Rusin's Review of Good, Bad Decisions in Work Comp

Saturday, May 19, 2007 | 0

By Michael E. Rusin

Cases Before the Supreme Court of Illinois

Court Reinstates Commission's Finding of Employment Relationship Between an Independent Truck Driver and Motor Carrier

Donald Roberson v. Industrial Commission and P.I. and I. Motor Express Inc., Docket No. 10273, filed 03/22/07.

Petitioner worked for respondent as an employee truck driver from March 2000 to May 2000. However, on May 15, 2000, petitioner bought his own truck and switched from being an employee to an independent contractor. He signed a standard independent contractor agreement with respondent. The agreement (as required by the Department of Transportation) compelled petitioner to grant to respondent the exclusive possession, control and use of the equipment during the time of any transport.

Petitioner, however, was an independent contractor. He paid all his own costs and expenses. He was allowed to have employees. He could accept and reject loads. He was allowed to trip lease, although he claimed that the trip lease requirements were onerous, so he did not trip lease. The employer required him to comply with all DOT regulations. The employer kept a personnel file on petitioner and did annual performance reviews.

Petitioner claimed a work injury on Jan. 5, 2001. The respondent disputed an employment relationship contending petitioner was an independent contractor. The case was tried before an arbitrator who found there was no employment relationship.

Petitioner appealed and the commission reversed. The circuit court reversed and reinstated the arbitrator's decision. The appellate court reversed and reinstated the commission.

The respondent appealed to the Supreme Court and the Supreme Court affirmed the commission's finding of an employment relationship.

The court analyzed various factors which go into determining whether an employment relationship exists. The various factors which determine when an individual is an employee include "whether the employer may control the manner in which the person performs the work; whether the employer dictates the person's schedule; whether the employer pays the person hourly; whether the employer withholds income and Social Security taxes from the person's compensation; whether the employer may discharge the person at will; and whether the employer supplies the person with materials and equipment." Further, the court stated it is significant whether the employer's general business encompasses the person's work.

In finding the case compensable, the court analyzed the federal requirements which demand that an employer be given exclusive possession of the independent contractor's equipment. The court noted that the employer didn't dictate petitioner's routes. Petitioner chose his own routes. Petitioner could accept or reject loads. Petitioner could trip lease but allegedly he didn't because the rules regarding trip leases were too onerous. The court ruled this was a close call but decided to affirm the commission because there was evidence sufficient to support the commission's decision.

Comment: This is a very bad decision from the court for trucking companies who retain independent contractors.

This case decision is contrary to the appellate court's decision in Earley v. Industrial Commission, 197 Ill.App.3d 309 (1990). The Earley decision involved essentially the same facts that were presented to this court. However, in Earley, the commission denied the employment relationship and the appellate court affirmed.

In this case, the commission found an employment relationship and the appellate court and Supreme Court affirmed. However, these decisions are wrong.

The same facts exist in Earley as here. The only difference is that there are different commissioners who heard the case now than heard the case back in the late 1980s when the Earley case was presented to the commission. Legal precedence should dictate that the same result should occur here as in Earley.

Employers, especially trucking companies, base their business decisions on legal precedence.

This decision basically eliminates the possibility of having an independent contractor relationship in a truck driver case. Future independent contractor cases involving truck drivers will be nearly impossible to win before the commission.

This Supreme Court decision validates the commission's decision in a fact pattern which should have been rejected.

This petitioner was an independent contractor. The respondent acted as an employer only to the extent that is required by DOT regulations. The contract was a good one. The petitioner should have been found to be an independent contractor. Since he was not, trucking companies and their insurers should expect more and more workers' compensation claims from "independent contractor" drivers.

Insurance Coverage Issue -- Supreme Court Rules That Employer's Commercial General Liability Policy Does Not Cover Employer's Liability for Contribution Claim in Excess of Kotecki Cap

Virginia Surety Co. Inc. v. Northern Insurance Co. of New York, Docket No. 102036, filed 01/19/07.

This case involves the frustrating issue of what insurance, if any, covers an employer's liability in a third party contribution suit wherein the employer has by contract waived its Kotecki cap.

In this case the employer (DeGraf) was performing work on a job site pursuant to a construction subcontract which included an indemnity provision. The subcontract provisions purported to hold the general contractor harmless against any claims made involving injuries arising out of the employer's work activities.

The indemnity provision essentially waived the Kotecki cap and exposed the employer to unlimited contribution liability.

The employer purchased a workers' compensation policy from Virginia Surety and a CGL policy from Northern.

An employee of DeGraf was injured and filed a civil lawsuit against the general contractor. The general contractor filed a third party complaint against DeGraf for contribution. Virginia Surety accepted the tender, but Northern refused to accept the tender.

Virginia Surety filed a declaratory judgment action against Northern, seeking a finding that Northern was obligated to defend the claim and cover the liability of the employer in excess of the Kotecki cap. The trial court denied the declaratory judgment and the appellate court affirmed.

The Supreme Court confirmed the denial of the declaratory judgment action. The court summarized and analyzed the development of contribution claims in Illinois, including the establishment of the Kotecki cap and the later modification of the Kotecki cap where there is an indemnity provision in a construction contract (known as a Braye waiver). The court noted that the appellate courts had split over whether there was insurance coverage for the liability in excess of the Kotecki cap and whether that excess liability would be covered by a CGL policy.

The 5th District had found that the CGL policy did not provide coverage. The 2nd and 4th Districts had concluded that there would be coverage.

The Supreme Court ruled that there was no coverage under the CGL policy. The court ruled that the indemnity provisions of the construction contract did not represent an "insured contract."

Rather, the court noted that an employer has its Kotecki protections only as an affirmative defense. An employer is not automatically protected by Kotecki. The Kotecki protection must be affirmatively raised or it is waived.

Therefore, the court rejected any coverage under the CGL policy. The court overruled any appellate court decisions to the contrary.

Comment: This case decision eliminates a large body of ongoing litigation over whether or not a CGL carrier is obligated to defend or pay a claim for contribution. The lower courts have been divided on this issue. The workers' compensation carrier denies liability for any judgment in excess of the Kotecki cap. The CGL carrier claims it doesn't have any liability for employee lawsuits. This decision answers affirmatively that the CGL carrier does not have responsibility to pay or defend in cases of Braye waiver. There now appears to be uninsured liability for employers who execute indemnity provisions in construction cases.

Before the Appellate Court  Workers' Compensation Commission Division

Court Denies Compensation to Home Nurse Who Traveled from Her Home to a Client's Home for the Day

Sheila Dastous v. Industrial Commission (Alpha Christian Nurse Registry), No. 4-06- 0162WC, filed 02/06/2007.

Petitioner was employed by respondent as a home health care nurse. Her job duties required her to provide nursing services at patients' homes. On Jan. 30, 2003, petitioner left her home and drove to her day-long assignment which was providing care for a child in another city. While driving on her way to the child's home, she was involved in a motor vehicle accident.

She filed a claim for workers' compensation, and we contended that she was not entitled to compensation since the accident did not arise out of and in the course of her employment. We contended that petitioner was not a traveling employee. We contended that petitioner was injured while "going to" work.

The arbitrator ruled in our favor and petitioner appealed.

The commission affirmed in a 2-1 decision.

Petitioner appealed but both the circuit court and the appellate court affirmed the denial of liability.

The appellate court stated that an injury suffered while an employee is going to or from work generally does not satisfy the requirement that an injury arose out of and in the course of the employment. There is an exception to this rule if the employee is paid for time spent traveling to or from work. There is an exception where the course or method of travel is determined by the demands of the job rather than the employee's own personal preference as to where he or she chooses to live.

The court found that there were no exceptions to the general rule that apply in this case. Petitioner wasn't paid travel time to or from work. Moreover, she chose the course and method of travel. Petitioner didn't qualify as a traveling employee. She didn't travel between various locations in the course of her work day. Petitioner instead traveled to a single work location, completed a shift and then traveled home like an ordinary employee.

The fact that she traveled to a patient's home rather than directly to the employer's home office made no practical difference. The claim for compensation was denied.

Comment: This is a good decision for employers. This decision wasn't published but is a significant restatement of an important legal concept. This case was expertly handled by Terry Schroeder from our firm's Champaign office. Significantly, the appellate court rejected a dissenting opinion from Commissioner Pigott, the Employee Commissioner on Panel A of the commission.

Court Reverses Commission's Decision as to Average Weekly Wage. Average Weekly Wage Held Not to Include Overtime Hours Where Petitioner Failed to Prove Overtime Hours Were Mandatory and Consistent

Airborne Express Inc. v. Illinois Workers' Compensation Commission and Ron Bronke, No. 1-06-1960WC, filed 03/20/2007.

Petitioner was employed by respondent as a driver/dock worker. His job consisted of loading overnight packages onto a truck and then delivering the packages. His regular work consisted of an eight-hour shift from Monday through Friday. He testified that it was company policy that a driver had to finish his route and deliver all of his packages before returning back to respondent's facility, no matter how long it takes. Petitioner admitted that he normally completed his route during his scheduled eight-hour shift. He couldn't testify any specific days where he had to work extra.

In addition to a driver's route, petitioner testified that overtime was available on a seniority basis. Petitioner admitted that most of his overtime work, prior to his accident, was voluntary. The evidence showed that overtime was made available to employees on a voluntary basis. However, if insufficient senior employees volunteered to work, management could mandate overtime for less senior people. The station manager testified that petitioner's seniority was sufficiently high that it was doubtful he was forced to work overtime prior to the accident. The manager testified that he believed petitioner's overtime was voluntary.

Petitioner claimed that his average weekly wage should include both his regular and overtime hours.

The arbitrator disagreed and found an average weekly wage of $901.41.

Petitioner appealed and the commission modified the arbitrator's award. The commission included all regular hours and overtime hours, finding an average weekly wage of $1,246.86.

The circuit confirmed the commission, but the appellate court reversed.

The appellate court found that petitioner's overtime hours should not have been included in the average weekly wage. The court reviewed its prior cases involving overtime including Edward Hines Lumber, Edward Don Co. and Freesen, Inc. The court held that its decision to reverse the commission was consistent with the prior cases.

The court stated, "Overtime (hours that are to be included) include those hours in excess of an employee's regular weekly hours of employment that he or she is not required to work as a condition of his or her employment or which are not part of a set number of hours consistently worked each week."

In this case, the court found that petitioner's overtime hours shouldn't be included.

Petitioner testified that his regular work week was daily eight-hour shifts Monday through Friday. The fact that petitioner worked overtime 31 of the 32 weeks in the year prior to the accident was irrelevant. The uncontroverted evidence established that petitioner wasn't required to work the overtime as a condition of employment. Rather he used his seniority and requested to work overtime.

Moreover, the wage summary sheets admitted into evidence showed that petitioner's overtime hours varied from week to week. In one week, he only worked .8 hours of overtime. In another week he worked 28.3 hours of overtime.

The court admitted that this issue was a question of fact and the court was reluctant to overturn the commission's decision, but the commission's decision was wrong. The commission felt it was significant that the employer could mandate overtime.

However, the evidence here showed that even though the employer could mandate overtime, this employee's overtime was not mandated. The court excluded the overtime hours and recalculated the average weekly wage.

The case was remanded and the commission was instructed to recalculate the wage without overtime hours.

Comment: This is an excellent decision on wages from the court. The court in Edward Don & Co. and Freesen signaled the commission to change the way it calculated average weekly wage and exclude overtime hours which were not mandatory and consistent.

Nevertheless, the commission has resisted and refused to apply the appellate court's decisions. Instead, the commission has continued to include overtime and has continued to ignore the court's clear direction. This decision crystallizes the court's stance and makes it clear that voluntary overtime hours should not be included in the average weekly wage calculation. Overtime hours to be included are those hours that are mandatory and consistent, not those that are voluntary and inconsistent. Employers would be wise to continue to litigate this issue until the commission adopts the court's directions.

Court Awards TTD and Medical for Back Surgery Even Though Petitioner Had Significant Pre-existing Back Problems and Treatment

St. Elizabeth's Hospital v. Workers' Compensation Commission and Calvin Nichols, No. 05-06-0081WC, filed 02/21/2007.

Petitioner was employed by respondent which operates a hospital as a patient care assistant. His duties included transporting patients to surgery and moving medical equipment. On Sept. 16, 2002, he had to move five monitors. As he was moving one of the monitors, he claimed that he slipped and twisted his back.

Prior to this incident, petitioner had back pain in June or July of 2002. He was off work for two weeks and was diagnosed with muscle spasms. He was treated by Dr. Leone. He testified that he wasn't having any problems with his back until the accident of Sept.16, 2002. After this admitted accident, he stopped working. He initially treated with an emergency room doctor.

He eventually treated with Dr. Sprich, an orthopedic surgeon at the hospital where he worked. Sprich performed a two-level fusion at L2-L3 and L3-L4 on April 29, 2003. Prior to surgery, petitioner had a discogram which proved abnormal at all levels. He had an MRI which showed a bulge or herniation at L2-L3 but on the left side. Petitioner was complaining of right side radiculopathy.

The employer had petitioner examined by Dr. Cantrell. He reviewed petitioner's MRI and found it inconsistent with petitioner's complaints of right leg radiculopathy. He concluded petitioner simply had a back strain. He didn't think petitioner needed any surgery. Dr. David Kennedy also examined petitioner at the employer's request. He didn't believe petitioner had any pathology which required surgery. He didn't think any of petitioner's diagnostic findings correlated with his accident.

The arbitrator found the case compensable. The arbitrator relied on the alleged credible testimony of petitioner and petitioner's doctor. The arbitrator found that the employer's doctors weren't credible.

The employer appealed but the commission and the circuit court affirmed the arbitrator's decision.

The employer appealed to the appellate court, and the appellate court affirmed as well.

The appellate court ruled that the surgery issue was simply a question of fact, and although the employer presented evidence to support his contention that the case wasn't compensable, the court would not substitute its judgment for that of the commission. The court found the commission was justified in relying on the testimony of petitioner and his treating doctor, especially where petitioner testified that he felt better after his surgery.

Comment: It is surprising that the employer took this case all the way to the appellate court since there were no questions of law, only questions of fact. Since petitioner's doctor strongly supported his claim, the likelihood that the court would reverse the commission's decision was remote. Frankly, it's surprising that the court even published this decision since it didn't establish any new precedents. It's possible that the court published this decision just to discourage employers from filing similar appeals.

Court Affirms Finding of Causal Connection for a Truck Driver Allegedly Struck by a Pipe Despite Denial of Any Traumatic Incident for Five Days -- Chairman's Participation in Decision Held Valid

Piasa Motor Fuels v. Industrial Commission, No. 5-05-0570WC, filed 10/23/2006.

Petitioner was employed by respondent as a truck driver. He drove a tanker truck and was required to load and unload fuel. He testified that his injury occurred on Friday, Sept. 21, 2001. Petitioner testified that he loaded his tanker by using a large hose that was mounted above the ground. He claimed that after disconnecting the hose, it twisted back and struck him in the back. Despite suffering this alleged accident, petitioner did not report the incident nor did he seek any medical treatment.

Petitioner completed his work day and made deliveries but claimed that he was feeling chest and back pain. Petitioner called in sick the following day, Saturday, Sept. 22, 2001. Petitioner worked Sunday, Sept. 23, 2001, but claimed he had chest pain. Petitioner was scheduled off work Monday, Sept. 24, 2001 and allegedly stayed in bed. Petitioner went to work Tuesday, Sept. 25, 2001 and had chest and stomach pain. After work his stomach pain worsened, and he went to the emergency room.

When petitioner was seen in the emergency room on Sept. 25, 2001, he denied any specific trauma. He claimed he had driven in heavy traffic the day before and had an anxiety attack. He saw a surgeon, Dr. Miller, and complained of abdominal pain for several months. He denied any specific traumatic incident. Medical personnel found a ruptured spleen and petitioner underwent a splenectomy with evacuation of an intraabdominal hematoma. The operative report indicated there was no history of trauma.

After petitioner's five-day hospitalization, he saw his operating surgeon in follow-up and again denied recalling any specific trauma.

Several days later, he saw his surgeon, Dr. Miller, again. Dr. Miller again questioned whether petitioner had been struck by anything and petitioner for the first time, on Oct. 8, 2001, stated he was struck by the hose at work.

On Oct. 8, 2001 petitioner then reported to his employer than he suffered an injury at work when he was struck by the hose. The employer tried to duplicate the accident to see how petitioner could have been struck by the hose. The employer's operation manager testified that they could not recreate the accident as described by petitioner because the hose didn't twist or snap back in a manner which would have struck petitioner.

One of petitioner's doctors testified that his splenic rupture was caused by a traumatic injury. An employer's physician that it was doubtful that petitioner's ruptured spleen was caused by the work injury.

After a trial before an arbitrator, the case was denied. The arbitrator found that petitioner's testimony was incredible and felt it was unrealistic that petitioner could have suffered such a significant traumatic event and then not be able to recount it to medical personnel five days after the event. It took petitioner over two weeks before he first mentioned this alleged traumatic event to any medical provider or his employer.

Petitioner appealed and the commission in a unanimous decision reversed. They awarded 24 weeks of TTD, almost $100,000 in medical bills and 25% man as a whole. The decision was signed by Commissioners Paul Rink and Barbara Sherman and Chairman Dennis Ruth.

The employer appealed to the circuit court and the appellate court but the commission's decision was affirmed. The employer challenged the fact that Chairman Ruth participated in the decision. The court ruled that the statute did not prohibit the chairman from participating in a commission decision. The court noted that the statute identified the chairman as a commissioner. The statute designates the chairman as a supervisor of the commissioners but does not absolutely preclude him from deciding cases.

The employer also challenged the commission's decision on the issue of causation. The employer needed to convince the court that the decision was contrary to the manifest weight of the evidence.

Again the court rejected the employer's argument and affirmed. The court found that the commission's decision was not contrary to the manifest weight of the evidence, relying on the testimony of petitioner's surgeon who concluded that petitioner's condition was probably caused by trauma. The court found that it wasn't unreasonable for the commission to find petitioner's testimony credible despite the long delay between his alleged accident and his first reporting of a traumatic incident.

Comment: I am not surprised that the court validated the chairman's participation in the commission's decision. This is especially not unexpected in view of the fact that the decision was a unanimous decision from the commission.

Therefore, even if the chairman didn't participate in the decision of the commission, there were two other commissioners who voted to find the case compensable. Given the fact that the chairman is a former plaintiff's attorney, it seems unfair to have him participate, especially on a panel such as this one which included a public representative and an employee representative. In essence, the decision was made by a panel consisting of two employee representatives and a public representative. The decision was made without an employer representative. The employer had an excellent point; the composition of the panel was patently unfair.

On the issue of causation, the court's decision is simply wrong. It was manifestly unfair for the commission to find causal connection here.

Petitioner suffered from a spleen problem, but it wasn't obviously from a traumatic injury. Moreover, if the injury was from a traumatic event which occurred at work, petitioner would have been able to remember it immediately or within days of the accident. This accident allegedly occurred and petitioner didn't report it to his employer and he didn't seek medical treatment for five days. He was then hospitalized and saw multiple medical personnel. Each one of them asked him if he had suffered a traumatic injury, and petitioner specifically denied any traumatic incident. It took multiple visits to the doctor as well as multiple repeated questions as to trauma before eventually, two weeks later; petitioner decided that he suffered a trauma at work.

Moreover, the employer then tried to recreate the alleged traumatic incident and couldn't even recreate it because the hoses didn't swing in a horizontal manner as claimed by petitioner to even have struck him. The arbitrator correctly decided this case. His decision should have been affirmed the whole way.

Employer's Workers' Compensation Lien Includes Payments Made for Replacing and Servicing an Injured Employee's Prosthesis

Truman Crispell v. Industrial Commission and Transervice Corporation, No. 5-05- 0575WC, filed 10/04/2006.

Petitioner suffered a traumatic injury in July 1991 which caused the traumatic amputation of his right leg. The employer accepted liability and paid TTD, PPD and medical expenses. In addition, the employer paid for a prosthetic device in the amount of approximately $32,000.

Petitioner filed a civil suit arising out of the workers' compensation claim and received a judgment of almost $1 million. The employee reimbursed the employer for its lien as to compensation and medical, but refused to reimburse the employer's lien as it related to the prosthetic device.

This issue was tried before an arbitrator and the arbitrator granted the employer's lien. Petitioner appealed to the commission, and the commission affirmed. Petitioner appealed to the circuit court and the Circuit Court of Madison County reversed and denied the employer's lien. The employer appealed to the appellate court and the appellate court reversed granting the employer's lien.

The appellate court ruled that an employer's lien includes all amounts paid for prosthetic devices. The petitioner's argument relied on a sentence in Section 8(a) of the Act which states, "The furnishing of any such services [payments under Section 8(a)] or appliances or the servicing thereof by the employer is not the payment of compensation."

The court ruled that the employer's payments for prosthetic devices is part of the employer's lien despite this language in Section8(a). The court ruled that the payment of medical and the payment for prostheses are all considered the payment of compensation except for determining when the statute of limitations runs in a workers' compensation claim. Therefore, the employer was entitled to a lien for the amounts paid for the prosthesis.

Comment: The employer is obviously entitled to a credit under Section 5 of the Act for all amounts paid to or on behalf of petitioner for medical expenses including the expenses associated with a prosthesis. The fact that the Circuit Court of Madison County rejected this claim shows the extreme bias of Madison County judges in favor of claimants and against employers.

The decision highlights the illogical morass created by the court over what constitutes the payment of "compensation."

The Act specifically provides in Section 8 "the furnishing of any such services [medical expenses under Section 8] or appliances or the servicing thereof by the employer is not the payment of compensation."

The reason for this section of the statute is clear. The legislature intended to have employers pay for medical expenses promptly after an accident even if the employer should later decide that the accident is not compensable.

The goal was to get employees prompt medical care and then subsequently determine whether the accident was compensable. The intention of the legislature is clear. The furnishing of medical treatment is not the payment of compensation. The payment of compensation is the payment of PPD and TTD.

Nevertheless, there has been a series of court decisions which now hold that the payment of medical is the payment of compensation. Medical expenses constitute the payment of compensation for the purpose of determining penalties. An award of medical expenses is considered compensation for the purpose of awarding interest.

The payment of medical expenses has even been held to extend the statute of limitations. Multiple court decisions have rendered this particular provision of the Act essentially non-existent. A specific modification by the legislature would be required to change this entire series of court decisions in order to re-establish the original intent of the legislature in 1925 by enacting this section of the statute.

Case Held Compensable Despite the Fact that the Claimant Knowingly Violated a Safety Rule -- Even Where the Violation of the Safety Rule Was the Cause of the Accident

J. S. Masonry Inc. v. Industrial Commission, No. 1-06-0717WC, filed 12/09/2006.

Petitioner was employed by respondent as a bricklayer's helper. His job duties required him to bring bricks, blocks and mortar to bricklayers at a work site. He also assisted in constructing scaffolding.

On June 10, 2002, he assisted co-workers in the construction of a second level scaffolding on the job site. On the scaffolding was a safety gate. On the morning of the accident, petitioner's supervisor told him that he had to remember to close and lock the safety gate or else he'd be sent home. The supervisor testified that safety was very important on the job site. A co-worker testified that he heard the supervisor telling petitioner to close and lock the safety gate. Another co-worker testified that he also told petitioner to close and lock the safety gate.

Nevertheless, Petitioner did not close and lock the safety gate. While walking on the scaffolding petitioner tripped and fell over a brick and fell through the unlocked safety gate 12 feet to the ground, suffering an injury to his left arm.

The employer denied liability for the case, claiming that petitioner's injury occurred solely because he knowingly violated a safety rule. The case was tried before an arbitrator and the arbitrator denied compensation. The commission reversed and held that petitioner's accident was compensable regardless of whether or not petitioner violated a safety rule.

The employer appealed to the circuit court and appellate court, but the appellate court affirmed. The appellate court ruled that petitioner's case was compensable even though he violated a safety rule. The appellate court ruled that petitioner's conduct was not so egregious as to take him outside the scope of his employment. The court held,

"The claimant was performing the duties for which he had been hired, namely to stand atop a scaffold and receive materials, and to relay bricks, blocks and mortars to the bricklayers. He was not in an area in which he was forbidden to enter, and he was not engaged in any activity which was unauthorized by the company. Although he may have been performing his duties in a negligent manner, the claimant was 'doing exactly the thing he was employed to do.' The claimant was acting in the sphere of his employment and his injuries arose out of his employment, without regard to the factual dispute as to whether he had violated a company rule by failing to secure the safety gate. We conclude, therefore, that the commission did not err in finding that the claimant's injuries arose out of and in the course of his employment."

Comment: This is an unfortunate but expected decision from the court.

The court has denied benefits to claimants who have violated certain safety rules, but the denials have come in cases where the actions of the employees are so egregious as to take them outside "the sphere of employment."

For example, in Sanders, a claimant rode double on a forklift truck and was injured. His case was denied because there was no business purpose for him to be riding double on a forklift truck. The employer showed that Sanders' actions were for his personal enjoyment and/or benefit. Cases involving violations of safety rules can be found non-compensable if it can be shown that the actions of the employee were personal in nature.

In this case, petitioner's injury was clearly the result of his safety rule violation, but he was actually trying to do his job at the time the injury occurred.

Therefore, it had to be expected that the case eventually would have been ruled compensable.

Court Reverses Commission Award of Odd Lot Permanent Total Disability Where Petitioner Presented No Evidence That He Looked for a Job Within His Restrictions

Westin Hotel v. Industrial Commission of Illinois and Theodoros Vakalidis, No 1-06- 1728WC, filed 03/27/2007.

Petitioner was a 59-year-old Greek immigrant who had a limited education and couldn't speak English. He worked a few years for the respondent hotel chain as a painter. He claimed he hurt his back on Oct. 5, 1998 when he attempted to upright a cart that was falling over.

He treated with several different doctors complaining of back pain and knee pain. He had disc degeneration and disc bulging, but no clear-cut evidence of a herniated disc. He never had any back surgery. Respondent had him examined by several different doctors and concluded that he didn't need back surgery. The employer did not present convincing evidence of a full duty release. Several doctors, including petitioner's examining doctor, concluded that petitioner had permanent restrictions.

Petitioner made no effort to return to work anywhere. Petitioner did no job search. Nevertheless, the arbitrator awarded over 200 weeks of TTD and permanent total disability benefits for life. The commission affirmed and the employer appealed.

The appellate court affirmed the commission's conclusion as to causal connection and TTD, but they reversed the award of permanent total disability benefits. The court noted that the commission found petitioner to be an odd lot permanent total in part because of his age, limited education, work experience, and limited language skills.

The court noted that the claimant is considered permanently and totally disabled when he is unable to make some contribution to industry sufficient to justify payment of wages.

The court stated, "The employee must show that he is unable to perform services except those that are so limited in quantity, dependability or quality that there is no reasonably stable market for them."

The court held "the claimant ordinarily satisfies his burden of proving that he falls into the odd lot category in one of two ways: (1) by showing diligent but unsuccessful attempts to find work, or (2) by showing that because of his age, skills, training, and work history, he will not be regularly employed in a well-known branch of the labor market."

In this case, the court determined that petitioner hadn't established his burden of proof by a preponderance of the evidence. The court noted that the claimant did not present any evidence that he conducted any job search. Moreover, the only witness to testify concerning claimant's employability was petitioner's IME doctor.

The court stated, "The most recent cases making an odd lot determination on the basis that there is no stable job market for a person of the claimant's age, skills, training, and work history have required evidence from a rehabilitation services provider or vocational counselor."

The court therefore reversed the commission's finding of an odd lot permanent total and remanded the case to the commission to consider whether petitioner is entitled to permanent partial or permanent total disability benefits.

Comment: This is a good decision for employers on this one issue of what constitutes an odd lot permanent total. Based on this decision, the commission should not award a claimant an odd lot permanent total absent evidence of a job search and/or absent evidence of a vocational counselor's testimony as to claimant's employability. This also means that it is important for employers to retain a vocational counselor in situations where the claimant is alleging permanent total disability. The counselor should at least perform a vocational analysis and give testimony as to a claimant's employability.

A further important step would be to present evidence of a labor market survey documenting jobs available within claimant's restrictions. The commission should be reluctant to make such determinations without that evidence. Based on this decision, it is likely that more claimants' attorneys will be retaining vocational counselors to prove up their claim of permanent total cases.

Before the Appellate Court of Illinois, Non-Workers' Compensation Division Cases

Court Holds Employer Did Not Waive Workers' Compensation Lien Even Though Lien Rights Were Not Specifically Reserved in Settlement Contract

Edwin Harder v. Timothy Kelly and Illinois Central Railroad Company, No. 2-06-0404, 2nd District, filed 01/11/2007.

Petitioner suffered a work-related injury when he was involved in a motor vehicle accident. He was paid compensation benefits by his employer. On Aug. 17, 2004 he filed a civil suit against the defendant, claiming negligence and seeking civil damages.

On Nov. 4, 2004, the employer settled the workers' compensation claim with petitioner. A year later, petitioner settled his civil lawsuit against the defendant. Petitioner and the defendant refused to honor the employer's lien. On Dec. 20, 2005, the employer filed a petition to intervene.

The lump sum settlement contract entered into between petitioner and the employer did not specifically reserve the employer's workers' compensation lien.

Therefore, the trial court ruled that the workers' compensation lien was waived.

The trial court relied on the appellate court's decision in Borrowman v. Prastein, 356 Ill.App.3d 546 (2005). In the Borrowman case, the court ruled that any employer who settled a workers' compensation claim with knowledge of a civil lawsuit waived its workers' compensation lien rights unless it specifically reserved its lien rights in the settlement contract.

The employer appealed to the appellate court, and the appellate court reversed.

The appellate court refused to follow the Borrowman decision. The appellate court found that the Borrowman decision was unsupported by case law and its reasoning was not sound.

Instead, this court relied on the case of Gallagher v. Lenart, 367 Ill.App.3d 293 (2006). In Gallagher, the 1st District of the Appellate Court concluded that an employer's lien was not waived simply because it wasn't specifically retained in a settlement contract.

The 1st District in Gallagher rejected the 4th District opinion in Borrowman.

The 2nd District found that the reasoning in Gallagher was sound. They reversed the trial court and remanded the case to grant the employer's lien.

Comment: This is an excellent decision from the 2nd District of the Appellate Court. The 4th District in Borrowman entered an erroneous decision denying the employer a lien when it should have granted it. Both the 1st and 2nd Districts have rejected the 4th District opinion.

This issue will eventually make it to the Supreme Court, and I am confident the Supreme Court will find the Borrowman court's reasoning was erroneous. Nevertheless, until the Supreme Court makes its final determination, employers should continue to specifically reserve their lien rights in their settlement contracts filed with the commission.

Declaratory Judgment Action to Determine Whether Corporate Officer Excluded Himself from Coverage under Workers' Compensation Policy -- Trial Court's Granting of Summary Judgment in Favor of Corporate Officer Reversed

Virginia Surety Inc. v. Bill's Builders Inc. and William Geigner, No. 3-06-0606, 3rd District, filed 04/10/2007.

Petitioner and his wife, Kristina, owned a small carpenter contractor business. They hired an agent to purchase workers' compensation insurance. Their agent submitted an application through the assigned risk pool. The application requested that both petitioner and his wife be excluded from the policy. The application had signatures on it reportedly signed by petitioner and his wife. The policy was issued by Virginia Surety and both petitioner and his wife were excluded from coverage.

In March 2003 petitioner fell from a scaffold and suffered a spinal cord injury. He filed a workers' compensation claim and Virginia Surety denied it on the basis that he was excluded under the policy.

Virginia Surety chose not to litigate this issue before the commission but instead filed a declaratory judgment action in Circuit court. After a hearing, summary judgment was granted in favor of the petitioner. Petitioner claimed that he never signed the application. Contrary to this assertion, the agent testified that he discussed this matter extensively with petitioner's wife. Petitioner's wife stated to the agent that they were to be excluded. The agent mailed the policy application to petitioner's wife and received the signed application in the mail.

Virginia Surety appealed and the appellate court reversed the award of summary judgment to petitioner. Since petitioner denied signing the application, the court remanded the case to the trial court to determine whether or not petitioner had actually signed the application seeking exclusion.

Moreover, the court's decision analyzes what actions are required in order for an officer to exclude himself from a workers' compensation policy.

The 3rd District rejected the 2nd District's reasoning in the decision of General Casualty Co. of Illinois v. Carroll Tiling Service Inc., 342 Ill.App.3d 883, 796 N.E.2d 702 (2003).

In the General Casualty case, the court had stated that a simple waiver of workers' compensation rights wasn't sufficient to have an officer withdraw from a work comp policy. The court found that any waiver had to be specific and inform the officer that he was not only seeking exclusion from the policy but he was also seeking exclusion from the protection of the Workers' Compensation Act. Absent that specificity in a waiver, the General Casualty court held that the exclusion was ineffective.

This court rejected the General Casualty analysis. This court held that special language is not required to opt out of a workers' compensation policy.

The court stated:

"Although the election [opt out] must be in strict conformity with the statute, section 3(17)(b) of the Act merely requires that the corporate officer take affirmative action by making an election to be excluded from operation of the Act and that the insurance carrier be notified of the election in writing. The statute does not require any special language be used in the election form to opt out from the operation of the Act and from coverage of insurance. Nor does the statute require the insurance carrier to take further action, upon receiving this written notice, to confirm that the corporate officer understands by opting out of coverage of the insurance policy, he is giving up the right to make a claim under the Act. It would be improper for this Court to require either party to take affirmative action not required by the statute before the election to withdraw from the operation of the Act can be effective."

The court held that petitioner was to be excluded from the policy and from the Act if in fact his signature was on the application or it could be proven that his signature was on the application with his authority. The case was remanded to determine whether facts existed to show that petitioner signed the application.

Comment: This is an excellent decision from the court and a much needed decision. I litigated a similar issue several years ago (D. Mayer Landscaping) and successfully proved that a claimant had opted out of a workers' compensation policy where the claimant hadn't actually even signed a waiver. I proved that a claimant opt out of a policy by producing an electronic writing authorized by the claimant and signed by his agent.

Several years later the General Casualty case purportedly imposed new, onerous restrictions on carriers to draft very specific waivers to make sure that officers knew they were opting out of coverage and opting out of the operation of the Act.

I thought the General Casualty case was poorly reasoned and erroneous. This court's decision agrees with my analysis.

This court finds that the General Casualty case was wrong and the Act does not require that a carrier have an extensive waiver in order to sustain an exclusion from coverage.

There simply has to be a writing demonstrating the officer's intention to opt out of the policy.

Exclusive Remedy of Workers' Compensation Act Did Not Bar Employee's Claim for Uninsured Motorist Coverage Against Employer's Auto Liability Carrier -- Uninsured Coverage Increased to General Liability Limits of $2 Million

Thadeus Norris and Nicolette Norris, Administrators of Estate of Tommy J. Norris, Deceased, v. National Union Fire Insurance Co., No. 1-05-3132 , 1st District, filed 10/17/2006.

The deceased was employed as a truck driver by Jones Truck Lines Inc. and was involved in a motor vehicle accident with a third party and was killed. His estate filed a workers' compensation claim and received $200,000 in workers' compensation benefits.

Plaintiffs filed an uninsured motorist claim against the employer's commercial fleet general liability policy seeking damages in the amount of $2 million, which were the personal injury limits under the policy. The policy did not include uninsured motorist coverage. After a mandatory arbitration hearing, the plaintiffs were awarded $1,575,500. Essentially they were awarded the full policy limits minus the workers' compensation benefits and minus a small amount for the decedent's alleged contributory negligence.

The carrier appealed on the basis that there was no uninsured motorist coverage under the policy and also on the basis that the claim was barred by the exclusive remedy of the Workers' Compensation Act. The insurer argued that an employee could not make a claim under the employer's uninsured motorist coverage because such a claim would be barred by the exclusive remedy of workers' compensation.

The appellate court ruled against the insurance company. The appellate court ruled that the policy had to be reformed to provide uninsured motorist coverage because the employer hadn't been properly notified of its legal right to purchase the uninsured motorist coverage. The appellate court also ruled that the employee was not barred by the exclusive remedy from pursuing an uninsured motorist claim against the employer's insurance coverage.

The employer's director of risk management testified that he did not want to purchase uninsured motorist coverage up to the liability limits of $2 million. He testified that he didn't want to pay for that additional coverage. He testified that if he was going to get any uninsured or underinsured motorist coverage at all, he wanted it to be only at the minimum limits required by state law. The court found that the insurer didn't properly advise the employer of the legal limits and therefore the policy had to be reformed to grant the limits set forth in the amount of the personal injury limits set forth in the policy of $2 million.

The court also affirmed the conclusion that the exclusive remedy did not bar an employee's claim against an employer's general liability policy so long as the claim against the general liability policy was premised on an accident caused by a third party and not by a co-employee.

The carrier also argued that the claim was barred by the insurance policy's "employment" exclusion. The insurance policy in this case which was issued to the employer specifically excludes from coverage any bodily injury to "an employee of the insured arising out of and in the course of employment by the insured."

Again, the court held that this exclusion does not preclude an employee from seeking uninsured motorist benefits against the employer's policy.

The court found support for this conclusion from cases decided in other jurisdictions. This finding, however, again only applies to claims based on accidents arising out of the negligence of uninsured third parties. It would not apply to a claim arising out of an action specifically against an employer or a co-employee.

Comment: This decision restates and reinforces a prior appellate court decision issued in 2001 involving the same parties. The conclusions are not surprising, although the decision does not appear to be supported by the facts. In this case the employer clearly did not intend this result.

Further, the carrier did not intend this result. The employer did not purchase uninsured motorist coverage up to $2 million. The employer didn't intend to purchase those limits. The employer did not want to pay and did not pay for the additional coverage.

Nevertheless, by this court decision, the policy was reformed and the carrier was required to provide that coverage to this plaintiff. This is patently unfair to the carrier. The carrier has no remedy as against the employer for additional premium.

It is incumbent on carriers and employers to seriously discuss and document uninsured and underinsured coverages. Employers and carriers can avoid the result in this case by making clear that underinsured and uninsured coverages are offered to and rejected by the employer in order to avoid this result. The carrier must carefully determine the minimum policy limits required in each state. The carrier must offer those limits to the employer and the employer must specifically accept those limits and place them in their policy coverage. This offer and acceptance will preclude a claim such as this where the policy is determined to be far in excess of anything intended by the employer or the carrier. This windfall to the claimant of $1,575,500 was never the intention of any of the parties.

Court Allows Claimant to File a 19(g) Action to Modify Commission Decision and Increase the Weekly Benefit Award

John Gurnitz v. Lasits-Rohline Service Inc., No. 3-06-0216 (3rd District, filed 12/06/2006.

Petitioner filed a claim with the commission seeking an award of permanent and total disability benefits. The arbitrator denied the permanent total claim and awarded permanent partial disability benefits at a rate of $410.43 per week. Petitioner appealed to the commission and the commission reversed. They awarded 196 weeks of TTD at a rate of $741.45 and then awarded permanent total disability benefits pursuant to Section 8(f) at a rate of $410.43 per week.

The employer appealed to the circuit court and the circuit court reversed and reinstated the arbitrator's decision. Petitioner appealed to the appellate court and the appellate court issued a nonpublished decision reinstating the commission's decision.

No further appeals took place and the commission's decision became final. The employer began paying the commission's decision as it was written.

Petitioner then filed a Section 19(g) action in the circuit court claiming that the employer was improperly paying the commission's decision. Petitioner claimed that the commission's decision for permanent and total disability should have been paid at $741.45 per week (the permanent total disability rate) rather than the rate of $410.43 per week (the PPD rate). The employer moved to dismiss the complaint and the trial court dismissed the complaint.

Petitioner appealed to the appellate court and the appellate court reversed. The appellate court admitted that the commission's decision was final. However, the court found that the decision had an "irreconcilable inconsistency."

Because of the irreconcilable inconsistency, the court found that the petitioner was entitled to the relief sought in the circuit court despite the fact that petitioner never filed an appeal from the final commission decision awarding $410.43 per week.

The court found that the Section 19(g) action was a proper venue for the petitioner to have the decision of the commission "reformed."

The case was remanded back to the circuit court with the clear instruction that the circuit court should reform the commission's decision and award benefits at a rate of $741.45 per week.

Comment: The purpose of Section 19(g) of the Act is to grant parties the ability to enforce a commission decision. The intent is not to grant the parties a right to appeal and modify a commission decision. Nevertheless, that's the effect of this decision.

At any point during the appeal of this case in the circuit court or appellate court, petitioner could have asked that the decision of the commission be modified and that the permanent total disability rate be reset at $741.45.

Nevertheless, petitioner never asked for that modification to be made. It was only after the decision became final that petitioner decided that the amount he was being paid was inaccurate and he then sought a change.

Frequently, a party is put in a difficult position where it fails to appeal a specific issue. The courts have routinely held that the failure to appeal an issue results in a waiver. That should have been the result in this case.

Petitioner had the opportunity to appeal the dollar amount of the award rendered by the commission and failed to do so. The right to change that benefit rate should have been held as waived. Parties should be bound to read the decisions rendered and take action on them. If any valid claim should have been made by the claimant, it should have been a malpractice claim against the attorney and not a reformation of the award by the appellate court.

Court Validates Commission Order -- Commission Order Not Void By Reason of Chairman's Signing Decision

Gary Arnold v. Mt. Carmel Public Utility, No. 5-06-0012, 5th District, filed 11/27/2006.

Petitioner filed an application with the commission alleging a work injury. The commission denied benefits and petitioner appealed to the circuit court. The circuit court reversed and instructed the commission to award benefits. On remand, the commission awarded benefits complying with the circuit court order. The order of the commission was signed by three members of the commission including Chairman Dennis Ruth.

The employer then appealed to the circuit court, but failed to comply with the statute. The appeal was dismissed. The employer appealed to the appellate court and the ruling dismissing the appeal was upheld.

Nevertheless, the employer refused to pay the award. The employer contended that the decision was void because the Chairman was not permitted by the statute to participate in the decision-making process with respect to cases.

Petitioner filed a Section 19(g) action to enforce the commission award and a judgment was entered. The employer appealed to the appellate court and the 5th District of the Appellate Court upheld the dismissal. The court held that the chairman was a member of the commission. The court noted that the chairman according to the Act does not have final authority when it comes to the determination of cases under the Act. However, the statute doesn't prohibit the chairman from participating as a voting member of the commission.

The court also applied the "de facto officer" doctrine. Under this doctrine, the chairman was acting as a de facto officer at the time of the decision and therefore his ruling could be upheld.

Comment: The ruling of the 5th District Appellate Court case here mirrors the ruling of the Workers' Compensation Division of the Appellate Court in the previously reported case of Piasa Motor Fuels.

As a general rule, the chairman does not participate in case decisions. Given the chairman's background as a former plaintiff's attorney, it would appear unfair to have him serve as the third member of a panel unless it was to replace an employee representative. There should be no presumption of the court that the chairman could or would serve as an independent public member.

Nevertheless, it's clear from these decisions that it's not worthwhile to challenge the decision of the commission simply because the chairman participated in the ruling.

Fatal Shooting by Fellow Employee -- Court Holds that Wrongful Death Action Was Not Barred by Exclusive Remedy Provision of Workers' Compensation Act

Maria Martinez, Administrator of Estate of Miguel Pena, Deceased, v. Gutmann Leather, LLC, No. 1-06-2346, 1st District, filed 03/27/2007.

The deceased, Miguel Pena, was shot to death on July 2, 2004, while working for respondent, Gutmann Leather. The deceased was shot by a co-employee, Ramon Hernandez. Plaintiff, the deceased's administrator, filed a wrongful death suit against the employer alleging that the employer knew that Hernandez was violent and knew that Hernandez hated and threatened to kill the deceased. The complaint alleges that the employer did not take steps to protect the deceased and in fact scheduled the men to work overlapping shifts.

The employer moved to dismiss the lawsuit, claiming it was barred by the exclusive remedy provisions of the Workers' Compensation Act. The trial court agreed and dismissed the case. However, the appellate court reversed. The appellate court found that the exclusive remedy provisions of the Workers' Compensation Act didn't apply. The complaint alleged that the dispute between Hernandez and Pena was personal. It had nothing to do with work. The men had a personal dispute and hated each other.

Therefore, the appellate court concluded that the claim would not be compensable under the Workers' Compensation Act and the exclusive remedy provisions of the Act would not apply.

Plaintiff was entitled to maintain her wrongful death claim.

Comment: Employers are frequently faced with difficult decisions as to whether or not to accept or reject a claim. Sometimes an employer feels they have a right to deny a claim and avoid all liability. However, sometimes when you deny a claim you open yourself up to potential civil liability. If the case is not compensable, that doesn't mean there is no potential liability. It simply means there is no liability under the Workers' Compensation Act.

That frequently means there could be liability for a negligence lawsuit. That is exactly the scenario here. The employer, by denying the case, leaves itself open for a negligence lawsuit. The employer must now prove it wasn't negligent in the way it treated this co-employee's action. A heavy burden is going to be placed on employers who know or should have known of a co-employee's violent tendencies. Employers must be vigilant even in areas where in the past they felt they had no obligation to interfere.

Michael E. Rusin is a senior partner of the Chicago firm Rusin, Maciorowski, Friedman. He can be reached at merusin@rusinlaw.com or by phone at (312) 454-5119.

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