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WCLA MCLE 5-16-12
bull LoaningBorrowing ELCrsquos amp Insurance Coveragebull Wednesday May 16 2012bull Guest Speaker Paul W Pasche Brady Connolly
amp Masuda Chicago ILbull 1200 pm to 100 pmbull James R Thompson Center Auditorium
Chicago ILbull 1 Hour General MCLE Credit
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull 4 Where an employer operating under and subject to the provisions of this Act loans an employee to another such employer and such loaned employee sustains a compensable accidental injury in the employment of such borrowing employer and where such borrowing employer does not provide or pay the benefits or payments due such injured employee such loaning employer is liable to provide or pay all benefits or payments due such employee under this Act and as to such employee the liability of such loaning and borrowing employers is joint and several provided that such loaning employer is in the absence of agreement to the contrary entitled to receive from such borrowing employer full reimbursement for all sums paid or incurred pursuant to this paragraph together with reasonable attorneysrsquo fees and expenses in any hearings before the Illinois Workersrsquo Compensation Commission or in any action to secure such reimbursement Where any benefit is provided or paid by such loaning employer the employee has the duty of rendering reasonable cooperation in any hearings trials or proceedings in the case including such proceedings for reimbursement
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull Where an employee files an Application for Adjustment of Claim with the Illinois Workersrsquo Compensation Commission alleging that his claim is covered by the provisions of the preceding paragraph and joining both the alleged loaning and borrowing employers they and each of them upon written demand by the employee and within 7 days after receipt of such demand shall have the duty of filing with the Illinois Workersrsquo Compensation Commission a written admission or denial of the allegation that the claim is covered by the provisions of the preceding paragraph and in default of such filing or if any such denial be ultimately determined not to have been bona fide then the provisions of Paragraph K of Section 19 of this Act shall apply
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull An employer whose business or enterprise or a substantial part thereof consists of hiring procuring or furnishing employees to or for other employers operating under and subject to the provisions of this Act for the performance of the work of such other employers and who pays such employees their salary or wages notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this Section
bull Employee Leasing Companies and Staffing Agencies fall under this definition
Roman v Jett Cutting amp Staffing Resources12 IWCC 0087 03WC54078
bull Section 1(a)(4) of the Act provides that with respect to an injured employee the liability of the loaning and borrowing employers is joint and several as between employers the borrowing employer is primarily liable and the loaning employer is secondarily liable and if the loaning employer is required to pay the loss it has the right to seek reimbursement from the borrowing employer absent an agreement to the contrary Surestaff Inc v Azteca Foods Inc 374 IllApp2d 625 (1st Dist 2007)
bull The Arbitrator found that the brochure provided by Staffing Resources to Jett Cutting stating that Staffing Resources would assume the burdens and responsibilities of the employer including providing workers compensation insurance coverage constituted an agreement to the contrary for the purpose of Section 1(a)(4)
bull The Commission agrees with the Arbitrators conclusion that Staffing Resources Inc agreed to pay workers compensation benefits for its loaned employee The Commission takes note of Surestaff Inc v Open Kitchens Inc 384 IllApp3d 172 892 NE2d 1137hellipdoes not require a specific waiver as claimed by Staffing Resources it requires only an agreement that the loaning employer will assume responsibility for workers compensation losseshellipThe Arbitrator was not in error in determining that the loaning employer agreed that it would retain responsibility to pay workers compensation benefits
Insurance Coverage Section4(a)(3)820 ILCS 3054(a)(3)
bull Section 4(a) Any employer including but not limited to general contractors and their subcontractors who shall come within the provisions of Section 3 of this Act and any other employer who shall elect to provide and pay the compensation provided for in this Act shallhellip
bull (3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredhellipthe employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly void
Insurance CoverageCommission Jurisdiction
bull Employers Mutual v Skilling163 Ill 2d 284 644 NE2d 1163 206 Ill Dec 110 (1994) Therefore although we conclude that the Commission had concurrent jurisdiction to hear the disputed insurance coverage issue presented in this case when the question of law was presented to the circuit court in the declaratory judgment suit the jurisdiction of the Circuit Court became paramount
bull Hastings Mutual v Ultimate Backyard Nos 1-10-1751 1-10-3001 (cons) February 9 2012 Appeal from the denial of a motion to stay proceedings and the granting of motions to dismiss Hastings Mutual filed a complaint for declaratory judgment seeking an order that it was not responsible for an underlying workers compensation claim between Vasquez and his employer Ultimate Backyard The case ultimately turns on the issue of whether a notice of cancellation that was sent from Hastings Mutual to NCCI conformed with the statutory requirements Hastings Mutual appeals the denial of its motion to stay as well as the order granting appellees Vasquezs and Ultimate Backyards motions to dismiss We reverse and remand with directions for the lower court to stay the underlying workers compensation claim until a decision is made by the court regarding the issue of insurance coverage
Employee Leasing CompaniesNew Section 4(a-2)
820 ILCS 3054(a-2)
bull (a-2) Every Employee Leasing Company (ELC) as defined in Section 15 of the Employee Leasing Company Act shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers compensation insurance policy issued to the ELC (1) Any client company of the ELC listed as an additional named insured (2) Any informational schedule attached to the master policy that identifies any individual client companys name FEIN and job location (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client as well as the dates of inception and termination of coverage if applicable
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull 4 Where an employer operating under and subject to the provisions of this Act loans an employee to another such employer and such loaned employee sustains a compensable accidental injury in the employment of such borrowing employer and where such borrowing employer does not provide or pay the benefits or payments due such injured employee such loaning employer is liable to provide or pay all benefits or payments due such employee under this Act and as to such employee the liability of such loaning and borrowing employers is joint and several provided that such loaning employer is in the absence of agreement to the contrary entitled to receive from such borrowing employer full reimbursement for all sums paid or incurred pursuant to this paragraph together with reasonable attorneysrsquo fees and expenses in any hearings before the Illinois Workersrsquo Compensation Commission or in any action to secure such reimbursement Where any benefit is provided or paid by such loaning employer the employee has the duty of rendering reasonable cooperation in any hearings trials or proceedings in the case including such proceedings for reimbursement
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull Where an employee files an Application for Adjustment of Claim with the Illinois Workersrsquo Compensation Commission alleging that his claim is covered by the provisions of the preceding paragraph and joining both the alleged loaning and borrowing employers they and each of them upon written demand by the employee and within 7 days after receipt of such demand shall have the duty of filing with the Illinois Workersrsquo Compensation Commission a written admission or denial of the allegation that the claim is covered by the provisions of the preceding paragraph and in default of such filing or if any such denial be ultimately determined not to have been bona fide then the provisions of Paragraph K of Section 19 of this Act shall apply
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull An employer whose business or enterprise or a substantial part thereof consists of hiring procuring or furnishing employees to or for other employers operating under and subject to the provisions of this Act for the performance of the work of such other employers and who pays such employees their salary or wages notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this Section
bull Employee Leasing Companies and Staffing Agencies fall under this definition
Roman v Jett Cutting amp Staffing Resources12 IWCC 0087 03WC54078
bull Section 1(a)(4) of the Act provides that with respect to an injured employee the liability of the loaning and borrowing employers is joint and several as between employers the borrowing employer is primarily liable and the loaning employer is secondarily liable and if the loaning employer is required to pay the loss it has the right to seek reimbursement from the borrowing employer absent an agreement to the contrary Surestaff Inc v Azteca Foods Inc 374 IllApp2d 625 (1st Dist 2007)
bull The Arbitrator found that the brochure provided by Staffing Resources to Jett Cutting stating that Staffing Resources would assume the burdens and responsibilities of the employer including providing workers compensation insurance coverage constituted an agreement to the contrary for the purpose of Section 1(a)(4)
bull The Commission agrees with the Arbitrators conclusion that Staffing Resources Inc agreed to pay workers compensation benefits for its loaned employee The Commission takes note of Surestaff Inc v Open Kitchens Inc 384 IllApp3d 172 892 NE2d 1137hellipdoes not require a specific waiver as claimed by Staffing Resources it requires only an agreement that the loaning employer will assume responsibility for workers compensation losseshellipThe Arbitrator was not in error in determining that the loaning employer agreed that it would retain responsibility to pay workers compensation benefits
Insurance Coverage Section4(a)(3)820 ILCS 3054(a)(3)
bull Section 4(a) Any employer including but not limited to general contractors and their subcontractors who shall come within the provisions of Section 3 of this Act and any other employer who shall elect to provide and pay the compensation provided for in this Act shallhellip
bull (3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredhellipthe employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly void
Insurance CoverageCommission Jurisdiction
bull Employers Mutual v Skilling163 Ill 2d 284 644 NE2d 1163 206 Ill Dec 110 (1994) Therefore although we conclude that the Commission had concurrent jurisdiction to hear the disputed insurance coverage issue presented in this case when the question of law was presented to the circuit court in the declaratory judgment suit the jurisdiction of the Circuit Court became paramount
bull Hastings Mutual v Ultimate Backyard Nos 1-10-1751 1-10-3001 (cons) February 9 2012 Appeal from the denial of a motion to stay proceedings and the granting of motions to dismiss Hastings Mutual filed a complaint for declaratory judgment seeking an order that it was not responsible for an underlying workers compensation claim between Vasquez and his employer Ultimate Backyard The case ultimately turns on the issue of whether a notice of cancellation that was sent from Hastings Mutual to NCCI conformed with the statutory requirements Hastings Mutual appeals the denial of its motion to stay as well as the order granting appellees Vasquezs and Ultimate Backyards motions to dismiss We reverse and remand with directions for the lower court to stay the underlying workers compensation claim until a decision is made by the court regarding the issue of insurance coverage
Employee Leasing CompaniesNew Section 4(a-2)
820 ILCS 3054(a-2)
bull (a-2) Every Employee Leasing Company (ELC) as defined in Section 15 of the Employee Leasing Company Act shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers compensation insurance policy issued to the ELC (1) Any client company of the ELC listed as an additional named insured (2) Any informational schedule attached to the master policy that identifies any individual client companys name FEIN and job location (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client as well as the dates of inception and termination of coverage if applicable
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull Where an employee files an Application for Adjustment of Claim with the Illinois Workersrsquo Compensation Commission alleging that his claim is covered by the provisions of the preceding paragraph and joining both the alleged loaning and borrowing employers they and each of them upon written demand by the employee and within 7 days after receipt of such demand shall have the duty of filing with the Illinois Workersrsquo Compensation Commission a written admission or denial of the allegation that the claim is covered by the provisions of the preceding paragraph and in default of such filing or if any such denial be ultimately determined not to have been bona fide then the provisions of Paragraph K of Section 19 of this Act shall apply
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull An employer whose business or enterprise or a substantial part thereof consists of hiring procuring or furnishing employees to or for other employers operating under and subject to the provisions of this Act for the performance of the work of such other employers and who pays such employees their salary or wages notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this Section
bull Employee Leasing Companies and Staffing Agencies fall under this definition
Roman v Jett Cutting amp Staffing Resources12 IWCC 0087 03WC54078
bull Section 1(a)(4) of the Act provides that with respect to an injured employee the liability of the loaning and borrowing employers is joint and several as between employers the borrowing employer is primarily liable and the loaning employer is secondarily liable and if the loaning employer is required to pay the loss it has the right to seek reimbursement from the borrowing employer absent an agreement to the contrary Surestaff Inc v Azteca Foods Inc 374 IllApp2d 625 (1st Dist 2007)
bull The Arbitrator found that the brochure provided by Staffing Resources to Jett Cutting stating that Staffing Resources would assume the burdens and responsibilities of the employer including providing workers compensation insurance coverage constituted an agreement to the contrary for the purpose of Section 1(a)(4)
bull The Commission agrees with the Arbitrators conclusion that Staffing Resources Inc agreed to pay workers compensation benefits for its loaned employee The Commission takes note of Surestaff Inc v Open Kitchens Inc 384 IllApp3d 172 892 NE2d 1137hellipdoes not require a specific waiver as claimed by Staffing Resources it requires only an agreement that the loaning employer will assume responsibility for workers compensation losseshellipThe Arbitrator was not in error in determining that the loaning employer agreed that it would retain responsibility to pay workers compensation benefits
Insurance Coverage Section4(a)(3)820 ILCS 3054(a)(3)
bull Section 4(a) Any employer including but not limited to general contractors and their subcontractors who shall come within the provisions of Section 3 of this Act and any other employer who shall elect to provide and pay the compensation provided for in this Act shallhellip
bull (3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredhellipthe employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly void
Insurance CoverageCommission Jurisdiction
bull Employers Mutual v Skilling163 Ill 2d 284 644 NE2d 1163 206 Ill Dec 110 (1994) Therefore although we conclude that the Commission had concurrent jurisdiction to hear the disputed insurance coverage issue presented in this case when the question of law was presented to the circuit court in the declaratory judgment suit the jurisdiction of the Circuit Court became paramount
bull Hastings Mutual v Ultimate Backyard Nos 1-10-1751 1-10-3001 (cons) February 9 2012 Appeal from the denial of a motion to stay proceedings and the granting of motions to dismiss Hastings Mutual filed a complaint for declaratory judgment seeking an order that it was not responsible for an underlying workers compensation claim between Vasquez and his employer Ultimate Backyard The case ultimately turns on the issue of whether a notice of cancellation that was sent from Hastings Mutual to NCCI conformed with the statutory requirements Hastings Mutual appeals the denial of its motion to stay as well as the order granting appellees Vasquezs and Ultimate Backyards motions to dismiss We reverse and remand with directions for the lower court to stay the underlying workers compensation claim until a decision is made by the court regarding the issue of insurance coverage
Employee Leasing CompaniesNew Section 4(a-2)
820 ILCS 3054(a-2)
bull (a-2) Every Employee Leasing Company (ELC) as defined in Section 15 of the Employee Leasing Company Act shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers compensation insurance policy issued to the ELC (1) Any client company of the ELC listed as an additional named insured (2) Any informational schedule attached to the master policy that identifies any individual client companys name FEIN and job location (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client as well as the dates of inception and termination of coverage if applicable
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
LoaningBorrowing Section 1(a)4 820 ILCS 3051(a)4
bull An employer whose business or enterprise or a substantial part thereof consists of hiring procuring or furnishing employees to or for other employers operating under and subject to the provisions of this Act for the performance of the work of such other employers and who pays such employees their salary or wages notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this Section
bull Employee Leasing Companies and Staffing Agencies fall under this definition
Roman v Jett Cutting amp Staffing Resources12 IWCC 0087 03WC54078
bull Section 1(a)(4) of the Act provides that with respect to an injured employee the liability of the loaning and borrowing employers is joint and several as between employers the borrowing employer is primarily liable and the loaning employer is secondarily liable and if the loaning employer is required to pay the loss it has the right to seek reimbursement from the borrowing employer absent an agreement to the contrary Surestaff Inc v Azteca Foods Inc 374 IllApp2d 625 (1st Dist 2007)
bull The Arbitrator found that the brochure provided by Staffing Resources to Jett Cutting stating that Staffing Resources would assume the burdens and responsibilities of the employer including providing workers compensation insurance coverage constituted an agreement to the contrary for the purpose of Section 1(a)(4)
bull The Commission agrees with the Arbitrators conclusion that Staffing Resources Inc agreed to pay workers compensation benefits for its loaned employee The Commission takes note of Surestaff Inc v Open Kitchens Inc 384 IllApp3d 172 892 NE2d 1137hellipdoes not require a specific waiver as claimed by Staffing Resources it requires only an agreement that the loaning employer will assume responsibility for workers compensation losseshellipThe Arbitrator was not in error in determining that the loaning employer agreed that it would retain responsibility to pay workers compensation benefits
Insurance Coverage Section4(a)(3)820 ILCS 3054(a)(3)
bull Section 4(a) Any employer including but not limited to general contractors and their subcontractors who shall come within the provisions of Section 3 of this Act and any other employer who shall elect to provide and pay the compensation provided for in this Act shallhellip
bull (3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredhellipthe employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly void
Insurance CoverageCommission Jurisdiction
bull Employers Mutual v Skilling163 Ill 2d 284 644 NE2d 1163 206 Ill Dec 110 (1994) Therefore although we conclude that the Commission had concurrent jurisdiction to hear the disputed insurance coverage issue presented in this case when the question of law was presented to the circuit court in the declaratory judgment suit the jurisdiction of the Circuit Court became paramount
bull Hastings Mutual v Ultimate Backyard Nos 1-10-1751 1-10-3001 (cons) February 9 2012 Appeal from the denial of a motion to stay proceedings and the granting of motions to dismiss Hastings Mutual filed a complaint for declaratory judgment seeking an order that it was not responsible for an underlying workers compensation claim between Vasquez and his employer Ultimate Backyard The case ultimately turns on the issue of whether a notice of cancellation that was sent from Hastings Mutual to NCCI conformed with the statutory requirements Hastings Mutual appeals the denial of its motion to stay as well as the order granting appellees Vasquezs and Ultimate Backyards motions to dismiss We reverse and remand with directions for the lower court to stay the underlying workers compensation claim until a decision is made by the court regarding the issue of insurance coverage
Employee Leasing CompaniesNew Section 4(a-2)
820 ILCS 3054(a-2)
bull (a-2) Every Employee Leasing Company (ELC) as defined in Section 15 of the Employee Leasing Company Act shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers compensation insurance policy issued to the ELC (1) Any client company of the ELC listed as an additional named insured (2) Any informational schedule attached to the master policy that identifies any individual client companys name FEIN and job location (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client as well as the dates of inception and termination of coverage if applicable
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Roman v Jett Cutting amp Staffing Resources12 IWCC 0087 03WC54078
bull Section 1(a)(4) of the Act provides that with respect to an injured employee the liability of the loaning and borrowing employers is joint and several as between employers the borrowing employer is primarily liable and the loaning employer is secondarily liable and if the loaning employer is required to pay the loss it has the right to seek reimbursement from the borrowing employer absent an agreement to the contrary Surestaff Inc v Azteca Foods Inc 374 IllApp2d 625 (1st Dist 2007)
bull The Arbitrator found that the brochure provided by Staffing Resources to Jett Cutting stating that Staffing Resources would assume the burdens and responsibilities of the employer including providing workers compensation insurance coverage constituted an agreement to the contrary for the purpose of Section 1(a)(4)
bull The Commission agrees with the Arbitrators conclusion that Staffing Resources Inc agreed to pay workers compensation benefits for its loaned employee The Commission takes note of Surestaff Inc v Open Kitchens Inc 384 IllApp3d 172 892 NE2d 1137hellipdoes not require a specific waiver as claimed by Staffing Resources it requires only an agreement that the loaning employer will assume responsibility for workers compensation losseshellipThe Arbitrator was not in error in determining that the loaning employer agreed that it would retain responsibility to pay workers compensation benefits
Insurance Coverage Section4(a)(3)820 ILCS 3054(a)(3)
bull Section 4(a) Any employer including but not limited to general contractors and their subcontractors who shall come within the provisions of Section 3 of this Act and any other employer who shall elect to provide and pay the compensation provided for in this Act shallhellip
bull (3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredhellipthe employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly void
Insurance CoverageCommission Jurisdiction
bull Employers Mutual v Skilling163 Ill 2d 284 644 NE2d 1163 206 Ill Dec 110 (1994) Therefore although we conclude that the Commission had concurrent jurisdiction to hear the disputed insurance coverage issue presented in this case when the question of law was presented to the circuit court in the declaratory judgment suit the jurisdiction of the Circuit Court became paramount
bull Hastings Mutual v Ultimate Backyard Nos 1-10-1751 1-10-3001 (cons) February 9 2012 Appeal from the denial of a motion to stay proceedings and the granting of motions to dismiss Hastings Mutual filed a complaint for declaratory judgment seeking an order that it was not responsible for an underlying workers compensation claim between Vasquez and his employer Ultimate Backyard The case ultimately turns on the issue of whether a notice of cancellation that was sent from Hastings Mutual to NCCI conformed with the statutory requirements Hastings Mutual appeals the denial of its motion to stay as well as the order granting appellees Vasquezs and Ultimate Backyards motions to dismiss We reverse and remand with directions for the lower court to stay the underlying workers compensation claim until a decision is made by the court regarding the issue of insurance coverage
Employee Leasing CompaniesNew Section 4(a-2)
820 ILCS 3054(a-2)
bull (a-2) Every Employee Leasing Company (ELC) as defined in Section 15 of the Employee Leasing Company Act shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers compensation insurance policy issued to the ELC (1) Any client company of the ELC listed as an additional named insured (2) Any informational schedule attached to the master policy that identifies any individual client companys name FEIN and job location (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client as well as the dates of inception and termination of coverage if applicable
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Insurance Coverage Section4(a)(3)820 ILCS 3054(a)(3)
bull Section 4(a) Any employer including but not limited to general contractors and their subcontractors who shall come within the provisions of Section 3 of this Act and any other employer who shall elect to provide and pay the compensation provided for in this Act shallhellip
bull (3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredhellipthe employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly void
Insurance CoverageCommission Jurisdiction
bull Employers Mutual v Skilling163 Ill 2d 284 644 NE2d 1163 206 Ill Dec 110 (1994) Therefore although we conclude that the Commission had concurrent jurisdiction to hear the disputed insurance coverage issue presented in this case when the question of law was presented to the circuit court in the declaratory judgment suit the jurisdiction of the Circuit Court became paramount
bull Hastings Mutual v Ultimate Backyard Nos 1-10-1751 1-10-3001 (cons) February 9 2012 Appeal from the denial of a motion to stay proceedings and the granting of motions to dismiss Hastings Mutual filed a complaint for declaratory judgment seeking an order that it was not responsible for an underlying workers compensation claim between Vasquez and his employer Ultimate Backyard The case ultimately turns on the issue of whether a notice of cancellation that was sent from Hastings Mutual to NCCI conformed with the statutory requirements Hastings Mutual appeals the denial of its motion to stay as well as the order granting appellees Vasquezs and Ultimate Backyards motions to dismiss We reverse and remand with directions for the lower court to stay the underlying workers compensation claim until a decision is made by the court regarding the issue of insurance coverage
Employee Leasing CompaniesNew Section 4(a-2)
820 ILCS 3054(a-2)
bull (a-2) Every Employee Leasing Company (ELC) as defined in Section 15 of the Employee Leasing Company Act shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers compensation insurance policy issued to the ELC (1) Any client company of the ELC listed as an additional named insured (2) Any informational schedule attached to the master policy that identifies any individual client companys name FEIN and job location (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client as well as the dates of inception and termination of coverage if applicable
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Insurance CoverageCommission Jurisdiction
bull Employers Mutual v Skilling163 Ill 2d 284 644 NE2d 1163 206 Ill Dec 110 (1994) Therefore although we conclude that the Commission had concurrent jurisdiction to hear the disputed insurance coverage issue presented in this case when the question of law was presented to the circuit court in the declaratory judgment suit the jurisdiction of the Circuit Court became paramount
bull Hastings Mutual v Ultimate Backyard Nos 1-10-1751 1-10-3001 (cons) February 9 2012 Appeal from the denial of a motion to stay proceedings and the granting of motions to dismiss Hastings Mutual filed a complaint for declaratory judgment seeking an order that it was not responsible for an underlying workers compensation claim between Vasquez and his employer Ultimate Backyard The case ultimately turns on the issue of whether a notice of cancellation that was sent from Hastings Mutual to NCCI conformed with the statutory requirements Hastings Mutual appeals the denial of its motion to stay as well as the order granting appellees Vasquezs and Ultimate Backyards motions to dismiss We reverse and remand with directions for the lower court to stay the underlying workers compensation claim until a decision is made by the court regarding the issue of insurance coverage
Employee Leasing CompaniesNew Section 4(a-2)
820 ILCS 3054(a-2)
bull (a-2) Every Employee Leasing Company (ELC) as defined in Section 15 of the Employee Leasing Company Act shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers compensation insurance policy issued to the ELC (1) Any client company of the ELC listed as an additional named insured (2) Any informational schedule attached to the master policy that identifies any individual client companys name FEIN and job location (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client as well as the dates of inception and termination of coverage if applicable
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Employee Leasing CompaniesNew Section 4(a-2)
820 ILCS 3054(a-2)
bull (a-2) Every Employee Leasing Company (ELC) as defined in Section 15 of the Employee Leasing Company Act shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers compensation insurance policy issued to the ELC (1) Any client company of the ELC listed as an additional named insured (2) Any informational schedule attached to the master policy that identifies any individual client companys name FEIN and job location (3) Any certificate of insurance coverage document issued to a client company specifying its rights and obligations under the master policy that establishes both the identity and status of the client as well as the dates of inception and termination of coverage if applicable
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Employee Leasing Company Act215 ILCS 11330
bull (a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following (1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Paid by Employers Consortium Inc (ECI) to work at Precision Cabinets
bull 56 year old cabinet maker two back injuries DArsquos 1-10-03 amp 12-12-03 (continued treating after 1st injury though RTW)
bull SX by Dr LeCompte 4-12-04 (decompression)bull SSDI since 2005
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Isak Klein v Precision Cabinets04WC003879 amp 08WC002037
bull Arbitratorrsquos Decision 5-6-08bull Causation to 1-10-03 accident (1st injury) no
intervening accident on 12-12-03bull PTD since 12-9-04 bull ECI amp Precision Cabinets = LoaningBorrowingbull Precision Cabinets = West Bendbull ECI = NO INSURANCE (Travelers policy cancelled
for 1-10-03 not reinstated until 1-15-03)
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Isak Klein v Precision Cabinets10 IWCC 0400
bull Commission Decision 5-21-10bull There is no dispute that Employers Consortium Inc (ECI) is the loaning
employer and Precision Cabinets (Precision) is the borrowing employer in this case The Arbitrator found that ECI did not have workers compensation coverage on January 10 2003 In so finding the Arbitrator opted to rely on the Commissions own records noting that she found the Commissions records most reliable The Commission disagrees and finds that ECI had workers compensation coverage through Travelers Insurance on January 10 2003
bull The one page of Petitioners Exhibit 2 that the Arbitrator relied on to find that ECIs policy was cancelled effective Sept 29 2002 and was not reinstated until Jan 15 2003 is the last page of this exhibit a printout titled CancReinstNon-Renewldquo hellip We find that the evidence shows that ECIs policy was cancelled effective January 15 2003 and was reinstated on February 12 2003 and that ECI was insured by Travelers on January 10 2003
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Isak Klein v Precision Cabinets10 IWCC 0400
bull ECI and Precision are jointly and severally liable for Petitioners work related injurieshellipIn Travelerss brief it argues that the applicable statute in this case is the Employee Leasing Company Act 215 ILCS 1131 Travelers contends that Section 30 of the ELCA expressly requires the addition of borrowing employers such as Precision by endorsement prior to the borrower or lender becoming entitled to coverageldquo The Commission rejects Travelerss position The purpose of the ELCA is to ensure that leasing employers provide workers compensation insurance for all of its employees and that proper premiums are paid
bull Under Section 4(a)(3) of the WCA it is clear that once it has been determined that ECI had workers compensation insurance through a policy provided by Travelers all employees of ECI during the effective dates of the policy are covered by that policy regardless of any provisions endorsements or lack thereof attempting to limit or modify the liability of Travelers It is also clear that the intent of the ELCA is that leased employees be covered by workers compensation insurance consistent with our rejection of Travelerss argument here While ECIs failure to obtain an endorsement in a timely manner identifying Precision as a lessee may have thwarted the ELCAs intent that premium commensurate with exposure be paid it does not result in a lack of coverage for any of ECIs employeeshellip
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Travelers Insurance v IWCC10 MR 288
bull Circuit Court of the 16th Judicial District Kane County 2-18-11bull Travelers policy in effect on 1-10-03bull The Employer ECI failed to have an endorsement naming
Precision Cabinents added to its WC policy with Travelers until 8 frac12 months after the Petitionerrsquos DA
bull Commission decision overlooks financial reality that ECI did not pay correct premium
bull Commission decision ldquooverturnedrdquo bull Petitioner should look to Precision Cabinets West Bend
ldquoandorrdquoECI for his recovery
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull The issue before us is one of pure statutory interpretation and our review proceeds de novobull Travelers argues that ECIs failure to secure the endorsement adding Precision to the
Travelers policy until August 29 2003 barred Precision from coverage under the Travelers policy on January 10 2003 Travelers admits that the policy period was from September 29 2002 to September 29 2003 In support of its argument Travelers relies on section 30 of the Employee Leasing Company Act Section 30 is titled Responsibility for policy issuance and continuance and states that [w]hen a workers compensation policy written to cover leased employees is issued to the less or as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees
bull Following these principles we find that Travelers argument is refuted by the plain language of section 4(a)(3) of the Act Section 4(a)(3) requires that [e]very policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insuredldquo Further [a]ny provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidldquo
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Travelers Insurance v Precision CabinetsNo 2-11-0258WC filed 3-16-12
bull In this workers compensation case by choosing to purchase workers compensation coverage ECI purchased it for all of its employees including the claimant ECIs failure to secure an endorsement adding Precision to the Travelers policy until August 29 2003 was ineffective to withdraw the claimant from the operation of the Act The claimant was still under the protection of the Act at the time of his injury
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
WORKERS COMPENSATION LAWYERS ASSOCIATION
LoaningBorrowing ELCs ampInsurance Coverage
Travelers Ins v Precision Cabinets Inc 2012 IL App (2d) 110258WC
Paul W Pasche bull Brady Connolly amp Masuda PC
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Two workersrsquo compensation cases 11003 and 121303
bull Petr sustained serious back injuriesmdashmedical perm total
bull Petr was employed by Employerrsquos Consortium (ECI) an employee leasing company and was lent to Precision Cabinets
bull The agreement between ECI and Precision called for ECI to provide WC insurance for any leased employees
bull Travelers had issued a policy to ECI with coverage from 92902 to 92903
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull The policy terms specifically covered the workerrsquos compensation liability of ECI
bull The policy terms also statedldquoTerms of this insurance that conflict with the workers compensation law are changed by this statement to conform to that lawrdquo
bull An endorsement was attached to the policy in August 2003 specifically naming Precision as a client and additional insured with the ldquoPolicy Effective Daterdquo listed as 92902 and the ldquoPolicy Expiration Daterdquo stated as 92903
bull In December 2002 Travelers sent ECI a cancellation notice due to unpaid premium the notice showed a cancellation date of 11503 but the premium was paid and Travelers lsquoreinstatedrsquo the policy effective January 15 2003 and there was no dispute that the policy was in existence on the first accident date
bull There was also no dispute Travelers had renewed the policy and covered both ECI and Precision for the December 13 2003 accident date
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Travelers Ins v Precision Cabinets IncBACKGROUNDCASE FACTS
bull Precision had insurance through West Bendbull After petrrsquos injuries ECI hired a TPA that paid
medical benefits and TTD until 2007 When ECI and the TPA folded the claim was submitted to Travelers and to Precisionrsquos carrier West Bend
bull In 2010 West Bend retroactively updated PTD benefits and continued until the appeal was decided in 2012
bull $5500 in medical bills were at issue at trialbull There were no penalties issues at trial
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Arbitratorrsquos Decision
bull Petr sustained a work-related accident injuring his low back on 11003bull On 11003 and 121303 Petr was employed by ECIbull ECI and Precision had a borrowing-lending contract (ECI was the lending employer
and Precision was the borrowing employer)bull On 11003 Precision had workersrsquo compensation insurance coverage through
West Bendbull On 11003 ECI had no workersrsquo compensation coverage in effect because the
Travelers policy had lapsed As a consequence the arbitrator ruled that there was no insurance coverage by Travelers for the accident of 11003
bull Petr sustained a temporary exacerbation of his low back condition on 121303 but this incident did not break the chain of causation between the injury of 11003 and the claimantrsquos subsequent permanent total disability that commenced 120904
bull TTD medical expenses and permanent total disability benefits were awarded in the claim for 11003 and no benefits were awarded for the claim for 121303
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Commission Decision
bull Benefits awards were not in dispute and were affirmedbull The Travelers policy did provide workersrsquo compensation
coverage to ECI on 11003 per Section 4(a)3 of the WCAbull ECI and Precision were jointly and severally liablebull Petrrsquos injuries were covered under the policy issued by
Travelers to ECIbull The Employee Leasing Company Act did not contain any
provision that would limit the Travelers policy coverage or otherwise limit the mandatory coverage scope of the WCA
bull Travelers motion to take judicial notice was denied
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Circuit Court Decision
bull Confirmed the Commissionrsquos decision on all issues except one
bull In its order the court stated ldquothe fact that Travelers did not receive premiums for [the Petr] was simply wrong and ignore[d] the intent of [the Employee Leasing Company Act] Accordingly the Commissionrsquos decision is overturnedhellip[] Travelers owes no coveragehellip[ and the Petr] must look to Precision Cabinets insurer andor to ECI for his recoveryrdquo
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Precisionrsquos Appeal
bull Commission correct Travelers policy covered petrrsquos injuries pursuant to WCA
bull Commission correct ELCA did not eliminate coverage of Travelers policy
bull Commission did not abuse its discretion in denying motion to take notice of documents
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Any WC policy covers entire liability
820 ILCS 3054(a)(3)(West 1992) ldquoSection 4 (a) Any employer shall
(3) Insure his entire liability to pay such compensation in some insurance carrier authorized licensed or permitted to do such insurance business in this State Every policy of an insurance carrier insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured Provided however that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1 2 or 4 for the remainder of his or her liability to pay such compensation subject to the following two provisions Firstly the entire compensation liability of the employer to employees working at or from one location shall be insured in one such insurance carrier or shall be self-insured and secondly the employer shall submit evidence satisfactorily to the Commission that his or her entire liability for the compensation provided for in this Act will be secured Any provisions in any policy or in any endorsement attached thereto attempting to limit or modify in any way the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly voidrdquo
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Non-impact of premium paymentsbull Petr was at all times an employee of ECI on ECIrsquos payroll
bull Travelers had a duty under the Insurance Code sectsect462b and 467 to diligently investigate ECI to determine the correct premium
bull Travelers failed to investigate ECIrsquos payroll etc
bull Textile Maintenance v Industrial Commrsquon 263 IllApp3d 866 636 NE2d 748 (1994) the mandatory coverage provisions of Section 4 of the WCA extends coverage under a policy notwithstanding that the employer had not paid premiums
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Liability amongst respondentsinsurers
bull Between loaning and borrowing employers joint and several liability 820 ILCS 3051(a)(4)
bull In the absence of agreement borrowing employer is primarily responsible Id
bull Here the agreement between ECI and Precision named ECI as responsible
bull Between employer and insurer insurer becomes primarily responsible 820 ILCS 3054(g)
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Employee Leasing Company Act215 ILCS 11330 (West 1998)
(a) When a workers compensation policy written to cover leased employees is issued to the lessor as the named insured the lessee shall be identified thereon by the attachment of an appropriate endorsement indicating that the policy provides coverage for leased employees The endorsement shall at a minimum provide for the following
(1) Coverage under the endorsement shall be limited to the named insureds employees leased to the lessees(2) The experience of the employees leased to the particular lessee shall be separately maintained by the lessor as provided in Section 25
(b) (Blank) (c) The lessor shall notify the insurer or a licensed rating organization 30 days prior to the effective date of termination or immediately upon notification of cancellation by the lessor of an employee leasing arrangement with the lessee in order to allow sufficient time to calculate an experience modification factor for the lessee
(d) The insurer shall provide proof of workers compensation insurance to the lessor and to each applicable lessee within 30 days of the coverage being effected or changed
(e) Calculation of a lessors or lessees premium shall be done in accordance with the insurers rating manual filed with the Department
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Appellate Court Decision
bull DE NOVO review The circuit court erred in overturning the decision of the commission because the commissionrsquos finding that the Travelerrsquos insurance policy covered the liability of ECI for the claimantrsquos work-related injury was not contrary to the law
bull Per Section 4(a)3 of the WCA Travelersrsquo policy covered ldquoall the employees and the entire compensation liabilityrdquo of ECI
bull Coverage of ECI by the Travelers policy was not negated by the provisions of the Employee
Leasing Company Act
Section 4(a)3 specifically negates any endorsements that would otherwise limit coverage of a policy ELCArsquos stated purpose ldquosupportedrdquo the Commissionrsquos decision Mandatory coverage language in 4(a)3 was there to protect the claimant not the insurer
bull The law is settled that the insurer is primarily liable to pay for the liability of the employer sect4(g) See also Corrugated Metals Inc v Industrial Commrsquon 184 IllApp3d 549 540 NE2d 479 (1989)
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
Practical Application
bull Statutory Language of sect4(a)3 is paramountbull Petitioners Can bring all respondents and
insurers to arbitration to resolve coveragebull Respondents ndash Be prepared to make record at arbitrationndash Terms of leasing agreement between loaning and
borrowing employersndash Arrange for payment of disputed benefits until
coverage issue resolved
![WCLA 3-27-14.pptx [Read-Only] CLE/WCLA_3... · 2016-12-02 · WCLA 3-27-14 • The Five Factors of Section 8.1b • Thursday March 27, 2014 • 12:00 pm to 1:00 pm • James R. Thompson](https://img.pdfslide.net/doc/110x75/5f397c7167df047dfe28db98/wcla-3-27-14pptx-read-only-clewcla3-2016-12-02-wcla-3-27-14-a-the.jpg)
