Illinois Work Comp Should Not Make You Wealthy

Wednesday, June 10, 2009 | 0

By Eugene F. Keefe


Synopsis: Beelman Trucking redux.

Editor's comment: In response to an e-mail from a claimant lawyer in central Illinois commenting about his view there is a possible interpretation of the Workers' Compensation Act of this state to allow the outcome rendered by the Illinois Supreme Court in this matter, we want to confirm we don't think an employee should ever get more than lifetime weekly total and permanent disability benefits. When you start to spontaneously "re-interpret" the act so as to add more weekly benefits to lifetime weekly benefits, you walk into a land where you are just abstractly giving away WC benefits beyond need and into wealth. We again assert the Illinois Trial Lawyers Association's participation in Beelman Trucking was focused on making injured workers unnecessarily wealthy at the expense of Illinois employers. We think that is short-sighted, unnecessary and anti-competitive. We also feel it adds confusion and markedly higher costs to the biggest claims — this is an enormous concern to major Illinois ' businesses and government bodies who are struggling to stay afloat in this economy.


With deepest respect to severely injured workers, no one is supposed to get wealthy from WC — it is a backup system to avoid poverty or deprivation when something catastrophic happens. No matter how much money you give him, claimant in Beelman Trucking cannot be made scientifically or medically "whole" based on current medical technology — some day, his employer or its insurance carrier may have to fund surgery if our physicians and scientists find another miracle to allow them to heal the spinal cord and fix amputations. Until then, we assert all of our readers, many of whom own small and mid-sized businesses would never want to pay any injured employee 100% on-demand medical benefits and lifetime weekly benefits with COLA increases for the rest of their lives and then pay them even more money.

And, until May 2009, our 100-year-old Workers' Comp Act had never been interpreted to add PPD to T&P for one injury. That is 100 years of the Supreme Court, Appellate Court and Workers' Compensation Commission either implicitly or overtly telling all of us lifetime medical and weekly total and permanent disability benefits were plenty. However you recraft the Act, we assert more weekly benefits are not needed for such injuries — when an injured employee is being taken care of for life, they are taken care of. Why mess with something that wasn't broken?

We also don't think anyone needs to discuss "employability" for someone who is being paid on a weekly basis for the rest of their life due to a work injury. Again, we walk into the same legal fantasy world where Illinois' moderately disabled police and firefighters get lifetime disability pensions and can also work; albeit not as police or firefighters. If you can work, why do you get a lifetime pension for disability? Some day, someone will start to see this is a cost to taxpayers similar to the millions of people on Social Security Disability benefits who can work but claim to be "disabled" under a weird version of the word. Experts now report such misguided government benefits will bankrupt that federal benefit system by 2037, if we don't do something about it.

If you don't think risk managers from Illinois employers are furious with this unprecedented abstract legal theory to give away their money, you are in the world we feel our courts and commission are now in. No other state, province or country does this. With unemployment in this state at about 10%, we have got to start giving business the sense that we give a darn and want people to be taken care of without anyone getting rich from it. Everyone across the country thinks Illinois WC is as crooked as the rest of our state and the WC system is trying to steal money wherever and whenever possible. We urge our leaders on the union-side and business-side to start to think about turning that vision around.

On another note, we have learned the oral arguments in Beelman Trucking v. Workers' Compensation Commission can be viewed on the Internet where an audio recording is also available. The electronic recordings present an opportunity to see and learn how attorneys argue a case before our highest court and what may catch the justices' interest. You may also note the camera shows a packed court room empty out before the workers' compensation arguments start. Observers jammed the court room for a previous argument over water rights. Workers' comp isn't nearly as spicy.

Readers who are interested in learning more about how benefit entitlements get shaped may want to watch the arguments in the work comp case. The Supreme Court's ruling regarding the trucking accident that happened over a decade ago is, of course, the second interesting aspect. As we have previously advised our readers, we hope the publication and dissemination of video of oral arguments may lead the Appellate Court, Workers' Compensation Division to stop "non-publishing" the vast majority of their rulings under their interpretation of Illinois Supreme Court Rule 23 — the constant implementation of this Rule leads most of their rulings to be kept secret from the public and somehow "non-precedential." With respect to this body, we think judicial secrecy is always a negative. Good, bad, happy or sad, publish, publish, publish and let the rest of us adjust to your wisdom. The audio and video recordings of the Beelman Trucking arguments can be found on the worldwide web at:  http://www.state.il.us/court/Media/On_Demand.asp.
       


Synopsis: Another wonderful ruling certain to keep Illinois risk managers growling — busting one's hip trying to get chips out of a convenience machine is compensable in Illinois under the so-called personal comfort concept that we feel may be better termed "personal discomfort" doctrine.

Editor's comment: You might want to put a "Do Not Bash" sign up by your vending machines following this ruling. In Circuit City Stores v. Illinois Workers' Compensation Commission, (No. 2-08-0722WC May 21, 2009), the Appellate Court, Workers' Compensation Division unanimously reversed the trial court's denial of benefits and reinstated a significant award by the Workers' Compensation Commission. The commission found an injured employee suffered compensable injuries arising out of and in the course of his employment when he fell and fractured his hip helping a fellow employee dislodge a bag of chips from defective vending machine supplied by employer.


Claimant was a car-stereo installer who rammed a vending machine that refused to give up a bag of Fritos. We note it isn't often that retrieving a stuck snack becomes a compensable injury. As often happens when someone pays for snacks that get stuck in a vending machine, the worker first tried shaking the machine set in a hallway just outside a workplace break room. When that didn't help he backed up and jumped and threw his shoulder into it. He fell down with a broken hip and was rushed into surgery. He got over $60,000 in medical benefits, 12+ weeks of lost time and 35% LOU of the leg.

Ramming the vending machine was legally foreseeable because products regularly jammed in it, our appellate court said. For those who argue it is a risk common to the public, we can only say "welcome to Illinois ." Allegedly employees at the store often shook the machine to dislodge snacks. So the court said butting, bashing and shaking the machine were foreseeable and the worker was acting within the scope of his employment when he did so. From the business perspective, no one pays an employee to bash, butt or jump into vending machines. Illinois employers should not have to tell their employees if a stack gets stuck; ask the manager for a refund or assistance to open the machine and don't endanger yourself. Common sense only applies in Missouri or Indiana.

Aaaah — How are Circuit City's Illinois locations doing these days? If you need the citation or have any thoughts send a reply.


Synopsis: Federal Court of Appeals blocks an insured's claim for its own counsel in possible conflict situation in employment practices claim.

Editor's comment: There is always a concern about the need for independent counsel in Employment Practices Liability Insurance (EPLI) claims. This ruling should clear up many of the issues raised by risk and human resources managers about when you can get your insurer to pay for truly independent counsel for your organization.


In National Casualty Co. v. Forge Industrial Staffing Inc. (No. 08-3110 June 3, 2009), the Federal Court was faced with a claim by an insured — Forge Industrial Staffing for their attorney's fees in defending themselves. Fearful that its insurer, National Casualty Corp. ("NCC"), would control its defense in a way that would preclude coverage, Forge declined to accept insurer-appointed counsel to defend it against claims brought before the Equal Opportunity Employment Commission ("EEOC"). The parties filed cross-claims for declaratory judgment seeking to resolve whether an actual conflict of interest existed requiring NCC to reimburse Forge for the costs of retaining independent counsel to defend against the EEOC charges.

NCC issued an insurance policy to Forge Industrial Staffing, a staffing company that places temporary, and occasionally permanent, employees. Among other things, the policy insured Forge against any legal damages stemming from intentional acts, including intentionally discriminating against any of its employees. Four of Forge's former employees filed anti-discrimination charges with the EEOC. As a result of these charges, NCC agreed to defend Forge under the Employment Practices Liability  part of the insurance contract and assigned NCC's own counsel to do so. At the same time, NCC reserved the right to later deny coverage based on any of the exclusions in the policy. Most notably, the policy did not provide coverage for "punitive damage awards" or for any claim arising out of Forge's "willful failure . . . to comply with any law . . . or regulations relating to employment practices."

Forge requested NCC provide independent counsel for Forge because a purported conflict of interest existed as a result of NCC's reservation of rights. Specifically, Forge asserted that whether the policy would indemnify Forge for its alleged conduct depended on how the EEOC charges were defended with respect to the issues of punitive damages and Forge's knowledge of the applicable anti-discrimination laws. When NCC refused to provide independent counsel, Forge hired its own counsel.

The lower court found conflict counsel was not required and Forge appealed. On appeal, Forge argued conflict counsel was required as the possibility punitive damages that were not covered could potentially dwarf any compensatory damages that were covered. Forge further argued mutually exclusive theories of liability existed and appointed counsel could steer the facts of the case to the non-covered theories. The Federal Court of Appeals Court agreed and confirmed the lower court ruling.

In coming to its decision, the Court of Appeals noted an insurer has a broad duty to defend its insured in any action where the allegations in the complaint are even potentially within the scope of the policy. If there is an actual conflict of interest between the insurer and insured, the insured has the right to obtain independent counsel at the insurer's expense. An actual, not merely potential, conflict is required to trigger the insured's right to conflict counsel. An actual conflict does not arise merely because the insurer has an interest in negating coverage as to every count of the underlying complaint.

In order to determine if a conflict exists, the court "must compare the allegations of the underlying complaint against the insured to the terms of the insurance policy at issue."  If, after comparing the complaint against the insured to the insurance policy, "it appears that factual issues will be resolved in the underlying suit that would allow insurer-retained counsel to 'lay the groundwork' for a later denial of coverage, then there is a conflict between the interests of the insurer and those of the insured."

With respect to the punitive damage issue, the Court of Appeals found the mere possibility that punitive damages might be sought in litigation did not create an actual conflict of interest. The court also noted that no evidence existed that any punitive damages would be so disproportionate that a conflict would exist. The appellate court further reasoned that no evidence existed that Forge and NCC's interests were not aligned on this issue. In the event of the filing of the lawsuit, both punitive and compensatory damages would be tied to the same conduct, and thus, in defending Forge's actions, NCC would be protecting Forge's interests with respect to all damages.

Forge also argued conflict counsel must be appointed when the underlying complaint contains two mutually exclusive theories of liability, one which the policy covers and one which the policy excludes. The Court of Appeals found the policy provided Forge liability coverage for intentional acts, including intentional torts such as intentionally discriminating against one of its employees. The policy did not cover Forge if it "willfully failed" to adhere to anti-discrimination laws. The court acknowledged that if a jury was to find Forge both intentionally discriminated against its employees and did so in willful violation of anti-discrimination laws, Forge's conduct would fall within the policy's "willful" exception, and NCC would not have to indemnify Forge.

The Court of Appeals held conflict counsel was not required as by generally defending Forge against discrimination charges; the NCC-supplied defense would encompass both "intentional claims" and "willful claims." Further, any attempt by the NCC-supplied defense to shift the facts and focus to the non-covered theories of liability would be transparent and be a violation of counsel's ethical duty. Further, the facts regarding both theories would be necessarily fleshed out during discovery, whether there was conflict for assigned counsel representing Forge. Also, a contrary ruling would require the appointment of independent counsel any time a complaint could foresee ably be amended to assert a non-covered theory. As there were no direct allegations as to Forge's "willful" conduct, conflict counsel was not required.



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Eugene F. Keefe is a partner in the Chicago law firm of Keefe, Campbell & Associates.
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