Illinois Supreme Court Rules On Illinois Workers’ Compensation Immunity Issue

By Melinda S. Kollross

In Munoz v. Bulley & Andrews, LLC, 2022 IL 127067, the Illinois Supreme Court ruled that the immunity provisions of the Illinois Workers’ Compensation Act do not extend beyond an injured worker’s direct employer, “under the facts of this case”.

Facts

Bulley & Andrews, LLC (Bulley & Andrews) is the sole owner of Bulley Concrete. Although a wholly owned subsidiary of Bulley & Andrews, Bulley Concrete operated as a separate corporation, distinct from Bulley & Andrews. Each company had separate tax I.D. numbers, different presidents, and different workers.

Bulley & Andrews contracted with a project owner to serve as general contractor for a construction project in downtown Chicago. Under the contract, Bulley & Andrews agreed to purchase insurance that would protect Bulley & Andrews from claims which could arise out of Bulley & Andrews’ operations under the contract and for which Bulley & Andrews could be legally liable whether such operations were by Bulley & Andrews or by a subcontractor. Bulley & Andrews used Bulley Concrete and its employees for the project’s concrete work as well as other subcontractors.

During the time of the project, Bulley Concrete was an insured under a workers’ compensation policy. Bulley & Andrews and other subsidiaries and affiliates of the company were insured under the same policy. Bulley & Andrews paid the premiums for the insurance.

Plaintiff was employed as worker by Bulley Concrete. He was hurt on the project and filed a workers’ compensation claim against Bulley Concrete for his medical bills and was also paid temporary disability benefits. Plaintiff then brought a personal injury action against the general contractor on the project, Bulley & Andrews, seeking damages for its failure to insure that all project work was performed safely. The trial court dismissed plaintiff’s action holding that the action was barred by the exclusivity provisions of the Workers’ Compensation Act because Bulley & Andrews was legally obligated under the project contract to pay for the workers’ compensation insurance and benefits that plaintiff received. The Appellate Court affirmed, but the Illinois Supreme Court in a unanimous decision reversed and remanded for further proceedings on plaintiff’s action.

Analysis

The Supreme Court ruled that the statutory language used in the Workers’ Compensation Act was clear and unambiguous: Workers’ Compensation Act immunity from an action for damages was conferred only on the immediate employer of an injured worker, regardless of who paid benefits or the premiums for the workers’ compensation coverage. In this case, it was undisputed that Bulley & Andrews was not plaintiff’s immediate employer. Thus, plaintiff was not barred from suing Bulley & Andrews by Workers’ Compensation Act immunity.

Moreover, the fact that plaintiff’s immediate employer, Bulley Concrete, was a subsidiary of Bulley and Andrews was irrelevant according to the Court. If a parent and a subsidiary are operated as two separate and distinct companies, then only the company who is the immediate employer gets immunity. Under the facts of this case, that company was Bulley Concrete and not Bulley & Andrews.

The Supreme Court further addressed and rejected the appellate court conclusion that its past decision in Ioerger v. Halverson Construction Co., 232 Ill. 2d 196 (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. Ioerger held that an employee could not sue a joint venture, which was contractually required to reimburse the workers’ compensation insurance premiums paid by one of its constituent entities which happened to be the direct employer. According to the Court, Ioerger did not abrogate prior Illinois Supreme Court decisional law holding that Workers’ Compensation Act immunity did not hinge on the payment of benefits, but only upon the identity of the injured worker’s immediate employer. Further, the Court found Bulley & Andrews did not have any preexisting legal obligation to pay benefits because its agreement with the project owner did not provide for Bulley & Andrews to provide workers’ compensation insurance for Bulley Concrete. According to the Court, its decision in Ioerger was limited to the facts of that case.

Learning Point: Although the Supreme Court’s decision here seems straightforward, the Court couched its holding by stating that it was reaching its decision “under the facts of this case”. Under the facts of this case, Bulley & Andrews and Bulley Concrete were distinct companies; Bulley & Andrews was not in a joint venture with Bulley Concrete; there was no agency relationship between Bulley & Andrews and Bulley Concrete, and there was no written contract between Bulley & Andrews and Bulley Concrete that required Bulley & Andrews to provide workers’ compensation insurance or benefits to Bulley Concrete employees. What all this means is that like Ioerger, Bulley & Andrews should be viewed in the context of its own facts, and with different facts in another case to distinguish Bulley & Andrews, there might be a different result