Larson’s Spotlight on Recent Cases: Uninsured Employers’ Fund and Insolvency of Employee Leasing Company’s Workers’ Comp Carrier

Larson's Spotlight on Uninsured Employers' Fund, Voluntary Withdrawal From Labor Market, Bad Faith, and Going and Coming. Larson's surveys the latest case developments that you need to know about. Thomas A. Robinson, the staff writer for Larson's Workers' Compensation Law, has compiled the list below.

IL: Where Employee Leasing Company's Comp Carrier Becomes Insolvent, Uninsured Employers' Fund May Not Look to Coverage Provided by Borrowing Employer's Carrier

A growing number of states have established uninsured employers' funds that pay workers' compensation benefits to injured employees where the employer has failed to secure appropriate insurance coverage.  Some states, including Illinois, add statutory provisions that require the Fund to pay such benefits where the employer has secured coverage, but where the insurance carrier has become insolvent and, therefore, unable to pay the claim [see 215 ILCS 5/546(a)].  Ordinarily in such cases, any "other insurance" must be exhausted before the Fund is actually liable.  In a recent decision, an Illinois appellate court determined that the workers' compensation insurance policy purchased by a borrowing employer to cover its own employees was not such "other insurance" related to a claim filed by an employee of an employee leasing company, who sustained injuries after he had been lent to the borrowing employer, when the workers' compensation carrier of the leasing company became insolvent.  The borrowing employer, while considered the "employer" of the employee for some purposes, was not required to purchase workers' compensation coverage for its borrowed employees where the employee leasing company had already done so. The court indicated that given that a double recovery was not permitted, duplicative coverage over the same workers would not further the overall purpose of the state's Workers' Compensation Act.

See Illinois Ins. Guaranty Fund v. Virginia Surety Co., Inc., 2012 Ill. App. LEXIS 840 (Oct. 12, 2012).

See generally Larson's Workers' Compensation Law, §§ 67.05, 102.04.

PA: Participation in Employer's "Special Attrition Plan" Means Loss of Disability Benefits

Acceptance of a lump sum payment of $35,000, in association with participation by the injured employee in his employer's "Attrition Plan," was sufficient to show that the worker had voluntarily withdrawn from the workforce, held the Commonwealth Court of Pennsylvania recently.  Accordingly, the burden shifted to the worker to demonstrate that he was seeking employment or that his work-related injury had forced him to retire. Noting that the worker testified that he was not seeking employment, and observing further that the WCJ rejected the worker's testimony that he retired because of his work-related injury as not credible, the appellate court affirmed the WCJ's findings.

See in Krushauskas v. Workers' Comp. Appeal Bd. (General Motors), 2012 Pa. Commw. LEXIS 291 (Oct. 11, 2012).

See generally Larson's Workers' Compensation Law, § 84.04.

US: Injured Employee May Not Sue Insured Employer for Bad Faith Failure to Pay Workers' Comp Claim

A federal district court, construing Iowa law, recently granted an employer's motion to dismiss an action filed against it by a worker who had asserted that he had been injured in the course of his employment and that the various defendants, including the employer, had in bad faith failed to pay his workers' compensation claim, or alternatively, had in bad faith engaged in a conspiracy to delay or refuse to pay benefits, and had breached their fiduciary duty. The district court observed that the employer was neither an insurer nor a self-insured employer.  It held that the extension of bad faith liability, as urged by the plaintiff-employee, would undermine the purpose of the exclusive remedy provisions of IC Chapter 85.20, with respect to employee tort claims against an insured employer.  The court also noted that the employee was able to bring a bad faith action against the insurer and that the common thread in the decisions that had allowed the civil action to proceed was either the defendant's status as an insurer or that of a self-insured employer, the substantial equivalent of an insurer.  Here, the employer here was neither.

See Kent v. United Heartland, 2012 U.S. Dist. LEXIS 146752 (N.D. Iowa, Oct. 11, 2012).

See generally Larson's Workers' Compensation Law, § 104.05.

TX: Issues of Fact As to Whether Lunch Time Travel Was Related to Work Meant Summary Judgment on Going and Coming Grounds Was Inappropriate

In a consolidated appeal of two cases involving injuries to two workers who sustained injuries in an auto accident while the claimants were returning from a restaurant to the work site after eating lunch, a Texas appellate court recently held that that the trial courts erred by granting the parties summary judgment because the existence of fact issues precluded summary judgment in favor of either the insurer or the claimants. The record contained evidence of multiple purposes, both work-related and personal, that were accomplished during the claimants' lunch break and promoted by the claimants' lunchtime travel.  Moreover, the primary purpose and impetus behind the claimants' decision to travel to a particular restaurant was disputed. The claimants alleged that the employer required them to eat lunch at a location away from the work site due to the presence of hazardous substances and that the supervisor picked the restaurant. The insurer alleged that the claimants could exercise their own discretion and choose where to eat.  Citing Texas case law that, in turn, quoted Larson's Workers' Compensation Law, the court indicated that with such factual discord, summary judgment was not appropriate.

See Texas Mut. Ins. Co. v. Jerrols, 2012 Tex. App. LEXIS 8494 (Oct. 11, 2012).

See generally Larson's Workers' Compensation Law, §§ 13.05, 21.02.

Source: Larson's Workers' Compensation Law, the nation's leading authority on workers' compensation law.

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