Illinois Commission Does Not Have Exclusive Jurisdiction Over Insurance Coverage Question

Acknowledging that under 820 ILCS 305/18, questions under the Illinois Workers’ Compensation Act must generally be determined by the state’s Industrial Commission, a state appellate court held that the circuit courts of Illinois nevertheless have jurisdiction to resolve certain workers’ compensation matters [Illinois Ins. Guar. Fund v. Priority Transp., 2019 IL App (1st) 181454, 2019 Ill. App. LEXIS 851 (Oct. 24, 2019)]. Accordingly, where claimant’s former employer was merged into a new corporation under 805 ILCS 5/11.50(a)(2), two and one-half weeks prior to claimant’s work-related injury, and claimant received benefits for a period of time from the workers’ compensation carrier of his original employer, which then became insolvent, the Industrial Commission did not have exclusive jurisdiction to determine if the new corporation’s insurer should be responsible for further benefits, or if those benefits were the responsibility of the Illinois Insurance Guaranty Fund.

Background

Witte was employed as a truck driver for Fox Midwest, which had a workers’ compensation policy with Fremont Casualty (“Fremont”). On December 31, 1999, Fox Midwest merged into 1999 TGT Merger Sub, Inc. (“TGT””), a subsidiary of another trucking corporation. TGT had secured workers’ compensation coverage through Ace Insurance Company (“Ace”). On January 17, 2000, Witte sustained injuries in a work-related accident. Fremont began paying benefits and did so until July 2, 2003, when it was involuntarily liquidated by the State of Illinois.

Several years later, the Fund filed suit in a circuit court, contending that Witte became the employee of TGT after the merger and that TGT’s insurer was responsible for the benefits paid and to be paid to Witte. TGT and Ace moved to dismiss, contending that the circuit court lacked subject matter jurisdiction to entertain the Fund’s claims. In pertinent part, the circuit court denied the motions to dismiss and granted Fund’s motion for summary judgment, holding that Witte was covered under the TGT policies with Ace at the time of his injury.

Appellate Court’s Decision

The appellate court affirmed. Acknowledging that generally under Section 18 of the Act, workers’ compensation issues were to be determined by the Commission, the court said Section 18 was, nevertheless, insufficient to divest the circuit court of jurisdiction of all issues involving workers’ compensation. Because of this, a court must determine whether an issue involving workers’ compensation is reserved exclusively for the Commission or whether the circuit court and the Commission hold concurrent jurisdiction over the issue. If concurrent, a court must decide which forum has paramount jurisdiction.

Issue Was Not Whether Witte Was Entitled to Benefits

The court stressed that the Fund’s declaratory judgment action did not involve an issue about whether Witte was entitled to workers’ compensation benefits. Indeed, it had already been determined that he was entitled to such benefits and he had received some three years of benefits from the original insurer. The primary issue concerned the legal effect of Fox Midwest’s merger into TGT as it related to workers’ compensation insurance policies. Stated broadly, the dispute related to corporate and contract law.

The court continued by stating that while workers’ compensation law was tangentially related to the issue at hand, the case did not require a detailed examination of the Act or any other matter where specialized and technical expertise in workers’ compensation law was required. The court concluded that as such, given the questions of corporate and contract law involved, the Fund’s declaratory judgment action was properly resolved by the circuit court.