Our preview of the civil cases on the Illinois Supreme Court’s November oral argument docket continues with Skokie Castings, Inc. v. Illinois Insurance Guaranty Fund. Our initial look at Skokie Castings, just after review was granted, is here.

Skokie Castings arises from a severe workplace injury which permanently disabled the employee. At the time, the employer was a qualified self-insurer. After the Illinois Industrial Commission confirmed that the employee was totally disabled, the employer paid up to its retention amount. At that point, the employer’s excess carrier took over. But then the excess carrier went broke and was placed in receivership.

Like most states, Illinois has a system in place to protect injured workers when a workers comp insurer goes bankrupt. As part of the price of doing business in Illinois, all insurers contribute to the Illinois Insurance Guaranty Fund. When a company begins the liquidation process, its obligations are taken over by the Fund. According to the Insurance Code (215 ILCS 5/537.2), "such obligations shall not . . . exceed $300,000, except that this limitation shall not apply to any workers’ compensation claims."

So was the employer’s claim against the Fund a "workers’ compensation claim"? The Fund thought not; they paid up to the $300,000 ceiling and then stopped.

The employer filed a declaratory judgment action, seeking a declaration that the Fund had improperly stopped paying, and the $300,000 ceiling didn’t apply. The parties filed cross-motions for summary judgment; the trial court granted plaintiff’s motion, holding that the claim, despite being filed by the self-insured employer, was a "workers compensation claim" within the meaning of the statute.

The Appellate Court affirmed. The Court found that several sections of the Insurance Code noted that the Fund was intended to protect not only claimants but policyholders as well. Following a New Mexico decision rendered under a similar statutory structure, In re Delinquency Proceedings Against Mission Insurance Co., the Court held that if the legislature had intended to exclude claims by self-insured employers whose excess carriers had gone bankrupt, it would have done so. Since the statute contained no such language, the reasonable inference was that the legislature intended that such claims should fall within "workers compensation claims," and thus be exempt from the payment ceiling.

Skokie Castings will be argued during the 9:00 a.m. session of the Illinois Supreme Court on Tuesday, November 20.