8-16-11; Whatever happens, in Illinois, workers get rich and business takes the hit--a recent multimillion dollar decision from southern Illinois reconfirms this state can be duplicitous...

A couple weeks ago, The Southern newspaper based in Carbondale, IL had an article with a headline about a Marion, IL man supposedly winning a $4.2 million dollar workers compensation “verdict.” The article (which can be found here: http://thesouthern.com/news/local/crime-and-courts/article_afad61d0-b8d5-11e0-87e6-001cc4c03286.html#ixzz1TPrLUXOK) was actually about a retaliatory discharge claim being handled in the state courts, but the basis for the claim did allegedly arise from a work-related injury.

We point out there is a double-standard in the Illinois courts when one compares claims for retaliatory discharge by employees with claims for workers’ comp fraud brought by Illinois employers. We consider both to create rights and duties ancillary to our workers’ compensation system.

We first point out retaliatory discharge is specifically prohibited by the Illinois Workers’ Compensation Act. From our view, any action for retaliatory discharge claimed by an employee against an employer should be heard by an Arbitrator or the Commission and not by the Courts. The Act specifically provides in Section 4 (h) as follows:

It shall be unlawful for any employer, insurance company or service or adjustment company to interfere with, restrain or coerce an employee in any manner whatsoever in the exercise of the rights or remedies granted to him or her by this Act or to discriminate, attempt to discriminate, or threaten to discriminate against an employee in any way because of his or her exercise of the rights or remedies granted to him or her by this Act. It shall be unlawful for any employer, individually or through any insurance company or service or adjustment company, to discharge or to threaten to discharge, or to refuse to rehire or recall to active service in a suitable capacity an employee because of the exercise of his or her rights or remedies granted to him or her by this Act. (emphasis added)

What this means is the Workers’ Compensation Act specifically estops retaliatory discharge. At present, despite the statute, retaliatory discharge is not a claim ever handled by the Arbitrators or Commissioners at the IWCC. Such claims are routinely handled in the Circuit Courts regardless of the statutory language above. Please note handling such claims in the Circuit Courts allows claimants to seek damages for “pain and suffering” which an Arbitrator would never consider. Such claims also allow for punitive damages, almost as a matter of right because retaliatory discharge is always brought with allegations of intentional acts by the employer. You can’t make a claim for punitive damages at the Illinois WC Commission.

In contrast, when an employer wants to sue employees for the clearest possible evidence of WC fraud, the Illinois Workers’ Compensation Act has provisions defining such fraud with language at least as clear as the statutory provisions above. Our Workers’ Compensation Act specifically estops workers’ compensation fraud. However, the Circuit and Appellate Courts, particularly in the First District, appear to be bowing to the interests of ITLA in stalling or otherwise remanding such issues to initial adjudication solely by the IWCC, despite the fact numerous Commission decisions say they won’t handle WC fraud claims. Please also note with the grindingly slow pace of some workers’ compensation litigation that can be controlled to a great extent by the claimant bar, strong evidence of workers’ comp fraud could languish as continuance after continuance is granted.

In contrast, Illinois courts have routinely held an action for retaliatory discharge can simultaneously be sought while the workers’ compensation claim is pending. In workers’ comp, what is sauce for the goose, isn’t always sauce for the gander.

How does the injured worker settle his WC claim, thereby giving up all rights under the WC Act and still pursue the employer for retaliatory discharge which is clearly proscribed by the same legislation?

What is even weirder about this ruling is our research indicates the WC claim was quietly settled years prior to the verdict reported above. If you go the IWCC website and look up claim 09 WC 23977, you will find the wildly aggrieved and now potential millionaire, Larry Holland accepted $17,460.75 or 7.5% BAW for his injuries and the Arbitrator approved it about two years before this verdict. From our review of the IWCC website, it does not appear there was anyone who represented the employer in that claim, leading us to believe the insurance carrier directly settled it. To veteran observers, this would appear to cause you to wonder where the multi-million dollar damages came from—the settlement contracts don’t actually point to the payment of any TTD or lost time. Arbitrators won’t approve settlements if claimants remain off all work due to their injury.

Right now, one of our defense competitors from southern Illinois is telling everyone on their website you can’t go after a claimant for WC fraud if you first settle their workers’ compensation claim, even on a disputed basis. Well, it appears there is no concern on the other side—clearly Larry Holland gave up “all rights under the Act” in settling his pending workers’ compensation claim. One has to wonder if the defense attorney who got whacked with the multi-million dollar verdict knew what rights were being given up when settling workers’ compensation claims at the IWCC.

For all the members of the claimant bar who are certain to write about the Illinois Supreme Court’s ruling in Kelsay v. Motorola—please note Plaintiff Kelsay in that claim didn’t first settle the workers’ comp case and waive all rights under the Act.

What does this mean for employers? A few things – most important, build your case carefully when you are thinking about terminating a person who has a pending workers’ compensation claim. You need a clear reason for the termination, something that is not “pretext” or a bogus reason. This will need to be something you would terminate any employee for, such as theft, failure to appear for work without a doctor excusing the no-show, etc. If you are going to use grounds that are less severe, make sure you have terminated other employees who did not have a pending workers compensation claim for the same purpose so you can be sure to point out those claims as well in any subsequent case.

If the employee is claiming termination was due to his injuries, please also ask the Arbitrator to hear the dispute and don’t settle it quickly and quietly. Fight such claims early and often and at every stage of the process. If the Arbitrator will hear it, it is much, much cheaper to litigate at the IWCC and you avoid the issues of “pain and suffering” and punitive damages as we outline above.

Please note the outcome above also reinforces the idea of insuring you obtain a release and resignation as a part of claim closure. We understand most insurance carriers are reluctant about handling it. We feel that is short-sighted and someone should ask the carriers how they insure you for the statutory language above but simultaneously wash themselves of such liability.

The release/resignation tool is useful in many situations, not the least of which being those where there has already been a termination, although they can cost a lot more in such cases. If you incentivize a claimant to sign off on a release and resignation, you are insulating yourself from any potential retaliatory discharge claims in the future. Often times this will purchase peace for both parties when any potential civil claim is in dispute or tentative. Other times, you can nip this type of claim in the bud by obtaining a release/resignation early if you press your evidence and say you intend to terminate based on said evidence. Always remember to carve out the WC claim on any release/resignation paperwork, as the IWCC needs to have approved settlement contracts on the WC claim in order for you to protect yourself fully from any further seeking of benefits. Please feel free to respond to us with any questions on this idea or for a draft version of a release and resignation. KC&A is happy to work with Illinois employers to tailor your release/resignations to specific claims and needs.