10-31-11; Subrogation, indemnification, contribution--is there a distinction in relation to Illinois Workers’ Compensation Act?

If it means possibly defeating the purpose of the Illinois Workers’ Compensation Act then “no” as found by the Illinois Appellate Court, 5th District in Enterprise Leasing Company of St. Louis v. Hardin, 2011 IL App (5th) 100201 (September 8, 2011). Defendant collided with a median while driving a rental car in Kentucky during business trip; her two passengers, who were her co-workers, were injured.

The Appellate Court found the rental car company's claim is barred by the IL Workers' Compensation Act, which gives employees immunity from liability for negligence that injures their co-workers. The Court ruled co-worker immunity bars indemnification claims by third parties.  

Plaintiff Enterprise argued their indemnity claim was not barred by the Illinois Workers’ Compensation Act because it is a claim sounding in indemnification and not subrogation. The Illinois Appellate Court 5th District disagreed, citing factual similarities with both Ramsey and Kotecki rulings noted Section 5 of the Illinois Workers’ Compensation Act provides co-workers with immunity that prevails over the right to contribution and it is a bar to third party contribution claims against co-workers.  

What continues to be confusing is the Court at first admits contribution, subrogation and indemnification are distinct causes of action yet by contrast, both indemnification and subrogation place the entire burden for a loss on the party ultimately liable or responsible for it and by whom it should have been discharged. So are they distinct causes of action?

We think the Appellate Court’s own words sums up this confusing topic:

Requiring the Defendant to bear the cost of the claims paid by the Plaintiff for which she would have been immune from liability if sued directly would shift the burden of these work related injuries from the employer to the co-worker and we also note that claims could exceed the limits placed on the employer’s liability by the Illinois Workers’ Compensation Act which would defeat the purpose of the Illinois Workers’ Compensation Act just as surely as allowing a third-party contribution claim under similar circumstances.

This article was researched and written by Michael J. Danielewicz, J.D. If you would like to discuss this article further Michael can be reached at mdanielewicz@keefe-law.com or office 312-756-3703 or cell 312-907-8220.