Appellate Court Nails another One

Wednesday, March 25, 2015 | 0

The Illinois 5th District Appellate Court ruled the Illinois Workers' Compensation Commission, not the Circuit Court, has exclusive jurisdiction to decide whether a claimant who settled a third-party lawsuit resulting from a work-related accident may also pursue workers' compensation benefits from his employer after resolving the initial lien.
 
In Bradley v. City of Marion, plaintiff Bradley had been injured in an automobile accident while working for the City of Marion and initially sought recovery from the motorist who arguably caused the accident. He settled that case for $650,000 and as part of the settlement Bradley reimbursed Marion $190,112.89 for their current workers' compensation benefits it had paid and voluntarily dismissed his workers' compensation claim after Marion and its insurer, the Illinois Public Risk Fund, released the existing lien in writing. Bradley then filed a new workers' compensation claim after the City and its insurer released their lien and the City argued Bradley waived his right to further workers' compensation benefits when he settled the third-party suit and received the lien release.
 
Bradley filed a complaint for declaratory judgment at the Williamson County Circuit Court based on his argument there was no waiver or closure of workers' compensation benefits without approval by the Workers' Compensation Commission – and the IWCC had not approved any waiver.
 
Marion/Public Risk filed a counterclaim and requested declaratory judgment for breach of contract and also argued Bradley waived his right to benefits. The trial court decided there was no jurisdiction to consider the disputes since benefits under the Workers' Compensation Act were the sole function of the Commission who had exclusive jurisdiction and the Appellate Court affirmed there was no jurisdiction for the same reason.
 
Both sides of the bar can understand the frustration of a case where there is a third-party issue, and with a settlement for $650,000, which included reimbursement of $190,112.89 for WC benefits paid, it seems reasonable that Marion and its defense counsel would have considered the WC claim ended with the voluntary dismissal. Realistically, in hindsight they would have been much better with a $1 workers' comp settlement contract along with the return of the lien amount. The act is very clear in Section 23 in noting a claimant "cannot waive the amount of compensation which may be payable to the employee except after approval by the Commission." 820 ILCS 305/23.
 
There appears to be a strong argument the lien release "contract" has a substantial issue and no proverbial “meeting of the minds” occurred based upon the significant amount achieved over the lien amount and lack of incentive for Marion to leave additional benefits open and it would appear the best result for each party would be for rescission of that agreement and either some final settlement approved by the IWCC or ongoing benefits to be credited at 75% until the third-party settlement value is exhausted. We will report on the outcome of the claim as it is determined.
 
One final thought – there have been a plethora of new actions in Circuit Courts in Illinois attempting to circumvent the Illinois Workers' Compensation Act and directly sue industry components with attempts at:

•  "Assignment of rights" (which is specifically not allowed for certain portions of workers' comp claims) or
• Interest on unpaid medical bills.

This is generating anti-business and anti-insurance carrier/TPA litigation outside of the Workers' Compensation Commission jurisdiction. For those reasons, it is good to see the Appellate court confirm the exclusive jurisdiction of the Commission for benefits under the Illinois Workers' Compensation Act.

The case is here.

Sean Biery is a partner with Keefe, Campbell, Anderson & Biery Associates, a Chicago workers' compensation defense law firm. This column was reprinted with permission from the firm's client newsletter.