DAN S STIMULUS PLAN: CASE LAW UPDATE Presented and Prepared by: Daniel R. Simmons dsimmons@heylroyster.com Springfield, Illinois 217.522.8822 The cases and materials presented here are in summary and outline form. To be certain of their applicability and use for specific claims, we recommend the entire opinions and statutes be read and counsel consulted. Heyl, Royster, Voelker & Allen PEORIA SPRINGFIELD URBANA ROCKFORD EDWARDSVILLE 2009 Heyl, Royster, Voelker & Allen B-1
DAN S STIMULUS PLAN: CASE LAW UPDATE I. EXCLUSIVE REMEDY... B-3 II. SUBROGATION... B-4 III. LOANING AND BORROWING EMPLOYERS... B-5 IV. TEMPORARY TOTAL DISABILITY... B-5 V. PROCEDURAL MATTERS... B-6 A. Section 19(g) Petitions... B-6 B. Arbitration Decision Recall... B-6 C. IME Report Admissibility... B-7 D. Law of the Case... B-7 E. Failure to File Statement of Exceptions... B-7 F. Release... B-8 VI. MISCELLANEOUS CASES... B-8 A. MBA PTD... B-8 B. Accident... B-9 C. Undocumented Aliens... B-9 D. Uninsured Motorists Coverage... B-9 E. Choice of Doctors... B-9 B-2
DAN S STIMULUS PLAN: CASE LAW UPDATE I. EXCLUSIVE REMEDY Ioerger v. Halverson Const. Co. Inc., 232 Ill. 2d 196, 902 N.E.2d 645, 327 Ill. Dec. 524 (2008) Iron workers brought a personal injury action against a construction company that was a member of a joint venture and the joint venture for injuries they received when a scaffolding collapsed at a bridge repair site. The circuit court granted the defendants motion for summary judgment. The Appellate Court reversed and remanded on grounds that the construction company and joint venture were not immune under the Workers Compensation Act. The Supreme Court granted the defendants petition for leave to appeal. The Supreme Court reversed and affirmed the circuit court s original ruling that the co-venturer was immune from suit pursuant to the exclusive remedy provision of the Workers Compensation Act. Under Illinois law, joint ventures are governed by partnership principles. A joint venture is essentially a partnership carried on for a single enterprise. The joint venture was required to reimburse the employer for labor costs, including workers compensation insurance premiums. The Court held that the co-venturer of the injured workers employer was an agent of the employer and therefore was immune from personal injury suit under the exclusive remedy provision of the Workers Compensation Act. Kolacki v. Verink, 384 Ill. App. 3d 674, 893 N.E.2d 717, 323 Ill. Dec. 445 (3d Dist. 2008) An employee of a veterinary clinic was kicked in the head by a horse. She brought suit against the land owners who leased their property to the clinic, alleging violations of the Illinois Animal Control Act and negligence. The circuit court found that the employee s action was barred by the exclusive remedy provision of the Workers Compensation Act. The Appellate Court affirmed. The Court held that the employee failed in her burden to show that workers compensation laws dual capacity doctrine applied so as to allow the negligence suit to go forward against the landowner who also owned the clinic. Under the dual capacity doctrine, a defendant who is protected by the exclusive remedy provision of the Workers Compensation Act may become liable in tort if he acted in a second capacity that creates obligations independent of those imposed on the defendant as an employer. The only business being conducted on the premises was the business of the veterinary clinic. The veterinary clinic provided medical treatment and boarding services for horses, therefore the landowner was not acting in a dual capacity as an owner of a separate business. The duties of the landowner as property owner were so intertwined with their duties as owner and employee of the clinic that the two capacities could not be separated. Uphold v. Illinois Workers Compensation Comm n, 385 Ill. App. 3d 567, 896 N.E.2d 828, 324 Ill. Dec. 752 (5th Dist. 2008) The Workers Compensation Commission affirmed an arbitrator s decision that the petitioner could pursue workers compensation benefits under either the state s workers compensation law or under the federal Long Shore Harbor Workers Compensation Act. The circuit court set aside the Commission decision. The Appellate Court affirmed. If an employee is injured on navigable waters while engaged in traditional maritime activity, jurisdiction under the Long Shore and Harbor Workers Compensation Act is exclusive. B-3
Ship repair is a traditional maritime activity. The petitioner injured his back while vacuuming a barge. Accordingly, jurisdiction was exclusively under the Long Shore and Harbor Workers Compensation Act. It should be noted that the petitioner argued for dual jurisdiction, while the employer argued that Illinois Workers Compensation law was not applicable. II. SUBROGATION Pederson v. Mi-Jack Products, Inc., Nos. 1-07-2327, 1-07-3228, 2009 WL 650628 (1st Dist. March 10, 2009) The plaintiff brought suit two days before the expiration of the two-year statute of limitations. The defendants eventually brought a third-party complaint for contribution against the plaintiff s employer. After a variety of missteps in the underlying case, the plaintiff was faced with the possibility of having summary judgment entered against him. He also dismissed his former attorneys and filed a malpractice suit against them. He then negotiated a compromise settlement with the defendants; however, the employer s workers compensation insurance carrier objected to the settlement because it was for substantially less than the workers compensation lien. The employer sought to be substituted in to pursue reimbursement of its workers compensation lien. The plaintiff asked the trial court to enforce the settlement and adjudicate the workers compensation lien. The trial court refused. The Appellate Court reversed. Section 5(b) of the Illinois Workers Compensation Act provides that the employer may file suit to seek subrogation recovery of its workers compensation lien against a third party at any time within three months of the expiration of the statute of limitations. In this case, the employer did not file suit within three months of the expiration of the statute of limitations. Accordingly, pursuant to the express provisions of the Act, the employer did not have the right to intervene as a plaintiff in the employee s law suit absent the employee s consent. Hollywood Trucking, Inc. v. Watters, 385 Ill. App. 3d 237, 895 N.E.2d 3, 324 Ill. Dec. 3 (5th Dist. 2008) An interstate motor carrier brought an action against a physician and medical provider who performed a Department of Transportation examination of the truck driver that it later employed. The suit alleged negligence, fraud and fraudulent misrepresentation relating to the examination. The circuit court dismissed the fraud and fraudulent misrepresentation claims. The Appellate Court affirmed. Among other things, the interstate motor carrier wanted to recover workers compensation benefits paid to its employee on the theory that the driver fraudulently misrepresented his physical condition at the time of his hiring. The Appellate Court ruled that there was no jurisdiction to consider that claim. In order for the Court to be able to consider the claim for recovery, the Court would have to determine factual issues concerning accident, nature and extent and the carrier s possible defenses. Given that all of those determinations fell within the Workers Compensation Commission s exclusive jurisdiction, the trial court had no jurisdiction to consider the motor carrier s claim. In cases involving a determination of an employee s entitlement to workers compensation benefits and the employer s defenses to the claim, the circuit court s role is appellate only. B-4
III. LOANING AND BORROWING EMPLOYERS Surestaff, Inc. v. Open Kitchens, Inc., 384 Ill. App. 3d 172, 892 N.E.2d 1137, 323 Ill. Dec. 145 (1st Dist. 2008) A loaning employer brought an action against a borrowing employer to recover workers compensation benefits paid as a result of the death of a borrowed employee. The circuit court entered judgment on a jury verdict in favor of the loaning employer. The Appellate Court affirmed. A borrowing employer that seeks to avoid reimbursing a loaning employer for workers compensation benefits paid as a result of the death of a borrowed employee has the burden to establish the existence of an agreement by the loaning employer waiving its statutory right to reimbursement. There was no such agreement, therefore the reimbursement was allowed. Hester v. Gilster-Mary Lee Corp., 386 Ill. App. 3d 1104, 899 N.E.2d 589, 326 Ill. Dec. 372 (5th Dist. 2008) A worker who was assigned to a company by an employment agency brought a retaliatory discharge action against the company, alleging that she was refused further work in retaliation for testifying in a workers compensation proceeding. The circuit court granted the company s motion to dismiss. The Appellate Court reversed. The Court held that, as a matter of first impression, a borrowed employee could maintain a retaliatory discharge claim against a borrowing employer. To the extent that an employee could maintain an action against an employer for retaliatory discharge as a result of activities engaged in by the employee which are protected by the Workers Compensation Act, an action is also available to a borrowed employee against a borrowing employer because borrowing employers are entitled to claim the protections of the Illinois Workers Compensation Act. IV. TEMPORARY TOTAL DISABILITY Weyer v. Illinois Workers Compensation Comm n, 387 Ill. App. 3d 297, 900 N.E.2d 360, 326 Ill. Dec. 724 (1st Dist. 2008) The Workers Compensation Commission found that the petitioner was not entitled to temporary total disability benefits for a shoulder lesion. The circuit court affirmed. The Appellate Court affirmed. This was the second proceeding for the petitioner. He successfully won temporary total disability in the first proceeding. The Appellate Court noted that each proceeding on a workers compensation claimants claim for temporary total disability benefits as a separate proceeding, limited to a determination of temporary total disability up to the date of the hearing. Each TTD decision is a separate and appealable order. Accordingly, a prior decision finding that the shoulder injury was caused by the work-related accident was not law of the case in the subsequent TTD proceeding on the issue of whether the claimant s shoulder condition as it existed at the time of the subsequent proceeding was causally related to the accident. The arbitrator could correctly find that, while the accident caused an aggravation of a pre-existing shoulder condition, the aggravation had resolved itself by the date of the hearing in the subsequent proceeding. Interstate Scaffolding, Inc. v. Illinois Workers Compensation Comm n, 385 Ill. App. 3d 1040, 896 N.E.2d 1132, 324 Ill. Dec. 913 (3d Dist. 2008) An injured employee who had been returned to B-5
light duty work filed an application for adjustment of claim after he was terminated for writing religious graffiti on storage room walls. The arbitrator declined to award TTD benefits subsequent to the dismissal. The Commission found that the employee was entitled to TTD. The circuit court affirmed. The Appellate Court reversed. There was no question that the employee had not reached maximum medical improvement by the time that he was discharged by his employer. That the injured employee engaged in conduct that led to his termination meant that he removed himself from the work force as a result of his conduct that was unrelated to his injury, therefore he was not entitled to TTD benefits. V. PROCEDURAL MATTERS A. Section 19(g) Petitions Hagene v. Derek Polling Const., No. 5-07-0225, 2009 WL 503454 (5th Dist. Feb. 24, 2009) The petitioner filed a section 19(g) Petition to reduce a lump sum settlement agreement to judgment. The trial court dismissed the petition. The Appellate Court reversed. The settlement indicated that the respondent had paid all of the petitioner s medical bills; however, three past medical bills remained unpaid. The first page of the settlement contract contains a section called Medical Expenses. The yes box was checked to show that all medical expenses had been paid. There was also a space to list unpaid medical expenses. The settlement contract was blank in that space. The terms of settlement indicated that all medical expenses were resolved as part of the settlement agreement. The Court noted that the contract language did not contain any separate payment for medical expenses. The Court stated that [w]hen we consider the entire contract in the context of all the surrounding circumstances, we conclude that the parties did not intend to discharge the respondent s statutory obligation to pay the petitioner s past related medical bills. The surrounding circumstances indicated that the respondent had paid all of the petitioner s medical bills. As a result, the respondent was obligated to pay the unpaid medical bills. B. Arbitration Decision Recall Smalley Steel Ring Co. v. Illinois Workers Compensation Comm n, 386 Ill. App. 3d 993, 900 N.E.2d 1161, 326 Ill. Dec. 914 (2d Dist. 2008) A claimant filed an application for workers compensation benefits that were awarded by the arbitrator. After the arbitrator issued the decision, the employer filed an emergency motion to recall the arbitrator s decision and reopen proofs. The employer discovered new evidence to show that the plaintiff lied about his identity and that he had actually suffered the same injury while working for a different employer and obtained benefits under the Act. The arbitrator recalled the decision and found that the claimant was not entitled to benefits. The Commission reversed and the circuit court affirmed the Commission. The Appellate Court also affirmed. Section 19(f) of the Act provides that the only legitimate basis for recalling an arbitrator s decision is for correction of a clerical or computational error. Accordingly, the arbitrator lacked jurisdiction to recall the decision on the employer s motion alleging fraud. The Court noted that a party may maintain an action in circuit B-6
court to obtain relief from a judgment based on fraud, therefore the employer was not without a remedy. C. IME Report Admissibility City of Chicago v. Illinois Workers Compensation Comm n, 387 Ill. App. 3d 276, 899 N.E.2d 1247, 326 Ill. Dec. 596 (1st Dist. 2008) A petitioner was awarded permanent total disability benefits. At the Appellate Court level, the Court held that the Commission committed reversible error when it excluded the independent medical evaluation report from the employer s physician and remanded the case for further proceedings. The IME report was not allowed in evidence because it was not tendered to the treating physician before the physician s deposition. The IME was not conducted until after the physician s deposition, and the report was tendered to the claimant a few days after the examination and well before the arbitration hearing. The purpose of the statute requiring the exchange of IME reports no later than 48 hours before a case was set for hearing was to prevent surprise medical testimony at the arbitration hearing. The Court found that the arbitration hearing did not start at the time that the treating physician was deposed. D. Law of the Case Ming Auto Body/Ming of Decatur, Inc. v. Industrial Comm n, 387 Ill. App. 3d 244, 899 N.E.2d 365, 326 Ill. Dec. 148 (1st Dist. 2008) The Appellate Court held that after the arbitrator and Workers Compensation Commission found that the claimant had sustained an employment related accident and that the injury was causally related, the law of the case doctrine precluded the arbitrator and the Commission from revisiting those questions in the subsequent permanency hearing even if the claimant had engaged in fraud. The Court noted that the employer could bring an action before the circuit court to seek relief from a judgment of the Commission based on fraud pursuant to section 19(f) of the Act. E. Failure to File Statement of Exceptions Kline Const. v. Illinois Workers Compensation Comm n, 384 Ill. App. 3d 233, 892 N.E.2d 112, 322 Ill. Dec. 865 (1st Dist. 2008) A claimant failed to file a statement of exceptions in his petition for review. The Appellate Court held that the failure to file a statement of exceptions did not result in waiver of all of the issues raised in the appeal. The administrative rule requiring a statement of exceptions states that the Commission would consider only issues raised in both the petition for review and the statement of exceptions. On the other hand, the Workers Compensation Act mandates review of all questions appearing from the transcript once a petition for review is filed. Specifically, section 19(e) of the Act states that if a petition for review and agreed statement of facts or transcript of evidence is filed,.... the Commission shall promptly review the decision of the arbitrator and all questions of law or fact which appear from the statement of facts or transcript of evidence. Administrative rules that are in conflict with a statute are invalid. Accordingly, once a timely petition to review an arbitrator s decision has been filed along with an agreed statement of facts or a transcript of the evidence, the Commission is B-7
obligated to review all questions of law or fact which appear from the transcript of evidence even if no statement of exceptions is filed. F. Release Maxit, Inc. v. Van Cleve, 231 Ill. 2d 229, 897 N.E.2d 745, 325 Ill. Dec. 206 (2008) An employer filed a complaint against its employee alleging that the employee breached a settlement release by continuing to pursue his workers compensation claim after signing a release. The employee filed a counterclaim alleging that the employer had fraudulently induced him to sign the release. The circuit court granted the employer s motion for summary judgment. The Appellate Court reversed. The Illinois Supreme Court granted leave to appeal and affirmed the Appellate Court. There was a dispute concerning whether the release that the employee signed covered only underinsured motorists claims or both underinsured motorists and workers compensation claims. The Supreme Court held that even if one assumed that the release was intended to apply to both underinsured motorists claims as well as workers compensation claims, the workers compensation claims could not be released in the absence of approval from the Workers Compensation Commission. Section 23 of the Workers Compensation Act specifically provides that no employee shall have the power to waive any of the provisions of the Act with regard to the amount of compensation payable except after approval by the Commission. Accordingly, even if the release was valid and covered the workers compensation claim, the employee did not have legal authority to waive section 23 of the Act which requires Commission approval of the settlement. VI. MISCELLANEOUS CASES A. MBA PTD Ameritech Services, Inc. v. Illinois Workers Compensation Comm n, No. 1-08-1412WC, 2009 WL 723476 (1st Dist. March 17, 2009) The petitioner worked for Ameritech as a universal account executive. The petitioner was 30 years old and had an MBA. The treating physician concluded that the petitioner could no longer do his previous job. The employer s medical expert also agreed that the petitioner should be restricted to lifting no more than 15 pounds. The claimant s vocational rehabilitation expert testified that the petitioner was permanently and totally disabled. She found that the petitioner had transferrable skills in the areas of accounting, finance, marketing and customer service. She did a labor market survey, but believed that the petitioner would not be a candidate for any of the jobs identified. She offered an opinion that it was unlikely that an employer would hire the petitioner over an able bodied candidate and, even if he was hired, the petitioner would not be able to continue working. She did not explore the availability of any non-skilled jobs for the claimant. The burden was then on the respondent to show that work was available. The respondent did not introduce testimony of a vocational rehabilitation expert to contradict the petitioner s expert. They did have a psychological expert. However, she did not perform a labor market survey and did not comment on the effect of his physical limitations and restrictions on his ability to obtain and hold work in the labor market. B-8
B. Accident City of Springfield v. Illinois Workers Compensation Comm n, No. 4-08-0170WC, 2009 WL 475292 (4th Dist. Feb. 11, 2009) The Appellate Court upheld consistent rulings from below that the petitioner sustained a compensable, repetitive use work injury. The Court found that the evidence was sufficient to establish a repetitive trauma injury where the petitioner had to operate hand held tools for at least five hours per eight hour work day. C. Undocumented Aliens Economy Packing Co. v. Illinois Workers Compensation Comm n, 387 Ill. App. 3d 283, 901 N.E.2d 915, 327 Ill. Dec. 182 (1st Dist. 2008) The Commission awarded the claimant, an undocumented alien, workers compensation benefits. The Appellate Court affirmed. The Court held that all aliens in the service of another pursuant to a contract for hire, regardless of their immigration status, are considered employees within the meaning of the Workers Compensation Act. Accordingly, the mere fact that the claimant is an undocumented alien does not preclude him from recovering workers compensation benefits. D. Uninsured Motorists Coverage Taylor v. Pekin Ins. Co., 231 Ill. 2d 390, 899 N.E.2d 251, 326 Ill. Dec. 34 (2008) An employee who was injured in an automobile accident with an uninsured motorist during the course of his employment brought a declaratory judgment action against his employer s insurer that provided both workers compensation and automobile insurance coverage. He claimed that the insurer was not allowed to deduct from his uninsured motorist award the full amount of his workers compensation award without a deduction of 25 percent for attorney s fees. The circuit court dismissed the action. The Appellate Court reversed. The Supreme Court granted leave to appeal and reversed the Appellate Court and affirmed the circuit court. The Supreme Court held that the insurer had a contractual right of set off rather than a right of reimbursement, therefore the insurer was not required to pay a portion of the fees for the attorney for the employee. The Court found that the 25 percent attorney fee rule did not apply where the claimant obtained recovery for his injuries through his employer s uninsured motorist coverage rather than from the third-party motorist. Accordingly, the insurer, which provided both UM coverage and workers compensation coverage and which had a contractual right in the automobile insurance policy to a set off against UM benefits for recovery under workers compensation law, was not required to deduct from its contractual set off 25 percent for attorney s fees. E. Choice of Doctors Comfort Masters v. Workers Compensation Comm n, 382 Ill. App. 3d 1043, 889 N.E.2d 684, 321 Ill. Dec. 419 (1st Dist. 2008) The Appellate Court held that the claimant s two visits to an acupuncturist for massages did not exhaust the claimant s second choice of physician. The statute applies to treatment from a physician, surgeon or hospital. The Court held that the B-9
acupuncturist was not a physician, surgeon or hospital, therefore going to the acupuncturist did not count as a choice of physician for purposes of the rule. B-10
Daniel R. Simmons - Partner Dan concentrates his practice in the areas of workers' compensation and general insurance defense, including auto liability, premises liability and third party defense of employers. Since graduation from law school in 1984, he has spent his entire legal career at Heyl Royster in the Springfield office. He became a partner in 1996. Dan has extensive litigation experience. He has taken numerous cases to jury verdict both in state and federal courts. Additionally, he has arbitrated hundreds of workers' compensation claims before the Illinois Workers' Compensation Commission. Dan appreciates that his clients' goal is to conclude claims in the most efficient, economical means possible and strives to achieve that goal through motion practice, settlement or trial. Dan is a frequent author and lecturer on civil liability and workers' compensation issues. His speaking is both to clients and to Illinois attorneys for continuing legal education. Dan continues to provide writing and speaking services to the Property Loss Research Bureau/Liability Insurance Research Bureau's annual conference that is routinely attended by over 2,500 senior claims professionals from around the United States. Professional Recognition Martindale-Hubbell AV Rated Professional Associations Lincoln-Douglas American Inn of Court (past president and program director) American Bar Association Illinois State Bar Association Sangamon County Bar Association Central Illinois Claims Adjusters' Association Court Admissions State Courts of Illinois United States District Court, Central District of Illinois United States Court of Appeals, Seventh Circuit Education Juris Doctor, University of Iowa, 1984 Bachelor of Arts (Magna Cum Laude) - Political Science, Speech and Humanities, Augustana College, 1981 Dan is a past president and program director of the Lincoln-Douglas American Inn of Court. The Inn is designed to promote legal education, civility and collegiality among members of the bar. B-11 Learn more about our speakers at www.heylroyster.com