IL Contractor Who Provides Coverage for Subcontractor’s Workers Not Immune From Suit
The exclusive remedy provisions of the Illinois Workers' Compensation Act (Act)—820 ILCS 305/5(a), 11— do not extend to a general contractor who paid workers’ compensation insurance premiums and benefits for a subcontractor and its employees, held the Supreme Court of Illinois [Munoz v. Bulley & Andrews, LLC, 2022 IL 127067, 2022 Ill. LEXIS 2 (Jan. 21, 2022)]. The Court stressed that the Act lacked any provision for an entity that was legally distinct from the immediate employer to insulate itself against liability for its negligence by paying workers’ compensation insurance premiums or benefits on behalf of the immediate employer of an injured worker.
Background
Munoz filed suit against Bulley & Andrews (the general contractor), a corporation and sole owner of Bulley Concrete, which employed Munoz. The general contractor contracted with its subsidiary, Bulley Concrete, for concrete services at a Chicago site. As part of the agreement between the general contractor and the property developer, the general contractor agreed to purchase and maintain workers’ compensation coverage for subcontractors working at the site, including Bulley Concrete’s employees.
Munoz sustained injuries in a 2016 work-related accident at the site. He filed a civil action against the general contractor, seeking damages for his injuries. The county trial court found that the general contractor was immune from the suit under the exclusive remedy provisions of the Act and dismissed the case. The appellate court affirmed [2021 IL App (1st) 200254, 2021 Ill. App. LEXIS 48 (Feb. 10, 2021)].
Supreme Court Reverses
The Supreme Court noted that there was no dispute that on the date of injury, plaintiff was an employee under the Act and that he was injured in the course of employment. Rather, the dispute in this appeal concerned whether the general contractor, who was not plaintiff’s direct employer, enjoyed the immunity afforded by the exclusive remedy provisions of the Act.
The 1976 Laffoon Decision
The Court noted that it had previously addressed this very issue in Laffoon v. Bell & Zoller Coal Co., 65 Ill. 2d 437, 359 N.E.2d 125, 3 Ill. Dec. 715 (1976). Laffoon involved three consolidated appeals by injured workers employed by different subcontractors that did not provide them with workers’ compensation insurance. In each instance, the general contractor that hired the uninsured subcontractor was required to pay compensation benefits to the injured employee. The workers later sued the general contractors under the structural work statute (Ill. Rev. Stat. 1975, ch. 48, ¶ 60 et seq.). One of the general contractors moved for summary judgment, and two of the general contractors moved to dismiss the plaintiffs’ causes of action. The general contractors claimed that, by paying the injured workers benefits under the Act, they were entitled to the same immunity conferred on employers by section 5(a). The trial courts agreed with the general contractors and granted summary judgment in favor of one of the general contractors and granted the motions to dismiss in favor of the other two general contractors.
In Laffoon, on appeal before the Supreme Court, the general contractors maintained that section 5(a) of the Act provided them with immunity from an action for damages by an employee of an uninsured subcontractor when they were required to pay compensation benefits to the employee under section 1(a)(3) of the Act. The workers claimed that section 5(a) was intended to provide immunity only to the employer of the injured employee. The Supreme Court rejected the general contractors’ argument and held that only an injured worker’s direct employer can claim immunity.
Laffoon Applies to Instant Dispute
Returning to the instant dispute, the Supreme Court noted that the lower appellate court had acknowledged that the case at bar was factually similar to Laffoon, yet it declined to follow the Court’s holding. Instead, the appellate court concluded that Ioerger v. Halverson Construction Co., 232 Ill. 2d 196, 902 N.E.2d 645, 327 Ill. Dec. 524 (2008), created a new test for immunity based on whether an entity paid compensation benefits to an injured worker pursuant to a preexisting legal obligation. The appellate court found that the contract between the general contract and the property developer provided the requisite legal obligation.
The Court stressed that Ioerger did not abrogate Laffoon. In fact, the Ioerger Court did not discuss Laffoon because Ioerger concerned the specific and completely different issue of whether a joint venture is an agent of its members for purposes of immunity under section 5(a), which specifically provides that agents of an employer are also entitled to immunity.
The Court stressed further that Section 5(a) of the Act included no category granting nonemployers of the injured worker the ability to acquire immunity by either paying workers’ compensation insurance premiums on behalf of the injured worker’s direct employer or compensation benefits directly, as the general contractor did here. Nor did the Act make any provision for an entity that is legally distinct from the immediate employer to insulate itself against liability for its negligence by paying workers’ compensation insurance premiums or benefits on behalf of the immediate employer of an injured worker.