NEWSLETTER - October 2007

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October 2007

This month we have news of two new attorneys joining our ranks, victories at the Appellate Court and the Illinois Worker's Compensation Commission, a new blow to municipal employers from our General Assembly and Governor and perhaps a "final answer" on the Borrowman/ Lenart decisions.

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• Firm Happenings
• Legislation Update
• Illinois Workers' Compensation Commission Update
• Case Law Update
  1. The Illinois Supreme Court Finally Resolves The Borrowman / Gallagher / Harder Conundrum Regarding Purported Waivers Of Section 5 Lien Rights In Settlement Contracts

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Firm Happenings

We are pleased to announce the addition of two new associates to the firm. Jynnifer Bates is a 2006 graduate of Ohio State University's Moritz College of Law, having obtained her undergraduate degree at Big Ten rival Michigan in Organizational Studies and English. Elsye Kattengell comes to us via Loyola University Law School's Class of 2007, and obtained her undergraduate degrees in English and Philosophy, with an M.S. in Industrial Engineering, all from St. Mary's University in San Antonio, Texas. Welcome aboard ladies!

Tina Freund just received an Appellate Court decision in a case she argued, affirming a Commission victory for an employer in a parking lot injury case. In Gonzales v. Best Care, the claimant stepped on a rusty nail while in a parking lot of the Respondent's facility. The Respondent did not own or maintain the lot, and the employees had a choice of several lots to park in that were located near the premises. The particular lot the employee was injured in was also accessible to the public. We argued at trial and before the Commission that there was no risk peculiar to the employment from the injury and that the employer was not responsible for the conditions of the lot, and won at both levels.

The Appellate Court unanimously affirmed the decision of the Commission, finding that the petitioner failed to prove her injuries arose out of and in the course of her employment. The court found that the facts did not establish that the petitioner's employment required her to be in the parking lot where she was injured and that Respondent was not responsible for maintenance or control of the lot.

As much as parking lot cases are becoming goldmines for claimants regardless of the circumstances or the alleged "defect" leading to the accident (recall the case discussed in our newsletter of July 2006 where the accumulation of wet leaves was deemed to be a compensable "defect" in an employer's parking lot) it is refreshing to see the Commission actually put limits on an employer's responsibility for accidents that occur in parking lots.

Nicole Buban Hanlon recently notched two victories for our clients, one of them on arbitration and one before the Commission, which upheld the Arbitrator's favorable award.

In Kovacic v. Wilmette Real Estate, the petitioner alleged that on April 29, 2006 he was working and severely cut his left hand on a power saw. The petitioner testified that he immediately went to the hospital, where surgery was performed.

The main issue was whether the petitioner sustained an accident while working for the Respondent. The petitioner was a building engineer and was scheduled to work from 8am - 4pm. The petitioner left before his shift ended and testified that he returned. There were 9 surveillance cameras capturing every entrance and exit of the building that showed otherwise. Nicole presented an expert witness whom the Arbitrator found highly credible regarding the surveillance footage, particularly the absence of any footage showing the petitioner returning to work during his shift. The Arbitrator found that the petitioner failed to meet his burden of proving that he suffered an accident arising out of and in the course of his employment and the claim was denied.

In Gyovai v. Kendall County, the petitioner was a 71 year old lady serving on jury duty with Kendall County. On Day 2 of jury duty, she slipped and fell, injuring her collar bone and both of her knees. The petitioner underwent a left total knee replacement with a recommended arthroscopy on the right knee and a right clavicle fracture.

The main issue in this case was whether the petitioner, a juror, was an employee of the county. Nicole argued that an employer/employee relationship did not exist; therefore the petitioner did not sustain a compensable injury and was not entitled to benefits. Arbitrator Kinnaman agreed that the petitioner was not an employee of the county. The Commission affirmed the decision of the Arbitrator, finding that there was no employer/employee relationship. The decision resulted in savings of over $80,000.00 in exposure to our client, but more importantly, it established favorable precedent that there is no employer/employee relationship created when a county summons the public for jury duty.

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Legislation Update

On August 21, 2007, Governor Blagojevich signed into law House Bill 928. This new law amends Section 6 of the Illinois Workers' Compensation Act and Section 10 of the Illinois Occupational Diseases Act, providing that any condition affecting the health of a firefighter, emergency medical technician, or paramedic that arises directly or indirectly from any blood borne pathogen, respiratory disease or condition, heart or vascular disease, hypertension, tuberculosis, or cancer resulting in any disability to the employee shall be rebuttably presumed to arise out of and in the course of the employee's employment and shall be rebuttably presumed to be causally connected to the hazards or exposures of the employment. In addition, the bill provides that the presumption shall also apply to any hernia or hearing loss suffered by a firefighter, EMT or paramedic.

The bill states that the presumption does not apply to an employee who has been a firefighter, EMT or paramedic for less than 5 years at the time he or she files an Application for Adjustment of Claim for the condition. This bill will go into effect on January 1, 2008.

The potential impact of this bill on our municipal clients cannot be overstated. Barring substantial evidence that the claimed condition did not arise out of the employment or is not causally connected to the risks of the employment, a firefighter, EMT or paramedic claiming any number of injuries within these classifications will have a presumed compensable injury without having to actually prove that the injury did indeed arise out of and in the course of the employment and is medically causally connected to it.

For now, it would appear that traumatic or repetitive orthopedic injuries - back injuries, carpal tunnel syndrome and the like - will still require the claimant to meet his or her burden of proof, but injuries such as heart attacks, respiratory problems and hernias (of all things), along with hearing loss, will be deemed to have arisen out of the employment and be compensable unless the Respondent can prove otherwise.

Fortunately, the law states that the presumption does not apply to claims made before the Pension Board for the same condition. As a result, however, claims that may easily be defeated at a pension hearing on the basis of IMEs or other medical evidence may very well be found compensable at the Commission despite the same evidence being available to the employer.

It will be interesting to see if any challenges arise to the constitutionality of this provision, which singles out one class of employees and specified injuries for special treatment, and turns the burden of proof on its head. On the other hand, the Worker's Compensation Act is a strictly legislative creation, and the courts give wide latitude to the legislature in drafting its provisions. Perhaps once the impact of the bill is felt in a couple of years it can be revisited and possibly repealed. We will see.

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Illinois Workers' Compensation Commission Update

One aspect of the 2005 amendments to the Act that may actually benefit employers is the fraud provision and the creation of the Fraud Unit at the IWCC. Based on data posted recently on the IWCC website, the Unit received 74 reports of possible workers' compensation fraud, leading to investigations in 38 of those cases. Of those 38 cases, 12 cases of employee fraud, involving $618,000 of possible fraud, and one case of employer fraud, involving $24,000, were referred for prosecution. The first workers' compensation fraud trial was set for September. You can read the Commission's full report by clicking on the link below:

See: http://www.iwcc.il.gov/WCFU-07report.pdf for further information.

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Case Law Update

The Illinois Supreme Court Finally Resolves The Borrowman / Gallagher / Harder Conundrum Regarding Purported Waivers Of Section 5 Lien Rights In Settlement Contracts

We have been following the development of case law among the five Illinois appellate districts since the Fourth District's surprising decision in Borrowman v. Prastein, finding that a respondent had waived its statutory rights to its lien on a claimant's civil suit arising out of his work injury by including general language in its workers' compensation settlement contract with the claimant that the parties waived all their rights under the Act. The First District in Gallagher and the Second District in Harder disagreed with the Borrowman decision, setting up a conflict in the appellate districts that had to be resolved by the Supreme Court.

The court therefore agreed to hear the Gallagher v. Lenart appeal, and upheld the First District's determination that Section 5(b) lien rights cannot be waived by general release language in a workers' compensation contract. The court noted that "the workers' compensation lien is deeply rooted in the overall scheme of the Workers' Compensation Act. Consequently, there must be something more than general waiver language before the lien can be considered waived." The Court did not say that 5(b) rights cannot be waived with specific language, but confirmed that boilerplate release language found in many contracts before Borrowman was insufficient to waive the employer's section 5(b) lien rights.

This is the only decision the Supreme Court realistically could have come to in our view. Still, many downstate petitioners' and plaintiffs' attorneys were relying on the Borrowman decision to obstruct employers' efforts to recoup their workers' compensation payments from settlements or verdicts that the injured parties obtained against third-party tortfeasors. As a result, Inman & Fitzgibbons settlement contracts continue to contain language specifically reserving the employer's lien rights under section 5(b) of the Act. We are pleased with what should be the final word on this issue.

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