When is a loss covered by the Illinois Workers’ Compensation Act?
Editor’s comment: The first thing an adjuster must do when a new claim has been made is to evaluate whether the loss is covered by workers’ compensation law (versus general liability or some other common law or statutory remedy). If so, the next inquiry is whether Illinois workers’ compensation law applies versus the law of some other state. Finally, if the case is properly an Illinois workers’ compensation claim, the adjuster must determine whether the policy in force at the time of the accident or disability covers the particular loss alleged.
A. Is this a workers’ compensation claim?
This basic question is often overlooked. The assumption is that if a workers’ compensation claim is filed, the case necessarily involves a loss that should be compensated under workers’ compensation law. However, in order to recover benefits under workers’ compensation law, the claimant must be at or close to work and “working” to obtain benefits. The traditional WC injury occurs when the employee is injured while incurring risks which they only incur at work vis a vis the risks of daily life and discourse. If it can be established that the accident or disability occurred outside the employment or as a result of a risk of everyday life (regardless of work), the claim for workers’ compensation benefits should be denied.
One exception to the general rule above is the “traveling employee” rule. Claims involving employees who are traveling on a special mission for their employers are said to be protected by workers’ compensation coverage for all activities they could reasonably be expected to partake in while on the road.
Also, it is important to understand that the employer and its carrier and TPA have in some instances an “‘option” with regard to payment of benefits under either workers’ compensation or general liability. For example, if an employer has an employee become injured as a result of slipping on ice and snow while working on company property, it is possible that you could successfully deny the claim for workers’ compensation benefits only to then face a premises liability lawsuit which is possibly much more expensive to defend and potentially explosive due to the unpredictability of jury awards. The employer can opt not to fight the workers’ compensation claim and voluntarily pay workers’ compensation benefits which would block any third party claim against the employer if the employee knowingly accepts such benefits.
B. Illinois jurisdiction
Once it has been established the claim properly involves workers’ compensation benefits, the adjuster must determine whether Illinois is the proper jurisdiction for the claim to be heard. It is critical to understand a claimant could have a claim for workers’ compensation benefits in a multitude of states or jurisdictions. The employer should receive credit for any benefits paid in any state or under federal law under the full faith and credit clause of the United States Constitution. You should never have to double or triple pay benefits. But remember, payment of Illinois benefits does not block the filing of a claim in another state or under federal law, if applicable.
Illinois has proper jurisdiction if one of the following tests are met:
1. The accident occurs in Illinois. This concept applies even if the employee executed a written agreement prior to employment to only seek benefits in another state;
2. The accident occurs outside Illinois but the “contract for hire” was formed in Illinois. This is the tactic most commonly used to bring out of state claims into Illinois. The contract for hire is said to be finalized where the employee accepts the offer of employment which leads to a number of factual disputes;
3. Employment was principally localized in Illinois. This is utilized when the employer may have an out of state headquarters for employees who really perform the majority of their work in Illinois. This situation frequently occurs in trucking claims where the petitioner establishes the principal localization of work in Illinois by logs indicating the aggregate number of miles driven in Illinois versus other states.
Other factors sometimes cited by the Commission and the courts in jurisdiction claims include the state of petitioner’s residence, the location of the principal work site and the level of business conducted by the employer in Illinois. These concepts are not contained in the Illinois statute but seem to be utilized by the courts looking for factors considered in other areas of law involving jurisdictional fights.
C. Pre-injury agreements with regard to jurisdiction
Be wary of pre-injury agreements to have an employee select or agree to the jurisdiction where benefits will be received upon suffering an injury. Some employers with multi-state operations or traveling employees will routinely require employees to execute such agreements. These documents will generally be ignored in Illinois and we do not feel that they have any real legal effect. However, we are not aware of any prohibition with regard to such agreements. It is possible that an employee will not become aware of his or her ability to make a claim for benefits in Illinois or may honor they commitment and may act consistent with the agreement with regard to jurisdiction. If workers’ compensation benefits will be paid timely in the state that they have agreed to and a dispute does not arise, this concept may be successful.
D. Multi-state settlements
Also, when any workers’ compensation claim is settled, you may attempt to block the filing of other claims by indicating that the settlement is for claims in any state. This technique is employed more for the perception of the employee and his attorney than for its legal effect. For technical reasons which do not bear repetition here, this concept probably wouldn’t be legally effective. It does leave petitioner and his counsel with the sense that closure has been reached and may cause them to refrain from filing subsequent claims in other states.
E. Insurance Policy Coverage
The adjuster must also consider whether the specific policy written for the employer covers the loss. The date of accident or disability must fall within the dates of coverage although this issue becomes clouded in repetitive trauma claims where no specific incident is identified. It is not uncommon for two or three different insurance carriers to argue that the actual manifestation of injury occurred during a different carriers’ policy. If a coverage question is precipitated by the lapse of the workers’ compensation policy prior to the accident taking place, the insurance carrier must prove that the policy was properly terminated. This requires notice to the employer/respondent as well as the Workers’ Compensation Commission. Otherwise, the Workers’ Compensation Commission will require extension of coverage through the date of accident to ensure the injured party gets benefits.
An additional consideration in policy coverage is the employment position of petitioner. If petitioner is a sole proprietor, owner or partner of a business, coverage for injuries must be elected. If there is no election for coverage, the principal may not be entitled to workers’ compensation benefits paid by the carrier. This does not mean benefits might not be sought; they would just not be covered by the insurance policy. This also would not affect any other common law rights available.
If you have thoughts or questions about jurisdiction, coverage of the Act or any other workers’ compensation or employment law issue, send a reply.
