Two Birds, One Stone: Simultaneously Concluding Work Comp and Civil Litigation

December 2018

By: Jeffrey F. Clement

The Petitioner sustained eye injuries while laying carpet. Not only was he the sole employee of the Respondent company, he was its President. Defending against his attempt to recover Comp benefits, BCM obtained a copy of the Respondent’s workers’ comp insurance policy. Careful scrutiny confirmed petitioner was not protected. Specifically, he executed a form electing to opt out of coverage. BCM notified Petitioner’s attorney that the case would be fought in consideration of his client’s choice.

Counsel for Petitioner believed he would be able to argue in his client’s favor based on either an equitable remedy or by arguing the policy to be illusory. In other words, counsel thought it was “not fair” the Petitioner could pay premiums but not be covered for his injuries sustained at work. The issues counsel raised would require a Declaratory Judgment action in the law courts for their resolution.

Given the specter of costly litigation looming in both the Circuit Court and at the Illinois Workers’ Compensation Commission, BCM and the client determined legal research was warranted.

Accordingly, BCM’s Comp department enlisted the Firm’s Civil Litigation section to pinpoint the exact basis for our coverage defenses and determine how we could deploy them to preempt future litigation. Fortunately, the research conducted by BCM supported our defenses entirely. The Act specifically allows for a corporate officer to opt out of coverage pursuant to section 820 ILCS 305/3(17)(b) of the Act. And, all that is required for an “opt out” to be effective is for the insurance carrier to receive written notice of such election to withdraw. A “corporate officer” includes a bona fide President. In addition, Illinois case law supports upholding the “opt out” policy even when the corporate officer in question is also the sole employee. The Illinois precedent was strong that the contract terms were to be honored over the equitable arguments petitioner’s attorney was making.

Fortified by the outcome of its investigation, BCM counseled the client to hold firm to the non-coverage defense. Recognizing, however, the costs and risks of further litigation, BMC decided to share with petitioner’s attorney the documentary evidence unearthed by the investigation. This strategy proved successful and counsel agreed to voluntarily dismiss the pending workers’ compensation case, acknowledging he would not be successful on the coverage issue.

Our client thus saved further litigation costs for the workers’ compensation matter and a potential civil coverage lawsuit. This instance provides an excellent example not only of the benefits to be reaped when Workers’ Compensation and Civil Defense join forces but also how getting out in front of an issue early results in savings in the long run.