3-5-2018; Birth Defect Claims by Children Not Blocked by WC "Exclusive Remedy" Proviso; Wisconsin Legislature Moves Rapidly to Block Appellate Court Ruling about Coverage for Temp Workers and more

Synopsis: Birth Defect Claims by Kids Based on Exposure to Parents at Work Not Blocked by WC “Exclusive Remedy” Proviso.


Editor’s comment: We consider this article required reading for the insurance/claims industry. In a ruling with potentially far-reaching implications, two Illinois teenagers who claimed to have suffered life-long birth defects because of their fathers' workplace exposure to toxins are not blocked by the concept of their parent’s WC “exclusive remedy” under Section 5 of the IL WC Act. In short, the children can and will pursue a civil suit against their parent’s employer, Motorola for millions in damages.

I assume these sorts of claims will potentially bring billions in new liability exposure to U.S. employers, as birth defects are lifetime medical/physical problems, causing decades of misery. Juries are generally very amenable to finding causation and awarding box-car verdicts.

In these claims, the Appellate Court of Illinois ruled workers' compensation was not the exclusive remedy for 18-year-old Claimant Finzer and 17-year-old Claimant Hardison, because they were seeking damages for their own injuries, not their parents. The decision reversed the Circuit Court of Cook County, which granted Motorola's motion to dismiss, following that legal concept.

Motorola successfully argued because “the children’s injuries were … derivative of a work-related injury to their fathers’ reproductive systems,” they should be required to adjudicate their claims through the IL workers’ compensation system, like their fathers would have had to. But this argument ignored the fact the children weren’t employees of or otherwise paid by Motorola, and they were suing over their own injuries, not their fathers.

“Because minor plaintiffs seek to recover not based on workplace injuries sustained by their employee-fathers, but for their own personal injuries, the exclusive remedy provisions of the Arizona and Texas workers’ compensation laws do not apply,” Justice Mary Anne Mason wrote for the unanimous three-judge Appellate Court panel.

In contrast, the circuit court reasoned because the validity of these claims depended on the validity of their fathers’ claims, the workers’ compensation exclusivity provision applied to the teenagers’ claims as much as it would have to their fathers.

The appellate court found no basis for this legal argument. The ruling compared these claims to a personal injury lawsuit brought by a Claimant named Woerth in 1984. Woerth was a Kentucky man who contracted hepatitis from his wife, a nurse who allegedly got it from work. “The court specifically noted that ‘[w]hile Woerth’s hepatitis may derive from his wife as a matter of proximate cause, his cause of action does not,’” Mason wrote in Ledeaux v. Motorola. “Because Woerth was not seeking relief relating to his wife’s injuries, his claim for his own injuries was not barred by the exclusive remedy provision.”

Claimant Finzer’s father worked at Motorola’s manufacturing plant in Mesa, Arizona, from 1997 to 1998. Finzer was born in April 1999 with a club foot.

Claimant Hardison’s father worked at Motorola’s manufacturing plant in Austin, Texas, from 1991 to 2001. Hardison was born in April 2000 with an underdeveloped jaw.

In 2010, alongside almost two dozen other plaintiffs, Finzer and Hardison filed a combined complaint against Motorola, claiming negligence, willful and wanton misconduct, abnormally dangerous activity and loss of child consortium. They alleged their fathers sustained injuries to their reproductive systems as a result of exposure to toxic chemicals on the job. They also alleged that Motorola knew that its “limited environmental and biological sampling” did not comply with federal occupational safety guidelines.

The lawsuit further alleges “high-level corporate employees” knew reactions between the chemicals used during Motorola’s manufacturing process and machinery at the plants “dramatically increased and/or compounded the likelihood of resultant injury to workers and their unborn children.”

When the lawsuit arrived at the 1st District Appellate Court, the court had to decide how Finzer's and Hardison’s claims compared to the concept of a “derivative claim,” or a claim that “would not exist in the absence of the injury to the employee.” Common derivative claims include loss-of-consortium and wrongful death claims, which are generally resolved through the workers’ compensation system.

The Appellate Court ruling decided the teenagers’ claims were not derivative claims, because they were claims for “injuries personal to them that exist apart from and regardless of a work-related injury sustained by their parent.”

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Synopsis: Wisconsin Legislature Acts Fast to Overturn Recent Appellate Court Case Addressing Remedies for Injured Temp Workers. Research and analysis by Matthew Ignoffo, J.D., M.S.C.C

Editor’s Comment: A month ago we reported on the January 2018 ruling in In Re the Estate of Carolos Esterley Cerrato Rivera v. West Bend Mutual Insurance Company and Alpine Insulation, No. 2017AP142. The Appellate Court held because a deceased temporary employee’s Estate had not made any claim for workers’ compensation medical or death benefits, it was not barred from pursuing tort claims against the borrowing employer and its insurer.

In less than a month after the court’s ruling, Senate Bill 781 was introduced and three weeks later it was enacted into law. It was published March 1, 2018. This bill changes the language of Section 102.29 of the Wisconsin Worker’s Compensation Act from an employee who “makes” a claim for compensation to an employee who “has the right to make” a claim for compensation.

The pertinent discussion in Rivera focused on the fact the decedent’s estate had never made a claim for WC benefits. Under the amended Act the fact the estate had the right to make a claim means it cannot pursue a tort action against the employer who accepted the loaned employee’s services.

We suspected the legislature would not let the ruling stand for long and applaud it for quickly addressing the matter as the amendment is a welcome relief to staffing agencies, their clients, and their insurers.

This article was researched and written by Matthew Ignoffo, J.D., M.S.C.C., who is licensed and practices in Illinois and Wisconsin. Matt is one of KCB&A’s top Medicare Set-Aside experts.

Please feel free to contact Matt on a 24/7 basis at mignoffo@keefe-law.com.