Wednesday, March 11, 2015

Circuit court punts on setttlement release of 3rd party case

A recent Illinois case dealt with a fairly common problem:  what happens when the worker releases a pending worker's compensation claim in conjunction with a "global settlement" of a federal lawsuit?  The court declined to answer the riddle and upheld a dismissal of the appeal for declaratory judgment based on lack of jurisdiction.  Bradley v City of Marion, 2015 Il App. (5th) 140267 (March 10, 2015).

Both parties agreed that the circuit court had jurisdiction to render declaratory judgment.  The worker in the case received a $650,000 settlement in a third party case. The worker repaid $190,000 in benefits and agreed to dismiss the comp claim, filed a dismissal of the pending comp claim,  but then about 5 weeks later refilled on the comp claim.  The worker contends that the employer could not enforce a dismissal of the work comp claim and waived any right to further credit against the prior settlement.

The employer sought declaratory judgment that the worker could not pursue further comp benefits based on the terms of the settlement.  The employee sought declaratory judgment that there was no legally enforceable waiver because the Commission never approved a waiver and that the statute required approval of any enforceable waiver.  820 ILCS 305/23.  The employer sought declaratory judgment and  filed suit for breach of the settlement contract.

The circuit judge had no authority except to dismiss the claim due to lack of jurisdiction.  Section 305/18 vests original jurisdiction exclusively with the Commission and  305/19 grants circuit courts jurisdiction only for appellate issues.  For example, the circuit court cannot enjoin the employer from stopping TTD benefits or allow the employer to seek a restitution claim for a worker who lied about his condition when he was hired.  The court asserted there was no concurrent jurisdiction with the circuit court and primary jurisdiction doctrine did not apply, distinguishing the case of Employers Mutual Cos. v. Skilling,  644 N.E.2d 1163, 1165-66 (Ill App. 1994).   Skilling is distinguishable as a case of concurrent jurisdiction which did not require exhaustion of administrative remedies because it involved contractual interpretation of insurance coverage. 

It is unclear why both parties sought the circuit court to pursue remedies.   'Global settlement' language of comp cases often fail to make obligations to pay contingent on approval of the work comp dismissal.

Atty:  Hannagan, Vacala