Synopsis: Toward a Better Understanding of Workers’ Compensation Certificates of Insurance for our Industry.
Editor’s comment: What is a WC Certificate of Insurance and Why do Employers in IL, WI, IN and MI Want/Need Them? As we have advised our readers in the past, Illinois and many states have gotten very serious about WC insurance requirements. Particularly for large employers, you don’t want your vendors/suppliers to have someone get injured and have their employee bring a potentially explosive WC claim against your company. Also, as we see staffing companies and PEO’s growing rapidly, if you are using such workers, you want to be sure you are covered if a staffer suffers an unfortunate injury.
According to the 8th Edition of Black’s Law Dictionary, a certificate of insurance (or COI) is “A document acknowledging an insurance policy has been written and setting forth in general terms what the policy covers.” Typically, the COI is a snapshot of basic policy coverages and limits at the time of issuance of the certificate. Certificates are not intended to modify coverages or change the terms of the insurance contract which they “certify.” Certificates of Insurance are provided either by the insurance company who issued the policy or by an insurance agency who represents the insurance company and issues the certificate on behalf of the insurance company.
Most insurance certificates are created to provide insurance policy information to interested third parties. They may be produced as a requirement of a contract between the named insured on the policy and the third party involved. A Certificate of Insurance typically provides to the certificate holder proof a workers’ compensation insurance policy exists. Please note in most states, WC coverage is in place or it is not; there isn’t a limit or amount of WC insurance provided on the COI—all benefits are covered. A certificate of insurance may also convey information to the certificate holder as required under their contract with the named insured to be shown as an additional insured or having coverage limited to a specific job or location.
WC Coverage for Staffing Companies and the Employers Utilizing Them
If you use a staffing company or a PEO, in Illinois, the rule on liability and needed WC insurance coverage for work-related injuries is not clearly known by even some veteran risk managers. The Illinois rule is both companies are jointly liable for a work-related injury to a staffer. In short, both companies are “on the hook.” The battle may sometimes be over primary liability. The easy answer to the question of primary liability is the company where the injured person was working is primarily liable unless there is an agreement to the contrary. Please be sure you have a written agreement as to primary liability.
Therefore when you retain a staffing or a staffing company, be certain to ask for documentation confirming they are not only providing you the worker(s) but also providing primary WC coverage for any injuries suffered by the worker(s). Remember, if you are told they have workers’ comp coverage, that simply means what it says—they have the WC coverage required by law. It does not necessarily mean they are providing primary coverage of injuries. This is one situation where you want to look at the fine print to insure you are clear about who may have primary coverage. The difference can cost thousands of dollars.
Should I Let a Sole Proprietor “Opt Out” of WC Coverage and Still Work for Me?
We get asked this question with some frequency. The IL WC Act allows a sole proprietor or officers of a company to “opt out” of coverage and save the premiums associated with workers’ compensation insurance for themselves. Please remember if you let such an individual on your worksite or facility, you take a giant risk. If that man or woman is killed as the result of a work-related injury, the minimum death benefit in this state is currently about $625,000. The maximum Illinois death benefit is over $1.6 million dollars. It is also possible for a worker to require lots of medical care and potentially need TTD before passing away. Most widows or widowers in such a setting may be willing to take a shot at making a claim even if their spouse didn’t insure for such risks. As we have told many clients, widows/widowers make sympathetic claimants.
In short, the exposure that comes from allowing a potentially uninsured contractor on your job site is massive. For a small or mid-sized company, it could be a business-busting liability. In our reasoned legal view, we strongly recommend against letting anyone who “opts out” of WC coverage for themselves to work on or at your jobsite(s). Make sure they have coverage for themselves and all their workers at their cost and not yours.
Limitations of Workers Compensation Certificates of Insurance
As a document that only provides information about workers’ compensation insurance policy coverage an insurance certificate is limited. In today's world an insurance certificate is used every day to provide valuable policy information to third parties. Generally a COI is used when someone requested to be supplied with proof the named insured on the policy carries WC insurance usually as required by a contract or continuing business relationship.
The certificate of insurance is limited in the type of information it can provide. The COI is designed to provide rudimentary policy information. Please also remember it is workers’ compensation fraud in most states to provide a false COI. While we understand what the certificate is, we also are repeatedly asked what a COI isn’t and can’t do.
A Certificate of Insurance cannot:
§ Provide those seeking the COI with defined rights under the related insurance contract—you need the policy itself to know what it provides;
§ Change a WC insurance policy—changes/modifications can only be made by an endorsement to the policy--if the COI conflicts, the insurance policy typically controls;
§ A certificate of insurance is only an informational document and does not guarantee or preclude changes or endorsements to the insurance policy.
§ Extend insurance policy conditions to the certificate holder;
§ Modify the terms within the WC insurance policy;
§ Guarantee an insurance policy will not be cancelled in accordance with the conditions of the policy;
§ Cancellation of a workers compensation policy may be controlled by state statute and are not able to be modified by changes to a COI;
§ Bestow or extend new rights to the certificate holder;
§ Definitively provide insurance coverage to the certificate holder.
If you are a certificate holder and require modification to the named insured's insurance policy you should request a policy endorsement reflecting such requirements. Many businesses require some form of additional insured on the named insured's policy. Most commonly such a request applies to general liability and business auto policies rather than a workers compensation policy. If you need policy modification, make sure the policy endorsement is processed.
What to Look for on a COI
Certificates of insurance are crucial to the world of business, particularly construction. As an insurance document the COI provides information about insurance policies and coverage restrictions to interested third parties. Most of those third parties are involved because of some type of contract. Most often, certificates are asked for when there is some type of contract involving two or more companies.
Here's a list of the type of information you can find on a Certificate of Insurance:
§ Name and address of the named insured on the policy;
§ An issue date of the COI;
§ The name of the insurance carrier providing coverage;
§ A list of policy numbers for the various policies shown on the certificate;
§ Limits of liability might be present but for workers’ compensation there are no true “limits”;
§ Effective dates and expiration dates for the various policies on the certificate;
§ Information as to whether the Owner, Partners, LLC Members or Corporate Officers are included or excluded from workers compensation coverage;
§ There may be a section for a description of operations, special items, restrictions to coverage as provided on the included policies;
§ The Certificate Holder information, name and address;
§ Policy cancellation wording, conditions of notification;
§ The insurance producers’ signature(s).
Of these listed factors, we consider the most important one to be cancellation wording and conditions of notification—as the “general contractor” or anyone relying on a WC COI, you have to be notified if the underlying policy is cancelled for any reason. In the right setting, you may have to put the contractor off the job or your plant. Please remember it is against Illinois law not to have WC coverage and the IWCC can stop work or fine the parties involved. The fines can be very heavy and can certainly disrupt your business.
Regularly Audit Your Vendors/Suppliers
We are telling, asking, cajoling and requiring our clients to ask suppliers and anyone working on their property to regularly show them proof of insurance. The certificate is written proof workers compensation coverage is being provided for a worker or group of workers for a specified term. If you enter into any contract or agreement where the contracting company or their workers may try to shift liability to your business for work they are going to perform you want them to supply continuous proof of insurance coverage.
If you have questions about any of these recommendations, please send a reply. We appreciate your thoughts and comments. Please do not hesitate to post them on our award-winning blog.
Synopsis: Spoliation Alert!! Thoughts from Ellen Keefe-Garner, J.D., R.N., BSN on new Supreme Court ruling of note for employers/adjusters and risk managers.
Editor’s Comment: Yes, Illinois has a very limited law against destruction of evidence following an accident with injuries. However, Illinois employers need to be forewarned, there is no clear test to determine when evidence-preservation may be required. Our vote for risk managers who aren’t sure what to do—contact Ellen any time at 312-756-3734 and ask!
When evidence following an accident is spoiled or destroyed, a potential litigant may lose his or her chance to pursue a lawsuit against an offending party. Without a statute, law or clear rule against spoliation of evidence, a person or entity that might be responsible for an injury could be tempted to destroy the evidence with the hope of avoiding liability. Despite the injustice that might arise if evidence were destroyed by a potential litigant, the general rule in Illinois is there is no duty to preserve evidence. Although there is no general duty to preserve evidence, the Illinois Supreme Court has held such a duty can arise through an agreement, a contract, a statute, or under another special circumstance. Additionally, the Court has indicated the duty may be imposed when a defendant voluntarily assumes the responsibility to preserve evidence by affirmative conduct.
In Martin v. Keeley & Sons, the Supreme Court of Illinois continued to apply a limited interpretation of the law of spoliation of evidence. In Martin, four construction workers were injured when they fell off a beam on which they were standing when the beam collapsed. Following the accident, the Illinois Department of Transportation (IDOT) and the Occupational Safety and Health Administration (OSHA) inspected the damaged beam. After the inspection was completed and while the four potential Plaintiffs were still in the hospital, the employer destroyed and removed the broken beam.
As part of a larger lawsuit, the injured workers sued the employer for negligent spoliation of evidence, alleging the employer had a duty to preserve the beam as evidence. At the outset of the suit, the employer brought a summary judgment motion in which it argued the general rule indicating it had no duty to preserve the evidence for the four Plaintiffs. Agreeing with the employer, the Circuit Court granted summary judgment and dismissed the spoliation claims against Defendant-employer. Although the Appellate Court reversed the trial court’s ruling in favor of the employer, the Supreme Court later reversed the Appellate Court and affirmed the Circuit Court’s finding indicating the employer had no affirmative duty to preserve the broken beam as evidence.
According to the majority of the Supreme Court, the following factors were relevant to conclude the employer did not have a duty to preserve the evidence:
Ø The employer had not voluntarily undertaken to preserve the beam;
Ø The beam had not been moved from the place where it had fallen before it was destroyed, and
Ø Defendant-employer had never attempted to perform any tests on it.
Notably, the Court rejected the view mere possession or control of the evidence created a duty on the part of the employer to preserve the broken beam, or Defendant’s status as Plaintiffs’ employer made a difference. Nor did the Court find any reason to impose a duty to preserve evidence simply on the grounds the parties were likely to wind up in litigation as a result of the accident.
Notably, the dissenting opinion disagreed and concluded certain “special circumstances” had been established such that a duty to preserve had existed and summary judgment should not have been allowed. According to the dissent, one fact which established special circumstances included the fact Plaintiff-employees had been hospitalized when the broken beam was destroyed. The dissent described this as a special circumstance since the then-hospitalized Plaintiff-employees could not act to get the broken beam inspected. According to the dissent, another special circumstance was the likelihood litigation would result. In addition, the dissent pointed out refusing to recognize a duty to preserve might encourage other potential litigants to destroy evidence in order to circumvent discovery rules or escape responsibility.
Based on the outcome in Martin, it appears the Illinois rules applicable to spoliation of evidence continue to be as clear as mud. Although the Martin Court reiterated the general rule that parties have no duty to preserve evidence, the factual scenario underlying the case made the Appellate Court and the Supreme Court’s dissent raise good arguments over certain pesky facts they believed stood in the way of upholding Summary Disposition in favor of the Employer. Given the legitimate arguments raised in favor of disallowing summary judgment, all that was made clear by this ruling is most cases are going to fall squarely into a factual void in which it is unknown how any Illinois Court will eventually rule on a spoliation of evidence issue.
This article was researched and written by Ellen Keefe-Garner, J.D., R.N., BSN who can be reached for thoughts and comment at email@example.com.
Synopsis: BooooOOOO--Gotta Love the Scary Folks in Madison County, IL—Ghost Payroller Runs for County Office.
Editor’s comment: The top investigative reporter in the field of Illinois workers’ compensation is George Pawlaczyk of the Belleville News-Democrat. As we reported in our last KCB&A Update, we feel one of the major problems facing the State of Illinois and its thousands of taxing bodies are Ghost Payrollers—we define Ghost Payrolling as
§ Gov’t workers who are on unfunded “pensions” or basically back on our payroll for the rest of their lives after having quickly exhausted their sometimes miniscule pension contributions;
§ Gov’t workers on “odd-lot” total and permanent disability who could be working if their government body would bring them back and accommodate them in other positions;
§ Gov’t workers being given “disability” in various forms when they are clearly able to work and
§ Gov’t workers who get “PAL” or Paid Administrative Leave which is basically full pay without having to work as a weird form of “punishment.”
Last week, Mr. Pawlaczyk reported Madison County Board candidate Dennis Renner should stop accepting publicly funded disability payments and go back to his county truck driving job, his opponent in the Nov. 6 election said. It appears Candidate Renner is physically able to drive around the county, swing sledgehammers and install his own political signs.
"If he can perform those functions on behalf of his campaign, he should be well enough to go back to work," said Bill Blair, a Republican and the incumbent County Board member from District 23.
It appears Candidate Renner filed seven workers' compensation injury claims with the IWCC over the past two decades. Commission records indicate four of the claims already resulted in nearly $273,000 in settlements and paid time off. Three other WC claims -- one in 2010 and two last year -- are pending against Renner's current employer, the St. Clair County Highway Department. Candidate Renner has been off work for over a year and continues to receive TTD because of alleged injuries to his back and knees which he asserts prevent him from working as a truck driver. He was last listed as making about $37,000 in his county job.
Illinois Workers' Compensation Commission records show Candidate Renner received a $50,000 settlement and $10,000 for paid time off in 1986, when he filed a claim, approved by a state arbitrator, in which a physician stated Renner lost 31 percent of the function of his "body as a whole," working for a private concrete company. Renner's next injury claim, filed in 1992, resulted in a total of $109,786 paid for by taxpayers for a settlement and paid time off for an injury sustained while he worked for the Illinois Department of Transportation. In 2004, he filed a pair of workers' compensation injury claims filed against a private trucking firm that netted $103,152 in settlements and paid time off.
For more on this scary story, go to http://www.bnd.com/2012/10/24/2371711/county-board-candidates-workers.html#storylink=cpy