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Workers’ Compensation FLASHPOINTS March 2021

Joseph P. Basile | E-mail Joseph Basile

Appellate Court: Workers’ Compensation Act Exclusive Remedy Provisions Barred Plaintiff’s Negligence Action

In February, the appellate court filed a decision concerning the applicability of the exclusive remedy provisions of the Workers’ Compensation Act, 820 ILCS 305/1, et seq. The plaintiff was an employee of a wholly owned subsidiary of the defendant named in the plaintiff’s negligence action. The case is reviewed this month.

In Munoz v. Bulley & Andrews, LLC, 2021 IL App (1st) 200254, the court affirmed the judgment of the circuit court dismissing the plaintiff’s lawsuit. Bulley & Andrews, LLC (Bulley LLC), entered into a contract with RAR2-222 South Riverside (South Riverside) to be the construction manager on a construction project at the building. Bulley LLC purchased a workers’ compensation insurance policy for its employees and for employees of Bulley & Andrews Concrete Restoration, LLC (Bulley Concrete), its wholly owned subsidiary. The plaintiff, Mr. Munoz, an employee of Bulley Concrete, sustained injuries while working on the project. Bulley LLC provided workers’ compensation benefits to Mr. Munoz. Munoz filed suit against Bulley LLC. Bulley LLC filed a motion to dismiss the suit, which the circuit court granted, finding that Bulley LLC was immune from suit based on the exclusive remedy provisions of the Workers’ Compensation Act.

The plaintiff argued on appeal that Bulley LLC was not his employer and, therefore, not immune from the lawsuit.

Under the terms of the contract between South Riverside and Bulley LLC, Bulley LLC was required to purchase insurance that would protect the contractor from claims that “may arise out of or result from the Contractor’s operations under the contract . . . and for which the Contractor may be legally liable, whether such operations . . . be by the Contractor or a Subcontractor or by anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable.” 2021 IL App (1st) 200254 at ¶4. This included claims under the Workers’ Compensation Act.

The policy Bulley LLC purchased named Bulley LLC and Bulley Concrete, among others, as insureds. Although Bulley Concrete was a wholly owned subsidiary of Bulley LLC, the companies had different presidents, employed different people, and had different specialties. Bulley LLC agreed to perform much of the concrete work for this project and used employees of Bulley Concrete, including the plaintiff.

The plaintiff injured his back on December 4, 2016, and filed a workers’ compensation claim. Bulley LLC paid him benefits. The plaintiff filed the lawsuit in April 2019. He claimed he was an employee of Bulley Concrete and that Bulley Concrete was a subcontractor of Bulley LLC on the project. Bulley LLC filed a motion to dismiss pursuant to §2-619(a)(9) of the Code of Civil Procedure, 735 ILCS 5/1-101, et seq., arguing that the suit was barred by the exclusive remedy provisions of the Workers’ Compensation Act (820 ILCS 305/5(a), 305/11) because it had a preexisting obligation to pay the plaintiff’s workers’ compensation benefits. An affidavit from the safety director was attached to the motion, which averred to the supporting facts in the motion as well as a list of medical payments made to plaintiff’s medical providers. The plaintiff argued that although Bulley Concrete was a wholly owned subsidiary of Bulley LLC, they were distinct entities. He argued that a parent company was not shielded from a lawsuit by an injured employee of its subsidiary.

In granting the motion to dismiss, the circuit court judge determined that the contract between Bulley LLC and South Riverside obligated Bulley LLC to pay for the workers’ compensation insurance and benefits for Bulley Concrete’s employees. The court further determined that Bulley LLC was legally obligated to pay for the benefits the plaintiff received, and there was no evidence that Bulley Concrete was self-insured or that Bulley LLC had the option to reimburse Bulley Concrete for any payments Bulley Concrete may have made.

The court’s analysis as to whether the plaintiff was barred from suing Bulley LLC began with the exclusive remedy provisions contained in §§5(a) and 11. The court then reviewed §§1(a)(2) and 1(a)(3), which define an “employer” under the Act. The opinion then reviewed three decisions that addressed the applicability of the exclusive remedy provisions: Laffoon v. Bell & Zoller Coal Co., 65 Ill.2d 437, 359 N.E.2d 125, 3 Ill.Dec. 715 (1976); Ioerger v. Halverson Construction Co., 232 Ill.2d 196, 902 N.E.2d 645, 327 Ill.Dec. 524 (2008); and Burge v. Exelon Generation Co., 2015 IL App (2d) 141090, 37 N.E.3d 907, 395 Ill.Dec. 71.

In Laffoon, supra, the Supreme Court found that a general contractor did not become an injured worker’s employer for purposes of the Act merely because it paid workers’ compensation benefits. In Ioerger, supra, the Supreme Court found that because the joint venture was the entity ultimately responsible for paying the workers’ compensation premiums and making benefits available to any injured workers, “it was entitled to avail itself of the Act’s exclusive remedy provisions.” 902 N.E.2d at 649. In Burge, the court found the circuit court erred in granting the motion to dismiss because Exelon’s affidavits were insufficient proof that it had a legal obligation to pay for workers’ compensation benefits.

The court found this case factually like Burge, except that Bulley LLC had sufficiently proven its preexisting legal obligation to pay for workers’ compensation benefits of Bulley Concrete’s employees, including the plaintiff. As part of its agreement with South Riverside, Bulley LLC was required to obtain various insurance policies including workers’ compensation insurance to cover it, a subcontractor, or “anyone directly or indirectly employed by any of them.” 2021 IL App (1st) 200254 at ¶22. Bulley LLC obtained workers’ compensation insurance that designated it and Bulley Concrete, among others, as named insureds. Bulley LLC paid over $76,000 in medical bills, which it was obligated to do under the contract with South Riverside and the insurance policy. The facts were proven through the contract with South Riverside, the insurance policy, and the list of medical payments to plaintiff’s providers. The court held:

[T]he immunity afforded by the Act’s exclusive remedy provisions is predicated on the simple proposition that one who bears the burden of furnishing workers’ compensation benefits for an injured employee should not also have to answer to that employee for civil damages in court. Id., quoting Ioerger, 902 N.E.2d at 649.

The plaintiff had relied on Laffoon, and the court agreed this case was similar, except that in Laffoon the Supreme Court did not have to consider a preexisting contractual obligation to provide workers’ compensation benefits because there was no evidence that the general contractors had preexisting legal obligations to pay for workers’ compensation insurance. That situation was not present in Munoz because Bulley LLC had a preexisting legal obligation to pay for workers’ compensation insurance and any benefits that might result by virtue of the contract with South Riverside. Thus, the circuit court properly found the exclusive remedy provisions barred the plaintiff’s lawsuit and properly granted the motion to dismiss.

For more information about workers’ compensation, see WORKERS’ COMPENSATION PRACTICE (IICLE®, 2019). 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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