Court Opinion

ID: 9703906
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:12:07.2311+00
Date Added: 2024-06-11T18:21:52.925211
License: Public Domain

MR. JUSTICE KLUCZYNSKI, dissenting: I must respectfully dissent from the majority opinion which has effectively deprived Herman Jackson of the meager workmen’s compensation award given to him after he sustained a fractured skull and was totally and permanently blinded as the result of an industrial accident in 1963. Joseph Schaden is in a similar position because his injuries, which were sustained in 1963, resulted in his complete disability, rendering him wholly and permanently incapable of work. This court has held that the underlying purpose of workmen’s compensation statutes here and in other States is to provide financial protection to workers whose earning power is temporarily diminished or terminated as a result of injuries arising out of and in the course of their employment. (Board of Education v. Industrial Com., 53 Ill.2d 167, 171.) In Grasse v. Dealer’s Transport Co., 412 Ill. 179, 190, the court stated that the “primary purpose of the Workmen’s Compensation Act is to afford employees and their dependents a measure of financial protection.” As one authority has observed, the Workmen’s Compensation Act was designed to provide timely compensation and lessen the amount of litigation formerly attendant to industrial injuries. It was also designed “to provide reasonable and necessary medical, surgical and hospital services, a definite basis for compensation during a period of temporary total disability, a fixed schedule of benefits for disabilities or death resulting from accidental injuries or death arising out of and in the course of employment ***.” (Angerstein, Illinois Workmen’s Compensation (rev. ed. 1952), at 24.) The majority opinion has clearly frustrated this intent. In Donoho v. O’Connell’s, Inc., 18 Ill.2d 432, we recognized that there was no constitutional prohibition created in permitting an award under the Workmen’s Compensation Act to be free from the liens of the Public Aid Commission. This court noted the fact that a claimant, by asserting claims under the Act, receives limited and smaller recoveries than those returned in common-law actions, and he can claim no allowance for pain and suffering. This genuine difference supported the fact that workmen’s compensation recoveries may be treated differently from others. 18 Ill.2d at 438. Therefore the provisions of the Workmen’s Compensation Act are explicitly comprehensive in an attempt to insure payments of claims. Section 4(a) (Ill. Rev. Stat. 1969, ch. 48, par. 138.4) requires the employer to post satisfactory guarantees that claims will be paid, and section 21 (Ill. Rev. Stat. 1969, ch. 48, par. 138.21) provides that awards are to be free of all liens, attachments, or other encumbrances. It is apparent that the policy underlying the Workmen’s Compensation Act is to insure that claimants are guaranteed an expeditious recovery to which they are entitled. In Federoff v. Ewing (1971), 386 Mich. 474, 192 N.W.2d 242, where the same Highway and Peerless reinsurance treaty was involved, the general view expressed in Fontenot v. Marquette Casualty Co. (1971), 258 La. 671, 247 So. 2d 572, that a claimant of the reinsured may have no rights against the reinsurer was rejected. The Michigan court held that the reinsurance provision creating a condition precedent of actual payment by Highway of its share of a recovery before Peerless might be liable as reinsurer was to be given no force and effect. The court in Federoff reasoned that the underlying public policy expressed in the Michigan compensation statute rendered the aforesaid reinsurance provision unenforceable. It relied upon the statutory provision that specifically brought all workmen’s compensation policies within the ambit of its compensation act and which further voided all policy provisions inconsistent therewith. Illinois does not have a provision similar to that of Michigan construing all compensation insurance to be subject to its provisions, although this court has stated that The Workmen’s Compensation Act is part of every insurance contract (Carmack v. Great American Indemnity Co., 400 Ill. 93, 96). Moreover, section 4(a)(3) is comparable to that of Michigan. It provides, in part, “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.” (Ill. Rev. Stat. 1969, ch. 48, par. 138.4(a)(3).) I would hold that the result in Federoff is correct. This would negate that portion of the Peerless-Highway policy requiring payments by Peerless to the liquidator and further requiring that Highway pay each claimant as a condition to Peerless’s duty to provide any amount to Highway in excess of $25,000. It therefore follows that the next issue would be whether Jackson and Schaden may proceed directly against Peerless for recovery of amounts in excess of $25,000. Section 4 of the Workmen’s Compensation Act (Ill. Rev. Stat. 1969, ch. 48, par. 138.4) states, in pertinent part: “(a) Any employer 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 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: *** 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. * * (g) *** In the event the employer does not pay the compensation for which he is liable, then an insurance company, association or insurer which may have insured such employer against such liability shall become primarily liable to pay to the employee *** the compensation required by the provisions of this Act to be paid by such employer. The insurance carrier may be made a party to the proceedings in which the employer is a party and an award may be entered jointly against the employer and the insurance carrier.” Section 4(g) permits a claimant to bring an action directly against the “insurer” to sustain this right, and I am of the opinion that Peerless must be considered as such to the extent of the excess coverage it assumed. In effect, Peerless was liable to pay any amount exceeding $25,000 up to $1,000,000. While its policy provided that payment was to be made only upon Highway’s payment of its share, such provision would be inequitable and allow Peerless to avoid its obligations to plaintiff. Additionally, Peerless agreed to assume a liability as an insurer of portions of awards or judgments entered pursuant to various common-law and statutory proceedings. The terms of the reinsurance agreement also allowed Peerless to retain the right to control the management of certain claims against Highway if the claims exceeded $25,000 and Peerless could not be held chargeable with any expenses resulting from an adverse verdict unless the trial had been held with the specific consent of Peerless. Finally, Peerless reserved the right to decline or cancel any individual risk by giving Highway 30 days’ notice. I believe that the aforementioned statutory and insurance policy provisions must be construed so as to classify Peerless as an “insurer” (to the extent of its excess coverage) within the meaning of section 4(g). Thus, effect would be given to the liberal interpretation of the Workmen’s Compensation Act as intended by the legislature (Vaught v. Industrial Com., 52 Ill.2d 158, 165) and the expressed public policy would be served by allowing these claimants the right to recover a substantial portion of their awards from Peerless. Various arguments pertaining to preference among creditors are raised by the Director and amici. They primarily claim that by permitting recovery in this instance Jackson and Schaden will be given a preference to distribution of assets among other creditors of Highway thereby creating an unmanageable situation in the liquidation matter. The question posed, however, is not whether the assets of an insolvent insurance company are to be preferentially divided among the creditors but rather whether the funds owed by Peerless as a result of the awards entered on behalf of Jackson and Schaden will become assets of Highway subjecting them to distribution by the Director. Since claimants would be able to proceed directly against Peerless, the dire consequences envisioned by the aforesaid parties would not occur. I would therefore affirm the judgment of the appellate court.