When is the Illinois Worker’s Compensation Statute Not an Exclusive Remedy? When the Supreme Court Says So!

January 26th, 2022

We tell our clients that the quid pro quo for paying Illinois' high worker's compensation premiums, and enduring specious claims for soft-tissue injuries, is the fact that at least these cases are not being litigated in circuit courts against personal injury lawyers. They are not litigated in these venues because employers can invoke the "exclusive remedy" provision of Illinois Worker's Compensation statute.

We were too sanguine.

The Illinois Supreme Court unanimously held on January 21, 2022, that the exclusive remedy provision contained in Illinois worker's compensation statute does not extend vertically to a general contractor even though that general contractor was contractually obligated to provide worker's compensation insurance coverage for the injured employee and even thought that general contractor did in fact pay more than $76,000 in medical expenses under its worker's compensation carrier. Munoz v. Bulley & Andrews, LLC, 2022 IL 127067.

1. The Facts in Munoz – The Corporate Relationships

Defendant Bulley & Andrews is a corporation and the sole owner of Bulley Concrete. Bulley & Andrews entered into a contract with RAR2-222 to serve as a general contractor at a project in Chicago and the contract also required Bulley & Andrews to purchase worker's compensation insurance which it did. It purchased a policy from Arch Insurance Company and the policy had a large $250,000 deductible.

Bulley & Andrews owned a subsidiary company called "Bulley Concrete." The companies file separate tax returns, they have different presidents and employ different workers. Bulley Concrete employs approximately 100 laborers, caulkers, and concrete finishers. Bulley & Andrews employs approximately 500 carpenters. No court analyzed whether the two companies shared human resource functions nor was the concept of "joint employment" or "control" ever invoked.

2. The Concrete Work, Mr. Munoz's Injury, and the Worker's Compensation Claim.

Both Bulley & Andrews and Bulley Concrete performed concrete work at the RAR2-222 project. Donovan Munoz, a Bulley Concrete employee, was hurt on the project on December 4, 2016. Since the concrete work was performed in the wintertime, blankets were placed over it. Mr. Munoz hurt his back while removing one of the blankets covering the concrete.

Mr. Munoz filed a claim with the Illinois Worker's Compensation Commission against Bulley Concrete. He incurred $76,046.34 in medical bills and he was paid $2,157.77 in temporary disability benefits. Bulley Concrete was an insured under the same policy purchased by Bulley & Andrews.

3. The Lawsuit Against Bulley & Andrews the Lower Court Decisions, and the Supreme Court's Analysis.

Mr. Munoz filed a personal injury lawsuit against Bulley & Andrews on April 11, 2019. The trial court dismissed this suit, however, finding that Bulley & Andrews was legally obligated under its contract with RAR2-222 to pay for the worker's compensation insurance and benefits that plaintiff received. The First District Court of Appeals affirmed the dismissal.

The Illinois Supreme Court framed the issue this way, "this appeal concerns whether Bulley & Andrews, who was not plaintiff's direct employer, enjoys the immunity afforded by the exclusive remedy provisions of the Act." The Court concluded, "No." Because Bulley & Andrews was not the "direct employer" it would not enjoy the Worker's Compensation bar.

The Court said that it did not matter that Bulley & Andrews paid for the policy nor did it matter that it paid for Munoz's care pursuant to the large deductible. Similarly, the fact that Bulley Concrete, was a subsidiary of Bulley & Andrews was not important. The Court acknowledged, under a prior decision called Ioerger v. Halverson Construction Co., 377 Ill. App. 3d 223 (2007), that if the two Bulley entities were joint venturers, they both would have been able to use Illinois Worker's Compensation bar, but the Court said that this fact pattern did not apply.

Employer Takeaways

The concept of "joint employment" which we warn employers about all the time simply does not exist when it comes to asserting the Illinois Worker's Compensation bar. It does not matter if your business purchases the worker's compensation policy or even pays the claim under some self-insurance provision – unless your company is the "direct employer" it may still be held liable outside of Illinois' worker's compensation statute.

Fair or not, the Illinois Supreme Court will construe the definition of "employer" narrowly when it comes to reviewing who can assert the statute's exclusivity provisions. There are a few things that employers can do on the front-end when it comes to contracting with the end-user to support a later application of the worker's compensation bar. But these arrangements need to be put in place before a worker is hurt.

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