Illinois Supreme Court Holds Primary Jurisdiction No Longer Grants Circuit Courts Authority to Stay Pending Workers’ Compensation Claims

April 2020

The Illinois Supreme Court recently addressed the interplay between circuit courts and the Illinois Workers’ Compensation Commission in the context of an insurance coverage dispute.  In West Bend Mutual Insurance Company v. TRRS Corporation, et al., 2019 IL 124690, West Bend filed a declaratory judgment action in circuit court seeking a determination that it owed the petitioner’s employer no coverage for an underlying workers’ compensation claim.  West Bend argued the employer failed to give timely notice of the workers’ compensation claim in violation of the policy’s notice requirements.

West Bend moved to stay the workers’ compensation claim filed with the Illinois Workers’ Compensation Commission pending resolution of the insurance coverage litigation.  The circuit court granted West Bend’s motion to stay.  The circuit court ruled the stay was appropriate under the doctrine of primary jurisdiction.  The main issue on appeal was whether the decision to stay the workers’ compensation case was a proper exercise of primary jurisdiction by the circuit court. The Illinois Supreme Court reviewed established precedent in Illinois, noting both the circuit court and the Illinois Workers’ Compensation Commission have jurisdiction to decide insurance coverage matters.  However, as between the two venues, circuit courts have primary jurisdiction because the interpretation of an insurance policy involves questions of law which fall precisely within the scope of Illinois’ declaratory judgment statute (735 ILCS 5/2-701).

The Illinois Supreme Court ruled the circuit court erred by staying the workers’ compensation case.  The Supreme Court held the doctrine of primary jurisdiction does not grant the circuit court the power to stay an administrative proceeding before the Illinois Workers’ Compensation Commission.   In so holding, the Illinois Supreme Court expressly overruled Hastings Mutual Insurance Co. v. Ultimate Backyard, 2012 IL App (1st) 101751.  Given this recent decision, insurance carriers contesting insurance coverage for workers’ compensation claims will no longer have the ability to stay workers’ compensation claims based on the doctrine of primary jurisdiction.