## I L L I N O I S 

## O F F I C I A L 

## R E P O R T S Appellate Court

Skokie Casti ngs, In c. v. Illinois In suran ce G uaran ty Fun d

, 2012 IL App (1st) 111533

Appellate Court Caption SKOKI E CASTI NGS, I NC., as Successor to Wells Manufa ctur i n g Company
, Plaintiff-Appellee
, v. I L L I NOI S I NSURANCE GUARANTY FUN D, Def

endant- Appellant.

District & N o. First District, Third Division Docke t No. 1-11-1533

Filed J anuar y 18, 2012

Held (Note : T

his syl lab us

con st it ute s n o par t of the opi nio n of the cour t but has bee n pre

par ed by the Rep o rt er of D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) Where plaintiff employ er was a self-insure r with respe ct to worke rs’
compensa tion insurance and car ried excess insurance
, and it had exhausted its rete ntion limit at a time when its excess insurer beca me insolvent, the t rial court, in the employ er’ s decla ratory judgme nt action
ag ainst the I llinois I nsuranc e Guaranty Fund, properly decla red that the Fund improperly terminated pay ments owed to one of p laintiff’s employ ees who had been awa rded benef

its for life for her tota l and
perma nent disability , since the statutory cap did not a pply to the Fund’ s pay ments in plaintiff’s ca se.

Dec ision Under Review Appea l from the Circuit Court of Cook County
, No. 10-CH-20252; the Hon. Michae l B. Hy

man, J udg e, pre siding.

J udg ment Affir med.Counsel on

Appea l L ocke L ord Bissell & L iddell, L L P, of Chicag o (Steven T

. W hitmer, Hug h S. Balsam, a

nd Mere dith V. Coley , of counse l), for a ppellant.

I nman & Fitzgibbons, L td., of Chicag o (Jack M. Shanahan and L aure n E. Z immer, of counse l), for a ppellee.

Panel PRES I DI NG J USTI CE STEEL E delivere d the judgme nt of the court, with opinion.
J ustices Murphy

and Salone c oncurr ed in the judg ment and opinion.

OP INION

¶ 1 Def

endant, the I llinois I nsuranc e Guar anty Fund (F und), appe als an order of the circ uit
court of Cook County g ranting summary judgme nt to plaintiff, Skokie Castings, I nc., as

succe ssor to Wells Manufa cturing Company (collec tively Wells), in a decla ratory judgme nt action. The circ uit court ruled that Wells, a self-insuring employ er, was entitled to pay ment from the Fund based on excess worke rs’ compensa tion policies Wells purcha sed from Home I nsuranc e Company (Home) befor e the insurer beca me insolvent. For the following rea sons,

we a ffirm the judg ment of the c ircuit court.

¶ 2 BA CKGROUND ¶ 3 The rec ord on appea l discloses the following fac ts. I n 1985, Wells was an i n d u strial
company doing business in Skokie, I l l i n ois. On Fe bruar y 6, 1985, Wells employ ee Mona Soloky was injured w hen she sustaine d a bullet wound to the hea d while in the cour se and
scope of her employ

ment. Soloky filed a worke rs’ compensa tion claim ag ainst Wells seeking benef its for her injury

. On Marc h 10, 1993, the I llinois I ndustrial Commi ssion found Soloky
to be totally and perma

nently disabled and order ed Wells to pay all rea sonable and nece ssary medical c osts, plus weekly benef it pay ments for life ( Soloky

awa rd). ¶ 4 At the time of Soloky ’s injury
, Wells was a qualified self-insure r with respe ct to worker s’
compensa tion insurance

. However, Wells also purcha sed an “Ag g reg ate Ex cess Workers’ Compensat i o n and Employ ers’ L iability Policy ” and a “Specif ic Ex cess Workers’ Co m p en sation and Employ ers’ L iability Policy ” from Home. The ag g reg ate Home policy provided in par

t: “Upon r ece ipt of a monthly or quarterly statement from or on behalf of the insure d showing eac h pay

ment made by the Insured during such period in excess of the I nsured’ s Retention *** the co mp a

ny w il l promptly reimburse the I nsured for such indemnification as the c ompany

is obligate d to pay

under the terms of this policy .” The Home policy

at issue provided in pa

rt:

-2-“[Home] here by ag ree s to indemnify the I nsured ag ainst excess loss, subject to the limit ations, conditions and other terms of this policy
, which the I nsured may sustain on

acc ount of *** compensa

tion and other benef

its require d of the I nsured by the Workers’ Compensation L aw ***.” Wells paid the Soloky awa rd up to the rete ntion amount stated in the Home policies. Home then paid the a

war d until the insurer we nt into rece ivership. ¶ 5 Following the liquidation of Home, the F und, pursuant to t he st atute crea ting the F und (215 I L CS 5/532 et seq. (West 2004)), beg an paying benef its based on the Soloky awa rd and S o l o k y ’s ong oing medical needs. On May 13, 2005, the Fund notified Wells th at t h e $300,000 cap on cover ed claims under the statute (215 I L CS 5/537.2 (West 2004) ) applied

an d t h e claim was near ing exhaustion. I n approximately Aug ust 2005, the Fund cea sed
paying benef

its unde r the Soloky

awa rd. Wells has assumed all pay ment obligations unde r the Soloky

awa rd since that time. ¶ 6 On M ay 11, 2010, Wells filed a complaint seeking a judi cial d ec l aration that the Fund improperly terminated pay ments on the Soloky awa

rd and the $300,000 cap does not apply to the Fund’ s obligations re g arding the Soloky awa rd. On J uly 7, 2010, the Fund move d to dismiss the complaint. On October 14, 2010, the circ uit court enter ed an order construing the motion as one seeking summary judgme nt. On November 12, 2010, Wells filed its response and cr oss-motion for summary judgme nt. ¶ 7 On J anuar

y 20, 2011, the circ uit court hear d oral argument on the motions and, pursua nt to the court’s reque st, the parties filed supplemental briefs addre ssing the rele vance , if any , of the Self-I nsurer s Advisory Boa rd and Self-I nsurer s Security Fund (see 8 2 0 I L CS 305/4a-5, 4a-7( a) (West 2004)) to the case

. On May 5, 2011, the circ uit court enter ed a memorandum opinion and order g ranting summary judgme nt in favor of Wells. On May 27, 2011, the Fund filed a timely

notice of a

ppeal to this court.

¶ 8 DI SCUS SI ON ¶ 9 The issue on appea l is whether the circ uit c ourt err ed in g ranting summary judgme nt to Wells. Summary judgme nt is appropr iate wher e “the pleading s, depositions, and admissions

on file, toge ther with the aff i d av i t s , i f an y , show that there is no g enuine issue as to any

m at eria l fac t and that the moving party is entitled to a judgme nt as a matter o f l aw

. ” 7 3 5 I L CS 5/2-1005(c) (West 2010). The tria l court must view t hese documents and ex hibits in the light most favor able to t h e n onmoving party

. Home Insurance Co. v. Cincinnati Insurance Co.
, 213 I ll. 2d 307, 315 (2004). Our revie w of a summary judgme nt ruling is de

novo

. Arangold Corp. v. Zehnder , 204 I ll. 2d 142, 146 (2003). ¶ 10 Moreove r, in this case , the parties ag ree th e fa ct s ar e u n disputed and the Fund r aises statutory interpre tation questions on appea l, which are questions of law we revie w de novo

. Hossfeld v. Illinois State Board of E lections
, 238 I ll. 2d 418, 423 (2010). The fundame ntal rule of statutory construction require s courts to asce rtain and g ive eff ect to the leg islature’s intent. Gene ral Motors Corp. v. Pappas
, 242 I ll. 2d 163, 180 (2011). The statutory lang uag e, g iven its plain and ordinary meaning
, best indicates the leg islature’s intent. Id. at 1 8 0. I n interpre ting a statutory provision, courts evalua te the statute as a whole, “with eac h provision

-3-construed in c onnection with e very other section.” Id. When the statutory lang uag e is c lear

and unambig uous, a court must g ive ef fec t to the statute’s plain meaning without r esorting
to ext rinsic statutory

construction aids. Id. ¶ 11 We turn to article XXXI V of the I llinois I nsuranc e Code (Code) (215 I L CS 5/532 ( West 2004)), whic h cre ates the F und and ar ticulates its purpose:
“The purpose of this Article is to provide a mecha nism for the pay

ment of cover ed claims under cer tain insurance policies, to avoid excessive delay in pay ment, to avoid financ ial loss to claimants or policy holders beca

use of the entry of an Orde r of L iquidation ag ainst

an insolvent company , and to provide a Fund to assess the cost of such protec tion among member c ompanies.”
I n particula

r, sec tion 537.2 of the Code (215 I L CS 5/ 537.2 (West 2004)) provide s: “The Fund shall be ob l i gated to the extent of the cover ed claims exis ting prior to the entry of an Orde r of L iquidation ag ainst an insolvent company and arising within 30 day s afte r the entry of such Orde r, or befor e the policy expiration date if less than 30 day s afte r the entry of such Orde r, or befor e the insured repla ces the p o l i cy o r o n reque st eff ects

canc ellation, if he does so within 30 day s afte r the entry of such Orde r. I f the entry of an Orde r of L iquidation occur s on or afte r *** J anuar y 1, 1988, such obligations shall not: *** exceed $300,000, except that this limit ation shall not apply to any wo rk er s [ ‘]
compensa tion claims ***. I n no event shall the Fund b e o b l i gat ed to a poli cy holder or claimant in a

n amount in e x cess of the fac e amount of the policy from which the claim arises.” The Fund’ s members include all insurance companies authorized to t ra n s ac t business in I llinois

. Roth v. Illinois Insurance Gu a r a n t y Fund
, 366 I ll. App. 3d 787, 795 (2006). All insurers transact i n g b u siness in I llinois are require d to contribute to the Fund in direc t propor t i o n t o their premium income, and, since all insurers must contribute, “ ‘it is the philosophy of t he Fund to have all potential claims ag ainst the Fund’s as s et s re d u ced by a

s o l v en t insurer, and not the Fund, whene ver possible.’ ” Id. at 794 (quoting Harrel l v. Reliable Insurance Co.
, 258 I ll. App. 3d 728, 730 (1994))

. These contributions “ ‘ar e passed along to the insurance -buy ing public in the form of highe r premiums.’ ” Id. (quoting Norberg

v. Centex Homes Corp.
, 247 I ll. App. 3d 267, 274 (1993))

. The Fund is to be “ ‘a source of last reso rt ’ ” i n t h e event of the insolvency of an insurer. Id. at 794-95 (quoting Illinois Insurance Guaranty Fund v. Farmland Mutual Insurance Co.
, 2 7 4 I l l

. App. 3d 671, 673 (1995))

. ¶ 12 The Fund maintains that Home’s obligation to r eimburse Wells ca nnot be considere d a “wor kers’ compensa tion claim” under section 537.2 of the Code. The term is not define d by the Code. I n its brief, Wells first argues t h e t er m ref ers only to an “ employe e’s claim for benef its under the Workers’ Compensation Act.” Wells cites Grabs v. Safeway, Inc.
, 395 I ll. App. 3d 286, 293 (2009), as support for this argument, but the decision–which addre sses a claim of re taliatory

discharg e–does not e stablish a g ener al def inition of the term. ¶ 13 Section 532 of the Code establishes a purpose to preve nt loss not only to claimants, but also to policy

holders. 215 I L CS 5/532 (West 2004). Section 537.2 of the Code also ref ers to the Fund’ s obligations to “a policy holder or claimant

. ” 2 1 5 I L CS 5/537.2 (West 2004).

-4-M o re o ver, section 537.2 of the Code ref ers to “ any worke rs compensa tion clai m s

. ” (Emphasis added.) 215 I L CS 5/537.2 (West 2004). The co m m o n d i cti onary definition of “any” encompasses “one or some indiscriminately of whatever kind.” M er ri am-Webster’ s Collegia te Dictionary 53 (10t h ed

. 1 998). Acc ording ly
, we conclude that worke rs’ compensation claims under section 537.2 of the Code are not narr owly limit ed to claims broug ht by employ ees, but may extend to claims of policy holders of worke rs’ compensa tion policies issued by

insolvent insurers. ¶ 14 I ndeed, the Fund in this case paid on Wells’s c laim a s a policy holder. Moreove r, as the circ uit court corr ectly noted in its order
, counsel for the Fund conce ded at oral argument that if it wa s a primary insurance policy
, the Fund would “pay up to the moon.” Thus, the Fund
argues in the alternative that Wells’s claim ag ainst Home as a self-insure r ag ainst an excess i n s urer is not a worke rs’ compensa tion claim under section 537.2 of the Code. T h e Fu n d notes that under the Workers’ Compensation Ac t: “I n t h e ev en t the employ er does not pay the compensa tion for which he or she is liable, then an insurance company , association or insurer which may have insured such employ er ag ainst such liability shall become primarily liable to pay to the employ ee, his

or her persona l repr esenta tive or benef iciary the compensa

tion require d by the provisions of this Act to be paid by such employ er. The insurance car rier may be made a party to the
proce eding s in which the employ er is a party and an awa rd may be enter ed jointly ag ainst the employ er a

nd the insuranc e ca

rrier .” 820 I L CS 305/ 4(g ) (West 2004). Thus, the Fund argues that a primary worke rs’ compensa tion insurer is, u n l i k e an excess insurer, direc tly responsible for paying worke rs’ compe nsation claims. Acc ording to the Fund, wher e an employ er ha s elec ted to self-insure under the Workers’ Compensation Ac t (see 820 I L CS 305/4(a)( 1), (a) (2) (West 2004)) and its excess insurer become s insolvent, the employ er rema ins liable for pay ment of all obliga

tions until it be comes insolvent, at which point the obligation passes to the Self-I nsurer s Advisory Boa rd (see 820 I L CS 305/4a-1, 4a-6 (West 2004)). ¶ 15 There is n o I l l i n o i s ca s e l aw direc tly addre ssing the trea tment of excess worke rs’
compensa tion policies under the Code. Reinsurers ma y not be direc tly

liable to employ ees for worke rs’ compensa tion claims. See People ex rel. Baylor v. Highway Insurance Co.
, 57 I ll. 2d 590, 596-98 (1974). Simi larly
, article XXXI V of the Code is l i m i t ed i n p art to insurance “wr itten on a direc t ba sis.” 215 I L CS 5/533 (West 2004)

. The Fund is statutorily oblige d to pa

y “cove red claims,” but the statutory definition of “cove red claims” excludes: “[A]ny claim for any amount due any reinsure r, insurer, insurance pool, or underw riting association as subrog at ed rec overie s, reinsura nce rec overa

bles, contribution, indemnification or otherwise. No such claim held by a reinsure r, insurer, insurance pool,

or underw riting association may be asser ted in any leg al action ag ainst a person insured under a policy issued by an insolvent company other than to the extent s u ch claim exceeds the Fund obligation limit ations set forth in Sect i o n 537.2 of this Code.” 215 I L CS 5/ 534.3(b)( v) (West 2004).
The majority of jurisdictions to consider the issue have rul ed t h at a self-insure d employ er under their state’s worke rs’ compensa tion laws was not an “insurer ” for purposes of their

-5-state’s g uar anty laws, and thus, self-insure d employ ers could rec over from their state’s

g uara nty funds af

t er their excess insurers beca me insolvent. See MGM Mirage v. Nevada Insurance Guaranty Ass’n
, 2 0 9 P

. 3 d 766, 772 (Ne v. 2009) (and case s cited there in). The Fund relies prim arily

on In re Claim of National Fire Insurance Co. of Pitt sburgh
, No. A3876-0672, 2008 WL 516290 (N.J. Super. Ct. App. Div. Fe b. 28, 2008) ( per curiam ), but as the circ uit court noted: (a) it is an unrepor ted case not binding on any court (N.J. Ct. R. 1:36- 3 (ef f. Sept. 1, 1994)); and (b) the applicable New J er s ey statute expressly provides that

excess insurance purcha sed by self-insuring employ ers is excluded (N.J. Stat. Ann. § 34:15- 77 (West 2008)). Howeve r, even the weig ht of authority is more persua sive on the issues of whether the Home polices were “ written on a dire ct basis” a nd whether

the claim her e is a “cove red claim” under the Code than whether the claim i s s p ec i fica lly a worke rs’
compensa tion claim. ¶ 16 The circ uit court relied on In re Delinquenc y P r o ce ed i n g

s Against Mission Insurance Co. , 816 P.2d 502, 506 (N.M. 1991), in whic h the New Mexi co Supreme Court found that

a self-insure r’s excess worke rs’ compensa tion policies are not excepted from cover ag e under that state’s g uara

nty law. The circ uit court noted the New Mexi co law, like the I llinois law, limit ed the a

mount that could be paid on cover ed claims, “except that the a ssociation shall
pay the full amount of any cover ed claim arising under a workmen’ s compensa tion policy .” N.M. Stat. Ann. § 59A-43-4( C) (1978). The New Mexi co Supreme C o u rt rea soned that althoug h the unlimit ed cover ag e of the state’s g uara nty law was meant to prot ec t i n j u red worke rs, it doe s not follow that the self-insure d employ er’ s excess policies fell outside the

cover age o f that law, where ex cess workers’ compensa tion policies are not excepted from

cover ag e or define d as bey ond the scope o f t he g uara nty law. Mission Insurance Co.
, 816 P.2d at 506. ¶ 17 L ike the circ uit court, we find Mission Insurance Co. is persua sive authority on this issue. The Code demonstrates that our leg islature understood how to exclude various contra cts of reinsura nce or indemnity from the scope of the Fun d ’s obligations. See 215 I L CS 5/534.3(b)(v) (West 2004). Had our leg is l at u re s o u g ht to exclude or limit the Fund’ s obligation reg arding excess worke rs’ compensa tion policies purcha sed by self-insuring employ ers, it could have expressly done so, as was done in New J erse y

. Compare N.J

. Stat. Ann. 34:15-77 (West 2008). The weig ht of authority interpre ting simil ar g uara n t y l aws in other states–a s well as the Fund’ s own behavior in this case–per suades us that this is not a

case of reinsurance to be treated differe ntly as t he Fund sug g ests. Although the provisions of the Workers’ Compensation Act est ablishing the Self-I nsurer s Advisory Boa rd addre ss the situation wher e bo t h a self-insuring employ er and the excess insurer (if any ) become insolvent, they do not addre ss the Fund’ s obligation to a solvent employ er whose insurer become s insolvent. The Fund conce ded it would have an unl imited obligation to a solvent employ er carr

y ing primary insurance and offers no persua sive rea son fo r a d i ffe rent result wher e a solvent self-insure r carries excess insurance and exhausts the rete ntion limit

. Our leg islature, in adopting the Code, expressly chose not to limit the F u nd’s obligation reg arding

“ anyworke rs compensation claims.” (Emphasis adde d.) 215 I L CS 5/ 537.2 (West 2004).

-6-¶ 18 CONCL USI ON

¶ 19 Thus, we conclude the circ uit c ourt did not err in granting summary judgme nt to Wells and decla ring : (1) the Fund improperly terminated pay ments owed on the Soloky awa rd; (2) the statutory cap does not apply to the Fund’ s pay ments in this case ; (3) the Fund is liable for all benef its paid to Soloky by Wells since Home went into liquidat i o n ; (4 ) the Fund owes reimburse ment to Wells for pay ments made to Soloky since the Fund terminated pay ments in 2005; and (5) the Fund continues to owe pay ments for benef

its p u rs u ant to the Soloky

awa rd. Ac cording ly , the judg ment of the c ircuit court of Cook County

is affirme d.

¶ 20 Affir

med.

-7-