“Not Compensable” Does Not Always Mean “Not Covered”: Using Conflicts Law to Bar Civil Actions Arising From Injuries Subject to Another State’s Workers’ Compensation Statute

On June 27, 2014, the Appellate Court of Illinois, First District, held that a plaintiff’s common-law negligence action against her decedent’s employer was not barred by the exclusive remedy provision of Illinois’ workers’ compensation statutes[1] because her work comp claim would have been non-compensable as untimely under the law’s repose provisions.

The Decedent was allegedly exposed to asbestos at a plant owned by defendant Ferro Engineering (“Ferro”) from 1966 to 1970. Folta v. Ferro Engineering, 2014 IL App (1st) 123219, ¶ 1, (Ill. App. Ct. 1st Dist. June 27, 2014). Decedent was not diagnosed with mesothelioma until forty-one years after he left Ferro’s employ. Id. It was not disputed that Decedent’s injury was accidental and arose from and was received during the course of his employment. Id. at ¶ 28. By the time he was diagnosed, however, any claim Decedent’s estate could have made against Ferro under Illinois’ workers’ compensation acts was barred by the applicable statutes of repose. Therefore, Plaintiff argued, the trial court erred in dismissing her common law negligence action as being outside the workers’ compensation and Workers’ Occupational Diseases Act pursuant to the exclusive remedy provisions.

All 50 states have enacted workers’ compensation statutes and each of these statutes contains some type of exclusive remedy provision. That is, an employer is required only to furnish compensation mandated by the workers’ compensation statute and is released from all other liability whatsoever. Typically, a workers’ compensation statute covers only accidental injuries and occupational diseases arising out of and in the course of an employee’s employment. There are exceptions, however: intentional injuries, defamation, violations of civil rights, etc. do not fall within the purview of a workers’ compensation act even though those injuries may arguably occur within the scope and course of employment. Indeed, no competent lawyer would consider filing a work comp claim on behalf of a client who suffered discrimination at work based on a protected classification within the Americans with Disabilities Act or a state equivalent.

On the other hand, an injury resulting from the breach of an employer’s duty to provide a safe work place does fall within most (if not all) workers’ compensation acts. This claim was precisely the claim Decedent’s estate made against Ferro when Plaintiff filed her common-law action in the Circuit Court of Cook County. In response, Ferro filed a motion to dismiss and argued that Plaintiff’s claims were barred by the exclusivity provision[2] of the Illinois Workers’ Compensation Act and the homologous provision within the Workers’ Occupational Diseases Act (see Handley v. Unarco Industries, Inc., 124 Ill.App.3d 56, 70, 79 Ill.Dec. 457, 463 N.E.2d 1011 (1984)). Nevertheless, the First District Appellate Court disagreed with Ferro. 2014 IL App (1st) 123219, (Ill. App. Ct. 1st Dist. June 27, 2014).

Although an injury may fall within the purview of workers’ compensation, traditional affirmative defenses are available in most workers’ compensation statutes. Namely, statutes of limitation and repose are typically included within the act itself. Indeed, Illinois’ Workers’ Compensation Act contains a 25-year statute of repose provision (820 ILCS 310/6(c)) and the Illinois Workers’ Occupational Disease Act contains a 3-year statute of repose (820 ILCS 305/1(f)). As such, Plaintiff argued that since her workers’ compensation claim would have been barred by these limitations, her claims were “not compensable” and therefore were not subject to the acts’ exclusivity provisions. The Appellate Court agreed–but only because of the way in which Illinois defines the scope of its exclusivity provision.

In Meerbrey v. Marshall Field & Co., Inc., the Illinois Supreme Court explained that, despite the advent of workers’ compensation, an injured employee may still bring a common-law action against his employer if he can prove any of the following exceptions: (1) the injury was not accidental; (2) the injury did not arise from his employment; (3) the injury was not received during the course of employment; or (4) the injury is “not compensable under the Act.”139 Ill.2d 455, 467, 151 Ill.Dec. 560, 564 N.E.2d 1222 (1990). It is the inclusion of this last exception that differs widely across the United States. Indeed, some states[3], like Illinois, hold that when a particular accidental injury is not compensable (as opposed to covered) under the provisions of the workers’ compensation law, it is thereby excluded from the realm of workers’ compensation altogether and the plaintiff is free to bring a civil action against her employer.

On the other hand, several other states[4] hold that the fact that a worker’s claim for compensation under the act may be limited or barred by some provision within the statute, does not thereby authorize the injured party to bring a civil action for damages. Indeed, Missouri diverges from Illinois here. In Combs v. City of Maryville, for instance, the Missouri Court of Appeals, Western District held “the exclusivity clause does not mean “not compensated for”, and can refer only to those employments specifically excluded from coverage under the Act; namely, those where the employee sustains a non-accidental injury on the job, or those where the injury was suffered while not engaged in the course of his employment, or the like.”
As you can see, an employer’s motion to dismiss in a civil suit for an on-the-job injury can be granted in one state and denied in another, depending on how that state interprets its own exclusive remedy provision. If your state interprets its exclusive remedy clause narrowly, like Illinois, Oregon, Washington, Montana, and Pennsylvania (among others), it may be helpful to consider moving to apply another state’s law when facing a civil claim for breach of the duty to provide a safe workplace by a current or former employee. In general, if the difference between two state’s laws is material and directly affects the outcome of the case––that is, whether the exclusivity provision from either state provides for a dismissal––then a court may entertain a choice of law analysis. The majority of states today follow the “most significant relationship test,” as set forth in Section 145 of the Restatement (Second) of Conflicts of Law, to determine which state’s law applies. However, a more specific Restatement provisions exists which directly applies to issues involving two states’ workers’ compensation statutes. Specifically, Section 184 of the Restatement (Second) Conflict of Laws provides:

Recovery for tort or wrongful death will not be permitted in any state if the defendant is declared immune from such liability by the workmen’s compensation statute of a state under which the defendant is required to provide insurance against the particular risk and under which

(a) the plaintiff has obtained an award for the injury, or

(b) the plaintiff could obtain an award for the injury, if this is the state

(1) where the injury occurred, or

(2) where employment is principally located, or

(3) where the employer supervised the employee’s activities from a place of business in the state, or

(4) whose local law governs the contract of employment under the rules of §§ 187-188 and 196.  Restatement (Second) of Conflict of Laws § 184 (1971).

If the work injury occurred in a foreign state, or if the employment was “principally located” in the foreign state (or numbers 3 or 4 apply) and the foreign state’s exclusive remedy provision is broadly-interpreted (like Missouri, Alabama, Kentucky, or Massachusetts–to name a few), then the forum court could grant a motion to apply foreign law under Section 184 of the Restatement and dismiss your claim. This is just what happened in Mendez v. Atlantic Painting Co., Inc. (404 Ill. App. 3d 648, 344 Ill. Dec. 378, 936 N.E.2d 1135 (2010).

In Mendez, a contractor, Atlantic, agreed to paint and clean a bridge in Kentucky for the Commonwealth of Kentucky. 404 Ill. App. 3d at 649. In turn, Atlantic entered into a subcontract with Eagle, who would perform some of the painting work on the job. Id. An employee of the subcontractor, fell to his death from a platform while painting part of the bridge. Id. An arbitrator awarded the Employee’s estate workers’ compensation benefits. The employee’s estate then sued Atlantic in a circuit court in Illinois. Id. at 650. It just so turns out that Kentucky’s Workers’ Compensation Act provides immunity for contractors (like Atlantic), whose subcontractors paid a workers’ compensation claim for injuries to an employee of the subcontractor. See Ky. Rev. Stat. Ann. § 342.690. Illinois did not have a similar provision. Atlantic filed a motion for summary judgment arguing that Kentucky’s workers’ compensation law applied and granted immunity to Atlantic. The trial court agreed with Atlantic and the worker’s estate appealed. On appeal, the worker’s estate argued that “the trial court should have applied Illinois substantive law to [the] case because Illinois has a more significant relationship with this dispute and, therefore, section 145 of the Restatement (Second) of Conflicts of Laws requires application of Illinois law.” Id. at 652. In response, the Court stated “we find that Section 184 of the Restatement applies more closely to the facts of this case.” Id. It then went on to affirm the trial court’s decision. Id. at 658.

Folta v. Ferro Engineering and Meerbrey made clear that ‘non-compensable’ claims for compensation under Illinois work comp means that the employee is free to sue her employer in circuit court. These decisions also create conflicts with other states that interpret their exclusivity provision differently. Therefore, a choice of law analysis may be helpful in achieving the desired outcome.

[1] Illinois sports two parallel work comp acts: the Workers’ Compensation Act (820 ILCS 305/1 et seq.) and the Workers’ Occupational Diseases Act (820 ILCS 310/1 et seq.).
[2] “No common law or statutory right to recover damages from the employer***for injury or death sustained by an employee while engaged in the line of his duty as such employee, other than the compensation herein provided, is available to any employee who is covered by the provisions of this Act***.” 820 ILCS 305/5 (West 2010).
[3] See, e.g., Errand v. Cascade Steel Rolling Mills, 888 P.2d 544 (Ore. 1995); McCarthy v. DSHS, 759 P.2d 351 (Wa. 1998); Gidley v. W.R. Grace & Co., 221 Mont. 36, 717 P.2d 21 (1986); Tooey v. AK Steel Corp., 81 A.3d 851, 855 (Pa. 2013).
[4] See also Akins v. Drummond Co., Inc., 628 So. 2d 591 (Ala. 1993); McGuire v. Lorillard Tobacco Company, 2012-CA-000845-MR, 2014 WL 585626 (Ky. Ct. App. Feb. 14, 2014), reh'g denied (Apr. 3, 2014); Green v. Wyman-Gordon Co., 664 N.E.2d 808 (Mass. 1996).

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