury was “by reason of his intentional and wilful misconduct.”
- The Michigan Court of Appeals reversed the WCAC, concluding the statutory bar did not apply.
- The Michigan Supreme Court granted review.

## Issues

1. Whether a mental disability caused by workplace disciplinary proceedings is an “injur[y] by reason of [the employee’s] intentional and wilful misconduct” barred from compensation under MCL 418.305.
2. Whether the statutory phrase “by reason of” requires the injury to occur during the misconduct itself, or instead permits denial where the injury results from consequences of the misconduct (such as discipline).

## Decision

- The Michigan Supreme Court reversed the Court of Appeals and reinstated the WCAC’s denial of benefits.
- The Court held Daniel’s depression was an injury “by reason of” his intentional and willful misconduct within the meaning of MCL 418.305.
- The Court accepted the WCAC’s factual finding that Daniel repeatedly engaged in sexually harassing conduct while aware of rules prohibiting it.
- The Court concluded the causal link was satisfied because Daniel’s mental injury resulted from disciplinary proceedings triggered by his misconduct, not from ordinary job stress.

## Legal Principles

- Under MCL 418.305, workers’ compensation is unavailable when an employee is injured “by reason of” the employee’s intentional and wilful misconduct.
- “By reason of” requires a sufficient causal relationship between the injury and the misconduct; the injury need not occur simultaneously with the misconduct or be the immediate physical result of the act.
- A mental injury attributable to disciplinary proceedings may be barred when the proceedings are a consequence of the employee’s intentional violation of workplace rules and the injury flows from that consequence.
- Reviewing courts should not displace the WCAC’s supported factual determinations on whether conduct constitutes intentional and willful misconduct for purposes of the statutory bar.

## Conclusion

The court held that an employee who develops a compensable mental disability after discipline may be denied benefits under MCL 418.305 when the disability is causally attributable to disciplinary proceedings initiated because of the employee’s intentional and willful workplace misconduct.


Daniel v. Dep't of Corr., 658 N.W.2d 144 (Mich. 2003)