What's The Point In Settling

July 2014

For the workers' compensation respondent, settling carries three main goals: termination of past and present litigation, prevention of future litigation, and minimization of exposure. When a settlement agreement occurs, these goals are embodied in the wording of the settlement contract. Respondents must be aware of the advantages and pitfalls that can arise from including various terms or from excluding certain language in the contract. This article provides a brief overview of the pertinent case law, and important points to consider with each settlement.

Workers' compensation settlement contracts are governed by contract law, including the concepts of mutual intent and consideration. Hagene v. Derek Polling Constr., 388 Ill.App.3d 380, 902 N.E.2d 1269 (Ill.App., 5th Dist., 2009). The courts will therefore typically enforce unambiguous terms as written. Countryman v. Industrial Comm'n, 292 Ill.App.3d 738, 686 N.E.2d 61 (Ill.App. 2 Dist., 1997). However, whether a contract is ambiguous or clear is a question of law, and if the contract is ambiguous its interpretation is a question of fact subject to rules of contract construction and parol evidence. Id. One rule of construction commonly cited by the appellate courts is the tenet that the more specific provision controls over the more general provision. Mayhew v. Industrial Comm'n, 304 Ill.App.3d 557, 710 N.E.2d 909 (1999). As with general contract law, courts will also look toward the intent of the parties, which is discerned from the language used as well as the circumstances of the transaction. Hagene.

The courts have nonetheless expressed disfavor toward strictly interpreting contracts to find that a party has relinquished statutory rights. Hagene, supra; Gallagher v. Lenart, 226 Ill.2d 208, 874 N.E.2d 43 (2007). In most circumstances, an explicit statement waiving a specific right is required before the courts will imply such a right has been extinguished. Id. Therefore, if it is the intent of the agreement to terminate litigation of these issues, the contract drafter must carefully tailor the language to accomplish this.

Making Change Work: AMA Standards Part II

There is more we can do to promote the trend of decreasing permanency awards, specifically, at the end of Part I of this article. Even though the Commission has been somewhat critical of the impairment ratings to date, these critiques give respondents ways to improve and bolster this evidentiary tool. Remember, most, if not all, of the evidence presented for factors other than the impairment rating tends to come from petitioner’s own testimony. And, when there is no evidence from the respondent rebutting the testimony, the Arbitrator has no choice but to weigh the factor in petitioner’s favor. How do we combat this?

In order to strengthen defenses under the “new” approach, here are some tips for ensuring that at trial your hard work on the file will pay off and you will see those permanency awards decrease.

Impairment Rating Report

Decide whether an AMA rating is right for your case (is the petitioner at MMI, is it cost effective given the nature of the injury?). In all cases for date of injury after September 1, 2011 you have the right to obtain an AMA rating. Without a rating, no weight will be assessed for this factor;
Ensure that the medical provider is certified for the 6th Edition of the AMA Guidelines;
Ensure the doctor has secured a functional history intake form, QuickDASH, PDQ or other recommended questionnaire from petitioner and that the doctor provides it to you before deposition or trial. Not providing it can undermine the opinion and less weight may be given to the rating;
Scrutinize the report! Make sure the doctor used the diagnosis that would result in the highest impairment;
The medical records should be reviewed by the evaluator prior to the examination so that petitioner’s complaints can be verified;
Consider obtaining the rating when the petitioner has returned to full duty work so that any limitations due to work activity can be corroborated;
Assess whether you need the doctor’s deposition prior to trial. A deposition can allow the doctor to go through his analysis in a more detailed manner on the record and add credibility to his testimony where needed.

Application Of De Minimis Rule Upheld By Second District

June 2014

By Andrew R. Makauskas

In Charles L. St. Martin v. First Hospitality Group, Inc., d/b/a Hilton Chicago/Indian Lake Resort, 2014 Ill.App. (2d) 130505, the plaintiff alleged he was injured when he tripped and fell on an uneven portion of sidewalk outside the hotel owned by defendant. At his deposition, plaintiff testified that on the day of the fall, he was attending a seminar at the hotel. He went outside to smoke a cigarette at some benches 10 to 12 feet from the main entrance where an ashtray was located. When he returned, he tripped over uneven slabs of concrete a couple of feet away from one of the doors at the main entrance to the hotel. Photographs showed the area was just before the entryway rug and under a roof that extended over a drive-up area at the front of the hotel. Plaintiff's brother later measured the height difference between the concrete slabs at 1 ½ - 1 ¾ inches.

The defendant provided photographs which were purportedly taken by the hotel's manager the day after the fall. The photographs showed the difference in height to be around ½ inch. An expert retained by defendant observed the area approximately 29 months after the incident date and measured the height difference at under an inch. In an affidavit, the expert stated the sidewalk would heave and move during normal winter conditions and that the varying alignments of the concrete slabs were typical, commonplace and expected. He opined the area was not in need of repair or replacement and that it did not constitute a hazardous condition.

The defendant moved for summary judgment, arguing it did not owe plaintiff a duty of care because the defect in the sidewalk was de minimis. Plaintiff argued the de minimis rule was inapplicable because of how near the defect was to the front doors. Thus, he maintained, there was an issue of fact as to whether aggravating circumstances existed. The trial court granted the motion for summary judgment, finding the defect was de minimis as a matter of law and further noting the affidavit of defendant's expert was unrebutted. Plaintiff appealed.

Employers Liability Insurance: The Kotecki Coverage Exclusion And The Importance Of A Reservation Of Rights Letter

June 2014

In Illinois, an employer's contribution liability cannot exceed the amount of workers' compensation payments in accordance with the Illinois Supreme Court decision Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155, 166 Ill.Dec. 1, 585 N.E.2d 1023 (1991). This well-known rule of law in Illinois is commonly referred to as the "Kotecki" capon damages. Subsequent to the Kotecki decision, Illinois courts held that an employer may waive its Kotecki protection by contract and thereby become potentially liable for its full pro rata See Liccardi v. Stolt Terminals, Inc.share of contribution liability., 178 Ill.2d 540, 227 Ill.Dec. 486, 687 N.E.2d 968 (1997); Braye v. Archer Daniels-Midland, Co., 175 Ill.2d 201, 222 Ill.Dec. 91, 676 N.E.2d 1295 (1997). A Kotecki waiver is typically found in a contractual indemnity provision, where a party agrees to indemnify and hold harmless another party.

The issue of coverage under an employers liability policy for liability above the Kotecki cap was addressed in Christy-Foltz, Inc., v. Safety Mutual Casualty Corporation, 309 Ill.App.3d 686, 722 N.E.2d 1206, 243 Ill.Dec. 137 (4th Dist. 2000). In Christy-Foltz, the plaintiff insured filed a declaratory judgment action seeking a determination that its employers liability policy covered all contribution liability, including any liability above the Kotecki cap. The defendant insurer, Safety National, conceded that it owed coverage for any judgment up to the Kotecki cap, but denied any duty to cover damages above the Kotecki cap. Safety National relied on a policy provision which excluded coverage for "any loss or claim expenses voluntarily assumed by the employer under any contract or agreement, express or implied." The Appellate Court held the plaintiff's contractual Kotecki waiver constituted a voluntary agreement to assume liability beyond the Kotecki limit on damages and, therefore, the policy did not provide coverage for any liability above the Kotecki cap.

Legislation Expanding Employees Right to Sue Safety Consultants Awaits Vote in Springfield

May 2014

By Francis M. Brady

In 2012, the Illinois Appellate Court ruled that a worker cannot sue a consultant (styled "service organizations" by the Court to conform with language of the Illinois Workers' Compensation Act) based on negligent safety advice or service the consultant provides to the worker's employer. Mockbee v. Humphrey Manlift Co., Inc., et al., 973 N.E. 2d 376, 362 Ill. Dec. 276 (May 18, 2012).

Now, in a vote of 35-19, the Illinois Senate has passed a measure aimed at overruling the Appellate Court. Senate Bill 3287 seeks to amend the Illinois Workers' Compensation Act so that only service organizations "wholly owned" by the employer, its insurer or broker, are, like the employer itself, immunized from civil suit under the exclusive remedy provisions of the Illinois Workers' Compensation Act.

Opponents of Senate Bill 3287, including numerous business and insurance associations, argue that "erosion of the exclusive remedy provision will create more litigation and higher costs for employers, both public and private." The economic impact will be most keenly felt by small employers that typically cannot afford to employ full-time safety professionals and must hire outside consultants. Obviously, these outside consultants will have to pay more for insurance costs which will be passed along to small employers. There may be fewer inspections done and the end result will be that the workplace will be "exposing more workers to injury."

Ramirez v. FCL Builders, Inc., 2013 IL App (1st) 123663

March 2014

By Andrew R. Makauskas and Molly P. Connor

The plaintiff, an employee of Sullivan Roofing, Inc., ("Sullivan"), was hurt pushing heavy material across the roof of a warehouse. Sullivan was a subcontractor of FCL Builders, Inc., ("FCL"), the general contractor for the warehouse project. The roofers had been using all-terrain vehicles, ("ATVs"), to move the material, but were told to stop after the practice was determined to be damaging to the roof. The plaintiff brought a negligence claim against FCL. Sullivan was not a party to the litigation.

At the conclusion of the trial, the jury found in favor of the plaintiff and found he suffered $1.985 million in damages. On the jury verdict form, the jury allocated fault as follows:

Plaintiff: (20%)
FCL: (40%)
Sullivan: (40%)

The verdict was $1.58 million after reduction for plaintiff's share of fault.