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Legal Aspects of Workers’ Compensation; Employer Liability; and General Liability
Illinois Judicial System <ul><li>Circuit Courts (DuPage County is 18 th  Circuit) </li></ul><ul><li>Appellate Courts (DuPa...
Federal Courts <ul><li>District Courts </li></ul><ul><li>Circuit Court of Appeals (Illinois is part of 7 th  Circuit) </li...
Illinois Industrial Commission <ul><li>Not a court per se </li></ul><ul><li>Arbitrators are not judges and most times do n...
Workers Compensation <ul><li>Originally intended to be the exclusive remedy for injured employees </li></ul><ul><li>Employ...
Workers Comp Policy <ul><li>Part A: Coverage for employee injuries </li></ul><ul><li>Statutory Limits; no aggregate </li><...
Employer’s Liability Claims <ul><li>Contribution – Joint & Several Liability </li></ul><ul><li>Tender- Breach of Contract/...
Joint & Several Liability <ul><li>Public Policy:  To allow plaintiff (injured party) opportunity to collect full damages f...
Contribution <ul><li>The right to recover from other defendants their proportional share of damages that a defendant has p...
Stare Decisis <ul><li>Latin: To abide by, or adhere to decided cases. </li></ul><ul><li>All Appellate Court and Supreme Co...
Significant Case Law <ul><li>Kotecki – Employer is only liable to the extent of it’s worker’s compensation exposure called...
Waiving the Kotecki Cap <ul><li>“ Braye” Decision </li></ul><ul><li>Employer waives it’s cap by signing a construction con...
Kotecki covered or not <ul><li>“ Christy-Foltz”  if insured contractually agrees to accept liability then the Employers Li...
More Complications <ul><li>Both Christy-Foltz and Michael Nicholas were Appellate Court decisions </li></ul><ul><li>A diff...
Virginia Surety Case <ul><li>Illinois Supreme Court Decision </li></ul><ul><li>“Law of the land” effective March 26, 2007 ...
Virginia Surety Legal Stuff <ul><li>Contribution liability of an employer in suit brought by an employee is always to reco...
Virginia Surety con’t <ul><li>Employer’s waiver of Kotecki is a waiver of an “affirmative defense”, and is not a “loss ass...
Virginia Surety Ramifications <ul><li>EL policy limits need to be adequate to cover true exposure </li></ul><ul><li>Umbrel...
Insurance Company Positions <ul><li>West Bend General Counsel:  Virginia Surety case provides Kotecki coverage under the E...
Prime Meridian Issues <ul><li>Certificates and alert info </li></ul><ul><li>Review of client EL limits and umbrella covera...
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Legal aspects of workers’ compensation

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Court decisions on Illinois insurance law regarding interplay between workers compensation and general liability policies including Kotecki waivers.

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Legal aspects of workers’ compensation

  1. 1. Legal Aspects of Workers’ Compensation; Employer Liability; and General Liability
  2. 2. Illinois Judicial System <ul><li>Circuit Courts (DuPage County is 18 th Circuit) </li></ul><ul><li>Appellate Courts (DuPage is in 2 nd District) 5 total </li></ul><ul><li>Illinois Supreme Court (only one) </li></ul>
  3. 3. Federal Courts <ul><li>District Courts </li></ul><ul><li>Circuit Court of Appeals (Illinois is part of 7 th Circuit) </li></ul><ul><li>U.S. Supreme Court </li></ul><ul><li>All Federal Court Decisions are published </li></ul>
  4. 4. Illinois Industrial Commission <ul><li>Not a court per se </li></ul><ul><li>Arbitrators are not judges and most times do not have a legal education </li></ul><ul><li>It is an administrative forum </li></ul><ul><li>Decisions are not published </li></ul><ul><li>Has it’s own internal appeal process </li></ul><ul><li>Final appeals can be made to the Illinois Circuit Court </li></ul>
  5. 5. Workers Compensation <ul><li>Originally intended to be the exclusive remedy for injured employees </li></ul><ul><li>Employees exchange statutory limits on damages in return for a “no fault” system </li></ul>
  6. 6. Workers Comp Policy <ul><li>Part A: Coverage for employee injuries </li></ul><ul><li>Statutory Limits; no aggregate </li></ul><ul><li>Injury must have a “causal connection” to the work </li></ul><ul><li>“ in course of” and “arising out of” </li></ul><ul><li>Part B: Employers Liability </li></ul><ul><li>Covers “third party” claims against employer as a result of injury to an employee </li></ul><ul><li>Bodily injury may be from accident or disease. Bodily injury includes death </li></ul>
  7. 7. Employer’s Liability Claims <ul><li>Contribution – Joint & Several Liability </li></ul><ul><li>Tender- Breach of Contract/Failure to Procure Insurance </li></ul><ul><li>Adjudication of Liens </li></ul>
  8. 8. Joint & Several Liability <ul><li>Public Policy: To allow plaintiff (injured party) opportunity to collect full damages from injury </li></ul><ul><li>Illinois Law: Any defendant that is 25% or more at fault can be required to pay 100% of the damages awarded. </li></ul><ul><li>As of 6/4/2003: The employers % of fault is not included in this calculation </li></ul><ul><li>Legislation is pending making this even more onerous for defendants </li></ul>
  9. 9. Contribution <ul><li>The right to recover from other defendants their proportional share of damages that a defendant has paid as a result of joint and several liability. </li></ul><ul><li>Dinner tab analogy. </li></ul>
  10. 10. Stare Decisis <ul><li>Latin: To abide by, or adhere to decided cases. </li></ul><ul><li>All Appellate Court and Supreme Court decisions are published. </li></ul><ul><li>Circuit Courts follow Appellate decisions in their district and give strong weight to decisions from other districts </li></ul><ul><li>Supreme Court decisions are the law of the land. Everyone follows </li></ul>
  11. 11. Significant Case Law <ul><li>Kotecki – Employer is only liable to the extent of it’s worker’s compensation exposure called the “Kotecki cap” </li></ul><ul><li>Reason: Workers’ comp is supposed to be the exclusive remedy </li></ul><ul><li>Problem: “Kotecki cap could leave plaintiff’s short on collecting damages or “unfairly penalize” other defendants </li></ul><ul><li>Example: </li></ul>
  12. 12. Waiving the Kotecki Cap <ul><li>“ Braye” Decision </li></ul><ul><li>Employer waives it’s cap by signing a construction contract which provides indemnification to an upstream contractor. </li></ul><ul><li>Question: Who pays for the new “Kotecki Gap” </li></ul><ul><li>Example: </li></ul>
  13. 13. Kotecki covered or not <ul><li>“ Christy-Foltz” if insured contractually agrees to accept liability then the Employers Liability exclusion “loss assumed by contract” denies coverage. </li></ul><ul><li>“ Michael Nicholas” the insured contract exception to the contractual liability exclusion in the CGL policy triggers coverage for Braye waivers. </li></ul>
  14. 14. More Complications <ul><li>Both Christy-Foltz and Michael Nicholas were Appellate Court decisions </li></ul><ul><li>A different outcome was reached by another appellate court on Michael Nicholas </li></ul>
  15. 15. Virginia Surety Case <ul><li>Illinois Supreme Court Decision </li></ul><ul><li>“Law of the land” effective March 26, 2007 </li></ul><ul><li>Affects suits against employers under both CGL and Employers Liability (EL) Policies </li></ul>
  16. 16. Virginia Surety Legal Stuff <ul><li>Contribution liability of an employer in suit brought by an employee is always to recover solely for the employer’s own tort liability </li></ul><ul><li>Therefore; the CGL exception to the contractual liability exclusion “insured contract” is not triggered because the contract is not assuming the tort liability of another. </li></ul><ul><li>“ Michael Nicolas” is overruled. </li></ul>
  17. 17. Virginia Surety con’t <ul><li>Employer’s waiver of Kotecki is a waiver of an “affirmative defense”, and is not a “loss assumed by contract, so the exclusion to the EL opolicy does not apply. </li></ul><ul><li>Christy-Foltz is overruled </li></ul><ul><li>Employers Liability Policy covers Kotecki gap. </li></ul>
  18. 18. Virginia Surety Ramifications <ul><li>EL policy limits need to be adequate to cover true exposure </li></ul><ul><li>Umbrella coverage limits very important </li></ul><ul><li>Response to request for Kotecki coverage. </li></ul>
  19. 19. Insurance Company Positions <ul><li>West Bend General Counsel: Virginia Surety case provides Kotecki coverage under the EL policy </li></ul><ul><li>Hastings General Counsel; Virginia Surety case creates a new gap in Kotecki coverage (since changed opinion). </li></ul><ul><li>Zurich Construction: We have always added contractual endorsement to employer’s liability policy covering Kotecki and excluding coverage under the CGL </li></ul>
  20. 20. Prime Meridian Issues <ul><li>Certificates and alert info </li></ul><ul><li>Review of client EL limits and umbrella coverage </li></ul><ul><li>Memo to clients on Virginia Surety Case </li></ul><ul><li>Need to look at subcontractors insurance limits and adequacy, both our GC’s and subs who sub out work (R&R) etc. </li></ul>

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