Exclusive Remedy Applies – Defendant Had Preexisting Legal Obligation To Pay Workers’ Compensation Benefits

June 2021

By: Andrew R. Makauskas

In Munoz v. Bulley & Andrews, LLC, 2021 IL App (1^st) 200254, Plaintiff was an employee of Bulley & Andrews Concrete Restoration, LLC (“Bulley Concrete”). He sustained a back injury arising out of and in the course of his employment. Workers’ compensation benefits, including medical bills exceeding $76,000.00, were paid by Bulley & Andrews, LLC (“Bulley LLC”), the general contractor for the project. Bulley Concrete was a wholly-owned subsidiary of Bulley LLC.

Plaintiff filed a lawsuit in circuit court against Bulley LLC and other defendants. Bulley LLC moved to dismiss, arguing that it was immune from the lawsuit under the exclusive remedy provisions of the Workers’ Compensation Act (“Act”) (820 ILCS 305/5(a), 11 (West 2018)).

Judge Gillespie agreed, and dismissed Plaintiff’s lawsuit as to Bulley LLC.

Plaintiff appealed, arguing that Bulley Concrete was his employer, not Bulley LLC. The workers’ compensation claim had been made against Bulley Concrete, not Bulley LLC. Plaintiff argued that a parent company is not shielded from a lawsuit filed by an employee of its subsidiary.

Plaintiff also cited Laffoon v. Bell & Zoller Coal Co., 359 N.E. 2d 125 (1976) in support of his position. In that case, employees of three different subcontractors were injured. None of the subcontractors had workers’ compensation insurance, which made the general contractor responsible for paying their workers’ compensation benefits as the statutory employer. Id., 359 N.E. 2d 125. The Supreme Court found that the general contractor did not become the employer for purposes of the Act merely because it paid their workers’ compensation benefits. Id., 359 N.E. 2d 125.

However, the First District in Munoz distinguished Laffoon. In this case, Bulley LLC, under its contract for the project, was obligated to pay the workers’ compensation insurance and benefits for Bulley Concrete’s employees. This preexisting contractual obligation to pay these workers’ compensation benefits was not present in Laffoon. The First District held that because of this pre-existing legal obligation, the exclusive remedy provision barred the lawsuit by Plaintiff against Bulley LLC. The Circuit Court’s decision was affirmed.

In assessing whether an exclusive remedy defense can be used, look to see if there is some type of contractual obligation requiring your company or insured to provide the benefits. This can be in the form of the contract of the type in Munoz or arguably in a borrowing/lending agreement.