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Workers’ Compensation FLASHPOINTS July 2019

July 15, 2019Print This Post Print This Post

Joseph P. Basile | E-mail Joseph Basile

Three cases from the appellate court are featured this month. The first concerns the immunity protection of the exclusive remedy provision of the Workers’ Compensation Act, 820 ILCS 305/1, et seq., that apply to loaning and borrowing employers. The second and third cases serve as reminders to practitioners of the importance of knowing and following procedure. Both involve jurisdiction. In one there was a failure to appoint a special administrator to substitute as petitioner and in the other a failure to comply with §19(f)(1) to vest subject-matter jurisdiction with the circuit court.

Exclusive Remedy Provision Precluded Plaintiff’s Civil Action Against Borrowing Employer

The appellate court affirmed a summary judgment in favor of a borrowing employer in Holten v. Syncreon North America, Inc., 2019 IL App (2d) 180537. The injured worker was employed by Staff on Site, a temporary staffing agency, which sent him to work for Android, a manufacturer. Staff on Site and Android entered into an agreement providing that Staff on Site would provide employees and that Android would pay Staff on Site according to a rate set forth in the agreement. Staff on Site would maintain personnel and payroll records; hire, assign, discipline, and discharge employees; calculate and pay wages; and be responsible for and handle all work-related claims, among other provisions in the agreement.

The plaintiff was injured on January 20, 2012, while operating a forklift truck. He filed a workers’ compensation claim against Android. Android directed him to file the claim against Staff on Site, which he did, and he received workers’ compensation benefits.

The plaintiff filed suit against Android alleging negligence. Android filed affirmative defenses including that the claims were barred by the exclusive remedy provision of the Act because it was a borrowing employer pursuant to §1(a)(4) of the Act. The parties filed cross-motions for summary judgment.

The affidavit and deposition of Android’s human resources manager was attached to Android’s motion for summary judgment. These demonstrated the agreement between Android and Staff on Site. The testimony revealed that the plaintiff reported to Android’s facility every day and worked the same hours as Android employees, that Staff on Site did not have any input on how the work was performed, that Android’s supervisors instructed the plaintiff, that there were startup meetings daily, and that the work assignments came from Android’s staff. Android provided the forklift and equipment for work. Android had the right to remove but not fire a worker. Android would advise Staff on Site to end the worker’s assignment. Android controlled the plaintiff’s starting time and ending time and had discretion to provide fewer or greater hours.

The plaintiff testified he was employed by Staff on Site and not Android. Staff on Site told him to report to Android, and he did. He testified his duties changed before the accident because he was a good forklift driver. Mike and Wil, Android supervisors, made the change in his duties. He also testified he was concerned that Android would fire him if he filed a workers’ compensation claim based on a conversation with an Android supervisor the day before the accident. In his affidavit, he stated he was never told that Android had the power to dismiss him or that Android had the power to have Staff on Site dismiss him. He further stated that after the accident Android’s human resources manager told him that only Staff on Site could hire and dismiss him and that Android did not fire him and did not control whether he worked at Android.

The trial court granted Android’s motion for summary judgment, finding no genuine issue of material fact with respect to Android’s right to control and direct the manner of the plaintiff’s work and that Android was a borrowing employer entitled to the immunity set forth in the Act’s exclusive remedy provision. The court also rejected the plaintiff’s argument that there must be a payment of benefits as a prerequisite to apply the exclusive remedy provision. The court later denied the plaintiff’s motion to vacate and reconsider.

On appeal, the plaintiff argued the exclusive remedy provision did not apply because Android neither paid the plaintiff’s workers’ compensation premiums or benefits nor was it obligated to reimburse Staff on Site for the expenses. He also argued there was a question of fact as to whether a borrowed employee relationship existed.

The court addressed the issue of whether Android was entitled to immunity under the exclusive remedy provision as a borrowing employer under the Act. Section 1(a)(4) specifically incorporates the borrowed employee doctrine and extends the immunity of the exclusive remedy provision to borrowing and loaning employers. The court first analyzed the plaintiff’s position that the payment of or obligation to reimburse for workers’ compensation premiums or benefits should be considered a prerequisite for exclusive remedy protection under the Act.

The plain language of §1(a)(4) contemplates that the loaning employer, rather than the borrowing employer, may be the entity that provides or pays the workers’ compensation premiums or benefits. The statute further specifies that the liability of the borrowing and loaning employers is joint and several and that the loaning employer is, “in the absence of [an] agreement to the contrary,” entitled to reimbursement from the borrowing employer “for all sums paid or incurred pursuant to this paragraph,” in addition to the specified attorney fees and expenses. 2019 IL (2d) 180537 at ¶33, quoting 820 ILCS 305/1(a)(4).

Thus, “regardless of which of the two employers pays the workers[’] compensation benefits, the exclusivity provision of the Act immunizes both the borrowing employer and the lending employer from further claims.” 2019 IL App (2d) 180537 at ¶34, quoting Illinois Insurance Guaranty Fund v. Virginia Surety Co., 2012 IL App (1st) 113758, ¶19, 979 N.E.2d 503, 365 Ill.Dec. 899.

In this case, there was an agreement to the contrary in which Staff on Site was responsible for workers’ compensation coverage. An agreement to the contrary, as contemplated by the statute, does not eliminate a borrowing employer’s right to exclusive remedy protection under the Act. 2019 IL App (2d) 180537 at ¶37, citing Chaney ex rel. Chaney v. Yetter Manufacturing Co., 315 Ill.App.3d 823, 734 N.E.2d 1028, 248 Ill.Dec. 737 (4th Dist. 2000). The court pointed out that Chaney rejected essentially the same argument the plaintiff was making in this case.

The opinion goes on to point out that none of the cases on which the plaintiff relied involved a borrowed employee relationship under §1(a)(4). Some of the cases were Ioerger v. Halverson Construction Co., 232 Ill.2d 196, 902 N.E.2d 645, 327 Ill.Dec. 524 (2008) (joint venture), Forsythe v. Clark USA, Inc., 224 Ill.2d 274, 864 N.E.2d 227, 309 Ill.Dec. 361 (2007) (parent corporation), and Burge v. Exelon Generation Co., 2015 IL App (2d) 141090, 37 N.E.3d 907, 395 Ill.Dec. 71 (sole member of employer limited liability company).

The court found the plaintiff’s argument would have it ignore the plain language of the statute. It determined the plaintiff presented no persuasive argument on which to hold that he was entitled to summary judgment on the ground that Android neither paid his workers’ compensation insurance premiums or benefits nor was obligated to reimburse Staff on Site for the expenses.

The court then found there was no genuine issue of material fact as to whether Android was a borrowing employer. The court had to consider (1) whether the alleged borrowing employer had the right to control and direct the manner in which the performed the work and (2) whether there was an express or implied contract of hire between the employee and the alleged borrowing employer. A.J. Johnson Paving Co. v. Industrial Commission, 82 Ill.2d 341, 412 N.E.2d 477, 45 Ill.Dec. 126 (1980).

The primary element is the right to control and direct the manner of the work. The court had little difficulty finding that Android did control and direct the plaintiff’s work. The plaintiff worked the second shift, and his hours were the same as those of Android’s second shift employees. The plaintiff received instructions and assistance from Android’s supervisors, Mike and Wil. Android employees provided his assignments, and there were always startup meetings. There were no Staff on Site supervisors present at Android while he worked there. Android controlled the plaintiff’s starting time and ending time. The plaintiff used Android’s equipment to perform his duties. Android also had the power to dismiss him from temporary employment at Android.

The court also had little difficulty finding the existence of an express or implied contract of hire between Android and the plaintiff. Staff on Site directed him to report to Android for work and he did so. Thus, he impliedly agreed to the borrowed employee relationship.

Therefore, the court affirmed the trial court’s order granting summary judgment in favor of Android.

Failure To Appoint Personal Representative in Substitution of Deceased Petitioner Suspended Commission’s Jurisdiction

In Illinois State Treasurer v. Estate of Kormany, 2019 IL App (1st) 180644WC, the court vacated the trial court’s judgment confirming the Illinois Workers’ Compensation Commission’s finding, holding that the Commission’s decision was premature and improper. The petitioner, Gyula Kormany, filed an application for adjustment of claim against his employer, A-Tech Stucco EIFS, in April 2008. In June 2009, the Circuit Court of Cook County found that A-Tech’s workers’ compensation insurance carrier had no duty to defend or indemnify A-Tech because A-Tech breached the insurance contract. Kormany amended the application for adjustment of claim to name as a party the Illinois State Treasurer as ex officiocustodian of the Injured Workers’ Benefit Fund. An arbitrator awarded medical expenses and permanent partial disability benefits. The arbitrator concluded the Fund was liable for payment because, although A-Tech had workers’ compensation insurance at the time of the accident, it “failed to provide” coverage within the meaning of §4(d) of the Act. The Commission affirmed and adopted the decision. 2019 IL App (1st) 180644WC at ¶1. The Circuit Court of Cook County confirmed the decision of the Commission, and the Treasurer appealed.

In October 2014, prior to the arbitration hearing, Kormany died of causes unrelated to his workers’ compensation claim. A personal representative was not appointed and substituted as the petitioner. When a plaintiff dies, the jurisdiction of the circuit court is suspended until the appointment of a proper party plaintiff. See Voga v. Voga, 376 Ill.App.3d 1075, 878 N.E.2d 800, 316 Ill.Dec. 78 (2d Dist. 2007). As a result, the court found that Kormany’s death suspended the Commission’s jurisdiction over the claim until such time as a personal representative of Kormany’s estate was properly appointed and substituted as petitioner. Without the appointment and substitution, the Commission’s decision was premature and improper. The court also made clear that the case could not proceed under §25-1 of the Probate Act, 755 ILCS 5/1-1, et seq., by means of a small estate affidavit. While that section permits the distribution of an estate’s assets by means of a small estate affidavit, it is separate and distinct from the requirement that a personal representative be appointed to prosecute a workers’ compensation claim that is pending and unresolved at the time of the employee’s death.

Consequently, the court vacated the judgment of the circuit court and the decision of the Commission and remanded the case to allow a properly appointed personal representative to be substituted as the petitioner.

Failure To File with Circuit Court Proof That Notice of Intent Was Filed with Commission or Affidavit Within 20 Days of Receiving Commission’s Decision Deprived Court of Jurisdiction

In Conway v. Illinois Workers’ Compensation Commission, 2019 IL App (4th) 180285WC, the Workers’ Compensation Division of the Illinois Appellate Court found that the claimant failed to comply with §19(f)(1)’s requirements to vest the circuit court with subject-matter jurisdiction. The claimant sought review of an arbitrator’s decision before the Commission. The claimant received the Commission’s decision, which affirmed and adopted the arbitrator’s, on October 27, 2017. On November 13, 2017, the claimant filed a petition for administrative review and request to issue summons in the circuit court.

On December 6, 2017, the employer filed a motion to dismiss the petition for failure to file with the circuit court proof that a notice of intent was filed with the Commission or an affidavit within 20 days of receiving the Commission’s decision. Attached to the motion to dismiss was a copy of the November 13, 2017, letter sent by claimant’s counsel to the Commission and the employer’s counsel. The letter stated a check was enclosed for $35 for the cost of the record to be filed along with three copies of a notice of intent to file for review with the circuit court. The claimant’s counsel requested the Commission file stamp the extra copy and return it. The circuit court was not included as a recipient of the letter.

A hearing was held on the motion on March 9, 2018. The claimant’s counsel tendered an affidavit dated March 9, 2018, stating that on November 13, 2017, the claimant’s attorneys sent their notice of intent to file for review in the circuit court to the Commission and provided a file-stamped copy of the notice of intent filed with the Commission dated December 15, 2017. On March 23, 2018, the circuit court granted the motion to dismiss.

The question on appeal was whether the filing of a notice of intent or an affidavit in the circuit court within 20 days of receipt of the Commission’s decision is a requirement to vest the circuit court with subject-matter jurisdiction. The court found that it is a requirement. The court reviewed the current version of §19(f)(1), which, in part, states that “[a] proceeding for [judicial] review shall be commenced within 20 days of the receipt of notice of the decision of the Commission” and

[n]o request for a summons may be filed and no summons shall issue unless the party seeking to review the decision of the Commission shall exhibit to the clerk of the Circuit Court proof of filing with the Commission of the notice of the intent to file for review in the Circuit Court or an affidavit of the attorney setting forth that notice of intent to file for review in the Circuit Court has been given in writing to the Secretary or Assistant Secretary of the Commission. 2019 IL App (4th) 180285WC, quoting 820 ILCS 305/19(f)(1).

The claimant argued that §19(f)(1) does not specifically state that a notice of intent or affidavit must be filed in the circuit court within 20 days. The court reviewed interpretations of §19(f)(1) as it was written prior to the 2013 amendments. Before the amendments, §19(f)(1) required the party seeking review to show proof of payment to the Commission for the probable cost of the record before a summons could be issued. The current version requires proof that the party seeking review filed a notice of intent with the Commission before a summons can be issued.

The court reviewed caselaw interpreting §19(f)(1) prior to the amendment, which held that the party seeking review must not only file a written request for summons within 20 days after receiving the Commission’s decision but must also exhibit to the clerk of the circuit court within the same time frame either a receipt showing payment of the probable cost of the record on appeal or an affidavit of an attorney setting forth that such payment has been made to the Commission. Following those interpretations, the court concluded that the current version of §19(f)(1) requires a party seeking judicial review to exhibit proof of filing with the Commission of the notice of the intent to file for review in the circuit court or an affidavit of the attorney setting forth that notice of intent to file for review in the circuit court within 20 days of receiving the Commission’s decision.

In this case, neither of the documents demonstrating that the claimant mailed the Commission a notice of intent within 20 days was filed with the court within the 20-day period and the circuit court lacked subject-matter jurisdiction.

For more information about workers’ compensation, see WORKERS’ COMPENSATION PRACTICE (ILLINOIS) — 2015 EDITION. Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

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